The Looming War Against China: Economic Logic Has Been Replaced by National Security Overrides

Yves here. One of the subthemes of the latest offering from Michael Hudson on the bizarre spectacle of the US escalating against China is puzzlement that the West is not operating in its best interest. Lambert has been chewing over this conundrum too.

Perhaps it’s that they really do believe their propaganda, and still don’t recognize that the military and economic clout of the US/EU bloc on a relative basis isn’t anywhere near substantial enough for them to push the rest of the world around.  But you think their self-delusion would have started to crack with the failure in their efforts to pressure many countries, such as India and South Africa, to side with the US and condemn Russia’s actions in Ukraine, and now with the supposedly superior US/NATO war machine not performing too well.

Another possibility is the so-called Iron Law of Institutions, that individuals and interests are operating to maximize their own position, with little/no concern to the impact on the system.

However, there is a way that the campaign against Russia is succeeding for the US. The economic sanctions have done far more to damage the EU than Russia by largely cutting the EU off from cheap Russian energy (or increasing its cost by having it laundered through other countries).  Europe is an important trade partner for China. An economically declining Europe will hurt China.  Hudson warns that the West plans to go on more of a trade diet with China, but it’s not at all clear how deeply dependent consumers and industries will do without.

By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College. His latest book is The Destiny of Civilization. Originally published in the Investigación Económica (Economic Research), produced by UNAM (Autonomous National University of Mexico)

The July NATO summit in Vilnius had the feeling of a funeral, as if they had just lost a family member – Ukraine. To clear away NATO’s failure to drive Russia out of Ukraine and move NATO right up to the Russian border, its members tried to revive their spirits by mobilizing support for the next great fight – against China, which is now designated as their ultimate strategic enemy. To prepare for this showdown, NATO announced a commitment to extend their military presence all the way to the Pacific.

The plan is to carve away China’s military allies and trading partners, above all Russia, starting with the fight in Ukraine. President Biden has said that this war will be global in scope and will take many decades as it expands to ultimately isolate and break up China.

The U.S.-imposed sanctions against trade with Russia are a dress rehearsal for imposing similar sanctions against China. But only the NATO allies have joined the fight. And instead of wrecking Russia’s economy and “turning the ruble to rubble” as President Biden predicted, NATO’s sanctions have made it more self-reliant, increasing its balance of payments and international monetary reserves, and hence the ruble’s exchange rate.

To cap matters, despite the failure of trade and financial sanctions to injure Russia – and indeed, despite NATO’s failures in Afghanistan and Libya, NATO countries committed themselves to trying the same tactics against China. The world economy is to be split between US/NATO/Five Eyes on the one hand, and the rest of the world – the Global Majority – on the other. EU Commissioner Joseph Borrell calls this as a split between the US/European Garden (the Golden Billion) and the Jungle threatening to engulf it, like an invasion of its well-manicured lawns by an invasive species.

From an economic vantage point, NATO’s behavior since its military buildup to attack Ukraine’s Russian-speaking eastern states in February 2022 has been a drastic failure. The U.S. plan was to bleed Russia and leave it so economically destitute that its population would revolt, throw Vladimir Putin out of office and restore a pro-Western neoliberal leader who would pry Russia away from its alliance with China – and then proceed with America’s grand plan to mobilize Europe to impose sanctions on China.

What makes it so difficult in trying to evaluate where NATO, Europe and the United States are going is that the traditional assumption that nations and classes will act in their economic self-interest is not of help. The traditional logic of geopolitical analysis is to assume that business and financial interests steer almost every nation’s politics. The ancillary assumption is that governing officials have a fairly realistic understanding of the economic and political dynamics at work. Forecasting the future is thus usually an exercise in spelling out these dynamics.

The US/NATO West has led this global fracture, yet it will be the big loser. NATO members already have seen Ukraine deplete their inventory of guns and bullets, artillery and ammunition, tanks, helicopters weapons and other arms accumulated over five decades. But Europe’s loss has become America’s sales opportunity, creating a vast new market for America’s military-industrial complex to re-supply Europe. To gain support, the United States has sponsored a new way of thinking about international trade and investment. The focus has shifted to “national security,” meaning to secure a U.S.-centered unipolar order.

The World Is Dividing into Two Blocs: a Post-Industrial US/NATO vs the Global Majority

U.S. diplomats became increasingly worried as Germany and other European countries came to rely on imported Russian gas, oil and fertilizer as the basis for its steel, glass-making and other industries. They became even more worried as China had become the “workshop of the world” while the U.S. economy de-industrialized. The fear was that growth by China and its neighboring Eurasian countries benefiting from the Belt and Road expansion threatened to make that part of the world the main growth area, and hence a magnet for European investment. The logical prospect was that politics would follow economic interest at the expense of America’s ability to maintain a unipolar world economy with the dollar at its financial center and trade subject to U.S. protectionist unilateralism.

By joining America’s crusade to destroy the Russian economy and promote regime change, Germany’s and other European countries’ refusal to trade with Russia has destroyed the basic energy foundation of their industry. Destruction of the Nord Stream pipeline has plunged the German and other European economies into depression involving widespread bankruptcies and unemployment. In place of Russian gas, the NATO countries must now pay up to six times as high a price for U.S. liquified natural gas (LNG), and must build new port facilities to physically import this gas.

The European leaders sponsored and financed by U.S. election meddling over the past seventy years have done what Boris Yeltsin did in Russia in the 1990s: They have agreed to sacrifice Europe’s industrial economies and end what had been its profitable trade and investment integration with Russia and China.

The next step is for Europe and the United States to stop trading and investing with China, despite the fact that these NATO countries have benefited from the flowering of this trade, relying on it for a wide range of consumer goods and industrial inputs. That line of prosperous trade is now to be ended. NATO’s leaders have announced that importing Russian gas and other raw materials (including helium and many metals) runs the “risk” of becoming dependent – as if Russia or China might find it in their economic or political interest to abort this trade simply to hurt Europe and to do to it what the United States has been doing to force it into submission.

But submission to what? The answer is, submission to the logic of mutual gains along lines leaving the U.S. economy behind!

By trying to prevent other countries from following this logic, U.S. and European NATO diplomacy has brought about exactly what U.S. supremacists most feared. Instead of crippling the Russian economy to create a political crisis and perhaps breakup of Russia itself in order to isolate it from China, the US/NATO sanctions have led Russia to re-orient its trade away from NATO countries to integrate its economy and diplomacy more closely with China and other BRICS members.

Ironically, the US/NATO policy is forcing Russia, China and their BRICS allies to go their own way, starting with a united Eurasia. This new core of China, Russia and Eurasia with the Global South are creating a mutually beneficial multipolar trade and investment sphere.

By contrast, European industry has been devastated. Its economies have become thoroughly and abjectly dependent on the United States – at a much higher cost to itself than was the case with its former trade partners. European exporters have lost the Russian market, and are now following U.S. demands that they abandon and indeed reject the Chinese market. Also to be rejected in due course are markets in the BRICS membership, which is expanding to include Near Eastern, African and Latin American countries.

Instead of isolating Russia and China and making them dependent on U.S. economic control, U.S. unipolar diplomacy has isolated itself and its NATO satellites from the rest of the world – the Global Majority that is growing while NATO economies are rushing ahead along their Road to Deindustrialization. The remarkable thing is that while NATO warns of the “risk” of trade with Russia and China, it does not see its loss of industrial viability and economic sovereignty to the United States as a risk.

This is not what the “economic interpretation of history” would have forecast. Governments are expected to support their economy’s leading business interests. So we are brought back to the question of whether economic factors will determine the shape of world trade, investment and diplomacy. Is it really possible to create a set of post-economic NATO economies whose members will come to look much like the rapidly depopulating and de-industrializing Baltic states and post-Soviet Ukraine?

This would be a strange kind of “national security” indeed. In economic terms it seems that the U.S. and European strategy of self-isolation from the rest of the world is so massive and far-reaching an error that its effects are the equivalent of a world war.

Today’s fighting against Russia on the Ukrainian front can be thought of as the opening campaign in World War III. In many ways it is an outgrowth of World War II and its aftermath that saw the United States establish international economic and political organizations to operate in its own national self-interest. The International Monetary Fund imposes U.S. financial control and helps dollarize the world economy. The World Bank lends dollars to governments to build export infrastructure to subsidize US/NATO investors in control of oil, mining and natural resources, and to promote trade dependency on U.S. farm exports while promoting plantation agriculture, instead of domestic food-grain production. The United States insists on having veto power in all international organizations that it joins, including the United Nations and its agencies.

