Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Tag: Pre-War World

Delusion Regarding the Fall of Neoliberalism and Globalization

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On September 25, 2020

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So, the article below was published December 8th, 2015.

The pull quote is:

Neo-liberalism is nearing the end of its cycle. It will kill a lot of people dying, but its death is now ordained and can only be slowed by fanatical levels of police state repression in a few countries. And its death convulsions and the birth pangs of the new system will create a new age of war and revolution which will kill far more.

This is now as close to inevitable as human affairs, endlessly complicated and subject to unexpected shocks, can be.

Nothing has changed, the process has simply continued. Notice the repression going on in the US right now. Since I wrote it, the UK left the EU, there was massive resistance to Macron in France, and so on. We have massive fires all over the world: Australia, California, South Africa the Amazon and more. Wealth continues to concentrate at the top, etc, etc…

These convulsions take time. Slap the start of the actual fall as 2020, with the UK’s Brexit, and we’ve got 12 to 20 years to go. This one’s going to be bad, really, bad, simply because of climate change and our vast over-exploitation of limited resources. There’s going to be a lot of real hunger and lack of water, and so on.

The next age is undetermined, but one possibility is a centrifugal period. It is hard to imagine a future in which, India, for example, survives as a unified nation. For that matter, I’m not sure I’d put my money on China holding together over the middle run: 50/50 it’s fallen into warlordism by 2050 to 60.

The simple way to make your guesses is ask if a country can feed itself with domestic production AFTER the effects of climate change. If it can’t even feed itself now (or only barely); or if it is going to have serious water issues (water, obviously affects agriculture, so it’s not really two things), then the smart money is that it’s going to break up or lose effective control of various hinterlands.

And if you’ve got resources a more powerful nation on your border wants, well, that could go very badly for you. (My fellow Canadians, who seem clueless about how violent Americans are, should take note here.)

On the upside, this will be a very interesting period to be alive, if you can stay that way.

Natalie Nougayrède writes in the Guardian about The Front National’s victory in France:

Marine Le Pen has no solution for France’s problems, her economic programme is all about retreating from the outside world and Europe. Her social vision is of a mythical, homogeneous France that never existed. What she has to sell is an illusion. It’s only because so little else is on offer that people are buying.

This analysis is, there is no kinder way to put it, delusional.

And Nougayrède should know it, because she writes:

The impact of globalisation marked the end of what the French demographer Jean Fourastié coined Les Trente Glorieuses (The Glorious Thirty), the 1945-1975 period when France was modernising and increasing its international influence. There is much twisted nostalgia in the rise of the National Front.

Nougayrède blames this on the oil shocks, which the entire West failed to handle (note that Japan, far more vulnerable to the oil shock, DID handle it. Their later failure had other causes). She notes that France’s elites have not, since 1975, been able to turn things around, something I have noted as well.

But she is wrong about a retreat from globalization being delusional. The simple fact is that in France and almost every other country (including, by the way, most African countries), growth was better before globalization, and the proceeds of that growth were distributed to their populations much more evenly.

This is a fact, and you can only argue against it by invoking China (which used classic mercantalist policies, and was not meaningfully party to the 1945-1975 consensus economy.)

There will always be trade. There will always be global movement in goods, capital, and ideas, but more is not always better.  In fact, one can easily argue that more is rarely better.

As for “Europe,” the fact is that increased integration has not been to the benefit of most Western Europeans. That assertion is, again, extraordinarily hard to argue against and is especially true of the creation of the Euro.

Nougayrède wants France’s leaders to fix things, and not to fail, but she is very nearly as delusional as them. She admits that their failure has led to the rise of Front National, but cannot admit that their policies have failed, economically, along the lines that Marie Le Pen says they have.

Just because someone is a near-Fascist does not mean they are wrong about everything. I have no tolerance for LePen’s brand of Imperialism and cultural supremacy, but she, like Trump, is telling a lot of truths to a lot of people who feel like their country has been on the wrong track for a long time. (In the U.S., white, working class male salaries peaked in 1968. No matter how much you scream about white privilege, you are a fool if you expect white males to gravitate towards anyone who doesn’t at least pay lip service to reversing that.)

