Notes on the West’s economic decline

The year now ending saw a record number of elections in the West. In not one of them did the decline of Western supremacy feature. Like the proverbial elephant, it was addressed by neither America’s duopoly nor Britain’s. The same goes for the EU, France and Japan.

Few noticed. It wasn’t in the papers.

But the decline of Western supremacy is as real as the threat of thermonuclear war it gives rise to; a threat greater than at any time since August 1945. I’ve gone into this in other posts: on the war against Russia in Ukraine, and those in the Middle East, and on the increasingly globalised drive to contain China. ¹  Here my concern is with economic aspects of the decline.

In a post of October 18 I wrote:

The Reagan-Thatcher transformation in the eighties, of Anglo-Saxon capitalism and to lesser extent of Western capitalism at large, did two things not apparent at the time. One, it oversaw the export, accelerating through the nineties, of manufacturing to the cheaper labour pools and ‘business-friendly’ regimes of the global south. Two, the attendant financialising – FIRE – of the home economies allowed rentier  capital to take over Western governments and establish de facto creditor oligarchies:

Those who wrote trade deals to profit from underemployment of U.S. workers and sweatshop labor overseas are omnipotent. The insurance and pharmaceutical industries that run healthcare for profit are omnipotent. The intelligence agencies that spy on the public are omnipotent. The courts that reinterpret laws to excuse corporate crimes are omnipotent.

Politics is a tawdry carnival act where a constant jockeying by the ruling class dominates the news. The real business of ruling is hidden, carried out by corporate lobbyists who write the legislation, banks that loot the Treasury, the war industry and an oligarchy that determines who gets elected and who does not. It is impossible to vote against the interests of Goldman Sachs, the fossil fuel industry or Raytheon, no matter which party is in office.

Chris Hedges (abridged)

Chris Hedges points to why Western decline has featured nowhere, this year or any other, as an electoral issue. Having outsourced manufacturing for their own greater enrichment, our ruling elites now face barriers to their ability to exploit this earth’s resources – vegetable, mineral or human – regardless of national borders. The implications are far reaching and explosive.

China and BRICS challenge dollar rule:

… a new global order was drawn up at Bretton Woods in July 1944, its reserve currency a gold-backed US dollar. Fusing the “demand side” thinking of John Maynard Keynes with America-first capitalism, it saw – in marked contrast to the slump after WW1 – decades of boom in the West, with near full employment and welfare infrastructure to this day not fully dismantled or privatised. The workers of the West had been bought off, said much of the Left, with crumbs from the imperial table.

But within three decades cracks were showing, while the costs of war in Indochina forced the Nixon Shock of 1971-3, a set of measures leading to a decoupling of dollar from gold. Though seen at the time as (a) temporary and (b) humiliating, the benefits soon became clear as US military bases ringed the planet – at said planet’s expense – and France’s Valery Giscard d’Eistang spoke for the West at large in complaining of America’s “exorbitant privilege”.

That privilege created high demand for a fiat dollar whatever the state of the US economy, and was augmented by the OPEC crises of the early 70s, or rather by their resolution. A House of Saud with zero legitimacy would be protected from its subjects in exchange for an infidel US military presence in the KSA, and allowed to hike oil prices in exchange for the stuff trading in ‘petrodollars’.

US Neocons & Israel’s far Right: Part 2

As dollar rule wanes, Russia in Ukraine exposes the limits – set by the inherent contradictions of neoliberal orthodoxy ² – to NATO power while the canals and highways, the pipelines and transcontinental rail links of Belt & Road promise to bypass sea lanes vulnerable to closure by US warships. For their part, the Shanghai Cooperative Organisation and Asian Infrastructure Investment Bank offer the global south an alternative to IMF/World Bank loan conditionality, which demands welfare cutbacks and the opening up of state sectors to Western investors. Since those investors valorise then recycle the south’s wealth in non wealth-creating finance, insurance and real estate within the home economies, the future for most Westerners, even if we do by some miracle dodge WW3, looks far from rosy. ³

I speak of hundreds of millions, obliged by a capitalism once progressive ⁴ to sell their labour power but increasingly unable – due on the one hand to manufacturing having gone south for good, on the other to automations which in a political economy managed by and for the many rather than the few would be a blessing – to find buyers for the stuff. So huge a slice of society rendered economically superfluous is without precedent.

This is the elephant in the room, ignored by every mainstream political party in the West. In that silence, that stupendous denialism, lies a problem more serious than the decline itself. It would still be possible – painful but possible, and bringing in its wake the seeds of a better world – to face into and adapt to the end of Western supremacy.

But because we in the West do not live under democratic rule, only hollowed out mockeries of it, and are not informed by truly independent media, ⁵ the elephant continues to be ignored. In my next post I’ll address one of many consequences of that denial; soaring mental illness.

