3. determinant factors driving the ‘governance-world’
Present post:
- Societal atomization
- Creeping totalitarianism
- Western illusions
- The West has no clue about China's strategy
- The West is setting itself up for a rude awakening
- The empire loses its clients
My next post
... I'm taking 2 months off ...
The next post in this series will appear on Friday 2019-09-06:
4. the grand convergence of all the side-effects of Modernity
__________
Present post:
- Societal atomization
- Creeping totalitarianism
- Western illusions
- The West has no clue about China's strategy
- The West is setting itself up for a rude awakening
- The empire loses its clients
My next post
... I'm taking 2 months off ...
The next post in this series will appear on Friday 2019-09-06:
4. the grand convergence of all the side-effects of Modernity
__________
3. determinant factors driving the ‘governance-world’
I wrote the following in “1. Pragmatism versus ideology”:
“ We are living in a particularly dramatic time of transition from what the world is presently to what the world will be tomorrow. I call this the transition from Modernity to After-Modernity. And two factors tower over the landscape of this transition:
The present chapter addresses point 1 that, in term of popular perception, can be summarized as follows:
Lets now plunge in a more detailed presentation.
3.1. Societal atomization
Postmodernism, the intellectual fad launched in the seventies by Parisian critical thinkers, indoctrinated Western citizens to abandon any remnants of their traditional societal worldviews in order to concentrate on narratives about narrow segments of reality that could be shared by narrow groups of individuals. The direct consequence of the resulting fall in traditional societal worldviews operated as an opening to manipulate societies in the interests of big capital and its servants:
I wrote the following in “1. Pragmatism versus ideology”:
“ We are living in a particularly dramatic time of transition from what the world is presently to what the world will be tomorrow. I call this the transition from Modernity to After-Modernity. And two factors tower over the landscape of this transition:
- the contradictions affecting the ‘governance-world’ and its vulnerability to collapse through a financial crash followed by an economic depression that results in social upheaval which, I fear, the decision-makers in our system of governance will try to resist through war
- the broader context of the mass extinction of life on earth and how this is going to impact the acceleration of the contradictions of the ‘governance-world’ until those systems of governance collapse. “
The present chapter addresses point 1 that, in term of popular perception, can be summarized as follows:
- over the last decades in Western societies, societal fragmentation and further atomization have resulted in a cacophony on the market-place for ideas that drove the individuals in a one way street where they completely lost touch with societal and natural realities.
- In “A growing disconnect between East & West” I wrote the following about Western loss of touch with societal and natural realities : “ Societal cohesion acts like the energy that powers the engine of a car. When the fuel tank is empty the engine stops but the car nevertheless continues to roll till its force of inertia is completely exhausted. The same goes for societies. When a society has exhausted its cohesion it has no energy left to power its survival. Only remain the habits of its citizens that act like the force of inertia that allows a dead society to roll somewhat further. Societal death or collapse is baked in the atomization of a society and inertia is merely the push of a zombie society a little further down the road until the habits of the individual citizens have been completely forgotten either through their physical death or through their escape and integration in a new or another existing societal group. “ Page 37. “ Art form for the sake of form is nothingness. The role of art in history was to prefigure the future culture of society at large. With nothingness Western art has essentially been prefiguring what Late-Modernity would be all about: nothingness, emptiness, and the loneliness of the individuals in their atomized societies in waiting to die. “ Page 71
Lets now plunge in a more detailed presentation.
3.1. Societal atomization
Postmodernism, the intellectual fad launched in the seventies by Parisian critical thinkers, indoctrinated Western citizens to abandon any remnants of their traditional societal worldviews in order to concentrate on narratives about narrow segments of reality that could be shared by narrow groups of individuals. The direct consequence of the resulting fall in traditional societal worldviews operated as an opening to manipulate societies in the interests of big capital and its servants:
- invention of “rights ". The rights of minorities are recuperated as political tools to submit populations or governments. Minorities deviating from the traditional sexual norms were suddenly pushed forward on the market place for ideas. The focus on the rights of sexual minorities was adroitly exploited to contest the power of those who conserved traditions in the first place. Note that this was theorized by so called left-wing intellectuals while it was encouraged and financed by big capital holders and their servants. After the 2nd World war it was art that had been recuperated to act as the ideological weapon of the right to freedom against the enemy on the other side of the iron curtain. Now they recuperate sexual minorities, as their ideological weapon representing the right of sexual ‘freedom’, to shock Western working populations and foreign governments that do not submit to the diktats of Western big capital and their ideology of neoliberalism. What is important to remember here is that these tactics are always initiated by big capital holders and their servants who always act to ‘divide and conquer’. The artists of the New York Art School after the 2nd World War and sexual minorities today are merely pawns of power elites searching to affirm their ideological superiority.
- growth of individualism. As indicated here above living species are activated by their twin and complementary polarities: societies and individuals. But the fact of the matter is that big capital, and its newest ideological iteration neoliberalism, want to weaken societal institutions in order to push individual freedom and initiative. Their target is to eliminate all obstacles in the path of consumerism. Everything has to be made a commodity and the individuals need to be given free reign to buy these commodities. So the interest of capital always leads to greater individualism and weaker societal institutions and the individuals gladly follow. The resulting deconstruction of societal institutions eliminates any possibilities of exercising the precautionary principle over the activities of the individuals. This imbalance between the twin polarities of species inevitably leads to the accumulation of side-effects that inevitably will impose severe consequences for the individuals, their societies, and living species.
