WWII & the twilight of Western Enlightenment

AT the turn of the 20th century, ruling classes mobilized nation states to struggle for territorial control and economic development, while working classes struggled for emancipation

From the 16th century, the Atlantic ruling class (the ruling class of Britain, the Netherlands, the US, France, and other North Atlantic territories) successfully ascended to world power through a potent combination of capitalist relations and primitive accumulation, including enclosures, global imperialism and colonialism, and slavery. By the turn of the 20th century, both German and Russian networks were left out of this power ascent, stagnant but still latently capacious and entitled. They had long-influential ruling classes managing and intervening in European territories. Where Russia had dwindled from Enlightenment and power influence to supplying mercenary militaries to the ultimately-losing European ruling class repressions of democratic revolts, German society had lost its influential long-time role supplying the educated, princely managerial staff to European monarchies.

Communists overthrew the dissolute Russian monarchy network, and mobilized massive and disruptive economic modernization campaigns across the Soviet Union’s vast Eurasian territory. German territories attempted to correct their over-investment in European aristocracy by reorganizing as a militarized nation-state mobilizing strong managerial and productive capacity. To carve out territory in an already-owned world required warfare. While the Atlantic ruling class has had enormous capacity to absorb other ruling elites, it has not accommodated them, with the exception of the semi-independence concession to Middle East absolutist tyrannies ruling keystone geopolitical and oil extraction territory. When upstart Germany lost WWI, the Atlantic ruling class sought to crush an independent Germany and the German sense of entitlement with the Treaty of Versailles. This vainglorious effort only produced more outraged re-organization in Germany, spawning the fascist campaign to put Germany on the global capitalist map.

Germany’s reactionary, anti-socialist fascism at first was thought to be compatible with the anti-communist Atlantic ruling class order. For seven years, from 1933 to the September 1939 invasion of Poland, the capitalist Atlantic ruling class had agreeable relations and multiple pacts with the pro-capitalist, anti-communist fascist regimes, including Nazi Germany. During this period, the young Soviet Union had been struggling with imperial, fascist Japan, which was invading China.

13 Nation-state Compacts with Fascist Germany

YEAR SIGNATORY COUNTRIES NAME OF PACT
1933 UK, FRANCE, ITALY THE FOUR POWERS PACT
1934 POLAND HITLER-PILSUDSKI PACT
1935 UK ANGLO-GERMAN NAVAL AGREEMENT
1936 JAPAN ANTI-COMINTERN PACT
1938 SEPTEMBER UK GERMAN-BRITISH NON-AGGRESSION PACT
1938 DECEMBER FRANCE GERMAN-FRENCH NON-AGGRESSION PACT
1939 MARCH ROMANIA GERMAN-ROMANIAN ECONOMIC TREATY
1939 MARCH LITHUANIA NON-AGGRESSION PACT
1939 MAY ITALY PACT OF STEEL (FRIENDSHIP & ALLIANCE)
1939 MAY DENMARK NON-AGGRESSION PACT
1939 JUNE ESTONIA NON-AGGRESSION PACT
1939 JULY LATVIA NON-AGGRESSION PACT
1939 AUGUST SOVIET UNION MOLOTOV-RIBBENTROP NON-AGGRESSION PACT

A side product of Britain’s imperial expansion and its opposition to Russia and that country’s power, Polish and other weaker-community nationalisms surged in the 16th century. Russia and Poland then struggled for territorial control, with Russia controlling the territory from the 18th century until Russia’s collapse after WWI. By contrast, the Atlantic ruling class gained further power after WWI, taking control over former Ottoman Empire territory and populations.

In August 1939 Germany made an opportunistic, temporary alliance with the Soviet Union and Slovakia to re-take Poland and divide it. Britain and France had a post-WWI pact that should Poland be invaded, they would regard the invasion as an act of war against the Atlantic ruling class. Polish gold was smuggled out to London and Ottawa. In reclaiming territory, the Soviet Union was again acting independently of the Atlantic ruling order, and so was a categorical enemy. But the geopolitical crisis was a fascist state acting independently of the Atlantic ruling order. In an already-owned world, German economic development intolerably forced both (temporary) capitalist-communist cooperation and a dis-identification between the Atlantic ruling order and capitalism.