* * *

1. China rising poses no conceivable threat to ordinary Americans. The US is protected east and west by vast oceans and has vassal states to the north and south. It’s a nuclear super power and, again, its military bases ring the planet. What China rising threatens is the licence of an oligarchy masquerading as a democracy to treat all earth’s riches as its own and – by comprador leverage, or force in the name of lofty ideals parroted (footnote 5) by power-serving media – to subvert, neutralise or destroy any obstacle to that end.
2. On the one hand the manufacturing capacity needed for a war of attrition against a peer adversary has been hollowed out in the West. On the other, even in the military sectors, the interests of profit trump those of effective arms manufacture. My November 20 post, Five things to know about Kiev’s ATACMS, noted the West’s inability to rapidly step up arms production when:

   Surge capacity means maintaining slack – plant standing idle – to enable a near instant stepping up of arms production when needed. Such wastefulness from a profit-centric standpoint requires levels of state oversight which are anathema to the neoliberal mind. Add to this the fact of Raytheon et al having every incentive – costs + 10%  – to make eye-wateringly expensive weaponry which can wow arms fairs, and may do lethally well in seven-day wars on the global south, but whose shortcomings – inability to produce at scale, and unreliability in the heavy usage of protracted war as opposed to the quick-win conditions of “shock and awe” – stand exposed in the Ukraine. Ditto that revolving door between government and the military industrial complex (whose gravy-train influence, by the way, vastly exceeds that of the Israel lobby) which has earned the incumbent Defence Secretary the moniker, Lloyd ‘Raytheon’ Austin.

3. In the UK the decline is exacerbated by Brexit. Sociologist and welfare specialist Michael Lambert yesterday put out a podcast entitled, Is the UK economy Finished? In a manner reminiscent of Anna Maxwell Martin’s DS Carmichael in Line of Duty, he sets out a litany of self-harm which, while overly reductive in attributing all to Brexit and nothing to either the broader decline I speak of or the EU’s equally hubristic and denial-driven own-goals, merits a viewing as dossier of disaster. As does this shorter reckoning, livelier and more data led but lacking the qualitative nuance of Michael Lambert’s.
4. The historically progressive role of industrial capitalism in overcoming blocks to wealth creation posed by monopolies, unearned and non productive, on land and labour under feudalism and slavery is explored in Why read Michael Hudson?
5. On many matters our ‘quality’ media serve us passably well but this enables a greater lie. Media must show themselves trustworthy even if this embarrasses high office. (Not only does long term capacity to manufacture consent depend on this. So too, on pain of losing market share, do their business models.) But the trust so gained helps them mislead us, more by omission than commission, on matters critical – above all the vilifying of states and leaders in the way of empire designs – to the power they ultimately serve.

   We need not suppose dishonest practitioners. The corruption is systemic. Media are, as Chomsky observed, “corporations selling privileged audiences to other corporations”. (“Public service” broadcasters like America’s PBS, Britain’s BBC or Australia’s ABC are not only headed up by appointees from ruling elites, but subject to market pressures at one stage removed, via politicians who fear and/or are in bed with Citizen Kane figures like Murdoch and Rothermere.) At a more personal level, I speak less of outright mendacity than a well honed human capacity to see the world in ways that best suit our perceived interests. Journalists who know what’s good for them please editors. Editors who know what’s good for them please proprietors. Proprietors not only crave seats at the high table but need advertisers and/or wealthy sponsors. Last but not least, all are as much influenced as influencers, a truth I touched on three years ago in Monolithic control at the Guardian?

   The subject of ideology … is vast. Here it suffices that in our messy world: (a) humans are good at believing what it suits us to believe; (b) we’ve imbibed since infancy – from news media (which journalists consume as well as produce), from school and college, and from arts and entertainment whose soft propaganda power is underrated – that liberal democracy is the worst system except for all the others; ergo (c) most journalists will believe the dangerous drivel they so often write.

   Having the masses support measures against their objective interest is crucial to a ruling class whose greatest feat, like the Devil’s, has been to convince us it no longer exists. To this end corporate media have been pivotal. But media trust is falling, threatening the notion – always fanciful but seldom scrutinised in cold light of day – that meaningful democracy can coexist with today’s extremes of wealth and poverty. One response is to rein in social media, often in the name of ‘woke’ values. This is made easier to the extent the Tim Berners-Lee vision of Cyberspace For The People has given way – in a theft of the commons akin to the 18th century enclosures, or Mrs Thatcher’s mass privatisations – to oligarchic ownership. The other is to withdraw, step by step, the trappings of democracy and rule of law. (Ask Julian Assange. Ask Romanians.) But sufficient unto the day the evils thereof. Those larcenies lie beyond today’s remit.