Global Capitalism: January 2023

[January 2023] New

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The Second War in Ukraine

with Richard D. Wolff  

Co-sponsored by Democracy at Work & Left Forum

In this lecture, Prof. Wolff discusses the historical aspects of the ongoing war in Ukraine, and how it reveals how far along we are into a second, economic war between the U.S. and China. Wolff explains what he sees are the impacts of this second war on the US, Europe, and China.

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Transcript has been edited for clarity.

Welcome friends, and thank you for joining me this evening for another global capitalism presentation. We do these presentations every other month throughout the year as a public service by our organization, Democracy at Work. It is a non-profit small media organization currently celebrating its 10th year of producing economic and social analysis and advocating for a more equitable and democratic world. Be sure to check all of our events, live events, and other kinds of events coming up. And you can do that best by going to our website www.democracyatwork.info

This evening I'll be talking about the Ukraine war, the economics of that war and how they impact us. And I've organized it to talk first about how and why I think this is a historic war. All wars are but this one [is] in a particular way. And I'm going to then go on to talk about its impact on the United States to begin with, on Europe, Western Europe in particular, and then on the rest of the world that we used to call the “third world,” but that is no longer an appropriate name, if it ever was. Okay, let's jump right in.

Why do I think that the war in Ukraine is historic? Well it's less because of the war itself than because of what that war is revealing about the world we live in, about the new organization of the world that is coming into being. It was already coming into being before the war and it will continue after the war. But the war has accelerated the process and the war has made it evident to millions and millions of people who didn't see quite the historic process that this war now puts forward in very bold outlines. That I want to work through with you this evening.

Let me begin by saying I am no military expert. I am not going to be talking much about the military conflict between Russia and the Ukraine. I will note that it's hard even for people who know about these things to learn much news of any reliable sort is scarce to come by. Mr Zielinski and the Ukraine side are constantly hyping what they want to be the reality. My assumption is Mr Putin on the other side with the Russians is doing comparably the reverse. And in the fog of propaganda, and pretense, and hype, and hope it's very hard to know what's going on.

But in any case as a war, as a military conflict, we are not talking about what's historic. The only historic quality of that war is the horror of the destruction of human beings, of people's bodies and health, of the infrastructure and life of the society we call Ukraine. That is a horror of war that everybody is repulsed by, and upset by and for good reason.

But there is a second war going on and most of what I have to say is about the second war, which is very different from the first one. The second war [is] often called “war in Ukraine” as if the military and what I'm about to discuss with you were identical, or interwoven in such a dense way that it makes no sense to separate them. I disagree. I think it makes eminent sense to separate them because they're different.

What's the second war? It's the war of economic sanctions. It's an economic war, not a military war. And in the sanction war, not only are the weapons different (economic not military) not only are the goals different (in the Ukraine war it has to do with territory that was in the Ukraine may stay there may become Russian etc) it isn't territory that the second war is about. And finally not only are the weapons different and the conditions different the goals are different. What's going on in the second war is the attempt of one side (the United States and some of its allies particularly in Europe and perhaps including also Japan) and the side I'm going to call Russia and China, but as you'll see as we go on it's bigger than that. But Russia and China is enough to start the conversation.

This war is a war that's economic. It is an attempt by the United States to destroy the Russian economy in large parts and by doing so to “weaken” (that's the word of the U.S Secretary of Defense), to weaken Russia as an ally of China. As I'll try to show you as we go along the sanction war is more a war of the United States against China neither of whom are combatants in the military war than it is anything else. Ukraine is simply a country in the wrong place at the wrong time and even Russia falls close to that in terms of its position between the United States and China.

And to make all of this crystal clear I'm going to do what we economists sometimes do and use a statistic to drive home a point. And the statistic I'm going to use is the GDP: the gross domestic product. It is a crude and rough statistic maintained by many many international organizations, economists, and others as a rough way to measure the size, if you like, the global footprint of an economy. GDP literally measures the output of goods and services in each country per year, so usually it has a date attached to it. The GDP of the United States in 2020 tells you roughly the total value of output of goods and services achieved in the United States during the year 2020. And I want to use GDP for China, U.S., Russia, and the Ukraine to give you an idea of who are the major players and who are the minor players in this two war scenario of Ukraine, and why even the name Ukraine war is a bit of a misnomer.