- weakening of the cohesion of societies. Greater individualism comes at the cost of the weakening of societal institutions and big capital encourages both through sheer ideological manipulation as indicated in 1 and 2. In the process big capital certainly satisfies its interests but this comes at the cost of a weakened societal cohesion that complicates the reproduction of societies which, in the last instance, is a threat to the survival of the species.
This gives the measure of the real consequences that neoliberalism and postmodernism are inflicting on contemporary societal cultures and societal worldviews.
After nearly half a century of falling traditional societal worldviews Western societies have atomized, meaning that each individual has been made to believe that he knows the truth about anything better than anyone else including the scientists who are specialized in any narrow segment of reality. But this resulted in the unfortunate closure of all communication channels between the individuals who thus landed into the no men’s land of the self. In other words the individuals soon discovered that their pretension to know better trapped them into isolation and loneliness. And the only way for them to talk about one’s existential questions is now to face a mirror or a screen…
The individuals felt trapped and were soon overwhelmed by anxiety and fear.
What postmodernism did to culture neoliberalism did to the economy. By the end of the sixties big capital holders observed that their profits were stagnating and they devised a strategy to force the opening of all nations on earth to their investments. In other words big capital decided to suddenly run away from the traditional narrative about economics as a means to bolster the economic productions of their nation-states in order to increase the well-being of their citizens. Doing so big capital assuredly has secured the growth of its profits which has been attested by the returns on invested capital over the last decades. But in real life this took the form of delocalizing Western productions to low wage nations that had no regulatory systems to protect their workers, to protect their environment and so on. The profits of Western big capital holders suddenly jumped but the revenues of Western citizens suddenly stagnated. This explains how Western societies ended up being stuck in a fundamental contradiction between the interests of the 1% and the 99%.
Western societies have been practicing postmodernism and neoliberalism for half a century. We discover now what are the consequences for the individual citizens who visibly are now having enough of this elitist program. And so they are rebelling: Yellow vests in France, Brexit in Britain, Trump in the USA, and more generally the growth of anti-establishment parties everywhere. In other words the West has landed itself in deep trouble and the establishment reacts to these troubles in the most convenient and vile way by pointing fingers to scapegoats. That’s how China was suddenly made to become the center of attention in order to deflect the responsibilities of Western big capital holders and their servants the intellectuals, economists, state bureaucrats, an other. But by deflecting their responsibilities they are adding to their national problems an intractable geo-political situation...
While postmodernist thinkers boxed societal worldviews in a coffin, big capital holders boxed societal material productions in the same coffin. In other words Western societies suddenly lost their cultural and economic foundations. This should serve as a lesson to the rest of the world to avoid the trap of neoliberalism and postmodernism. The world is thus in the most urgent need of alternative economic, political and cultural narratives. This is something that starts to be vaguely perceived by more and more people, not only from the south, but from the whole world and so more and more eyes are now watching China for answers.
3.2. Creeping totalitarianism
Along the way into postmodernism and neoliberalism the servants of big capital, I mean – the intellectuals – the scientists – the political elite composed of elected officials and tenured bureaucrats (deep state), observed the increasing cultural anxiety of the citizens while the stagnation of their incomes, becoming systemic, injected fear in the societal body about the days to come. They also observed that both factors were in fact reinforcing each other and slowly breaking apart the cohesion of Western societies.
This observation led to whispers among the elites about “what to do?”. The fact of the matter is that servants of big capital have an existential interest in the preservation of the status-quo and are thus focusing on hiding the contradictions between the interests of the 1% and the 99%. Their tools are numerous. Since Edward Bernays Western propaganda refined the art of “manufacturing consent” but this is no longer considered sufficient to possibly contain what is seen as an unavoidable coming explosion of anger and rage by the 99%. Obama and Trump navigated this anger with sheer cynicism by playing the 99% into believing that they were on their side. But their slogan-logos HOPE and MAGA soon sounded empty.
Image and narrative manipulation works momentarily but comes a time when it does no longer work. This is when propagandist manufacturing of consent is expanded to new tools, of coercion at the hands of the institutions of power, like:
Such a cynical totalitarian approach freezes the minds of the citizens who suddenly can no longer distinguish between what is news and what is fake-news. And so facts and fiction are now synonymous in what remains of Western so called "advanced democratic countries". This results in a complete loss of touch with reality and this new “cultural phenomenon” has now expanded to all fields of Western life. People are not only detached from societal realities they are now confronted to their mirrors projecting images of their loneliness and the rates of suicide explode.
Even the 1% is going completely mad. Some are speculating about a future when their robots will displace the 99% which they think will instantly render them societally useless while others dream about a nuclear first strike… Think about that for a second. Let it sink in and observe the answer that your mind will soon propose you.
3.3. Western illusions
One example of the most glaring un-realities in economics is the GDP swindle to make believe that Western countries are still far more advanced than the rest of the world. But in reality these GDP figures are pure fiction.
First let’s observe that there is no world standard method to calculate the GDP of nations. The US, for example, resorts to multiple statistical fakeries like "hedonic adjustments" that all result in fake "inflation-adjustments" which inflate its GDP by a very large margin.
After nearly half a century of falling traditional societal worldviews Western societies have atomized, meaning that each individual has been made to believe that he knows the truth about anything better than anyone else including the scientists who are specialized in any narrow segment of reality. But this resulted in the unfortunate closure of all communication channels between the individuals who thus landed into the no men’s land of the self. In other words the individuals soon discovered that their pretension to know better trapped them into isolation and loneliness. And the only way for them to talk about one’s existential questions is now to face a mirror or a screen…
The individuals felt trapped and were soon overwhelmed by anxiety and fear.
