For some time I’ve been hammering away at the point that China’s capitalists are subordinate to the state, while in the West the reverse applies. My aim is not to counter mainstream media propaganda, predictably immense and ceaseless; upmarket no less than down, financial no less than general. I do that too – it’s a big part of my job – but as a separate project
Rather, I make this point to counter far left currents which say China, being capitalist, is “just as bad” as the West. Indeed, in a flurry of recent posts, Canadian socialist Stephen Gowans – with whom I disagree over Ukraine while applauding his work on Israel and empire – makes that very argument. My reply is the one I gave two years ago in an open letter on the subject:
China’s capitalists (a) have been an important component in a miracle that’s lifted hundreds of millions from what the World Bank calls extreme poverty, (b) are subordinate to state policy – when in the West it’s the other way round – and (c) exist precisely because the failure of the West’s Left to make its own revolutions obliged China to adapt to global conditions of entrenched neoliberalism.
I’ve yet to hear any of my three points rebutted by far left Sinophobes. As for corporate media – The Economist, WSJ, Business Insider and the like in particular – they tacitly endorse point (b) through their attacks on Beijing “meddling” in the sanctity and sovereignty of “free enterprise”.
(This has seen those organs descend into some two decades of wolf crying self parody as they issue warning after doomsaying warning of China’s “imminent” economic stagnation. I confess though that my approval of Beijing on this point is tempered by fear that, by its inherent nature, capitalism may in the end prove no more controllable in China than in 19th century Europe. If I could see another horse in the race – socialism or barbarism – I might hedge my bets, but other horse see I not. All those far left critics offer are either armchair platitudes mixed with IdPol incoherence, or a call for the workers of the world to unite, rise up and throw off their chains. Worthy cause, but I’m not holding my breath. Nor are they.)
What of Russia though? I’ve spoken of Kremlin dirigisme in the context of its arms sectors. See in this respect the exchanges below my post, Broken… In non adversarial dialogue with Jams O’Donnell – possibly not his real name – I spoke of:
… the deeper malaise of finance capital having hijacked government in the West. Russia has superiority in SAMS and hypersonic missiles because her arms sectors, while largely private, are regulated by a dirigiste government. This reflects the wider truth that post Yeltsin Russia, and more decisively China under the CCP, puts capitalism at the service of the state. In the west it’s the other way round.
(Joseph Heller’s depiction of Milo Minderbinder in Catch-22 was prescient. The primary concern of Boeing, Raytheon, Lockheed-Martin etc is not to deliver effective deterrence but the best returns to shareholders.)
A key delusion of Western leaders was a wildly overstated emphasis on GDP as an accurate measure of a nation’s prosperity and economic clout.
It may be argued that weapons production in a state under siege …
… is too narrowly specific to be useful in broader characterisations of Russia’s capitalism vis a vis the West’s. But a post today by Russian pundit Simplicius the Thinker – Exploring the Truth of Russia’s Central Bank – offers a parallel contrast with the US Federal Reserve.
It opens with this:
Recently I’ve gotten a lot of requests to discuss Russia’s new digital Ruble, signed into law by Putin on July 24. It’s been oft-included in the blanket scary ‘CBDC’ category under the narrative that Putin is some sort of WEF stooge secretly helping to roll out the ‘Great Reset’ agenda.
I’ll skip a whole chunk on Klaus Schwab, The Great Reset and those whom Simplicius regards as libertarian conspiracy freaks; analogous to but distinct from ultra-leftists of the type who damn China and Russia on grounds sketched out above. Instead I’ll go to the heart of his argument on the very different roles, structuring and ownership of the two countries’ central banks.
NB, as is his wont, Simplicius takes his time but, as also is his wont, that’s due to thoroughness not verbosity. Still, for those of you with a busy day ahead, here’s his argument in a nutshell:
America’s central bank is owned by the crooks who own everything else in that fake democracy. Russia’s, while far from perfect, is not.
Here, for those with more time at their disposal, is the longer version …
Many have previously accused the head of Russia’s central bank Elvira Nabiullina of being a globalist plant. The problem is, Russia’s central bank does not work like the not-so-Federal Reserve, and does not leave much room for the same type of syndicate co-option by private interests which is rampant in the Western system.
