7 THE RISE AND FALL OF THE

GLOBAL POLITICAL-ECONOMY

The Rise of the Global Pol/Econ

Both before and after WW2 significant reform of the capitalist system was only possible on a global scale. National capitalism was incapable of responding in a reformist manner to the shock of the Russian revolution (and post WW1 internal uprisings) - with the exception of USA capitalism which implemented the New Deal in response to the purely internal revolutionary shock of H.P. Longs' movement.

Instead national capitalism clamped down - especially in Germany - backing fascist street fighters to repress the left - which (for reasons outlined in Chapter 6) had singularly failed to target the legitimacy of the regime and move in for the kill.

After prolonged stagnation in Germany (& a series of defeats of the working class), a slight upturn prompted a bourgeois - fearful of the renewed threat of workers attempts to exploit this new room for manouevre & recapture lost pol/econ ground - to clampdown appointing Hitler chancellor.

When (not long afterwards) the Nazi regime was confronted with the renewed recession/slump it embarked on a massive war boom armed by Britain's ICI-Noble - happy to profit from Britain's enslavement and actually financed/re-inforced by the west as a bulwark against core radicalism/laborism, causing/severely aggravating a permanent inflationary crisis that could only be resolved by continuous military conquests - passing on the costs onto workers in other countries - meaning permanent war; as the mounting consequences & crisis deepened.

WW2 can be characterised as a liberal imperialist war waged by a section of reformist capital under USA hegemony in alliance with a core-radical state (USSR) against a section of decomposing ultra-reactionary (national) capital under Nazi-Fascist leadership.

In certain respects WW2 mirrored (on a global scale) the reformist processes of Asquith & later the New Deal. The expansion of radical anti-capitalism (USSR and radical left movements in W. Europe, and China - which contained Japanese imperialism, tying down 2/3 of Japan's army, saving the USSR saving Europe - while the USA re-asserted its' control over the Pacific rim) compelled a pre-existing section of (hegemonic) liberal capital (FDR's USA) to reform the pol/econ on a global basis (while of course murdering the revolutionaries), with the re-establishment of mafia/Nazi (capitalists) and (with Hirohito) Japanese fascists (capitalists), within a modified/reformed pol/econ system.

Also the fall in real wages brought about by the previous victories of fascism across continental Europe, provided the all important (for capitalist hegemony) starting point for the boom & expansion of free trade and a world market (representing an advance on the old national capitalist systems of imperial preference & tarriffs that preceeded them), which then as before, could generate their own developmental momentum.

So WW2 (and the post-war settlement) brought the partial end of competing national capitalisms (which had reached their explosive apogee with the 3rd Reich - formerly re-inforced by west against core radicalism) and the effective construction of a single global pol/econ - under capitalist (USA) leadership.

Massive reforms (nationalisation of key industries, to stabilise commodity prices, social housing, education, health, social wages) combined with repression of the far-left were implemented in the (buffer/border) capitalists states of W. Europe, Japan etc, in order to contain the threat of socialist revolution; be it democratic, semi-democratic or Stalinist.

Much shallower reforms were implemented in Britain (whose empire the USA was displacing globally) accounting for how & why Britain tended to decline & de-industrialise sooner than the economies of continental Europe (as these were willing to take a more long-term approach & accept a lower rate of profit than Britain/USA); and these buffer states ultimately undermined the USA's global hegemony.

These reforms were critical to the further development of capitalism (beyond the boundaries of the nation state) and could only be implemented/forced through because of the combined threat of revolt (and the experience of it) and decisively, the existence of an alternative (and expanded) pol/econ bloc (USSR and China), forcing the hegemonic power (USA) to accept &/or aid these reforms.

It is important to emphasise that the two economic systems were separate but effectively comprised a single global political-economy - both parts antagonistic, but politically interdependent on each other for (initially compelling & forcing) development within the framework of capitalist hegemony.

It should be mentioned that the fact that Britain was compelled to fight alone (up to 1941) for its' very survival was of secondary importance here. Without USA & Russian involvement, resolution of the crisis would have been completely impossible within the capitalist system. Either:

Britain would have been defeated.

Britain would have sued for peace - instigating a new carve-up - collapsing into war again further down the line.

Britain would have won but itself moved in a fascist direction.

Britain would have moved in a revolutionary direction (a la Paris Commune) - prosecuting the war as a war of national liberation - moving increasingly (in a revolutionary direction) towards full-scale revolutionary warfare in open alliance with the German masses against both German and British capitalists.

Concerning both a) and c), military-fascist victory would not have been the end of it. Though it certainly would have been for the British bourgeois as we can see by the collaboration of the French bourgeois and the British bourgeois collaborators in the Channel islands - the files of which are still sat on `in the interests of national security'.

Thence would have begun (perhaps after an interval of a few years allowing for the military-political recomposition & revolutionary realignment of the anti-fascist forces)a sustained popular (counter-) terrorist campaign against the prevailing fascist empire, combining political warfare with military action to drive the invader out; merging into full-scale European civil war culminating in the collapse of the empire at its' very heart.

Without USA leadership (able and willing to) responding (in a reformist way to (and) the radical shock of the USSR 's westward expansion, the survival and further development of capitalism in Europe (and globally) would have been impossible. But because they were possible they were virtually inevitable.

To further illustrate the existence & nature of the global pol/econ - while the USA was partially capable of reforming herself by herself (in response to a purely internal revolutionary shock), she was not capable of reforming the whole of world capitalism without the existence of a core radical state to compel her to intervene (in a reformist way). And without global reforms the USA would have dragged down by global stagnation/war as well.If the USSR had been smashed in WW2 or before; in WW2 either:

The war would have become revolutionary.