The creation of NATO is often misunderstood. Ostensibly, it depicted itself as a military alliance, originally to defend against the thought that the Soviet Union might have some reason to conquer Western Europe. But NATO’s most important role was to use “national security” as the excuse to override European domestic and foreign policy and subordinate it to U.S. control. Dependency on NATO was written into the European Union’s constitution. Its objective was to make sure that European party leaders followed U.S. direction and opposed left-wing or anti-American politics, pro-labor policies and governments strong enough to prevent control by a U.S.-client financial oligarchy.

NATO’s economic program has been one of adherence to neoliberal financialization, privatization, government deregulation and imposing austerity on labor. EU regulations prevent governments from running a budget deficit of more than 3% of GDP. That blocks Keynesian-type policies to spur recovery. Today, higher military arms costs and government subsidy of energy prices is forcing European governments to cut back social spending. Bank policy, trade policy and domestic lawmaking are following the same U.S. neoliberal model that has deindustrialized the American economy and loaded it down with debt to the financial sector in whose hands most wealth and income is now concentrated.

Abandoning Economic Self-interest for “National Security” Dependence on the US

The post-Vilnius world treats trade and international relations not as economic, but as “national security.” Any form of trade is the “risk” of being cut off and destabilized. The aim is not to make trade and investment gains, but to become self-reliant and independent. For the West, this means isolating China, Russia and the BRICS in order to depend fully on the United States. So for the United States, its own security means making other countries dependent on itself, so that U.S. diplomats won’t lose control of their military and political diplomacy.

Treating trade and investment with other countries than the United States as involving “risk,” ipso facto, is a projection of how U.S. diplomacy has imposed sanctions on countries that resist U.S. domination, privatization and subordination of their economies to U.S. takeover. The fear that trade with Russia and China will lead to political dependency is a fantasy. The aim of the emerging Eurasian, BRICS and Global South alliance is to benefit from foreign trade with each other for mutual gain, with governments strong enough to treat money and banking as public utilities, along with the basic monopolies needed to provide normal human rights, including health care and education, and keeping monopolies such as transportation and communication in the public domain to keep the costs of living and doing business low instead of charging monopoly prices.

Anti-China hate has come especially from Annalena Baerbock, Germany’s Foreign Minister. NATO is warned to “de-risk” trade with China. The “risks” are that (1) China can cut off key exports, just as the US cut off European access to Russian oil exports; and (2) exports could potentially be used to support China’s military power. Almost any economic export COULD be military, even food to feed a Chinese army.

Treasury Secretary Janet Yellen’s trip to China likewise explained that all trade has a military potential and thus has a national-security element. All trade has a military potential, even selling food to China could be used to feed soldiers.

The US/NATO demand is that Germany and other European countries should impose an Iron Curtain against trade with China, Russia and their allies in order to “de-risk” trade. Yet only the US has imposed trade sanctions on other countries, not China and other Global South countries. The real risk is not that China will impose trade sanctions to disrupt European economies, but that the United States will impose sanctions on countries breaking the US-sponsored trade boycott.

This “trade is risk” view treats foreign trade not in economic terms but in “National Security” terms. In practice, “national security” means joining the U.S. attempt to maintain its unipolar control of the entire world’s economy. No risk is acknowledged for re-orienting European gas and energy trade to U.S. companies. The risk is said to be trade with countries that U.S. diplomats deem “autocracies,” meaning nations with active government infrastructure investment and regulation instead of U.S.-style neoliberalism.

The World Is Dividing into Two Blocs – with Quite Different Economic Philosophies

Only the United States has imposed trade sanctions on other countries. And only the United States has rejected international free trade rules as national security threats to US economic and military control. At first glance the resulting global fracture between US/NATO on the one hand and the expanding BRICS alliance of Russia, China, Iran and the Global South might seem to be a conflict between capitalism and socialism (that is, state socialism in a mixed economy with public regulation in labor’s interests).

But that contrast between capitalism and socialism is not helpful upon closer examination. The problem lies in what the word “capitalism” has come to mean in today’s world. Back in the 19th and early 20th century, industrial capitalism was expected to evolve toward socialism. The U.S. and other industrial economies welcomed and indeed pressed for their governments to subsidize a widening range of basic services at public expense instead of obliging employers to bear the costs of hiring labor that had to pay for basic needs such as health care and education. Monopoly pricing was avoided by keeping natural monopolies such as railroads and other transportation, telephone systems and other communications, parks and other services as public utilities. Having governments instead of business and its employees pay for these services increased the global competitiveness of national industry in the resulting mixed economies.

China has followed this basic approach of industrial capitalism, with socialist politics to uplift its labor force, not merely the wealth of industrial capitalists – much less bankers and absentee landlords and monopolists. Most important, it has industrialized banking, creating credit to finance tangible investment in means of production, not the kind of predatory and unproductive credit characterized by today’s finance capitalism.

But the mixed-economy policy of industrial capitalism is not the way in which capitalism evolved in the West since World War I. Rejecting classical political economy and its drive to free markets from the vested rent-extracting classes inherited from feudalism – a hereditary landlord class, a financial banking class and monopolists – the rentiersector has fought back to reassert its privatization of land rent, interest and monopoly gains. It sought to reverse progressive taxation, and indeed to give tax favoritism to financial wealth, landlords and monopolists. The Finance, Insurance and Real Estate (FIRE) sector has become the dominant interest and economic planner under today’s finance capitalism. That is why economies are often called neofeudal (or euphemized as neoliberal).

Throughout history the dynamics of financialization have polarized wealth and income between creditors and debtors, leading to oligarchies. As interest-bearing debt grows exponentially, more and more income of labor and business must be paid as debt service. That financial dynamic shrinks the domestic market for goods and services, and the economy suffers from deepening debt-ridden austerity.

The result is de-industrialization as economies polarize between creditors and debtors. That has occurred most notoriously in Britain in the wake of Margaret Thatcher and the New [Anti-]Labour Party of Tony Blair and Gordon Brown’s “light touch” deregulatory approach to financial manipulation and outright fraud.

The United States has suffered an equally devastating shift of wealth and income to the Finance, Insurance and Real Estate (FIRE) sectors in the wake of Ronald Reagan’s tax cuts for the wealthy, anti-government deregulation, Bill Clinton’s “Third Way” takeover by Wall Street. The “Third Way” was neither industrial capitalism nor socialism, but finance capitalism making its gains both by stripping and indebting industry and labor of income. The new Democratic Party ideology of deregulated finance was capped by the massive bank-fraud collapse of 2008 and Barack Obama’s protection of junk-mortgage lenders and wholesale foreclosures on their financial victims. Economic planning and policy was shifted from governments to Wall Street and other financial centers – which had taken control of in government, the central bank and regulatory agencies.

U.S. and British diplomats are seeking to promote this predatory pro-financial and inherently anti-industrial economic philosophy to the rest of the world. But this ideological evangelism is threatened by the obvious contrast between the US-British failed and de-industrialized economies compared to China’s remarkable economic growth under industrial socialism.

This contrast between China’s economic success and the NATO West’s “garden” of debt-ridden austerity is the essence of today’s campaign by the West against the “Jungle” countries seeking political independence from U.S. diplomacy so as to uplift their living standards. This ideological and inherently political global war is today’s counterpart to the religious wars that tore European countries apart for many centuries.

We are witnessing what seems to be an inexorable Decline of the West. U.S. diplomats have been able to tighten their economic, political and military control  leadership over their European NATO allies. Their easy success in this aim has led them to imagine that somehow they can conquer the rest of the world despite de-industrializing and loading their economies so deeply in debt that there is no foreseeable way in which they can pay their official debt to foreign countries or indeed have much to offer.

The Traditional Imperialism of Military Conquest and Financial Conquest Is Ended

There has been a sequence of tactics for a lead-nation to carve out an empire. The oldest way is by military conquest. But you can’t occupy and take over a country without an army, and the US has no army large enough. The Vietnam War ended the draft. So it must rely on foreign armies like Al Qaeda, ISIS, and most recently Ukraine and Poland, just as it relies on foreign industrial manufactures. Its armaments are depleted and it cannot mobilize a domestic army to occupy any country. The US has only one weapon: Missiles and bombs can destroy, but cannot occupy but not occupy and take over a country.

