2013: Turning Point inthe Long Western Decadence

The “global crisis” — as it is still called — continues its course, becoming ever deeper over the years, wearing away at the institutions of the central powers, breaking the economic and cultural connections that have united these societies, plainly visible as decadence, like a process of general irreversible deterioration. It is also reaching the so-called “emerging countries,” shattering the myth of capitalist rejuvenation from the outside, of the bourgeois improvement of Western neoliberalism, thanks to intervention by the state.

The years 2008 and 2013 constitute periods where the decline of capitalism sped up; in both cases, the origin of the disaster was the imperial center, which later spread to the network of the global system. We could establish an even more precise period and set the months — September 2008 and September to October 2013 — as the “moments” when universal history sharply accelerated, when the accumulation of deterioration produced a large jump of quantity into quality. From the point of view of the system’s masters, it is possible to speak of “annus horribilis,” namely, years of great disgraces, although from the side of the victims, the thousands of millions of human beings who go unnoticed on the bourgeois planet, we can speak of “annus mirabilis,” periods where the system advances clearly toward its ruin, that is to say, with “wonderful” events that encourage hope in the possibility of achieving a better world.

On Sept. 15, 2008, in the United States, the financial giant Lehman Brothers declared bankruptcy, and the American International Group, considered the world leader of insurance and financial services, needed to be rescued by the Federal Reserve. The crisis caused by the collapse of the U.S. real estate bubble spread rapidly, bursting other real estate and stock exchange bubbles in Europe and Asia, and the governments of the large powers poured in several trillion dollars in the following years to stop the world economy’s international financial system’s foundation from flooding. They were unable to understand its prior dynamics, much less the productive structures, but they were able to avoid the danger through postponement.

And so it has been from 2008 onward: The global financial mass, which was expanding at an exponential rate, stopped growing, and, in fact, experienced a gentle decrease. It is what we confirm when we compare the speculation of “financial derivatives” — the heart of global financial parasitism — with the gross world product. In mid-1998, these businesses amounted to around 2.4 times the global face value, coming to around 4.3 times toward the end of 2002, 8.5 times at the end of 2006 and 11.7 times by the middle of 2008, in complete speculative delusion, slowly dropping from then: to 10.5 at the end of 2009, 10.6 by mid-2011, falling to 8.9 at the end of 2012 and 8.6 by mid-2013.

The stagnation of the financial mass and, worse yet, its collapse, marks the end of the long, high growth of global capitalism during neoliberal financialization. The financial restructuring of capitalism has gone on since the 1970s, permitting the enlarged playback of the system’s imperial area: The central states were getting into debt and subsidizing industry — military expenses, fiscal reductions of all kinds — and stemmed the deceleration of consumption — subsidies to the unemployed. Businesses were going into debt to continue investing, and consumers were going into debt, supporting these large markets; on the other hand, the baseline drops in the productive earning rate of large economic groups were more than compensated by the expansion of financial businesses.

However, the bubble finally burst in 2008; from then on, a “controlled” financial-productive decline took place: The public and private debts of the traditional central powers continued growing, the European Union held back to finally go into recession, Japan took an even more dramatic path — Fukushima intervening — and the United States had an anemic growth, which threatened to become stagnation or go right into recession from 2012 to 2013. The system had entered a new phase.

War and Petrodollars

The crisis of 2008 did not end with America’s militaristic wave. On the contrary, it fueled it: Long before this crisis, facing its financial and productive weakness, the imperial elite was convinced that just by using its military superiority, it could turn its economic setbacks around or at least stop their development. The Western victory in the Cold War seemed to confirm this hypothesis. The militaristic avalanche of the Reagan era during the 1980s, continued by George Bush’s presidency, gave the final blow to the Soviet Union, obliging it to compete in an arms race that overwhelmed its economic capacity and bureaucratic deterioration. With the USSR finished off, the United States emerged as the only military superpower, with the planet at its disposal.

Now, for a bit over a decade, we have been seeing kind of a mega-Vietnam spread to several geographical regions with different levels of intensity and patterns. The empire’s view of the rest of the world is mainly militaristic; those on the sidelines appear like a vast battlefield to the eyes of the ruling elite.

The coups in Honduras (2009) and Paraguay (2012), the emphasis on interventions regarding Colombia and Venezuela, and destabilizing activities in other Latin American countries show that the Empire has launched a wide-ranging offensive on the region. To this, we have to add the development of a second war front in Africa — whose most dramatic moment has been the destruction of Libya — but simultaneously, it aims toward the Arab world. Both offensives converge on the continuation of the long war in the Middle East and Central Asia, the third front, and the deployment of a fourth front of military forces, more and more extended and intense, targeting China in the Asia-Pacific region.

