Globalisation.

1. Global Trade.
The finality of production is consumption. This also applies to value. The value added is the value that needs be consumed. In an age of mass (industrial) production, the necessary consumption of all added value can only be achieved by a distribution of wealth. This seems an obvious obstacle to the accumulation of capital. But an obstacle surmounted by merchant nations since the beginning of history.
The industrial revolution put to use the concentrated energy of fossil fuels. And, almost overnight, one person could do the work of hundreds. Human and animal muscles were no longer the driving forces of production and their limitations ceased to be a constraint. Matter could be transformed on an unprecedented scale. Surprisingly, this resulted in mass poverty.
All added value must finally be consumed. But this necessary consumption can take place abroad. A nation can export consumer commodities and import raw materials. Such a nation can add value that it need not consume. Such a nation can accumulate capital investments, without upsetting the balance of consumer supply and demand. On its own national market, that is. The repercussions for its commercial “partners” form a inverted image.
The finality of production is no longer consumption. Production’s raison d’être is the accumulation of capital. This means that consumer goods must be exchanged for raw materials on the world market. But, if some nations export consumer goods and import raw materials, other nations must necessarily do the contrary. And, consequently, they must consume more value than the value they have added.
The exchange of commodities with a high proportion of added value for commodities with little or no added value means that one nation adds more value than it consumes, while the other nation must consume more value than the value it adds. On the one hand, consumer supply is reduced by exports and demand is reduced accordingly by capital investments. On the other hand, consumer supply is increased by imports but demand is unchanged. And, as the imported commodities are more sophisticated, or simply cheaper, than the locally produced ones and are in competition with them for the same demand, local products are devalued and production stops.
Foreign trade is seldom a balanced affair. Trading nations throughout history have accumulated wealth by exporting their consumption. This has often increased existing rivalries and provoked nations to war. Since the beginning of the free trade movement, laissez faire, laissez passer (Quesnay), the debate over open markets has never been concerned by the nature of the commodities exchanged. The subject is never publicly discussed, as the focus is kept on commodity value and “fair” trade.
The accumulation of capital, by unbalanced trade, deprives a nation’s labour of the fruit of its toil, while it condemns other nations to inactivity and hand-outs, or to war. Britain was the first nation to combine foreign trade and the fossil fuel revolution. During the first half of the 19th century, Britain literally ruled the waves. Then came Germany and Japan (Italy, France, Russia), and the USA. Now it seems to be China’s turn, along with some less powerful nations.
Over the past two centuries a small group of nations has stripped the planet of its productive investments, thereby reducing two thirds of humanity to a hand to mouth existence. This means that the new players of the 21st century can only capitalize at the expense of those nations who capitalized in the past. By exchanging consumer goods for raw materials and technology, China is accumulating capital investments at an unprecedented rate. By combining 19th century working conditions and 21st century financial tools, a nation comprising one fifth of humanity could put most of the other industrial nations out of work. And this is only part of the problem.



2. Global Debt.
In prehistoric times, borrowing took the form of reciprocal gifts. And Stone Age borrowers often made it a point of honour to return more than was received. But accountancy and money had to be invented for indebtedness to take on its modern sense. From the start, trading money was a dangerous business, subject to the whims of church and state. However, given certain circumstances, church, state and bank managed to unite. The Delos league, republican Rome, republican Venice, Lombardy(!), the Dutch republic, the Swiss confederation, England after the “Glorious” revolution, are a few early examples of this alliance and its success. The Church of Rome was a constant hindrance, as it had outlawed usury from the start. And absolute monarchs could seize and execute without warning. So that the Reformation and the republican revival can be seen as nurturing the banking Renaissance (Max Weber).
Bankers had realized from the start that money lent out returned almost immediately to their coffers. It merely moved from one account to another. They knew that material money is a convenience and that account money is what really maters. Bankers possessed the philosopher’s stone. They materialized the alchemists’ dream of creating gold ex nihilo. Account money, however, needs stability and control. It cannot be put in a pot and buried in the garden. This control was completed when the gold standard was abandoned, when bankers declared material money redundant.
Being immaterial, mere writing and now moving electronically at the speed of light, money becomes limitless. And, having (almost) done away with the minting of money, this expanding monetary mass is circulated (almost) exclusively in the form of credit. Stripped of its fetishistic status, money discloses its primal function of a promise to pay. Commodity - Money - Commodity. The money makers, however, have a different point of view. Money - Commodity - Money. And, for the transaction to be worth while, the sum returned must exceed the sum paid out. A rate of interest must be forthcoming.
Bankers decide who gets credit and the price they pay for it. But this extravagant power is subject to market forces. A limitless supply faces a reluctant demand. Given the choice, entrepreneurs would rather invest profits than debts and workers would prefer larger salaries to mortgage and consumer credit. And historic trends have causes that are inherent to borrowing. The growth of debt is a cyclical process, with as many cycles as there are terms for debts.