What postmodernism did to culture neoliberalism did to the economy. By the end of the sixties big capital holders observed that their profits were stagnating and they devised a strategy to force the opening of all nations on earth to their investments. In other words big capital decided to suddenly run away from the traditional narrative about economics as a means to bolster the economic productions of their nation-states in order to increase the well-being of their citizens. Doing so big capital assuredly has secured the growth of its profits which has been attested by the returns on invested capital over the last decades. But in real life this took the form of delocalizing Western productions to low wage nations that had no regulatory systems to protect their workers, to protect their environment and so on. The profits of Western big capital holders suddenly jumped but the revenues of Western citizens suddenly stagnated. This explains how Western societies ended up being stuck in a fundamental contradiction between the interests of the 1% and the 99%.
Western societies have been practicing postmodernism and neoliberalism for half a century. We discover now what are the consequences for the individual citizens who visibly are now having enough of this elitist program. And so they are rebelling: Yellow vests in France, Brexit in Britain, Trump in the USA, and more generally the growth of anti-establishment parties everywhere. In other words the West has landed itself in deep trouble and the establishment reacts to these troubles in the most convenient and vile way by pointing fingers to scapegoats. That’s how China was suddenly made to become the center of attention in order to deflect the responsibilities of Western big capital holders and their servants the intellectuals, economists, state bureaucrats, an other. But by deflecting their responsibilities they are adding to their national problems an intractable geo-political situation...
While postmodernist thinkers boxed societal worldviews in a coffin, big capital holders boxed societal material productions in the same coffin. In other words Western societies suddenly lost their cultural and economic foundations. This should serve as a lesson to the rest of the world to avoid the trap of neoliberalism and postmodernism. The world is thus in the most urgent need of alternative economic, political and cultural narratives. This is something that starts to be vaguely perceived by more and more people, not only from the south, but from the whole world and so more and more eyes are now watching China for answers.
3.2. Creeping totalitarianism
Along the way into postmodernism and neoliberalism the servants of big capital, I mean – the intellectuals – the scientists – the political elite composed of elected officials and tenured bureaucrats (deep state), observed the increasing cultural anxiety of the citizens while the stagnation of their incomes, becoming systemic, injected fear in the societal body about the days to come. They also observed that both factors were in fact reinforcing each other and slowly breaking apart the cohesion of Western societies.
This observation led to whispers among the elites about “what to do?”. The fact of the matter is that servants of big capital have an existential interest in the preservation of the status-quo and are thus focusing on hiding the contradictions between the interests of the 1% and the 99%. Their tools are numerous. Since Edward Bernays Western propaganda refined the art of “manufacturing consent” but this is no longer considered sufficient to possibly contain what is seen as an unavoidable coming explosion of anger and rage by the 99%. Obama and Trump navigated this anger with sheer cynicism by playing the 99% into believing that they were on their side. But their slogan-logos HOPE and MAGA soon sounded empty.
Image and narrative manipulation works momentarily but comes a time when it does no longer work. This is when propagandist manufacturing of consent is expanded to new tools, of coercion at the hands of the institutions of power, like:
- systematic conversion of the media into information agencies of power institutions,
- systematic spying on the citizens by all kinds of 3 letters agencies,
- systematic countering of active minorities by means of new technologies like artificial intelligence,
- systematic militarization of the police services,
- and finally a systematic reduction into misery of the lives of the majority of citizens which drives them into loneliness and despair far from the street...
Such a cynical totalitarian approach freezes the minds of the citizens who suddenly can no longer distinguish between what is news and what is fake-news. And so facts and fiction are now synonymous in what remains of Western so called "advanced democratic countries". This results in a complete loss of touch with reality and this new “cultural phenomenon” has now expanded to all fields of Western life. People are not only detached from societal realities they are now confronted to their mirrors projecting images of their loneliness and the rates of suicide explode.
Even the 1% is going completely mad. Some are speculating about a future when their robots will displace the 99% which they think will instantly render them societally useless while others dream about a nuclear first strike… Think about that for a second. Let it sink in and observe the answer that your mind will soon propose you.
3.3. Western illusions
One example of the most glaring un-realities in economics is the GDP swindle to make believe that Western countries are still far more advanced than the rest of the world. But in reality these GDP figures are pure fiction.
First let’s observe that there is no world standard method to calculate the GDP of nations. The US, for example, resorts to multiple statistical fakeries like "hedonic adjustments" that all result in fake "inflation-adjustments" which inflate its GDP by a very large margin.
What are the lessons we can learn from this graph?
- shadow stats’ figures indicate that he USA has been in a recession since 2000. This conclusion has the merit to reconcile economic figures with the social reality that has been observed to go south since the eighties. Statistics are projecting the lies that power wants to fill peoples’ minds. But statistical lies do no erase peoples’ growing social misery. These lies have now been going on for so long that people are just not interested any longer to hear political babble.
- the differential in results between the BEA and SGS has been steadily increasing since the eighties and in 2019 the difference is over 4%… This surely parallels a deepening popular perception that statistics don’t really measure the reality on the ground and the growing distance between statistical lies and social reality results in a general cynicism and rejection of the establishment.
But there is more to the fakery.
The GDP's of all countries on earth are converted in US dollars for the sake of comparability. But what about the value of the US dollar? Its comparative value in other currencies has been observed to fluctuate within a, plus or minus, 20% band over the last half a century while the US printing presses, or computer clicks, have actively increased the volume of money in circulation. How on earth can anyone, in such circumstances, trust the validity of a comparison of national GDP's that have been converted in US dollars?