A core-radical state would have emerged to force such reforms globally.

The war would have become (renewed) ultra-reactionary from every standpoint leading to b) or a). If a (new) core radical state had then come into being and (if required) a 2nd internal radical shock to the USA pol/econ compelled the development of a new internal (to the USA) rev-reformist and global reformist wave - we would have reached, by a longer route, where we did in 1945.

To summarise WW2 began/was broadly anti-colonial in character (from the British/USSR standpoints - in spite of Britain's ICI arming Adolf Hitler in the first place) but all possible revolutionary evolution of the war was eliminated with USA involvement (after Pearl Harbour Dec 7th 1941), from then we can date the existence of the global pol/econ and the virtually inevitable liberal imperialist character of the war - with the inevitable re-imposition of the same Nazi-Fascist (and mafiosi) business elite on the German, Italian and Japanese masses after the war - within a reformed capitalist system.

The Decline of the Global Pol/Econ

The post-war reforms provided the basis for a protracted economic upsurge/boom (in the USA/W. Europe and the buffer states) - which in turn fed further reforms (in response to the civil rights movement) with Linden Baines Johnsons' Great Society program (a second wave of FDRism or Asquithismism) absorbing a section of the radical movement into the established pol/econ.

But both the boom and the post-war settlement (strengthening the alternative power of the USSR) encouraged the development of anti-colonial movements (sensing they had new room for manouevre), some of them anti-capitalist others national capitalist & reformist in character.

Both threatened the hegemony of USA monopolies & finance and were resisted bitterly by USA imperialism. USA monopoly capitalism (its' profitability) itself was fundamentally threatened by capitalist development in the semi-colonial states, through competition for (colonial and USA) markets - (as was the case with the buffer states of Germany/Japan, which however had to be tolerated as a block against socialist expansion)

Though ultimately the falling rate of profit (which undermines capitalism) is caused by the hegemony of the profit system itself - The collapse of demand caused by over-production, caused by over-accumulation and the tendancy of wages to not rise as quickly as productivity.

The bitter fighting between the hegemonic power (USA) and the anti-colonial movement reached crunch point with the Vietnam war. The spiralling costs of the Vietnam war hastened (prematurely) the end of the post-war boom and the present epoch of permanent recession.

The rise of Black radicalism (whose hand had been strengthened by the boom) & threat of merger with white masses, mortally threatened USA capitalism. Meant that UNTIL Black radicalism crushed (via COINTELPRO/ military destruction of Black Panthers etc) was impossible for USA military plutocracy to pull out of Vietnam.

Vietnam war was the key lever to switch USA global pol/econ to a military/ credit speculative expansionary system; that in outflanking laborism (& USA national radicalism), meant that it was possible to keep Black & White divided & keep the world safe for nuclear plutocracy (see `Black Radicalism in the USA' in Chapter 2 Vol II - for more in depth analysis)

Eg (under cover of the Vietnam war) this political crisis, was actually resolved through the geo economic crisis.....

(rise in oil prices as a result of the long term boom creating shortages/ strengthening the hand of the oil producer states in relation to the USA/ core states....

The core problem is that the war/ finance nexus (military plutocracy) reigns as a law unto itself, making it impossible to establish political economic mechanisms to guide development, to meet long term threats to human survival in a concerted way (eg resource oil shortages/ environmental impact of genetic engineering from biocorps beholden to no-one but their shareholders & even the much bigger projcets/ threats posed by climatic change....) to see how to address these & the immediate apocalyptic threats posed by the pol/econ tailspin of the global financiers speculator regime, see `Basic Program of the Revolutionary Democracy Movement'....

......which impact of led to capital eclipsing the USA core empire....& therefore meant that USA radical forces were outflanked by switch to credit/ speculative expansion.... (which meant that while USA radical forces were trashed, there were enough profitting from this system to keep USA regime stable while the radicals could be outflanked/ crushed under cover of ideological `anticommunism'/ Vietnam war)

........as an organic process

Because (at this stage) capitalism needed a single hegemonic power (like the USA) to give global leadership (in reforming the capitalist system), the decline of the USA (speeded up by the inflationary costs of the Vietnam war) meant that there was no more scope for further reform of the capitalist system ( - as no SINGLE state was/is powerful enough to reform the system of global finance). Even though many capitalist (buffer) states (Particularly the new S.E. Asian `tiger economies' developed post-Vietnam, Japan and Germany), continued to thrive long after the USA went down the pan. Ultimately the world crisis shall drag them down, as they are too small to override it through internal then globalised reform as the USA had done before.

In order to cut costs & maintain (individual corporations) profitability & rate of return, USA monopoly capital transferred many of its' operations to Latin America - which it dominated economically and politically (eg. 70% of senior military officers in Latin America were/are trained at the notorious `School of the Americas' based in Georgia, USA, which specialises in training in the art of military-fascist coups' d'etat, liasing with landlords & drugs barons, torture etc). Falling profitability there, led to an increasing tendancy to transfer capital into (more profitable) speculative investments.

We can see this in the growth of the L. American debt:

by 1968 debt was $11.7Billion

" 1974 " " $59.1Billion

over the period !976-81 debt grew to $275Billion

Over 85% of (the loans of) which returned via the servicing of old debts (interest) and capital flight; much of the rest went on arms expenditure and useless grandiose projects.

