Declining power is reactionary

The method is probably as old as minority rule. When people come together in large numbers to protest and claim their rights, provoke them to some act of violence, if necessary by infiltrated agitators, and use that as a pretext for massive repression. Just firing tear-gas canisters and rubber bullets at a peaceful crowd will often do the trick. Make them angry enough and they may riot, resorting to looting and arson. That brands them as criminals indiscriminately. It alienates public opinion and motivates the forces of repression. Opposing armed violence with unarmed non-violence is difficult and may be impossible. Strikes can be effective and a general strike even more so. But they suppose the existence of factories and organised labour, both of which have largely disappeared in the developed world.

Power has a vast experience of dealing with protest. It has learnt brutal and sophisticated forms of repression and diversion. It can resort to the hard tools of police violence, mass incarceration, torture and assassination, but it also uses the soft tools of propaganda and corruption. There is always a mix of the two, though the latter is preferred as it is less disruptive. If it is generalised, ultra violence hinders industry, commerce and the production of wealth. Far better is the propagation of ideology, the same ideas heard repetitively from cradle to grave. This means controlling the information in circulation and, ultimately, the vocabulary that transmits it. However, this also handicaps production as it severely inhibits initiative, creativeness and entrepreneurship.

The practice of power must navigate between the fear of brute force and the ties of ingrained convictions. However, too much fear paralyses society, and convictions need the constant repetition of the same story. Thought control – albeit the Orwellian dystopia – cannot be completely estranged from reality, and it must constantly ward off contrary ideas. This is often facilitated by language barriers, as a local idiom is less permeable to external influences. Power can control education, the press and all Hertzian emissions quite effectively, but printed material, audio and video tapes or disks are easily smuggled, and internet remains difficult to regulate. However, China and Russia have constructed separate national webs, which make incoming and outgoing material much easier to scrutinise. And this may be a trend that other nations will implement. The free circulation of ideas threatens the hold power has on what people think. The certainty of its ideology is questioned. When that certainty is triumphant doubts are drowned by the cheering, and power can by quite liberal in its censorship. When the ideology strays from reality the questioning strengthens, and control must tighten correspondingly. When the ideology of power fails, that power is vulnerable and dangerous. It will be swept away, but its relegation to history’s dustbin can leave a wasteland.

A few dominate the many with a monopoly of weapons and ideas. But power is a corruptive agent that corrodes ideals and favours force. It tends to be absolute and destructive. While sharing power is a complex, difficult and often chaotic alternative. Instead of being fearful and obedient, people are outspoken and demanding. Instead of receiving orders, they take initiatives, and society is turbulent and creative. But somehow this state is always ephemeral, as power and wealth accumulate again inexorably. It is often easier to be told what to do than to decide oneself. And all children are led to believe that their elders know better. They usually do, but all depends on how this knowledge is transmitted. Is it dogmatic or is it reasoned, and can it be questioned? Is the world view taught as a certainty or as the most probable explanation at a given time? And then there are all the mystifications and outright lies, such as Father Xmas at a very early age, a primordial imposture that is soon followed by others. The deceits of childhood lead to those of adulthood, and power plays with them to expand its reach. But reality lurks in the background, ever ready to burst the dream bubble.

Power imposes itself by force and by acquiescence. Tyranny is always assisted by countless petty tyrants. Many accept power and are its willing servants (1). The central power over all gives them local power over some. But power always overreaches its capacities. This all-powerfulness may seem real for a time, but it is a mirage that finally dissipates. To be conclusive, power must expand and grow. When it falters and contracts, its foundations are threatened and it can only consolidate them by force. Waning power gets more violent. As it loses its prestige, it increases its brutality. A stick and a carrot, and when the carrot is eaten only the stick remains.

Power is basically the force of arms, but it constructs a story that provides a different legitimacy. In various roundabout ways kings were anointed by gods. Religion consecrated power and bolstered it with ideology. When that ideology was brought down kings lost their heads (London 1649, Paris 1793). But religion as such did not disappear, and power still insists it has some sort of god on its side. As the rule of might needs the varnish of right, the pen writes the sword’s panegyric. Today’s god is money, its religion is profit and its clergy are bankers. That ideological construction is showing signs of weakness. Shrinking profits (and zero interest) are sapping its foundations and will soon have it tumbling down. Then power will resort to all the force it can muster, and now is the last chance to restrict that force as much as possible, so that toppling power does not bring the whole world down with it.

