Sunday, 31 July 2011


A few days ago, Soraya Sepahpour-Ulrich emailed me a Chris Hedges essay entitled: “How Democracy Dies: A Lesson from the Master,” which relies on Aristophanes’s works as an example of how society decays from within by corruption, greed, arrogance, distortion of ideals designed to promote the welfare of all people, and of course perpetual militarism that debilitates society and ultimately contributes to its demise. After reading the article, I surfed the Web for stories with the titles “who threatens US democracy” and “threats to US democracy,” and discovered that many essays (more than 20 million hits) include the following ten categories:

1. military establishment, conventional war, and war (PR, covert, etc.) on terror;
2. government bailout of banks and corporations;
3. the Supreme Court that is out of touch with the American people;
4. economic weakness and economic inequality;
5. the World Trade Organization and the UN;
6. Corporate power, corporate media, corporate campaign contributions;
7. Religious extremism of all types, Islamophobia, and Terrorism;
8. political (voter) ignorance, and interest groups;
9. the Internet;
10. narcotics trade and crime.

One very interesting article argues that the most basic threat to democracy is the human brain that “is predisposed to use information to confirm their existing beliefs, which makes democratic governance impossible.” If we accept that human nature as inherently atomistic and irrational without regard to others, assumptions that English philosopher Thomas Hobbes articulated in the Leviathan, then the human brain with its predisposition to the irrational and atomistic is indeed the obstacle to democracy.

If we also accept the assumption that competition and private accumulation of wealth power, prestige, etc. in the social, economic and political spheres promotes self-interest at the expense of the greater good, then we have another obstacle to democracy functioning harmoniously for the welfare of all its citizens. But all of this is predicated on the definition of “democracy,” a concept that many people equate with free enterprise and individual pursuit of wealth (Adam Smith and his Liberal followers), others with social welfare and the pursuit of the greater good for the greatest number (utilitarian democracy), others with human rights and social welfare (social democracy), others with basic freedoms such as press, assembly, etc.(Libertarian), others equating democracy with voting.

Of the ten categories listed above as “threats to US democracy,” clearly all of them and many more are real, depending on the individual’s definition of democracy, and on value systems that spell out not only what democracy is but what it is not. On the broader question of endogenous or exogenous factors that cause the demise of a democratic society, here we can look at historical experiences of countries that were “to some degree open societies,” countries that enjoyed aspects of democracy but lapsed toward some model of authoritarianism. In the cases of interwar Italy, Germany, and Japan the causes of abandoning pluralism for an extreme form of militaristic ultra-authoritarianism rooted in ultra right-wing ideology were internal, although external causes served as a pretext to convince the public of the need for a militaristic/authoritarian regime.

If indeed people care more about safety and security, or at least if the media and their political, business, and social leaders convince them that nothing matters more than safety and security, people will voluntarily surrender any commitment to democracy for the perceived guarantee of safety and security. If the US moves increasingly toward a more authoritarian model under the political shell of “democracy,” as it could if in the future it faces more and deeper economic contractions that result in an increasingly smaller and weaker middle class, the cause will not be the UN, the WTO, Islamic “terrorism,” rogue nations like North Korea, etc.

The dynamics of human society are similar today as in the 17th century when Hobbes wrote the Leviathan, therefore if a modern American Leviathan emerges it will be an expression of contemporary society confronting a social and economic structure that is unraveling. The segment of society that has the power to mold public opinion and convince them that Leviathan means “salvation” from self-destructive proclivities of an otherwise irrational public, will move society away from the Jeffersonian model that some equate as the ideal toward one that projects an image of narrowly-defined democracy and equates it with “the freedom to shop, to enjoy safety and security, and vote for politicians who represent the same institutions”" a model behind which rests an authoritarian/police/military state.

China and the Global Balance of Power

China’s role in the 21st century has been the subject of many books, scholarly journal articles, government and NGO studies, think-tank and private business studies, and of course blog essays. It has been the focus of all countries, especially the larger ones that find themselves competing and cooperating with China out of necessity and self interest. Unlike the postwar miracles of Germany, Japan, to a lesser degree South Korea and Taiwan, China’s economic ascendancy comes with a centuries-long history as a major power, recently (past half century) a nuclear power, and more recently with the ability to influence the entire world’s course in a number of areas from economic to military.

The question of how China is integrated China into the world power structure is key for policy makers in Beijing, US, EU, Japan, Russia, India and the rest of the world. Depending on the perimeters that Beijing sets on its military, political, and economic power, depending on the models of political, military and economic integration it chooses, the world could be much more prosperous or poorer and polarized, more harmonious experiencing fewer conflicts or more divided and more bloody than the 20th century. What limits do the Chinese want to impose on the various facets of their power as it increases?

This is a difficult question because there are disparate Chinese groups that do not agree about the course of their country. Do they want to become militarily hegemonic as People’s Liberation Army (PLA) Senior Colonel, Liu Mingfu, is demanding, or does China want to reach a balance of military power with Russia, US, India and EU and live under constructive and peaceful co-existence?

If China follows the US-USSR arms-race model during the Cold War, the entire world will be less safe, far less prosperous and much more dangerous with regional conflicts more frequent. The Chinese government, many academics, journalists and businesspeople claim that they want a peaceful and harmonious global ascendancy, unlike the economic, military and political ascendancy of western Europe, US and Japan that came during the Age of Imperialism at the expense of underdeveloped countries, including China that Europe, US, and Japan divided into spheres of influence and exploited.

Not all Chinese agree with this model of ascendancy. “As long as China seeks to rise to become world number one … then even if China is even more capitalist than the US, the US will still be determined to contain it,” writes colonel Liu. Rivalry between the two powers is a “competition to be the leading country, a conflict over who rises and falls to dominate the world,” says Liu. “To save itself, to save the world, China must prepare to become the (world’s) helmsman.”

Because the Chinese Communist regime is under pressure from the military to use the country’s economic might to become the world’s strategic power, the US has been trying to strengthen India to counterbalance China. But to what degree does India wish to play the role the US wishes to assign to it, instead of pursuing its long-standing foreign policy of balancing its interests between Russia, China, and US?

For now, India too wishes great power status in the economic and military domains. India is securing strategic assistance from US, Japan and Russia as well as massive injections of investments from US, Japan and western nations that will help raise India to a global technological competitor. India’s rise to power is one way that China’s ascendancy can be mitigated, with Japan and South Korea holding the East Asia balance of power. But that will hardly be sufficient to counterbalance China to the degree that Japan, US, and EU wish in order to prevent the inevitability of China’s preeminent global role in the century.

The limits of China’s power may come from the ongoing global competition for minerals, including strategic ones, as well as raw materials in general. Between now and 2035 China’s energy needs will increase by an estimate 133%, of which 60% will come from coal that China has in abundance. The Cold War was in large measure a struggle for control of the world’s raw materials, especially oil and strategic minerals. By 2035, oil will reach peak capacity at 110 million barrels per day, more or less sufficient to meet demand… and then the long decline after 2035. By 2035, China is expected to have the world's largest economy and it will have the most significant voice in determining the world economy. Of course, anything can change, in the next 25 years, but China seems focused on assuming the economic leadership role.

China has signed strategic partnership deals with energy-rich Russia, but as Joseph Stalin feared when Mao took power, it is not in Moscow’s interest to have a powerful neighbor, so Russia is balancing its interests by looking to the EU. Well aware of the delicate balance of power that the other great powers are engaged in, China is trying diplomacy of commerce and currently using its surplus as leverage for global influence. In 2011 it is estimated that debtor countries around the world will borrow an amount that is approximately 20% of the world’s GDP.
The largest borrower will be the US, which is expected to hit the markets for around $4.5 trillion, a good percentage of it from China; that is if China remains convinced that the US is a solid investment and politically desirable bet. The Chinese are taking credit for saving the world economy from suffering an even deeper world recession than they would otherwise, if it were not for Beijing putting together a $600 billion economic stimulus package in November 2008 to finance public works that employed over 20 million people.
With the ultimate goal of maintaining socio-political stability and steady economic growth at home, China has been busy making multi-billion-dollar commercial deals with countries in all continents, while at the same time proceeding with massive infrastructural development programs that includes the world’s largest and fastest rail system. China has been taking these steps while NATO countries have neglected infrastructural development, instead focusing on maintaining defense spending at Iraq War levels.
In 2009 the world economy’s purchasing power parity grew by 0.19%, while China’s grew by 1.19%, thus preventing a much deeper economic contraction. While the world economy was contracting in 2009, China grew by 9%. From 2000 to 2008, China accounted for 22% of global domestic demand, while in 2009 amid the depths of the recession China contributed 46 percent of global domestic demand.
If it were not for the massive demand in China, much of the export trade in Latin America, Africa and Australia would have suffered more than it did owing to decline in exports to the EU and US. At the same time, China has become a major trading partner for European nations small like Greece and large like Germany that is equally influenced by economic developments in China as it is by those in France or the UK. 
If China had not increased imports in 2009 and 2010, EU and US would have suffered a much worse economic fate."Clearly, it (China) made a significant contribution,” stated Vivek Arora, assistant director of the IMF’s Asia-Pacific department. China is now one of the world’s largest IMF and World Bank contributors, advising its trading partners to adhere to IMF-World Bank monetary and fiscal policy advice.