The second way to create imperial power was by economic power to make other countries dependent on U.S. exports. After World War II the rest of the world was devastated and was bullied into accepting U.S. diplomacy maneuvering to give its economy a monopoly on basic needs. Agriculture became a major weapon to create foreign dependency. The World Bank would not support foreign countries growing their own food, but pressed for plantation export crops, and fought land reform. And for oil and energy trade, U.S. companies and their NATO allies in Britain and Holland (British Petroleum and Shell) controlled the world’s oil trade. Control of world oil trade has been a central aim of US trade diplomacy.

This strategy worked for US assertion of control over Germany and other NATO countries, by blowing up the Nord Stream pipeline and severing Western Europe from access to Russian gas, oil, fertilizer and also crops. Europe has now entered an industrial depression and economic austerity as its steel industry and other leading sectors are invited to emigrate to the United States, along with European skilled labor.

Today, electronic technology and computer chips have been a focal point of establishing global Economic Dependency on U.S. technology. The United States aims to monopolize “intellectual property” and extract economic rent from charging high prices) for high-technology computer chips, communications, and arms production.

But the United States has deindustrialized and let itself become dependent on Asian and other countries for its products, instead of making them dependent on the US. This trade dependency is what makes U.S. diplomats feel “insecure,” worrying that other countries might seek to use the same coercive trade and financial diplomacy that the United States has been wielding since 1944-45.

The United States is left with one remaining tactic to control other countries: trade sanctions, imposed by it and its NATO satellites in an attempt to disrupt economies that do not accept U.S. unipolar economic, political and military dominance. It has persuaded the Netherlands to block sophisticated chip-engraving machinery to China, and other countries to block anything that might contribute to China’s economic development. A new American industrial protectionism is being framed in terms of national security grounds.

If China’s trade policy were to mirror that of U.S. diplomacy, it would stop supplying NATO countries with mineral and metal exports needed to produce the computer chips and allied inputs that America’s economy needs to wield its global diplomacy.

The US is so heavily debt-laden, its housing prices are so high and its medical care is so extremely high (18% of GDP) cannot compete. It cannot re-industrialize without taking radical steps to write down debts, to de-privatize health care and education, to break up monopolies and restore progressive taxation. The vested Financial, Insurance and Real Estate (FIRE sector) interests are too powerful to permit these reforms.

That makes the U.S. economy a failed economy, and America a Failed State.

In the wake of World War II the United States accumulated 75% of the world’s monetary gold by 1950. That enabled it to impose dollarization on the world. But today, nobody knows whether the U.S. Treasury and New York Federal Reserve have any gold that has not been pledged to private buyers and speculators? The worry is that it has sold European central-bank gold reserves. Germany has asked for its gold reserves to be flown back from New York, but the United States said that it was unavailable, and Germany was too timid to make its worries and complaints public.

America’s financial quandary is even worse when one tries to imagine how it can ever pay its foreign debt for countries seeking to draw down their dollars. The United States can only print its own currency. It is not willing to sell off its domestic assets, as it demands that other debtor countries do?

What can other countries accept in place of gold? One form of assets that may be taken as collateral are U.S. investments in Europe and other countries. But if foreign governments seek to do this, U.S. officials may retaliate by seizing their investments in the United States. A mutual grabbing would occur.

The United States is trying to monopolize electronic technology. The problem is that this requires raw-materials inputs whose production presently is dominated by China, above all rare-earth metals (which are abundant but environmentally destructive to refine), gallium, nickel (China dominates the refining), and Russian helium and other gasses used for engraving computer chips. China recently announced that on August 1 it will start restricting these key exports. It indeed has the ability to cut off supplies of vital materials and technology to the West, to protect itself from the West’s “national-security” sanctions against China. That is the self-fulfilling prophecy that U.S. warnings of a trade fight has created.

If U.S. diplomacy strongarms its NATO-garden allies to boycott China’s Huawei technology, Europe will be left with a less efficient, more expensive alternative – whose consequences help separate it from China, the BRICS and what has become the World Majority in a self-reliant alignment much broader than was created by Sukarno in 1954.

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  1. digi_owl

    From what i have been told, even Marx lamented the fight between finance and industrial capital in the notes for his unfinished volumes.

    Something about how during a capitalist crisis it would benefit the industrialists to side with their workers against finance, but that if they did so they invariably did it far too late.

    1. Maricata

      What we are looking at is the human species. It is the only species we know capable of self-delusion and that is what is going on — what we see.

      I would also add the ‘cost sunk fallacy’.

      This fallacy you will find in logic.

      It goes like this:

      You push the button for the elevator to come down and after waiting five minutes you say, “Well I have waited this long, invested this much time, so I guess I will wait another five minutes or so and not take the stairs.”

      This is what you see.

      Of course capitalism is the context but it is the self-deluding human being, peppered with fallacies and inordinate power that will destroy the world if we do not decapitate their power NOW

  2. JW

    It was only after I bought a property in the US and starting living there for 5 months a year that I fully realised how much of the average US citizen’s wealth is absorbed by the FIRE sector ( which includes what is laughingly called ‘health’).
    And its the way its layered to be almost impenetrable to the average joe. I insisted on completing all my own IRS submissions ( decades ago working for HMRC has left me immune to worries about tax forms). That was met with a mixture of horror, disbelief, and frankly being warned off from doing it. I was threatening the very fabric of society, or at least it felt like it. This was all repeated when I sold my property, myself.
    Its the dream of the US FIRE sector to replicate itself, Borg like, across the globe. The UK is now well on its way there, some of European countries puts up resistance but the EU works tirelessly to do its master’s bidding. I cannot comment on OZ and Canada, but I would guess they are at least as far down the road as the UK.
    So what is more natural than use the MIC and USD as mutually supportive mechanisms to extend this model everywhere. Unfortunately there has been somewhat unexpected resistance from Putin and Xi who just can’t seem to get their heads around the pleasures of being owners of properties around the flashier flesh spots of the world along with numerous Swiss accounts. Its almost like they actually believe there is a different model, one that promotes more levelised wealth across and within nations, based on the very old fashioned notion of making or extracting stuff. And even worse a lot of other people seem to prefer their model.
    But fear not, there is an extension of the virtual ‘services’ model to deal with this. Just use other people’s fears and prejudices to fight for you to the last of them if necessary. I mean their body bags don’t get on the front pages of the NYT or WaPo do they? Only one slight hiccup, they don’t seem very able to use all the MICs clever stuff.
    Crikey might need to drop some very nasty bombs after all.

    1. Rip Van Winkle

      Growing up in the ‘60s through early ‘80s in working class neighborhoods the only debt anyone may have had was a 15 year fixed rate mortgage,

    2. Kfish

      Here in Australia, real estate is God. Also, our superannuation (401k equivalent) is invested in the stock market. The health system is less extractive than the US, but it’s going downhill.

  3. john

    Well, there u have it…Hudson sums it all up quite well. Dont need to hear or read anything else.

    1. Maricata

      Oh yes you do if you want to be a critical thinker.

      You live behind enemy lines.

      Life is now a tour of duty.

      Binary thinking must be replaced by critical thinking and this means cobbling together many points of view and arriving at your own conclusions.

      And it is especially important to examine the points of view you do not agree with.

      Michael is spot on in my book.

      But my book has multiple points of view to compare and contrast and I came to my own conclusions, as did Michael.

      “But submission to what? The answer is, submission to the logic of mutual gains along lines leaving the U.S. economy behind!”

      Michael does not agree with me and has told me so in writing but there are many who do.

      Hitler’s gold and the Golden Lilly funds have never been traced although Paul Manning and the Seagraves have done the great work on this.

      There is an underground synarchy and it emerged after WWII.

      Come to your own conclusions but never say this person says it all I do not have to think critically.

      We off shored our industry, let us not out
      source our minds.

    2. Maricata

      Critical thinking demands multiple points of view and the ability to reason through them

      Michael is spot on in my book but that is due to my reasoning through multiple points of view.

      Do not contract out your thinking as we off shored our industry.

      Always know what the enemy is thinking and always reason through multiple points of view to come to your own conclusions.

    3. Maricata

      Remember: When you censor you commit the same act of betrayal.

      Allow people to speak!

      We do not win when we censor.

    4. Maricata

      You do good work but people will not support you if you censor.

