The Fed published the minutes of its June meeting on July 8, in keeping with its normal procedures, including a summary of the staff forecast.
The minutes said the staff moved its forecast for 2015 growth “a little lower.” The detailed data showed the staff predicted the economy would expand by 1.55 percent in 2015.
The minutes also described the staff forecast as predicting that inflation will return to a 2 percent annual pace by 2018. The staff actually forecast that inflation would average 1.92 percent in 2018, and that it would not reach the Fed’s 2 percent target in the next five years, rising to 1.97 in 2020.
Fed officials serving on the policy-making Federal Open Market Committee have said that they plan to raise interest rates later this year, and investors are eager for information about the exact timing. Analysts cautioned that the new disclosures reflected the views of staff members, and that the forecasts of Fed officials, published in June, were more optimistic.The super-rich are doing smashingly well in this low-growth/low-inflation economy. To get a feel for how it all works, consult John Bellamy Foster's "The New Imperialism of Globalized Monopoly-Finance Capital" in the current July-August issue of the Monthly Review.
It is a depressing picture of global labor arbitrage where cost savings are vacuumed up by corporate monopolies in the capitalist industrial core creating "dynastic" wealth for a fraction of the 1%. This imperial system is precariously enforced by five monopolies enumerated by Samir Amin (see below): technology, financialized markets, resource extraction, media, and weapons of mass destruction:
Economically, the outward movement of generalized-monopoly capitalism is propelled primarily by the competitive struggle for low cost position via global sourcing of labor and increasingly scarce raw materials, and the monopoly rents that all of this generates. The result, as we have seen, is enormous cost savings in production for individual monopolistic enterprises, generating widening profit margins, which, coupled with more traditional forms of tribute, leads to a continual inflow of imperial rent to the center of the system. The full extent of extracted surplus is disguised by the enormous complexity of global value chains, exchange ratios, hidden accounts, and above all by the nature of capitalist GDP accounting itself.46 A part of the imperialist rent remains in the peripheral country and is not transferred to the center, but constitutes rather a payment to local ruling classes for their roles in the globalization game. About $21 trillion of this global tribute, meanwhile, is currently parked abroad in tax-haven islands, “the fortified refuge of Big Finance.”47
At the center of the capitalist economy the tendency to economic stagnation has been increasingly asserting itself since the mid-1970s. This induced repeated attempts to stimulate the system through military spending, with the United States as the engine.48 This strategy proved to be limited, however, since a big enough boost to the capitalist economy by these means in today’s environment would need to assume the dimension of a world war.
Under these circumstances, as corporations in the 1970s and ’80s sought to hold onto and expand their growing economic surplus in the face of diminishing investment opportunities, they poured their massive surpluses into the financial structure, seeking and obtaining rapid returns from the securitization of all conceivably ascertainable future income streams. Increased concentration (“mergers and acquisitions”) and its attendant new debt, securitizations representing the income stream of already-existing mortgages and consumer debt that piled new debt on old, and new issues of debt and equity that capitalized the potential future monopoly income of patent, copyright, and other intellectual property rights, all followed one another. The financial sector provided every sort of financial instrument that could arguably be serviced by a putative income stream, including from the trading in financial instruments themselves. The result, as Magdoff and Sweezy already documented in the early stages of the process from the late 1970s to the ’90s, was a vast increase in the financial superstructure of the capitalist economy.
This financialization of the economy had three major effects. First, it served to further uncouple in space and time—though a complete uncoupling is impossible—the amassing of financial claims of wealth or “asset accumulation” from actual investment, i.e., capital accumulation. This meant that the leading capitalist economies became characterized by a long-term amassing of financial wealth that exceeded the growth of the underlying economy (a phenomenon recently emphasized in a neoclassical vein by Thomas Piketty)—creating a more destabilized capitalist order in the center, manifested in the dramatic rise of debt as a share of GDP. Second, the financialization process became the major basis (together with the revolution in communications and digitalized technology) for a deepening and broadening of commodification throughout the globe, with the center economies no longer constituting to the same extent as before the global centers of industrial production and capital accumulation, but rather relying more and more on their role as the centers of financial control and asset accumulation. This was dependent on the capture of streams of commodity income throughout the world economy, including the increased commodification of other sectors—primarily services that were only partially commodified previously, such as communications, education, and health services. Third, “the financialization of the capital accumulation process,” as Sweezy called it, led to an enormous increase in the fragility of the entire capitalist world economy, which became dependent on the growth of the financial superstructure relative to its productive base, with the result that the system was increasingly prone to asset bubbles that periodically burst, threatening the stability of global capitalism as a whole—most recently in the Great Financial Crisis of 2007–2009. Given its financial ascendancy, the United States is uniquely able to externalize its economic crises on other economies, particularly those of the global South. As Yanis Varoufakis notes in The Global Minotaur, “To this day, whenever a crisis looms, capital flees to the greenback. This is exactly why the Crash of 2008 led to a mass inflow of foreign capital to the dollar, even though the crisis had begun on Wall Street.”49