While the Atlantic ruling class has remained in fairly-constant geopolitical opposition to Russia (regardless of its government), British sponsorship of Polish and Eastern European national ambitions has been rather more opportunistic than a primary goal. It is the Polish (among other Eastern European buffers) nationality’s perspective that the Western powers “betrayed” their sponsorship agreements in 1939 (inter alia), as the North Atlantic powers allied with the Soviet Union to fight WWII, to stop Germany’s further territorial invasions and expansions. The Soviets ground down the imperial German war machine; and the Soviet Union’s gambit to reduce the Atlantic ruling order’s combined anticommunist and geopolitical opposition was thus soon played out.

British war leader Winston Churchill hoped to simply redirect WWII against the Soviet Union upon Germany’s defeat in April 1945. But British analysts concluded that the Atlantic powers would not be able to defeat and control the Soviet Union’s territory via direct warfare. So, in another “betrayal,” Churchill and Stalin divided up the former Austro-Hungarian borderlands (the Austro-Hungarian Empire collapsed in WWI), from 1945 until the modern Russian communist experiment was liquidated in 1989 under the co-optative idea, and a patently false and geopolitically-naive expectation, suggesting that simply by dissolving communism to the benefit of oligarchs, Russia would become included and supported as an autonomous capitalist country in the North Atlantic metropole archipelago, much as Germany, Italy, and Japan had been under the redistributive Marshall Plan. But in that North Atlantic, states had since largely been claimed by a financially-liberated, cosmopolitan ruling class, and that class already had a capitalist relationship with the great reserves of Chinese and Indian labor, resources, pollution sinks, and consumers. Nor was it possible for even-oligarchical Russia, with its broader social networks and infrastructure, to be integrated into the Middle East tyrants’ efficient, special relationship with the Atlantic ruling class.

Since then, the Atlantic ruling class has pursued an oppositional relationship with Russia, offering instead the City of London as an increasingly-posh haven for the Russian klepto-collaborators and their booty, the once-public wealth accrued with brains, blood, sweat and tears within the Soviet Union territories. A globally-networked, cosmopolitan ruling class with key bases in North Atlantic financial cities and countries currently enjoys the restoration of its undiluted, unrivaled power, as well as steep and immobile social hierarchy and all its effects. As billions of people are surveilled, policed, incarcerated, militarized, exploited, poisoned, dispossessed, violently disrupted, and dislocated into spectacular migrations, outside of continental Europe, aristocracy and servitude have been restored. Western Enlightenment ideas, culture, and institutions have fallen, but the extraction and slavery infrastructure remains and has been technologically enhanced.

Thus, while there are still states and of course market institutions managing cosmopolitan extractivism and the social reproduction of inegalitarianism, with the eradication of Enlightenment thought and institutions, nation-states have been reorganized as rigid, stagnant Night-watchman states. Nations are reserved for the industrializing countries.

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Greece, Pinatified

Yanis Varoufakis posts Marshall Auerback’s “Greece and the Rape by the Rentiers,” with Varoufakis’ caveat that the best option is for Greece to default.

More on the austerity debacle in Greece
What the (Troika–the European Commission, European Central Bank, and International Monetary Fund) MOU (with the Greek parliament) is really all about:

“It’s a corporate wish list; a mix of punitive belt tightening policies for working people and perks for big oil, big gas, electric, aviation, railroads, communications etc. ‘Fast track licensing’ and baby food have nothing to do with helping Greece reach its budget targets. It’s a joke. … None of this has anything to do with helping Greece. It’s just corporate pillaging gone haywire. Greece is a big pinata that’s just been cracked open and everyone (Euro capital) is pushing and shoving to grab their fistful of candy. All of this is coming soon to a neighborhood near you. If not’s already there, that is” (Mike Whitney, quoted by Chris Floyd).

Bustin’ open the Greeks. Who’s next?

Athens in flames, Michael Dussault (quoted by Naomi Wolf): “’The rebellion has begun,’ the Greek resistance hero and veteran left-winger Manolis Glezos told reporters. Indeed, as students and anarchists fought back waves of riot police assaults on the occupied University Law Department, as hundreds of outraged protesters took over a TV station, and as plumes of smoke and clouds of teargas filled up the Athenian night skies, one thing became overly clear: the social situation in Greece has spun entirely out of control.”

Damned if it shouldn’t be. As Chris Floyd says, what Greeks are facing is down a few levels of hell lower than the imposition of Sharia law.

 There is no (0) possibility that an Anglo-American intervention (which is what a NATO intervention would be) could improve the lives of Syrians in the oil era. However, pro-democracy North Americans can support the Greeks, perhaps Spanish Civil War style? Or what about support in Spain? Right now Spaniards and the Portuguese need help fighting against the conservative state-facilitated anti-labor crusade.

