Review Article

War and Depression

Anirban Biswas

What surfaced as a subprime crisis in the USA and quickly spread all over the world, was not just a subprime crisis that started with the burst of the housing bubble. Any serious and thoughtful person must observe the way world capitalism was moving prior to the eruption of the crisis, if he/she wants to know the underlying reasons. What is necessary to understand is how world capitalism was moving inexorably to this crisis and how the international political developments, particularly the regional wars—war is a continuation of politics by other means—were linked with it. In this brilliantly written *book, James Petras tries to analyze how the dynamics of Capitalism has led to the crisis, which in turn leads to increasing militarization and new wars. The book was first published in the USA in 2009, and to some extent the facts presented may now seem out of date. But the analytical structure has not lost its relevance, since it helps readers to understand how the seeds of crisis germinated in the earlier years through overaccumulation of capital that was largely caused by overexplopitation of labour internally, and by pillage of the former USSR and Latin America externally. ‘‘The dynamic accumulation process exceeded the capacity of the highly polarized capitalist system to absorb capital in productive activity at existing high rates of profit. This led to the large scale and multiform growth of speculative capital in order to maintain the same rate of return to which investors had become addicted, leading to massive reinvestment and price inflation in real estate and commodities, and a range of financial restructuring related to hedge funds, securities, debt-financing, mergers and acquisitions—all divorced from real value-producing activity’’. Here the author discusses the phenomenon, quite correctly, in the global context and brings in the role of countries like China and Russia in the inflow of massive amounts of looted capital into the western banks and in the expansion of the financial sector in the west. The author dismisses such bourgeois rubbish as 'failure of leadership', or  'willful ignorance of what markets need' as explanation of the crisis with cogent reasoning. What is really noteworthy is that he has attempted a serious class analysis of the crisis, how overexploitation has choked the channels of productive investments. He also notes elegantly that the current depression is contextually different from the earlier ones. "The current configuration of economic and social structures of capitalism include astronomical levels of state pillage of public treasury in order to prop up insolvent banks; and factories, involving unprecedented transfers of income from wages and salaried taxpayers to non-productive 'rent earners' and to failed industrial capitalists, dividend collectors and creditors... Never in the history of capitalism has a deep economic crisis occurred without any alternative socialist movement, party or state present to pose an alternative. Never in the history of an economic depression has so much of government expenditure been so one-sidedly directed towards compensating a failed capitalist class with so little going to wage and salaried workers.'' (p-33) This observation is entirely correct, and those who are familiar with F D Roosevelt's New Deal can easily see the difference between the two types of situations as well as policies. The book has many interesting things to offer. One is the story of Bernie Madoff, the Wall Street broker who used to raise money in typical Ponzi fashion and pulled off perhaps the biggest financial fraud in history. One may liken his activities with the Saradah scam with one difference: Saradah's clients were predominantly poor and low middle class people, while those of Madoff were multi- millionaires and billionaires. These included persons from Switzerland and Israel as well as the USA's largest hedge funds. The author has, however, ironically, although correctly, pointed out some good effects of this swindle, namely dent on US Zionist funding of illegal Israeli colonial settlements in occupied territories, discredit brought on speculative hedge funds, exposure of the stupidity of the leaders of the stock exchange, reduction of the wealth of the beneficiaries of a highly unequal class system etc.

The author's graphic description of the hypocrisy of Obama, the contrasts between his election promises and his actual deeds ('He catches your eyes and picks your pocket') is convincing. It is interesting that not only in the USA, but in India also, eminent academics hailed Obama's victory in glowing terms, saying that Obama represented the best values of American tradition. Now they are silent, but reluctant to decry Obama. In this sense, they differ little from the self-opiated camp followers of Obama. Summing up the collapse of the Wall Street, the author concludes trenchantly. "No economic recovery is possible now or in the foreseeable future as long as the US Congress and executives provide trillion dollar bailouts to Wail Street's insolvent speculators, bankroll trillions of dollars to the budgets of never ending wars called for by Zionist power brokers dictating US Mideast policies, and the US economy itself remains based on US consumer debt and the speculative issuance of finance capital." Those who have followed the events since the book was first published should not have much to disagree. Of course, the 'Occupy Wall Street' movement has forced a little policy change, but that is not powerful enough to bring about a reorientation of the economy.

The author has meticulously described the USA's policy regarding the Middle East, her promotion of Zionism and the barbaric attcaks on Palestinians. The recent invasion of Palestine territories by Israel, resulting in the killings of many civilians, women and children included, has borne out the truth of the author's analysis. The falsity of US propaganda on the Iranian election, which resulted in the victory of Ahmadinejad despite all efforts by the USA and her allies, has been ruthlessly exposed by the author. What is noteworthy is that the bombardment of Iran has been prevented by countervailing forces, notably Russia and China. The author has also noted the existence of other constraints, such as the capacity of Iran to strike back, the opposition by one section of Jew intellectuals and the general climate of increasingly hostile world opinion. A discerning reader of the book should not fail to note the ideology of military Keynesianism operating behind the US policy. Besides the influence of the Jionist lobby and the oil lobby, this is also important, because in this way Barack Obama seeks to get out of his own crisis. The author could have discussed the role of US jingoism in shaping Obama's policy.

The discussion on Latin America is richly informative. In India, many persons with profoundly anti-imperialist sentiments had come to believe that the days of the lackeys of Western imperialism were over in Latin America. Petras's account, however, shows that these lackeys are very much there, with the partial exception of Venezuela and Cuba. On Cuba and Venezuela, the author argues that neither offers a model for the rest, because 'the former is highly dependent on a vulnerable tourist economy while the latter is a petrol economy. Given the systematic collapse of capitalism, these countries will need to move beyond piecemeal reforms (such as Chavez food subsidies) and towards the socialization of the financial trade and manufacturing sectors'. He goes on to conclude, quite correctly, 'Mass protests, general strikes, and other forms of social unrest are beginning to manifest themselves throughout the continent. No doubt the US will intensify its support for rightist movements in opposition and its existing rightist clients in power. US hegemony over the Latin American elite is still strong even as it is virtually non-existent among the mass organizations in civil society.'

In two of the last chapters, the author discusses admirably the nature of eastern progressive opinion and Obama's foreign policy failures. His exposure of the former is necessary and useful. As he aptly sums up, the attitude of these fellows is 'Commiserate with the victims, condemn those who resist. He notes Obama's foreign policy failures, regarding Iran, Afghanistan, North Korea, Iraq, Venezuela etc. Today this failure is more evident because of the growing resentment against the hegemony of dollar and the striving for trade zones free from US influence. In short, this book is a severe indictment and ruthless exposure of the barbaric nature of the US ruling classes in the twentieth century. The discussion is fairly detailed and full of facts and information. Although first published in 2009, it should be a useful guide to an understanding of the tentacles of US imperialism.

*Global Depression and Regional Wars
By James Petras
Indian Edition, Aakar Books, New Delhi, 2013, 238 pages, Price Rs 350

Vol. 47, No. 22, Dec 7 - 13, 2014