Nekaj zanimivih odlomkov iz izjemne knjige Michaela Hudsona, profesorja na University of Missouri “The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism“, o rentniškem kapitalizmu, ki ne more biti konkurenčen, zakaj morajo ZDA odstraniti vse vlade držav, ki ne pristajajo na ta neoliberalni rentniški kapitalizem z vodilno vlogo ameriške finančne oligarhije in o sistemskem rivalstvu med ZDA in Kitajsko, kjer ZDA izgubljajo prav zaradi rentniške narave njihovega kapitalizma.
Is China’s market intervention to promote industrial growth and raise living standards an autocratic road to serfdom, or a classical policy of prosperity that is rapidly outstripping the West’s de-industrialization, economic polarization and road to debt peonage ? Neoliberals accuse public enterprise, protective tariffs and subsidies to check rent seeking and reduce economic inequality of being less efficient than “free markets.” The question that needs to be asked is: “Efficient at what ?”
Rentiers look to efficiency at maximizing economic rent, and measure economic success by their own fortunes and those of the One Percent. Financial and property investors would like to siphon off China’s economic surplus as interest, rents and dividends. That aim has led George Soros to urge U.S. firms to boycott investing in China to protest against President Xi’s Common Prosperity aim “to reduce inequality by distributing the wealth of the rich to the general population,” because putting the people’s interests first “does not augur well for foreign investors.” In his view, rentier income can be maximized by preventing wages and living standards from rising.
Is China to blame for de-industrializing America?
Also deemed unacceptable is China’s policy of subsidizing public services to minimize its living costs and the market prices for its industrial exports. Arguing for “fair trade” and a “level playing field,” American diplomats complain that providing low-cost support for basic needs in this way is an unfair mode of trade competition. Yet this was the policy that the United States and Europe followed in their own industrial takeoffs. China simply is doing what the United States did in the late 19th and early 20th centuries, and indeed what the social democracy of that era was expected to achieve in the West. China’s “interference” with markets follows the classical aim of minimizing rentier “free lunch” income. It has achieved its remarkable growth in capital investment, productivity and living standards largely by public investment and regulatory shaping of its economy (“the market”), above all by keeping money, bank credit creation and other key infrastructure as public utilities instead of privatizing them for profit and rent extraction.
U.S. trade diplomats blame China for de-industrializing America. But even if China didn’t exist, there seems little way for the United States to regain its former industrial dominance. The aim of the Clinton Administration’s NAFTA trade agreement with Mexico and Canada in 1994, followed by its invitation to China to join the WTO in 2001, was to facilitate the offshoring of U.S. manufacturing to countries with lower wages. De-industrialization was inevitable as privatizing education, health care and other basic infrastructure, alongside a debt-financed real estate bubble, has made the U.S. cost of living so high that industrial employers have little choice but to shift their employment and production abroad.
The effect of all this has been to de-industrialize the U.S. and other Western economies while concentrating wealth in the hands of a rentier elite. Contrasting this de-industrialization and polarization in the West with China’s economic success leads to the obvious question: Should governments limit private rent-seeking (as classical free-market economists urged) or support it (as neoliberals demand), and what kind of social system will emerge dominant? This question is the basic issue that shapes today’s rivalry between the United States and China.
The conflict is not an industrial trade competition, but a fight between opposing economic systems. Burdening family budgets and industrial companies with debt service, land rent and monopoly rent is not something that China seeks to “do better” by creating more rentier billionaires. Its policy makers view the U.S. economy as an object lesson in what to avoid, not what to emulate.
Neoliberalism presents itself as a free-market opposition to centralized planning, but its aim is precisely to use control of credit to concentrate resource allocation in the hands of the major financial centers. There is still Big Government, but its role is to protect the wealth of the One Percent from public regulation and taxation of rentier income, not to raise prosperity for the economy at large. The financial sector’s aim is to promote rentier oligarchies in which bankers play the dominant role, wielding their wealth to control national politics much as landed aristocracies did down through the 19th century.