How the Federal Reserve of the United States works is that the main top-level Fed central bank in DC is comprised of a group of 12 regional member banks, like the NY Fed, Boston Fed, St. Louis Fed, etc. At this level, the system still appears ‘federal’ rather than private. But each of these member banks is actually comprised of, or rather owned by, the private member banks like JP Morgan, Citigroup, Bank of America, et al, who have purchased stock in them, and are tasked with appointing their Board of Directors. To clarify, the Board of Directors in each of the 12 regional Federal Reserve banks is elected by the private banking powerhouses like JP Morgan and co. In fact, here’s a list of the top shareholders of the NY Fed as a sample:
The largest shareowners of the New York Fed are the following five Wall Street banks: JPMorgan Chase, Citigroup, Goldman Sachs, Morgan Stanley, and Bank of New York Mellon. Those five banks represent two-thirds of the eight Global Systemically Important Banks (G-SIBs) in the United States. The other three G-SIBs are Bank of America, a shareowner in the Richmond Fed; Wells Fargo, a shareowner of the San Francisco Fed; and State Street, a shareowner in the Boston Fed.
So these private banking powerhouses in fact own the Federal Reserve bank and even appoint its directors, and make profit via dividends on the shares they hold in the Fed bank. This creates massive conflicts of interest. For instance, during the 2008 crash, the NY Fed naturally bailed out its largest shareholders despite huge amounts of fraud and malfeasance from those private mega-banks. NY Fed’s disbursements to the banks which own it:
Secondly, on an individual level, there are endless conflicts of interest for the actual board members of the Fed banks. The most high profile case was that of Jamie Dimon who was the CEO of JP Morgan Chase at the same time as serving on the Board of Directors of the NY Federal Reserve bank. But this is actually normal, as directors are chosen literally from the field of CEOs and other big wigs at major corporations. For instance, here’s the board of directors from the NY Fed’s own website:
Note how every member of the board for the NY Federal Reserve is a CEO of another major corporation (IBM, etc.) or major financial institution or bank. The president of each of the 12 Fed banks makes up the FOMC committee of the Fed central bank in DC, which is one of the chief organs of the Federal Reserve System which oversees market operations. That means this arm of the Federal Reserve is directly run by the CEOs of major corporations, banks, etc., acting as parallel ‘board of directors’ to the central Fed’s own ‘Board of Governors’ headed by the Fed Chairman.
Another example is how in 2008, Stephen Friedman was a chairman of the NY Fed and sat on the Board of Directors of Goldman Sachs. Not surprisingly, he was able to get Goldman Sachs a ‘bank holding company’ title (they were previously just a hedgefund and not allowed to operate as a bank) which allowed them to greedily siphon cheap Fed loans. There are many other examples, particularly older ones can be found in such places as Eustace Mullins’ works on the Federal Reserve system.
Russia’s central bank system doesn’t function in this way. In fact, the Russian central bank is not comprised of any member ‘branches’ and has no type of private or corporate ownership in the way of the U.S. Fed. It simply has offices of the main central headquarters in different parts of Russia, but these are just administrative offices and nothing more. Further, because of this much simplified structure, the bank is administered primarily by a far more transparent board of directors which are appointed by the Russian president and State Duma. And most importantly, those directors are not involved in the same conflicts of interest as are possible and rampant in the U.S.—i.e. sitting on boards of other major globalist conglomerates and private commercial banks.
In fact, in Russia the banking situation can almost be said to be backwards to that of the U.S. in the following way. In the U.S., the largest private banks control the government and its monetary policy by way of their direct control over the Federal Reserve itself. In Russia, the largest banks in the country, like Sberbank, VTB, etc., are actually majority-state owned. Which means the Russian government has the controlling share and say in them.
With that said, Sberbank is headed by one of the few people at the top of the Russian food chain that we can unequivocally say is a full-blooded globalist, or mostly so: one Herman Gref, the ethnically German and seeming WEF stooge. He has served on the WEF board of trustees before, though he’s apparently not on it in the post-Covid era, and has been behind attempts to usher in a lot of WEF-initiated-and-designed societal ‘changes’ into Russia.
Hence, Russia isn’t perfect, and has some bad seeds actively working in its financial industry—but like I said, that’s the half-private Sberbank, not the Bank of Russia, which is Russia’s central bank. My point is not to exonerate those, but to simply point out the other major differences which makes Russia very unlike the West.
In fact, what’s startling for people used to the cronyism of the West, is that if you click through each member of the Bank of Russia’s board of directors, you’ll note that all, save one, are career state bankers, economists, or some type of career state employees. Meaning they’ve worked in various positions in the Bank of Russia or other state institutions for the majority of their careers rather than in private hedgefunds, investment firms, corporations, and the like, as is so common in the U.S. Federal Reserve system.
There’s simply nothing of this sort in the Russian system.
Food for thought, no?
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