To escape the unreality of traditional GDP calculation big financial institutions are, since some time already, using a new method of calculation that uses the value, of what the citizens of different nations can purchase in real life, to derive their real GDP numbers. That method is called PPP for ‘Purchase Power Parity’. And in PPP terms the GDP of China overtook the US GDP in 2014.
The GDP's of all countries on earth are converted in US dollars for the sake of comparability. But what about the value of the US dollar? Its comparative value in other currencies has been observed to fluctuate within a, plus or minus, 20% band over the last half a century while the US printing presses, or computer clicks, have actively increased the volume of money in circulation. How on earth can anyone, in such circumstances, trust the validity of a comparison of national GDP's that have been converted in US dollars?
To escape the unreality of traditional GDP calculation big financial institutions are, since some time already, using a new method of calculation that uses the value, of what the citizens of different nations can purchase in real life, to derive their real GDP numbers. That method is called PPP for ‘Purchase Power Parity’. And in PPP terms the GDP of China overtook the US GDP in 2014.
According to the IMF this is the situation today in 2019.
In
this cloud of Western unreality some recent articles fortunately shed
some light on the geo-political implications of China’s newly gained
economic might.
What transpires from those articles is that the West has completely lost touch with reality. Here are some basic facts that will not go away:
The West seems to be completely clueless about these facts and it is also clueless about China's development strategy. As a result, I think, that the West will soon experience a rude awakening and unfortunately the 99% are going to bear the brunt of the coming damages.
3.4. The West has no clue about China's strategy
" Without Mao’s industrial revolution, the economic reformers of the post-Mao era would have had little to reform because the higher yields obtained on individual family farms during later years would not have been possible without the vast irrigation and flood-control projects–dams, irrigation works and river dikes–constructed by collectivized peasants in the 1950s and 1960s. " This commentary, by Godfree Roberts on Pepe Escobar's article "US-China: the hardcore is yet to come", is right on the mark. The cultural revolution is seen in the West as an economic and political catastrophe but the reality is a lot more complex. In the rough brush stroke of Deng Xiaoping the cultural revolution is given as having been 30% negative and 70% positive. This is why the communist party continues, to this very day, to pay its respect to Mao the initiator of the Chinese Cultural revolution.
The success of China's reforms in agriculture could indeed not have materialized outside the context that was set by the 3 earlier decades of Maoist political investments in the collectivization of the country. It was this particular context that allowed the agricultural reforms set in motion in the early eighties to conclude in an explosion of productivity that resulted in very large surpluses that gave China its initial capital accumulation to invest in its industrialization. The cultural revolution furthermore weakened Chinese traditions and this procured an opening for the reforms of the country's economy which were indeed accompanied by the expression of popular acceptance and enthusiasm. In other words the cultural revolution erased the traditions that could cause frictions in the execution of the reforms. Traditions have indeed habitually resisted all big societal changes to the point of popular violence. In light of this idea it will be interesting to observe how India and other countries navigate this cultural and social conundrum.
In the 2nd part of the seventies big capital was initiating its drive towards globalization and China’s leaders were made aware by members of the ‘Trilateral Commission’ about what the dynamic, that was put in motion, meant for the world. The leadership concluded that this dynamic was a threat to the survival of the Chinese nation and their answer to this threat was to surf on the wave of globalization that was initiated by Western big capital holders. Confucius scholars had astutely observed 2500 years ago in the classic “The Analects” that:
I have been personally immersed in the reality of Chinese life since the mid-eighties and I had the privilege to observe the execution of this grand-plan. I rapidly became convinced that the Chinese had an advantage over all other nations on earth that no one seemed to be aware of. China has indeed inherited a traditional culture that is shared by all its citizens, even by those who oppose the Communist Party, and this boosts the cohesion of the nation. Furthermore China inherited a body of knowledge about the management, over the last 3000 years, of the biggest state machinery on earth often in a context of complete chaos. And one is forced to observe that this unique advantage has been put in use with a unique mastery over the last decades. I would go so far as to state that without this advantage China would never have succeeded to pilot its entry into Modernity to the point that it has attained presently. And I have to add that no other country is blessed with such an advantage which leads me to believe that no other country will be able to attain the kind of success China achieved.
As good Marxists the Chinese were well aware that the first step of their grand plan had to ensure the country’s “primitive accumulation of capital ”. This was realized by extracting the surpluses of the country’s agriculture that had been privatized with the first batch of reforms in 1980. But the country was wise enough to let its local authorities invest a big chunk of these agricultural surpluses locally (eighties). For the most part they were invested in local township enterprises and the champions among these township enterprises formed the industrial backbone of the restructuring and privatization undertaken in the nineties. So in sum the large surpluses that resulted from the agricultural reforms financed China's first stage of industrialization and it were these large surpluses and the industrial dynamism they fostered that started to attract the interest of Western big capital holders. The west has the illusion that China's development was due to the infusion of Western capital and technology. But the reality was far different.
The housing restructuring of the nineties then engaged the 2nd stage of industrialization by distributing 40 years worth of public investments to the citizens in urban areas. And this explains why housing ownership is so high today in China compared with the West (approximately 90 % versus 60% in the US). This newly gained housing wealth, practically without any indebtment, then allowed families to purchase cars... and the car market then exploded to become the world's largest within a short single decade. This housing reform also explains how the Chinese citizens could possibly be holding bank savings estimated to be in the region of 30 Trillion US $ today. These bank savings is what ensures a rapidly growing internal consumption ... No other country disposes of such a volume of liquidity in the hands of its consumers and this, for whatever reason, is nevertheless completely ignored by all Western media. But how can you understand the future of a country if you make abstraction of the fact that its consumers dispose of a pile of cash equivalent to 2 years of their country's GDP ? The ignorance of such an overwhelming fact participates in the build-up of the delusion of the West about China’s future.