1. See “Discourse on Voluntary Servitude” by Etienne de la Boétie (1530-1563)

The past is a failed model

“As in the past, privilege and power do not willingly submit to popular control or market discipline, and therefore seek to undermine meaningful democracy and to bend market principles to their needs.” Noam Chomsky in World Orders Old and New, 3/10

Nations are supposed to be homogenous and egalitarian, all citizens having the same rights and duties. In practice they are divided by class, religion, origins and quite frequently by language. This is because nation states are artificial constructions. Their borders, finalised in the 19^th and 20^th centuries, are the result of conquest, dynastic marriages, cash payments and colonial invasions, and their populations are conglomerates of more or less forced immigrations and loss of sovereignty. The nation’s real function is to define the limits of the domains and prerogatives of its ruling class, even if those class interests are often transnational. Nationalism comes to the fore when the class divide is so extreme that rulers and ruled no longer have anything in common. Then populists and demagogues propagate the idea of a past nation that has lost its way. They promise to restore a previous primacy, by going back to a mythical past and negating the present. This is pure buffoonery because time only moves forward, but those who want to believe it are numerous enough to give it credence. Political discourse becomes a blame game, and the nation’s enemies are abroad and at home.

Capital aspires to be global, but it remains in private hands. And that private property depends on the power of states for its protection. As capital expands its dominion and concentrates its ownership the necessity of armed force increases. At the same time, this use of public force for private interests becomes more apparent and provokes resentment, which must be diverted. The forces stationed abroad are not there to subjugate the weak and insure corporate plunder. They are deployed to protect the homeland from foreign attack. The forces at home are not for mass surveillance, repression and control of labour to benefit the few. They are needed to protect all citizens from criminal elements. However, when the threat of an attack by Afghanistan or Mali is finally perceived as ludicrous, a more consequential enemy must be constructed. And when criminals are those who prefer hemp resin to fermented malt, along with protest marchers, something more dangerous must be invented. So China and Russia are built up as credible menaces, while drug barons and anarchists are said to roam the streets.

Capital’s reliance on accumulating debts to realise its profits means it is periodically confronted by mountains of debt and subprime lending. Debts can be diluted away by inflation. But inflation pushes up interest and provokes labour unrest over wages. It can get out of control or bring economic stagnation. In the distant past, when things were far simpler, debts have been absolved. But today’s complexities make that hard to imagine. Mass defaults can also occur, but that threatens by contagion the whole financial structure with a freeze up of lending and exchanges. A dozen years ago that was beginning to happen when central banks came to the rescue, by buying up debts with seemingly unlimited amounts of monetary creation. Because of historic abuses central banks cannot lend money to governments, so the spending spree occurred on the market. And the market bidding pushed up the prices of Treasury bonds and brought down their rates of interest below the rate of inflation, and even into a new dimension of negative rates where the lender pays the borrower. This had repercussions for pension funds that rely largely on the regular incomes of interest, and for banks that are obliged to acquire public debt. But these low Treasury rates also lowered rates elsewhere. Corporations did some heavy borrowing to cover their losses or buy back their shares, and mortgages were cheaper thereby increasing demand and raising the cost of housing. Meanwhile current account overdrafts remained usurious.

Quantitative easing was about reducing the amount of public debt held by commercial banks. It allowed them to sell their Treasury bonds for newly minted cash at prices way above their face value, which meant getting some/most of the interest paid in advance (1). They could start lending again and did so more than ever. However, there was some unease about the process and its final outcome. Then came the pandemic lockdown and swaths of “helicopter money” were thrown to companies (mostly) and households (leftovers). This is government overspending on a huge scale, 10% to 20% of GDP. So government debts have grown by the same amounts, and central banks are buying them second hand from commercial banks that do the primary lending. In effect, central banks are creating money to finance government spending. This could provoke a long awaited inflationary cycle and reduce the proportion of debt to income for everyone. But inflation is chaotic. Some gain and others lose, wages are always behind the curve, production stagnates and lending dries up.