Other factors contributing to the growth of the L. American debt were:

Due to the USA's dollar hegemony (originally the gold-backed currency of the whole world - post WW2), successive devaluation's of the dollar (which the first world countries were warned about in advance) transferred the inflationary costs of the USA crisis to those states that were still left with dollar reserve accounts (mainly 3rd world) - temporarily alleviating the crisis in the USA.

The empires also successfully transferred the cost of the oil crisis to L. America by recycling (reloaning) Arab petrodollars in loans at floating rates of interest (including to oil producers like Mexico and Venezuala), hiked up viciously later on (further passing on the inflationary costs of the crisis in the west).

These loans required still more loans (from the west) to cover interest payments (at exorbitant rates). So profitable was this that the banks imposed penalty clauses deterring EARLY repayment!!!

The L. American bourgeois tolerated this exploitation (and their own decline) as the only alternative - mobilising the masses to oppose this, would have meant that the masses themselves would inevitably have imposed their own more radical demands/agenda later on. The L.American bourgeois were squeezed between two rocks and having little/no room for manouevre, preferred the USA trained & installed dictators.

For the same reason there was little opportunity for orthodox labor struggles to make headway; except in the period of immediate clampdown, and then because they could not move in for the kill, inevitably lead to more defeats.

To recap the crisis originated from USA inflation - from general market saturation - speeded up by the Vietnam war, exacerbating the fall in real demand. The `solution' was highly inflationary (though to begin with L. America has got the worst of it), by attracting capital away from real investment (and REAL demand) to (more profitable) finance speculation - particularly loans to L. American dictatorships.

But inflation in the USA still picked up threatening the doomed hegemony of the dollar -prompting a massive hike in USA interest rates (to attract short term finance to prop up the USA's currency) - further entrenching finance capitals' parasitic stranglehold over industrial production/labor (and gravely aggravating L. America's debt crisis) - in order to prepare a last stand/orgy for USA finance hegemony.

The USA's next step (under Reagan) to `resolve' this crisis was to artificially boost the economy - by massive arms expenditure, deregulation of savings and loans (equivalent of Britains' building societies) - encouraging an orgy of Nero-esque credit expansion and speculation (all the while increasing the independence of global finance from any nation state - including the USA - making the USA econ more vulnerable to speculative capital movements).

The balance of payments plummeted and the deficit soared. But perversely the dollar soared (partly aided by a collapse in oil prices due to the first gulf war and the consequent glut of oil to finance the purchase of arms) - as finance-capital (Japan/Germany and other buffer states) was attracted to this speculative bubble (aiding the purchase of their consumer goods) - paying out high short-term profits at the expense of long-term development - (and workers' wages - the real ability to absorb production). And much of the Great Society was dismantled.

The massive & unprecedented (USA-led) consumer boom was fuelled by ridiculously spiralling (speculative) rising house & land prices - increasing their nominal paper value against which credit was expanded. Credit expansion even (further) gathered its' own independent momentum being offered/pushed at even the low paid & unemployed and (in some cases) even schoolkids! - Many of which hadn't an arms dealers' in hell chance of repaying the debt.

But just as the 2nd speculative bubble (in the west) was expanding (aided by the buffer states - aiding their exports), the original L. American bubble became increasingly precarious. The (short-term) rise in interest rates (as a result of USA competition for capital) - expanding real interest rates (the rate above the inflation index) by fourfold - totally shafted the L. Americans, who (with the aggregate debt consequantially piling up) became increasingly incapable of paying the exorbitant interest charges - (Their tribute had originally helped cover the utterly unsustainable expansion of the USA public deficit).

There were limits to how much could be squeezed out of L.America. And Wall St.s' perverse measure of values took a jolt when L. America was unable to keep up its' exorbitant interest payments to USA/western banks. It should be re-emphasised that the money was lost when it was invested in paper speculation not at the moment the bubble burst to (only partially) correct the discrepancy. It was L.America's partial default (on its' interest repayments) that detonated the stock market crash - which however did not end immediately the speculative boom in the west - Propped up by Japanese credit; in order to fund the continuing purchase of Japanese & German consumer goods.

As a measure of the extent and damage of this speculation, it took 200 years for the USA to accumulate its' first $1Trillion debt. It took barely 10 years for this to reach over $4Trillion with the Reagan/Bush finance/credit/military boom.

Increasingly a part of the cost of the banks L. American adventure was passed onto 1st world consumers, in the form of exorbitant charges; they were also later to pick up the bill for their various speculative adventures in the first world as well.

Visible Inflation picked up as a result of this phoney expansion and the banks shook down those they'd leant to and indeed everybody else - via high interest rates (covering their arses in both instances). Artificial property prices fell revealing not causing the system of structural debt and bankruptcy engendered by this policy - and much of what remained of industry went to the wall.

In the USA the Savings and Loans collapsed along the line leaving the USA taxpayer with a bill for $1.5TRILLION - Neil Bush, son of George (who signed the deregulation act), headed an S+L aptly named `Silverado' which collapsed owing $1Billion.

Though as the post Vietnam cold war boom petered out, the geo rev reform in the buffer states (in concert with post cold war USA) led one last genuine boom....until hegemonic capitals demand for a return inevitably led to productive capacity growing out of kilter with real demand leading to over production & a massive switch of capital back into speculative investments in the USA/ European core (we shall examine the consequences in Chapter 9 on the so called `Asian Crisis - though to re-iterate, as NO single state is so overwhelmingly strong - as the post war USA was, enough to lead a rev reformist reconfiguration of the global capitalist pol/econ, it is impossible to reform per se).