As an economic project, the EU is a failure for many of its members, including France. There are exceptions (Germany, Poland, etc.) but the losers cannot be expected to just sit there and take the beating forever. The “beating” has been exacerbated by Europe’s deliberate imposition of austerity. It is not just that Europe’s elites have failed to create a good economy, it is that they have deliberately made the economy worse for the majority of residents in many of its countries.

Until we can honestly evaluate the failures of neo-liberalism, and gut globalist cant which claims more trade and capital flows are always a good thing (and, even if they aren’t, are “inevitable”) we cannot fix the economy.

France, like about half of the EU, should leave the Euro. It should re-impose tariffs on a wide variety of goods and produce them in their own countries. Yes, they would cost more, but wages would be higher. It should also move radically to non-oil-based energy (as is true of, well, almost everyone).

These basic policies are not difficult. Corbyn is not wrong to say “make the necessary adjustments so it will work today, and go back to post-war policies.”  It failed,  yes, but it was the last economy which spread money evenly through the economy.  Make sure it’s not sexist and racist, update it for new energy technology, and try it. It may not be the best solution (I’d like some fairly radical changes), but it’s certainly not crazy, given that it did give France those 30 great years.

The failure to deal with the oil price shock doomed the post-war world, yes. But it is 40 years later and we have technology and knowledge they did not have.

Until the developed world’s sanctioned intellectuals (as opposed to pariahs like myself and my ilk) and their masters come to grip with these facts, the population will continue to turn elsewhere. They may turn to sane and reasonable people like Corbyn, or they may turn to people like LePen and Trump, but people will not put up with “it’s going to get worse for the forseeable future” forever.

We can have reasonable policies, which will make the world better for everyone (even if that means there will be a lot less billionaires–the Corbyn solution), or we can have the rise of fascists and their left-wing equivalents.

The room in the mushy middle for those who aren’t willing to do something radical to fix the economy and other problems is narrowing. It will continue to narrow.

Our current elites will not adjust, so the question is: Who will we get? Corbyn and FDR? Mussolini, LePen, Trump?

Neo-liberalism is nearing the end of its cycle. It will kill a lot of people dying, but its death is now ordained and can only be slowed by fanatical levels of police state repression in a few countries. And its death convulsions and the birth pangs of the new system will create a new age of war and revolution which will kill far more.

This is now as close to inevitable as human affairs, endlessly complicated and subject to unexpected shocks, can be.

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Will Capitalism Be Replaced By Something Better?

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On April 2, 2016

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The short answer is: “Who knows?”

The longer answer is “probably not,” simply because we have such a mess coming down the road in terms of climate change, resource exhaustion, imperial collapse, and so on.

But the answer isn’t “No.”

The answer is that it is possible. Not likely, but not so unlikely as to be a write off not worthy of consideration.

Far better systems can be thought up, I believe. I believe it’s even possible those systems would work with human nature well enough to be viable (a.k.a., are not utopian, in the impossible sense).

I also think they are our best alternative.

Wait? What?

Yeah. I think the odds are less than even that we pull it off, but I also think it is our best chance.  Sometimes the best bet you’ve got just isn’t a very good bet. We either fix the way our economic system works (how we turn resources into goods and services) and our political system works (how we make group choices) or we could go extinct. Better case scenarios involve billions of deaths and amazing amounts of suffering.

Of course, dividing the problem in two is wrong. Capitalism isn’t “just” an economic system.  The great mistake of the social sciences was changing from “political economics” to “economics.” Capitalism is a political choice, but it’s also how we make most of our group choices.

The right is right. Ideas matter, and the ideas on the ground during a crisis are important.  We’ve got a lot of crises ahead of us. That is bad, but it is also our hope. Setting up to win those crisis points is what matters. The neoliberals won the last one (the financial crisis), but no one wins them all.

It would be good if we had some radical options on the floor which would also make most of humanity better off, provide for freedom, and so on.

