Thanks to Saint Jimmy (Russian American) for recommending this essay...

Who’s Winning?

By FABIO VIGHI

‘The West has become a totalitarian space – the space of a self-defensive hegemony defending itself against its own weakness.’ (Jean Baudrillard)

One of the most frequently referenced scenes in Arthur Penn’s Night Moves (1973) features a despondent Gene Hackman slumped in front of a small black-and-white television, half-heartedly watching a game of American football. When his wife walks in and asks, “Who’s winning?”, he mutters: “Nobody. One side’s just losing slower than the other.” As consciously depressing Hollywood films like Night Moves foresaw, the crisis of the 1970s was already signalling the end of capitalist socialisation: a structural and soon-to-be global socioeconomic, cultural, and psychological debacle that is now entering its phase of rapid escalation (though Hollywood this time is in full denial).

As it’s becoming increasingly clear, the system today survives only through the successful marketing of emergencies: pandemics, military conflicts, trade wars, and other disasters waiting patiently in line. Chaos and destabilization are deliberately weaponised in order to trigger a series of Pavlovian chain reactions whose actual raison d’être is emphatically financial. In other words, predicaments “of global concern” are the only resource left to an imploding civilization whose populations increasingly resemble multitudes of zombies marching in lockstep towards their grim destiny – while Instagramming every second of it.

In purely systemic terms, the logic is simple: today’s free-market capitalism is addicted to an unbroken string of geopolitical shocks that work as alibis so that “funds” can be created out of economic nothingness and deftly “redirected” to the stock markets. Derivatives and missiles are two sides of the same capitalist coin, and those who exert control over derivatives normally decide who shoots first. Debt-driven speculations concerning an endlessly re-mortgaged aggregate of fictitious value that will remain unrealized is a simulation game that requires constant traumas. Capital is now violently cannibalising its own future in a desperate attempt to hide its insolvency – a ruse that works only insofar as the fiat money representing the IOUs is not claimed back as a store of value.

But it must be added that even this criminal Truman Show is now nearing the point where the sailing boat hits the fake cardboard skyline. The underlying problem should be obvious by now: the most powerful nation in the world – the masters of globalization – is drowning in debt and unproductive consumption (which is not without irony, for it means that the global reserve currency issuer is dying of the very disease it has for decades visited upon other countries in order to suck them dry). In other words, the US is engaged in a pointless and catastrophic struggle to stave off the collapse of its global hegemony by attempting to rollover a Sisyphean debt burden that has grown from Reagan’s $900 billion in 1981 to today’s $35+ trillion (while the debt to GDP ratio has risen from 30% to 122%).

If the debt issue, considered in the wider context of human existence, were not stupid enough per se, the most ludicrous part of the story is that the super-indebted and super-unproductive superpower now needs the aid of inflation to keep its dirty underbelly covered. In other words, the US requires negative real rates: inflation must be higher than the debt yield if the increasingly unloved treasury securities (especially T-notes and T-bills, i.e. short- and medium-term debt securities) are to be monetized and refinanced. However tedious the debt maths may seem to most of us, it alone confirms that today’s system is bankrupt – a predicament significantly exacerbated by the ubiquitous phenomenon of “collapse denialism”, which edges the system closer to the thermonuclear “solution”.

We must realise that the main purpose of globalised capitalism is no longer merely to gobble up profits at the expense of human and natural life; more perversely, to pursue that end it must first keep the escalating mass of IOUs from revealing their junk status. This is an existential struggle that requires increasingly manipulative, irrational, and destructive measures. And since much of the capitalist world is collateralised in US treasuries that can only survive by stretching into the future, it would seem legitimate to conclude that “the shit has hit the global fan”. Simultaneously, however, the decline of the West has now persuaded a number of geopolitical actors to pragmatically call themselves out of a chicken game dictated by an insolvent master. The ongoing process of de-dollarisation (heralding the end of dollar dominance) can only appear logical in capitalist terms, and yet it has already triggered internecine, intra-systemic conflicts (Ukraine, Middle East) which might easily expand into the annihilation of large portions of human life on Earth.