A debt can be either invested or consumed, though the consequences of each alternative are quite different. The last long cycle (Kondratieff, Schumpeter) of about sixty (2x30) years started in the 1940’s with massive state investment in the war industry, followed by its privatization and the non-military offshoots. Both were largely financed by long term bonds. During the first phase of the long cycle, debts are generally invested. Conveniently, this part of the cycle is plagued by high inflation. This means that investments fast out-value the original debts. During the second phase of the long cycle, debts are mainly consumed. Unfortunately, this part of the cycle is plagued by low inflation. This means that debts keep their value to the bitter end. This relation, between inflation and the use debts are put to, is not a coincidence.
An investment may be a machine, or a building, or whatever, but it will also be more turn over and more value added by work. Increased investments, at the start of the cycle, increase the work force and the demand for consumption. But, the division of labour means that demand is ahead of supply. (Consumer goods are the end result of the production process. Several years of increased investments usually precede a growth in consumer supply.) This starts the ball rolling for successive rises in wages and prices.
High inflation makes contracted debts easy to pay back. But it also raises interest rates and makes new debts more difficult to negotiate. States go on borrowing and pay the bill. Individuals borrow less. Corporations turn to the stock market to raise investments. There is a marked slow down in growth as the long borrowing curve reaches its peak.
[Growth in borrowing means that paid-back debts, as well as the interest paid, must be lent out again. This means that, at regular intervals depending on the debt’s term, the amount paid back increases. When bonds are concerned, it happens quite suddenly.]
At the peak of the long curve, in the early 1970’s, borrowing came to a stand still. The 30-year loans were flagging and the shorter term ones were in a trough. The 10-year T-bonds peak growth years seem to be 1960, 1980 and 2000. However, forty years after Black Thursday 1929, stocks and shares started coming back into public favour. This was the first stage of the equity boom that crunched in 1987. Companies were able to finance their investments with money raised on the stock exchange. But the stock market does not create money, the way banking credit does. It merely moves money from one account to another, from consumption to investment. (At the best, it circulates money that has been withdrawn from circulation.) So that companies seemed to flourish, but consumer demand did not. Supply and demand were not coordinated and a stock market crash was the logical conclusion. This massive loss of wealth provoked a “domino” effect on emerging economies and increased poverty world wide.
In the process of producing goods and services, value is added. And the total value added is the value that needs be consumed. Added value is the nation’s (and hence the world’s) income. As such it is divided up among various beneficiaries. And this division reflects the historical patchwork of the prevailing social structures.
The state takes its share in the form of taxes and duties.
Labour struggles for salaries and social insurance.
The rest goes to property.
The owners of real estate, patents and copyrights receive rent and royalties.
The owners of money are paid interest.
The owners of the other means of production (trade and industry) make a profit.
This sharing of added value is constantly being modified. And, if some obtain a larger share, others must be content with a smaller one.
Social, ideological and political power struggles are centred around the sharing of national income. Labour and property confront each other, while the state favours one or the other, shifting positions to insure its own perpetuation. This permanent repositioning is farther complicated by the internal divisions of the three groups and by the absence of clear cut boundaries between them. (A worker may be under contract to the state, and own property.) Labour is fragmented by conflicting interests, the state swings from left to right and back again and land owners, bankers and entrepreneurs jostle for the best position, for the largest share. This situation has the appearance of all against all and conveniently hides the fundamental confrontation.
The transfer of debt from investments to consumption has a drastic effect on the distribution of income. As consumer demand is increased by debt and credit, income can be invested and increase supply without upsetting the balance. Instead of debt being invested and increasing supply as well as demand, by a distribution of added value (income), debt is consumed to increase demand and added value (income) is invested to increase supply. This new situation means that growth is no longer distributed. To increase their consumption, consumers must borrow. This means that the state and the workers get ever deeper into debt. While the other beneficiaries of national (world) income, those who own the means of production, invest an ever increasing part of their share, as private property.
Increasing demand for consumption by borrowing does not result in inflation, as credit is only granted when the supply is on hand. And a lot of production units, at this stage, are at less than their maximum capacity. Wages are on hold and the struggle for more spending power is with the credit card provider, not the employer. Prices are stable, except for the rarefaction of non renewable resources. And, as incomes are invested instead of debts, the inflation that made paying back easier looses its usefulness. But the absence of inflation means that consumer credit must be paid back in full and that borrowing cycles run their course relentlessly.
The long borrowing cycle contains all the shorter ones. According to J.A.Schumpeter, the long up and down wave lasts 57 years. This means that the actual situation is comparable to 1950, with a few (4/5?) lean years still to come. Last time, a recent World War, a budding Cold War, a war in Korea and anti-colonial insurgencies in Africa and Asia, all helped to keep the lid on when the pressure of discontent increased. This time, the current wars seem to lack (for the time being that is) the intensity needed to counteract any sort of social unrest. While the expectations world wide have never been as great and the ideology of growth has never been as central in justifying the dictatorship of the middle class. Should growth flounder, as it seems it must, mountains of paper debts may submerge the world sooner than the rising oceans.

Here is a copy of Schumeter's time scale. I have added a Kuznets curve while placing the zero in 1900. Repetitions occur in several places and seem to correspond to the trend of the curve. 1929/87, the stock market crashes, and 1914/71, the coal and oil wars, are examples of recurrences.