Yet China has been feeling the pressure from the US and other countries to change its own monetary and fiscal policy, that is, to adjust its undervalued currency and to stimulate greater consumerism at home. Chinese people for the most part have a living standard that is comparable with many Third World countries and extremely uneven with many poor at the bottom of the pyramid and a few wealthy people with a slowly rising middle class.
Already there are signs that Beijing is yielding to some of the external and internal pressures, but only to a small degree as one would expect of the presumptive preeminent power of the future. At the same time, it has taken steps to become technologically and scientifically independent. While external pressures help to influence China’s policy on the road to hegemony, ultimately it is domestic factors that will decide its future. As the social structure is changing very rapidly and a wealthy as well as middle class is forming and has a voice in society, will this mean that the Communist regime will be able to survive without making major reforms expected of an open society, or even survive at all?

To what degree will the reform movement have an influence and to what degree will the current regime, or the one that succeeds it yield to pressures for delivering social justice instead of merely invoking vacuous Marxist rhetoric without doing anything about rural poverty, especially in Western China? If the PLA continues to exert pressure that China focus more on its military might at the expense of becoming a consumerist society, will China evolve into a monolithic power and continue the path of one-party state rule like the old USSR, or will it evolve into a multiparty state structure?

If it chooses to retain the one-party regime that neglects the rapidly changing social structure, it may face eventual decline owing to inevitable tensions that contradictions of the market economy invites, especially if combined with expensive and destabilizing militarist ventures. As India and Russia also become more prominent in the world economic-strategic-political power structure, will China seek the kind of “natural” alliance with the US that Mao and Zhou Enlai (Chou En-lai) envisioned during the Civil War, and later Mao when he invited Nixon to Beijing?

Finally, while China holds many cards to influence the world’s future, the manner in which the other great powers behave toward China will determine how China reacts, just as the manner that the West behaved toward the USSR largely determined Moscow’s conduct. If the US and its partners choose a new containment policy toward China, setting limits on China’s power through pressure and conflict and if China does not choose to set its own containment perimeters, the world will be less stable and prosperous and much more dangerous in the 21st century.

China, US and the Currency Debate

The US public debt issue directly impacts China as the largest purchaser of US treasuries, but China is very close to balancing its interests and cutting its losses when it comes to the dollar. Having accumulated $3.2 trillion in foreign reserves after the Asian financial turmoil of the late 1990s, China has tried to protect itself from external shocks. Given that 40% of its trade is with US, EU, and Japan, all countries that suffered seriously in the global crisis of 2008-2011, China has been trying to become more 'multilateral' in financial and commercial relations, especially given US pressures about the undervalued currency - yuan - which translates into unfair trade practices.

In the past few years, especially in 2010, there have been repeated calls in the mass media, including one by popular economist Paul Krugman in a NYT article entitled “China, Japan, America,” to pressure the Chinese government to stop manipulating its currency, thereby undercutting the economies and balance of power of the developed countries with which it does business.

China is currently holding a reported $2.5 trillion in foreign reserves, of which about $1 trillion is US. Krugman and others like-minded commentators who have called for China to stop manipulating its currency leave the impression that the US, EU, Japan and other countries are not playing politics with their currencies like China, but permit the “invisible hand” to do its magic! In essence, the critics want China as a creditor nation to offer a discount for US bonds through overvalued yuan that would ease the burden on the dollar as a reserve currency.

This “populist” game that certain academics, journalists and politicians are playing very opportunistically is designed to apportion blame to external forces for the domestic economic problems in advanced capitalist countries, especially the US. Krugman is an intelligent economist and he knows that governments for centuries since the Roman Empire have manipulated currencies, just as he knows the US has engaged in this practice. Chinese currency manipulation is a complex political issue with serious multifaceted consequences if Washington upsets the delicate inter-dependency it has with Beijing. Krugman and like-minded individuals have further complained about Chinese subsidies.

Again populist critics know that the US, EU, Japan, Korea, Taiwan also provide subsidies in varying forms to strengthen certain domestic sectors or specific industries for the “good of the national economy.” All of this noise about China has been around for many years. It assumed momentum after a January 2007 report to Congress warned that “China’s Trade with the US and the World” posed threats to US, EU & Japan national industries and employment.
The US, EU and Japan have been concerned for many years about intellectual property rights violations and dumping by China. Beijing has deliberately kept its currency low and it is guilty of intellectual property rights violations and dumping; all issues that the World Trade Organization can help resolve with China as a member. However, it seems that journalists, consultants, and even academics are falling into the politicians’ perfidious mold of writing/saying what people want to hear, just so that they can be accepted by the public that responds to cryptic or overt nationalist rhetoric. 
The key question for the US economy is whether the solution rests a tariff war of some sort limited or extended. Reducing this issue into populist protectionist rhetoric to appease the public, only helps the few companies crying out for government help and does nothing to address structural problems in the US. The “economic nationalists”–at least those like Krugman currently playing the card for popular consumption–know that the US has an inter-dependent relationship with China, that the currency issue has many facets beyond economic, and that abrupt and direct pressure would hurt the US much more than China.

Besides, the US has imposed “select tariffs” on those Chinese products, including steel, copper, tires, and automotive parts, that the Commerce Department deems part of a “dumping campaign.” Moreover, the US and EU have intervened to prevent China from buying bonds from EU members and associate members beyond a certain amount. In short, the US and EU do not want China to create a “dependency” relationship with countries traditionally under the Western sphere of influence. The solution for the US and EU is to get their own public finances and economy in order, starting with a progressive fiscal policy and restructuring the economy on a jobs-growth basis as the IMF and ILO recommended during Olso meeting a few days ago. China is hardly responsible for the fact that the US and EU are over-consuming and under-producing to the detriment of their own socio-economic and political harmony.

Like the Latin-speaking half of the Roman Empire after the death of Marcus Aurelius, the US, the EU is right behind it, has chosen the road to wealth concentration in the hands of a small percentage, a runway culture of wasteful spending and over-consumption, and refusal to undertake systemic changes to alter the current course that will yield cyclical crises down the road. By contrast, China with a Communist regime–such as it is practicing capitalist economics–has opted for productivity oriented route and very slowly it is allowing consumption to filter down to the masses.

History will judge in a few decades if the Chinese or the US-EU models of development will best serve their respective populations. The Chinese model–detrimental as it is to hundreds of millions of cheap laborers working under unsafe and unhealthy conditions–is focused on exported-oriented growth strategy with low domestic consumption. The US-EU model rests on perpetual debt-by-growth strategy, using the reserve currencies and political power to maintain global market advantages, weakening the welfare state and focusing on strengthening finance capital while hoping that will somehow filter down to benefit the middle class needed to maintain the existing social order. 
The global economic crisis of 2008-2011 awakened China to the reality of how its economy could be seriously undermined because of how Western governments manage their own economies and public finances, using the state as a vehicle to redistribute income from the bottom up, thus undermining the mass consumer base. If China decides to stimulate internal demand - raising incomes - thus relying less on external demand for its products, it would also have to rethink the purchase of foreign bonds, especially US. 
In short, China's domestic economic policy will have an impact on the value of the dollar and on the US economy. The question is whether it is in China's interest in the next tow to five to years to make any sudden moves with regard to the US debt, or whether it should opt for a smooth transition as it plans to move into the number one economic position in the world, a position which entails massive responsibility toward the US, EU and Japan.


Some scholars argue that the Vietnam War combined with the nuclear arms race and inordinate defense spending are the main reasons for the US long economic decline after Lyndon Johnson left the White House. Clearly, the wars in Iraq and Afghanistan, adding an estimated one trillion dollars to the US debt, totaling $14.4 trillion in July 2011, have damaged the economy.

What does the US have to show for a record of militarism in the last fifty years? What does it have to show for its wars in Iraq and Afghanistan, even if Osama is no more, but the absurd and bogus 'war on terror' remains? The cases of Iraq and Afghanistan prove beyond any doubt that the US has lost not only economically, but geo-politically as well. In 2008, I argued that the US had lost the war in Afghanistan and that Iraq would be more chaotic and socially unjust after the US leaves than it was under Saddam Hussein.

In Iraq, there is no political, social or economic stability, and it seems that once the US troops leave, the situation may deteriorate further and the country that the US wanted to 'democratize' will be one of the most authoritarian in the world. Shiite militias engage in perpetual violence and assassinations. This is especially in the northeastern province of Diyala bordering Iran, and having a population of Sunni and Shiite Muslims and Kurds.

Violence is a means of forcing US troops out and imposing their authority according to U.S. Special Inspector General for Iraq Reconstruction Stuart W. Bowen Jr. It is highly likely that once the US is out Iran will sharply increase trade relations with Iraq (already trade between the two countries amount to $10 billion and plan to double it within a few years). Iran will exercise enormous influence over Iraq, without the US having much of a voice in the matter. In short, the goal of moving into Iraq to determine the balance of power has not been achieved, given Iran's regional hegemonic role.