      And why would they give money to a site that mu ffles their point of view.

      No, the problem is not just financial capitalisms it is also the lack of critical consciousness.

      That is why I left Amerika 11 years ago for th e global south.

      the country is not a failed state, it is dead.

      I will continu to read and as you wish, will not comment.

      Sad. Actually, tragic.

  4. Marvin

    Not only economic self-interest has been replaced by “national security” considerations, but also large parts of international law and international organisations.

    Sanctions, for example, are illegal according to international law unless authorised by the UN security council. The WHO puts, in theory, strong limits on any kind of trade barriers.

    Unfortunately, the US has decided to expand a tiny execption in the sanctions rulebook -“national security” into a full replacement of the rulebook. As for the WTO, starting with President Obama, US governments have effectively dismanteled the WTO by refusing to appoint members for the appelate system. WTO rules may still be in place, but until the US stops sabotaging the organisation, they will not be enforced.

    All this may work well for the West as long as we (the US) are the gorilla in the room. Once others emerge who are equally strong, or stronger, we will dearly regret having destroyed the very foundations of civilization that made us great.

    1. digi_owl

      > Unfortunately, the US has decided to expand a tiny execption in the sanctions rulebook -“national security” into a full replacement of the rulebook.

      So basically the same as when “interstate commerce” is used to excuse any federal meddling in state internals?

      That same kind of reasoning is behind EU meddling as well BTW, through its numerous directives meant to ease trade between members. Often undermining hard fought labor concessions to the benefit of globalist finance.

  5. Carolinian

    FIRE may dominate DC but from where I sit China is still everywhere and even the real estate sector, with its frantic recent construction, uses power tools and materials made in China. Example: a new kitchen faucet I recently bought at Lowe’s says “made in China.”

    So it’s one thing to sanction Russia from whom we buy very little and another to sanction China from whom we now buy everything. And if China is our enemy why were we shifting to China made products in the first place? American labor complained about this even as Wall Street insisted on it.

    It’s hard not to suspect that all this aggressive talk from the Bidenistas is simply another example of their floundering around. Every agonist needs an antagonist for their narrative of heroic leadership. Reality is something to keep in the shadows.

    1. John Wright

      Yes, when one visits the USA big box home improvement stores, everything is either made in China or Mexico.

      About the closest one approaches a “Made in America” product is provided by box notes “Assembled in the USA from global components.”

      I suspect too many of our leaders believe they have absolute legislative control over the material world.

      However, sanctioning China might cause them to stop exporting tungsten to the USA and its allies.

      The Washington elite may view tungsten as unimportant (“used in old lightbulbs”) but tungsten is used in cutting tools (tungsten carbide) and other industrial items.

      Substituting other materials may be difficult/impossible.


      “The world’s reserves of tungsten are 3,200,000 tonnes; they are mostly located in China (1,800,000 t), Canada (290,000 t),[56] Russia (160,000 t), Vietnam (95,000 t) and Bolivia.”

      From the wikipedia page: “The strategic value of tungsten came to notice in the early 20th century. British authorities acted in 1912 to free the Carrock mine from the German owned Cumbrian Mining Company and, during World War I, restrict German access elsewhere. In World War II, tungsten played a more significant role in background political dealings.

      Maybe the elite believe that Canada can supply tungsten as needed, if Chinese sanctions are invoked.

      1. some guy

        Now that Chinese companies are investing bigly in manufacturing facilities in Mexico in response to the “nearshoring” and “friendshoring” performative gestures being suggested and even dabbled in by business and government, we will also be seeing stuff made in ” Mexichinaco”. Which will eventually become a recognized concept and then a thing.

    2. some guy

      ” We” didn’t shift to China-made products. Our pro Free-Trade rulers in the DC FedRegime shifted us to it.
      Millions of ” we” objected to that engineered shift the whole time Clinton engineered the final passage of Reagan-Bush’s Free Trade Agreements and more such agreements besides.

      America may be a failed state. It is certainly an Upper-Class Occupied Colony. And the American Upper Class has wanted for decades to turn America into One Big Haiti. Forcey Free-Trade, including with China, was a toolbox of weapons designed to achieve that goal.

  6. The Rev Kev

    An excellent summary this. Some groups really want a fight with China though I do not know what they expect to get out of it. Most corporations are trying to fight this as it would kill their businesses. The military-industrial complex are all in on this idiocy though. One of the big media organizations staged a war game a coupla months ago on TV and it was supposed to be sooo realistic. They even had a Chinese-looking bird act the role of China. It was one of those times that you wish that you could be there to speak up. So when the “US” side said that they were advancing ships to China, I would have announced that henceforth, China will cut of all exports of spare parts, rare-earth materials and medicines to any nation that takes part in aggression against China. And just to make the other side understand what that meant, would have explained in a hundred words what that would exactly mean for the west.

    1. Carolinian

      WSWS says y’all are practicing an amphibious invasion of China using Abrams tanks. Good luck Aussies!

      Defence News, an industry publication, gave a chilling indication of what is being simulated. The core mission of Talisman Sabre will be “a joint logistics over-the-shore exercise where the [American] Army will take 17 M1 Abrams tanks off of its Army Prepositioned Stock Afloat ship and onto watercraft as well as 400 pieces of rolling stock, which has never been exercised at this size in the theater.”

      Germany is showing up for the games too although no word whether the fearsome Leopards will be joining the Abrams.

      1. The Rev Kev

        And guess what? I read recently that we are buying another hundred Abrams as well. Can’t wait to see how well they do in the Ukraine. They may have burned in Yemen but surely the same won’t happen in the Ukraine, will it?

      2. Maricata

        Correct. The US overthrew the Whitman government in the Australia in 1975.

        The Neman/Hand bank was partially behind this.

        The Aussies are bought and paid for.

    2. ChrisPacific

      My theory:

      As Hudson says, the US wants to continue telling other countries what to do. Massive trade dependence on China is a problem, because it gives China an unacceptable amount of leverage. Yes, it’s a self-created problem, but leaders will talk their way around that (it was the right thing then but not now, it was done by other people who didn’t have our best interests at heart, or something similar).

      Leaders would like to reduce trade dependence on China to give themselves more leverage to push China (and its allies) around. The small problem is that China currently provides the US with All The Stuff, and if they were to stop doing that then there would be a sudden and drastic drop in living standard as the US had to find alternative sources.

      Things like a sudden and drastic drop in living standard are typically electorally fatal in a democracy, with one exception: when you are at war. Then it’s considered a patriotic duty and a badge of honor to endure it in the name of victory for your country.

      Therefore the only framework in which US leaders can decouple from China without being voted out of office at the earliest opportunity is a war framework, so that’s what they are trying to engineer.

  7. Adams

    “The plan is to carve away China’s military allies and trading partners, above all Russia, starting with the fight in Ukraine. President Biden has said that this war will be global in scope and will take many decades as it expands to ultimately isolate and break up China.” I can’t make sense of this.

    As I have not seen such a statement from Biden, Blinken, or Austin with respect to China (certainly would have thrown a wet blanket on Yellen’s trip) I assume “this war” means Ukraine. However, these guys have made crystal clear statements with respect to Russia that make it undeniable that the purpose of the Ukraine conflict as a proxy war is to depose Putin, and weaken and possibly break up Russia into more “manageable” pieces. Is it safe to assume then that “break up China” at the end should be “break up Russia” as one of the necessary steps toward focusing on defeating China and re-establishing US global hegemony against the burgeoning threat of BRICS+ global south, etc?.

    1. John Gilberts

      According to John Helmer in a MUST HEAR interview with former European/NATO military intelligence officer Jacques Baud, the preparatory proxy war against Russia isn’t going at all well. And European military circles now know it. The war on China may soon come to a grinding halt as well. Not to mention the administration of Joe Biden if the ‘Biden crime family’ deets about dirty dealings in both Ukraine and China become widely known.

      Colonel Jacques Baud on War of the Worlds

    2. Altandmain

      Of course it is. Note the US actions on Taiwan, which the US signed the One China policy. It also has used the CIA in Tibet and its now more widely known the CIA was active during the Hong Kong riots (Brian Berletic has a good video about this).

  8. Boomheist

    I love the point Yves makes about how the EU stresses from the Russian fiasco serve to weaken one of China’s biggest markets, and as such makes an argument that there might be some basis or logic behind this proxy war as an anti-China strategy. Now combine that with the efforts here in the US to rebuild manufacturing, which will further weaken that Chinese market….

