Every so often, the World Bank puts out a paper that calls for better social protection or at least a somewhat better deal for working people. The public relations people there evidently believe we have very short memories.
No, dear reader, the World Bank has not changed its function, nor have elephants begun to fly. Without any hint of irony, the World Bank’s latest attempt at selective amnesia is what it calls its “Social Protection and Jobs” strategy, in which it purports to advocate that the world’s national governments “greatly expand effective coverage of social protection programs” and “significantly increase the scale and quality of economic inclusion and labor market programs.” Hilariously, the World Bank titles its 136-page report fleshing out this strategy “Charting a Course Towards Universal Social Protection: Resilience, Equity, and Opportunity for All.”
In that report, the World Bank, with a straight face, writes that it “recognizes that the progressive realization of universal social protection (USP), which ensures access to social protection for all whenever and however they need it, is critical for effectively reducing poverty and boosting shared prosperity.” Furthermore, the report builds on a previous document that allegedly offers “an overarching framework for understanding the value of investing in social protection programs and outlined how the World Bank would work with client countries to further develop their social protection programs and systems.” The report asserts goals of achieving equity, resilience and opportunity for all people, especially the developing world’s most vulnerable, and “to create opportunity by building human capital and helping men and women to access productive income-earning opportunities.”
We arrive at that favorite set of code words, “human capital.” We’ll return to that shortly. But before we highlight the actual record of the World Bank and its role in imposing devastating austerity on countries around the world, at enormous human cost, let’s take a brief look at the International Trade Union Confederation response. The ITUC, which represents 200 million workers in 163 countries and has 338 national affiliates, says its “primary mission is the promotion and defence of workers’ rights and interests.” Readers may recall that the ITUC issues a yearly report on the state of labor, consistently finding that not a single country fully upholds workers’ rights.
In its four-page summary of the World Bank declaration, the ITUC said it agrees with the World Bank’s stated goals, and “agrees with the Bank that the lack of social protection for the majority of the world’s workers in the informal economy is a challenge that needs to be urgently addressed.” Nonetheless, the ITUC “has a number of considerable reservations to some of the policy messages” and disputes “the rigor of the analysis underpinning some of the policies proposed.”
The ITUC writes: “The Bank’s vision of universal social protection appears to prioritise the extension of targeted non-contributory social assistance at the expense of social security, when both forms of support serve distinct and complementary functions.” Further, it “disagrees with the Bank’s critique of social security schemes, especially pensions, as an undue burden on public finances and ‘regressive’ in nature.” The World Bank’s “solution” to make pension and social security systems sustainable “mainly involve reducing public subsidies to social security, strengthening the link from contributions to entitlements through defined-contribution schemes [retirement plans in which you pay into but have no guarantees as to payout], as well as strengthening the role of voluntary and private pensions.”
In other words, it’s work until you drop! That is already a long-term goal of right-wing ideologues and corporate interests not only in the United States but around the world.
Underneath the rhetoric, the usual right-wing prescriptions
And, true to right-wing form, the World Bank places the onus for unemployment squarely on individuals. The ITUC critique says: “the onus of addressing unemployment appears to focus on the individual, rather than on the broader structural forces at play. The [bank report] disregards in particular the measures that governments can take to create new, quality jobs, such as proactive industry planning, public sector job creation, and public investment – including in labour intensive sectors with strong social and environmental dividends, such as infrastructure, care and the green economy.” Finally, the World Bank claims that labor regulations are “excessive” and threaten employment, and advocates lowering already meager worker protections.
Once again, the World Bank has not forgotten its raison d’être; it has not suddenly changed its stripes. Elephants will continue to not fly.
Did we really expect otherwise? A look at the World Bank’s record provides all the evidence anyone could want of it being one of the world’s most destructive agencies, an organization dedicated to enhancing corporate plunder and imposing punishing austerity. A one-two punch with the International Monetary Fund. Both organizations do the bidding of the Global North’s multi-national corporations through playing complementary roles.
When I last checked in at the World Bank, in 2018, the bank was in the process of completing its “World Development Report 2019: The Changing Nature of Work,” which opened with quotes from Karl Marx and John Maynard Keynes. That was merely a feint. What we soon read in examining the report is that the problem is “domestic bias towards state-owned or politically connected firms, the slow pace of technology adoption, or stifling regulation.” Sure, jobs are disappearing, but that’s no problem because “the rise in the manufacturing sector in China has more than compensated for this loss.” Essentially, the World Bank was advocating that we become sweatshop workers in China. What else to do? “Early investment in human capital” — in other words, pay lots of money for advanced degrees you won’t be able to use — and “more dynamic labor markets,” which is code for gutting labor protections and making it easier to fire workers.
Elephants didn’t, after all, fly five years ago, either.
The World Bank has even declared itself above the law. Unfortunately, at least one U.S. court agrees. A lawsuit filed in federal court in Washington on behalf of Indian farmers and fisherpeople ended with a ruling that the World Bank is immune from legal challenge. The bank provided $450 million for a power plant that the plaintiffs said degraded the environment and destroyed livelihoods. The court agreed with the World Bank’s contention that it has immunity under the International Organizations Immunities Act. The World Bank thus was declared the equivalent of a sovereign state, and in this context is placed above any law as if it possesses diplomatic immunity. Another suit, however, also filed by EarthRights International against the World Bank for its role in turning a blind eye to alleged systematic human rights violations by a palm oil company in Honduras for a project it financed, was allowed to proceed by the U.S. Supreme Court in 2019. That case, however, appears to yet be decided by the trial court. So the World Bank can sometimes be sued in the United States legal system but it remains to be seen if it will have to shoulder any responsibility.
The World Bank has a long history of ignoring the human cost of the projects it funds. The World Development Movement, a coalition of local campaign groups in Britain, reports that the World Bank has provided more than US$6.7 billion in grants to projects that are destructive to the environment and undermine human rights, a total likely conservative. To cite merely three of the many examples, the World Bank:
Loaned an energy company in India more than $550 million to finance the construction of two coal-fired power plants. Local people, excluded from discussions, were beaten, their homes bulldozed and reported reduced food security and deteriorating health as a result of the power stations.
An Indonesian dam, made possible by the World Bank’s $156 million loan, resulted in the forcible evictions of some 24,000 villagers, who were subject to a campaign of violence and intimidation.
In Laos, a hydropower project made possible by World Bank guarantees displaced at least 6,000 Indigenous people and disrupted the livelihoods of around 120,000 people living downstream of the dam who can no longer depend on the rivers for fish, drinking water and agriculture.