The growth of Chinese consumerism is bound to be the backbone of the 3rd stage of China's development. The income generated from consumerism is indeed going to be the cash-cow that will finance China's "flying geese pattern of development" but nobody seems to be aware about this. Understandably the Chinese don't talk about it. They don't want to attract the attention of the West to what really is going on. Better indeed to let it ferment in its delusion. This third stage of development is inspired by the international aspect of Kaname Akamatsu 1930s theories that had been published in Japanese and were translated in English in 1961 and 1962. In light of this idea the Chinese economy now starts to acts like the first goose in a V-shaped formation. China rushes in a fast lane of technological development while investing its older technologies in neighboring follower geese countries. In this process China
The belt and road is China's particular form of a "flying geese pattern of development". China is already the largest trader it the world and US at this moment represents no more than 14% of China's Trade. A trade war with the USA is thus not going to decimate China. Furthermore 60% of all China's Trade today is realized in areas that are growing very fast. Here are the 2017 figures of China's exchanges with the rest of the world in billions US $ and in percentage: (in green: fast growth. In red: negative growth)
- "On Hostile Coexistence with China" by Chas Freeman. Chas Freeman blog
- "Propaganda Intensifies Trade War With China" by Bernard. Moon of Alabama
- "US-China: the hardcore is yet to come" by Pepe Escobar. The Saker
- “Why capturing Huawei is no victory in tech war” by Pepe Escobar. The Saker
- “Full Spectrum Economic War has replaced Trade War” by Chris Faure. The Saker
- “We’re in an economic war with China” by Chris Bannon. Washington Post
- “The Euro-Atlantic Populist Wave” by Andrew Spannaus. Consortiumnews.
What transpires from those articles is that the West has completely lost touch with reality. Here are some basic facts that will not go away:
- the extended West, as in the developed North, represents barely 10% of the world population and this proportion is continually decreasing.
- the ‘other’ 90% are watching the same images of the world as the Northern 10%. What they see is that a largely white minority lives in opulence while their own lives are devoid of the goodies of consumerism. The desire of the ‘other’ 90% is thus extremely strong…
- the numerous side-effects of Modernity, that have been put in motion by a Western-centric model of economic development, are suddenly converging during Late-Modernity
- the outcome of the interactions, of all these side-effects, is demanding a reduction of the footprint of humanity on the natural systems of the bio-sphere.
- Northerners are the first to know about the necessity to reduce the footprint of humanity but their ideas run counter to the desire of the ‘other’ 90% of the world population. The ‘other’ 90% of the world population wants rapid economic growth and they hope to emulate China’s example...
The West seems to be completely clueless about these facts and it is also clueless about China's development strategy. As a result, I think, that the West will soon experience a rude awakening and unfortunately the 99% are going to bear the brunt of the coming damages.
3.4. The West has no clue about China's strategy
" Without Mao’s industrial revolution, the economic reformers of the post-Mao era would have had little to reform because the higher yields obtained on individual family farms during later years would not have been possible without the vast irrigation and flood-control projects–dams, irrigation works and river dikes–constructed by collectivized peasants in the 1950s and 1960s. " This commentary, by Godfree Roberts on Pepe Escobar's article "US-China: the hardcore is yet to come", is right on the mark. The cultural revolution is seen in the West as an economic and political catastrophe but the reality is a lot more complex. In the rough brush stroke of Deng Xiaoping the cultural revolution is given as having been 30% negative and 70% positive. This is why the communist party continues, to this very day, to pay its respect to Mao the initiator of the Chinese Cultural revolution.
The success of China's reforms in agriculture could indeed not have materialized outside the context that was set by the 3 earlier decades of Maoist political investments in the collectivization of the country. It was this particular context that allowed the agricultural reforms set in motion in the early eighties to conclude in an explosion of productivity that resulted in very large surpluses that gave China its initial capital accumulation to invest in its industrialization. The cultural revolution furthermore weakened Chinese traditions and this procured an opening for the reforms of the country's economy which were indeed accompanied by the expression of popular acceptance and enthusiasm. In other words the cultural revolution erased the traditions that could cause frictions in the execution of the reforms. Traditions have indeed habitually resisted all big societal changes to the point of popular violence. In light of this idea it will be interesting to observe how India and other countries navigate this cultural and social conundrum.
In the 2nd part of the seventies big capital was initiating its drive towards globalization and China’s leaders were made aware by members of the ‘Trilateral Commission’ about what the dynamic, that was put in motion, meant for the world. The leadership concluded that this dynamic was a threat to the survival of the Chinese nation and their answer to this threat was to surf on the wave of globalization that was initiated by Western big capital holders. Confucius scholars had astutely observed 2500 years ago in the classic “The Analects” that:
- there is no need to leave the country to accumulate richness,
- the easiest path to richness is to create an inviting national environment for the expression of economic creativity by the citizens,
- and when the national economy starts to boom with creativity foreigners will unmistakably start to flock to the country with their money, their knowledge, and technology in order to profit from the local dynamism.