Toward the beginning of the current decade, the United States was engaging four simultaneous mega-fronts. Everyone off to the side not controlled by the West found themselves attacked or threatened. In this way, the aggressiveness of the hawks in the Bush era — when Secretary of Defense Ronald Rumsfeld confirmed that the United States could successfully develop two wars at the same time — was later increased in the Obama era.

The double face of the empire — economic and social decadence on one side, and militarism on the other — raises the question: Is the military wave sustainable in the medium to long term? In reality, it is not certain that it can be backed up, even in the short term, seeing that the real military expenses of the U.S. amount to approximately $1.3 trillion dollars. And if we add to that the costs of the Department of Defense for military functions in other areas of public administration — Department of State, Department of Energy, NASA — and those interests paid for through necessary debt to make them a reality, in the 2013 budget, this figure equals almost all of the foreseeable increases in direct personal taxes or 140 percent of the projected fiscal deficit.

So, if militarization is not economically sustainable, we have to ask ourselves if there is any logic, some superior rationality, which explains this phenomenon.

Wallerstein firmly responded to the question some years back: The United States would find itself facing the alternative of accepting an honorable decline — the “rational” option — or go overboard. To sum up, following the second path, the imperial elites would be showing that they had gone “crazy,” that decadence had destroyed their sense of reason. The explanation is simple, direct, but ultimately superficial, mainly ignoring the necessary connection between rationality and reality, between the theoretically viable and the practical feasibility of the theory that conditions rationality, keeping it down-to-earth. We find ourselves facing the concrete historical dynamic of instrumental rationality — bourgeois rationality — such as the start of the 21st century presents, while expressing the evolution, contradictions, drama, needs, possibilities of the ruling imperialist forces that develop it — in this case, the Western elites. It is a rationality interested only in the efficiency of the mechanisms for preserving and expanding power, increasingly bogged down in the short term, absolutely disinterested with the consequences in the long term. In this sense the chain of “rational solutions” to concrete problems can become a guaranteed path to disaster, toward a system crash, the rational — and amoral — effort of recomposition, of preserving decadent capitalism, becoming self-destructive.

The West finds itself engaged in a global war, one of whose objectives is looting the natural resources of others: firstly, energy. The success of the business would allow it to realize drastic containment of productive costs, ensuring acceptable levels of the earning rates of large industrial groups and, consequentially, extensive benefits and expanses of business or financial networks — and of the consumerist parasitism of the middle and upper classes in America and Europe.

The “oil war” is associated with another war: the financial one, focused on the dollar’s worn-down hegemony, which spins around a decisive factor, petrodollars.

In 2012, the global export of oil reached approximately $2 trillion. Then, this “physical” trade generated speculative businesses in the markets of financial derivatives in the order of $30 trillion, equivalent to around 42 percent of this year’s gross world product, or even two times the gross national product of the United States, or around 13 times the value of its imports. Since the end of World War II, the oil businesses — both commercial and financial — were made a reality in dollars and, since the start of the 1970s, in “petrodollars,” without gold backing, but the fall of the American currency and the superpower’s relative economic weight caused the gradual reduction of the hegemony of the dollar. It is not just America’s displacement in the global oil market, but also the set of first world countries whose relative oil consumption is declining. Controlling the main production areas and commercialization networks for the United States and its European counterparts, plus Japan, is not only an aggravated “energy” priority through the stagnation era of global oil extraction, but also an extremely serious financial topic. If the demand for dollars begins to decline decisively and, consequentially, their relative price as related to other important international currencies — especially the emerging ones, like the Yuan or ruble — as well as to gold, then it could topple the whole parasitic American structure, dragging down the whole first world, with the U.S. unable to support neither its civilian consumption nor its military costs, fed with paper (dollars and titles from the Treasury) by trade and fiscal deficit.

In 1970, the first world consumed 70 percent of the global oil production. When the first Gulf War broke out in 1991, this figure had descended to 54 percent. In 2005, it fell to 49.6 percent, and in 2012, to 41.2 percent. The “war of Eurasia,” begun in 1991 and accelerated a decade after, sought Western control over a region that, including the Caspian Sea and Persian Gulf basins, contains around two-thirds of the world’s oil reserves. The military victory would have cornered Russia — the second largest producer of oil in 2012 — causing it to become a subject of the West.

However, the United States was unable to win that war, and when it tried to sanction Iran, letting it buy its oil and forcing the EU to do the same, the Iranians were able to sell their product to China, replacing the dollar with the Yuan, or to India, in exchange for gold. The first world is no longer the major market for oil, nor does it manage its production. As a result, its financial dominance is rapidly declining.