Let's start with Ukraine. Ukraine has a tiny GDP. It's literally to be counted in a few billions of dollars. Much larger than Ukraine is Russia. Its recent GDP was in the neighborhood of one and a half trillion dollars. So there you have a large economy, society, economic unit, Russia, fighting a war with a much smaller economic unit [Ukraine]. But now let's turn to the United States.

The GDP last year in the United States was in the order of 21 or so trillion dollars. Vastly larger than the Ukraine or Russia, vastly larger than the Ukraine and Russia put together. And if you added the GDPs of the major allies of the United States in fighting the sanctions war against Russia (countries like Germany, France, Britain, and so on) then the combined GDP of all of them is above 30 trillion dollars, versus Russia with one and a half trillion dollars. That’s as lopsided a conflict as Russia versus Ukraine.

And where does China fit in all of that? China's recent GDP was around 17 trillion dollars. Notice China is catching up to the United States and fast. China is in the same league. Poorer than the United States still by a significant amount, but catching up. And when you remember that for the last 30 years every single year the Chinese economy grows much faster than the United States, catching up is now an established historical fact.

China is the big issue for the United States, not Russia. Russia is an ally of China and vice versa and therefore a target. But keep in mind the relative size and you will avoid making grotesque misjudgments about what is going on in the world provoked and exposed by the war in Ukraine.

I'm going to begin by talking about some just some of the major impacts of the war. And again, I mean mostly the sanctions war between the United States and its allies on the one hand, and Russia and some of its allies on the other. If I had more time I would go through the specifics of that sanction war but let me simply summarize so we can get on to the impacts.

Very shortly after hostilities began the United States seized seized hundreds of billions of dollars of the reserves held by Russia to support and back up its currency. This is an extraordinary act. It violates all manner of global understandings, agreements, contracts, you name it. It is an act of war. And it is an act of economic war. The United States also cut off access of Russia to many of the international payments systems that grew up over the last 40, 50, 60 years, a period of time during which the United States was the overwhelmingly dominant economic power. Remember, the GDP numbers minus China because until recently China hadn't exploded with its successful economic growth program the way it has over the last two decades. The United States was dominant and the United States believed in globalism and presented itself as the guarantor of the safety, the reliability of the global system it dominated. You often have that if you have unipolarity if you have one power dominant enough to control and nobody's in a position to challenge, to question, to attack, to diverge from the power exercised by that hegemonic unit.

So the United States took extraordinary actions in seizing the reserves of Russia and shutting Russia out of the Swift and other international payment systems. But it went further. Entities in Russia were sanctioned. Any entities outside of Russia that did business with Russia were sanctioned or threatened with sanctions. The United States with its allies, particularly in Western Europe, went to work to isolate the Russian economy, to cripple it, to prevent it from functioning. The Europeans, major purchasers of oil and gas from Russia, were pressured and began the process of decoupling, cutting off those purchases. And the combination of all of these acts, because Russia depends on exports of oil and gas, were expected to bring this war to a quick close by basically collapsing Russia so it could not function, let alone pursue a war. That was the reality. That was the threat. That was the way it looked in February, March maybe even into April. But it didn't work out.

And before I go into the impacts I have to tell you not only roughly what the sanctions wore was but I also have to tell you that it didn't work. The Russian economy hasn't been collapsed the Russian Ruble is worth as much today as it was before all of this started. It had some rough period, but it stabilized shortly after the war began. It's an index of how good or bad the Russian economy is. You know, make a long story short, Russia found other buyers for oil and gas. Those other buyers are paying high prices for oil and gas. These high prices earn Russia the money that is in large part paying the costs of the war. So far, at least as of the time I'm speaking to you, the plan, the hope of crippling Russia economically and thereby punishing Russia for invading Ukraine and bringing the war to an end has not worked.