The cost to the US economy notwithstanding, the legacy of the US war is that Iraq is left in shambles, perhaps in some respects resembling China that lapsed to the fate of warlords after the Boxers' Rebellion. As much as the US tried to present an image to the world that it was interested in freedom and democracy, the legacy in Iraq is one of violence and chaos, sharp societal divisions and collapse of the entire social fabric that will take decades to repair before Iraq is restored to some semblance of a nation that exists in relative internal tranquility and relative social harmony.Of course some companies and individuals became wealthy during the Iraq war, and ideologues argue that the war was worth it just to bring down Saddam. Such are the voices of 'reason' that prevail in the US government claiming to represent freedom and democracy.

US legacy in Afghanistan is even worse than that of Iraq, partly because Afghanistan had gone through the civil war and Soviet invasion of the 1980s, followed by the Taliban era, followed by US invasion. The core country of 'the war on terror', Afghanistan will take more than half a century to restore itself into a society of some social, political and economic stability after the US-NATO forces are out. The US is pointing fingers at its European partners for not doing enough in Afghanistan, while Europeans see the situation as an American affair in which NATO assisted. Afghanistan exposed the fragile NATO alliance, especially when former DoD secretary Robert Gates criticized Europe for slashing defense budgets even before NATO hesitantly decided to attack Libya.

For its part, Europe sees the US of making decisions unilaterally and then consulting later when it demands assistance from its junior partners. In short, NATO solidarity means Europe backing the US after it decides that it needs assistance for political, economic and strategic considerations. Who is right, the US or Europe? Neither, because both sides know that the public does not support NATO, and it does not support costly military adventures like Afghanistan and Libya. NATO solidarity without public support cannot work when the policy is flawed from the start, as it has been with Iraq, Afghanistan and Libya.

On Sunday, 31 July 2011, a suicide bomber killed 10 police officers and one child in Lashkar Gah, a southern city where pro-US elements recently took control. This was only the latest in a series of violent incidents that include assassinations of officials Kandahar and in Uruzgan provinces; invariably the targets are government officials, but violence takes its toll on innocent civilians. This is the sort of 'progress' that US and NATO are making as they are planning their withdrawal from a country they leave in ashes. The only satisfaction the US and its allies have in Iraq and Afghanistan is to lay claim to the role of hegemonic military powers with the ability to destroy. 

If great civilizations were distinguished by their ability to destroy in the manner that US and its NATO partners have destroyed Afghanistan, then the Third Reich would be among the great civilizations. Sadly for the people of Afghanistan and Iran, sadly for Americans and Europeans, sadly for Muslims everywhere and for humanity as a whole, the only benefits that have accrued from these wars have been to a handful of investors, not just Americans, but from various parts of the world, who made money on the blood of hundreds of thousands and the misery of millions.

Gold Standard vs Credit Economy

The US debt problem that has caused gold to rise sharply, combined with the debt crises in the EU periphery nations, has fueled discussion about a gold standard. Not only is it necessary for the US to raise its borrowing requirements, especially given the low GDP growth rate in 2011, but the EU may need as much as $5 trillion to save the eurozone. This means that both the dollar and the euro as reserve currencies are in essence worth a great deal less than their nominal value which rests on the fact that they are reserve currencies with the faith of the holder that the economies of the US and EU would perform better in the future than they do now.

On 8 November 2010, World Bank president Robert Zoellick proposed “employing gold as an international reference point of market expectations about inflation, deflation and future currency values.” Less concerned about China’s undervalued currency than the IMF that has sided with the Fed, the World Bank, which enjoys a cordial relationship with China, made the ”gold standard proposal” ahead of this week’s G-20 meeting.
Given the sensitivity of the monetary policy question and the war of words that has erupted between various countries, Zoellick is proposing something that countries with reserve currencies can agree in order to engender greater international financial and trade cooperation. Zoellick added that: “This new system is likely to need to involve the dollar, the euro, the yen, the pound and a renminbi that moves towards internationalization and then an open capital account.” 
The World Bank proposal is attractive to monetarists, to the IMF and to creditor countries like Germany pushing tight monetary policy because it is to their benefit. In recent interviews, Wolfgang Schäuble, Germany’s finance minister, castigated Fed policy for pursuing a “stimulative monetary policy” while at the same time criticizing China for doing the exact same thing. “It is not consistent when the Americans accuse the Chinese of exchange rate manipulation and then steer the dollar exchange rate artificially lower with the help of their [central bank's] printing press,” Schauble told the press.
Who gains and who loses under a gold regime based on a basket of currencies is the key question before the G-20. In 1971 Nixon, under pressure from Japan and Europe and with the advice of the IMF that had secretly warned Washington about its current account deficit and weak dollar since 1957, ended the link between dollar and gold established during Bretton Woods in 1944. “Bretton Woods II” began in 1971 and it seemed to serve the US and countries with strong currencies that held dollars as reserve currency. China, Russia, India and Brazil were not part of the equation in launching “Bretton Woods II,” the EU did not have a common currency, and there was no economic crisis to the degree the world is confronting today.

There are a number of reasons that the World Bank proposal will not be adopted. First, creditor nations trying to develop their economies amid global economic contraction would suffer disproportionately under the World Bank’s proposal. Second, the Organization for Economic Cooperation and Development (OECD) has recently trimmed growth forecasts for 2011 and cautioned central banks about raising interest rates that would further choke off growth. In 2011 US and EU will perform by 40-50% under what the OECD estimated six months ago, and they will not reach 3% growth as was expected for 2011 until 2012. 
“OECD warned that the economic crisis of the last two years had ‘pushed public deficits and debt to unsustainable levels.’ OECD Secretary General Angel Gurria said: ‘Simply stabilizing debt relative to gross domestic product in most countries will require a historical consolidation effort of anywhere from 6.0 to 9.0 percent of GDP.” 
Third, if the World Bank proposal is adopted, growth will suffer and unemployment will rise, as will the sharp gap between the rich creditor nations and the poor debtor countries. Fourth, trade will increase between rich nations, but it will slow in many parts of the underdeveloped world to the degree that there will be a return to bartering at the local level. The gold standard proposal raises the political question of how society ought to measure the “wealth of the nation,” a question that Adam Smith tried to answer during the nascent stage of industrial capitalism. Should we return to a regime of neo-Bullionism? 
Adopting the World Bank’s “gold standard” proposal will entail lower inflation, stable reserve currencies, absence of currency wars, fewer cases of “out-of control budgetary deficits,” and very strong banking/finance capital sector. The clear winners in this scenario would be the banks and financial institutions in general. It would also mean that politicians would be surrendering power of monetary policy to the banks. Given that the public sector accounts for a very large percentage of the economy’s GDP–larger in China than in the US–and given that monetary policy impacts economic and social policy, should the elected representatives of the people have the power over monetary policy, or should it be the banks, insurance companies, and investment firms? 
If the World Bank gold proposal was in effect, could the FED buy $600 billion of long-term bonds, the day after the election, in order to stimulate the stock markets and indirectly the real economy? Taking the long view, if countries stuck to the gold standard when the Great Depression erupted, how much greater would be the cost for people? There are economists who argue that the gold standard was a factor that caused the Great Depression, and those who believe that gold standard regime severely restricts economic growth. Right-wing ideologues, and of course financial elites in general, though they are by no means of one mind on monetarism, want government to have as little influence in money supply policy as possible. 
Finally, the monetary policy debate that the World Bank is proposing as “food for thought” more than a plausible alternative implies that tight monetary policy best serves society because it engenders “monetary stability.” Putting aside the OECD warning about a tight monetary policy, the more significant question is that the culture of capitalist economics has convince people around the world that inflationary policies are detrimental, while deflationary policies are beneficial. And there is no doubt that hyper-inflation is detrimental as is inflation accompanied by IMF monetarist policies that severely curtail wages and benefits in order to curb consumer spending.
Examining the periods of inflationary vs. monetarist policies, in almost every case what we see is that the financial elites do not fare as well under inflationary climate as they do under a tight monetarist regime, but upward mobility definitely takes place during inflationary cycles and downward mobility during deflationary cycles as the world is currently experiencing. Truth and wisdom on monetary policy are not the domain of one ideological school of thought or the other. Rather the issue before us is about social interests; it is an issue of what social groups benefit and what social groups are harmed if tight monetary policy and/or the gold standard is followed as the large banks, conservative ideologues and the IMF and World Bank wish. 
While the timing for gold standard debate seems appropriate against the background of massive public debt problems in many countries, including the US, the question is how long before another cyclical economic downturn precipitate serious damage to reserve currencies to the degree that creditor nations demand a new reserve currency that would be treated like gold, a prospect that has been on the table for some time and has the support of countries like China as one of the world's largest creditors. How long before finance capitalism completely destroys the credit system as capital remains super concentrated?

