fuTuRe sHOcK

Steve Lendman
Worse Than the Great Depression?
According to The New York Times, “leaders of 20 countries agreed Saturday to work together to revive their economies, but they put off thornier decisions about how to overhaul financial regulations until next year (when it plans) its next meeting for April 30, 101 days after (Obama) is sworn into office.” Whatever is finally agreed on, this much for certain is clear. Unchanged Washington/Wall Street dominance is planned along with putting the IMF in charge of global “neoliberalizing” with all its destructive fallout.

A Long-Term View on the Depression:

It’s from noted sociologist, social scientist and world-systems analyst Immanuel Wallerstein, now a Senior Research Scholar at Yale where he covers world-systems in three ways:

– the historical development of the modern world-system;

– the contemporary crisis of modern world-economy capitalism; and

– structures and knowledge.

He’s authored numerous books and writes regular commentaries on major world and national topics. A recent October 15 one is titled “The Depression: A Long-Term View.” It’s started in his view. We’re “at the beginning of a full-blown worldwide depression with extensive unemployment almost everywhere. It may take the form of a classic nominal deflation (or less likely) a runaway inflation, which is simply another way in which values deflate.” What caused it, he asks? Derivatives? Subprime mortgages? Oil speculators? It’s a “blame game of no real importance.”

Understanding it calls for far more revealing factors, such as “medium-term cyclical swings (and) long-term structural trends.” Over several hundred years at least, he describes two major ones. “One is the so-called Kondratieff cycles that historically” lasted 50 - 60 years. The other is called “hegemonic cycles” that are much fewer in number but last far longer.

America contended for hegemony as early as 1873, achieved it fully in 1945, and has been declining since the 1970s. “George W. Bush’s follies have transformed a slow decline into a precipitate one. And as of now, we are past any semblance of US hegemony. We have entered, as normally happens, a multipolar world. The United States remains a strong power, perhaps still the strongest, but it will continue to decline relative to other powers in the decades to come.” Nothing can change this.

Kondratieff cycles are timed differently. Its last B-phase ended in 1945, followed by “the strongest A-phase upturn in the history of the modern world-system.” It peaked around 1967 - 73, and headed down. “This B-phase has gone on much longer than previous (ones) and we are still in it.”

Its characteristics are as follows:

– “profit rates from productive activities go down, especially in those types of production that have been most profitable;”

– it directs capitalists to financialization and speculation for higher returns; and

– “productive activities, in order not to become too unprofitable, tend to move from core zones (like America) to (lower cost) parts of the world-system.”

Speculative bubbles are profitable while inflating, but they always burst. “If one asks why this Kondratieff B-phase has lasted so long, it is because the powers that be (the Treasury, Fed, IMF, and western European and Japanese collaborators) have intervened in the market regularly and importantly” to shore it up at times of economic disruptions - 1987, the 1989 S & L crisis, 1997 Asian contagion, 1998 Long Term Capital Management debacle, the 2001 - 2002 corporate scandal period, and more than ever today with big unanswered questions whether this time it will work.

It doesn’t matter because we’ve reached the limits of what can be done - “as Henry Paulson and Ben Bernanke are learning to their chagrin and probably amazement. This time, it will not be so easy, probably impossible, to avert the worst.” The present system won’t survive. A new one will replace it. It will not be capitalism as we know it, but may be far worse or far better (more democratic and egalitarian). Determining the outcome is “the major worldwide political struggle of our times.” More

Tags: Asian contagion, Ben Bernanke, depression, European, fed, George W. Bush, hegemonic cycles, IMF, Immanuel Wallerstein, Japanese, Kondratieff cycles, neoliberal, Paulson, subprime mortgages, Treasury