    1. Pat

      There are efforts to rebuild manufacturing? Outside of foreign investment tax scams I haven’t seen much of that and I look for those reports.

      1. tegnost

        I searched us manufacturing growth just for kicks and it was a real dogs breakfast of grifters, hacks and scoundrels. This is the most recent in a couple of pages of search but overall the us benefited basically from killing people by opening up while china did zero covid. Let me see your smile! And as usual, as soon as uncle sugar starts paying for infra then the boom will accelerate and the rich will get massively richer.
        key quote…”but, but, but….inflation reduction act!”

        but then…

        lede.”Manufacturing Production in the United States decreased 0.3% year-on-year in June of 2023, marking a fourth consecutive month of falls in factory output.”
        The manufacturing renaissance is going to be a bidenomics meme for the next 450 odd days methinks…and as I’m sure you know, it doesn’t actually have to be a real thing.

        1. Piotr Berman

          Trading Economics is OK, but very unfriendly, essentially it is a teaser for a very expensive subscription.

          One tidbit I found elsewhere: US manufacturing production is now 2% larger than in 2012. Population growth and the effect to Trumpian trade war, and whatever Bidenomic offers did not yield any visible stimulus. After regaining losses in output during Covid, the trajectory resolutely oscillates around zero, currently below.

          I could offer more smart alec comments, but we see a collusion of a complex issue with simplistic solutions that include a fair share of boondoggles. For the latter, transportation is a nice case study.

          To move transportation to “carbon neutral” there is a program to replace trucks with 2-3 times more expensive battery driven trucks (400k a piece? charging infrastructure? 1/3 of time spend in charging stations?). A “low hanging fruit” is to a) increase shares of railroads in moving cargo, at least doubling from current 22%, railroads offer much smaller energy per mile-ton, preferably eliminating most of long distance trucking
          b) electrifying railroads — that actually saves money! unlike trucks
          c) EV-ing short distance truck traffic (especially under 100 miles) is much less expensive, smaller batteries etc.

          However, existing railroad management is averse to investing in increasing capacity and it CANNOT BE TOUCHED by current political structure. It is easier to start a world war…

    2. ex-PFC Chuck

      Except as Hudson notes above:

      “The US is so heavily debt-laden, its housing prices are so high and its medical care is so extremely high (18% of GDP) cannot compete. It cannot re-industrialize without taking radical steps to write down debts, to de-privatize health care and education, to break up monopolies and restore progressive taxation. The vested Financial, Insurance and Real Estate (FIRE sector) interests are too powerful to permit these reforms.”

      Because of these predatory costs USA-made products will not be competitive with those made in global majority countries.

      1. JBird4049

        And if the American population was not impoverished by the FIRE sector, it could buy all the products of American manufacturing; the biggest market for American goods has always been America. I still remember that almost everything I saw as a child was American made.

    3. some guy

      There are no such efforts. There may be some cardboard-replica life-size foam-rubber models of such efforts. But they are only meant to fool the American public into thinking that the DC FedRegime operatives and their social class owners ” really do care about us deep down in their hearts”.

      Rebuilding any comprehensive multi-level multi-function industrial ecology in America would take decades. And it could only be accomplished behind a trade-stopping Big Beautiful Wall of Protectionism kept in place for all those decades. And it, too, would result in a lower “standard of living” then the PMCists now have for themselves. But it would be a stable-survival standard of living.

      It would also be an acknowledgement that the best America can hope for would be a
      “middle-income middle-power” status in the future as the price of survival at all. But a “middle-income” standard of living would be better than the lower-income and falling-fast mode-of-existence which many ( and more and more every day) Americans are now consigned to by their Free Trade Conspiracy rulers.

      Could a movement arise itself and agitate and organize on the concept of ” a balanced semi-autarkish survival-economy survival society” as a still-possible future for America? An America with zero world leadership and zero American Exceptionalism? An ” American Okayness Ordinarianism” America?

      Or would the upper class and all their social mass-gaslighting engineers suppress and kill it before it could even arise?

  9. Simple John

    I wish the greedy rich didn’t steal our future.
    They always have a scam – organize religion for millennia, economics for a century overlaid with national security, now it’s AI.
    We were nationally secure in 1970 when I left the defense industry.
    I can’t believe Biden talks about something taking decades. I wonder if he can define “decade”.

  10. Lex

    The diamond path for analyzing US international behavior is to assume projection. If the US worries publicly that country A will do action Z, you’ll be right most of the time in understanding that the US is talking about itself again.

    The US is an anomalous empire in that it is primarily economic, though the late British empire and most of the Dutch empire are similar. However, it still relies on the threat of military force. Hence the constant talk about the biggest, baddest military in history (regardless that the statement is patently untrue). What the US has is the power of military projection globally. In reality, it’s the power of pinpricks but for 30+ years that’s been enough.

    The real problem with Ukraine for the US is that the current situation and probable projection of the conflict into the medium term future is that it destroys the myth of the US’s big stick. Increasingly it is destroying the actuality of the US’s big stick too as munition and material stockpiles are used. The cupboard can’t be bare yet, the US has too many potential conflicts that it requires stocks for but it may be approaching an inability to supply Ukraine without degrading its potential for other conflicts.

    So in concert with the economic factors Dr. Hudson describes, the US is now experiencing the downslope of classical imperial overstretch. Ukraine has shown it to be a paperish tiger, especially unwilling to put its own on the line for what it describes as an existential conflict. That shows fear of failure or inability to prosecute success. Going forward, the inevitable issues on the imperial periphery become more problematic and almost certainly more numerous.

    Exactly where we are on the doom loop spiral of imperial decline is debatable. But there’s little question that the US is well into the tightening of that spiral and so the velocity is increasing too.

  11. GC54

    Well, impoverishment of 99% of the Golden Billion might delay the global environmental catastrophe by a few years, so there’s that.

    1. juno mas

      …but all the rotting corpse laying about from violence will increase methane production and the climate catastrophe will proceed.

  12. ISL

    Hudson’s (compelling) arguments suggests that economic interests and logic likely will not determine the pace of de-dollarization (to shift to where the world’s economic center has shifted) – it will be determined by national security – a very nebulously defined term!

  13. Val

    Creeper Joe “this war will be global in scope and will take many decades”

    rhymes wistfully with GWOT, don’t it?

    Frustrated maniacs require a new spectacle and soon.

    This charming experiment of ours has well and truly concluded. Advice on moving productive endeavors and brain candy out of the late empire would be welcome and efficacious in a moral sense.

  14. Gregory Etchason

    I would hope someday Michael Hudson will write “anything” in less than 2000 words.🙄

  15. spud

    this is very easy to understand if you were paying attention to the bill clinton administration, and all of the outrageous claims, assumptions and white supremacy that they belched out of their mouths.

    anyone who thinks that the clinton admistration was merely corrupt, which it was maybe the worst america ever had, is that clinton and his people and supporters were feverish believers in free trade.

    like hitler who knew free trade was for global domination, the current crop of free traders knows this all to well.

    and in their eyes, whats mine is mine, whats yours is mine, and there will be no discussions about this period.

    all one needs to do is listen to biden about the rules based global economy. its the free trade stupid!

    the problem is america must go on that diet Yves, only we are really going to pay a steep price for it. but since we really have no choice but to reverse what bill clinton did, or otherwise face a future of a ever more poverty and a slow meltdown into a third world country, which we are close to now.

    if hitler, Mussolini, and the central european fascists were deemed insane, then we can rightly say so was bill clinton and his people and supporters.

    so to understand, brings clarity.

    the problem again is that only a tiny elite have prospered from free trade. i reject the statement that america prospered from it. if you have gutted your standard of living, driven the country deep into debt, and gutted your technology, that can hardly be considered prosperous.

    its easy to see that indeed, governments are supporting their business interests, in fact, just big business that has its footprints all over the world. the parasites controlling those business’s, could care less about their home country, they only know feeding, and china and russia are taking away their chance to feed uncontrollably.

    the politicians actually believe in free trade, and what it really stands for. so they could care less about mid sized to small businesses.

    absolutely correct!,

    “The US is so heavily debt-laden, its housing prices are so high and its medical care is so extremely high (18% of GDP) cannot compete. It cannot re-industrialize without taking radical steps to write down debts, to de-privatize health care and education, to break up monopolies and restore progressive taxation. The vested Financial, Insurance and Real Estate (FIRE sector) interests are too powerful to permit these reforms.