Billy Bragg once composed a little song, RE: serving as a fightin’ tool for Anglo-American capital.

New consensus in Berlin, according to Varoufakis: As soon as Sarkozy wins the French Presidency, Germany will amputate Greece & Portugal (maybe Ireland too) from the EU, and cauterize the wounds by printing money.

Varoufakis thinks the strategy won’t work because:

1) German financiers are underestimating the substantial links between Portuguese banks and Spanish banks, and between Greek banks and German and French banks.
2) Injecting massive liquidity into European banks will Japan1990s-ize them.
3) The problem is in the uneven nature of capitalism, here the geographic core-periphery, that creates systemic trade imbalances, and the lack of a GSRM (global surplus recycling mechanism) in Europe. This problem will not be addressed by the German financier’s solution. So when a couple of countries are amputated, the problem will move over and take up residence in the remaining periphery–Italy, Spain– requiring further amputations.

Richard Koo explains why the Japanese banks failed, and what that means for Europe.

Arabia & the West: Painful Lessons from Media History

In the solid “The Arab Spring and the West: Seven Lessons from History,” The Guardian‘s Seamus Milne reaches into the British Pathe News Video Archive to recall the oil-dependent fundamentals of West-Middle East Relations.

1) The West never gives up its drive to control the Middle East, whatever the setbacks.

2) Imperial powers can usually be relied on to delude themselves about what Arabs actually think.

3) The Big Powers are old hands at prettifying client regimes to keep the oil flowing.

4) People in the Middle East don’t forget their history – even when the US and Europe (conveniently) does.

5) The West has always presented Arabs who insist on running their own affairs as fanatics.

6) Foreign military intervention in the Middle East brings death, destruction, and divide and rule.

7) Western sponsorship of Palestine’s colonisation is a permanent block on normal relations with the Arab world.

Papandreou: Occupy!

The deposed Greek prime minister advocates Occupy!

The Greek parliament forced Papandreou to resign from his position of Prime Minister when he suggested holding a national referendum to allow the Greek people to have a say in whether they would accept the European Union’s bailout plan which would necessitate severe austerity cuts.

Democracy Now! speaks with Papandreou about the financial crisis, the role of banks, and the importance of the growing Occupy Wall Street movement.

 “The Occupy Wall Street movements … are saying something very, very specific, that inequality, in the end, is an inequality of power, and we need to redistribute power, not just money—power—and this is, I think, the democratic challenge that we have today,” Papandreou says.

The Politics of Western Bank Failures

“Public money and public institutions are bailing out a private banking industry that is not solving its own problems… Fundamentally this is a struggle to take a crisis caused by the business community and the governments they support and make the mass of people pay for it. That’s what austerity means. And the real test here is whether the mass of people will absorb it and accept it” –Richard D. Wolff, “The Mating of Our Dysfunctional Political-economic Systems.”

This is a great interview on the repeated political failures in the wake of the failure of economic leaders.

Iceland’s president Olafur R Grímsson: “The difference is that in Iceland we allowed the banks to fail. These were private banks and we didn’t pump money into them in order to keep them going; the state did not shoulder the responsibility of the failed private banks.” Quoted in “Iceland Exits Recession” (Dec 2011).

Financial Economic Power = Political Stranglehold

The Crisis in the Eurozone
by James K. Galbraith
Salon.com

 “(T)he ECB refuses to solve the crisis at a stroke, which it could do by buying up the weak countries’ bonds and refinancing them. The argument against this is called “moral hazard,” buttressed by old-fashioned inflation fears, but the real issue is that to do so would admit loss of control by creditors over the central bank. Actions parallel to those taken by the Federal Reserve – nationalizing the entire commercial paper market, for instance – would repel the ECB, even though it does buy up sovereign bonds when it has to.

[MF: This is all a polite, econ-theoretical way of saying that the ECB is the tool of financial capital, not a manager of social or economic welfare.]

 So instead the zone has gone about creating a gigantic toxic CDO called the European Financial Stability Fund, which may shortly be turned into an even more gigantic toxic CDS (like AIG, they will call it “insurance”). This may defer panic at most for a little while.

 Technical solutions exist. The most-developed of these is the “Modest Proposal” of Yanis Varoufakis and Stuart Holland, widely backed by older political leaders in Europe. It would 1) convert the first 60 percent of GDP of every eurozone country’s debt to a common European bond, issued by the ECB; 2) recapitalize and Europeanize the banking system, breaking the hammerlock of national banks on national politicians; and 3) fund a New Deal-like program of investment projects through the European Investment Bank.