When capital is in trouble it calls on governments for assistance. That means falling back on its national base. It means boosting nationalism to justify its demands. Since the Great Depression capital has been struggling to take off again, weighed down by too much accumulated debts. The pandemic lockdown presents a more serious problem. In 2008 lending was drying up. Now it is incomes that are not being earned. Back then demand failed from lack of credit. Today demand is failing from lack of incomes. And all those who have lost their earnings will soon default on their debts. Capital will need even more help from governments and will have to present it as a national emergency, and the blame will be on others, foreign nations and foreigners in general.

Capital expands to the limits of debt and, when the credit structures start to fall apart, it retreats to the safety of its national borders. The financial crisis in 2008 saw global banks huddling in their homelands and begging for national bailouts. Now multinational corporations are doing the same, downsizing goes back to the roots, and the breakdown of air and sea travel plus the slowdown of trade have strengthened the impression of being besieged. The contraction of capital that is just beginning will propagate a nationalist ideology, as only that can justify the financial support it receives from respective governments. It is said that capitalism and its fundamental defects cannot be contested as that leads to totalitarian socialism, so the fault must lie elsewhere. As the situation deteriorates, culprits will have to be found, popular anger will be canalised by the media and aimed at certain targets, at all those who do not fit the mould. Though it has provoked some catastrophic wars, this method has been successful in the past. It may not be so any more. Capital and its lackeys in governments and media have lost much of their credibility, as wealth and power are seen to concentrate in fewer and fewer not very capable hands.

Capital’s dependence on debts and plunder to realise its private profits is not sustainable and condemns it to failure. But the system is so complex and interwoven that it cannot be modified or reformed. And the fundamental dogma of private property and profit is so pervasive that it cannot be contested. Private property has always been theft, and Robber Barons in 11^th century Britain were neither the first nor the last to practise it, just as Proudhon was not the first to proclaim it as such. But the original and ongoing thievery is masked by inheritance, buying and selling, and by a seemingly unconditional quest for profits. And vast numbers have consented to the crime and possess a part of the stolen goods. Home ownership is the strongest incentive for political conservatism, and makes all owners accomplices of the robbery. “You can fool some of the people all the time” and that is enough if they have the guns.

Nations mark the boundaries of private property backed by central government and armed force. Empires extend these limits to encompass vassal nations. But the conquest can only succeed if the natives disappear or are totally assimilated. Either one nation is annihilated or the two are able to merge. If neither happens, the conquering nation is condemned to perpetual military occupation. Empire means subjugation. It contradicts the republic and the model of nationhood. Empire brings plunder, but it also has a cost. A few have the benefits, but the whole nation pays the price. And if resistance is strong and enduring, that price is high. It is a tax on labour in lives and wealth. As empire denies the commonwealth of other nations, so it does its own. It replicates its foreign practices at home. Absurd wealth and desperate poverty propped up by military, paramilitary and police is the imperium’s standard model for vassal states, and it ends up ruling the heart of empire. World dominion is based on armed force whereas commonwealth is based on consent. Empire and republic contradict one another. A republic can call up the nation to ward off an external or internal threat, real or imaginary, because it represents the nation. An empire must repress nationalism as it opposes imperial dominion. Empire denies the national identities of its subjects and dilutes its own to include all those who flock to its shores, more or less freely, from all its far flung domains. There is no national solidarity for the empire to call on.