So figure out what you want to replace capitalism (or how it can be radically fixed); and do look seriously at the political system. Democracy is not going to be immune from the fallout (nor is the sort of one-party state China runs.)

We can create a better world, but that doesn’t mean we will. It’s up to us, to humanity, in the largest sense.

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2015 in Review

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On January 1, 2016

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It was an “interesting” year, a year which clarified much.

Economically, this was a year of slow down and continued oil price collapse. China’s slow down is the core cause of all this, exacerbated by the insistence on austerity in Europe and to a lesser extent in the US. Many pretend austerity hasn’t been imposed in America, but it’s just been less austere than Europe.

Accelerating inequality has continued to undercut demand. There is too much investment supply in the world and too much money, though calling it investment supply is misleading; it is mostly money which seeks returns without wishing to create a new company, road, or product.

On the good side of the equation, renewable energy continues to drop in price, with coal now being underpriced by solar.  Battery prices are dropping and the process of moving from hydrocarbons to renewables continues. This is undercut by the collapse in hydrocarbon prices, but that will only slow it down.

The mass switch to renewables should have happened years, or rather, decades ago. It would have been more expensive then, but the mass market would have pushed prices down sooner and it would have been a far better way to spend money than on things like the Iraq war or Japan’s insane pouring of far more concrete than the Japanese islands could ever need.

Neo-liberal orthodoxy and the power of entrenched interests, however, would not allow for the massive subsidies necessary to make renewables and energy saving cheaper than hydrocarbons–indeed, subsidies flowed mostly to hydrocarbons.

The price of this will be some rather large number of people dead. I’m guessing the marginal cost is two billion dead or so. The Paris accords are all very nice, but they are too late and unenforced. The hothouse gasses in the air now are sufficient to release methane from northern Russia, the polar seas, and various other sources.

We are past the point of no return on this, and 2015 simply confirmed its inevitability.

A number of significant technologies are coming on line. Blockchains, electric cars, VR, and reusable rockets. Electric cars and reusable rockets should have happened ten and 15 years ago respectively, but were not allowed–until private companies manipulated the situation so the profits would go to themselves.

Hillary Clinton made an idiotic comment about a Manhattan Project on cryptography (the NSA already spends an inflation-adjusted Manhattan Project equivalent every 30 months.) But NASA should have been funded so that reusable rockets (an improvement on the Space Shuttle) were created long ago, and hybrid cars (really batteries) should have been being crashed as well.

While such cars would have had lower travel range than we’d have liked, subsidies and deliberate policies making sure that charging and battery exchange stations were built could have made them feasible far before now.

The majority of buildings in the US could have been made energy neutral using technology we had in the 1990s.

This may seem like a long diversion from “2015,” but the point is that, in 2015, stuff that should have happened long ago, that needed to happen long ago to stop catastrophe, finally began to happen in earnest–only because these enterprises are finally profitable for private companies. I’m glad Musk, et al. are creating reusable rockets and electric cars, but these things should have been happening ages ago.

And remember: What Musk and his competitors want is space mining, which they believe will create the world’s first trillionaire. Making space private property, primarily commercial, will make many of our problems far far worse than they could have been.

On the political side of the equation, 2015 was filled with frustration-borne changes. Syriza’s election fizzled into capitulation, in Canada the Liberals (who, despite great photo ops, look likely to govern largely from the center right) came into power based on an appetite for change. Trump took the lead in America’s Republican primaries, with Cruz and Carson coming on strong.  Bernie Sanders is challenging Clinton strongly from the left. In France, LePen had her best showing ever, though it was frustrated by an “Anyone But LePen” vote. Portugal had a strong showing of the left, and so did Spain.

And, very promising, Jeremy Corbyn stormed to the Labour leadership in England on a very left-wing platform.

These are, however, pre-revolutionary, pre-war developments. The old regime is failing, neo-liberalism’s double-down on austerity means that ordinary people are doing badly. The media has lost its stranglehold on the narrative and people are willing to take a run at anyone who looks like they can make the economy better. They do not care, particularly, if that person is left- or right-wing, they will try anyone who does not parse as part of the current regime. (Yes, Trump has money, but he doesn’t parse as a normal politician, at all.)

They will take the left, or they will take the right. In the 1930s, the US got FDR, but France, Italy, and Spain were not so lucky.  Whoever looks likely to “fix things” will get in eventually.

The European project took some hits in 2015 which may prove fatal. It is clear that the current regime in Brussls is anti-democratic and, more importantly, that they will not (and perhaps cannot) fix Europe’s economy. Even more importantly, it is becoming clear that it is impossible for most countries to have healthy economies within the EU and certainly not within the Euro; the policy flexibility, including monetary flexibility, needed is simply not available.

2015 was also the year that the West’s foreign policy failures came home to roost, with a huge influx of refugees into Europe, causing political chaos. This influx is minor in comparison to what Lebanon, Turkey, and other countries in the region have experienced, but a Europe in austerity does not want to absorb large numbers of refugees.

I have this written before, and I will say again: We are in a pre-war, pre-revolutionary period. Such periods can last a long time, sometimes decades, so this doesn’t mean “War and Revolution tomorrow,” but it does mean that the conditions are now in place. Ideological control, generally, and media control, specifically, are failing, repression is on the rise, the majority of economic gains are going to a handful of people, the majority of the population feels like they are losing economic ground and are willing to try new types of politics–including what amounts to fascism. The international regime is breaking country after country, destroying them physically, destroying their economies, and so on. Failed states are proliferating.

2015 confirmed this in spades. Every attempt to pull back from the brink (such as Syriza in Greece) was rebuffed.

So, repeated disasters have failed to change neo-liberal economic policy, and neo-conservative foreign policy; repeated warnings about climate change have led to an inadequate response, and 2015 confirms that we will continue to stumble towards multiple catastrophes.

The best hope resides in sensible parties on the left, by which I mean something quite different from what the media does.  Corbyn is not a radical. He is a 1960s liberal, a post-war liberal, with a side of environmental understanding and an appreciation for the harms inflicted by racism and sexism.

There are some more radical experiments being conducted being performed in small batches, around concepts like instituting basic incomes and changing how money is created. Those may lead to a more significant change of the political economy going forward and are what I would truly fear if I were an oligarch (money creation more than basic income–an improved dole doesn’t really threaten them.) We shouldn’t get too excited by this, yet. Canada performed an experiment in basic income in the 1970s, for example.

The real dangers in the world are increasing. For the first world, this doesn’t mean “Islamic Terrorism,” which has never been an existential threat; it means political and economic instability at home. The people one should fear most are almost always one’s own leaders, both political and economic, rather than foreigners, and this remains true.

I’ll write more about what the future holds, those shoots of hope that are visible, and what we can do about it in the New Year.  In the meantime, I hope my readers all had good 2015’s personally, and that 2016 showers you with prosperity, health, and happiness.

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If Syriza Blinks

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On July 9, 2015

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So, the EU wants Greece to sign an even worse deal than the “no” referendum already rejected.

If Syriza accepts such a deal, Greece will stay in depression and, likely, that depression will get worse.

Let me be explicit: This sort of thing will not stand. If the moderate left-wing (not center-left, moderate-left) won’t do the job, then someone else will.

That will mean either the hard-right, or the hard-left. People who can credibly say: “When we say we will end austerity, we mean we will do anything it takes. Anything.”

You have all been warned, repeatedly. French Economy Minister Emmanuel Macron said it, so it’s been said by a “real person”:

“Let’s not re-enact the Treaty of Versailles.”

The hard-right is salivating over what is being done to Greece. LePen in France, the hard-right in Britain, and so on. They know that rage, anger, and hate is building as people are smashed in the face over and over again by neoliberal politics. They are thrilled by Cameron’s smash-mouth budget in England. They love the way the refugee crisis is being bungled.

They know how to use the fear, desperation, and rage. And they will use it. People will become so fed-up with having lousy lives and no hope for the future that they will turn to anyone who looks hard-assed enough to fix it and to break with current power structures, who will get (and deserve) the blame.

This is not a game; this is not consequence free. We are fulfilling all the necessary conditions for an age of war, famine, and revolt. Greece is only one domino, but be clear, it is both a crime and a mistake. No matter what happens, the consequences of all these stupid and cruel decisions will be harsh. They will be harsher if the hard-right are the ones who make the break.

Europe has a chance here to negotiate with people who still believe in the European project and who are essentially moderates (Syriza is hardly left-wing at all in historical context, sorry).

There will come a day when they will meet people, from either the Left or the Right, who have no interest in negotiating. Given an electorate willing to follow me, I can tell you that, even in 2010, I would have had only very brief negotiations with the EU if I ran Greece.

Today, people like me who are willing to break things to make a new world are in the minority.

Today is passing.

Be afraid. Be very afraid.

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Chinese Stock Market Woes and the Pre-War World

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On July 9, 2015

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Bloomberg:

China is bolstering efforts to arrest a selloff that has rippled through risk assets globally, banning major stockholders from selling stakes as more than half the country’s listed companies are suspended from trading.

Expect some ripple effects, given that a LOT of people can’t sell formerly liquid assets—if they need money they will need to sell offshore assets.

As of this writing, the stock market is slightly up–but yeah, that’s with over half the companies frozen and with vast efforts by the government to funnel money into those that aren’t frozen. A ton of investors are still selling what they can.

Let’s talk China for a bit. I’ve long said that China is the place to watch: It is now a larger real economy than America’s, with a larger population, and it is the largest industrial country in the world. Making stuff, real material stuff, still matters. Americans trumpet innovation, but Britain was still producing more patents than America for years after America was the biggest economy in the world; the stuff just wasn’t made in Britain.

Commodity prices have been dropping in virtually every commodity, not just oil. This is driven by, yes, China, and it affects every commodity exporting country in the world.

(Insert ritual cursing out of Canadian Prime Minister Harper for his policy of doubling down on oil and abandoning manufacturing, thus critically damaging a mixed economy policy well over 100 years old.)

China has been vastly overbuilding infrastructure and real-estate for some time. The media is replete with stories of vast tracts of uninhabited high-rises and so on. Much of what has been built is of dubious quality (not necessarily entirely bad, if it has to be rebuilt, from an economic viewpoint, but disastrous from an environmental one). Peasants in China love their lives; workers hate theirs, even though workers have much more money. This is a direct analogue of Western industrialization, by the way, people had to be forced off the land. Early industrialization makes life much worse for most people directly involved.

I can’t speak directly to Chinese leadership, but I’d guess that we’re now reaching the point where the last competent people are near the end of their careers.  Soon the Communist party will be run largely by princelings: entitled, greedy, and short-sighted.

China is a violent nation. Huge industrial protests happen all the time, entire villages fight (and sometimes win) against army units, etc. The violence is often savage—hand-to-hand melee with iron rods and so on.

One wonders why the Communist party keeps cracking down, installing more surveillance, etc, etc. If they lose control, or if they don’t make it to the airport before the mob, they and their entire families will die, and die messily, or worse.

If things go really pear-shaped in China, the Communist party WILL blame foreigners. You can bet every cent you have on it. War is possible. China is making the necessary preparations and pre-war blocs are forming.

Now, this stock market crash isn’t necessarily the precipitating event. I doubt it is, and even if we look back in 20 years, in the midst of the sweet nuclear glow, and conclude it was, we won’t know for some time that it is.

But we are in a world which is a ton more dangerous than most people, many of whom buy into this “the world is getting less violent” stuff, are willing to believe. Yeah, the world is less violent than it was for most of the post-WWII period, but such periods, well, they end, when the conditions which made them possible end.

The Chinese can still print a ton of money. The lesson the elites took from the Financial Crisis has been “just print money if people who matter are hurting.” The Chinese and Westerners put different groups of people into their “who matters” categories, but both are willing to run the virtual printing presses.

What This Means: It’s likely that the situation won’t go really pear-shaped until such time as running the printing presses stops working as a preventative to staving off disaster. Unless until someone gets stupid and doesn’t run the presses when they should because they think the people suffering don’t matter enough to bother with.

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