Now to the impacts of the effort because that's what we have. Since February 24th of 2022 we have a terrible war with an effort on both sides: Ukraine, Zielinski ,U.S., Western Europe on one side, Russia primarily on the other side with its allies supportive in the background. And that war continues. And for those of you that need to believe that you know who the winner is, I congratulate you. I don't. Nor do I think anyone has the basis for having a statement at this point about who the winner (whatever exactly that will mean) will be. But we do know what the impacts of this war are, many of them, because they're already in place.

First I'm going to start with the United States. By far the most important impact is what I began with. The United States is exposed by this war, by everything I've said to this point (and especially the failure to date of the war of sanctions, the economic war against Russia) the United States is exposed as unable to function as the hegemonic dominator of the world economy. Russia dared, by invading Ukraine, to move against the consensus that you can't do such a thing. And the United States is exposed as having been unable, at least to this point, to do much about it. And that is the historic shift. And I'm going to be saying more about it. But it's not the only impact.

For the United States to spend over a hundred billion dollars on equipment and other kinds of support for the Ukraine war effort and to keep its economy from total collapse, for the United States to have done all of that is inflationary. It's government spending. Whether it's on a bomb or a plane or any of the other associated costs it is a testimony to the level of domination of the news that such a sudden explosion of government spending isn't exposed as the inflationary act it is. Consider this remarkable fact. The Federal Reserve of the United States over the last 12 months has dramatically raised interest rates to fight an inflation.

The logic of that is that if you raise the interest rates businesses and individuals will borrow less money because it's become expensive to do so. And if they borrow less they'll have less to spend. And the inflation will be moderated because there's less spending so people who charge prices won't be so quick to raise them because people are not borrowing and therefore not spending. You are directly contradicting the whole logic and point of the Federal Reserve if the fiscal side of the budget (government spending) is booming up with its “defense” spending on the Ukraine.

Now, you may not talk about that in your public statements, your politicians may babble as they usually do as if there is no contradiction because they have no idea how to handle it or to justify it. But we don't have to do that. You and I don't have to do that. We can see it for what it is. Historians will look back and they will say that if this inflation continues, as many commentators believe it will, one of the reasons will be the spending on this scale over such a short time of over a hundred billion dollars for the war in the Ukraine. Wow.

That's an impact the war is having, and it's an impact whether we own up to it and face it and deal with it, or pretend it isn't there, however politically convenient such a pretense is.

We are historically shifting from the attitude this country had in its universities, in its public statements, in the minds of most of its people. Much of the last half century [was] a period often called neoliberalism or globalism or globalization. The idea was that the United States would do best if there were no barriers to trade and capital moving around the world. We should bring everybody into the global free market. No government interference, no letting politicians mingle in. The economy will work best for everybody if everybody is free to wheel and deal, and buy and sell, and invest and borrow as the market dictates. You know, it's the application of one understanding of Adam Smith to the world today. And so the United States was the champion of open markets, free trade, no government interference. It pressured the World Bank and the International monetary fund and other organizations to promote that all over the world.

That period is over. This is a historic end of that period. What we have now is rampant economic nationalism. The government, far from being told to stay away from the economy, not to mingle, not to interfere, not to render it inefficient, but to leave it to the free market, all of that's gone. The government is called upon to enter into [and] to control trade. You can't trade with him, he can't trade with her, she can't do [that], the tariff on this one, the tariff on that one. The government is spending huge amount of money subsidizing certain industries because we want to make the decision for companies where you locate. We're going to bring you here by giving you a tax-based subsidy. The government is managing everything. The government is literally brought in because it seems that the American
leadership has given up on globalization.

[They’ve] given up on neoliberalism not because millions of people lost their jobs because of it (which they did), not because it widened the gap between rich and poor (which it did). That's not their problem. Their problem is that the domination of the world economy by the United States was undercut by the neo-liberal globalization. Why? Because capitalists around the world did what capitalists always do. They looked for the best profit situation. And the capitalists who once found it in the United States, in England, in France, in Germany, and Italy, in Japan, figured out that they could make more money by moving their production to China. Which in huge numbers for the last 40 years is what they did.