I have been personally immersed in the reality of Chinese life since the mid-eighties and I had the privilege to observe the execution of this grand-plan. I rapidly became convinced that the Chinese had an advantage over all other nations on earth that no one seemed to be aware of. China has indeed inherited a traditional culture that is shared by all its citizens, even by those who oppose the Communist Party, and this boosts the cohesion of the nation. Furthermore China inherited a body of knowledge about the management, over the last 3000 years, of the biggest state machinery on earth often in a context of complete chaos. And one is forced to observe that this unique advantage has been put in use with a unique mastery over the last decades. I would go so far as to state that without this advantage China would never have succeeded to pilot its entry into Modernity to the point that it has attained presently. And I have to add that no other country is blessed with such an advantage which leads me to believe that no other country will be able to attain the kind of success China achieved.
As good Marxists the Chinese were well aware that the first step of their grand plan had to ensure the country’s “primitive accumulation of capital ”. This was realized by extracting the surpluses of the country’s agriculture that had been privatized with the first batch of reforms in 1980. But the country was wise enough to let its local authorities invest a big chunk of these agricultural surpluses locally (eighties). For the most part they were invested in local township enterprises and the champions among these township enterprises formed the industrial backbone of the restructuring and privatization undertaken in the nineties. So in sum the large surpluses that resulted from the agricultural reforms financed China's first stage of industrialization and it were these large surpluses and the industrial dynamism they fostered that started to attract the interest of Western big capital holders. The west has the illusion that China's development was due to the infusion of Western capital and technology. But the reality was far different.
The housing restructuring of the nineties then engaged the 2nd stage of industrialization by distributing 40 years worth of public investments to the citizens in urban areas. And this explains why housing ownership is so high today in China compared with the West (approximately 90 % versus 60% in the US). This newly gained housing wealth, practically without any indebtment, then allowed families to purchase cars... and the car market then exploded to become the world's largest within a short single decade. This housing reform also explains how the Chinese citizens could possibly be holding bank savings estimated to be in the region of 30 Trillion US $ today. These bank savings is what ensures a rapidly growing internal consumption ... No other country disposes of such a volume of liquidity in the hands of its consumers and this, for whatever reason, is nevertheless completely ignored by all Western media. But how can you understand the future of a country if you make abstraction of the fact that its consumers dispose of a pile of cash equivalent to 2 years of their country's GDP ? The ignorance of such an overwhelming fact participates in the build-up of the delusion of the West about China’s future.
The growth of Chinese consumerism is bound to be the backbone of the 3rd stage of China's development. The income generated from consumerism is indeed going to be the cash-cow that will finance China's "flying geese pattern of development" but nobody seems to be aware about this. Understandably the Chinese don't talk about it. They don't want to attract the attention of the West to what really is going on. Better indeed to let it ferment in its delusion. This third stage of development is inspired by the international aspect of Kaname Akamatsu 1930s theories that had been published in Japanese and were translated in English in 1961 and 1962. In light of this idea the Chinese economy now starts to acts like the first goose in a V-shaped formation. China rushes in a fast lane of technological development while investing its older technologies in neighboring follower geese countries. In this process China
- will continue to supply the bulk of its Western customers with cheap but low quality mass productions realized in China invested factories in neighboring countries. Read this article for more information: « Vietnam and India see explosion in direct investment from China as tech suppliers shift production overseas, says Goldman Sachs »
- will lead these neighboring countries into industrialization and the development of a middle class of consumers
- will concentrate, internally, on more technologically advanced productions (see cell phones, 5G, and so on). By satisfying the local market these more advanced productions will generate sufficient returns to pay off their initial investments. And the consumers of the countries that benefit from Chinese investments will become natural consumers of Chinese more technologically advanced goods…
The belt and road is China's particular form of a "flying geese pattern of development". China is already the largest trader it the world and US at this moment represents no more than 14% of China's Trade. A trade war with the USA is thus not going to decimate China. Furthermore 60% of all China's Trade today is realized in areas that are growing very fast. Here are the 2017 figures of China's exchanges with the rest of the world in billions US $ and in percentage: (in green: fast growth. In red: negative growth)
Asia
and Africa have the fastest economic growth rates among all countries
on earth and today their exchanges with China already make up some 60 %
of all Chinese trade. Their trade relations with China have been growing
extremely rapidly over the last decade and are expected to continue
growing extremely fast all along the next decades. In the meantime
Trump's shenanigans are a powerful incentive for China to gradually
shrink its exchanges with the US … ensuring the economic isolation of
that country and a rising inflation in the price of most of its consumer
goods.
The fact of the matter is that:
The heavy trends that have been described here are the inescapable future economic reality of the world. Asia is firmly establishing itself as the center of the economy-world. And China is the geese that leads all other Asian geese countries.
In such a context acting so publicly as a bully against China is not going to bring the USA a lot of friends in Asia. For proof the USA is already losing ground in this beating heart of the world economy. Not very wise indeed.
3.5. The West is setting itself up for a rude awakening
The present attempt by the West to contain China is pure hubris that is acted out of complete ignorance of history and the facts on the ground. And this is going to hurt the West very badly in the near future. Unfortunately the hurt will be more particularly experienced by its citizens. Big capital holders and other one-per-centers, who are the ones responsible for such an outcome, live indeed over national borders and being opportunists they will always find ways to insert themselves in the big trade flows wherever they come from.
The Western effort today at containing China is like begging to be sidelined tomorrow from participating in the supply of goods to satisfy the needs of Chinese consumerism which is going to dwarf the volume of consumerism of all Western countries added together. The size of the Chinese market promises to leave Western markets in the dust and, in light of this, Western bullying today is not a wise move by any stretch.
