“…I am not a politician, I am even less a politician in power and therefore I do not suffer from the professional need to be relatively optimistic about the near future; which I am positively not. We are living amidst considerable global insecurity and I personally think that this global insecurity will increase and not decrease in the next decade, perhaps longer than that. Let me explain why I think this, in terms, first of all, of world economy and, secondly, of the geopolitical situation.
Over the last year or two, we have been discussing around the world, the so-called global financial crisis as though it was something that came to pass at the year 2008 or perhaps the year 2007 because somebody did something wrong at some given point in time. I do not think that is the case at all. We have been living since 1970 in a Kondratiev B phase. What is unfolding now this is simply an accumulating point in this B phase and not the last of it. The difference between an A phase and a B phase is very simple. In an A phase some capitalists make a considerable amount of money out of productive enterprises, provided they can create quasi-monopolies and do not suffer the pains and fortunes of a ideally competitive situation.
Quasi-monopolies always self-liquidate. The one we had from 1945 to about 1970 (what in French is called les trente glorieuses) exhausted itself, and after that people who wanted to make considerable amounts of money, not just small amounts, had to turn to the financial sphere. When you do this (and this is a cyclical pattern that has been going on for 5 hundred years, you are by definition irresponsible. The only way you can make money in the financial sphere is from speculation and speculation requires getting people to go into debt. And the unfortunate thing about going into debt, is that sooner or later, debts have to be repaid. So we have had a series of debt crises over the last 30 years.
First, we had the famous debt crisis of the 1980s which resulted from the rise in the price of oil. It was followed by the debts of corporations then by consumer debt (particularly in the USA) and by governments’ significant indebtedness in the first decade of the XXI century (again the USA). And then we had, of course, the latest form which was the mortgage crisis. It is not the last, we will have some more.
The response to this latest crisis consisted in stimulus plans of the USA governments and of a number of other governments. The stimulus plans are wonderful but they exhaust themselves. There is only so much money you can pour into it because where do they get this money from? Basically they borrow it, so that is additional debt, and they print it. I expect us to have a further considerable drop in the world economy in the next few years.
Let me dwell briefly on the geopolitical situation. The Unites States was a hegemonic power in the world system after the World War II. It reigned on the world scene from 1945 to roughly 1970. Hegemonic cycles are much longer but, just like quasi-monopolies, they self-liquidate. Hegemonic power has the function of creating a kind of stability of world order in which capitalists can in fact make their profits. It’s an important function. But I have to reiterate hegemonies exhaust themselves. US power as a hegemony has been under the reclaim since the 1970s. Every American president from 1970 to 2000, that is from Nixon to Clinton including Ronald Reagan, followed the same policy of attempting to slow down the decline of the United States. When George Bush became president, he said the reason why the US was declining as a power was that we had a series of weak presidents including Ronald Reagan in that list of weak Presidents. The response to that he said was to reassert the Unites States’ power unilaterally through militarization of its foreign policy. That’s where the Iraq war is rooted. As we know the French, the Russian, and the German governments, were all opposed to the US invasion in Iraq. In any case the US government hoped by this invasion to intimidate everybody, to intimidate Western Europe, to intimidate potential new nuclear powers. It was a fiasco and it yielded the opposite result. It caused a slow decline of the US and turned it into definitive decline.
We are now living in a post-American world. And this post-American world is a truly multipolar world. This means we have eight, ten, twelve poles of power, not equally strong but sufficiently powerful to have a fairly autonomous position. Among these poles we have, of course, the United States, Western Europe, Russia, China and Japan, but also Iran, Brazil, South Africa, and perhaps some others, like India, etc.
Now let me expand on the consequences of the continued crisis in the economy and in an upcoming multipolar situation. What is going to probably happen as a result of the next (and perhaps final) collapse of the debt economy, is that the US dollar which has been declining in relative value for 15-20 years and which has already plunged approximately by 30 per cent, and may plummet by another 30 per cent. At which point can it no longer be considered the reserve currency of the world? It’s not a question about other people deciding to create other reserve currencies, it’s just that the US currency will no longer be the reserve currency. We will have a situation in which there will be multiple currencies with which people will trade. In effect, one of them will be the dollar, but there will be the yen and there will be the euro and so forth. When you have multiple currencies, people begin to trade by SWAPs; in fact they have already begun to do so. When you are faced with that kind of situation there is great financial instability. Prices go up, they go down, and no one is quite sure what is going to happen. We will have enormous fluctuations. This will lead to certain reactions by governments.
Governments by definition wish to stay in power. One of the things all governments fear, and not just so-called authoritarian governments, but all governments, the more democratic, the less democratic; is uprisings by their population. We have the situation today in which governments have less real income because of the financial crisis and increased demands put upon them. So, governments with less money are being asked to spend more and that is not an easy thing to do. At that point, what do governments do? There is an enormous pressure from their own population to solve the problem at a national level. In the last 5 years, there is not a single government in the world, not the United States government, not the French or German governments, not the Russian government that has not increased the degree of protectionism that it has practiced. It has soared by comparison with 5 years ago. And it will continue to grow under internal political pressure. Protectionism solves problems in the short run in response to serious political demands on governments but, on the other hand, theoreticians of capitalism have always argued that it does tend to reduce world trade and render the situation more difficult.
Now touching upon geopolitical difficulties… If you have a multipolar world order, if you have 8 or 10 powers, then everybody has to begin to think about plausible alliances, we are in the situation today where all these 8 or 10 poles, and I include the United States, not only Russia or China or Western Europe or Iran or anyone else, are considering alternative possibilities of more stable geopolitical alliances. I don’t think anybody has made up their minds yet. So, they are testing the ground.
And if you think back historically at points of time when it occurred previously, it is a very instable and uncomfortable situation. It may well be in 10 years from now that we will return to the situation of fairly stable alliances and so there will be only 2 or 3 poles of geopolitical power, but for the moment we do not have that. So I present this picture of what I consider to be happening in the world system and is characterized by increasing internal problems for every government in the world (including the United States government), by internal disorder and the necessity for all of us to think about how in the middle of this we can pull out of these vital alternatives…”