In order to continue financing (in the short-term) this spiralling debt/speculators' jamboree, the Latin American model (of finance capital rape) is now being transferred to the 1st world. With the progressive elimination of the welfare state and the ultra-exploitation of industry, all to feed the insatiable greed of global finance (we have already examined the dialectics of institutional neo classical laborism/ fascist reaction in the EC, eg why such a reformist dialectic cannot consolidate either a socialist commonwealth or reformed global capitalist system in C1 - please refer back if neccessary).

It is perhaps worth bearing in mind that when politicians say "The economy is so strong, that we need to keep/push interest rates up to prevent overheating", what they are really saying is "if we don't keep interest rates high, the speculative hot money artificially propping up the currency will flow out like water down a plughole".

*NB The geo pol/econ role of Japan seems to suggest that my analysis is overly fixated on role of the USA (it isn't; it is only with the collapse of the USA that everything shall turn to ashes & it is only with USA support that Japan had been able to act in the way that it has done....). For in spite of its greater reforms, post WWII than USA, Japan has disproportionately performed the function of the great black hole of global finance. It used its strategic position as a bulwark against core radicalism in east Asia, to blackmail the west into allowing it to flood western markets with its goods (threat of USSR alliance/ expansion) while refusing to open its markets up to the west. Much of the profits repatriated to Japan have thence gone on spectacular property/ financial speculation & low yield investments that have bourgeois economists marvelling at the low rate of returns... & wondering how the problem can be resolved....

The problem (as we explained in Chapter 3) is that (finance ruling as a law unto itself) capitalism is disappearing up its own speculative arsehole.... pouring the capital (that could not find such an immediately profitable return in the core states through real productive investment) into speculation made everyone feel rich (like it did recently in the west with the intensified stockmarket boom), & able to expand credit against this; until the bubble burst, revealing (NOT creating) a mountain of debt

The solution to this problem (whereby an `excess' of capital - unable to find a profitable return through REAL productive investment - magically turns into a hyperinflationary deficit) is to prevent capital reigning as a law unto itself (to prevent such manic speculative flows of capital into property/ share speculation etc), by instituting the global reconstruction centred rev constitutional framework outlined in chapter 4, so that those with more money than sense, have their excess capital taken of them in higher taxes (& invested in funding the twin stabilising pillars of global reconstruction/ social wages - preventing speculation, which is the result of finance being a law unto itself, which in turn depends on a global division between core military plutocracies & the 3rd world...); instead of inflicting on humanity the apocalyptic military pol/econ consequances from such devastating speculative investments (of course to get the world out of this mess will require WARTIME sacrifices to fund global reconstruction).

Keeping most of the world in bondage just isn't profitable anymore...

The Rise and fall of the Core Radical Bloc

WW2 enabled and compelled the Stalinist regime in the USSR to lean on the masses for support in a desperate struggle for survival. As this (leaning on the masses) was a response to an external threat (which therefore did not challenge directly the regimes' legitimacy) it had the effect of breathing new life into the regime; eg. the bureaucracy could point to an external threat to justify its' continued existence - whilst paring back on some of its' worst excesses.

Critical to the survival and advancement of the regime was the reform of global capitalism - as a reciprocal revolutionary reformist response to the new empire (controlled by the USSR) and revolts in western Europe (contained by USSR diplomacy & allied communist parties - eg. the Italian CP telling Partisans to hand in their guns! - as the USSR regime could not afford too many potentially dissident states, like Yugoslavia, never mind democratic or semi-democratic socialist states undermining their authority), as this enabled capitalism to progress so enabling the USSR economy to progress without critically undermining capitalist hegemony.

But a new (periodic/cyclical) crisis of under-production caused by the deadweight of bureaucratic control compelled & led to attempts by a liberalising section of the bureaucracy to purge some of the worst excesses and engage in decentralisation (epitomised by Kruschevs' `destalinization' speech and the more decentralist 6th plan). Even the notorious police butcher Lavrenti Beria advocated a more consumer orientated, less centralised approach. For despite the Korean war, the core-elite didn't have an adequate pretext to clampdown and reconsolidate control.

However revolt at the periphery of the empire (Hungary 1956), triggered a partial bureaucratic clampdown - an attempt by reactionaries to reconsolidate control in the core-radical empire - even though there was a (secondary) contradictory tendancy for the USSR to extract less from the satellites (for military production) than before (to defuse tension). This clampdown was expressed in the abandonment of the more decentralist 6th plan in favor of greater central control, leading to partial stagnation from 1958 onwards.

This process became completely set with intensified superpower tension over the Cuban missile crisis, Vietnam war and the increasingly aggressive stance of an economically weakened USA imperialism (arms race) fearful of the loss of its' colonies and global hegemony; not to mention the Czechoslovakian revolution of 1968 (smashed by USSR tanks) leading (with Brezhnevs' rise to power) to the total reconsolidation of the core-elite in the USSR. ultimately paving the way for massive re-armament, stagnation, and the Afghanistan debacle and partial collapse.

How was it possible for Hungary, Czechoslovakia, Yugoslavia and China to take (or in the case of Hungary/Czech, attempt to take) such different pol/econ paths to the USSR?

The answer lies in the fact that these states were essentially peripheral to the core-radical bloc/USSR empire.

In the case of Hungary and Czechoslovakia this led to an attempt to push break away from Great Russian hegemony instigate something approaching genuine workers' democracy.