 Variant proposals include Kunibert Raffer’s call for a sovereign insolvency regime modeled on the U.S. municipal bankruptcy statute, Thomas Palley’s proposal for a new “government banker” and Jan Toporowski’s proposal for a tax on bank balance sheets to retire excess public debt.

 These are the best ideas and none of them will happen. Europe’s political classes exist these days in a vise forged by desperate bankers and angry voters, no less in Germany and France than in Greece or Italy. Discourse is sealed off from fresh ideas and political survival depends on kicking cans down roads so that the fact that this is a banking crisis does not have to be faced. The fate of the weak is at best incidental. Thus every meeting of finance ministers and prime ministers yields treacherous half-measures and legal evasions.

Political fragility also explains the fury in France and Germany when George Papandreou [the calmest man in Europe, by the way, having been born and raised in Minnesota] sought to cut the knot of his rebellious ministers, irresponsible opposition and angry public by putting the latest austerity package to a vote. God help the bankers! The move was fatal to Papandreou in short order, and Greece will now be turned over to a junta of creditors’ deputies if such can be found willing to take the job. It won’t be anyone who wants to continue to live in Greece afterward.

Greece and Ireland are being destroyed. Portugal and Spain are in limbo, and the crisis shifts to Italy – truly too big to fail – which is being put into an IMF-dictated receivership as I write. Meanwhile France struggles to delay the (inevitable) downgrade of its AAA rating by cutting every social and investment program.

If there were an easy exit from the Euro, Greece would be gone already. But Greece is not Argentina with soybeans and oil for the Chinese market, and legally exit from the Euro means leaving the European Union. It’s a choice only Germany can make. For the others, the choice is between cancer and heart attack, barring a transformation in Northern Europe that not even Socialist victories in the next round of French and German elections would bring.

[MF: Here, I would demur. This explains why Greece hasn’t exited so far. But at this point, why not choose exit? Everybody proper said, following orthodox theory, that exit wouldn’t work for Malaysia, Argentina, etc. as well. But it did. Considering the empirical evidence at this point in history, and adding to that game theory logic, I think exit is the only rational option now.]

So the cauldrons bubble. Debtor Europe is sliding toward social breakdown, financial panic and ultimately to emigration, once again, as the way out, for some. Yet – and here is another difference with the United States – people there have not entirely forgotten how to fight back. Marches, demonstrations, strikes and general strikes are on the rise. We are at the point where political structures offer no hope, and the baton stands to pass, quite soon, to the hand of resistance. It may not be capable of much – but we shall see.”

…..

There remains a popular or perhaps professional conservative economist’s insistence that the cause of economic crisis in Europe is immoral Greek consumer and political behaviour. That might be an opportune, EZ, resonant, discursive tactic if you’re a Greek with a meso-political axe to grind or a conservative economist clinging to the wire monkey mother of your dogma.

As someone who was hounded by bankers and real estate agents to buy a house in the US at the peak of the bubble (and of course I was! I was even given a whole book by the realtor explaining in simple terms that if I bought a home, I could be part of the Infinite Pyramid Scheme (TM) and someone would without fail buy that home from me for an even-more inflated price.), when I had just graduated from my PhD program with grotesque mounds of student debt, I know good and well that moralistic arguments about the consumer root of economic crises are full-on undiluted bullshit, toxic CDOs, if you will.

To still buy those toxic funds, you would have to be completely autistic; hallucinating nothingness in the face of mass marketing, highly-unequal social status and institutionally-flogged hegemony; utterly blind to the global quality of the economy; and abjectly deaf to the extreme variations in money-borrowing and -lending power. You would have to be a conservative economist, or the slave of some such defunct economist).

Debt + No Class Compromise > Delay > Asset Liquidation

If you get your rocks off by pursing your lips sourly and pointing fingers at more-or-less hapless pawns, here’s a link to Greg Palast’s observation of one of the proximate causes of Greek economic crisis. The conservatives had to borrow from financial capital in order to temporarily prop up the pretense that the financial capitalist’s order works, and the conservatives can operate it. The order, one of primitive accumulation, doesn’t, cannot work for most societies and people and environments. So what were conservatives supposed to do? Admit that, and lead the socialist revolution? THAT WAS NEVER GOING TO HAPPEN. Did I even have to caps-lock that? No. Conservatives’ only (pro-system) choice was debt-to-delay. So that is not a choice.