    That makes the U.S. economy a failed economy, and America a Failed State”

    what russia and to a lesser extent china, what they are building is not free trade, but selling what you can, buying what you have to, and russia is prospering from it mightily.

    china needs to abandon the work shop of the world mentality, which is the mentality of free trade, and turn inwards and support their population with massive subsidies.

    as the parasites pushing the politicians to enforce free trade vanish and abandon the free trade hollowed out burning hulks to the newly created massive middle classes in russia and china, the dim wit free trading politicians and academia will be outraged!

    1. some guy

      I think the ChinaGov Regime would say that it is not our place as Americans to offer China advice on what China “needs” to do.

      And at this late date, I would agree operationally, even if I nurtured some nostalgiac pleasure at once having been able to tell the ChinaGov Regime what China needs to do.

      At this late date, lower-class majority Americans need to focus on what a lower-class majority America needs to do to survive. Some of that might involve dealing with all the pro-free-trade ClintoBama DemoBidencrats in a way which would not be nice to describe in a family blog.

      What would Jesus do?
      What would Stalin do?
      What would Scooby do?

      1. spud

        i agree, that china no longer should listen to us. but they also have a responsibility to break down all free trade regimes.

        1. some guy

          I wouldn’t waste my time waiting around for the ChinaGov Regime to acknowledge any such responsibility. They have too much to gain by exploiting the current Free Trade Order to their benefit, running a Mercantilist policy under Free Trade cover. They plan to make America into one of their Mercantilonial hunting grounds. ” Mercantilonialism” should be a word.

          This also answers the question as to why the ChinaGov regime doesn’t do an all-out tit-for-tat total reciprocal embargo response to the DC FedRegime’s various embargoes and sacntions and so on. And the reason is . . . . is that if China did that, they could collapse the American economy to zero within months. But that would collapse America’s ability to buy made-in-China goods, and the ChinaGov wants to keep Americans buying from China till America has zero money left to buy zero anything from China anymore. At which point China will turn America into one of its Overseas Tibets if it thinks it worthwhile from a residual resource-exploitation point of view, or will throw America away like a worn out old shoe if America has nothing left to be exploited of.

          If China buys the last mineral nutrient ion from the last farm in America in the form of soybeans and corn, so that there is no mineral nutrition left in American farmland anymore, hence no more corn an no more soybeans, why would China even care about controlling America at that point? That is the happy end-game state China wishes to achieve for America, and freezing the American economy now, while we still have something left to steal and take away from America, prevents that end-game state from being reached.

          And that’s why China won’t embargo America.

          If someone wants to call that ” China-hate” , they are free to do so. Events will prove me right or wrong over the next 30-50 years, unless America can “round up” and “exterminate” its Free Trade supporters first , and wall itself off in time to be able to survive as a kinder gentler ” North Korea” until we have rebuilt the means of our own Separate Survival.

  16. Aurelien

    Economists are always shocked! shocked! to discover that individuals, nations and communities don’t invariably act in their own economic self-interest, and often go to enormous lengths to try to find economic motivations and explanations where there are none, as is the case here.

    I won’t bore fellow readers here with arguments they can find on my Substack, but I’d simply point out that for the elites of both Europe and the US, the competition with Russia and China is an existential struggle for survival at the ideological level, and damn the practical consequences for their populations.There are casualties in any war, and if that includes jobs and standards of living so be it: what is important is that Liberal ideology, which is self-justifyingly true and universal, should triumph all over the world. Opposition is bad enough, but the existence of persuasive counter-examples is intolerable.

    1. NL

      Everyone knows that it is the socioeconomic status, and the economists just pretend not to know this. But economics is a pseudoscience anyway that steals the prestige of Nobel.

      The French nobility has had for centuries something called loi de derogeance, which basically a law that any nobleman who starts working as a attorney, clerk, merchant and artisan, etc is automatically stripped of the noble title and becomes a common man. The idea was that work takes away “quality”. Except of course for hunting, hunting was noble. And this was while the capitalists were taking over everything.

      We may have come the full circle, whereby the merchant classes overthrew the parasitic idle nobility only to become themselves parasitic idle nobility. How many people in the US live off the investment income and do not work at all? I would guess millions…

      As to the war in Ukraine, two weak oligarchies are having a mud fight. The oligarchy can’t command the loyalty of the people — Russia is fighting using contract mercenaries, we have a fully contract army that has difficulties recruiting now. For an oligarchy, fighting an external enemy means fewer resources for itself and for keeping the home population in check. Russia just had an attempted revolution to overthrow the Putin oligarchy and began a crackdown on the population by arresting key visible opposition leaders. The ruble resumed its slide to becoming rubble — why? Cause the Russian oligarchs have settled in new places and need money abroad for lavish life expenses. Are they willing to make sacrifices for the war? — of course not, sacrifices are for the common laboring people. Either the Putin oligarchy will be overthrown or Russia will disintegrate.

      Meanwhile, we are right now on the road to become an impoverished hermit failed state protected by nuclear weapons, like an inverted capitalistic North Korea..

      1. Daniil Adamov

        While I don’t disagree with much of this assessment, this: “Either the Putin oligarchy will be overthrown or Russia will disintegrate.” is a strange binary and rather unlikely besides. The Yeltsin-Putin regime has many faults, but its grip on power at home has been consistently strong. The opposition was a joke even before the war, it is completely disabled now, so arresting leaders or leaving them alone makes little difference. To call that a “crackdown on the population” is a stretch, since opposition figures of any stripe have little to do with most of the population – they are mostly a narrow slice of an already narrow elite, plus hangers-on. The “attempted revolution”, if that is what it was, found minimal support and ended in a day. I suspect we will hold on, though without any dramatic breakthroughs.

    2. Stephen

      Right. A minority of elites are acting in their own self interest. That self interest does not align with the interests of the average citizen but they simply do not care about that and our political systems create very little incentive for them to care.

    3. Lex

      The failure to act consistently according to economic especially interest that shocks economists is baked into the Liberal model all the way back to the Enlightenment. Humans as rational animals was accepted as axiomatic, philosophically. Granted the elite that formulated this idea did not extend it to the common man exactly and that’s why he couldn’t be trusted to run affairs directly. Nonetheless, the axiom took hold and was gradually extended down the social ladder and put into aggregate human behavior.

      So far as I know, nobody’s ever offered a proof of human rationality as our fundamental nature. Yet we continue to insist that we are and build all of our economic and political systems on the necessity of reason. And then in the worst case of individualism in Liberalism we confuse reason with selfishness, leading to even worse outcomes.

  17. FUBAR111111

    1968 – the USA in Vietnam – “We had to destroy the village to save the village!”

    2003 – the USA in Iraq – “We had to destroy the Baath Party and Saddam’s regime to save Iraq!”

    2011 – the USA in LIbya – “We had to destroy the Qaddafi regime and Libya to save LIbya!”

    2021 – the USA in Ukraine – “We had to destroy Ukraine to save Ukraine!”

    2022 – the USA in Europe – “We nad to destroy the European economy to save Europe!”

    2023/2024 – the USA – “We had to destroy ourselves and our allies economically to save ourselves!”

    2025 – the USA in Taiwan – “We had to destroy Taiwan to save Taiwan!”

    2026 – the USA – “We had to destroy the world to save the world!”

    2100 – the USA – “We had to destroy the Solar System to save the Solar System!:

    2300 – the USA -“We had to destroy the Milky Way to save tthe Milky Way!”

    2500 – the USA – “We had to destroy the Known Universe to save the Known Universe!”

    Everything is going according to Plan.

    1. Kouros

      Why the assumption that after 2026 the US would come on top? Are the continental US air defense systems that good? And is the population at large that domesticated?

      1. FUBAR111111

        You have to ask?

        Because they always assume they will easily win, at everything.

        “Losing Is Not An Option! We Are Fully Committed To (insert curent war here) For As Long As It Takes!””

        I should have put The Borg, The Blob, The Deep State, or US/UK/NATO/EU/WEF instead.

