30 siječanj 2021 ~ 0 Comments

The Fifth Wheel in the Carriage of Capital

The strong accumulation and careful preservation of capital in the West began during the Renaissance, when European markets began to develop. Capital was mainly accumulated through trade in the wider parts of the European continent, especially in the Baltic, along the North Sea and in the Mediterranean. Over time, Europeans began to trade around the world. They created separate colonial empires (Portuguese, Spanish, Dutch, French, English), within which trade was free, but the empires fought each other for space and for a monopoly in trade. However, although capital was collected all over the world, it would accumulate in only one city at a time. These were Genoa, Amsterdam, London and New York in a row.

The first round of strong capital accumulation took place in Northern Italy (Genoa, Milan, Florence) and in the Adriatic (Venice, Dubrovnik). There were two reasons for this. First, there was no strong royal authority in northern Italy, and there the influence of the Papal State was weak. Byzantine rule had weakened in the Adriatic. The holders of capital accumulation were mostly republics. (Milan had a weak provincial king.) Second, these and other republics had strong trade across the Mediterranean and the Black Sea with the Far East and Asia.

However, after the rise of the Ottoman Empire in the fifteenth century, trade with the East was significantly reduced and was taken over by France through a political conspiracy under an agreement between French King François I and Sultan Suleiman I in 1536. The northern Italian and Adriatic republics began to decline rapidly and lose accumulated capital. The capital was preserved only by Genoa, which Venice had previously excluded from trade with the East. After that, the Genoese in the diaspora were engaged in banking and trade in money, gold, silver and financial securities. In addition, Genoa was early involved first in Portuguese and later in Spanish overseas explorations and conquests. In the early sixteenth century, Genoa came into alliance with the House of Habsburg, which ruled Central Europe and Spain. Genoese capital had the “external” protection of the Habsburgs.

The second round of accumulation of Western capital took place in the Netherlands, which soon after the liberation from the Habsburg crown in 1588 became the world’s first political, naval, trade and financial superpower. The Netherlands ruled Europe and the world’s seas until the early eighteenth century. Her estates were in North America and the Caribbean, Australia and Indonesia. (The Dutch had 10,000 ships with more than 150,000 sailors in the world at one time.) The Dutch formed the first “open society,” so Jews, Huguenots, Calvinists, Puritans, and members of other minorities and apostates flocked to the Netherlands. They brought skills, knowledge and capital to the Netherlands, which multiplied strongly there. A considerable part of the Genoese capital overflowed into the Netherlands, when that capital lost the protection of the weakened Habsburgs.

The next political, economic and financial center of the world became London in the early eighteenth century after the founding of the private Bank of England in 1694, which credited the construction of the Royal Navy. The navy conquered the world by serving bankers, merchants, goldsmiths and jewelers. The English kings were servants of capital. Prior to that, Genoa had no king at all, and there was no king in the United Dutch provinces either, which had a “regent,” who was the commander of the Dutch army in case of war, but who had his kingdom in the separate province of Oranje. Much of the capital accumulated in the second, Dutch round flowed from Amsterdam to the City of London.

In addition to conquering vast areas on all distant continents, the English and the British used the Industrial Revolution to raise capital, in which hard human labor was replaced by the work of huge machines and plants (railways, warships and merchant steamboats, huge industrial plants), which were served by crowds of workers. The English accumulated capital through trade, industrial production, military force, plunder, and financial business.

For a strong accumulation of capital, it was the turn of the United States after the bloody Civil War (1861-1865), which President Abraham Lincoln started in the first year of his first term, precisely to accumulate the capital needed to conquer the whole ( indigenous) area to the Pacific Ocean between Canada and Mexico. The area was to be conquered and transport and communication infrastructure set up in it. In the period until the end of the century, ie until the outbreak of the First World War, the USA protected its market and the booming young industry with high tariffs and excise duties, so that only capital could be imported into the USA. There was also an overflow of British capital into the United States, because that capital was more prolific in the United States than in Britain. By the end of the nineteenth century, the United States had become the world’s first economic, industrial, financial, military, and political world power.

In the fourth, American round of accumulation, capital multiplied by industrial production, the seizure of land from indigenous peoples, the establishment of monopolies and cartels, the reckless exploitation of the labor of domestic people and immigrants, financial imaginations or speculation, and lending to warring nations in two world wars. After World War I, President Woodrow Wilson sought to establish American hegemony in the world through the export of capital and the export of democracy using the League of Nations. He was prevented from doing so at the Paris Peace Conference in 1919 by the colonial powers Britain and France, which were also the victors of the war. Such an idea for the postwar World War II was held by President Franklin Roosevelt, who foresaw the establishment of the United Nations, the World Bank, the International Monetary Fund and the (aborted) International Trade Organization during the war. A world monetary system was established with a base in gold, which came almost entirely into US ownership during the war. The implementation of American intentions was prevented by the Soviet Union, which was the biggest winner of the new war. The world was divided by an “iron curtain” that could not fit into American hegemony.

