Comments on Wallerstein’s article 

Comments on Wallerstein's article 

Russian version

Immanuel Wallerstein wrote a very interesting text, which I wanted to comment on from the point of view of an economist who has his own view on the periodicity of processes in the world economy

I met Wallerstein once (in the summer of 2008 in Ottawa, where I first talked about the scale of the upcoming crisis, here, by the way, is a photo from that my speech) and I liked him.

So, I was always interested in his opinion on the issue of how the basic geopolitical and geoeconomic processes are structured. It seems to me that if a discussion comes out of this text (unless, of course, someone translates this text to Wallerstein), then it will be quite interesting.

Wallerstein begins with the theme of the crisis of the 70s (which “descends” a little lower in the 60s), which he explains with two crises related to cyclic processes, cycles of “hegemony” and “Kondratiev’s”.

I have repeatedly written that there are no “Kondratiev’s” cycles in the economy, those waves of recovery in the world economy that were considered cyclical are in fact connected with periods of creation of technological zones and their expansion (after serious wars and crises of declining capital efficiency). So, the crisis of the 70s was due to the fact that the growth of the “Western” technological zone (in which the USA really dominated) ended, but there was an alternative technological zone, the Soviet (in which the USSR dominated), which was developing quite well.

By the way, for this reason it is not entirely correct to talk about “hegemony” of the USA, by the beginning of the 80s (that is, the beginning of “reaganomics”), the USSR brought the standard of living of citizens for purely material consumption to 70% of the American, and if you slightly change the “weight ”(for example, to strengthen the role of education and social security), then it is quite possible to talk about parity. So here I can’t agree, although from the point of view of the “Western” observer the picture is quite adequate. But lowering the point of view to a level lower (from the world picture to the level of one of the two technological zones existing at that time) is already a serious simplification of the picture.

If we talk about globalization, then we need to be aware that each global project, reaching a certain level of its development, forms its own globalization system. In the 60s and 70s of the last century there were two such systems, the “Western” and the Soviet and in the early 70s, the Soviet system quite won. This is the result of the collapse of the USSR, in the 90s, it became possible to talk about “globalization” in general (omitting its “Western” nature), but, by the way, today, at the sunset of the Bretton Woods world and the “Western” project, problems begin with globalization in general.

About profit there are very serious objections. Wallerstein, after all, was formed before the beginning of the 80s and did not fully understand the model of profit formation in the modern world of financial capitalism. The fact is that the economic nature of this profit is not associated with production and even sale, it is associated with emissions. If no one gives the consumer money to buy your product — you will not sell it. You can hand over as many brilliant products as you like, but without the participation of the financial sector it will never become profitable.

This is an absolutely fundamental moment, which was formed gradually, in three stages (the first: the creation of the US Federal Reserve; the second: the creation of the Bretton Woods system; the third: the introduction of “Reaganomics”, that is, direct emission stimulation of private demand), but has been operating for almost 40 years. And the entire world economy is built under this model, which is completely inconsistent with Wallerstein’s reasoning. Profit in the global economy today is not formed this way.

But we can’t but agree about the unitary order. The unitary order in the “Western” world has existed since the 80s, in the world since the beginning of the 90s. The only thing that personifies its is not the USA, but the elite of the “Western” project, or, otherwise, transnational bankers, who are the main beneficiaries of the Bretton Woods system. And the instruments for its implementation are the Bretton Woods institutions, the IMF, the World Bank and the WTO (GATT upon occurrence). Well, the US Federal Reserve, of course.

By the way, the fact that these institutions have different origins and legal status (the first three are international, the Fed is under the US national jurisdiction) creates a serious problem for the “Western” project today. Attempts to remove global currency emissions from US jurisdiction have failed (the “Strauss-Kahn case”), and President Trump is clearly trying to destroy the entire world dollar system, which is very expensive for the United States today. So here the situation is much more complicated, today it is especially clear that what was considered the dominance of the United States was indeed the dominance, not just the United States, but the transnational financial elite (the elite of the “Western” global project).

The “revolution” of 68 was almost exactly the same in nature as the current youthquakes in Russia: the post-war growth era, based on the expansion of markets after World War II, was drawing to an end (its formal end was on August 15, 1971, when the US president R. Nixon abolished the “gold standard”) and for young people who had already grown up in relative prosperity, there was no room for improving their social status.

