Yanis Varoufakis on China-US tensions

16 Mar

Two posts ago I placed the departure of Victoria Nuland as acting Undersecretary of State in the context of a decades old rift in Washington, between Russia hawks and China hawks. I said her going signalled the strategic defeat of the former by:

… those, including but not confined to the Trump camp, who questioned the wisdom of alienating Russia and China simultaneously … Not because they loved Russia but because war on [both] fronts only ever appealed to those whose PNAC hubris leads to precisely the kind of humiliation the West is now experiencing in Ukraine. The real adversary, they say … was always China.

The idea of a USA – with its long and bloody record of illegal invasion and occupation, regime change and weaponised terror, subversion, oil theft and chaos – curbing the ‘aggression’ of a nation that hasn’t invaded another in centuries is beyond fanciful. 1 Indeed, the fact it raises so few eyebrows pays eloquent tribute to the most extensive full spectrum propaganda machine in history. Likewise the idea of a Washington, friend to more dictators than I can keep track of – and let’s not even speak of Gaza 2 – driven by altruistic desire to raise the flag of freedom in lands groaning under authoritarian rule. 3

So let’s set aside such infantile credulity and cut to the chase. Washington hostility to Beijing, I’ve long insisted, is driven by the following:

  • China has cast off its junior role – in an imperialist status quo of capital-labour relations of production having become north-south relations – to surpass the US economy.
  • The outsourcing of manufacturing by the USA has enriched the rentier  oligarchs of Wall Street and FIRE sectors but crippled its real economy. (A truth laid bare by both military and economic defeat in its proxy war on Russia in Ukraine.) One implication of several is that the writing is on the wall for what France’s Valery Giscard d’Estaing called America’s “exorbitant privilege”. While all the collective West (exporters of monopoly capital to the global south; importers of profits repatriated by the same) is similarly weakened, the US is uniquely exposed by virtue of an erosion already underway, courtesy the China-led and steadily expanding BRICS, of the fiat dollar as world reserve currency.
  • China rising signifies more than the emergence of a formidable economic rival, alarming as that is to a Washington in thrall to the lethal chimera of full spectrum dominance. As Michael Hudson – economist, debt specialist, Sinophile and much besides – has shown, it may – sadly I can put it no more forcefully – also resurrect a possibility long forgotten: that of delivering on capitalism’s potential to socialise wealth production. (This being a necessary if not necessarily sufficient condition of any effective response to multiple and now well understood existential threats to humankind, and to the fast vanishing species we so arrogantly share this earth with.) If so, it would represent an attractive alternative to the recklessness of a Western, hyper-financialised capitalism some say isn’t capitalism at all, but neofeudalism.

Yanis Varoufakis – academic, Marxist, writer, former finance minister in Greece’s royally shafted Syriza government 4 and now successful pundit – would agree with much of the above, if not with my welcoming, or at any rate my reason for welcoming, the rise of China.

But he adds to the mix. We are in the age of techno-feudalism, 5 he insists, in which the mother of all forms of rentierism  is what he calls cloud capitalism as exemplified in the US by Amazon, in China by Alibaba. But the two do not exactly mirror one another.

A visitor to mainland China’s prosperous eastern seaboard (I was there seven years ago and the trend can only have grown more marked since) will notice that people pay for everything using their phones. At the time I attributed it to nothing more than the way purchasing behaviour had developed, no doubt ‘helped’ by vested interests almost as powerful as those in the west. What Yanis offers by way of explanation is the very different relationship, between ‘cloudalists’ and the banks, in the two superpowers. Amazon – even as it extracts rents 6 from suppliers and consumers alike – itself pays rent to banking oligarchs determined to hold onto their own rent-seeking monopolies. One tangible sign being the stubbornness, in the face of cheaper and more efficient transactional technologies, of plastic as an essential of any Amazon purchase.

No such stand-off operates in China, where Beijing exerts tight control over its banking sector. I call that sensible but in Yanis, who makes neither positive nor negative overt comment, I sense a disapproval rolled up into a wider depiction of the CCP as authoritarian. 7  I’ve given my own views on that, here for instance, but will add this from a post in September:

… in 2023 Michael Hudson published The Collapse of Antiquity. It advances a simple thesis. In the early civilisations of Sumer, it explains, a new king would start his reign by cancelling debt. Why? Because interest on debt rises exponentially while wealth production – from which debt is paid – can at best rise logarithmically. The inexorable logic is therefore for power to accrue to a creditor oligarchy. The forgiveness of debt derailed this tendency, but the new king had to be powerful enough to force it through. To put this in today’s terms, he had to be the very thing liberals (labouring under the delusion that ours is a democracy rather than a creditor oligarchy) condemn in a Vladimir Putin or Xi Jinping.