Now, should any working class person ever elect a liberal, let alone a conservative, to represent her in the political sphere? No. Absolutely not. Because that debt-to-delay non-choice is exactly what you get from them. Fetishizing the politicians’ systematic corruption is kind of perverse and creepy and stunted, given it’s about “catching” them doing what they are ideologically-constrained and coached to do.

Regardless of Keynesians’ belief that states can deficit spend, everyone believes in debt–or money liquidity, as it’s known when we’re not being manipulatively moralistic. It’s a fundamental part of economies, as well as pious, exploitative moral economies. Debt was the key to US military-economic dominance in the latter half of the 20th century, and this constrained everyone else’s options–especially in Europe, not to even mention how the financialization/debt model was sold, was saturation-marketed as the 1-Tru (TM) path to infinite economic expansion and happyness.

But of course the underlying problem is that actually-existing financialized capital is principally a tool for primitive accumulation–appropriating, concentrating and controlling value and exchange. In other words, debt-to-delay leads inexorably to wicked public and smallholder asset liquidation and a continuous and depleting debt-to-liquidation cycle, or else one helluva social fight to force garbage investors to take the losses on their garbage investments and to clean up their investment practices.

Our elites are very diligent at reminding us about the terms of their protection racket: that if investors are forced to be prudent, they will withhold liquidity and offload the costs onto the working class and the public. However, the traditional  threats have begun to mean nothing, because the primitive accumulation debt-to-liquidation cycle has resulted in withheld liquidity and economic crisis offloaded onto the working class and smallholders anyway. When there’s no class compromise, the hegemonic leverage wears down quickly, leaving bare brutality.

Unless we fight to reduce its power, we cannot escape capitalist primitive accumulation and our own over-determined economic dispossession and depletion. Yet we still have a wide range of commentators declaring TINA on austerity. There are alternatives. The alternatives simply do not support financial-military global monopoly capitalism.

Thus, faced with this impassible dilemma, (much like the 20% (a low) of Americans who still somehow believe that they will be in the top 1% of wealth accumulators) paid experts somehow still desperately pretend to believe that there is a universal, moral path to wealth accumulation in a fictitious 2-D world without power, and that little Greece, if they’d just been more moral, could have followed that yellow brick road, paved by the benevolent financial system devoted to unproductive accumulation and geo-political power moves undertaken by the financial capital centers of the US (US banks own over 10% of Greek risk), England, France and Germany in the west, and oil capitalists and China eastward. The level of political- economic and geopolitical naivete required to maintain this moral handwringing and within-Greece fingerpointing is flabberghasting at this point in history.

Within the context of global monopoly capitalism, nothing could have been done for the welfare of peripheral small economies (countries) like Greece. Financial-military capital has not been and is not aligned for this. That this mal-alignment destroys capital and undermines the Greek, European or global economy is not a problem to financial-military capital–especially not when the dollar as world reserve currency automatically secures such resolute US dependability for capital. (Which is why OWS is so important to disciplining global speculation.)

Someday, the capitalist lords and retainers claim, global monopoly capital may get in the mood or accidentally do something to benefit non-elites. You just never know. It’s happened (with some considerable drawbacks, including population explosion, scarcity and environmental catastrophe. But dammit some of us did get those nice SUVs for a while in some places.) In the face of their brutal solipsism and frigidity, the deity-bankers only ask for assurances that, as long as you or your politicians are worried about liquidity for your society’s survival (assuming of course that we’re not interested in bothering to establish a global network of rebellion), they are entitled to the wealth your society creates into the future. This is the blackmail of late monopoly capitalism. To really paraphrase Nixon all out of recognition, perhaps we all have Stockholm Syndrome now. You give your wealth. You get a steady supply of bloody fingers, etc. in the mailbox. It all ends when you open up the envelope to find your own bloody heart muscle wrapped in a tissue.

And for what? Regardless of what happens to the body, the economy or societies or the environment, as long as they get the wealth, financial capital wins. –Perhaps we go along with it because we think the capitalists are sexy (Thanks for the beer goggles, Frank Luntz!), because even all the militarized cops can’t follow all of us around in our daily rounds of assiduous obedience.

The US Model of Social Exclusion

Here is a link to Schmmitt & Zipperer’s “Is the US A Good Model for Reducing Social Exclusion in Europe?” (2006) CEPR.

Not so much, contend the authors, analyzing social exclusion through the variables of income inequality, poverty, education, health, crime and punishment, the labor market and finally, the coup de gras, social mobility.