The Chinese likewise, looking at the situation, welcomed them. The Chinese decided they would not, over the last 40 years, follow the Soviet Union and have the entire economic system owned and operated by the government. Russia had gone quite far. The Chinese made a decision not to go that far. The Chinese Communist Party leadership made the decision that their best interests would be served by a system that included a large, private capitalist industrial bloc (the Soviet Union did not allow that) and a large government-owned and operated bloc within the Chinese economy. And the private capitalist bloc could be foreigner owned (American, Japanese, British, Italian…) or chinese-owned. And that's what they've done. They operate a mixed system under the control of the Communist Party. That's an alternative to the Soviet Union system. It's also an alternative to the American system.

That alone would be a historic new way to think about economic growth and success, but more important even than that in our immediate situation was the fact that that Chinese innovation (what the Chinese call “socialism with Chinese characteristics,” this mixed system under the control of a Communist Party) grew much faster than the Soviet Union had or than the United States could. And for decade after decade they made this difference clear. So that by Mr Trump's presidency the United States, in a kind of peculiar way, woke up and realized that they needed to change because the system that had been very profitable (from 1980 to 2010 we had an explosion of profitability, an explosion of our stock market), we'd done real well but the Chinese grew faster. The Chinese have become the United States's first serious economic competitor in a century. Wow and this war exposes all of that. It has exposed that the world is no longer in neo-liberal globalization phase. It has passed into economic nationalism phase. And the United States isn't dominant the way it was, not even close.

That in fact we have three blocs. (1) the United States and its allies, (2) China and its allies, (3) and Europe and its allies, if they have them. And that's why I set up the talk the way I did. And that's why I want to take you through the impacts on these three blocs once I've made clear that the existence of them has now become well understood.

And so we have the United States reacting itself to what has been exposed. Both before the Ukraine war, and helping to bring the Ukraine war into being, and since it began the United States has expressed openly and repeatedly it's hostility to the Chinese-Russian bloc. The decision to support Ukraine is part of that. It's a provocation to the Russians and has been understood by the Russians in those terms at least as far back as 2014, if not as far back as 2008. The simultaneous provocation of the United States Navy in and around Taiwan and the South China Sea just continues what? The effort of the old hegemonic Power trying with a certain desperation to hold back historical change. To humiliate, to terrorize, to frighten, to threaten the new emerging Global power: China and its ally Russia. Trying to hold back the process of change.

I have repeatedly made the parallel, and I'm going to do it again, that as these blocs solidify: United States, parts of Western Europe, Japan on the one hand; and Russia, China, and other countries are mentioned later on the other; and Europe in between. And that's what I'm going to be arguing in a moment I've made the historical parallel with the United States and the empire of Great Britain.

The United States was once a small relatively unimportant colonial possession of the British Empire. Under the rules of the empire and the control of the empire, economic development happened in its colony. And eventually the economic interest in the colony clashed with the control exercised by King George III from England. And we had two Wars to express the desperate determination of the British not to allow Independence, not to allow independent economic growth in its colony. First in 1775-1777 and so on and then again in 1812. Two Wars to stop what history made impossible to stop. Even the British figured it out and for the rest of the 19th century, as we all know, they basically gave up. And between the end of the 19th and into the 20th [centuries] they even had to live with, as they still do, the role reversal. In which the dominant empire became the subordinate colony and the ex-colony became the dominant empire, which is the relationship between the UK and the U.S for a long time now and right to this minute.

Are we going to repeat this time with the United States and China? Will we have wars before it's figured out that the capitalists themselves were the ones who moved to China? Who wanted to cash in on the economic development the Chinese Communist Party had already achieved? And by doing so facilitated its continuance? That's the reality. Those wars are the question that I'm going to leave you with at the end of today.

Let me take a very momentary break here and thank you all for being an active and engaged audience. And we ask you to join in our effort, sharing our work as best you can, to be a partner with us. We ask you of course, also besides sharing our work and extending our reach, to provide whatever support, financial and otherwise, you can. It's very easy to do. The best way is to go to our website: www.democracyatwork.info is the way to do that. And you know that whatever you do with our work expands our reach and enables these kinds of presentations to enter into the national conversation. Please also know that it is without a charge to subscribe to our YouTube channel. There you'll find new releases, clips from all sorts of activities that we're engaged in. Subscribing not only helps keep you in our circle but, again, it helps promote the visibility of this channel.

Now back to the impact on the U.S. The impact also happens at a time when the United States has internal problems just as important as its foreign entanglements. Internal problems directly related to but different from those foreign entanglements. Because it turns out there's good reason for the United States and its employer class to be worried about losing its dominant hegemonic position in the world economy, becoming merely a bloc among other blocs. [Going] from a unipolar to a multi-polar global system, to use the language of the specialists who write about this.

And what always happens when empires begin to decline (and that's really what we're talking about: the decline of what became the American empire), when that decline happens a scramble begins. In most empires those at the top, the rich do not want to lose all of the wealth, all of the privileges that went with being the upper class of the global empire. And because they are the upper class they have the wealth and they have the political power to shift the burden of adjusting to no longer being the empire you once were, [to] push that off onto other people. Hold on to your wealth by really sticking it to the mass of other people.

We've been doing that for 40 years in this country but it's come to a head now, and it is being recognized for what it is. The last 40 years have been a mammoth redistribution of wealth from the bottom and the middle to the top 10 percent of our people, and the top one percent above all. All statistical studies show this. There is no basic dispute about this beyond those who can't see what is too difficult to digest.

And I want to underscore that this redistribution has now reached its limits. It went on through revising the tax code in the 80s and 90s, it went on by moving good high-paying jobs overseas, by using computers robots artificial intelligence to replace well paid jobs here with machines, it worked by bringing in cheap labor into the United States. Capital users all those mechanisms to improve its profitability. But it has been going on too long. There seems to be no end in sight and that's because it's a declining empire that is the problem, not this or that detail. A declining empire in which those at the top (the corporate leaders, the wealthy, the political elite, working together, intermarried, and going to the same golf courses) work a good deal to shift the burden of a declining empire off of them and on to everybody else. So in the last 20 years we've had to resort to more extreme ways of really sticking it to the mass of people.

Here's where inflation comes in. The inflation we're talking about raises prices (that's what employers get when they sell something) much faster than wages (that's what the employers pay the workers). If the employer can raise the prices by 7%, 8%, 9%, but wages only go up by 4% or 5% (and that's pretty much what we've had) then there's another shift of wealth. Workers can't buy, even if they get 4% or 5% more a year, they can't buy what they used to because it's going up by 7%, 8%, 9% a year. The pandemic hurt millions of Americans in countless ways. The fact that we don't have national health insurance… Rising interest rates is another whack against low and middle income people. They can't afford to pay the rising interest rates on their credit card balances, on their car payments, on their mortgage payments, on their kids' college loans. They can't and it's hurting them. College enrollments are down. People can't afford it. These are all ways of shifting the burden of a declining empire on the mass of your people.

And I wouldn't even be talking about this so much were it not for the fact that this is happening at a time when the American labor movement is waking up from decades of feeling there’s nothing they could do about this, focusing elsewhere, doing extra hours of work, taking a second job, working an extra shift, all the ways people cope. Making the elderly go back to work, making women who worked in the home take a second job outside the home.

All of these things since the 1970s have had their effect. They've made life more difficult for the mass of people in order that those at the top can have even more, can hold on, to be in a position of pretending to themselves as they do every day that the declining empire isn't declining. They do that with the same confidence that they say, as they have from the beginning, that one side is winning the war in Ukraine even though any reasonable observer knows that that's not the case, or if it is the case there’s no basis for us to know which one of the two sides is indeed “winning” anything.

Okay, enough about the impact on the United States. Let me turn to the impact on Europe. Europe has a problem. The great split in the world is between the United States and China and every European country which does business with both of them (which is most of the countries of Europe) faces a choice. And much of what's going on inside of Europe are struggles about that choice. Whether they're conducted in those terms or not, that's what they are. Because there's no other choice that you're a pass. Is it going to go alone? Is it going to become a bloc of its own and negotiate and struggle with the United States on the one hand and China on the other?