Due to the success of communism in World War II, capitalism shifted from the onslaught to the defense. Capitalism saw danger in Eastern Communism and in Western Labor. Capitalism needed to be saved. The so-called social capitalism or a kind of corporatism was created, because the volume of production, product prices and the level of workers’ wages were agreed upon by employers and trade unions. Stopping the external, communist danger was accomplished by the hasty reindustrialization of Germany and Japan. In the period of the so-called golden age of capitalism, workers and states defeated in the war did well, but not capital, which accumulated poorly.

However, Richard Nixon was brought in for the presidency of the United States, in order to break Roosevelt’s world financial and trade system. On August 15, 1971, President Nixon severed the link between gold and the dollar, so American gold could no longer be bought for national currencies of members of the International Monetary Fund. Gold and all world currencies became commodities on the free market. For all currencies and gold, “floating” rates were introduced instead of fixed ones. Since 1971, capital has been able to circulate freely on the world market. This was especially true of the “eurodollars,” which had accumulated as the earnings of American industrial corporations in Europe. The city of London has readily taken on the role of free capital management.

After the collapse of the communist bloc in Europe, the World Trade Organization (WTO), founded by President Bill Clinton on January 1, 1995, in the second year of his first term, served as a means of capital accumulated in the United States. Exactly one year earlier, President Clinton founded the market organization NAFTA, which connected the United States, Mexico and Canada into single market. The administration of President George W. Bush, which fought a large-scale wars in Asia, did not, according to Republican custom, try to replace the multilateral strategy of the Democrats with bilateral cooperation. Under the administration of President Barack Obama, there was a new momentum of multilateralism by trying to merge the European Union and North America (TTIP) into one single market, and North America and East Asia into another, but without China (TTP).

In the period from 1993 to 2017, America collapsed as a country or as a state. There has been a deindustrialization of the U.S. by exporting industrial capital and U.S. jobs first to Mexico and then around the world and especially to China. In the US, old industrial cities and transportation infrastructure have collapsed. There has been a technological lag in the US in communications, but the proliferation of private digital networks – where tax-free earnings accumulate – represents an expansion of the Hollywood entertainment industry. A huge portion of American capital is wasted in the media. American industrial corporations have become financialized, which means that they make more money by using free capital than by technological inventions and the production of material goods. (Boeing, General Motors)

The deindustrialization of the economy and the financialization of industrial corporations created the need for financial speculation in the United States, which led to the financial crisis and the Great Recession of 2008. America stopped working and producing, so the federation, federal states, cities, manufacturing corporations, consumer banks, and citizens borrowed heavily from domestic private and foreign state capital. Ingrained domestic, American capital that had a foothold in agriculture, the military industry, and energy (oil, gas, coal) began to crumble in favor of free, cosmopolitan, world capital. Because capital governs America and because capital in the United States is divided and opposed to each other, there has been a sharp division of Americans into two nations, one of which is the “silent” Anglo-Saxon majority and the other a set of vocal minority nations supported by “Eastern media”.

President Donald Trump, who was undoubtedly brought to the White House by endangered domestic capital, sought to establish the usual republican geopolitical strategy, based on bilateral cooperation with other states. However, Donald Trump was also brought to the White House to curb China’s rise, so he supplemented US bilateral cooperation with one group of countries by (1) refusing US cooperation with other countries and (2) political and economic punishment of many third countries. President Trump has seriously cut taxes, to boost the economy and create additional jobs. By the time the coronavirus pandemic broke, it had more than halved unemployment (from 7.3% to 3.4%), but most new jobs had been created in services, which were difficult to export. That is why the American trade deficit has increased. (President Trump used excise duties to force American corporations to return their capital to the United States and create jobs there, but he failed to do so. He created new jobs himself by reducing taxes in order to increase investment, while the released money was partly invested in shares on the stock exchanges, and new jobs were created in the service industries, not in the production of tangible goods for export.)

To implement the political and economic transformation of the United States, Donald Trump created a political movement, through which he fundamentally changed the American national strategy. Donald Trump created Trumpism, as a political thought, according to which America is first and foremost (America First!) and even before cosmopolitan, world, free capital, which did everything it could to remove Donald Trump from the White House. However, Trump left, but Trumpism remained a nightmare of the new, democratic administration of President Joe Biden.

