Tuesday, September 27, 2011

Decline and Fall of Just About Everyone


In the criminal bankers' world these days, there is no black and white, only different shades of grey

Asia Times
By Pepe Escobar
09/27/2011

More than 10 years ago, before 9/11, Goldman Sachs was predicting that the BRIC countries (Brazil, Russia, India, China) would make the world economy's top 10 - but not until 2040. Skip a decade and the Chinese economy already has the number two spot all to itself, Brazil is number seven, India 10, and even Russia is creeping closer. In purchasing power parity, or PPP, things look even better. There, China is in second place, India is now fourth, Russia sixth, and Brazil seventh.

     No wonder Jim O'Neill, who coined the neologism BRIC and is now chairman of Goldman Sachs Asset Management, has been stressing that "the world is no longer dependent on the leadership of the US and Europe". After all, since 2007, China's economy has grown by 45%, the American economy by less than 1% - figures startling enough to make anyone take back their predictions.

   American anxiety and puzzlement reached new heights when the latest International Monetary Fund (IMF) projections indicated that, at least by certain measurements, the Chinese economy would overtake the US by 2016. (Until recently, Goldman Sachs was pointing towards 2050 for that first-place exchange.) 

Within the next 30 years, the top five will, according to Goldman Sachs, likely be China, the US, India, Brazil and Mexico. Western Europe? Bye-bye!

A system stripped to its essence
    Increasing numbers of experts agree that Asia is now leading the way for the world, even as it lays bare glaring gaps in the West's narrative of civilization. Yet to talk about "the decline of the West" is a dangerous proposition. A key historical reference is Oswald Spengler's 1918 essay with that title. Spengler, a man of his times, thought that humanity functioned through unique cultural systems, and that Western ideas would not be pertinent for, or transferable to, other regions of the planet. (Tell that howler to the young Egyptians in Tahrir Square.)

     Spengler captured the Western-dominated zeitgeist of another century. He saw cultures as living and dying organisms, each with a unique soul. The East or Orient was "magical", while the West was "Faustian". A reactionary misanthrope, he was convinced that the West had already reached the supreme status available to a democratic civilization - and so was destined to experience the "decline" of his title.
     If you're thinking that this sounds like an avant-la-lettre Huntingtonesque "clash of civilizations", you can be excused, because that's exactly what it was.

    Speaking of civilizational clashes, did anyone notice that "maybe" in a recent Time cover story picking up on Spenglerian themes and headlined "The Decline and Fall of Europe (and Maybe the West)"? In our post-Spenglerian moment, the "West" is surely the United States, and how could that magazine get it so wrong? Maybe?
    After all, a Europe now in deep financial crisis will be "in decline" as long as it remains inextricably intertwined with and continues to defer to "the West" - that is, Washington - even as it witnesses the simultaneous economic ascent of what's sometimes derisively referred to as "the South."

    Think of the present global capitalist moment not as a "clash", but a "cash of civilizations".

     If Washington is now stunned and operating on autopilot, that's in part because, historically speaking, its moment as the globe's "sole superpower" or even "hyperpower" barely outlasted Andy Warhol's notorious 15 minutes of fame - from the fall of the Berlin Wall and collapse of the Soviet Union to 9/11 and George W Bush's doctrine. The new American century was swiftly throttled in three hubris-filled stages: 9/11 (blowback); the invasion of Iraq (preemptive war); and the 2008 Wall Street meltdown (casino capitalism).

     Meanwhile, one may argue that Europe still has its non-Western opportunities, that, in fact, the periphery increasingly dreams with European - not American - subtitles. The Arab Spring, for instance, was focused on European-style parliamentary democracies, not an American presidential system. In addition, however financially anxious it may be, Europe remains the world's largest market. In an array of technological fields, it now rivals or outpaces the US, while regressive Persian Gulf monarchies splurge on euros (and prime real estate in Paris and London) to diversify their portfolios.

     Yet, with "leaders" like the neo-Napoleonic President Nicolas Sarkozy, Prime Minister David (of Arabia) Cameron, Premier Silvio ("bunga bunga") Berlusconi, and Chancellor Angela ("Dear Prudence") Merkel largely lacking imagination or striking competence, Europe certainly doesn't need enemies.