“Drawing on Bank studies, project evaluations and sectoral reviews, it is shown that the World Bank still suffers from a pervasive ‘loan approval culture’ driven by a perverse incentive system that pressures staff and managers to make large loans to governments and corporations without adequate attention to environmental, governance and social issues. In 2013, Bank Staff who highlight social risks and seek to slow down project processing still risk ‘career suicide.’ … [The bank] has continued to binge on enormous loans to oil and gas extraction, coal-fired power stations and large-scale mining generating environmental damage, forest loss and massive carbon emissions.”
Destroying the environment in the service of short-term profits
Want more? The World Bank has provided nearly $15 billion in financing for fossil fuel projects since the 2015 signing of the Paris Climate Accords. An October 2022 report by Big Shift Global, a coalition of 50 environmental organizations across the Global North and South, notes that despite World Bank claims that it would end financing for upstream oil and gas production, it has other avenues to promote fossil fuels. One of these methods is to send funds to a financial institution, which in turns sends the money to the fossil fuel project. Another is to provide non-earmarked funds but make the money conditional on instituting reforms encouraging fossil fuels.
The biggest fossil fuel funding, according to the Big Shift Global report, is $1.1 billion for the Trans-Anatolian Pipeline, a gas distribution project in Azerbaijan. Another $600 million went toward a gas storage project in Turkey and another eight projects were given at least $100 million by the World Bank. Projects that the World Bank has financed include expansion of coal. Other work by the World Bank includes $2.8 billion so that Ghana could move its energy mix from mostly hydropower to majority fossil fuels, and pressured Ghana to enter into gas contracts that causes it to pay $1.2 billion annually for gas it doesn’t use, which also has put a greater debt burden on the country.
The World Bank also encouraged Guyana to use a Texas law firm that has Exxon as a major client to rewrite its petroleum laws, while providing money for oil and gas development in Guyana. That development will benefit Exxon as the fossil fuel multinational snagged a contract under which Guyana doesn’t receive any of the profits until the costs of the field are paid off. In other words, the Big Shift Global report says, “Exxon can continue to charge Guyana for every newly developed oil field. It could take decades before the money trickles down to the people.”
The World Bank attempted the same whitewashing stunt with its fossil fuel funding, once issuing a report lamenting global warming while completely ignoring its role in worsening global warming. At the time of that whitewashing report, the bank was providing billions of dollars to finance new coal plants around the world. By any reasonable standard, the World Bank is a key organization in the concatenation of processes that has brought the world to the brink of catastrophic climate change. The policies of the World Bank and its sibling, the International Monetary Fund, have constituted non-stop efforts to impose multi-national corporate control, dismantle local democratic institutions and place decision-making power into the hands of corporate executives and financiers, the very people and institutions that profit from the destruction of the environment.
A trail of evictions, displacements, gross human rights violations (including rape, murder and torture), widespread destruction of forests, financing of greenhouse-gas-belching fossil-fuel projects, and destruction of water and food sources has followed the World Bank. It works in conjunction with the International Monetary Fund, whose loans, earmarked for loans to governments to pay debts or stabilize currencies, always come with the same requirements to privatize public assets (which can be sold far below market value to multi-national corporations waiting to pounce); cut social safety nets; drastically reduce the scope of government services; eliminate regulations; and open economies wide to multi-national capital, even if that means the destruction of local industry and agriculture. This results in more debt, which then gives multi-national corporations and the IMF, which enforces those corporate interests, still more leverage to impose more control, including heightened ability to weaken environmental and labor laws.
The World Bank compliments this by funding massive infrastructure projects that tend to enormously profit deep-pocketed international investors but ignore the effects on local people and the environment. The two institutions are working as intended, to facilitate the upward distribution of wealth, regardless of human and environmental cost.
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.
The red-baiting of Bernie Sanders is in full swing. From Democrats. Yes, the silly season is upon us as Senator Sanders was roundly condemned because he believes literacy campaigns are good things.
I know the United States is a uniquely anti-intellectual country, but, still, you’d think teaching reading and writing might be thought of as positive goals. The Republican responses to Senator Sanders’ 60 Minutes interview in which he condemned the late Cuban leader Fidel Castro’s authoritarianism but also acknowledged Cuba’s social achievements, such as drastically improving literacy rates, was predictable. It was only to be expected that there would be pushback by Florida Democrats, who continue to believe they have to roll in the dust at the feet of right-wing Cuban émigrés.
Nonetheless, Democrats outdid themselves. Let’s first pause to quote the words of Senator Sanders that sent them into paroxysm of indignation: “We’re very opposed to the authoritarian nature of Cuba but you know, it’s unfair to simply say everything is bad. You know? When Fidel Castro came into office, you know what he did? He had a massive literacy program. Is that a bad thing? Even though Fidel Castro did it?”
Evidently it is. Particularly humorous was the response of Representative Stephanie Murphy, a Florida Democrat, who said of President Castro on Twitter: “His ‘literacy program’ wasn’t altruistic; it was a cynical effort to spread his dangerous philosophy & consolidate power.”
Teaching people who previously had been left in miserable poverty and without adequate education how to read and write? Run, run for your life!
Viñales Valley, Pinar del Rio province, Cuba (photo by Adam Jones adamjones.freeservers.com)
And demonstrating yet again his complete ignorance, Senator Marco Rubio offered this “history” lesson: “Democratic socialism sounds benign, but at the core of Democratic socialism is Marxism, and at the core of Marxism is this fake offer that if you turn over more of your individual freedom, we’re going to provide you security. We’re going to provide you free healthcare. We’re going to provide you free education. But the problem is that when they can’t deliver on it or you’re not happy with it, you don’t get your freedoms back.”
Where does one begin with such nonsense? Before we get to what socialism actually is, allow me to inform Senator Rubio and other bloviators that virtually every country on Earth, and every advanced capitalist country other than the U.S., has universal health care — and gets better results than the U.S. for a lot less money. Arranging for everybody to have access to health care really isn’t a spectacular achievement. It is not even necessary to be a socialist country to achieve it.
It ought to be possible to hold more than one thought in one’s head at a time, that there could be positive and negative attributes at the same time. Nor should it be forgotten that although demonologists like Florida politicians reflect those who don’t like Cuba, we never hear from those inside Cuba who support their revolution.
Can reading be a conspiratorial act?
A short-hand definition of socialism would be this: Popular control of production so that enterprises are oriented toward meeting the needs of everyone in a democratic system instead of for the profit of an individual owner or for speculators. A system in which working people make the decisions in their enterprises and their communities and that such decision-making is done in a broader social context so that decisions with social repercussions are made with the peoples and communities affected. In other words, when people have real control over the conditions of their lives — the rule of people instead of the rule of capital.