Though the national liberation struggles (around parliamentary issue), the logic of, had to result (if successful) in capitalist restoration and neo-colonialisation. Because the West could not accommodate a workers' state - such as would have occurred in 1956 (and the involvement of the west was the only way Hungary could break out of the core radical empire).

And because core radical bloc had not (then) collapsed, the west would NOT have been able to throw its weight around (to subordinate the Hungarian revolt to its hegemony) without either:

A general revolutionary turmoil across Europe/world (as insurgents resist the west).

Alternately, a clash of superpowers.

Therefore it was essential that the USSR core elite restore order to their unruly vassals. Concomitant to this dialectic is that there was general control of the masses/agenda by the core elite in the core radical bloc (therefore no viable framework to win over a superior force on the basis of their classical rationalist operational methods) and relative pol/econ stability in the global pol/econ.

These revolts could only come about as a reaction to & in defiance of Russian imperialism; and the Hungarian/Czechoslovak masses seeing the USSR as their principle enemy. They were therefore not as fearful of the USSR masses of USA/western imperialism, being already occupied. Some elements also felt they had some room for manouevre with the west (between the two blocs), that the USSR masses didn't - fearing that their only option was to surrender to western imperialism - as they had no alternative power to manouevre between.

Yugoslavia (which supported western imperialism in the Korean war) was a bureaucratic socialist state that used geo-political room for manouevre between the two superpowers to secure a more favorable pol/econ position for itself. Yugoslav bureaucratic socialism had internal hegemony but a greater degree of decentralisation (use of the market mechanism) was developed than was possible in the USSR without undermining the USSR elites' pol/econ control/hegemony.

The Yugoslav state was therefore able to balance between the superpowers (via the non-aligned movement) in a way similar to politically intermediate buffer capitalist states like Sweden and Norway, without undermining its' own legitimacy. Something much more difficult for the principle ideological powers of the USA and USSR.

But because of the eventual ultra-stagnation of the USSR/E. Bloc - Yugoslavia (caught between two decomposing systems) was therefore unable to capitalise on the benefits of decentralising cycles; precisely because the authority of the state was not immediately undermined (because of the earlier split from the USSR imperialism in 1948, eg, not an occupied colony); which would have enabled a revolutionary democratic govt. to implement socialist hegemony - calling for sacrifices from workers to fund expansion of the industrial capital base. The privileged elite lacked both the rev. democratic legitimacy and historical capacity neccessary to do this (eg. as such sacrifices would have weakened the pol/econ position of the workers in relation to the bureaucracy, such sacrifices would only have funded their privileges and created a greed/exploitation/de-investment cycle similar to that in capitalists states, especially Britain)

So the Yugoslav bureaucracy retained control of the pol/econ agenda and sought/was able to postpone the day of reckoning (tried to fund industrial expansion without curtailing living standards/private wages - which would have undermined its political position) by loans from international finance - which however meant that Yugoslavia became wholly dependant on the world (capitalist) market and its' fate inexorably linked to it.

This led to a hybridisation of evils. Shortages and (largely imported) inflation (oil crisis/import of petro dollars) and a pol/econ tendancy among the power elites of the (decentralised) different republics to seek to pass the cost onto each other and a growing willingness to play the nationalist card in order to cling to power in their own republics.

This process first openly manifested itself in Serbia (though before there had been growing disparities between the wealthier - better positioned geographically - western republics of Croatia and Slovenia and the much poorer republics; and an unwillingness to fund mutual development and a tendancy to build up their own economic position), but rapidly spread to the rest of the federation.

All such tendencies were/are wholly reactionary (with the exception of the Kosovan, who resisted, firstly, the nationalist brutality of the Serb-dominated army - though the fact that they have now March/ October1999 come under the hegemony of core imperial geo interests as outlined in chapter 1, has also irredeemably destroyed any radical aspect to their cause, until linkage with the new rev movement) as they are controlled/exploited by their own national chauvinist pol/econ power elites and (of decisive importance) behind them the greater imperialisms of Germany, USA, and Russia - who in turn are increasingly dominated by the destabilising geo-pol/econ interests of global finance (which insofar as its' - especially USA - state protagonists cannot exploit/benefit from a particular nations prosperity, it will prefer to make its' pol/econ rot - to prevent it becoming a regional/wider threat to its' ruling cliques' interests; as demonstrated by the evil influence of the USA in Haiti and some other Caribbean, African, and L.American states).

It should be stated in passing that comparisons with WW2 (concerning western intervention) are absolutely bogus. In WW2 the question was one of the lesser evil. Eg. the British (ruling class) state was thoroughly evil, but insofar as it resisted the expansion of a much more powerful evil (3rd Reich) its' interests, highly unreliably, happened to coincide (up to a point) with those of the British and international working class (effectively a war of anti-colonial survival even though they armed Hitler). Though this is NOT to say that the working class should in the slightest have abandoned its' own independent pol/econ agenda or even desisted from the most extreme revolutionary activities to turn the war into a revolutionary war internally and externally - in alliance with the German working class against the ruling classes of both countries.

The German regime systematically sponsored Tudjman/ Susak's Ustashe tyranny (Martin Bell M.P. has noted the way the German govt. pressured the British govt. to recognise Croatia WITHOUT GAURENTEES ON THE RIGHTS OF THE MINORITIES, as the price of German regime's help to support the pound in the Exchange Rate Mechanism, feeding Serb fears/ seccessionis, crystalising support around Tudjman - Tudjman's tyranny pretty well speaks for itself. German regime had enormous leverage with Croatia, which it could have used to stop its' terror - had it so desired), even as other's attempted to make sure the process of warfare did not spiral out of hand/ gather its' own momentum. Military intervention WITHOUT incorporation into a global commonwealth confederation, always, if only by default, can only lead to subjegation by an imperial agenda.