The hubris and ignorance of the West furthermore offers China an opportunity to hide its development strategy in plain sight. The biggest investors who presently delocalize their productions from China are indeed Chinese firms. And so Trump's exhortations, to delocalize productions from China, act like an invisibility wand on China's strategy... "China’s pain on trade with the US will fast become Mexico, India and Southeast Asia’s gain" ha ha ha… Hubris and ignorance seem to have no limits. The US is technically bankrupt. Its total contracted debts are representing nearly 400% of GDP and they are continuing to growth nearly exponentially. The federal government needs two trillion dollars in new loans every year to ensure a GDP growth in the order of 200 billion. Low interest rates encourage public corporations to borrow ever more to buy back their stocks and ensure fat compensations to their managers. And future expenses that are already engaged by present day policies, like social security or pensions health care and other social handouts, will leave no room for necessary investments in public infrastructure which is an absolute necessity for continuing to grow the economy.
All this incentivizes China to engage on an ultra-fast scientific and technological track which is going to drastically redesign the world economy. As I have illustrated earlier Western systems of governance are no match for China's system. No one, and certainly not Trump the buffoon, is going to distract Chinese policy makers to design, finance and organize the whole of their country's actors in a national effort at scientific and technological dominance. Things could have been otherwise if the USA had not incentivized China to reach for self sufficiency. But here we are. China wisely decided that it could no longer rely on Western high technology suppliers...
The sheer size of China's internal market gives it the benefit of very large economies of scale that dwarfs anything the West can ever dream of mustering. And so a Chinese ultra-fast scientific and technological track is rapidly cutting the West's advantage in science and technology. Finally a Chinese ultra-fast scientific and technological track is capturing the rapidly expanding market in the countries that benefit from China's "flying geese pattern of development" which is what the new silk roads are all about.
China is already churning out a lot more STEM graduate degrees than the whole West combined.
The fact of the matter is that:
- consumption on the North American market is already saturated
- in whatever outcome scenario the US started economic war is going to shrink the economic exchanges between China and the US
- most new economic growth is in Asia and Africa.
The heavy trends that have been described here are the inescapable future economic reality of the world. Asia is firmly establishing itself as the center of the economy-world. And China is the geese that leads all other Asian geese countries.
In such a context acting so publicly as a bully against China is not going to bring the USA a lot of friends in Asia. For proof the USA is already losing ground in this beating heart of the world economy. Not very wise indeed.
3.5. The West is setting itself up for a rude awakening
The present attempt by the West to contain China is pure hubris that is acted out of complete ignorance of history and the facts on the ground. And this is going to hurt the West very badly in the near future. Unfortunately the hurt will be more particularly experienced by its citizens. Big capital holders and other one-per-centers, who are the ones responsible for such an outcome, live indeed over national borders and being opportunists they will always find ways to insert themselves in the big trade flows wherever they come from.
The Western effort today at containing China is like begging to be sidelined tomorrow from participating in the supply of goods to satisfy the needs of Chinese consumerism which is going to dwarf the volume of consumerism of all Western countries added together. The size of the Chinese market promises to leave Western markets in the dust and, in light of this, Western bullying today is not a wise move by any stretch.
The hubris and ignorance of the West furthermore offers China an opportunity to hide its development strategy in plain sight. The biggest investors who presently delocalize their productions from China are indeed Chinese firms. And so Trump's exhortations, to delocalize productions from China, act like an invisibility wand on China's strategy... "China’s pain on trade with the US will fast become Mexico, India and Southeast Asia’s gain" ha ha ha… Hubris and ignorance seem to have no limits. The US is technically bankrupt. Its total contracted debts are representing nearly 400% of GDP and they are continuing to growth nearly exponentially. The federal government needs two trillion dollars in new loans every year to ensure a GDP growth in the order of 200 billion. Low interest rates encourage public corporations to borrow ever more to buy back their stocks and ensure fat compensations to their managers. And future expenses that are already engaged by present day policies, like social security or pensions health care and other social handouts, will leave no room for necessary investments in public infrastructure which is an absolute necessity for continuing to grow the economy.
All this incentivizes China to engage on an ultra-fast scientific and technological track which is going to drastically redesign the world economy. As I have illustrated earlier Western systems of governance are no match for China's system. No one, and certainly not Trump the buffoon, is going to distract Chinese policy makers to design, finance and organize the whole of their country's actors in a national effort at scientific and technological dominance. Things could have been otherwise if the USA had not incentivized China to reach for self sufficiency. But here we are. China wisely decided that it could no longer rely on Western high technology suppliers...
The sheer size of China's internal market gives it the benefit of very large economies of scale that dwarfs anything the West can ever dream of mustering. And so a Chinese ultra-fast scientific and technological track is rapidly cutting the West's advantage in science and technology. Finally a Chinese ultra-fast scientific and technological track is capturing the rapidly expanding market in the countries that benefit from China's "flying geese pattern of development" which is what the new silk roads are all about.
China is already churning out a lot more STEM graduate degrees than the whole West combined.
In light of these figures it should be no surprise that China’s progression in science and technology is so rapid. But there is more. US patents originating with one Chinese, or a team of Chinese researchers, reach between 10 and 15% of all US patents. Seen the troubles Chinese researchers are going through in the US presently an exodus has been put in motion that brings back droves of Chinese researchers to their motherland. What is at stake here is the US losing tens of thousands of top researchers and this is paralleled by a corresponding gain for China. Being a thing inside the researchers’ minds US knowledge is thus naturally flowing to China like water flowing down the mountain ...not as a result of China’s stealing but as the result of the US’ sheer stupidity.