Incidentally, Senator Sanders isn’t offering anything like that. He’s also been in favor of some U.S. overseas offensives, such as the bombing of Yugoslavia; echoes the right-wing lies about Venezuela even if he opposes an invasion; and refers to Hugo Chávez as a “dead communist dictator” even though President Chávez and his Bolivarian movement won 16 out of 17 elections in an electoral system the Carter Center called “the best in the world.” So the red-baiting of Senator Sanders is not based on reality but on an inability to distinguish between New Deal liberalism, designed to save capitalism, and socialism.
Miami skyline (photo by Wyn Van Devanter)
As I am writing these lines, I happen to be reading the autobiography of Dorothy Healey, the long-time Communist Party organizer who rose to be the chair of the party’s Los Angeles branch, then the second biggest in the U.S. In her book, she gave a detailed account of the political trial she and several other party leaders underwent in the 1950s on trumped up, political charges. Without minimizing the seriousness of the many years of jail they faced, this story also makes useful parallels with today. The prosecution used a strategy of guilt by association, and by distorting the party’s ideas, whether intentionally or out of ignorance of what those were. Healey wrote:
“As in the Foley Square case [a previous political trial of Communist leaders], it was a trial of books. The prosecutor would have witnesses read big chunks of violent-sounding passages from Marx, Engels, and Lenin. This kind of trial could not have been conducted in any other advanced capitalist country — France or England or Italy — because the basic concepts of Marxism were so well known, studied in every university, and familiar to every active trade unionist, that people would have laughed at the outrageous simplifications offered up so solemnly at our trial. That was a peculiarly American phenomenon.”
The mere act of reading and self-education was considered part of the “evidence” against Healey and her co-defendants! She wrote:
“The assistant prosecuting attorney, Norman Neukom, was a vulgar, ignorant man. He was so astonished when one of the defendants was quoted on the need for Communists to engage in continual study. ‘Imagine,’ he told the jury, ‘grown-up people feeling the need to continue to study history and economics and philosophy after they’ve left school.’ For him, somehow, this was further evidence of the evil nature of our conspiracy, grown-ups discussing books they had read. In his cross-examination he wasn’t interested in or capable of refuting any of the substantive points Oleta [O’Connor Yates] made about Party theory and activities.”
Times certainly haven’t changed.
Cubans under Batista had good reasons to join a revolution
None of the above is to suggest that Cuba is above criticism, or that the constrictions on political expression in Cuba is something to ignore. Cuba needs more democracy as it continues to convert the services sections of its economy from state-owned enterprises to cooperatives, as agriculture has long been. We might, however, reflect on the crushing burden of 60 years of attempts to strangle the country by its giant neighbor to the North.
The United States not only threatens to use its overwhelming power in military might but abuses its desirability as a huge market for exports by making its embargo extra-territorial and fully leverages its position as the controller of the global financial system. 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, a 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.
Conditions in pre-revolutionary Cuba were ripe for a revolution. The country’s hundreds of thousands of agricultural wage earners averaged only 123 days of work per year. Nearly half of the rural population was illiterate, 60 percent lived in huts with earth floors and thatched roofs and two-thirds lived without running water. Not surprisingly, poor health was rampant with health care generally unavailable and unaffordable to the poor who made up the huge majority of Cuba’s population. Plenty of force was used to maintain that level of inequality. In Santiago de Cuba, the country’s second-largest city, Batista’s police would torture people to death, with mutilated bodies strung from trees in city parks or dumped in gutters; victims could be as young as 14.
Those conditions and the use of state terror tactics to keep those conditions in place were swiftly reversed after the revolution, never to return. But let us not have any fear of acknowledging that authoritarianism is not unknown in post-revolutionary Cuba and although there are fully free elections at the municipal level, higher-level government positions are not subject to popular vote. One-party states are not conducive to democratic decision-making, regardless of where on the political spectrum the one-party state sits and even in a case like Cuba where citizens are widely consulted and policies adjusted based on popular feedback. Consultation isn’t the same as the power to make decisions.
There is terrorism, but it comes from Washington
But is the United States in any position to point fingers at another country? Let’s look at the record of U.S.-Cuba relations.
The mere fact of the revolution, and its insistence on developing Cuban resources to benefit Cubans rather than immiserating them to enhance U.S. corporate profits, was sufficient to ensure steady hostility from Washington. Aviva Chomsky, in her book A History of the Cuban Revolution, reports the Central Intelligence Agency’s Miami station alone was given $50 million per year to coordinate the sabotage and overthrow of the Castro government following the Cuban rout of the Bay of Pigs invaders. Not content with the CIA’s efforts, President John Kennedy established a separate effort to sabotage Cuba, called “Operation Mongoose,” tolerated terrorist activities by Cuban exile groups based in Miami, and oversaw a series of sabotage operations against Cuban infrastructure, one of which led to the death of 400 workers at an industrial plant. A steady stream of raids intended to sabotage infrastructure and industry continued after the missile crisis, including a CIA-organized operation in which Cuban exiles mined a harbor, which led to the destruction of boats and the deaths of several people.
Cartoon by Carlos Latuff
Later in the 1960s and thereafter, CIA tactics switched to encouraging exile groups to conduct those types of terrorist operations rather than directly conducting them itself. Instead, the CIA concentrated on biological attacks that resulted in a variety of crop, animal and human outbreaks of diseases. The CIA goal (carrying out U.S. government policy) remained fixed, as an agency operative would later admit: “We wanted to keep bread out of the stores so people would go hungry. We wanted to keep rationing in effect and keep leather out, so people got only one pair of shoes every 18 months.”
In a report published on April 20, 2000, in the Miami New Times, Jim Mullen compiled a list of terroristic acts committed by Cuban exiles in the Miami area, a list Mr. Mullen said is “incomplete, especially in Miami’s trademark category of bomb threats.” Mr. Mullen listed 71 acts of violence from 1968 (all but two from 1974) through April 2000. The list includes seven people, six of whom were exile figures, murdered in a three-year span of the 1970s; a radio reporter whose legs were blown off by a bomb after the reporter condemned exile violence; dozens of actual bombings; several beatings of demonstrators, including a nun; and bombings of cultural events.
Who gets to point fingers?
There is no bigger hypocrisy than U.S. government officials condemning other governments. Martin Luther King was correct when he called the U.S. the biggest pervader of violence in the world, and that is no less true today. The list of countries that the U.S. has invaded, overthrown governments or interfered in elections is too long to fully recount. In Latin America and the Caribbean alone, the U.S. has invaded 96 times. That total represents only the direct invasions; it doesn’t include coups fomented by the U.S., including Guatemala in 1954 and Chile in 1973.
Chile under Salvador Allende was similarly denounced as a dangerous dictatorship even though the Allende government kept strictly within legal bounds while the right-wing opposition used extralegal means to oppose it and when that didn’t work called in the military to bomb, arrest, force into exile, “disappear,” torture and kill hundreds of thousands. What “crimes” did President Allende commit? These three statistics concisely summarize the story:
• In 1970, on the eve of Allende’s electoral victory, 50 percent of Chile’s children were undernourished, stunting their development; there were 600,000 considered developmentally disabled because of lack of protein and other problems of malnutrition.
• In 1972, the Allende administration arranged for 550,000 breakfasts and 700,000 lunches to be served daily to students.
• By the early 1980s, under Pinochet, more than half the population of greater Santiago was unable to develop normally either physically or mentally as a result of lack of proper nourishment.
It takes a breathtaking level of ignorance to see providing health care, seeing to it that children receive proper food and raising literary and cultural levels is a form of terrorism while believing such basics should be provided only to those who can afford them. Unfortunately, such ignorance is bipartisan.
Challenging United States hegemony is never an easy course. A county need not be socialist — it is enough to either voice aspirations toward socialism, or merely demonstrate a pattern of not doing as Washington dictates.
So here we go again, this time with Venezuela. Ironically for a country that the corporate media insistently claims has been ruled by two “dictators” (remember that Hugo Chávez was routinely denounced in the same ways that Nicolás Maduro is today) it would be difficult to find a country with more opportunities for grassroots democracy and for everyday people to participate in the decisions that affect their lives and neighborhoods. There has been backtracking on some of this, and there are legitimate complaints about the top-down manner in which the ruling United Socialist Party of Venezuela (PSUV) is run. The U.S. government is in no position to point fingers, however, given its history in Latin America and the widespread voter suppression that is a regular feature of U.S. elections.
Supporters of the Venezuelan government demonstrate in 2017 (photo by Rachael Boothroyd Rojas/Venezuelanalysis)
It is also preposterous to assert that “socialism has failed” in Venezuela, when 70 percent of the country’s economy is in private hands, the country is completely integrated into the world capitalist system and it is (overly) dependent on a commodity with a price that wildly fluctuates on capitalist markets. Venezuela is a capitalist country that does far more than most to ameliorate the conditions of capitalism and in which socialism remains an aspiration. If something has “failed,” it is capitalism. Leaving much of the economy in the hands of capitalists leaves them with the ability to sabotage an economy, a lesson learned in painful fashion during the 1980s in Sandinista Nicaragua.
Before delving into the significant problems of Venezuela, largely due to the economic war being waged against it by the U.S. government and the economic sabotage within by Venezuela’s industrialists and other business interests, it is worthwhile to briefly examine some of the democratic institutions that have been created since the Bolivarian Revolution took root in 1998.
Communal councils organize at neighborhood level
The base of the Venezuelan political system are the communal councils. Various political structures designed to organize people at the grassroots level have evolved into a system of communal councils, organized on a neighborhood level, which in turn build up to communes and communal cities. These are direct-democracy bodies that identify and solve the problems and deficiencies of their local areas with the direct support and funding of the national government. After decades of neglect by previous governments, there were no shortage of problems to tackle.
Like many institutions of the Bolivarian Revolution, these have roots in grassroots organizing that pre-date Hugo Chávez’s first election.
The Barrio Assembly of Caracas emerged in 1991 as something of a general assembly representing local groups, coming into being after demonstrations marking the first and second anniversaries of the “Caracazo” uprising were dispersed by soldiers firing on them from rooftops. (The “Caracazo” uprising was a massive revolt sparked by popular resistance to an austerity package dictated by the International Monetary Fund.)Later versions of these assemblies organized on the eve of the 2002 coup attempting to overthrow President Chávez; among these assemblies’ accomplishments were distributing 100,000 fliers calling for a march on the presidential palace to defend the government.
The Bosque de el Valle in Mérida state (photo by Jorge Paparoni)
The communal councils are the base of an alternative government structure, one intended to bypass municipal and other local governments and to eventually replace them. This was an attempt to provide a concrete form to the concept of “constituent power,” the idea that people should be direct participants in the decisions to affect their lives and communities. Legislation passed in 2006 formally recognized the communal councils and the form quickly gained popularity — there were an estimated 30,000 in existence by 2009. These councils are formed in compact urban areas containing 200 to 400 households in cities and 20 or so in rural areas. All residents of the territory are eligible to participate. In turn, communal councils organize into larger communes, and communes into communal cities, to coordinate projects too large for a neighborhood or to organize projects necessarily on a larger scale, such as improving municipal services.
Communal councils are required to propose three projects that will contribute to development in the community; funding for approved projects will usually come from national-government bodies. An interesting development is that many (in the case of councils studied by researchers, a majority) who have taken active roles in the communal councils were not politically active before the 2002 failed coup. Generally, women outnumber men among the active participants, and it is often older women taking the lead. The culture of participation that the councils encourage and that the Bolivarian government is paying vastly more attention to solving social problems and the needs of the poor than prior governments has facilitated the organizing of women, and the new activity of women in turn is breaking down traditional macho attitudes. That pensions are now much stronger, proving material security, also enables participation. Health committees tackling problems of illness, access to contraception and motherhood are often where participation begins. Once involved, women sign up for training programs, with more women then men taking advantage of these.
Communes often organize enterprises to provide employment for local residents and to help supply needed basic goods. One example is the El Panal 2012 Commune in Caracas. El Panal operates several enterprises and a communal bank. One of the enterprises is a sugar-packaging plant, and there are also bakeries. El Panal activists are also creating links with neighboring communes in Caracas and in other parts of the country. Links are also being created with the countryside — a “Pueblo a Pueblo” initiative brings together urban communities and farmers to distribute food directly, eliminating intermediaries and speculators. El Panal also regularly organizes food fairs at which meats, vegetables and other basic foods can be bought at discounts, well below market prices.
Tackling social problems through missions
There are also the social programs known as “missions” that are based on the direct participation of the beneficiaries. Begun in 2003, there are more than two dozen missions that seek to solve a wide array of social problems. Given the corruption and inertia of the state bureaucracy, and the unwillingness of many professionals to provide services to poor neighborhoods, the missions were established to provide services directly while enabling participants to shape the programs. Much government money was poured into these programs, thanks to the then high price of oil, which in turn enabled the Chávez government to fund them.