Nationalism and xenophobia are on the rise, encouraged by the self-interest of demagogues and the self-interest of wealth. But they may have reached the limits of their appeal. The very notion of nationalism must seem increasingly futile, when the most obvious menaces are global. The pandemic, financial chaos and climate disruption are far more likely to make life difficult than Russia, China or skin pigmentation. And neither can be resolved nationally. Nationalism denies them as they oppose its agenda. But events are proving that those denials are lies. Empires crush nations. And when empires fall – as they all do when early gains give way to rising costs – there is a revival of nationalism. Today’s failing empire is universal, and nations around the world are trying to remember who they were. This looking back is futile, but it avoids looking forward into the darkness of looming catastrophes. The empire will tumble along with global finance. Trade will come to a standstill, while travel has already been localised by the pandemic and closed borders. Weather conditions will get more extreme, with increasingly destructive winds, droughts, floods and wildfires. And budding nationalism will be confronted by the reality of worldwide dependency. World Empire has brought about an unprecedented interconnection of all with all. Finance, production, communications, trade and tourism are global. Not even North Korea is completely outside the system. And the pandemic has globalised health, while closing borders and severely restricting travel. This could be the preliminary stage of a nationalist withdrawal, or it could be a final pathetic attempt at denying humanity’s unity on a one and only shared planet. Empire institutes unequal rights and duties and imposes conformity, world elites and world labour. This needs to be reversed into equal rights and duties and individual uniqueness.

1. When the price of bonds goes up, it is as though part of the future interest is being paid in advance to the seller. The buyer must reduce that extra cost from the future interest received, hence a fall in the effective rate of interest.

Spending the future 2

A profit is made by selling something for more than it has cost. That can be done by extracting unpaid surplus value from labour, or by just buying to sell. In both cases more money is obtained than has been spent. Labour does not have it, nor does the first seller, but that extra money must come from somewhere. This puzzled Marx, but in 1913 Rosa Luxemburg concluded that it came from colonial plunder (1). Bullion, raw materials, land grabs and forced labour were paying the profits of imperial powers. As the planet is limited geographically,

this looting brought the imperialists into conflict with one another and resulted in two world wars. After the second one the two victorious nations became adversaries, forcing the world to line up behind one or the other. Then, following Stalin’s death, the rift between Russia and China brought about an ephemeral non-aligned coalition (2). Its demise isolated China up until the 1970s.

War had interrupted the profits of empire, and it was followed by colonial unrest and armed struggles for independence. But governments had generously provided for those absent profits with public debts. During the war and its aftermath, government borrowing kept profits rolling in, and inflation was constantly shrinking those accumulated debts. And strong economic growth was reducing their proportions. Meanwhile booty from the South was flowing again under slightly different circumstances. Administration and lifestyles were transferred to faithful local vassals. Profits were realised as investments, and consumer goods were exchanged for raw materials. Though the USSR and China were excluded from these transactions, competition between industrial nations was quite strong, even if the US was taking the lion’s share. By the end of the 1970s, however, it became obvious that more consumer demand was needed.

Realising profits with consumer credit was not a new practice, but in the 1980s it became increasingly widespread. From everyday spending to durables, cars and housing, growing numbers were consuming their future incomes. Governments also increased their borrowing, and all this monetary creation, albeit from the future, was not inflationary. The price of housing did rise, but inflation in general was low. The expansion of consumer debt coincided with the outsourcing of production, and those reductions in production costs were keeping prices down. Outsourcing production also meant job losses for those sectors that could be moved abroad. The well-paid unionised factory jobs began to disappear, leaving industrial waste-lands and the miserable uncertainty of gig employment in the service sector. Salaries grew for executives and wages shrank for workers. On average things were stable, but workers had to compensate their lost income with credit, while executives invested their increased earnings and only changed their consumption spending marginally. Growth in consumer demand came to depend almost exclusively on credit and debt.

Profits need a solvency that is not there, and must create it artificially. Credit is the perfect solution as long as it is renewed, to the same borrower or a different one. If it is not, its repayment reduces demand. So debts are rolled over and piled up, at which point the payment of interest is such that it cancels new credit, and this can only be resolved by reducing interest rates to zero. Free perpetual credit can keep things going, but can it have a future if that future is already spent? This absence of a future is reflected in environmental pollution and resources exhaustion. A toxic depleted world with spent incomes and rising temperatures is tomorrow’s grim inheritance. Today’s youths are understandably angry.

1. See “The Accumulation of Capital”, especially the third section for those not familiar with Marxist economic theory.

https://www.marxists.org/archive/luxemburg/1913/accumulation-capital/index.htm

2. The 1955 Bandung Conference brought together representatives from China, India and 27 other Asian and African nations.

https://en.wikipedia.org/wiki/Bandung_Conference