Since the unofficial announcement of the results of the 2020 presidential election, think tanks have begun to compete with each other in advising the new administration on how to restore American hegemony in the world, which ceased due to the weakening of America as a state. The advice was given on the basis of the common notion that America forever has world political, economic, military and ideological leadership. Such inappropriate flattery of think tanks to the new American administration is based on the dubious assumption that there is enough world, cosmopolitan capital in the United States that they can rule the world again. New capital recently accumulated in private networks (Amazon, Google, Facebook, Twitter, Disney) rests on monopolies and is most often tied to unnecessary services and is sure to come under attack around the world for monopolies and for recent direct but careless interference in politics. The Internet and e-mail help people learn and know or do business, and private networks are only for entertainment, so their ability to raise capital will dry up. For the most part, the previously accumulated industrial capital has already spread around the world and enabled the industrial development of many underdeveloped countries to its advantage.

However, as the U.S. declined for nearly three decades, the rest of the world developed politically, technologically, and economically. Authoritative political systems have been created or improved in many countries (China, Iran, Russia, India, Japan, Indonesia, South Korea, Australia, Turkey, Brazil, Malaysia, Gulf countries, Philippines, some EU countries and other countries), which their citizens respect. The perfect opportunity for the introduction of politism was provided to all peoples by the pandemic of the coronavirus, for the suppression of which the capitalist states of liberal democracy could not be set in motion. (In capitalism, capital has control over politics, the economy, security, and ideology. In politism, politics has precedence over capital, the economy, security, and the belief system.) Britain’s withdrawal from the EU is also calculated to establish economic nationalism. More and more countries are indulging in economic nationalism and giving up liberalism, thus strengthening their sovereignty. In addition, science and technology are developing faster in the countries of ancient Asian and some European nations than in the United States. This is especially evident in the areas of military, space and digital technology, and biotechnology.

With the current situation in the United States – after Donald Trump failed to save the United States from further decline – the fundamental questions are: “Can the United States still remain a place of accumulation of world free capital?” And “Can another country become a place of a new, fifth round of capital accumulation?” The outcome of the US presidential elections in November 2020 suggests that there could be a resumption of multilateralism, exports of US capital and US “democracy” and the export of colored revolutions, which happened so often during the presidency of Barack Obama. In that case, the only capital which could be exported from the United States, would be the capital created by financial speculations, which do not help the United States, in which the living space and the well-being of the people in it are endangered.

In my view, if the US is no longer prolific in accumulating capital – as it used to be in Genoa, the Netherlands and the UK – and if capital multiplying around the world would have to accumulate in one place, it could happen in one of the two future places: in Israel or in China. This conditional conclusion is based on a “linear extrapolation” of the past process of capital accumulation from Genoa to New York: after the fourth, the fifth round of capital accumulation should come. Israel is a candidate because (1) the world’s accumulated cosmopolitan capital could easily flow into that country; (2) that the people of Israel have always or since their progenitor Abraham shown a will to establish world hegemony; and (3) that Israel has state-of-the-art science and technology, which it could offer with capital to many developing nations, in order to create in them a true productive economy. At the same time, Israel could offer protection to such nations, because it is a nuclear power and because it has an ubiquitous and effective intelligence service. The best protection for nations would be provided by achieved economic growth and the enjoyment of prosperity. Thus, for decades, the United States provided protection to weaker nations through the Atlantic Alliance or other regional military alliances. The United States was a benevolent hegemon, leaving nations sovereignty and self-government but not allowing them to conduct foreign policy.

Many economists believe that China could also become the site of the fifth round of world capital accumulation. Such an idea is based solely on economic growth and China’s overall strength. In 2020, China was the first in the world in terms of industrial production, in terms of international trade, in terms of total purchasing power, in terms of highway network (155,000 km), in terms of high-speed rail network (38,000 km), in terms of 5G digital network connections ( 200,000,000) and in grain production (670 million tons) The Chinese economy reached a volume of $ 15.4 trillion and a „pandemic“ annual economic growth of 2.3%, which was not recorded in 2020 in other developed countries, where the economy has shrunk significantly.)

However, China cannot be expected to become a stronghold for the accumulation of world capital, if all the factors related to China, to its special and long-lasting civilization and to its political history are taken into account. First, there has long been a populous real nation in China, not an “open society” or diaspora, so capital will never rule China and the Chinese. Second, China has a one-party system for creating and maintaining “socialism with Chinese characteristics for the twenty-first century.” This system is based on the acceptance by the people, that the only political party leads China. This acceptance will last as long as the Chinese Communist Party provides the people with progress and prosperity. This forces China to primarily dedicate itself to the needs of its living community. Contrary to that, the creation of world hegemony would necessarily lead to the neglect of domestic needs. Hegemony is a great obligation, which has ruined the United States and the American people.