Economic denialism is expressed through various metrics that are completely misleading – such as GDP. Today a country’s GDP, in the few cases where it still supposedly registers some kind of “growth”, merely reflects the quantity of credit deployed in that economy. Engineering productivity growth from oceans of credit that are shamelessly magicked into existence by central banks is the puerile strategy that sums up the mentally regressive status of our civilization and its decrepit leaders. The only aim is to kick the debt can down the road, at the cost of more agony for us, and, especially, the cold-blooded extermination of thousands of expendable civilians. Whatever (insignificant) “growth” one is able to conjure on the back of escalating deficits, one can rest assured that it is fake growth, since it can only be achieved through artificial monetary expansion. The extension of already maxed out credit lines represents a course of action whose cumulative effect is, in economic terms, the gradual but unstoppable destruction of those units of debt also known as fiat currencies. The way countries like the UK or the US are selling the public the story that, despite their fiscal black holes, they are going to reignite real growth by way of “strategic investment”, is both desperate and absurd. It is equivalent to carrying out cosmetic surgery on a nonagenarian suffering from stage-4 cancer. It is therefore a lie, whose only aim is to support the artificially inflated stock markets.

The dollar-centric framework that is now breaking at the seams is the monetary system we have had since 1944 (Bretton Woods Agreement), where the US dollar acts as global reserve currency and the US treasuries as primary global debt securities. During the second half of the 20^th century, this monetary order has undergone some key adjustments which eventually have resulted in the establishment of what is commonly known as a “deficit cycle” between the US and East Asian countries like China and Japan. Since the 1970s, the US has 1) Drastically deindustrialised its economy; 2) Started running large trade deficits; and 3) Allowed its capitals to flow to newly industrialised countries with massive reservoirs of cheap labour, like China. Productivity has quietly moved from one place of the planet to another, following capital’s natural inclination to exploit the least regulated labour-power available.

In 1971, President Nixon unpegged the dollar from gold while also lifting the 21-year trade embargo against Communist China (a new bilateral Trade Agreement came into effect in 1980). While trade was slow during the 1970s – with China remaining a place to sell rather than make products – the reformist policies introduced by Chinese leader Deng Xiaoping in December 1978 (Mao Zedong had died in 1976) began to invert the direction of investment and trade. Deng, in other words, opened China’s door to US capitals, particularly by establishing Special Economic Zones (initially in Shenzhen, Zhuhai, Shantou, and Xiamen) where foreign investments were able to take advantage of a massive and largely deregulated labour force. Since then, US-headquartered multinational corporations (including Nike, Apple, and Walmart) began to outsource production to China, which became the new centre of transnational value creation. The result is well-known: China produces cheap goods that the US imports and consumes thanks to its dollar-based financial “industry”. The US was therefore able to expand its debt and run large trade deficits without defaulting thanks to a “crafty” trade-off: its manufacturing was relocated to China while Wall Street hoovered the world’s overproduction courtesy of the global dominance of the USD. Since all productive countries need dollars to be able to trade transnationally, they have no choice but sell their commodities on the US (and collective West) markets while also investing their surpluses in dollar-based stocks and dollar-based bonds (US treasuries).

In short, a substantial portion of the net surpluses earned by the trading partners of the US found its way back into US stock and debt markets. In the 1990s, such influx of foreign capital started feeding the deficit-based boom of the US military industry (which turned the US into the “global policeman”) while also inflating enormous financial and real estate bubbles, which in turn supported a gargantuan consumer boom (70% of US GDP is still based on consumer spending). Essentially, both government and private consumption in the US was largely based on borrowing from the same foreign suppliers to which the US had outsourced commodity production. Initially, this mechanism built on the suction power of the dollar established a relatively stable co-dependence between US unproductive consumption and Asian export-driven production – with the US military bolstering the dollar through murderous post-9/11 wars that resulted in the loss of millions of innocent lives. However, since the 2008 global meltdown this fragile and intrinsically murderous compromise has rapidly deteriorated into a global whirlwind of fictitious monetary expansion, which is now unmanageable through conventional economic policy alone.