The phase of global monopoly-finance capital, tied to the globalization of production and the systematization of imperial rent, has generated a financial oligarchy and a return to dynastic wealth, mostly in the core nations, confronting an increasingly generalized (but also highly segmented) working class worldwide. The leading section of the capitalist class in the core countries now consists of what could be called global rentiers, dependent on the growth of global monopoly-finance capital, and its increasing concentration and centralization.50 The reproduction of this new imperialist system, as Amin explains in Capitalism in the Age of Globalization, rests on the perpetuation of five monopolies: (1) technological monopoly; (2) financial control of worldwide markets; (3) monopolistic access to the planet’s natural resources; (4) media and communication monopolies; and (5) monopolies over weapons of mass destruction.51 Behind all of this lie the giant monopolistic firms themselves, with the revenue of the top 500 global private firms currently equal to about 30 percent of world revenue, funneled primarily through the centers of the capitalist system and the core financial markets.52 As Boron points out with respect to the world’s 200 largest multinational corporations, “96 percenthave their headquarters in only eight countries, are legally registered as incorporated companies of eight countries; and their boards of directors sit in eight countries of metropolitan capital. Less than 2 percent of their boards of directors’ members are non-nationals Their reach is global, but their property and their owners have a clear national base.”53
The internationalization of production under the regime of giant, multinational corporations thus follows a pattern first explained by Stephen Hymer, and recently underscored by Ernesto Screpatini, who writes that “the great multinational companies” are characterized by “decentralized production but centralized control54As a consequence the process of expansion of foreign direct investments involves a constant flow of profits from the South to the North, that is, from the Periphery to the Center of the imperial power of multinational capital.”
Today the threatened implosion of this system is everywhere apparent. U.S. hegemony in the military sphere—in which it retains the power to unleash untold destruction but has a diminishing power to control geopolitical events—is receding along with its economic hegemony. This is so well understood today within U.S. foreign policy circles that some of the sharpest establishment thinkers emphasize that U.S. global preeminence is giving way to an imperium based on the combined force (military, economic, and political) of the triad of the United States/Canada, Western Europe, and Japan. The United States, although still retaining global preeminence, is increasingly able to exercise its power as a “sheriff” only when backed up by the “posse” (represented by Western Europe and Japan)—as famously articulated by Haass in The Reluctant Sheriff and subsequent works.55 It is thus the U.S.-led triad, and not Washington itself directly, which increasingly seeks to establish itself as the new governing power, through such institutions as the G7 and NATO. The goal is to promote the interests of the old imperial powers of the capitalist core through political, economic, and military means, while containing threats to its rule by a rising China, a recovering Russia, emerging economies generally, and the global anti-neoliberal revolt based in Latin America’s movement toward socialism.
Haass describes the current world situation as “The Unraveling.” As evidence he points to the U.S. role in destabilizing the Middle East and North Africa, the rise of the Islamic State of Iraq and al-Sham (ISIS), the growing conflicts of the United States with China over the South China Sea and Africa, the return of Russia as a world power (manifested in the dispute over the Crimea and the Ukraine), the misdirection (in his terms) of states such as “Brazil, Chile, Cuba, and Venezuela,” as well as a whole failed set of regime changes initiated by Washington. He concludes: “The question is not whether the world will continue to unravel but how fast and how far.”56
All of this highlights, as István Mészáros tells us, “the potentially deadliest phase of imperialism.”57 It is perhaps a reminder of the seriousness of the world situation today that Soviet and U.S. climatologists alerted the world in the 1980s to the fact that a full-scale nuclear war would generate a nuclear winter, reducing the temperatures of whole continents by several degrees and possibly several tens of degrees, destroying much of the biosphere itself and with it humanity. It was this type of scenario that E.P. Thompson had in mind in his “Notes on Exterminism, the Last Stage of Civilization.”58 A war between the great powers does not appear to be an imminent danger at present. However, the instability generated by the hyper-exploitative and expansionist imperialist world system of today, led by the United States, which is now engaged in simultaneous military interventions and drone warfare in a half dozen countries (and which is planning to spend $200 billion dollars in the next decade modernizing its massive nuclear arsenal), suggests any number of ways in which a deadly confrontation could emerge. Climate change itself, with the continuation of business as usual, is expected to destabilize civilization, heightening the threat of a world war, which would quickly lead to a planetary level of destruction.59
The responsibility of the left under these circumstances is to confront, in Lenin’s terms, the “contradictions, conflicts, and convulsions—not only economical, but also political, national, etc.”—that increasingly characterize our era. This means fostering a more “audacious” global movement from below in which the key challenge will be the dismantling of imperialism, understood as the entire basis of capitalism in our time—with the object of creating a more horizontal, egalitarian, peaceful, and sustainable social-metabolic order controlled by the associated producers.60Our future is not bright. Electoral politics -- democracy -- has not been able to right the ship. Syriza's Alexis Tsipras proved to be another Barack Obama: in the end, one more glib salesman of the status quo.
We could very well hit the Hobbesian trifecta of "nasty, brutish and short." We've already realized the first two; whether our present savagery is going to be a drawn out or brief is still up in the air.