The bankers ’ aim dovetailed with that of U.S. Cold War strategists, whose dream for Russia’s post-Soviet economy was summarized by Senator John McCain’s quip disparaging Russia as “a gas station with atomic weapons.” The plan was for this weaponry to be dismantled, by buying out the military’s major industrial suppliers and closing them down, and by breaking up the old Soviet Union’s far-flung supply system. U.S. advisors helped the new oligarchy’s members cash out by selling their takings to foreigners and keep their gains safely abroad out of the government’s reach. Natural-resource rents from oil and gas, nickel and land, and monopoly rents from public utilities, were to be paid to stockholders as dividends and to bondholders as interest, not to the government to restructure the post-Soviet economy. U.S. investors had similar neoliberal dreams for China’s economy upon its admission to the WTO in 2001.
State and local budgets also have suffered instead of sharing in the rise in real estate prices. Public investment in transportation and other amenities has been increasing the rent-of-location for real estate owners along the routes and in favored neighborhoods, but this windfall gain has not been recaptured by a tax on rent-of-location to recover the public cost of making the civic improvements that increase these rents. Land ownership has been turned into an investment vehicle and a market for bank credit to extract rent instead of serving as a public need for living and shelter at minimum cost.
The rentier problem has become endemic.
Financializing U.S. education has created a student-debt treadmill to debt dependency even before one enters the labor force, effectively blocking the traditional way to achieve upward mobility through higher education. University degrees have become a financialized commodity, paid for by running up student debt instead of education being provided freely as a public right. Labor and its employers share the high cost of privatized health insurance, in contrast to “socialized medicine” abroad. A self-proclaimed meritocracy is emerging, based largely on the merit of inheriting wealth via trust funds, along with the associated oligarchic mutual-aid educational and employment networks.
Financialization of basic needs for housing, education and health care has raised the cost of living so high that even if all Americans were given their physical consumer goods for free — their food, clothing and so forth — they still could not compete with China or other countries that have minimized the rentier charges that burden finance capitalism.
How China has avoided the American financial disease
- Instead of privatizing natural monopolies and key infrastructure, China has kept its “commanding heights” in the public domain, headed by banking as the most important public utility. The central bank, the Peoples ’ Bank of China, provides credit for tangible investment in high-speed railroads, schools, transportation systems and research laboratories to keep down the cost of living and doing business.
- China has pursued an Economy of High Wages policy by providing high-quality education and health standards to make its labor more productive and thus able to undersell low-wage but less productive labor and that of high-overhead rentier economies.
- As a socialist economy, China has aimed to free itself from rent seeking and usurious banking by government regulation strong enough to prevent an independent financial oligarchy from emerging with its own self-seeking rentier agenda. Still to be achieved is a progressive tax policy falling mainly on rentier income, headed by land rent.
- To protect themselves from U.S. and other trade and financial sanctions and related attempts at disruption, China and Russia are creating an alternative international payments system to avoid using the U.S. dollar and the SWIFT bank-payments clearing system. The policy of de-dollarizing their monetary systems, foreign trade and investment includes securing their own self-sufficiency in food production, technology and other basic needs.
The major markets for U.S. high finance are lending against assets already in place (headed by real estate), corporate raiding, buying and selling companies, privatizing public asset selloffs, and stock market speculation. The banking sector’s major market consists of lending against rent-yielding assets pledged as collateral, to the point where rents have been almost fully pledged to pay interest. Any move to restore taxation or re-regulate rent-seeking threatens to reduce prices for these assets, most notably stocks, bonds and real estate. That would crash the debt superstructure that is supporting asset prices.
Yet their effort failed in the West. Democratic reforms proved unable to prevent rentiers from dominating electoral politics and political parties, having co-opted the liberal-leaning middle class, whose members hold rentier aspirations for themselves and shy from taxing away or limiting economic rent seeking. Proposals to gradually enact classical tax and regulatory reforms are unlikely to work, because banks and other rentiers would have time to wield the political power that they have built up during their counter-revolution against the classical economic reforms to limit rent-seeking.
Claiming to spread democracy, America’s foreign interventions have been to promote Chicago-style free-market fundamentalism, as in Pinochet’s military dictatorship in Chile, spreading its terror squads throughout Latin America. Foreign alternatives to rentier finance capitalism are to be deterred by sanctions and, where deemed necessary, by force to impose a neoliberal “free market” for finance capital and its rent-seeking clientele. Blaming China for the deteriorating U.S. economy, American diplomats have escalated military confrontation and sanctions against it and its Shanghai Cooperation Organization allies.