     Decline or not, it might find a whole new lease on life by sidelining its Atlanticism and boldly betting on its Euro-Asian destiny. It could open up its societies, economies, and cultures to China, India, and Russia, while pushing southern Europe to connect far more deeply with a rising Turkey, the rest of the Middle East, Latin America, and Africa (and not via further North Atlantic Treaty Organization (NATO) "humanitarian" bombings either).

     Otherwise, the facts on the ground spell out something that goes well beyond the decline of the West: it's the decline of a system in the West that, in these last years, is being stripped to its grim essence. Historian Eric Hobsbawm caught the mood of the moment when he wrote in his book How to Change the World that "the world transformed by capitalism", which Karl Marx described in 1848 "in passages of dark, laconic eloquence is recognizably the world of the early twenty-first century."

In a landscape in which politics is being reduced to a (broken) mirror reflecting finance, and in which producing and saving have been superseded by consuming, something systemic comes into view. As in the famous line of poet William Butler Yeats, "the centre cannot hold" - and it won't either.

     If the West ceases to be the center, what exactly went wrong?

Are you with me or against me?
    It's worth remembering that capitalism was "civilized" thanks to the unrelenting pressure of gritty working-class movements and the ever-present threat of strikes and even revolutions. The existence of the Soviet bloc, an alternate model of economic development (however warped), also helped.

     To counteract the USSR, Washington's and Europe's ruling groups had to buy the support of their masses in defending what no one blushed about calling "the Western way of life". A complex social contract was forged, and it involved capital making concessions.

     No more. Not in Washington, that's obvious. And increasingly, not in Europe either. That system started breaking down as soon as - talk about total ideological triumph! - neo-liberalism became the only show in town. There was a single superhighway from there and it swept the most fragile strands of the middle class directly into a new post-industrial proletariat, or simply into unemployable status.

   If neo-liberalism is the victor for now, it's because no realist, alternative developmental model exists, and yet what it has won is ever more in question. Meanwhile, except in the Middle East, progressives the world over are paralyzed, as if expecting the old order to dissolve by itself. Unfortunately, history teaches us that, at similar crossroads in the past, you are as likely to find the grapes of wrath, right-wing populist-style, as anything else - or worse yet, outright fascism.

     "The West against the rest" is a simplistic formula that doesn't begin to describe such a world. Imagine instead, a planet in which "the rest" are trying to step beyond the West in a variety of ways, but also have absorbed that West in ways too deep to describe. Here's the irony, then: yes, the West will "decline", Washington included, and still it will leave itself behind everywhere.

Sorry, your model sucks
   Suppose you're a developing country, shopping in the developmental supermarket. You look at China and think you see something new - a consensus model that's turning on the lights everywhere - or do you? After all, the Chinese version of an economic boom with no political freedom may not turn out to be much of a model for other countries to follow.

     In many ways, it may be more like an inapplicable lethal artifact, a cluster bomb made up of shards of the Western concept of modernity married to a Leninist-based formula where a single party controls personnel, propaganda, and - crucially - the People's Liberation Army. 

Financial crises' are old as the hills
For its part, Europe is hawking a model of supra-national integration as a means of solving problems and conflicts from the Middle East to Africa. But any shopper can now see evidence of a European Union on the verge of cracking amid non-stop inter-European bickering that includes national revolts against the euro, discontent over NATO's role as a global Robocop, and a style of ongoing European cultural arrogance that makes it incapable of recognizing, to take one example, why the Chinese model is so successful in Africa.

     Or let's say our shopper looks to the United States, that country still being, after all, the world's number one economy, its dollar still the world's reserve currency, and its military still number one in destructive power and still garrisoning much of the globe.

     That would indeed seem impressive, if it weren't for the fact that Washington is visibly on the decline, oscillating wildly between a lame populism and a stale orthodoxy, and shilling for casino capitalism on a side street in its spare time. It's a giant power enveloped in political and economic paralysis for all the world to see, and no less visibly incapable of coming up with an exit strategy.