The Rupture of 2013

The year 2013 saw three decisive facts:

First, the U.S. global military offensive started at the beginning of the 1990s (post-Cold War) finally encountered a barrier it could not overcome: The intervention in Syria did not work — as was the case in Libya, or before, in Yugoslavia, Iraq or Afghanistan — in the direct action phase: massive bombing strikes on the country in this case. Its confrontation with Russia caused the operation in September 2013 to fail. There was no lack of Western newscasters to describe it as the beginning of a new cold war. In reality, it was the end of the post-Cold War era and the ushering in of a new era marked by the strategic military weakness of the United States. Only traditional vassals in the Middle East and Central Asia, such as Saudi Arabia, Israel or Turkey, remain in a difficult position, and Russia’s influence increases. For example, in November, it signed an agreement of military integration with Armenia, Belarus and Kazakhstan, and this is projected to quickly expand to Tajikistan, at the same time strengthening Russian-Egyptian military relations.

It is not simply a matter of a shift in influence in these regions, but also a hard blow to the image of omnipotence of the United States’ military machinery, as with the economic and political interests directly linked to it. And what is much more serious is that this has brought about a brutal loss of efficiency of the principle tool of global deterrence used by the United States. This does not mean the end of its aggressions, but causes a notable strategic discord that is aggravating the crisis of perception at its highest circle of power.

A second significant event was the feint that the U.S. might stop payments in October 2013. For the second time in this decade, the United States was on the edge of default, with a federal public debt that, at the time, was reaching $16.7 trillion, equal to 105 percent of its 2012 gross domestic product — surpassing $17.2 trillion toward the end of November 2013. Added together, all the public and private debts amount to something around 360 percent of the GDP. There was no default, but evidence of serious, political-institutional deterioration. For days, the political elites played with defaulting, exchanging tricks and low blows, until arriving to the Oct. 17 deadline, trying to outdo one another with a financial bombshell which, had it exploded, would have created an unprecedented global financial catastrophe and certainly wounded the American economy in the hyper-recession. Now, everyone is waiting for the next game of default, without knowing how it could end up.

The background is the financial deterioration of an economy quashed by debt, whose increasingly loud groans shed light on a political class that plays with stopping payments and the explosion of global capitalism, as if it were disputing the outcome of a baseball game or some local election. The tragedy is assumed with absolute frivolity; the decadence numbs the ruling elites.

These two facts — the political-military failure in Syria, plus the political-institutional scandal concerning the default and the economic mess that supports it — foster a third destructive phenomenon, the exhaustion of the imperial unipolarity, the rapid loss of relative U.S. world power. This compels the advance of regional powers and gives at least two aspiring ones a prominent global role: Russia and China. However, those movements do not impose the construction of a multipolar world, meaning the complete redistribution of the planet among a group reduced from the empires. What is now being produced — and is now speeding up — is a process of depolarization, and not of multipolarization, where neither one, nor three, superpowers can control the global system. It is the imperial hierarchy of capitalism, as manipulated by one master or several, that goes throughout the system’s entire history, which finds itself in decadence. In the first place, it will involve the old poles, such as the United States, the great Western European powers — Germany, England, France — and Japan, but also new or renewed powers: The Chinese economy is deflating, following the route that its industrial export system grades for its great declining clients: the United States, Japan and EU. The Russian economy is stagnating in 2013, and the predictions for 2014 are worse; the recession in Europe affects its energy exports. India and Brazil are in no better a situation: In both cases, the economy is stagnant and threatens to go into recession. All of the great economies are finding themselves trapped by the crisis — the traditional ones, as well as the emerging ones, those who take refuge in neoliberalism, and those who practice state capitalism. The motor of decadence is the G-7, while the BRICS are gradually — for now — entering into the common procedures.

The global depolarization seems to be a complex phenomenon, with contradictory images, where some powers fall back and others advance, where some only seem to recover to later fall back into decline. Others seem to be free of the depressive wave, only to suffer the impacts of the global entropic forces later down the road. It is necessary to understand the details, the specifics, but without losing sight of the bigger picture: the global systematic decadence.

The depolarization does not establish a sort of global, democratized capitalism, with less imperialism, with more articulated national or regional autonomy expanding its productive strengths. The illusion of progressive depolarization is no less unreal than that of orderly multipolarity. Reality shows the system headed toward larger and larger convulsions, toward the generalization of disorder, environmental self-destruction, enlarged playback of the economy tending toward zero and announcing becoming negative. It is capitalism being exhausted, which, in being depolarized, disarticulates itself, presenting future brutality, but also of insurgent messengers of liberating utopias.