The New Cold War against countries resisting neoliberal takeover
To neoliberals a “free market” means letting the rentier class become the economy’s planning agency. Governments are accused of being “autocracies” if they resist this takeover. It is as if the label “democracy” cannot be applied to such a nation — as if letting the rentier One Percent monopolize economic gains is a natural and even efficient post-industrial stage of economic evolution. This is the ground on which neoliberalism presents itself as an evangelistic drive for global conquest against nations that resist its takeover.
But China’s industrial success shows that financialization, privatization and monopoly rent are not natural laws, and that debt deflation, privatization of basic needs and the associated polarization of wealth and income do not have to occur.
Perception that nations do not have to follow the rentier lead is what ultimately threatens the U.S.-based world order. Isolating strong governments opposing rentier control of their own natural-resource rents and monetary and credit systems is therefore the essence of today’s New Cold War trade and financial sanctions and related moves against China, Russia and other nations rejecting the U.S.-sponsored “rules-based order.”
Such nations are not only to be isolated by economic sanctions but destabilized by “color revolutions” in the hope that this will lead to dissident regime change, such as the destabilization attempts that the United States has sponsored along Russia’s southern and western flanks, and in China’s west and Hong Kong. To cap matters, U.S. officials have brought pressure on Europe to reverse the trade agreements negotiated with China at the end of 2020, hoping to lock Europe into economic and political dependency on the United States.
But the cost of this confrontation is so high that for many counties the dollar, sterling and euro are losing their status as acceptable international currencies because they are seen to be arms of U.S. Cold War diplomacy. A Russian commentator on the hostility of the EU Parliament in Brussels pointed out that as a result of its subordinate satellite position leading to threats to cut off Russia from the SWIFT bank-clearing system: “The EU is losing the opportunity to strengthen and promote the role of the euro as a more desirable instrument for international payments.” And as for sterling, Britain’s role as an international financial haven was shaken when the Bank of England seized Venezuela’s gold reserves and gave them to a U.S.-designated opposition nominee.
Sergey Lavrov: “We are pursuing our own foreign policy, which has taken shape over the past two decades. … Attempts to destroy external opportunities that can be used to promote Russia’s growth continue unabated, but, in any case, there’s more to the world than the West. In the 1990s, after the collapse of the Soviet Union, we wanted to become part of something, but we now realize that there isn’t much we can become part of. At least, the West is not building anything of its own. … If we take Western development models, we have no place to fit in. The coronavirus, as if everything else wasn’t enough, showed it very convincingly. We need to build something ourselves. This is a fairly ambitious and complex goal, but it calls for immediate action.”
The oligarchic fight to limit the power of democracies
Promoting a coercive prorentier “rules-based order” at gunpoint, U.S. diplomacy continues to back the world’s most oppressive governments and the most violent and intolerant jihadist movements, as it has done for many decades. It is a strange kind of democracy and human rights that euphemizes kleptocratic insider grabbing enforced by client oligarchies as a “free market.” Installing warlords and military dictatorships has led to waves of refugees pouring out of Honduras, Guatemala and Ecuador, and America’s alliance with Saudi Arabia has backed Salafi jihadist forces in Syria, Iraq and Afghanistan.
As Chris Hedges has summarized: There is not a single case since 1941 when the coups, political assassinations, election fraud, black propaganda, blackmail, kidnapping, brutal counter-insurgency campaigns, US sanctioned massacres, torture in global black sites, proxy wars, or military interventions carried out by the United States resulted in the establishment of a democratic government. …
The idea that America is a defender of democracy, liberty, and human rights would come as a huge surprise to those who saw their democratically elected governments subverted and overthrown by the United States in Panama (1941), Syria (1949), Iran (1953), Guatemala (1954), Congo (1960), Brazil (1964), Chile (1973), Honduras (2009) and Egypt (2013). And this list does not include a host of other governments that, however despotic, as was the case in South Vietnam, Indonesia, or Iraq, were viewed as inimical to American interests and destroyed, in each case making life for the inhabitants of these countries even more miserable.
Vir: Michael Hudson, The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism