Commentary on Political Economy

Wednesday 28 September 2011

Latest Developments in the Capitalist World Economy

As you can see from Michael Pettis’s interesting-as-ever article linked below, things are moving very rapidly in the global capitalist economy, and certainly not in the right direction. You will be able to trace the reasons for these developments in our theoretical analyses spread throughout this site. We tend to steer clear of daily developments for the crucial reason that excessive concentration on current affairs distracts us and detracts from the much more important aim of understanding how capitalism works, why capitalists do what they do and what they are likely to do in the foreseeable future. Soon, our theoretical focus will centre more on what we can do to change things and indeed how we should go about it. I would ask visitors to read our theoretical pieces carefully because they contain vital clues in these essential regards.
Just a couple of quick notes: Apart from Pettis’s excellent points, I wanted to zoom in on the Chinese dictatorship. Pettis is certainly right to say that its options are diminishing very rapidly, and the FT even has an ominous article about what we called months ago (check this site) “the encirclement of the Chinese dictatorship” – which is very much what is happening now.
What Pettis does not say is that the US will be merciless with regard to Germany. The problems of the Eurozone have everything to do with the unwillingness of the German capitalist elites to unify Europe in more than just monetary terms by setting up the euro – which was yet another “imperialist” strategy on their part to achieve what the Nazi dictatorship could not, with the quiet acquiescence of the US willing to absorb German exports and higher capital imports feeding speculation and higher unemployment. We have said repeatedly here that European bourgeois elites are having insurmountable problems now explaining to their electorates that capitalist society is not about "competition" or "competitiveness" but about political power in the form of "profits", which means "greater 'value' coming out of production" that allows "dead labour" (capital) to exercise greater command over "living labour" (our living activity in producing our social reality). Because European elites have "marketed" European Union as a way to greater riches for all and not as an essential political consolidation of Europe in the face of mounting challenges from a fast-unravelling global capitalist economy. The last link below from the FT (and Pettis's sarcasm in Merkel's direction) are wonderful reminders of this deplorable failure of capitalist elites in Europe.

(On a personal note, I find it utterly execrable that we are still talking about "European unity" when the fact that Europe most certainly IS a political entity confronted by enormous external challenges ought to be evident to any European who, like me right now, has ever been to the Far East and South East Asia, from Indonesia to Japan!)
As Pettis says, this music had to stop, “something had to give” – and the US Administration with the Fed will come back with more quantitative easing because they will not tolerate the euro to be so low as it is now. Of course, the US Admin will be delighted with the “collateral damage” this is having on the Chinese dictatorship whose industrial and financial trains are colliding every day as civil unrest grows!!
All these matters may easily be gleaned from the linked articles below. But, again, we wish to concentrate on the “theory” – so we will continue shortly with Part 3 of our look at the Austrian School. And later we will have a superb extract from the ‘Nietzschebuch’ discussing the relationship of bourgeois political theory and the notion of “scientificity” (eminently with regard to economics) since the rise of the bourgeoisie in the middle of the seventeenth century (1600s). Watch out!

(Containment of China’s PLA)
(Pettis’s superb analysis of upcoming currency wars)

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