Which can take many forms, not merely the naked colonial; the geo strategic sponsoring of monsters, like Saddam Hussein, their demonisation & bombardment of the civil populace as the preffered option to the overthrow of said tyrant BY the civil populace. For after all PR bollox aside, it is the people, their desire NOT to be vassals of global finance/ corps., that are the real strategic problem, WHY the nationalism of Milosevic et al, despised as it may be, is preferable, for the sophisticated barbarians, to a global commonwealth confederation. Note not only the origins of the crisis, in the ratcheting up of the costs of Yugloslavia's debts by global finance, but the indirect oil war covered in Chapter 1.

Though it became almost historically inevitable that this could not happen when the USA joined the war - determining its' liberal imperialist character; eg. the re-imposition of the Nazi bourgeoisie (`They are not Nazis they are businessmen' was a familiar refrain) on the German workers (as was the case in Japan, Italy etc - The British imperialists/Mountbatten even held onto the far -eastern colonies for a period using Japanese troops in Hong Kong and Malaysia. The use of Waffen SS veterans in western Europe in `Operation GLADIO' to terrorise the people should not be forgotten either), within a modified & reformed capitalist system.

We are reaping now the bitter harvest due our catastrophic failure/dialectical inability to purge the world and Britain, of these criminal scum.

Because of the role of the great power imperialisms, Yugoslavia will not know real peace, stability and reconstruction until all the ruling criminals in Germany, USA, Russia and Europe have been put to the sword.

Post WW2 China could not (any longer) be contained within a modified neo-colonial system (having fought the Japanese Imperial Army to a standstill, saving the USSR, saving Europe). Unlike India, the Chinese landlordist bourgeois were completely discredited post-WW2 (having collaborated with the Japanese) and unable to continue in power - though it took another 4 years (for Mao's peasant army/revolutionaries) to remove them.

The British bourgeois with their traditional low cunning handed over (nominal) power to the Indian landlords & bourgeois before the political situation became as irretrievable as in China - locking India into the global neo-colonial system up to the present period; as the old landlords successfully maintained their pol/econ hegemony (in alliance with neo-colonialism) by retarding development by preventing land reform.

China could not have developed as another Yugoslavia (manoeuvring between East & West) or a capitalist buffer state, as the entire imperialist/capitalist world was petrified at the prospect of aiding the uncontrollable growth of a socialist or capitalist megapower of such vast scope - so it was embargoed and hoped the USSR would/could contain this threat to its' (the USSR's and the Wests') sub-hegemony over the core-radical bloc and hegemony.

(However) China could only progress so far under USSR hegemony (whose capacity to develop was in turn limited by that of capitalist hegemony) and this meant China (had to) could/would (at some point) try to break out of USSR hegemony (and eventually) to develop its' latent (agrarian-capitalist) productive potential (bureaucratic socialist preponderance over the economy having not been attained, as in E. Europe/USSR).

Paradoxically though this split (could not be openly capitalist) had to take place within the ideological framework of `communism' as the legitimacy of the regime was bound up with it; (by bidding for world leadership of the `communist' movement) but this could not be a democratised form like Hungary1956, but instead an ideological (and highly reactionary) form and manifestation (within the limits of and conforming to the power interests of the regime) of nationalistic independence from the USSR.

It was firstly neccessary that the CCP exhaust all possibilities for ideological `left' development before it could allow the development of capitalist potential - which was still possible as (unlike the USSR) the CCP had not achieved bureaucratised socialist preponderance over the latent means of production, which made this possible in the USSR. So that progress could only be possible (in USSR) on a revolutionary democratic basis. In China there was still considerable scope for agriculturally based capital accumulation, financing development - aided by cheap labour. Though it should be noted that it required a socialist revolution to enable China to break the constraints of neo-colonialism and Chinese capitalism to develop.

In order to cling onto/consolidate power, Mao's section of the bureaucracy inaugurated the Great Leap Forward (an industrialisation program of hopelessly ambitious stated objectives - the real purpose of which was to increase central control over the economy to reconsolidate the elite) in 1958 (after the `let 100 flowers bloom' liberalisation threatened CCP hegemony in 1957, along with the fallout from USSR destalinization) -this together with an aggressive foreign policy (contrary to Moscow's wishes) expressed by the renewed bombardment of Taiwan, was an attempt to play the patriotic card against the USSR and the USA - in order to engineer a pretext to regain the pol/econ initiative (over the Chinese masses) and reconsolidate/recentralize power.

This econ policy (of core elite reconsolidation) inevitably collapsed in a shambles, leading to a cataclysmic crisis of underproduction and famine costing 10-20 million lives.

But because the Great Leap Forward (and aggressive foreign policy, especially the bombardment of Taiwan - seen as broadly acceptable by Chinese public opinion, within the context of China's percieved legitimate domain) was in effect, an internally instigated coup (engineered to break from the USSR) and not an externally triggered clampdown (as in the USSR via Nazi rearmament, partially- the Hungarian uprising/invasion and the USA's rearmament/Vietnam war); the collapse of the Great Leap Forward lead not to fascization but towards a decentralising dynamic. Eg. now two core-radical states existed - until Vietnam.

The Vietnam war sparked (gave another pretext for) another clampdown this time externally instigated. But because the bureaucracy was too weak to maintain & entrench power by classical nat.sec state means (eg. rearmament, as in the USSR), it had to adopt a particular kind of perpetual fascizing dynamic (called the cultural revolution)), adapted to the conditions of China's backwardness; turning sections of the masses (eg. students) against oppositional elements in a mad frenzy - with continuous purges.

When this ultra reactionary section of the bureaucracy had in effect burned itself out, it became possible for semi capitalist elements of the bureaucracy (aided by the army) to take control. And to unlock latent capitalist potential by allowing peasants to sell produce on the market and (simply) allow the accumulation of capital to develop.

The decline of the USA was of vital importance in determining that there was now no more room for a dynamic core-radical state to grow and develop, significantly, without undermining capitalist hegemony - triggering a clampdown. But bureaucratic stagnation in a strong and independent (from colonial powers) backward Stalinist state (where there was no bureaucratic socialist preponderance over the latent economic forces/potential - and the state was strong enough to resist neo-colonial expansion) enabled the unlocking of latent (initially agricultural) capitalist potential. Whereas in the USSR and satellites, the whole economy just rotted.

Growth over the long run increased in the private sector (aided by cheap labor/rural poverty) and steadily eclipsed the (Stalinist type) public sector; setting in motion a continuous and evolving transition to a basically capitalist economy (which hegemony of, the CCP preferred as a guarantor & financier of their special privileges to socialist democracy).

A two price system operated, the lower official price and the higher market price. The private sector pushed up the prices of raw materials above nominal prices by outbidding the socialised sector plagued by a crisis of under production.

Ultimately the state sector was increasingly/ultimately eclipsed due to the crisis of under production and being outbid for resources by private capital in search of (surplus) profits.

To recap the motor force of the capitalist and Stalinist systems are:

Capitalism - The search for surplus profits. - Which leads to over-accumulation. - Which leads to over production.

Stalinism - In order to maintain bureaucratic control, the decentralising dynamic of the market mechanism is sabotaged by a bureaucratic drive to keep prices low. - Which leads to under production. - Which leads to under-accumulation.

Conversely:

Socialist Hegemony - Is impelled by the drive for equilibrium between capital accumulation & production and consumption (especially & increasingly through social wages). - Balanced progressive accumulation and consumption is achieved via the taxation system. The parliamentary/political state has a redistributive role, while capital is kept in check (prevented from being a law unto itself) by the WPCs (economic democracy). Production and consumption are otherwise kept in check via the market mechanism.

Ultimately this clash between state and private sectors led to a critical rupture between the bureaucratic socialist and the capitalist sectors of the economy, to inflation (caused primarily by the crisis of underproduction) and the partial (eventually to be total) collapse of the two price system.

The inflationary pressure caused by the crisis of underproduction (combined with official corruption - selling scarce goods & resources on at market prices, pocketing the difference), led to the 1989 revolutionary wave.

The 1989 mass movement was essentially a reflex action to the costs of rising capitalism (falling living standards triggered by the collapse of the two price system), which manifested itself in a revolutionary political attack against a political regime which no longer possessed legitimacy as a consequence.

However because it was a reflex action (to falling living standards) the revolutionary students/workers/soldiers had no clear pre-planned & worked out methodology as to how to (martial the people as an army and) move in for the kill. There was no effective revolutionary central coordination (leading to militarisation of the whole movement) because (being a reflex action) there was no clear pre-planned program of basic aims (and actions/strategy) of the movement worked out from the beginning/in advance ; except for vague notions of democratisation and stamping out corruption etc.

And the dithering inertia brought about by the lack of clear objectives & methodology led to demoralisation/the movement running out of momentum; and the enemy being able to crush it completely with the Tianenmem Sq. massacre.

In this decisive respect the movement was completely headless and differed crucially from revolutionary political Quantum Materialism - Which requires a very clear programmatic framework (with plenty of room for factional debate WITHIN the boundaries) and strategy worked out in advance, if it is to even begin to get of the ground. In its' totalised construct, Quantum Materialism is nothing less than the political equivalent of nuclear warfare.

curiously the massacre of Tianenmen Sq was followed by the temporary restoration of some Stalinist economic measures. This was neccessary as the capitalists had no historic legitimacy to exercise political power (especially through dictatorship) openly in their own name - It was therefore neccessary for the Stalinists to restore order for them.

To re-iterate, unlike E. Europe (which has become a playground for global speculation and assorted mafiosi), China still has potential to develop on a capitalist basis - because bureaucratic socialised preponderance was never attained over the latent productive potential.

Any new resistance in the short - medium term is likely to manifest itself in orthodox laborist forms, trades-union struggles etc (as is the case in other - still rising S E Asian states) until the global slump cuts across China's (and S E Asia's) development.

Though another problem that would cut across China's development later, is that of hegemony. China's political leadership is actually threatened by the acquisition of hegemony (in the same way that the USA's is undermined by its' loss), as the historical anti-colonial justification for the nat sec states' (continued existance would evaporate; eg. The Chinese masses would see clearly that the principle threat to their security comes not from any other imperialist power, but their own regime. It is inevitable therefore that as China grows her ruling elite will deliberately destabilise the region/world with rearmament, which in turn will give a pretext for the continued existence of the nat sec state. The ingenuity of the USA's nat sec state in justifying its' continued existence, by scaring us with mickey mouse dictators of its' own making, is an example of the cynical manipulation we can expect of China's nat sec state in the future. This process (always assuming the global slump did not cut across it), would cut across the normal capitalist process of market saturation.