Saturday, 30 July 2011

The Future of the Middle Class

The Obama administration remains concerned that the American Dream is fading because the middle class is weakening, especially right before the 2010 congressional elections that the prospect of a double-dip recession may be more real than it was six months ago. Arguing that the “middle class dream” (synonymous with the American Dream) is fading fast, the Obama administration has a task force operating on the assumption that “everyone wants to and can be in the middle class.”

Clearly not the same definition as in 18th century France or England, a definition that underwent change since then in Europe that operates in America’s shadow since the 1940s, US government (media and mainstream institutions as well) defines middle class on the basis of a) owning a home, b) car, c) college for the kids, d) retirement fund, e) health care, and f) family vacations. If you have these six things, you too are in the shrinking “middle class” as US government (and mainstream institutions) defines it. Therefore you are happily conformed and the social order will continue to exist for a very long time.

But what if you lack one or more of the six criteria? High-paying jobs in the secondary sector of production (manufacturing) have been going to Asia and Latin America and with it the drop in salaries and benefits for Americans, followed by white-collar jobs in sectors from computer science to medical engineering. The situation is not very different for many other advanced capitalist countries that have experienced downward social mobility under globalization.

Although Americans and their European counterparts became two-income families, some taking second jobs, the cost of living rose sharply in the last two decades, while wages, salaries, benefits, and social security income could not keep pace. “For most of the 20-year period following 1990, the Commerce Department reports that real median income grew at a rate of about 20%, while the cost of a college education grew between 43% and 60%, the cost of housing rose 56% and health care costs jumped by 155%.”

Joe Biden’s web site describing the task force notes that “A strong middle class equals a strong America.” But was it not government policies regardless of political parties whether in the US or any of the advanced capitalist countries that led to the shrinking middle class since 1970? Is the solution to a strong middle class a more even income distribution where the majority of the population does not live on less because the pyramid is becoming increasingly narrower at the top and wider at the bottom?

Who knows what Joe Biden will do to get Democrats elected this year against the background of a Republican assaults (Glenn Beck calling Obama racist)? It seems any solution that proposes social and economic justice would be unacceptable for mainstream America. A more acceptable solution for US government and mainstream institutions is: a) find another job to supplement your income, b) work harder, c) plan and invest better, d) return to school for more education or re-training; and e) wait for “lady luck” to ring your doorbell because you have conformed to the Calvinist work ethic!

If indeed the assumptions of the US government (and the entire mainstream institutional structure) that “securing a middle class” is the key the American Dream, how do we explain US public opinion polls indicating that the “happiness” level (granted the obvious difficult of quantifying it), has been under 50% and steadily declining since 1970? And how do we explain that in a global public opinion poll, the top four “happiest” countries in the world are Denmark, Finland, Norway, Sweden, while the US ranks 14th, despite the largest GDP on the planet?

Even if we accept the US (political and financial elites backed by media and academia) ubiquitous PR campaign, to project the image that upward mobility is the dream, scholarly studies by individual academics and think tanks for the last three decades indicate that there has been downward mobility in America, spreading to the rest of the world with some exceptions. Global outsourcing under neo-liberal policies has resulted in a shrinking middle class likely to shrink more in this decade in the US and EU.
In March 2009, I issued a posting on WAIS entitled “Twilight of the Middle Class,” where I argued that the middle class in most of the world has been created on paper owing to the credit economy. When I presented the same point last spring as a guest speaker at a Greek university conference dealing with issues of international political economy, no one in the audience was surprised that indeed the middle class was built on a mound of debt under an unsustainable global (public and private) credit economic structure designed to keep wealth concentrated. 
People know where they stand versus the image they project, a dream that the political and financial are projecting while constantly working to make the social pyramid even narrower. The larger question today is should the six-point criteria developed by individuals who want to perpetuate consumerism be the basis of the American Dream, or should there be an re-examination of peoples’ values in the wake of this prolonged global recession–and I mean all people, not just the middle class that constitutes the popular base of bourgeois political parties? 
Are these the values America wants to continue exporting to the rest of the world so it can strengthen finance capitalism at the expense socioeconomic chasm and social polarization from which arise extreme right wing elements? Is the essence of humanity predicated on the six points mentioned above? In the US government report, there was no mention of creativity, no mention of empathy in thought and deed for one’s fellow man, no mention of protection of nature, no mention of philosophical/spiritual self-reflection, no mention of greater social equality or collectivist action that alleviates suffering of the vast majority, no mention for lessening societal and institutional violence. 
America is becoming more polarized, and Europe is following in its footsteps as indicated by race riots in England, anti-gypsy sentiment in France, xenophobia in Italy, and of course America’s Beck and Palin backed by the extreme Christian right promising a slice of Heaven to “Real Americans.” The Obama administration needs to appoint a task force to reexamine what values it should be peddling to the American people and the world. At 4% of the world population, the US consumes roughly one-quarter of the world’s resources, but a mere 1% of the population owns 35% of the wealth. Is there a future for a growing middle class (the realization of the American Dream and the avoidance of sociopolitical polarization) under such wealth concentration?

Twilight of the “Credit Middle Class”

In all economic contracting cycles throughout finance capitalism’s history, labor (blue-collar skilled to unskilled, agricultural day laborers to small farmers, and white collar, clerical to professionals and mid-management) ultimately pays the price for dislocation. The middle class, as the media and governments define it today to include a very broad range from upper working class to highly paid professionals, experiences downward pressure toward “proletarization” status instead of upward mobility as it envisions its destiny. Very clear in the 1930s, this phenomenon is taking place today amid the current crisis not only because people are losing jobs, homes, retirement savings, etc., but because the future looks bleak for them and their children.

Besides part-time and contract work, blue-collar and white-collar workers are asked to accept pay cuts, reduced benefits, reduced work schedules, flexible working conditions, all of which will be accompanied by the expectation of retiring at a later age. Where are the blue collar, white collar, and the recently “proletariatized” middle class headed and will they emerge stronger than they did during the Great Depression, helped immensely by the war, or will the middle class society lapse into chronic decline? 
There is a fundamental question of whether the “middle class” was on sound footing, or artificially created by a deficit-spending system now in crisis. On paper, the combination of low labor values in the Third World that allowed for higher incomes in the advanced countries and the postwar credit economy accounted for the quantitative and qualitative growth of the middle class in core countries. A large percentage of the population in the West, Japan, Taiwan, South Korea experienced upward mobility in the past 40 years, but a large percentage of the middle class mobility was because of the credit economy. The “wealth effect” was a mirage because the middle class lived on credit and hoped values in everything from their incomes to homes and securities would continue to rise.

The current crisis has exposed the bourgeois facade of endless progress and revealed that a large percentage of the middle class was really working for the banks–all along, the proletariatization of the middle class was taking place serving both an economic and political purpose. The US Congressional Budget Office estimates that in the next three years there will be a $2.9 trillion gap between productive capacity and actual output; in short, more than 300% the amount that congress approved as part of Obama’s stimulus package. Such a gap will mean that the state must decide if the top 10% of income earners bare the brunt of the cost, or if the middle class and workers will have to endure lower living standards. 
Because capital accumulation on a world scale can take place by the more thorough exploitation of labor, the state will support financial elites’ efforts to squeeze out the maximum from middle class and workers short of precipitating social upheaval and political instability. Arbiter of social relations through control of the fiscal system, the state will largely determine how weak the working class and middle class will be for society to function without paying the price of radicalization and violence.

Hovering around 20% in the US and rising as it is throughout the world, chronic poverty will remain a permanent legacy of the current recession. “Third World-type” conditions already exist within the advanced capitalist countries–families in the American Deep South and northern inner cities subsist on a couple hundred dollars per month and rely on food stamps to feed themselves. Conditions for the bottom 20% of the population are not that much better in the EU where the prospects for recovery are not as bright as in US, and even less so for Japan. 
If finance capitalism is to survive with the inevitable wealth concentration within the top 10%, there must necessarily be downward income pressure on the middle class and workers. Generating greater surplus than the market can absorb will keep the capitalist economy in a limited-growth mode for at least a decade, unless the state absorbs the surplus and spends it for social development instead of defense.

Because the effective demand is limited by the earning power of workers and middle class in the post-credit crisis of the early 21st century, and the sharply reduced personal wealth (drop in real estate values, private pensions, and stock portfolios) the illusory middle class “wealth effect” will remain low and accumulated surplus capital high, thus keeping the world economy under limited growth prospects for a long time. 
Of course, China with a strong state structure and dynamic economy is the exception and of course, we must science and technology innovation take into account, as well as the degree to which the state will intervene to limit capital accumulation by the financial elites. But given existing conditions in the advanced capitalist countries, what impact will they have on the social order? Because there are multiple institutional means that condition people toward conformity, most people exercise self-restraint toward the status quo as they are convinced that there may be rewards in such behavior and punishment for social dissidence. 
There is also the cultural difference in every society–for example, in western countries historically the individual assumes responsibility for success or failure and thus internalizes what is in essence an outward or objective phenomenon like job loss. The internalization process entails that the individual feels guilty and may act against himself or loved ones, instead of criticizing or striking out at the system. Naturally, the mass media, schools, religion, business, and the state inculcate such thinking into the minds of the individual who blames himself as a failure, not realizing that the financial and political elites that control institutions have failed.