As for the social democracy that came to power in the “Western” countries, this was not a “left” movement at all, it was its imitation connected with the need to fight coming to win USSR. And it is very easy to see in their transformation after the fall of the USSR — they instantly turned into right-liberal parties, changing shoes right in the jump. In reality, they simply took off their “left” masks and moved on to their normal state. And in the USSR, after the Twentieth Congress of the CPSU, which adopted programs to increase the material needs of the Soviet people, drift to the right also began, which ended with a natural outcome in 1991 (for which, however, we had to first abandon the historical gain in the competition of the two systems in the beginning of 70s).

The youth protest could have any kind of appearance (due to the youth’s desire for justice, it always has a leftist character), it was the right-liberal doctrine that dominated, since it was determined by the economic model (which, after 1981, the beginning of “Reaganomics”, acquired absolutely dominant character). And the problems with this model began precisely because it had exhausted its economic potential: emissions ceased to generate economic growth.

The territorial division in this situation becomes a natural way out of the crisis: as private demand decreases, it again becomes profitable to reduce the maximum number of technological (currency) zones, and their subsequent growth (more precisely, a return to self-sufficiency, after globalization specialization) is possible only by stimulating demand for issue of regional (zonal) currencies. The rejection of such a policy leads to critically serious social problems associated with the impoverishment of the «middle» class.

I will not comment on reasoning about costs. In my new book (“Reminiscences about the Future”) almost a hundred pages were spent on this, and I can say that in the current financial (Bretton Woods) model, these considerations do not make much sense. Yes, it will appear, but only after the crisis and only if it is decided in some financial zones to repeat the path of the 19th-20th centuries. In my book, however, at least one alternative path is indicated. And there may be others.

All discussions about “extraterritorialization” will disappear after the crisis. The scale of production and, accordingly, the scale of production of various nasty stuff will also change. And the population will decrease, because in the face of falling living standards, hunger will become a normal phenomenon and, as a result, numerous epidemics will begin to play their role. In general, after the invention of antibiotics, the role of natural selection in mankind fell sharply (a large number of individuals completely unsuitable from the point of view of evolution began to survive) and in the conditions of a serious crisis they will almost inevitably become victims of illnesses and stresses.

By the way, the increase in taxes in recent years is connected precisely with the fact that emissions as a resource began to lose its effectiveness, while demand must be maintained. But let’s face it: since the 60s of the last century, in the USA, let’s say, taxes have decreased (the top income tax rate in the early 60s reached 92% in the USA). But the fact that the system collapsed and there is nothing to support it, I completely agree. And the reason is simple, the issue no longer generates economic growth, the potential of the Bretton Woods system is fully exhausted. And you can’t do anything here, you need to change the economic model.

If we talk about the magnitude of the problem mentioned by Wallerstein, then I agree, I agree with the structural causes of the crisis (although he did not indicate the reasons for this structurality). But I categorically disagree that there are only two forces. Based on our theory of global projects, there are at least five of them (the “Western” global project, the elite of which has been dominated by recent decades, the “Red”, Judaic, Capitalistic and Islamic, each with their own dominant country / countries or the desire to capture those), and all of them, with the exception of Red, have specific tactical plans.

The “four-cornered fight” mentioned in the article, it seems to me, does not make sense at all. Today, the main task is to determine the economic mechanism that will ensure economic growth after the crisis. While there is no such mechanism, so in this situation it is simply impossible to talk about how to build a system of governance and social relations in a particular macro-region. Not to mention the fact that it is not very clear which elites of which global project will dominate a particular region. But the difference is fundamental, which is clearly visible on the models of the USSR and the USA.

As for the recommendations, I have nothing to say here. I would bet on those issues that need to be discussed, including: understanding of new economic mechanisms, support for large social groups (previously belonging to the «middle» class) that have lost their sources of livelihood, new mechanisms of social stability, a new model of international relations in a multipolar world. And they need to be discussed, first of all, at international political and economic forums, pre-election discussions will not help here, their participants are clearly not ready for this topic today.

In conclusion, I would like to note that this text is not at all an attempt to explain that Wallerstein does not understand the subject. Rather, it is an explanation that the description of one and the same subject, geopolitical and geoeconomic, but from different angles, can give completely different results. And for this reason, in the current situation, when a full-blown crisis, which has already begun, but is still far from even reaching the middle of its scale, destroys almost all systems of social and political stability, very broad specialists are needed for adequate research. This is contrary to modern tradition, in which emphasis is placed on narrow specialists. So, I wrote this text just as an example of the fact that approaches to the economy will need to be changed very much.