Ultimately this can only lead to war. Though the pol/econ decomposition of Russia, Europe and the USA is likely to trigger war much sooner.

(we have already outlined the pattern of China's consequant collapse & solution to this threat in Chapter 1 & shall analyse what the falun gong represents dialectically in Vol II).

The post WW2 evolution and decline of conventional laborism

Post WW2 the core-radical bloc was instrumental in containing the threat posed by revolutionary and national liberation movements eg. betraying the Greeks and using their influence to hold back the Italian and French movements. Using them as bargaining chips in negotiations with the west and deliberately sabotaging them to avoid losing control of the socialist bloc, by being overstreched by too large/powerful a bloc of states - the USSR elite could not afford too many Yugoslavias, never mind democratic or semi-democratic European powers - undermining their imperium.

In the third world they converted friendly anti-colonial states into mere military outposts - insuring they would be of minimal attraction to surrounding states in the region (again containing the revolutionary threat. The perversion of the Cuban anti-colonial/democratic revolution, being perhaps the most tragic such example (which is not to deny the USA's tyranny was/would have been/be far worse). The USSR elite's approach was, if they cold not prevent it, sabotage/pervert it; then hold on for the purposes of prestige (as in Cuba/Angola). These (late-chartist) national revolts against colonialism had something of an isolated character and were not easily (if at all) internationalised. such states tended to latch on to (like iron filings to a magnet) anyone (especially the USSR) that would give them some (poisoned) support.

The third world anti-colonial states were therefore stranded between 2 devils, choking on a hybrid of evils afflicting both power blocs (as indeed did the USSR with its' own debt-crisis - an important secondary factor in its' collapse), tied to worsening terms of trade and depending on imperialist countries' contracting markets (who passed still more of the costs of their decline onto the weaker states via debt-servicing/extortion).

In post-war western Europe key sectors of radical workers looked naturally to the (victorious) USSR (bowing down before the accomplished fact) and the Stalinist `communist' parties, rather than the marxist-laborist (Leninist-Trotskyist) organs. Stalinism would only lose much of its' influence after atrocities like the Hungarian invasion (1956) and increasing pol/econ stagnation in the USSR - causing the CPs to evolve more into old-style conventional labor parties - sucking up more and more to their own ruling class rather than to Moscow.

And in turn, the prostration of the national economies before (increasingly independent from any nation state) global finance, completely undermined any long-term basis for a rebirth of marxist/laborism. The (limited) rise (in the early eighties) of the Militant Tendancy in Britain (which never had a mass CP, capturing the radical masses), being the exception that proves the rule.

To re-iterate Quantum Materialism could only be uncovered as a distinct strategy once all (generalised) illusions in conventional laborism per se had evaporated - once all room for negotiations between capital and labor had disappeared.

Similarly with most colonies now that have something resembling a permanent crisis of legitimacy, which are too weak militarily to assert themselves against USA backed power elites and USA state terrorism, their only hope is to tie the hands of imperialism by linking up with an operationally internationalised (and generalised) movement that delegitimises the ruling pol/econ criminals in the key imperialist states, buying them time until the revolutionary seizure of power in the key states.

According to Marxist theory, a revolutionary wave only becomes possible when the bourgeois split over wether to grant reforms to try and mollify the masses or to continue with repression (or vice versa).

But the pre-condition for this (such a split), is an organic accumulation of strength in the preceding period, of working class in relation to the bourgeois (squeezing its' position), eg. of bargaining potential over the economic upswing - so that the change from boom to slump critically squeezes the position of the bourgeoisie.

But historically a protracted downswing either:

Produces a revolutionary political wave forcing revolutionary reform if the system still possess the internal capacity to reform itself in response to such a radical shock.

Or if the system (as in the epoch of global finance) is incapable of reform - reaction, unless the legitimacy of the enemy is targeted via Quantum Materialism.

With the exception of the late-chartist Russian revolution & national liberation movements (contained within capitalist hegemony as a core-radical component of a global pol/econ), the only possible results of the conventional laborist radical wave on the downswing were rev reformism or Hitlerism - depending entirely on the national/global regimes capacity or not, for reform.

As we have seen (especially since the failure of the 1968-74 radical wave, when the movement was, again, completely incapable of delegitimising the regime and moving in for the kill), the situation is that through pre-planned defeats (by the bourgeois) on ground of the enemys' choosing (long-term planning in advance of conflicts by the enemy eg. miners' strike), the working class has in the preceding period had its position even more gravely weakened than the bourgeois who (whilst their regime is in permanent crisis/decline) have actually consolidated their power relative to that of the working class. So that we actually have in operation, a historical process of consolidated total collapse of both the economy and civil society/democracy.

The bourgeois (despite appearances) is (increasingly) not divided, over `repression or reform' but merely over how repression is to be enforced. Eg. outside or inside the EU; through `our own' national chauvinism, or through a (German) Euro-police state.

Without question on the basis of current prevailing modes of struggle, the working class' capacity to resist is being deliberately and systematically outflanked by the regime and (the traditional bastions of resistance having already being broken - miners/public sector) we are well on the path (secondary ebbs and flows notwithstanding) to a consolidated fascist dictatorship with superficial democratic trappings, taking an almost purely (formally) legal route (though as seen in Chapter 1, the global econ implosion shall lead to rise of fascist political warlordism on an apocalyptic scale).

We can summarise our analysis of the contempory political economy with the formulation that - "The incapacity of conventional laborism to resist the attacks of decomposing capital, and the incapacity of the regime to reform itself, amount to one and the same thing viewed from opposite ends of the equation".