Accountant John Smith in Denver lost his life’s savings in the stock market, he cannot find work, his wife divorced him, and it is all his fault because he has failed to receive the requisite training to conform to the “new market conditions.” People permit their lives to be conditioned and ruled, and sometimes often ruined by man-made systems that the entitlement-minded financial and political elites have forged to retain their privileged status. 
The individual has been conditioned to equate man-made systems with natural disasters like earthquakes or floods. Part of this thinking is a testament to the resounding success of a ubiquitous “birth-to-death” PR campaigns that have convinced people to accept capitalism as “natural,” a premise that both Adam Smith and Thomas Malthus shared. Once people accept that premise, and they aspire to upward mobility possible only within the system, they never even consider working class consciousness for to do so is to demean their own self-image the credit economy makes possible and to lack ambition for individual (bourgeois) success.

How many ads are there online, in newspapers, etc., about “assistant manager” in everything from office clerical positions to fast food jobs, when in reality those are low-paying jobs veiled by a bourgeois “status title” people appreciate more than income? After all, the “real worth” of the individual was “creditworthiness” bundled as part of net worth, thereby giving the illusion to a large percentage of people that they were part of capitalism’s success. 
Class-consciousness is the enemy of the financial and political elites that constantly inculcate the idea that “all of us must work together and sacrifice” for the greater good, when in fact the “greater good” is largely the domain of the elites. As proletarization of the middle class become more apparent, the current global crisis will evolve into a middle class crisis of alienation, stratification, and erratic class/status identity.
Additionally, there will be the increasingly prohibitive costs of higher education, especially graduate school that will be out of reach for a larger percentage of people in the next decade and possibly the next half century. At the same time, there will be fewer positions available for the college-educated population that will have to be highly mobile not only within its own country but internationally and must accept jobs unrelated to their college degree–a phenomenon that has been growing in the past decade. 
Alhough society will become increasingly polarized and likely to remain so because of capital accumulation in a credit-tight environment, the cyber-eco-bourgeoisie will co-opt and thus de-radicalize a segment of the recently created “proletariatized” middle class and working class aspiring to upward mobility and lifestyle. More realistic and self-aware than the “credit bourgeoisie” of the past half century, the cyber-eco-bourgeoisie of the 21st century will also be useful to the political and financial elites in promoting corporatism whether that is in the US, Japan, or EU.


As NATO's second largest military ally, Turkey is now a source of instability; this at a time that neighboring Syria is immersed in civil war/popular uprising, Iran is engaged in self-defense against the West, and NATO is failing miserably to depose Libya's Gaddhafi. On 29 July 2011, Turkey's Chief of General Staff General Isik Kosaner along with three other top military commanders resigned in protest over Prime Minister Tayyip Erdogan's decision to detain 250 officers accused of conspiring against the duly-elected government.

It is true that Turkey's judicial system is corrupt and subject to political manipulation, and to that extent the generals are correct to level accusations against Erdogan who remains popular and whose goal is to co-opt the military so he can achieve his dream of becoming a de facto modern day 'Ottoman Sultan' who transcends the long-standing Kemalist secularist tradition. The divide in Turkey between the Kemalist secularist elements and Erdogan's socio-culturally conservative Justice and Development Party is now threatening to destabilize the political arena and undercut the thriving economy.

In a statement to the press, Turkey's chief of staff declared:  "They tried to create the impression that the Turkish Armed Forces was a criminal organization and ... the biased media encouraged this with all kinds of false stories, smears and allegations." 
While Erdogan has done all he could to diminish the military's dominance, the idea that Turkey will have a weak military and be free of its ubiquitous role in every aspect of society is unthinkable for now. No matter what Kosaner states, it is true that the military would love to rid the country of Erdogan who has been using induction into the EU as a pretext to curb the military's powers. Interestingly, Erdogan goes along with military objectives in rhetoric, while through back channels he plans to undermine the military's goals. This is in cases where it concerns the Kurdish minority, Cyprus, the EU and the Middle East.

The only way for Erdogan to emerge even stronger is to weaken the military's role, and the only way to do that is by precipitating a crisis of constitutional proportions, so he can replace the Kemalists with his own men.  By naming paramilitary Gendarmerie commander General Necdet Ozel as new head of land forces, and acting deputy chief of general staff, Erdogan was signaling to Kemalists that their era is finished. That Erdogan chose to move against the old guard in the armed force now is not an accident.

To contain inflation, the central bank took steps to stop the lira's sharp fall arising from economic instability. All of this is a huge gamble for Erdogan who is a masterful politician. However, how long will smoke and mirrors continue to work for this consummate charismatic politician is any one's guess. Removing the top brass in the military may have been the key to Erdogan's plan to impose total control over the institutional structure. However, the military is in every aspect of society and it is almost impossible to rid them of their influence. Moreover, is it in Erdogan's best interest not to have the Kemalists in a relatively strong opposition, given that they help maintain consensus in society?

Friday, 29 July 2011

Cyber-Eco Bourgeoisie: Part III

For most of the western world and Asia, the last century has been the most deadly and turbulent politically and socially in human history, while at the same time experiencing unprecedented technological and scientific progress. In my view the last century has been even worse in many respects than the Black Death/Hundred Years War epoch that marked the slow structural transition–ideological, cultural economic and social–from the Medieval to the modern era.

Owing to global and regional wars and revolutions in the last 100 years, the entire world has undergone far-reaching systemic political, social, economic and cultural changes that signal the waning influence of hegemonic elites on society and the evolution of ideology designed to preserve the status quo that never seems to catch up with the speed of societal change, because it looks to the past instead of the present and future.

The dynamics, which give birth to new elites and new ideology, rest with evolutionary or revolutionary change that culminates into catalytic events and radical transformation in the prevalent mode of thinking and behaving by dominant groups as a response to societal changes. Crises of varying types from political to social and economic as the world is currently facing serve as catalysts in re-evaluating obsolete national and international institutions and the existing value system on which they are based. 
The hegemonic elites and their variation of 19th -century liberal ideology with modifications so they may fit into the 20th century world will be facing a challenge from the nascent Cyber-Eco Bourgeoisie (CEB) as the new elites of the 21st century . Ideas are born from the depths of human experience and become important to groups of people or society at large only if they reflect dearly held values and aspirations rooted in the human experience instead of dogma.

Once ideas are formalized and become part of an ideology and then adopted by elites interested in institutional conformity, ideas no longer reflect the original purpose of furthering the welfare of the people who embraced them to give their lives meaning and purpose. While ideas as ideology or dogma are useful to forge coalitions intended to preserve the status quo, the absence of authentically reflecting real experiences means the absence of systemic change that conflicts with ideology which invariably evolves into dogma by the hegemonic elites and their followers embracing and conforming by coercion or faith. 
While the body of ideas (ideology) based on philosophy or religion from centuries ago seems perfectly sound intellectually, society’s rapid changes make ideologies obsolete and regressive. For example “democracy” as an ideology that has ancient Athenian roots has no relevance to modern-day Norway any more than modern day France, US, or any other country. By the same token, Norwegian, French, or American democracy of 100 years ago has no relevance to the present generation, except for that which the hegemonic elites in each of these countries choose to attribute to ideology in order to perpetuate the social order.

Hegemonic elites use ideology to preserve a system and prevent change within the system, change needed to best serve the needs of the vast majority of the population in the present and prepare for the future. Thus ideology rooted in the past invariably works against the present and necessarily reflects the past that hegemonic elites wish to preserve. Like science that always stays dynamic and its conclusions invariably incorporate Einstein’s caveat–”until further notice”–similarly social, economic, and political ideology to remain vibrant and alive in the present, to reflect changing conditions instead of the distant past must remain dynamic. 
While science is indeed is possessed by the sense of universal causation as Einstein comments in The World as I See It , ideology must be rooted in scientific thought to be relevant in the present and look toward the future which is every whit as necessary and determined as the past . In short, if ideology is rooted in ontological (essential) criteria instead of empirical (historical), then it fails to look toward the future, and toward promoting progress which is both a scientific and socially ethical matter.

Modern political economy as articulated by ideology, rooted as Bertrand Russell pointed out in the Liberal theory of politics as a recurrent product of commerce, is used to justify an obsolete system that cyclical crises empirically demonstrate its decadence. Given this inescapable reality, the masses view traditional elites embracing an obsolete ideology with enormous popular skepticism–i.e. very recent public opinion polls indicate in the US 38% have confidence in business elites; the percentages are even lower in other countries. 
Crisis in confidence by those expected to conform to the ideology of the hegemonic elites necessarily provides an opening for the emergence of new elites. The CEB currently emerging will as previous elites formulate an ideology based on its own needs and aspirations, just as it will stand in opposition to ideologies of former elites standing in the way of systemic change.