The above observations alone should persuade us to abandon the misconception that national economies coordinate trades autonomously. Instead, it is the transnational and impersonal movement of capital that determines most choices made by individual countries, including those pertaining to war escalations. Only today does capital live up to its name: an anonymous, abstract, metaphysical, and tyrannical totality that oversees nearly anything that takes place on planet Earth. Seeing the “global capitalist” forest from the “national economy” trees is therefore essential if we are to unravel the ‘tangled web we weave when first we practice to deceive’ (as Sir Walter Scott put it in 1808). The credit and money crisis we are experiencing, which is turning into a geopolitical nightmare, is hardly ever considered as the necessary ruinous outcome of the internal erosion of real capitalist accumulation. What is painfully missing from most critiques – especially those on the left – is the substantial and thus fundamental part: the focus on the implosion of capitalist socialisation as such.

The US-China deficit cycle has been deteriorating for decades, primarily because the world’s reserve asset simultaneously represents a debt of such magnitude that it now calls into question the solvency of the dominant country – which, in turn, leads foreign investors in US treasuries to reconsider their investments. Furthermore, after the recent US confiscation of $300 billion in Russian assets in the West, everyone sees the extent to which the dollar can be weaponised, and therefore realises that it is high time to consider Plan B. Given its very shaky monetary supremacy, the United States has hitherto kept its debt credible (vis-à-vis potential default on its treasuries) mostly by sponsoring wars and other global emergencies, whose essential purpose is to justify printing more cash while also seeking negative real interest rates and nudging the world towards a new monetary infrastructure based on tokenised digital assets that eventually will be controlled centrally. Even in pragmatic capitalist terms, this is not a “sustainable” system. To start with, no sane investor is willing to lose out by holding bonds that are being inflated away by the government of a country that is more than $35 trillion in debt. Precisely by capitalist standards, this system is a dead man walking.

So, what is the outlook for the near future? Western and Japanese central banks are currently operating on autopilot to avoid a stock market crash. The Federal Reserve in particular is trying to keep a broken vase together, at least until November 5^th. Elsewhere, countries are loading up with hard assets, including gold, silver, oil, and rare earths. Should the equities bubble pop, China and other BRICS nations would at least have a partial backing. But since the ultimate cause of the crisis is that the total value produced (for which the competing participants fight) is shrinking, the “clever” individual or national capitals can only keep their heads above water for a short period of time, and no one can escape their socially interrelated destiny. Currency devaluation is now encompassing the entire reproduction of fully capitalized societies, taking place within the framework of a general expansion of credit (including in China). And because capitalism has already consumed its own future, nuclear nihilism is a strong candidate for the next “most realistic” option on the table. After all, war is intrinsically inflationary. The more destructive a war, the more it would provide the US and its subservient (masochistic) EU allies with justifications to implement regimes of capital control and goods or services rationing in a post-Covid environment where populations have already been successfully coached in civil compliance.

If, therefore, we have a single moral duty, it is to educate the new generations to think critically about the real causes behind the system’s violent implosion. Yet, capital seems to have long anticipated any such move by colonising all fields, including education. Grooming the new generations to a “culture” of narcissistic obtuseness and proud acquiescence is crucial for the establishment of a new totalitarian regime where poverty, violence, and manipulation become normalized. The social media conglomerates offer a perfect case in point. Addiction to the phone scroller, for example, is hypnotic per se, regardless of the content briefly appearing on the screen. Once the eyes are trapped in the diabolical contrivance, the mind is immediately desensitised to the need for serious critical thought. Thus, whilst we continue feeding our screen addictions, anything can happen “out there”, including the mashing of children’s bodies under democratic bombs produced by ethical arms manufacturers and authorised by liberal governments “in which we trust”. Since the great Covid experiment, the global village is increasingly populated by strange creatures programmed to debate pronouns rather than engage critically with the destructive processes of the killing machine called capital. More urgently than ever, people need to find ways of de-programming their minds and habits, or the risk is that not even the sound of a nuclear blast will shake them out of their trained acquiescence.

Source: The Philosophical Salon