In these lectures I shall venture to answer some of the queries made regarding the prospects of a major war. The notes to these lectures were scribbled over time in the corner of my living room. There are two large standing lamps that illuminate the copy book that I use to scribble these lines. The thin light black pen is gliding effortlessly over the paper. It is one of my inseparable companions. It is Made in China as well as the copy book with squared paper. Someone raised the question the other night: is there any manufactured products that American capitalism can produce that China cannot produce better and in greater quantities and considerably cheaper?
It is all too apparent that China is today not merely the our planet’s second largest economy (measured in terms of GDP purchasing power parity), the world’s largest creditor already possessing over 35% of the world’s foreign exchange reserves, the world’s biggest external sector, possessor of the world’s largest industrial workforce and already the industrial hub of the world. In short compass, it will have outstripped US capitalism. It is against this backdrop that the fundamental question can be raised: is a conflict between the Chinese powerhouse and an enfeebled American capitalism that is now a basket case a possibility in the not too remote future?
This is not fanciful speculation. It therefore follows whether American capitalism in its current state of indebtedness, ever rising levels of mass impoverishment, corruption unbounded and financial breakdown be able to compete internationally, and if so under what conditions? Or put it another way: how and by what means will it pay for its imports, for what it consumes? Will it be able – on present evidence it is not – to shave and ultimately to eliminate its trade deficit by exporting more than it imports? Further, can the dollar be an acceptable medium of payment and exchange given the battering to which it has been unrelentingly subjected for many years? The observation by Iran’s Mahmoud Ahmadinejad that the Greenback is worth less than used toilet paper is ungracious, but it is openly acknowledged by the leading protagonists of politics and finance capitalism.
In subsequent lectures we shall explore the ramifications of these issues, notably the question of financial imbalances. Suffice it to say that it is a matter of life and death that takes us into the deepest reaches of the conflictual forces within world capitalism that I briefly dwelt on in my lecture on Greenspan: The Torment of Contrition.
THE RAMIFICATIONS. Some of you have evoked the possibility of a world conflict in the course of 2009. I shan’t say that this prediction is far-fetched; or remote. Doubtless, many of you do not mean a regional conflict as in Ossetia and Gaza. Nor do I exclude the possibility of a US/ Israel genocidal onslaught on Iran. In the making of war, madness can never be excluded. And the US ruling class that now more than at any time in its history stands out as an implacable enemy of democracy even in its most anodyne forms, has always exhibited this state of dementia. Let us keep in mind that the US caste oligarchy (USCO) and its trillion dollar militarist appendage is at war on several front in areas engulfing tens of thousands of kilometers: it is pursuing a war in Gaza via its surrogate; it is pursuing a war in Iraq; and of course it is escalating its military drive in Afghanistan; it has extended its killing fields to Pakistan. Recall that Pakistan has a frontier of 2,500 kms with Afghanistan. And I shall not speak of the tens of billions that it has invested to annihilate the revolutionary governments of Cuba and Venezuela, and others whose political propensity is of a lesser nature. The U S C O has poised its dagger at the world’s jugular,
We do not argue that war is inevitable for there is no such thing as inevitability in the links of historical causation. Such a possibility, however, cannot be ignored. How does one approach the subject? What is the most appropriate method? I am aware that itemizing the potential flashpoints gives us individual dots but the dots are not connected. They remain separate and cannot provide an insight of the detonator. I am sympathetic to your speculation. The historian must select his facts This is a matter of personal choice. But how and to what purpose he selects his facts stems from his principle of selectivity that is a part of a process of abstraction.
His selection and his interpretation of events are thereby conditioned by his ideological and philosophical predilections. His class affiliations. His personal experience. One may itemize a list but itemizing single events do not give us a handle to comprehend these complex phenomena.. The assassination of Kronprinz Franz Josef by a young Serb nationalist was certainly the detonator but it tells us very little without disentangling the complex of nationalist convulsions and economic and dynastic rivalries that shredded the vitals of the imperialist denominated world economy.
Nor can we ignore the military naval buildup of the German empire that dared threw down the gauntlet to the centuries old supremacy of the Royal Navy. As David Lloyd George – the shrewdest of imperial artisans and a paramount leader in the Great War noted : "if 1914 had not come when it did it would have inevitably come later". The key words are ‘come later’. What Lloyd George had in mind was that the power politics of finance capitalism and imperialism, and the carnage it irrepressibly incubated, was inherent in the evolution of world capitalism given its ceaseless lunge for territorial and financial spheres of aggrandizement. And its wars were confirmatory.
3. The Arms Race. Many of you have emphasized the fact that the USCO is likely to boost expenditures to offset the fall in demand in the private sector thereby raising the level of employment. It is not a new recipe but the thesis is defective in the present context of international relations. The U S CO is already spending more than three times what the rest of the world is spending on arms. SIPRI in Stockholm the exact numbers. But I am not momentarily concerned with such comparative numbers.
The USCO and its military jackals, with the British jackal leading the pack, has been waging colonial war since 1945 non- stop. And that includes its role in the Chinese Civil War that ended in 1949, in Indochina since 1945, in Korea, in Iraq twice over, etc. According to my reckoning the losses suffered by the victims of these colonial expeditionary killers amount to no less than 20 million men, women and children. Distressingly none of the architect of these colonial wars were brought before a war crimes tribunal. .There is an ethnic dimension to all this in that colonial wars were fought exclusively against peoples of color. What has emerged is that these wars, and preparations for wars, have driven US capitalism into the pit of bankruptcy.
At the latest count, the USCO has 700 military bases outside the United States. It is spending more than it earns. It is the world’s biggest mendicant. The nation’s total debt is 350% of GDP growing at a rate 6 times faster than GDP. It is spending other people’s borrowed money. In Iraq alone, the cost of that colonial holocaust now stands at well over $4 trillion, and the wars are not yet over.. It is fighting wars in Iraq, Afghanistan, Pakistan. The assault of the Zio-fascist juggernaut against Gaza, as in Lebanon, was inconceivable without the explicit support of the USCO. This is a banality. Let me say that the phosphor bombs used in Gaza were made in Virginia. The uranium enriched artillery shells were manufactured in Tennessee. The bombers were F-18′s of American fabrication. Gaza – the world’s largest slum – was one more testing ground for its weapons of mass slaughter. That makes four wars. Some are right to stress that wars, preparations of wars, boosts output and employment. What matters here is the nature of the output and its related employment impact. It is unproductive and does not add to productive capacity.
This was certainly the case of Hitler’s Third Reich in which arms outlays provided a booster that eliminated the ranks of the jobless. And of course the jobless could always find jobs in the Wehrmacht subsequently transformed into cannon fodder. This was true of the spur to the UK economy by the armaments sector. from 1937 as Lord Beveridge argued. The historical record is irrefutable that the changes wrought by FDR’s New Deal, admirable but illusory in several ways, did not curtail the Great Depression. What did the job was massive public sector war expenditures bankrolled by debt.
Let me repeat that what ended that satanic slump triggered in 29 was the advent of World War 2. Can it therefore be suggested that war and preparations for war offers a ‘final solution’ for achieving full employment? In the case of the pathologically diseased and irreversible nature of US capitalism the answer is unequivocally no. War expenditures – bankrolled by foreign borrowing and ever swelling debt holes – sets the stage for endemic corruption, national indebtedness and bankruptcy and all its innumerable toxic corollaries. The debts of American capitalism – Federal, corporate and household – will never be repaid. They cannot be repaid. With the economy imploding daily the USCO does not have the wherewithal to repay its debts nor does it have the intentions of doing so even if its financial state was far less grim than it is now.
One may contend that it raises the revenues of the arms producers. In what sectors is this true? In what individual enterprises does this hold? If you take pains to examine the share prices of all of the big arms producers at the Standard & Poors and the Dow Jones Industrial Average (DJIA) you’ll find that their revenues and profits have tumbled as have their share prices.
Given the capital intensity of modern arms output the labour inputs required i.e. employment is sharply reduced. Productivity, (ratio of inputs to outputs) has risen sharply resulting in a cutback in labour requirements with sharp collateral falls in wages. I believe you’ll find that for the most part their balance sheets have been battered although not as horrendous as the financial sector The conclusion appears obvious: stimulus plans, or pumping the prime as it was earlier called, will obviously not do the trick.