Although CEB has emerged increasingly influential since the Clinton-Gore administration, the new US administration clearly represents CEB ideology and elites that are essentially technocratic, managerial, and part of the intelligentsia. Though Obama is the first president to be elected at least partly by CEB, and that may be indicative of ideological and political orientation of this group, it remains to be seen whether the broad coalition that includes the CEB will have any sustaining power to elect future presidents, and to formalize an ideology and move into the mainstream as I am confident it will in the next few decades. 
As the new emerging elites, the CEB will in time demonstrate and propagate a strong sense of social responsibility and obligation because their ideology rests on furthering human progress through cyber-eco value system that incorporates the interests of all classes under a neo-corporatist model. Unlike the old elites that relied on nationalism while practicing internationalism in business, CEB will embrace internationalism and solidarity with people throughout the planet they see as one in a geo-centric order whose common interests are intertwined. 
This will mean that global integration on a world scale would not proceed on a neo-colonial basis as it has in the 20th century, but on a more equitable geographic and social model. The core belief that symbiosis is the only rational and practical approach that benefits people and the planet will be the motivation of the masses to follow CEB elites that will embrace an internationalist cyber-eco ideology. To be effective in co-opting the masses and becoming mainstream the new CEB ideology will necessarily carry with it a new CEB ethos– a topic I will be addressing shortly in the final segment on CEB.

Cyber-Eco Bourgeoisie: Part II

After 60 years of upward social mobility in the second half of the 20th century and the Internet Revolution (a continuation of the Industrial and not a deviation from it), there is an overly educated population for which there are not enough jobs, let alone careers, to absorb an increasingly larger surplus of cyber-eco-bourgeoisie; at least not enough that pay in accordance with the candidates’ educational level or allow the individual to live the glamorized advertised bourgeois lifestyle commensurate with the ideal of a meritocracy.

US Department of Labor statistics reveal that a college graduate today will change an average of seven careers in a lifetime (not jobs but careers!). As China, India, Russia and Brazil develop rapidly in the next 50 years, there will be diminished career opportunities for the cyber-eco bourgeoisie in the advanced countries and necessitating mobility. This type of career mobility entails much greater geographic mobility within nations and globally. 
In the absence of sufficient career opportunities, more and more college graduates already live at home with their parents or with bachelor friends, they postpone marriage and family, and they are in perpetual search for career that reflects their education, training, and ambitions. This trend has been widely reflected in western popular culture–motion pictures, TV, web, books, magazines, etc. The gap between the reality of a society that offers fewer opportunities for the educated elites and an overly educated population unable to fulfill its career and personal lifestyle goals will be the cause of increased social conflict in the future. 
Alhough there is a great possibility that the revolution in biotechnology, environmental/food sciences, and hologram-cyber technology among other areas like energy will create opportunities, the question is whether science and technology innovation will be sufficient to absorb the cyber-eco bourgeoisie and prevent the institutional challenge they will pose to society in the years ahead.
Unlike 20th-century revolutions whose constituency was the worker and peasant against the entrenched middle class comfortable in its Lockean liberalism and entitlement mentality, the 21st-century revolution will be carried out by an overly educated, semi-employed-career-seeking, environmentally conscious, increasingly radicalized cyberspace-eco middle class that believes the gap between its aspirations and marketplace realities will not close in the absence of political change. Unlike working-class people who have maintained the medieval mindset that they must work to earn a plate of food otherwise they are unworthy to breathe the same air as the upper classes, the cyber-eco bourgeoisie like their 18th-century counterparts believe society needs them, but institutions, especially political regimes as currently constituted, preclude upward mobility and opportunities for integration into the mainstream.

The current economic crisis and others to follow in the 21st century will only exacerbate the aforementioned gap between the reality of career opportunities and expectations for the cyber-eco bourgeoisie. This trend is already evident across the developed and semi-developed countries. Portugal, Spain, France, Italy, and Greece are candidates for this phenomenon, but the cyber-eco bourgeoisie in Germany, England, Ireland, Japan, Taiwan, S. Korea, and the Scandinavian countries have shown signs that they will not rule out the path of insurrection; and insurrections are more contagious than viruses in the age of the web. 
The US is temporarily euphoric from the Obama effect that promises to resurrect the American Dream (the belief that upward social mobility is still possible), or at least not deny the opportunity for social mobility to all aspirants equally! But if the new administration and those after it do not deliver something more tangible like well-paying jobs as a first step, and realistic prospects for careers as an ultimate goal, American cyber-eco bourgeois youths and middle-aged unemployed professionals will not be far behind their European and East Asian counterparts in demanding the closing of the social gap.

And this is because the individual’s identity as defined under the capitalist regime is inexorably linked with career, money, and possessions, to which the cyber-eco bourgeoisie add an eco-value system and lifestyle. The emergence of the cyber-eco bourgeoisie does not mean the end of finance capitalism and its replacement with a new mode of production, thus it does not entail social discontinuity in the classic sense as took place when capitalism replaced the feudal/manorial economy. 
However, it does mean the reconfiguration of the political economy which has been increasingly moving toward state-directed capitalism and global quasi-management through international financial organizations and consortiums. Such institutional reconfiguration will result in the dominant socio-cultural influence of the cyber-eco bourgeoisie and the reshaping of institutions to reflect the social change, while finance capitalism will continue with increased state support and intervention.

Just as the mercantile bourgeoisie remained an integral part of the social order after industrial capitalism triumphed, and the same occurred with the industrial bourgeoisie once finance capitalism consolidated as the backbone of the economy, similarly the cyber-eco bourgeoisie will become the social group dominant in molding institutions. This does not mean the emergence of the cyber-eco bourgeoisie in the developed countries entails the end of the comprador bourgeoisie in the underdeveloped areas, any more than it would mean the end of lumpen-proletariat that is more than likely to be increasing in the 21st century along with the “informal” economy, especially in the underdeveloped and semi-developed countries.

While the 21st-century cyber-eco bourgeois revolution is a certainty in the absence of evolutionary institutional change, it is difficult to predict how it will impact institutions in each country under local political, economic, and social conditions. But it is certain that unless the asymmetrical relationship is effaced between the high expectations of the cyber-eco bourgeoisie and dim prospects for realizing career, upward mobility and bourgeois lifestyle, society can expect challenges within the perimeters of existing regimes as well as bourgeois-led mass movements that workers will follow to express their own grievances and aspirations. 
Because the cyber-eco bourgeoisie identifies (or soon will do so) societal interest with itself, just as their middle class counterparts of the 18th century, it would either have to be co-opted as their fathers were co-opted after the Vietnam War to become the yuppies of the 1980 and 1990s, or they will force the system to accommodate their interests so they become the class sharing in the privileges of traditional elites.
From conservative to liberal and varieties of socialist political parties that are remnants of 19th-century ideologies and 20th-century political movements, it is difficult to see how accurately, if indeed at all, they reflect the interests of the cyber-eco bourgeoisie. 
It is entirely possible that in the early 21st century at least a segment of cyber-eco bourgeoisie could mobilize under some type of a “fascist” movement that could very well become a regime, just as the petit bourgeoisie of the interwar era supported varieties of Fascist and authoritarian-type movements and regimes. In fact the neo-corporatist trends in a number of countries including Japan, South Korea, Taiwan, US, UK, and Germany to mention the most notable examples, lend themselves to such possibilities, especially under the convergence of a political, economic, and social crises coinciding with a major foreign policy challenge. 
However, it is much more likely that cyber-eco bourgeoisie will become increasingly radicalized and may adopt variations of Socialist paths. In the absence of systemic change in the mode of production in the next 100 years, the majority of the new middle class will either be absorbed or evolve into established parties that will eventually form regimes in the most progressive countries where there is a large social base of cyber-eco bourgeoisie.


The decadence of “imperial America” has many causes and manifests itself in many forms–economic, fiscal, educational, cultural, etc. but strengthening corporate welfare and pursuing an imperial foreign and defense policy remain at its core. The evidence of decadence of imperial America failed not only to maintain a healthy economy with a strong middle class and working class, but in so far as failed wars in Asia, and in unilateral or multilateral intervention in various parts of the world, especially in Muslim countries in the last three decades.

If an attempt is made to expand the current wars of Iraq, Afghanistan, and Libya to include Syria and Iran, decline will come sooner than later. If there is continued high defense spending that siphons off precious resources from the considerably weakened civilian economy, especially education, decadence is coming sooner than many expect. If the welfare state continues to drain resources from workers and the middle class through the regressive fiscal structure, salary and benefits, and cuts in programs, decadence is just around the corner where the Chinese are waiting to assume global economic leadership.

Decadence of empires takes place in every sector from economic to cultural, and is it difficult to recognize while it is unfolding because the signs are an integral part of an almost organic process that goes from maturity to old age. The Romans, the Spaniards, the British realized decadence far too late after it had set in, and even then they refused to change course because change implies that the privileged orders lose their status and benefits they enjoyed in society. Hegemony is an aphrodisiac for the elites, while the masses waiting for a messiah blindly follow fearing the unknown.