Among the approximately two dozen missions are Alimentación, which incorporates the Mercal network that provides food at subsidized prices and a distribution system; Cultura, which seeks the decentralization and democratization of culture to ensure that all have access to it and stimulate community participation; Guaicaipuro, intended to guarantee the rights of Indigenous peoples as specified in the constitution; Madres del Barrio, designed to provide support to housewives in dire poverty and help their families overcome their poverty; Negra Hipólita, which assists children, adolescents and adults who are homeless; Piar, which seeks to help mining communities through dignifying living conditions and establishing environmental practices; and Zamora, intended to reorganize land, especially idle land that could be used for agriculture, in accordance with the constitution.
Venezuelan political scientist and historian Margarita López Maya summarized the breadth of the missions in a Socialist Register article:
“Missions (programs bypassing uncooperative or ineffective state agencies), such as Barrio Adentro (free 24 hours a day primary health care and disease prevention for low income groups), Mercal (state distribution of food at subsidized prices), Robinson 1 and 2 (literacy and primary education for adults), Ribas and Sucre (secondary and university education for those who had missed or not finished these), Vuelvan Caras (training for employment), and the Bolivarian schools, where a full day schedule has been restored, with two free meals and two snacks a day, plus free uniforms and textbooks: all these undoubtedly had a positive political impact. The government has also invested in the social economy, as in the “ruedas de negocios,” in which the creation of cooperatives is encouraged in order to supply goods and services to the state sector. The government has also created a system of micro-financing with the Women’s Bank, the Sovereign People’s Bank, and so on, which make small loans to lower income borrowers.”
Struggles for economic democracy
In the workplaces, there are experiments with co-management, cooperatives, socialist production units and workers’ councils. These forms have been contested — an ongoing multiple-sided struggle over what constitutes “workers’ control” of industry and what forms such control should take continues. Cooperative enterprises are enshrined in the constitution, and a 2001 law mandates that all members be included in decision-making and that an assembly of all members has final decision-making power over all topics. Temporary workers can be hired for a maximum of six months, after which they must be accepted as members. A state ministry was created to provide assistance to cooperatives and small businesses, including the facilitation of securing contracts from state companies.
There are difficulties here. One significant problem were instances of cooperatives being formed only in order to acquire the start-up capital provided by the government, or were small companies that converted to being cooperatives only on paper to take advantage of preferential priority for state contracts or to obtain subsidies. In response to these irregularities, the government began to require coops obtain a “certificate of fulfillment of responsibilities,” which includes financial audits and demonstration of work within their local community. Nonetheless, there are many examples of successful cooperative enterprises.
There are also socialist production units. These are nonprofit, state-owned enterprises that are managed democratically by a combination of their workers, local communal councils and the national government. These enterprises are intended to provide local services, such as transportation and distribution of cooking gas, and the creation of production. Although workers are directly involved in decision-making at these enterprises, the state also has a role, which can sometimes lead to tensions. The goods produced are most often distributed through the Mercal state-owned chain of supermarkets that provides food at subsidized prices, and PDVAL, a state-run food-distribution network. These are often operated at a loss, as they are intended to provide needed goods and services to communities at steep discounts.
A continuing area of contestation are state-owned enterprises. Some argue for state ownership with employee participation, others argue for full autonomy of enterprises and the workers in them, and there are gradations in between. There are managements that don’t wish to cede decision-making authority to their workforce, and there are government officials, despite being part of the Bolivarian movement, who oppose workers’ control, sometimes because they believe in top-down control by the state. There are examples of state-owned companies in which management structures have changed multiple times as different factions temporarily gain control.
The push and pull of competing interests and tendencies is exemplified in the case of the state-owned aluminum smelter Alcasa, which had a well-functioning system of workers’ control under co-management that reversed its debt problems; then had a new director appointed who ignored the co-management structure, with an accompanying fall in productivity and return of corruption; and then a return to co-management when President Chávez named a new company president selected by the workers. Workers’ control was reinstated with new structures, and because of the precarious financial situation caused by the corruption of the middle period, workers began designing parts to be produced internally instead of buying them from suppliers as previously done. More difficulties arose when a dissident union aligned with the local state governor attempted to stop production, and although unsuccessful, caused a significant disruption. Yet another change in management by Chávez led to a renewed deterioration in co-management, and struggles at Alcasa continued.
Economic warfare at home and abroad
Shifting from a traditional capitalist economy toward a participatory economic democracy can’t be expected to be smooth sailing, especially when this attempt is being done in a country with subaltern status in the world capitalist system. President Chávez had to withstand three successive attempts to remove him — the 2002 coup, 2002-03 bosses’ lockout and the 2004 recall referendum. Five times he was elected president, never with less than 55 percent of the vote, and overall he won 16 of 17 elections and referendums in which his movement participated. The election system put in place by the Chávez government was declared by former U.S. President Jimmy Carter’s Carter Center to be “the best in the world.” None of this prevented the late president from being furiously denounced as a “dictator.”
Once he died, however, the attacks were stepped up by the revolution’s opponents, apparently believing that the loss of the leader would make the revolution vulnerable. In reality, the Bolivarian Revolution has always been a movement propelled by millions who will not readily give up the many gains they have achieved and which pushed the late president to go further. Venezuela has a long tradition of strong, organized movements, which predate the Bolivarian Revolution. Despite the difficulties of recent years and increasing popular disapproval of President Maduro, those movements do not want their gains to be reversed. During the Chávez years, unemployment and poverty were drastically reduced and people were able to participate in the political process for the first time.
So how much of Venezuela’s serious economic problems are the fault of the current president? Some of the blame can be laid at his doorstep, but mostly for his inability to act in timely fashion and allowing problems caused by outside forces to deepen. A serious mistake that has ran through the past 20 years is that no progress was made on reducing Venezuela’s heavy reliance on oil exports. When oil prices were high, the government was content to let the money flow and use it to fund social programs and finance a wide variety of projects. But the later crash in oil prices left the government vulnerable. By not diversifying the economy, much less is earned when the inevitable falls in price arrive and it becomes difficult to maintain consumption because so many consumer products must be imported.
(Cartoon by Carlos Latuff)
The over-reliance on a single export commodity would be difficult to overcome by itself. But greatly compounding Venezuela’s problems are U.S. sanctions, a currency that became drastically overvalued, and an inflationary spiral resulting from that overvaluation that incentivized black markets and smuggling. Poor management on the part of the government of President Maduro has intensified the damage done by those factors. Although the Venezuelan government set an official exchange rate for its currency, the bolívar, the effective exchange rate was determined by international currency speculators and thus the value of the bolívar is not in the control of Caracas.