     Really, would you buy a model from any of them? In fact, where in a world in escalating disarray is anyone supposed to look these days when it comes to models? 

    One of the key reasons for the Arab Spring was out-of-control food prices, driven significantly by speculation. Protests and riots in Greece, Italy, Spain, France, Germany, Austria and Turkey were direct consequences of the global recession. In Spain, nearly half of 16- to 29-year-olds - an overeducated "lost generation" - are now out of jobs, a European record.

     That may be the worst in Europe, but in Britain, 20% of 16- to 24-year-olds are unemployed, about average for the rest of the European Union. In London, almost 25% of working-age people are unemployed. In France, 13.5% of the population is now officially poor - that is, living on less than $1,300 a month.

     One of the key reasons for the Arab Spring was out-of-control food prices, driven significantly by speculation. Protests and riots in Greece, Italy, Spain, France, Germany, Austria and Turkey were direct consequences of the global recession. In Spain, nearly half of 16- to 29-year-olds - an overeducated "lost generation" - are now out of jobs, a European record.

     That may be the worst in Europe, but in Britain, 20% of 16- to 24-year-olds are unemployed, about average for the rest of the European Union. In London, almost 25% of working-age people are unemployed. In France, 13.5% of the population is now officially poor - that is, living on less than $1,300 a month.

As many across Western Europe see it, the state has already breached the social contract. The indignados of Madrid have caught the spirit of the moment perfectly: "We're not against the system, it's the system that is against us."

     This spells out the essence of the abject failure of neo-liberal capitalism, as David Harvey explained in his latest book, The Enigma of Capital. He makes clear how a political economy "of mass dispossession, of predatory practices to the point of daylight robbery, particularly of the poor and the vulnerable, the unsophisticated and the legally unprotected, has become the order of the day".

Will Asia save global capitalism?
    Meanwhile, Beijing is too busy remixing its destiny as the global Middle Kingdom - deploying engineers, architects, and infrastructure workers of the non-bombing variety from Canada to Brazil, Cuba to Angola - to be much distracted by the Atlanticist travails in MENA (aka the region that includes the Middle East and Northern Africa).

     If the West is in trouble, global capitalism is being given a reprieve - how brief we don't know - by the emergence of an Asian middle class, not only in China and India, but also in Indonesia (240 million people in boom mode) and Vietnam (85 million). I never cease to marvel when I compare the instant wonders and real-estate bubble of the present moment in Asia to my first experiences living there in 1994, when such countries were still in the "Asian Tiger", pre-1997-financial-crisis years.

     In China alone, 300 million people - "only" 23% of the total population - now live in medium-sized to major urban areas and enjoy what's always called "disposable incomes". They, in fact, constitute something like a nation unto themselves, an economy already two-thirds that of Germany's. 

Great Leap Backwards:  China holds too much toxic U.S. debt
The McKinsey Global Institute notes that the Chinese middle class now comprises 29% of the Middle Kingdom's 190 million households, and will reach a staggering 75% of 372 million households by 2025 (if, of course, China's capitalist experiment hasn't gone off some cliff by then and its potential real-estate/finance bubble hasn't popped and drowned the society).

     In India, with its population of 1.2 billion, there are already, according to McKinsey, 15 million households with an annual income of up to $10,000; in five years, a projected 40 million households, or 200 million people, will be in that income range. And in India in 2011, as in China in 2001, the only way is up (again as long as that reprieve lasts).

     Americans may find it surreal (or start packing their expat bags), but an annual income of less than $10,000 means a comfortable life in China or Indonesia, while in the United States, with a median household income of roughly $50,000, one is practically poor.

     Nomura Securities predicts that in a mere three years, retail sales in China will overtake the US and that, in this way, the Asian middle class may indeed "save" global capitalism for a time - but at a price so steep that Mother Nature is plotting some seriously catastrophic revenge in the form of what used to be called climate change and is now more vividly known simply as "weird weather".

Back in the USA
    Meanwhile, in the United States, Nobel Peace Prize laureate President Barack Obama continues to insist that we all live on an American planet, exceptionally so. If that line still resonates at home, though, it's an ever harder sell in a world in which the first Chinese stealth fighter jet goes for a test spin while the American Secretary of Defense is visiting China.