How long can an empire last before it it begins to crumble, while its political, economic and social elites delude themselves because their privileges are unaffected? The American Empire (Pax Americana) has lasted for more than a century and that is indeed a long time, given the intense global competition for hegemony in various areas from military and economics to industry and technology. The World Bank and private institutions are predicting that China will become the preeminent world economic power in less than 15 years, a prospect that could very well translate into military preeminence. If and how China manages its economic hegemony and how it decides to link it to defense as has the US for more than a century remains to be seen. The temptation to link economic to military power will be too enticing to resist.

Despite inevitable decadence, the US will remain a “great power” like Germany, UK, France. Depending on how it decides to support (or not) higher education, it may remain a world leader in non-military-related science and technology areas. If the higher education model is to support anything defense-related, anything that corporations can use, anything government can use for PR and political purposes, then decadence will continue in higher education where US is currently a world leader. Unfortunately, the value system of the academic elites has been for sale to the highest bidder, and that means academics are partly to blame for the decadence unfolding in the American Empire. There are very few academic voices crying out for a return to a Renaissance in higher education intended for the edification of the pupil and not the utilitarian value to government or corporate world.

Boxed and packaged creativity for sale to the highest bidder–government and corporations–naturally entails limitations of the human spirit. Instead of remaining in the enticing mode of hegemony and the glory of the past, the elites of the American Empire, especially educators always quick to sell out and cheaply at that, could be taking steps now to prepare for a transition from Great Power status. However, like the Romans, Spaniards, and British they will want to go down with the empire than to surrender to a lower status.

Cyber-Eco Bourgeoisie” Part I:

When the Paris-centered 18th-century intellectual revolution (Enlightenment) coincided with the London-centered First Industrial Revolution, the European intelligentsia demanded a political and constitutional system that closes the iniquitous gap between societal contributions of the forward-looking bourgeoisie and the reality of their inferior politically and legally mandated social status that precluded societal progress. Meritocracy needed to replace the old regime of privilege that allowed the nobility to rule on the basis of birth status, not only because the bourgeoisie wanted political and social recognition commensurate with their actual and potential contributions in all endeavors, as Sieyes wrote in the What is the Third Estate, but because they identified the national interest with their social order and regarded the backward-looking clergy and nobility (First and Second Estates) as more menacing enemies to the French nation than England. This was the birth of a new definition of progress, nationalism, and democracy, along with the nascent stage of bourgeois consciousness and value system.

Though other countries would aspire and emulate the Enlightenment’s definition of nationalism and democracy in the next two centuries, with each contracting cycle in the global economy there has been a corresponding crisis in the social and political structures on which 18th-century liberal democracy is rooted. Hence, the overriding concern of politicians and social elites to support sub-structures on which social order rests, fearing the inevitable socio-political turmoil if nothing is done. The under 40-years-of-age generation belonging to the cyber-eco bourgeoisie, as I have baptized it to distinguish it from bourgeoisie of previous eras, has been profoundly influenced by web mindset around which the world evolves, ecology sensitivity, and a new consciousness that distinguishes it from its predecessors. The West arrived at the present social order after the formation of the mercantile bourgeoisie (1350s-1750s), industrial bourgeoisie (1750s-1870s), and financial bourgeoisie (1870s-1970s), all the result of the evolutionary economic system predicated on perpetual expansion and global integration of the system.

Prevalent in developed and semi-developed countries, the cyber-eco-bourgeoisie (1970s-present) are now on the verge of a new revolution that is redefining the foundations of bourgeois liberal democracy. Manifesting signs of profound contradictions throughout the 20th century during the “revolt of the masses” as Jose Ortega y Gasset observed in a book by the same title, liberal democracy is in need of revitalization. There is a “cyber-eco-bourgeois revolution” currently unfolding; a systemic change not in the mode of production but in thought and way of life that is a continuation of the Enlightenment spirit. Technology and contradictions in the political economy will continue to foster the evolutionary development of this post-web middle class. The cyber-eco-bourgeoisie will become more evident once it emerges from its nascent stage and reconfigures the entire social and institutional structure just as the mercantile bourgeoisie and their successors did in their time. With the caveat that all social orders contain disparate elements within them, some characteristics of the cyber-eco-bourgeoisie that the political economy has created include:

* Cyberspace-Eco-consciousness and world-view. This entails distinct identity, and difference in the way of thinking not so much in terms of substance but of style from the bourgeoisie of previous eras. Cyber-eco bourgeoisie is not a passing fad nor is this class suffering from another form of addiction. Rather it is immersed in cyberspace-ecological consciousness to which it has given birth and an integral part of its common interests and lives. Just as the industrial bourgeoisie felt a sense of solidarity two centuries ago, so do their cyber-eco counterparts today.

* Living inside universal cyberspace. Doing everything from shopping and communicating to praying and dating through the web may be a sign of greater alienation of this class than of its counterparts in any previous era, but an indication of technology–computer system philosophy–determining life. Moreover, by living in and through the web as citizens of the world rather than citizens of nation-state and experiencing the world through cyberspace present, the new bourgeoisie and working class youths emulating them reject the real-time-real-space present. They are aware the world is institutionally corrupt, ecologically destructive to the planet, and backward instead of forward-looking. As currently constituted the political economy is immersed in contradictions in so far as it fosters greater scientific and technological progress along with wealth concentration that engenders greater poverty, greater social and geographic polarization, and less sustainable development.

* Fear, anxiety, and Cyber-cynicism of Proletariat-ization on the part of the cyber-eco bourgeoisie resulting from globalization and obsolescence of the professional class that identifies itself with the future. The web has an underlying universal egalitarian aspect to it that redefines elitism just as Enlightenment thinkers did three centuries ago to reflect societal change. The new bourgeois class is exposed to an overflow of web-knowledge from a very young age, therefore it is far more skeptical and demanding than any other group that the contradictions of 20th-century political economies and cultures have produced thus far in East or West. Perhaps justifiably, the cyber-eco bourgeoisie is more cynical of all authority–from politician to teacher and preacher–largely because information on the web presents many different viewpoints, facts, and possibilities other than those the establishment or authority wants to inculcate into the public mind. Skepticism stems partly from web exposure at a very young age and patterns of hypocrisy of rhetoric judged against the long-standing record of ecological contamination and social injustice. And unlike the corporate-owned media that fosters conformity, cyberspace contains endless possibilities for dissidence, endless possibilities for a better world.

* Nihilism: Immersed in massive information and fantasy of “multimedia” and the realization that there is a gap between severe limitations of institutions and daily life vs. limitless possibilities for progress as presented through cyberspace to achieve the goal of social and environmental justice along with sustainability accounts for tendencies of nihilism among the cyber-eco-bourgeoisie. Nihilism tends to pervade across a substantial segment of the bourgeoisie as a reflection that the “real world’”is irrelevant, unaccommodating, hostile, and above all hypocritical because it is socially unjust, environmentally dangerous, and nothing matters because the status quo remains unchanged behind the veneer of vacuous rhetoric. There is a widening gap between political systems and institutions in general that theoretically promote meritocracy when in the real world it is increasingly evident meritocracy is obviated by the absence of opportunities. Hence, the only option before the new bourgeoisie is to pursue institutional change to close the gap between very high expectations and very low reality levels.

* Techno-science would-be-rebels at one level, the cyber-eco bourgeoisie will be interested in re-molding society in a neo-positivist orientation to reflect their value system and way of life, and to be integrated into an institutional mainstream that reflects their values. More relativistic in political and social thought, the new bourgeoisie are unburdened by the political dogmatism that plagued their predecessors who felt the need to demonize the opponent. At a more fundamental level, however, dialectical materialism and class struggle is not and will not be obviated by the new bourgeoisie, who sees fighting against an entrenched obsolete institutional structure that marginalizes and deprives it of a future to which the new middle class believes it is entitled.

* Cyberspace-Eco Social Order is inevitable with the evolution of the bourgeoisie, largely because objective conditions will bring it about. The working class or at least a segment will be co-opted into the cyberspace-eco-bourgeois movement in more conservative countries like the US and UK, where institutions are under the firm control of traditional socioeconomic and political elites. In countries with a history of strong working-class consciousness labor will maintain greater socio-political cohesion and may forge alliances with other radical groups–students and cyber-eco bourgeoisie–as a way of retaining political influence. Whether co-opted by or antagonistic to the cyber-eco bourgeoisie, the comprador bourgeoisie inside and outside the formal economy, as well as the working class and its role in society will be influenced, if not largely determined, by the new middle class. Though this is already a reality in the rapidly evolving division of labor for the most advanced countries in high-tech sectors, it will become a reality for the entire world for that is at the core of the both the mode of production and mode of technology.


After analyzing Cyber-Eco Institutions: Social Identity in the first of a four-part essay in order to establish the thesis for arguing the transformation of the existing social order, in the second part there is analysis of Institutional Challenge that the Cyber-Eco-Bourgeoisie (CEB) will be posing to the social order during the 21st century. Ideology & Elites in the third part sets the foundation for the replacement of classical liberal ideology and its many variations in the past two hundred years with CEB ideology, while this final segment dealing with Elites and Cultural Evolution argues that we are and will continue to undergo thoroughgoing cultural evolution that will entail the consolidation of CEB elites in this century.