  18. Susan the other

    All things are possible, right? Conceivably, we could have two economies here in the US. The old economy, mired in debt, can limp along on a devalued currency. A new economy based on the value of a new eco-industrialism could run side by side with the old economy if we separated the two, each with its own currency and accounting system. If we isolate the dollar and keep it within the old system we could let the whole mess kinda “run off the book” like Bernanke did with the overwhelmingly imploded inflation of 2008. Makes me think that that is the real agenda of crypto, but crypto is ill conceived as a form of private (as opposed to sovereign) money. Private money cannot muster the required cooperation we need to make a new economy work. Those “capitalist” days are over, imo. Because that whole paradigm was the very definition of “herding cats.” There are so many productive and valuable enterprises we can focus on and time is running out while we confront each other idiotically with atomic weapons. I mean, really?

    1. digi_owl

      Crypto is not money, crypto is simulated commodities.

      It basically exist to give goldbugs an “eternal” conga line of new “investment” opportunities.

      1. some guy

        Maybe we should call them cryptobugs, for their endless true belief in the coming of the crypto which finally gets it right.

        Crypto can never fail. It can only be failed.

        I flunked crypto long ago. In fact, I never even signed up for the course.

  19. Cat Burglar

    “No problem! If we don’t have the ammo to give the Ukrainians, we’ll just make some more — er, well, we can just buy it off the shelf from Ch — er, well, we can substitute something else we can buy — er, well…”

    I don’t know how you can be a deindustrialized world power. At my remove from the powers, it is usually a principle of studying them not to assume they are stupid (it is risky). But the rise of China under its own political control has been a realistic possibility for decades (noted for example, in Chalmers Johnson’s Blowback in the 90s). Hard to believe they couldn’t see this one coming, but that looks like what happened.

    Aurelien is right that Liberal Ideology functioned like a sack over their elite heads, but we can also winnow out some other interest agendas at work. Career advancement along lines of patronage funded by weapons and security contractors and their policy shops. Inertia. Policy options circumscribed by the most powerful interests, always with the incentive to short-term solutions. Factional conflict over power and goodies between elite groups. Or, as above, they thought they could just buy a tool off-the-shelf when the crisis came; now they have showed up with the money, but the shelf is bare.

    As I rolled along the highway through Reno yesterday — the road surface always a mess of bumps and cracks,yet always under construction — it looked like we are not living in a failed state, but a failing state.

    1. Jams O'Donnell

      I may have posted this here before, but it may be that some readers have missed, so with your permission, Yves, I’ll post it again:

      The UN recently demoted the US to 41st, down from 32nd, in a global ranking based on its sustainable development goals. This index is focused on the quality of life of ordinary people rather than the creation of wealth. And, on this measure, the US comes just behind Cuba and just above Bulgaria. The US is “becoming a ‘developing country’,” one MIT economist said, based on this index. An example: in Chicago, a lack of funding at the city, state, and federal levels means that toxically high levels of lead in the water supply will not be dealt with.

      The US is a country where nearly one in 10 adults have medical debts and a broken bone can boot you into bankruptcy. Where a city of more than 160,000 residents recently had no safe drinking water for weeks. Where life expectancy has dropped for the second year in a row and poor people sell their blood plasma in order to make ends meet. Where the maternal mortality rate of black women in the capital is nearly twice as high as for women in Syria.

      The US prison system incarcerates more people than any other country in the world. Currently, there are over 2 million people in prisons, jails, and detention centers. This number represents 25% of all inmates in the world even though the US population makes up only 5% of the global population. A common opinion is that this system is broken and in need of repair.

      The problems with the prison system only continue when one looks at the obvious racial and gender disparities. For example, while black inmates make up nearly 40% of the prison population, they only make up 13.40% of the total US population. Native Americans represent 2.30% of the incarcerated population and only 1.30% of the population. 58.70% of the prison population is non-white, which includes Hispanic Americans. The effect of this on children is astounding. African American and Latino children are more likely to have a parent in jail or prison. Thus the number of African American children living in poverty has increased since 1968.

      Education: Consider this quote from an American education expert:
      “The US has never been first in the world, nor even near the top, on any international tests. Consistently over the past half century, American students have typically scored near the median at best, but most often being in the bottom quartile. The historical record indicates that American elementary students are only average at best, their performance degrading year by year until high school seniors perform last in almost all international tests. The International Science Studies that began in high schools in the late 1960s and early 1970s found that 14-year-olds were below average and seniors scored last of all countries. In the International Mathematics tests that began in the 1960s, American high school seniors scored last of all nations. In the 1982 International Mathematics Study, high school seniors placed at the bottom on almost every test. In terms of the PISA tests, American students – placing last – are simply following the pattern that has been consistent for the past 50 years or more.”

      And a quote from one news report: “In October of 2013 a new global report issued by the OECD found that Americans ranked well below the worldwide average in just about every measure of skill. In math, reading, and technology-driven problem-solving , the United States performed worse than nearly every other country… The US would have looked even worse if China had been included in this study. In basic literacy – the ability to understand and use basic written text – 80% of Americans reached only a level 2 out of 5. And in math and numerical proficiency, using numbers in daily life, they are worse … and 10% scored below level 1. Technological literacy and ability were worse too. In problem-solving in a technological environment and the use of “cognitive skills required to solve problems”, the Americans were at the bottom.” And that bottom is in math, vocabulary, language usage and technology, with Chinese students far surpassing the Americans even when using a language that is not their own.

      China is estimated to spend around $6bn a year on its space programme. Although that is almost $1bn more than Russia, it is still a fraction of the American space budget, which is around $40bn a year. Despite its large budget, the US made only 19 successful space launches in 2013, compared with China’s 14 and Russia’s 31.
      The only thing the US manufactures now is arms, and they are designed not for use, but for optimum profit. Hence the expensive but inefficient and next to useless F-35, the expensive F-22 which can only operate for one day per week and is now being scrapped, the useless ‘Littoral Combat’ ships which are literally falling apart and now being scrapped, the very expensive new ‘Gerald Ford’ class carrier which has unending problems, and the Zumwalt’ destroyers, cancelled after two expensive and dis-functional examples. These latter sport two humps on the foredeck, which were supposed to be large calibre guns for shelling land targets. Gun technology is now around 1000 years old – still, these guns were never made to work and are now abandoned!

      A report by the American Road & Transportation Builders Association (ARTBA) found: 220,000 bridges, 36% of American total stock, need repair and 79,500 need to be replaced. They identify the states with the most “serious” or “worse” condition bridges as: Iowa (1,762 bridges), Oklahoma (922), Illinois (764), Pennsylvania (728), Missouri (700), and Louisiana (638). This should be alarming, but clearly we have disfunctional priorities.

      On an A to F grading scale, the American Society of Civil Engineers gave the U.S.’ infrastructure condition a dreadful D+ and described investment in it’s improvement as “woefully inadequate.” 
      Here’s a breakdown of ASCE’s rating:-
Levees: D,
      Roads: D, 
Inland Waterways: D,
Dams: D,
Aviation: D-,
      Bridges: C+, 
Drinking Water: D+,
Energy: D+,
Hazardous Waste Management: D+, 
Transit: D,
      Rail: B, 
Ports: C.

    2. Felix_47

      While our production rate for single conventional 155 shells is low we apparently have 3 million rounds of 155 cluster shells available for Ukraine. I am not sure how the Russians are going to handle that in an artillery war. It will not be easy. 3 million rounds. It is a ghastly thought. But Joe seems to realize that if he does not win in Ukraine he is not going to win in November.

  20. NotThePilot

    Don’t know if it was intentional, but I think it’s fitting that Prof. Hudson capitalized the phrase “Decline of the West.” While the US and EU behavior makes very little sense from a PoV of self-interest or preservation (and what little it does is only with delusional priors), it actually fits pretty square in Spenglerian terms.

    (Currently Westernized) North America and the industrial core of Europe are a cultural sphere still on it’s first pass along the wheel, as opposed to an older civilization state. And when all the easy-pickings and dissipation of colonialism are done, a major hangover of cultural and political exhaustion sets in.

    At that point, even if subconsciously, the states in the cultural sphere sort of want to be subsumed into a single empire, at least in the abstract. Nobody can agree on the details though, which is why a Warring States period comes about. And towards the start of those periods, hegemony typically bounces between peripheral states with a lot of material advantages and a materialistic bent. Since the peripheral states originate in and are predicated on colonialism though, their hegemony is inherently obsolete, unstable, and short-lived.