3.6. The empire loses its clients
The whole world observes an astounding reality. In the worlds of Doug Casey the reality is that "The Chinese came from nothing; only 40 years ago, they had nothing but a billion impoverished peasants. No money. No technology. No power. Today, they’re on par with the United States. But, if this trend continues – which it will – their economy will be triple the size of the US economy in 20 years." (1)
If you think that China will be 3 times the size of the US economy within 20 years you have 2 choices:
- or you accept this new reality and you adapt to it by engaging with the Chinese culturally, commercially, and economically by attracting Chinese investments and by negotiating the best conditions for your national economic actors in their investments in China. And you try to do all that within the framework of the existing Western-centric international bodies specialized in international trade and monetary matters. This seems to be the choice made by the whole world minus the USA.
- or you do not accept this reality and you try to counter China’s development by all means available to you. This seems to be the choice made by the USA recently under President Trump.
Here follow some graphs from ‘US Global Investors’ indicating the direction of things to come.
Things
going the way this graph shows it is only natural that every country is
positioning itself in order to benefit from China’s rapid development
and this comes naturally at the expanse of those countries that are
losing in the re-calibration of the economy-world. But economics are
only one factor among many that guide national policies.
The present attitude of the US to counter China’s development might eventually force some countries to forgo their national interest in order to satisfy US demands. Canada is best illustrating this case. By satisfying US demands, to arrest and then to eventually extradite Mme Meng Wenzhou, Huawei's chief financial officer and daughter of Huawei’s founder Mr. Ren Zhengfei, Canada is provoking the ire of Beijing and suffering the consequences of China’s direct or indirect sanctions of its exports to China. The US is furthermore putting pressure on its allies to refuse buying Huawei’s 5G infrastructure equipment. But Huawei’s 5G technology seems to be at least 2 years ahead of its competitors and its patents are more than that of all American companies put together. And “ ...with such a large market space and cyberspace, 5G can make China realize the digitalization of thousands of industries, and truly realize the transformation of 5G digitalization” (2). What is jumping out of this last sentence is the following: “the digitalization of thousands of industries”. It is said that China will terminate its 5G installation over the whole country by end of 2020 while in the US and Europe this will only happen by 2015. The 5G infrastructure will give rise to a new generation of apps (AI, automation, medicine, education, games, and so on) and the first who comes to the market with mature apps will be the world leader in all those fields. Having a 5 years lead on their Western competitors Chinese companies could thus become the world leaders in future internet applications by 2025-2030. Think about that for a second. The future FANGS could be Chinese… To get an extensive presentation about this watch the following video by Valuetainment “US China Trade War Explained -Who Needs Who? ».
The present attitude of the US to counter China’s development might eventually force some countries to forgo their national interest in order to satisfy US demands. Canada is best illustrating this case. By satisfying US demands, to arrest and then to eventually extradite Mme Meng Wenzhou, Huawei's chief financial officer and daughter of Huawei’s founder Mr. Ren Zhengfei, Canada is provoking the ire of Beijing and suffering the consequences of China’s direct or indirect sanctions of its exports to China. The US is furthermore putting pressure on its allies to refuse buying Huawei’s 5G infrastructure equipment. But Huawei’s 5G technology seems to be at least 2 years ahead of its competitors and its patents are more than that of all American companies put together. And “ ...with such a large market space and cyberspace, 5G can make China realize the digitalization of thousands of industries, and truly realize the transformation of 5G digitalization” (2). What is jumping out of this last sentence is the following: “the digitalization of thousands of industries”. It is said that China will terminate its 5G installation over the whole country by end of 2020 while in the US and Europe this will only happen by 2015. The 5G infrastructure will give rise to a new generation of apps (AI, automation, medicine, education, games, and so on) and the first who comes to the market with mature apps will be the world leader in all those fields. Having a 5 years lead on their Western competitors Chinese companies could thus become the world leaders in future internet applications by 2025-2030. Think about that for a second. The future FANGS could be Chinese… To get an extensive presentation about this watch the following video by Valuetainment “US China Trade War Explained -Who Needs Who? ».
We start now to get a better grasp on the reason the US experiences such difficulties to corral its traditional clients in the anti-Huawei camp. Nobody wants to be left behind.
And there is more. With Trump in the White House US foreign policy does not do in diplomacy any longer. US officials now state bluntly that they want to dominate. “You are with us or you are against us and if you are against us we sanction you, we bomb you, until you submit to our diktats”. First this approach appeared to be outlandish but after having been practiced a few times nobody is laughing any longer. The Russians were the first to say no and to react. Their entry in Syria clearly showed to everybody that the US is no longer the super-power that it once was. Then there was the trade war on China and again the US appeared weaker than people thought. And lastly the US was adroitly driven by Iran in an impasse: or nuclear attack or cancel the sanctions. Both lead to a condemnation by the whole world. A nuclear attack would make the USA a pariah of the society of nations and the lifting of sanctions would show to the whole world that the USA is a paper tiger.
So here we are watching an empire losing all its clients. And so a multi-polar world is slowly emerging but nobody knows how the USA will fit in the new arrangement. Such an arrangement is coming as the answer to the coming financial and economic crash...
_________
Notes
1. in “ Not Just A Trade War, But A Shooting War With China Seems Inevitable “ by Doug Casey
2. in “ Huawei’s 5G patents surpass that of ALL US companies put together ” by Efe Udin. 2019-05-28.
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