Speculators caused the value of the bolívar to be reduced by 97 percent in 2017, and further drastic reductions in the currency’s value continued well into 2018. The value or output of the Venezuelan economy hardly declined by anything remotely comparable, so there are other factors at work for such a drastic reduction in exchange value. But because the Maduro government did not adjust the official exchange rate when the bolívar came under attack, the spread between the official rate and the de facto rate widened to the point that vast opportunities for smuggling and black-market operations were created. That in turn caused shortages and hyperinflation.
These developments were a consequence of Venezuela’s integration into the world capitalist system and the country’s heavy reliance on imports. Food and consumer goods intended to be sold at discounts in state stores were diverted to the black market, where profiteers sold them at prices several times higher or smuggled them into Colombia for huge profits. Government officials have repeatedly discovered vast quantities of consumer goods hidden in warehouses by local capitalists who are artificially causing shortages.
Hardening financial sanctions
United States government sanctions on Venezuela prohibit any U.S. persons or banks from providing financing or purchasing any debt issued by the Venezuelan government or the state oil company PDVSA, the purpose of which is to make it more difficult for the government to raise funds internationally or to restructure debt.
These sanctions are effectively extra-territorial. A non-U.S. bank that seeks to handle a transaction in U.S. dollars (the currency most often used in international transactions) 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 Obama administration intensified the U.S. financial war on Venezuela by absurdly declaring the latter a “national security threat” and the Trump administration has issued a succession of decrees tightening the screws.
The latest, issued on January 28, freezes all property and interests of PDVSA subject to U.S. jurisdiction — in other words, blocking Venezuela from any access to the profits generated by PDVSA’s U.S. subsidiary, Citgo, or any PDVSA activities in the United States. The Trump administration expects Venezuela to lose US$11 billion this year, The New York Times reports. That move is in addition to repeated calls by the Trump administration for an overthrow of the Venezuelan government, threats by President Trump to invade, and the Trump administration “recognizing” the opposition leader Juan Guaidó as president although Guaidó has never run for the position and is largely unknown to the Venezuelan public. An added insult is the appointment of death-squad cheerleader Elliot Abrams to “oversee” a “return to democracy,” an idea that would draw laughs if Abrams’ history in Latin America during the Reagan administration weren’t so deadly.
Successive U.S. administrations have subsidized opposition groups — an estimated US$100 million has been poured into Venezuela in an effort to subvert the elected government.
“[T]he sanctions strongly discourage other countries from lending money to the country for fear of reprisal and also discourage any businesses from doing business there too. A study from the 2018 opposition Presidential candidate’s economics czar suggested the sanctions were responsible for a 50% drop in oil production. Furthermore, Trump’s sanctions prevent profits from Venezuela-owned CITGO from being sent back to Venezuela. Trump has also threatened banks with 30 years in jail if they co-operate with Caracas and has intimidated others into going along with them.”
President Maduro is repeatedly called a “dictator,” an epithet endless repeated across the corporate media. But when a portion of the opposition boycotts, can it be a surprise that the incumbent wins? The opposition actually asked the United Nations to not send observers, a sure sign that they expected to lose a fair election despite their claims that the election would be rigged. Nonetheless, a coalition of Canadian unions, church leaders and other officials declared the election to be “a transparent, secure, democratic and orderly electoral and voting process.”
Unfortunately, there is every reason to be concerned, given the hostility of U.S. governments and capitalists to any intent to become independent of the U.S. or to direct economic activity to benefit local people rather than maximizing the profits of U.S. multinational corporations. 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. Guatemala was attempting nothing more “radical” than a land reform that would have forced United Fruit to sell idle land at United Fruit’s own under-valuation of the land (a self-assessment made by United Fruit to avoid paying a fair share of taxes). The U.S. overthrew the government and instituted what would become a 40-year nightmare of state-organized mass murder that ultimately cost 200,000 lives. The Chilean effort to build a humane economy was ended with the overthrow of Salvador Allende and the installation of Augusto Pinochet and his murderous regime that immiserated Chileans.
Dissimilar results can hardly be expected if the U.S. were to succeed in overthrowing the Venezuelan government and installing a right-wing government that would reverse the many gains of the past 20 years. Hands off Venezuela!
The Ken Burns/Lynn Novick television series on the Vietnam War provides yet another example of the narrowness of “acceptable” political discourse in the United States. More than four decades past the end of that imperialist adventure, having a serious discussion about it remains taboo.
The series also provides a fresh example of how the narrowness of acceptable discourse is disguised through the appearance of a vigorous debate. I will confess here I have not watched Burns and Novick’s The Vietnam War, but the consistency of the many discussions of it I have read confirm what would have been expected: The liberal side of the “debate” on the Vietnam War, that an “honorable” effort was tragically miscarried because of “mistakes.”
The series has a long list of corporate sponsors, typical for a Public Broadcasting System production. One of the Koch Brothers, David H. Koch, provided funding, as did the Andrew W. Mellon Foundation, the Rockefeller Brothers Fund and Bank of America. Such blue-chip sponsors are not going to associate themselves with any organization that has the slightest potential of providing any challenging critique.
Rice paddies in Vietnam (photo by Simon Gurney)
But let us not reverse cart and horse. This is the sort of case where corporate sponsors, including fiercely anti-democratic ones like the Koch Brothers, provide funding because they are confident of what they will be getting. There is no need for any formal censorship because corporate control of the media will see to it that viewpoints challenging the mythologies of capitalism are deemed out of bounds.
Most large, influential broadcast stations and print publications are owned by large corporations, and a typical small-city newspaper is owned by a prominent local businessperson if it is not owned by a large corporation. Powerful corporate interests appoint the top editors and managers of their media properties — these mass media decision-makers are men and women who already see the world through the prism of dominant ideologies, and those ideologies will be reflected in the way that news stories are covered. Those ideologies are also reflected in indirect ways — pressure to increase readership or viewership easily leads to pandering to perceived (and sometimes manufactured) consumer interests such as wall-to-wall coverage of celebrity gossip and exhaustive coverage of sports teams simultaneous with the shrinking of news sections.
The press isn’t free if you don’t own one
Many folks on the Left have the idea that there is some sort of organized conspiracy among owners and managers of major media outlets to make sure that ideologically inconvenient perspectives are shut out. That simply isn’t so. Competition alone would prevent any such collusion; within “acceptable parameters” reporters and editors want to be the first to report news. It is enough that corporate-inspired ideologies pervade a society and that corporate ownership ensures that decision-making positions are filled with those who hold to some variant of prevailing ideologies or are inclined to “play it safe” by cautiously remaining within “acceptable” boundaries.