There are forces in Europe who see that, and who want to try to do that. They have many disadvantages. China and the United States are now ahead of Europe on many key high-tech activities, in military terms, in sheer financial wealth, and global reach. And the Europeans know it. So yeah, they would like to be their own bloc. But their own internal disunity, their own internal divisions make that look probably like the least likely outcome.

Here's the second option. The old leaders of Europe, leaders of the old traditional parties that do govern most of Europe these days, have had long personal and political histories of being subordinate to the global hegemonic United States. They are very worried by the decline of the United States position. But they are afraid to question it, afraid to challenge it, afraid to bring unto themselves the kind of economic warfare that the United States has just imposed on Russia. And for that matter, they're also scared of the Russian counter sanctions which are also part of the economic war. It's not just what the United States and its allies do, it's what the Russians in particular have done in retaliation.

The European countries literally caught between the United States on one side and Russia and China on the other don't want to face this kind of situation. And so the old leadership has, at least so far, stayed with the United States, basically aligning Europe, as much as they can, with the United States. A bloc, if you like, of the United States and Europe against China.

But then there's a third group in Europe that says “No, no, no. Don't do that. What we ought to do is become a player who knows they're not the equivalent of the United States and China but can systematically do well by playing them off against one another.” Getting a benefit from the United States and then saying to the Chinese, “You better equal that otherwise we'll go with them,” and vice versa if they get something from China. There are many Europeans who want to go in that direction, particularly huge parts of capitalist Europe that is already dependent on China in many ways, and is unable to see an alternative because the United States isn't about to do for them what the Chinese have already done for them, buying their output for example.

Inside Europe this issue is being fought out. First of all among politicians and Industrial leaders but in the mass of people also. Why? Because the decline of the American empire has led to the American elite (the corporate leaders the politicians) not just to shift the burden of attack of uh Empire decline onto the mass of Americans, but also to shift the burden of empire decline onto the Europeans from the United States. Let me give you an example of many that I could give you if I had the time. Mr Biden has proposed all kinds of subsidies to the chip industry here in the United States, to the electric car industry in the United States, many others. He wants (because it's a problem here in this country as the Empire goes down and so many people don't have good paying jobs) [he] want[s] to bring good paying manufacturing jobs back to the United States. Every politician promises it and the fact that none of them can deliver it doesn't mean the promises aren't going to keep coming. So Mr Biden gonna do it again, like Trump did, like Bush did, like Obama did. And so he's going to subsidize (remember economic nationalism. No free market, don't let the market decide. You'll come in and you make it worthwhile).

But the Europeans had to tell Mr Biden and they're telling him in no uncertain terms “Don't you dare do this. You’re de-industrializing us.” That's what the newspapers in Europe say. “You're giving an incentive for companies located in Switzerland, or in Spain, or in Sweden, or in France, to leave and go to the United States otherwise they risk losing the market in the United States. They won't have a subsidy from our government of the size or the fluidity that you're giving them. You're hurting us, and you want us to be in a bloc with you? What kind of a deal is that?” And the very act of provoking it worsens the tensions.

And then there's the working class in Europe, hurt by an inflation (much worse than that in the United States) hurt by the rising energy prices (a direct result of the sanctions and counter-sanctions that I've been speaking to you about). A working class that doesn't see the war in Ukraine as having anything to offer them at all.

Please, those of you who have some historical sense understand that when the United States says it's fighting the war in Iraq to uphold a rules-based international order, or to oppose a large country invading a small country, that for the rest of the world, including Europeans, the country that invaded Korea, invaded Vietnam, invaded Iraq, invaded Afghanistan, this doesn't sound all that persuasive an argument. It's not that you have to agree with anything. Just see that there's a kind of on the surface impossibility of going with this.