He had to be An Authoritarian. How else could the king break the destructive – and ultimately self destructive – power of the oligarchs? It was their failure to do this, Michael argues, which brought down the civilisations of Greece and Rome: collapsing as they did under the weight of debt which could not  be repaid but would not  be forgiven.

I detect in the intelligent, cultured and personable Yanis a liberal humanism stronger than his Marxism. (God knows, for different reasons I too have had self-styled revolutionaries scold me for apostasy on that count.) Stronger too, for all his bouts with the beast in 2015, than his grasp of realpolitik. Yet in his talk of ‘cloudalism’ … ‘cloud capitalism’ …  ‘techno-feudalism’ … I sense and welcome a thing of potentially great explanatory power.

Over to the man himself, addressing journalists in Canberra. He speaks for 32 minutes but it’s worth sticking around for the Q & A. Have a great weekend.

* * *

  1. Tibet and Taiwan are internal matters. A brief 1979 incursion into Vietnam was “to teach it a lesson” after the latter’s own incursion into ‘Kampuchea’ in response to Khmer Rouge incursion – is this recursion? – into Vietnam.
  2. As I write this, Biden’s State of the Union Address has tried to sell a deal to a Party whose uncommitted movement has shocked DRC ringmasters. Bibi gets a further two months of mass murder in Gaza – that being roughly the time needed to get the means of aid by sea in place – while the party rebels get humanitarian jam tomorrow. But as The Duran noted yesterday, food trucks idling at the border could go in this afternoon if Uncle Sam put his foot down. It remains to be seen, therefore, whether so preposterous a sop will play or backfire for Sleepy Joe.
  3. Whataboutery? Given the ease with which armies of social media spooks plant memes, I don’t rule out conspiracy to insert whataboutery  into chatroom vernacular just when rising distrust of corporate media, and awareness of ruling class hypocrisy, called for so facile but firm a put-down. Likewise fake news  and conspiracy theory.
  4. You can find Yanis’s accounts of that ‘royal shafting’ in many places, here for instance. Equally if not more telling is an interview seven years ago – 18 months after the crisis – in which Michael Hudson is asked why Greece had defaulted  when “its lenders are expecting it to grow by 3.5% annually”.  He replies:

    You said the lenders expect  Greece to grow. That is not so. There is no way in which the lenders expected Greece to grow. In fact, the IMF was the main lender. It said that Greece cannot grow, under the circumstances that it has now.

    What do you do in a case where you make a loan to a country, and the entire staff says that there is no way this country can repay the loan? That is what the IMF staff said in 2015. It made the loan anyway – not to Greece, but to pay French banks, German banks and a few other bondholders – not a penny actually went to Greece. The junk economics they used claimed to have a program to make sure the IMF would help manage the Greek economy to enable it to repay. Unfortunately, their secret ingredient was austerity.

  5. Yanis’s latest book is Technofeudalism: What Killed Capitalism. I’ll be reading, with a view to reviewing, once I’ve finished and reviewed Glenn Diesen’s The Ukraine War & the Eurasian World Order.
  6. The term rent  means here what classical economists since Smith and Ricardo meant by it; values sucked from an economy not as rewards for contributing to wealth creation but as unearned income enabled by monopoly ownership of an entry-barrier resource. In this sense tithes to Rome or Amazon are rent. Ditto student debt, health insurance, mortgage, rents in everyday parlance, copyright and patent. Ditto loans for share buyout. Some of these things usefully oil the wheels of a modern economy but beyond a point reached by the West decades ago, they choke real wealth production.
  7. My approval of Yanis is guarded and circumscribed but I was still dismayed to see him play to the gallery at Canberra with allusions – as if to a truth beyond dispute and not industrial strength stenography for an empire whose weaponising of jihad goes beyond the middle east to take in Chechnya and Xinjiang – to a debunked ‘Uighur genocide‘. To those who say they get their negative views of China’s treatment of the Uighurs not from our systemically corrupt media but personal encounters I ask – as I do those who claim similar in respect of Tibet, Syria or Cuba – “how many have you met, and on what basis do you say they are representative of the millions you generalise about?”

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