Elites and Cultural Evolution:
Fernand Braudel in Civilisation Materielle et Capitalisme , and Samuel Huntington in Clash of Civilizations and “Culture, Power, and Democracy” contended that late 20th -century world is immersed in clashes of civilizations. Both Braudel and Huntington maintained that the Chinese, Russians, Africans, Indians, and Muslims feel that historically western civilization had tried to impose its hegemony through the “tools of imperial policies” that include everything from wearing apparel and entertainment to religion and hedonistic-atomistic-oriented value system. Cultures under Islam, Hinduism and Confucianism have historically resisted western cultural traits rooted in materialism, atomism, and pluralism that invariably alienate the individual or set her/him separate and above the community. Owing to globalization (neo-imperialism), there is gradual change in the values system of advanced and semi-developed countries around the world, change prompted by the combination of eco-awareness and modern web-cell technology that is shaping the new generation of CEB.

It seems difficult for some to conceive how cyber-eco-consciousness has pervaded the late 20th- century young bourgeoisie immersed in a cyber-eco world that has been an integral and ubiquitous part of life in all areas from education and business to leisure and entertainment. The convergence occurred largely because the environmental movement was popularized about the same time as cyber tech that disseminated information about global warming, holding the promise of seeking solutions from grass roots level to institutional mainstream. Science and technology for the CEB has a culture of life orientation rather than a culture of death, a phenomenon with which the bourgeoisie and hegemonic elites had been associated in the past century, largely because of mass destruction in two world wars and the nuclear race.

In Culture Against Man Jules Henry argues that in western culture most people associate science with the culture of death, a culture that includes all academic endeavors, corporations, and government. “Thus we have an elite of death that we support in relative luxury… The culture of life resides in all those people who, inarticulate, frightened, and confused, are wondering where will it all end.” Because the “elite forces of death” are institutionalized, while the mass forces of life are scattered and bewildered, where is the hope for society’s salvation in the future? The answer is from within the existing social order the emergence of the CEB that will provide the answer under an evolving ethos already manifesting itself in multifarious institutional and non-institutional settings.

Culture, of course, evolves over time in layers, and one cultural layer rests and absorbs elements of the previous. As Dietrich Bonhoeffer observed, culture is grown not acquired ( Ethics ). Given that culture cuts across class lines despite the dominant class institutionalizing it, it is inevitable that CEB culture will be a reflection of the evolving values and tastes of the bourgeoisie, with inevitable influences from aspects of Oriental cultures. A combination of grass-roots and top-down (superimposed or cultural imperialism) CEB culture will spread much faster than any other in history. Top-down (superimposed by domestic or foreign hegemonic elites) cultural domination does not work, at least not for very long even if they are perfectly rational from a social engineering and political perspective as far as the elites are concerned. On the other hand, hegemonic elites intending to co-opt evolutionary cultural trends afford legitimacy and mainstream value whether as part of native culture as in pluralistic-multiethnic western societies, or as an integral part of cultural imperialism as in the Third World under colonialism and neo-imperialism.

The catalyst to cultural dissemination, as with CEB currently in its nascent phase, is mass acceptance just as in religion; but also there must be a material basis for it. In “Grace, Violence and Self,” Frederick Hoffman argues that “grace may be the essence of culture” in so far as it is linked to goodness, virtue, and to a spiritual, and that people have been willing to sacrifice themselves for the sake of their culture’s survival. For culture to survive and flourish society must have a degree of shared values it is willing to wholeheartedly embrace–spiritual as Hoffman maintains or material as Marxists argue–but also prosperity even if concentrated within a small group of people, hegemonic elites that foment the growth of the education, the arts, sciences and other cultural endeavors.

At the same time, hegemonic elites that essentially create and propagate the dominant or mainstream culture are invariably successful in convincing the majority of the population to revere the cultural values and aesthetic achievements emanating from it only if there is not only an idealistic ultimate goal but a practical aesthetic aspect to culture. While economic determinism has an impact in cultural trends–in everything from elite to popular culture–economic determinism is by no means alone in shaping culture from ancient to modern times.

Though educational systems of most advanced and semi-advanced countries are consciously or unconsciously preparing young people for a cyber-eco-bourgeois culture, we are still many years away from an education system immersed in CEB values and chief instrument of disseminating CEB ideology. Besides stressing the traditional intellectual development and training for career, CEB education will have at its core the hypothesis that all progress is predicated on ecology-related research, technology and industry combined with emphasis on how next generation cyber-tech with applications in everything from surgery to space exploration will mean the salvation of humanity.

One of the most significant cultural CEB characteristics is the way people choose their partners who share their values. Everything from entertainment and religious worship to the way people choose partners and procreate will be determined by the new CEB-centered value system. CEB cultural trends are manifested in all forms of entertainment from TV and Hollywood motion pictures to magazines, newspapers, books, web blogs and web-related entertainment.

Gradually mainstream public and private institutions are adopting aspects of CEB cultural trends. The catalysts to cultural transformation will be the combination of eco-friendly energy and new high tech industries linked cyber and eco. All countries will be working toward that goal and that will translate into a new ethos that will represent CEB. At this embryonic juncture CEB is still at the “sub-culture” level but in the next half century or so it will be moving into the mainstream as it becomes more widespread and accepted throughout the world. Already there is evidence of CEB subculture in many areas that are obvious. There is very clear evidence of this already not just with cyber-net cafes and bars, but in the eco-friendly foods people choose to produce and consume throughout many advanced countries, and in CEB lifestyles they choose for themselves and their children.

As a reflection of culture, food will change to reflect the values of the CEB. Similarly lyrics in music will increasingly reflect CEB values, as will motion pictures, theater, television and all media. Of course there is already eco-tourism that has been around for time, and expanding very rapidly whether it involves travel to mountains or sea. Institutionalized religion too will change as it must reflect the values of its followers to survive. Already religion has adapted to web-cell technology where people access the faith of their choice on line, pray on line, receive sacraments on line, and contribute on line. Already we have CEB-oriented churches where “ecology is next to Godliness” and the followers are guided to preserve God’s ecosystem.
One of CEB’s principal characteristics is its inherent antithesis to “culturalism,” a phenomenon prevalent in a number of ancient and early modern societies, especially the Ming (1368-1644) and Ch’ing (1644-1911) dynasties when Chinese culture was identified with the state and uninviting to foreign influences of any type.

Unlike Oriental cultures, especially Chinese rooted in socio-political stability, Western culture from the Renaissance to the present has undergone intellectual, religious, commercial, industrial, scientific and technological revolutions, all of which lead to CEB culture. Rapid institutional changes in the West are rooted in cultural changes and socio-political imbalances since the rise of the nation-state that was the core of national culture as opposed to international culture CEB will be creating. If we accept the premise that scientific, technological, and artistic development and progress is both a reflection of the hegemonic elites representing society’s superstructure and an agent of systemic societal change, then it is inevitable (determinist) that the dynamics which have given rise to CEB will eventually propel it to the core of the superstructure.

The mass culture heavily dominated by commercial influences of the sominant institutional maintream evolves very slowly and as a reflection of institutional changes in society. Subcultures are always co-opted, everything from music and art created by the lower strata of society that the maintream then commercializes for profit to religion as practiced at the sub-cultural level. Co-optation of subcultures is the catalyst to imposing social conformity upon society and maintaining the existing social order and institutions that serve the privileged elites. This as true in the 18th century when Voltaire pointed out the obivous about the culture of the aristocracy at odds with the culture of the bourgeoisie fighting against the former for legitimacy. The French Revolution of 1789 was in large measure an attempt not only at political, economic, and social change, but also of cutlural change, and that was the reason so many conservatives and the church - Catholic, Protestant and Orthodox - vehemently opposed the French Revolution, while they had no problem with the American Revolution that did not attempt cultural, social or economic changes in the status quo.

The CEB will have the opportunity to bring about societal change as did the French middle class of the 18th century at the grassroots level, but only if they are not co-opted by the dominant culture that insists all who want reform must work within the existing institutional framework. While I doubt any change will come soon, the continued downward social mobility in the US and Europe, namely, the decline of the middle class in the last four decades, combined with the increasing awareness that the surperstructure no longer serves the vast majority of the population will result in systemic change that will have its seeds in culture.

No matter how much the mainstream media attempts to indoctrinate the public with a constant sense of "crisis peddling" emanating from enemies ranging from Islamic-based 'terrorism' to the small drug dealer and petty criminal in any inner city of the Western Wolrd, people know there is just no comparison between the aforementioned elements and the political and financial elites shaping society and determing what is mainstream culture. Will the Cyber-Eco-Bourgeoisie become the cultural revolutionaries of the 21st century? Absolutely the next time that the capitalist economy experiences another deep recession and the social social safety net leaves behind a substantial percentage of the population. History is against the dominant culture that a mechanismof conformity.