And now the impact on China, Russia and the so-called third world. The most dramatic emergence of the new blocs in the world is the Chinese bloc. China's allies now include not just Russia (and China has backed Russia throughout this war in Ukraine, particularly the economic warfare question. China has brought more oil. China is providing supports of all kinds). But the Chinese have their own objectives and those include building a new global system with multiple blocs, one of which is grouped around China. And it now has the active partnership of India, Iran, Turkey, Saudi Arabia. I could go on but it's enough. The control of the global oil business, the control of the two largest countries by population in the world (China and India) ought to give everybody pause. India has bought the oil and the gas that Russia can't sell in Western Europe. Other countries are doing the same.

Sanctions threatened against other countries for doing business with Russia and China have had very poor results. They just don't care. China offers the world an alternative. You can disagree with the United States. You can fashion your own economic strategic plan. You can clash with the United States because there's somewhere else to go: China, India, Turkey, Iran, Saudi Arabia, and the growing allies the BRICS group and the new members of that coming down the pike.

It's a new world. This war has exposed economic nationalism as the new ideological reality governing the world economic system. It's exposed the decline of the United States.

If I had more time I would take you through the development of an alternative reserve currency, the Petro Yuan. Saudi Arabia and China getting together. They're developing their own alternative to the Swift system, a global payment system, a Global Currency system that simply does an end run around the United States. Yeah, it'll take more time. These things are slow to work out all the problems. But they're now underway and the longer and the worse that the war in the Ukraine gets, the more determined the opponents of the United States’ shrinking position will be. The more clearly they will understand they too need to develop an alternative because the United States is no longer the reliable governor of the world system. It was for a while. Who will dare keep their reserves where the United States could get its hands on them? Every country in the world is watching the guardian of this system play favorites and that's gone way beyond what it was before, as this war has made clear.

Please understand that most of what I have said will continue because it was underway before the war, and it will likely continue because the forces making this happen are stronger and deeper than whatever happens on the battlefields in Ukraine. It's an important war but mostly because of what it exposes and reveals and how it accelerates what was already going on.

Thank you for your time and attention. I hope this presentation added understanding and insight to the horrors of war that we are presented with almost daily. I hope you find this kind of presentation interesting. And let me again ask you to partner with us by sharing it, letting other people know about it. It's a way to extend the reach of this conversation and to enable people to struggle more effectively about how to handle the decline of the U.S empire and of U.S capitalism, so that we don't wander our way into wars, especially now that the nuclear is part of our reality.

Learn from history. Learn from understanding the broader social forces so you don't get lost in the details. And for you who are already supporters of Democracy at Work, it's your help that makes this lecture series possible. Even if you're not yet a supporter and would like to become one let me close by urging you to consider doing so. And as always our website www.democracyatwork.info is the quickest and easiest way to connect with us. Thank you, and I look forward to another presentation like this in about two months.

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  • Ken Swanston
    commented 2023-01-19 07:55:43 -0500
    Regarding the war…
    The action by Putin’s Russia to initially invade the Ukraine in 2014 was with the use of his long standing technique of (FSB?) subversion from within (Crimea, Donetsk & Luhansk) that requests (Russia PLEASE!) help from outside. I believe the US of A has used the same technique (via the CIA?) throughout the years to justify its ‘interventions’ in various other countries affairs. Although Putin’s plan was partially (Crimea) successful, Ukraine has continued to fight for its internationally recognized borders since then.
    When the complete takeover of Ukraine’s provinces didn’t happen as expected, and from there to expand into the entire country, Putin’s long stated desire for a Soviet RE-Union required an OVERT ACT OF WAR…the invasion of Ukraine on February 24th, 2022, with the expectation of a quick annexation and welcome wreaths from the ‘liberated’ citizens…which failed to materialize for some reason…and the fight was on!

    The US of A lead ‘sanctions’ war was in response to the US of A failure of the Afghanistan ‘Americanization’ effort (that Biden always wanted out of) and the complete collapse of the US of A trained and supplied ‘Afghan Armed Forces’ with the embarrassing withdrawal of US of A troops on national TV…NOT something the American public was willing to get into again any time soon!

    Despite the general consensus that the Ukraine Armed Forces could not withstand the assumed MIGHT of Russia, they did, and have done remarkably well! Their fight inspired international military and financial support, mainly from the US of A but also LOTS of other countries, including mine, Canada!