     Or when the news agency Xinhua, echoing its master Beijing, fumes against the "irresponsible" Washington politicians who starred in the recent debt-ceiling circus, and points to the fragility of a system "saved " from free fall by the Fed's promise to shower free money on banks for at least two years. 

Hilarious:  Pelosi made sure she had hers before global meltdown
Nor is Washington being exactly clever in confronting the leadership of its largest creditor, which holds $3.2 trillion in US currency reserves, 40% of the global total, and is always puzzled by the continued lethal export of "democracy for dummies" from American shores to the Af-Pak war zones, Iraq, Libya and other hot spots in the Greater Middle East. Beijing knows well that any further US-generated turbulence in global capitalism could slash its exports, collapse its property bubble, and throw the Chinese working classes into a pretty hardcore revolutionary mode.

     This means - despite rising voices of the Rick Perry/Michele Bachmann variety in the US - that there's no "evil" Chinese conspiracy against Washington or the West. In fact, behind China's leap beyond Germany as the world's top exporter and its designation as the factory of the world lies a significant amount of production that's actually controlled by American, European, and Japanese companies.

     Again, the decline of the West, yes - but the West is already so deep in China that it's not going away any time soon. Whoever rises or falls, there remains, as of this moment, only a one-stop-shopping developmental system in the world, fraying in the Atlantic, booming in the Pacific.

    If any Washington hopes about "changing" China are a mirage, when it comes to capitalism's global monopoly, who knows what reality may turn out to be?

Wasteland redux

    The proverbial bogeymen of our world - Osama bin Laden, Saddam Hussein, Muammar Gaddafi, Mahmud Ahmadinejad (how curious, all Muslims!) - are clearly meant to act like so many mini-black holes absorbing all our fears. But they won't save the West from its decline, or the former sole superpower from its comeuppance.

     Yale's Paul Kennedy, that historian of decline, would undoubtedly remind us that history will sweep away American hegemony as surely as autumn replaces summer (as surely as European colonialism was swept away, NATO's "humanitarian" wars notwithstanding).

     Already in 2002, in the run-up to the invasion of Iraq, world-system expert Immanuel Wallerstein was framing the debate this way in his book The Decline of American Power: the question wasn't whether the United States was in decline, but if it could find a way to fall gracefully, without too much damage to itself or the world. The answer in the years since has been clear enough: no. 

Sign of the times:  World needs to foreclose on United States
Who can doubt that, 10 years after the 9/11 attacks, the great global story of 2011 has been the Arab Spring, itself certainly a subplot in the decline of the West? As the West wallowed in a mire of fear, Islamophobia, financial and economic crisis, and even, in Britain, riots and looting, from Northern Africa to the Middle East, people risked their lives to have a crack at Western democracy.
     
     That dream has been at least partially derailed, thanks to the medieval House of Saud and its Persian Gulf minions barging in with a ruthless strategy of counter-revolution, while NATO lent a helping hand by changing the narrative to a "humanitarian" bombing campaign meant to reassert Western greatness.

     As NATO's secretary general Anders Fogh Rasmussen put the matter bluntly, "If you're not able to deploy troops beyond your borders, then you can't exert influence internationally, and then that gap will be filled by emerging powers that don't necessarily share your values and thinking."

    So let's break the situation down as 2011 heads for winter. As far as MENA is concerned, NATO's business is to keep the US and Europe in the game, the BRICS members out of it, and the "natives" in their places. Meanwhile, in the Atlantic world, the middle classes barely hang on in quiet desperation, even as, in the Pacific, China booms, and globally the whole world holds its breath for the next economic shoe to drop in the West (and then the one after that).
    Pity there's no neo-TS Eliot to chronicle this shabby, neo-Medievalist wasteland taking over the Atlanticist axis. When capitalism hits the intensive care unit, the ones who pay the hospital bill are always the most vulnerable - and the bill is invariably paid in blood.

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007) and Red Zone Blues: a snapshot of Baghdad during the surge. His new book, just out, is Obama does Globalistan (Nimble Books, 2009).

He may be reached at pepeasia@yahoo.com.


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