The mass media will then simply reflect these dominant ideologies, and continual repetition through multiple mass media outlets reinforces the ideologies, making them more pervasive until the emergence of a significant countervailing pressure. The very competitive nature of mass media ownership helps dominant ideologies prevail — if so many different outlets report the same news item in a nearly identical way, that “spin” can easily gain wide acceptance. Or if stories are reported differently by competing media outlets, but with the same dominant set of presumptions underlying them, those dominant presumptions, products of ideologies widely propagated by elite institutions, similarly serve as ideological reinforcement.
Editors can reign in reporters with independent mindsets by not running unacceptable stories, or revising them so that dominate ideologies and mythologies are not challenged. When a reporter is fearless enough to follow the trail until some semblance of the truth can be published, even if in watered-down fashion, an exemplary punishment can be made of him or her (such as was done to Gary Webb after his reporting on the CIA). But even when that is not the case, a simple ignoring of a story can make it disappear.
The persistence with which stories are reported is another reinforcement — stories that serve, or can be manipulated, to uphold dominant ideologies can be covered for long periods of time with small developments creating opportunities to create fresh reports at the same time that stories that are ideologically inconvenient are reported briefly, often without context, then quickly dropped. An inconvenient story run once, then ignored, can even misleadingly be pointed to as “proof” that news is being reported no matter what interests are at stake.
One well-documented example will provide an illustration — coverage by elite media of Jerzy Popieluszko, a pro-Solidarity priest in Poland murdered in 1984 by Polish secret policemen in contrast to coverage of priests and other church personnel murdered in U.S.-backed Latin American dictatorships.
Human rights depends on if the U.S. supports the régime
In their classic book, Manufacturing Consent, Noam Chomsky and Edward Herman analyzed four U.S. media outlets that then often set the tone for the press — the most influential newspaper (The New York Times), the two main news magazines (Time and Newsweek) and the most authoritative television news broadcaster (CBS). Their study found 140 articles/broadcasts on Popieluszko and eleven articles/broadcasts on 23 victims in Guatemala during a period that overlapped with Popieluszko’s murder; the Times ran ten front-page articles on Popieluszko, none on the others.
The articles on Popieluszko routinely featured graphic descriptions of the details of his murder and consistently tied his murder to Polish communist authorities despite the fact that the murderers were swiftly arrested and found guilty in an open trial. By contrast, only four of the 23 Guatemalan victims had their names mentioned in any news account, little detail was offered for any of these murders, no remark was made concerning the fact that no arrests were made in any of these cases, nor was U.S. material support of the Guatemalan government that was behind the murders once mentioned.
None of the prevailing situation precludes energetic debate in capitalist mass media within the parameters set by prevailing ideological interpretations. Ideas that directly challenge corporate orthodoxy can be excluded at the same time that a debate among two or more “acceptable” ideas rages. This brings us back to interpretations of the Vietnam War. At the end of the 1990s a strong debate played out in the mass media outlets of the United States concerning the Vietnam War (one in which the Times was a significant participant).
A U.S. Air Force plane drops a white phosphorus bomb on Vietnam in 1966.
This debate had all the appearances of a serious dissection of a bloody, deeply divisive blot on U.S. history. But although the debate was heated and lively, it was only between two “acceptable” viewpoints — an honorable effort that tragically failed or a well-intentioned but flawed effort that should not have been undertaken if the U.S. was not going to be “serious” about fighting. Left out were the widely held views that the war should never have been fought because it was a war to extend U.S. hegemony or that the U.S. simply had no business fighting in someone else’s civil war.
Further, the first “acceptable” viewpoint implied, and the second explicitly stated, that the U.S. didn’t really fight hard to win the war, ignoring the actual intensive level of the U.S. war effort in which most of North Vietnam’s larger cities were reduced to rubble, much of the farming lands were destroyed and three million Vietnamese were killed. The total tonnage of bombs dropped by the U.S. in Vietnam exceeded that of all bombing by all countries during World War II. Reports of the countryside at the end of the war spoke of entire regions as “bare, gray and lifeless.”
So much for the proverbial “fighting with one hand tied behind the back.” And let’s not forget that the Vietnamese had already spent years freeing themselves from the grip of France, only to have the U.S. sabotage elections and resume the fight. That the Vietnamese have the right to decide for themselves how their economy will be structured, or even be allowed independent development at all, and that the U.S. used the full might of the world’s biggest military machine to prevent that, is still outside “acceptable” discussion.
Debate in the service of obfuscation
The liberal conception of an honorable effort that tragically failed is every bit an obfuscation as the conservative perspective that a well-intentioned but flawed effort that should not have been undertaken if the U.S. was not going to be “serious” about fighting. But that these two narrow perspective were allowed to fight it out provided the appearance of a free and open media at the same time that the media obscured.
To return briefly to Guatemala, there has only rarely been any effort in the U.S. to discuss Washington’s bloody role (and elsewhere in Latin America). The Eisenhower administration overthrew Guatemala’s democratically elected government, after a 1952 “national intelligence estimate” (a joint document put together by the CIA and other U.S. intelligence agencies) declared that the United Fruit Company’s massive profits there were a “U.S. interest” requiring intervention.
Allen Dulles, then the CIA director, met with a United Fruit official, promising that whomever the CIA would select as the next Guatemalan leader would not touch the company. The overthrow would institute 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.
The worst of these dictators was General Efraín Ríos Montt, whose régime murdered more than 1,000 people a month during 1982. Ríos Montt was an evangelical Protestant preacher who declared that his presidency was the will of God. Ronald Reagan responded by paying a visit to Ríos Montt, declaring him “totally dedicated to democracy” and claiming that reports of human rights abuses were a “bum rap.”
Do you ever see of this (only one of dozens of examples that could be cited) discussed in the U.S. corporate media? I don’t, either.
In countries in which the media is controlled by the government, it is easy for people to disregard what they read or hear because it is all coming from the same source, even when there is room for different opinions. A system in which the mass media is believed to be independent is far more effective at suffusing a society with an ideology. Such a system is not the result of some sort of conspiracy or a conscious plan, it is simply a natural outgrowth of corporate institutions growing so powerful at the expense of all other institutions.
And when a particularly skilled team of producers is able to uphold the interests of elite institutions, corporate and otherwise, the red carpet will be rolled out. Slick, beautifully presented work beats ham-fisted propaganda every time.
It is common for activists to decry the enormous sums of money spent on the military. Any number of social programs, or schools, or other public benefits could instead be funded.