3. Global War.
On the first page of Vom Kriege, Clausewitz defines war as “an act of violence engaged to force an adversary to submit to one’s will”. And war is indeed the ultimate proof of power, submission or death. And, this being so, war is also the ultimate refusal to submit. ‘‘Freedom and Death” chant Kazantzakis’ Cretans as they kill and die. Clausewitz goes on to explain (1.1.24) that ‘‘war is simply a continuation of politics by other means”, that it is a way of achieving a political end. If submission is not obtained by demands or by threats, it can be imposed by military might.
Clausewitz (1780-1831) grew up in a world where power politics and total war were being reintroduced by Napoleon Bonaparte. Neither was new as all empires are built this way. Nevertheless, the courts of Europe were taken by surprise. They had been accustomed to submitting the less “developed”, more “primitive” peoples of the planet, some still living in the Stone Age. While limiting their internal fighting to perpetual skirmishes, mostly in the plains of Saxony and Flanders. Napoleon turned this around. After his triumphs in Italy came the Egyptian fiasco. And, from then on, he seems to have ignored the wide world and concentrated his energy, and that of the budding French nation, on the conquest of continental Europe. (He did, however, restore slavery in the dwindling French colonies, after it had been abolished by the republic. Probably at the bidding of his first wife, Josephine. Her family being plantation owners in Martinique.)
Total war is an industrial process. A nation’s productive forces are organized for just one purpose, military power. Eisenhower warned of the danger this represented for civil society, but it was Orwell who dissected and described the workings of the military-industrial world and the reasons for its perpetuation. Power is control. And control is more easily accepted in an anxiety prone situation. Only war maintains this constant tension and the submissiveness of nations to their leaders. Only war and total war in particular, can justify the control needed for absolute sovereignty.
Ultimately, total war leads to total destruction. Moscow (1812) and Atlanta (1864) were tactical destructions, and Dresden (1945) may have been a mistake. But there is no doubt that the atomic bombs on Hiroshima and Nagasaki were carefully calculated acts of wanton murder. Killing has become a science and an industry, ranging from the “surgical” strikes to the multi-megaton ones. Total war may also cover up more selective destructions, such as the Jews of Europe, or the Communists of Indonesia. These also have recourse to science and industry to provide them with the means to their ends.
The destructive power of nuclear weapons meant that total war could no longer be “total”. The two remaining adversaries at the end of WW2, the USA and the USSR, could not attack each other directly. They built up vast arsenals as threats and counter threats, but striking at the heartlands was out of the question. The so called Cold War merely outsourced the fighting to the rest of the planet. The slightest social disturbance in one zone of influence was immediately armed and financed by the other side. Insurgency and civil war spread like wild-fire over Africa, Latin America, Asia and the Middle East. By the late 1950’s, China had joined the field as the third contender, making the fiction of Nineteen Eighty Four a reality. The leaders of the three super powers moved their pawns and their dominos, changed alliances, rewrote the past and controlled the future of the whole human race, and of all the other species into the bargain.
Something was lacking, however. The threat of mutual nuclear destruction was so apocalyptic that it ended up by having a numbing effect. The imminent end of the world is a thought that is best repressed. This absence of future, obliterated by a mushroom cloud, could also be countered by a hedonistic way of life. The late 1960’s and early 1970’s, when a whole generation seemed to be dropping out, were an ideological low point for the power-mongers. Orwell had imagined that homeland hysteria could be maintained at a high level by, among other things, frequent public executions of enemy war criminals (sic) and regular haphazard explosions of bombs. He was thinking of WW2 type rocket bombs, the V1 and V2. But, in his film Brazil (1985), Terry Gilliam strikingly brought the story up to date. Homeland security is threatened by an Irish looking truck driver and a foreign sounding plumber. While package bombs explode in shops and restaurants.
When the USSR finally went into insolvency in 1991 and could no longer pose as a credible menace, everything was in place for a new era, a new world order. Global war on terror was declared by Bush in 2001, after the September attacks. But we know that the Patriot Act had been prepared by the Clinton administration, following the Oklahoma bombing. Terror is the ideal foe, if one admits that war has become a spectacle. More than the continuation of power politics by other means, war has become a low intensity daily struggle of all against all. The terrorist danger is so protean, so multifarious, so persistent, and so easy to fake or to instigate, so hard to stamp out that, once instated, it is here to stay. The USA, Russia, China and their satellites need no longer confront each other to maintain a bellicose environment. They have found a common enemy, the axis of evil.
Orwell’s fictional character Winston Smith is allowed just enough rope to hang himself with. Or, more precisely, to bring him to Room 101. And so it is today with opposition wherever it comes from. The Thought Police is back in power with a vengeance and Big Brother is watching our every step, reading and listening to our every word and, as far as is possible, profiling our minds and intentions. Winston learns the hard way that the Party controls matter because it control minds. “Reality is inside the skull.” Or, as Chomsky has pointed out, “There Is No Alternative” is the totalitarian thought structure of the new millennium.