    This was the kind of war America could get behind, none of their boys losing blood and providing lots of support from one of their major industries (war materials) for the little guy…a win/win for most US of A politicians of all stripes if ever there was one.

    Regarding Russia’s economy…
    I do not claim to be an expert, but from what I’ve read (granted, in mainly Western media) the Russian economy has been based to a large extent on oil/gas, grains and military hardware spending. The profits from those enterprises have been funneled into the accounts of Putin’s friends and allies otherwise known as oligarchs. It appears that the ‘trickle down’ to the general population (outside of large cities like Moscow and St. Petersburg) has continued to be…minimal.
    - The military hardware, at least that used in the war against the Ukraine, has been shown to be somewhat less than overwhelming. This does not bode well for future foreign sales.
    - The grain production has been allowed out of Russia and the Ukraine for humanitarian reasons. I would imagine Russian grain deliveries would continue to be allowed for the same reason, even if general restrictions on Russian products continue.
    - Oil production and distribution from Russia to its closest users in Europe has recently been replaced by other suppliers and the move toward elimination of fossil fuels (aiming at Climate Change) in Europe has been sped up along with reduced/eliminated specific dependence on Russian oil/gas. Reduced demand for Russian oil and gas, although partially replaced by China and India, apparently also comes with reduced prices to Russia. I don’t imagine the Saudi’s and Iran would appreciate that ‘competition’ cut to their main product’s price very much.
    The war with Ukraine has exacerbated the historical ‘brain drain’ from Putin’s Russia and the mobilization of its young men for service/injury/death in the armed forces will not help reduce that in the near term and into the future.

    Regarding China…
    The upsurge in the economy of China appears to be directly related to the ‘offshoring’ of American heartland manufacturing and later, chip, clothing any other low cost high volume processing that Corporate America could use to improve their own “oligarchs’” bottom line for their 0.01%er’s bank accounts.

    China’s Belt and Road initiative is pretty effectively bankrupting ‘third world’ countries with locked in ‘development loans’ designed to benefit Chinese industrial production needs.
    Starting from essentially NO manufacturing base after Chairman Mao, it is not surprising at all that the country has experienced compound growth for an extended period of time. If Premier Xi allows his citizens to develop a ‘middle class’ then the potential decrease of American purchases could easily be replaced and overtaken by China’s own population.

    COVID restrictions and mass lockdowns in China has safeguarded the huge population from the problems encountered in the rest of the world. Unfortunately for Premier Xi, the population has recently had ENOUGH! Civil unrest throughout the country has forced a change in policy…also unfortunately, the general population has not been given nearly enough adequate injections to fight the disease and there is NO HERD IMMUNITY. This could well result in a substantial death toll.

    In addition to the inflow of American manufacturing machinery, know how and market, the outflow of Chinese intellect to the world’s universities and academies has brought back the world’s knowledge in leading edge science and technologies. In addition to passive collection there has been noted a specific spy effort to secure that knowledge as well. Chinese nationals are subject to a world wide national security law (does Hong Kong ring a bell?) that, at least in Canada, has been enforced with threats and coercion of Chinese residents in Canada from ‘Chinese police’ stations in Canada.

    Regarding the US of A…
    As a Canadian (not that we don’t have similar problems here) my favorite saying is that America has the best governments BIG MONEY CAN BUY!

    Illustrating the difference in size between Russia’s and the US of A’s 0.01%ers…
    According to Robert Reich…

    “While Russian oligarchs (Russia’s ~ 120 richest 0.01 percent) have hidden an estimated $200 billion offshore (over half of their financial wealth), American oligarchs — America’s 765 billionaires — have hidden $1.2 trillion (about 4 percent of their wealth), mostly to avoid paying taxes on it.”

    “American oligarchs have enormous political clout. In the 2012 presidential election (the most recent for which we have detailed data on individual contributions), the richest 0.01 percent of Americans (that is, the richest 1 percent of the richest 1 percent) accounted for 40 percent of all campaign contributions.”

    …bought and sold to maintain the status quo of the elite that run the (currently) most powerful country in the world.


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