Not least is this the case with the United States, which by far spends the most of any country on its military. The official Pentagon budget for 2015 was $596 billion, but actual spending is far higher. (Figures for 2015 will be used because that is the latest year for which data is available to make international comparisons.) If we add military spending parked in other portions of the U.S. federal government budget, we’re up to $786 billion, according to a study by the War Resisters League. Veterans benefits add another $157 billion. WRL also assigns 80 percent of the interest on the budget deficit, and that puts the grand total well above $1 trillion.
The War Resisters League notes that other organizations estimate that 50 to 60 percent of the interest would be more accurate. Let’s split the difference — if we assign 65 percent of the interest payments to past military spending (midway between the high and low estimates), then the true amount of U.S. military spending was $1.25 trillion. Yes, that is a gigantic sum of money. So gigantic that it was more than the military spending of every other country on Earth combined.
(Cartoon by Carlos Latuff)
China is second in military spending, but far behind at US$215 billion in 2015, according to an estimate by the Stockholm International Peace Research Institute. Saudi Arabia ($87.2 billion), Russia ($66.4 billion) and Britain ($55.5 billion) round out the top five. And lest we chalk up the bloated Pentagon budget to the size of the U.S. economy, the official $596 billion budget constituted 3.5 percent of its gross domestic product, the fourth-highest ratio in the world, while China spent 2.1 percent of its GDP on its military. But if we use the actual total of U.S. military spending, then U.S. spending as a share of GDP leaps to second place, trailing only Saudi Arabia.
The U.S. maintains military bases in 80 countries, and has military personnel in about 160 foreign countries and territories. Another way of looking at this question is the number of foreign military bases: The U.S. has around 800 while the rest of the world combined has perhaps 30, according to an analysis published in The Nation. Almost half of those 30 belong to Britain or France.
Asking others to pay more is endorsing imperialism
Is there some sort of altruism in the U.S. setting itself up as the gendarme of the world? Well, that’s a rhetorical question, obviously, but such self-deception is widespread, and not just among the foreign-policy establishment.
One line of critique sometimes heard, especially during this year’s presidential campaign, is that the U.S. should demand its allies “pay their fair share.” It’s not only from Right-wing quarters that phrase is heard, but even from Left populist Bernie Sanders, who insisted during this month’s Brooklyn debate with Hillary Clinton that other members of NATO ought to pay more so the Pentagon budget can be cut. Senator Sanders said this in the context of pointing out the superior social benefits across Europe as compared to the U.S., but what it really implies is that militarism is justified.
Setting aside that Senator Sanders’ record on imperialism is not nearly as distant from Secretary Clinton’s as his supporters believe, it is a reflection of how deeply imperialism is in the bones of United Statesians when even the candidate positioning himself as a Left insurgent doesn’t seriously question the scale of military operations or their purpose.
So why is U.S. military spending so high? It’s because the repeated use of force is what is necessary to maintain the capitalist system. As top dog in the world capitalist system, it’s up to the U.S. to do what is necessary to keep itself, and its multi-national corporations, in the driver’s seat. That has been a successful project. U.S.-based multi-nationals hold the world’s highest share in 18 of 25 broad industrial sectors, according to an analysis in New Left Review, and often by commanding margins — U.S. multi-nationals hold at least a 40 percent global share in 10 of those sectors.
A partial list of U.S. interventions from 1890, as compiled by Zoltán Grossman, a professor at Evergreen State College in Olympia, Washington state, lists more than 130 foreign military interventions (not including the use of troops to put down strikes within the U.S.). Consistently, these were used to impose U.S. dictates on smaller countries.
At the beginning of the 20th century, U.S. President William Howard Taft declared that his foreign policy was “to include active intervention to secure our merchandise and our capitalists opportunity for profitable investment” abroad. Taft overthrew the government of Nicaragua to punish it for taking a loan from a British bank rather than a U.S. bank, and then put Nicaragua’s customs collections under U.S. control and handed two U.S. banks control of Nicaragua’s national bank and railroad. Little has changed since, including the overthrows of the governments of Iran (1953), Guatemala (1954), Brazil (1964) and Chile (1973), and more recently the invasion of Iraq and the attempted overthrow of the Venezuelan government.
“I spent thirty three years and four months [in] the Marine Corps. … [D]uring that period I spent most of my time being a high-class muscle man for Big Business, for Wall Street and for bankers. In short, I was a racketeer for capitalism.”
The bipartisan refusal to acknowledge this is exemplified in U.S. narratives concerning the Vietnam War. The “debate” that is conducted in the corporate media is only between two “acceptable” viewpoints — an honorable effort that tragically failed or a well-intentioned but flawed effort that should not have been undertaken if the U.S. was not going to be “serious” about fighting. Never mind that tonnage of bombs dropped on Vietnam were greater than what was dropped by all combatants in World War II combined, 3 million Vietnamese were killed, cities were reduced to rubble and millions of acres of farmland was destroyed. By what sane measure could this be said to be fighting “without really trying,” as Right-wing mythology still asserts?
No modern corporate enterprise would be complete without subcontracting, and the Pentagon has not stinted here. That is not a reference to the massive, and often guaranteed, profits that military contractors enjoy as more supply operations are handed over to connected companies, but rather to the teaching of torture techniques to other militaries so that some of the dirty work of maintaining capitalism can be undertaken locally.
The U.S. Army’s infamous School of the Americas, lately masquerading under the deceptively bland-sounding name Western Hemisphere Institute for Security Cooperation, has long been a finishing school for the personnel enforcing the rule of military and civilian dictatorships throughout Latin America. Major Joe Blair, who was the director of instruction at the School of the Americas from 1986 to 1989, had this to say about the curriculum:
“The doctrine that was taught was that if you want information you use physical abuse, false imprisonment, threats to family members, and killing. If you can’t get the information you want, if you can’t get that person to shut up or stop what they’re doing, you assassinate them—and you assassinate them with one of your death squads.”
The change of the name more than a decade ago was cosmetic, Major Blair said while testifying at a 2002 trial of School of the Americas protestors:
“There are no substantive changes besides the name. They teach the identical courses that I taught, and changed the course names and use the same manuals.”
The entire history of capitalism is built on violence, and violence has been used to both impose and maintain the system from its earliest days. Slavery, colonialism, dispossession of the commons, draconian laws forcing peasants into factories and control of the state to suppress all opposition to economic coercion built capitalism. The forms of domination change over the years, and are often financial rather than openly militaristic today (although the armed fist lurks in the background); regardless, exploitation is the lifeblood of wealth. Demanding that the cost of this should be spread around is a demand to continue exploitation, domination and imperialism, and nothing more.