    The real paradox is how hard many people in the subject states will do everything they can to keep the hegemon in place. I think the reasons are complicated: that sense of exhaustion, fear of the (inevitable) return to conflict, and lingering mental habits from the colonial period (*cough* racism *cough, cough*).

  21. korual

    Rather than calling this WWIII, wouldn’t it be clearer to call it WW5?

    WWI ended the empires in Central Europe, WWII ended the empires in Western Europe, WWIII (“Cold War”) ended the empire in Eastern Europe, WW4 (“War on Terror”) ended the US empire.

    Now we have the final “Decline of the West” WW5, ending imperialism altogether and launching the multipolar age?

    1. Daniil Adamov

      The multipolar age seems to imply imperial competition to me. Certainly the last multipolar age (before WWI) had it as a prominent feature.

  22. ChrisFromGA

    Late to the discussion, but I want to challenge the notion that by taking Europe away from China as an export market, the super-geniuses in the State Dept. and other neolibs can hurt China.

    The problem with that argument is it ignores the rest of the world, including countries like India and Brazil that may gain from Europe’s loss. If Chinese exporters are able to adapt and grow in markets such as Latin America and SE Asia, then the loss of European markets can be overcome with new markets. Only in a static world is the loss of some of Europe a dead-on hit to China’s economy.

    That might explain some of the hysteria coming from US neoliberals when leaders like Lula refuse to take the “bash China” bait. Waging economic war on China requires ironclad hegemony over the rest of the world; it’s go full spectrum dominance, or go home.

    1. digi_owl

      Basically the mafioso of DC have considered latin-america their turf since Monroe.

      Also, it is the one market that the USN can blockade access to, as there is no overland alternative.

  23. vic

    “Another possibility is the so-called Iron Law of Institutions, that individuals and interests are operating to maximize their own position, with little/no concern to the impact on the system.”

    Or perhaps a reworking of : As Kuhn put it, “a new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.”

    Or from dialectical and historical materialism : Ideas emanate from objective reality, however as objective reality changes, ideas can lag, and appear disconnected from reality.

    1. digi_owl

      Given that some members of congress are in their 90s, that may well be closer to the truth than is comfortable to contemplate. Freeze dried warriors, basically…

  24. rob

    What seems to be so painfully obvious, to those of us here, and to dr. Hudson; that this antagonism towards china, is just plain stupid and utterly un-realistic. Is something we here , “in the choir”, can see because we are looking. Like the old parable “for those with eyes to see, and ears to hear”, We have chosen to be open to observing reality, by what we believe to be reality.
    But , I recently had a member of the us diplomatic corp. over for a visit, on a stateside break from Beijing,; and the reality seems to be the people who fill the ranks are only “true believers”. and they don’t believe in any of this stuff, and nothing the world can offer, can sway their convictions.

    We are screwed.

  25. rob

    The irony of how the story has changed here in north carolina over the last thirty years.

    This state had a robust textile industry, and a furniture industry, as well as plenty of other manufacturing; pre-1993/pre=NAFTA…

    But the powers that be, made a killing exploiting the dissolution of the soviet union…. and CHOSE to force realistic manufacturers OUT of the country; first to mexico, then to china, and elsewhere. Back then they wagged their finger at the millions of people who now needed to “get another job”, telling them to “learn a new way”…. and some did… but… since North carolina is a “right to work for nothing state”… the new manufacturing going after the NON-union employees, paid a lot less. And in the last thirty years the quality of all the products people bought, got crappier…. yet more expensive…And all the cumulative knowledge of people who know what they are doing has been lost.
    So now, the powers that be… enrich themselves because they have the connections to the right financial powers that be…and they are pretty sure they can pretend they haven’t “sold the family silver”, and hope for a feast when the jobs come back….But when they fail…. and they will, because they have just concerned themselves with hobbling the working class, and have not really made any investments that help any situation. Everything is just hanging on.
    And now North Carolina and other “right to work for nothing states seem to be getting new operations of various countries building batteries, electric cars, computer chips, etc….But really, these are not the kinds of operations that seem to be vast enough to bring prosperity to that many people. I also can’t think of any that are “self-sufficient” and not getting many supplies/ materials from abroad.
    So, regardless of the assorted boondoggle spending packages coming out of the congress, which will pad someone’s pockets….There is no effort of scope to “help”…. only to indebt.

  26. Stephen

    Just got to this. Excellent article. Thank you.

    One extra thought: the west seems also to seek to use Climate Change as a way to hit China and an excuse to keep other countries poor. Internally, it is also increasingly going to be a vehicle for justifying to western populations why their living standards need to stagnate. Along with “assuring national security”.

    That is irrespective of the merits of the science: it is an opportunity for the FIRE sector and for graft in financialized economies.

    1. c_heale

      Climate change is the one thing they are not thinking about. If it’s anywhere near as bad as it looks like it’s going to be from the current heatwaves, everyone is going to be poor and there will be no AI, Internet, (neither of these two can function with server farms and power stations out of action due to high temperatures) and insufficient food within a few years.

  27. David in Friday Harbor

    Also late, but the answer to Hudson’s question how the so-called “leaders” of the West can act so blithely against their own economic interests in the blind faith that they control finance while others must toil in the sweat-shops of industrial production was given to us quite plainly by Josep Borrell last Fall:

    Europe is a garden… Most of the rest of the world is a jungle, and the jungle could invade the garden.

    NATO is an alliance of racist imperialists. The recent celebrations of long-time neutral nations Finland and Sweden entering the NATO alliance thanks to their whiteness was quite evident (they will find a way to expel the swarthy asiatics of Türkiye).

    At the center of the NATO alliance is the last great slave empire, America. Even after her inconvenient protestant Christians managed to overturn that evil institution Blacks were subject to the violent peonage of Jim Crow and Asians to exclusion and imprisonment.

    The Germans eventually adopted the American racial laws and briefly imposed them on all of western Europe, where they were accepted with enthusiasm in many quarters of the occupied countries — until the asiatic Red Army crushed them (Putin and Shoigu: look at their eyes). The British love of race-based caste systems that they policed by imperial force has never really been challenged.

    NATO is quite simply an alliance of racism looking to enslave the rest of the world in service of their dream of a lily-white garden. The political brands of both Joe Biden and Donald Trump are rooted in racist dog-whistling (opposition to race-based bussing in Delaware, anyone?). Macron, Baerbock, Meloni — everywhere you look are racists and xenophobes (we can de-construct how Rishi Sunak fits this paradigm but it’s complicated).

  28. Lovell

    From the article:

    The U.S. plan was to bleed Russia and leave it so economically destitute that its population would revolt, throw Vladimir Putin out of office and restore a pro-Western neoliberal leader who would pry Russia away from its alliance with China – and then proceed with America’s grand plan to mobilize Europe to impose sanctions on China.

    My limited understanding of Putin era Russia is that it has already embraced the neoliberal capitalist order and that it was open to trade and economic partnership with western Europe.

    Why then did the collective west antagonized Russia by maintaining and expanding NATO and provoking a “special operations” in Ukraine?

    1. R.S.

      …Putin era Russia is that it has already embraced the neoliberal capitalist order and that it was open to trade and economic partnership with western Europe.

      The order, yes, their place in that order, no. As I know, the intention of the new Russian elites (at least their “patriotic” part) was that Russia would join the World Order on par and with the same rights as Western Europe. Germany, France, Italy, like that. The real place they were pushed towards was something like a third-world sh-hole no one cares about. Enclaves of mining/industry owned by western corps, poor masses ruled by a sliver of “westernized” elite, some token “humanitarian aid”, you name it. Calling Russia “Nigeria with snow” was in fact very popular a decade or so ago. In private conversations, some ex-Russians and Russia-watchers also didn’t mince words, using labels like “white n-g-rs”.

      The trade and economic partnership was really not a problem, but the terms of that trade, again, were contested. AFAIR Russia managed to prevent some critical industries form being broken apart and sold to foreigners. Gas/oil pipelines, nuclear industry, and certain parts of their energy infrastructure in general, that stuff.

      1. Lovell

        Which still begs the question, if US ultimate goal is in fact to isolate and/or subdue China why instigate policies that drove Russia into the welcoming arms of China or at least force both to make strategic alliance?

        1. Bruno

          Not “begs” the question: *poses* the question. To “beg a question” is to formulate an assertion as a question that contains its own answer. I find this pervasion of language almost as irritating as any sentence referring to a singular antecedent with a plural pronoun.

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