Third, China has lasted for twenty-two centuries, during which it did not indulge in militarism, colonialism, and imperialism: When it initially broke through to the “natural borders” that can be defended, China devoted itself to defense rather than invading other nations. The conquests were organized by the Mongols, Manchus and Japanese, and of course by the European peoples. In China, European peoples had cut down their colonial possessions in the lower reaches of navigable rivers and in the coastal areas of Hong Kong and Macao. China was a colony for more than a century (1840-1949). Even during the reign of the first emperor Qin Shi Huangdi, the Chinese set up protective walls around themselves, which were obviously not calculated on imperialism and the expansion of space, but on the protection of space. The emperors in the mid-fifteenth century gave up further naval construction and funding for exploration in the Indian Ocean because budget funds were to be used to defend against ground attacks from Central Asia. In my opinion, China has neither the will nor the ability nor the courage to establish world hegemony. The certainty of bilateral cooperation between the countries suits China. This is the meaning of the Chinese project “One Road, One Belt”, which in time will lead to the establishment of a global transport infrastructure, which is needed by the global world and the globalized species of Homo sapiens.

Nevertheless, I am firmly convinced that the fifth round of capital accumulation will no longer be based anywhere. This is a consequence of the globalization of business and the globalization of the species Homo sapiens, which are underestimated and which the scribes of capitalism from the think tanks do not take into account in their judgments. Capital has globalized business thanks to the appropriated and selfish freedom to travel the world, and now it has found itself in a trap, which it has set for itself. Due to the global nature of operations and the establishment of global supply networks, capital can no longer easily move from place to place, because capital is most often invested with the intention of longer-term fertilization, and the amount of free capital is still limited.

A collective awareness has suddenly emerged in our species, that the disturbed world climate and the coronavirus pandemic are seriously endangering our species and life on Earth in general. For the needs of climate recovery and the establishment of permanent “coexistence” with viruses, it will be necessary to strongly, synchronously and evenly invest capital throughout the Earth, ie to invest capital in all living spaces. It will be necessary to create a global health system, which will have enough doctors and other medical staff, enough hospital space and hospital beds, enough equipment and supplies, and a global digital network to monitor the movement of people and search for infected people. The species will need a worldwide network of top public institutes to study pandemics and to work systematically on vaccine research and discovery, as well as a reliable and extensive global vaccination network. The species will need more well-educated doctors, and fewer trained waiters, disc jokeys in nightclubs or tattoo experts.

Climate disturbance places heavier demands on capital than those carried by virus pandemics. Capital, private or public, will need to invest heavily in new technology, in new energy, in new production, in new modes of transport, in new agriculture, in new water supply, in new housing and in new ways of life. Investments in climate recovery must be ubiquitous and evenly distributed. Cleaning of environment and climate recovery efforts in one place cannot improve the general state of the climate if the climate deteriorates in other places. There is also no general protection against viruses, if that protection is not ubiquitous. Globalization, a disrupted climate, and virus pandemics have created complete interdependence in the species.

In addition to investing in climate recovery and pandemic control, huge investments will be needed to eradicate poverty and educate people around the world. This will allow poor countries to develop faster, which will eliminate the need for vicious mass migration, which is now shaking our species. The migration of the hardest hit people will be manageable.

World business can no longer be globalized and spatially fragmented. Climate cannot be globalized. The species Coronavirinae cannot be globalized and divided into strains bounded by national borders. The global species Homo sapiens can no longer be confined to limited habitats. Since life on Earth cannot be deglobalized, there will inevitably be a globalization of capital, ie its spatially and demographically uniform distribution, which is at odds with global freedom of capital and its urge to be gathered around the world and accumulate in one place or in few hands.

Capital, by the inevitable and forced loss of freedom, will change nature or temper, not just hair. Capital will have to take responsibility for space, people, climate, the health of our species, and for the Earth and for life on it. Capital will cease to rule the species and the Earth, and will begin to serve them. This will put an end to capitalism as a way to regulate the economy and living communities in our species. A worn-out carriage of capital cannot be usable even with the fifth wheel.

The inevitable scattering of capital to countries and peoples will lead to the attachment of capital to labor and space. This will make it possible to replace capitalism with politism and to replace the sovereignty of capital with the sovereignty of the people. The sovereignty of the people is paired with their responsibility. Capital will take responsibility, but it will lose its former sovereignty. Capital will turn from a master into a servant of the species. This is a great and crucial consequence of globalization.

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