HUMAN NATURE AND WAR: A Historical-Philosophical Perspective

Introduction: Human Nature and War

The subject of war is one that scholars in different fields have studied throughout history. Even today, anything to do with war – from large defense contractors to motion pictures and video games - is big business. What does this say about the fascination of people with the ultimate form of mass destruction?  Philosophers, priests and poets have all dealt with the topic and how it is a reflection of who we are as a species. In modern times, psychologists and varieties of social scientists have made their contributions, as have celebrated writers like Leo Tolstoy and Ernest Hemmingway.  For novelists to be devoting so much work to this topic, it reveals that it goes to the heart of our societal structures and how they shape the nature of human beings that in turn shape those structures.  

In The Origins of Totalitarianism, Hannah Arendt deal with war as a perverse force that affords meaning to an otherwise alienating life in a world of nihilism. Existentialist interpretations of war as something that can be fulfilling against the background of mass politics and mass alienation is something to contemplate, although by no means should one fall into the trap of assuming that human beings are not conditioned into accepting war as natural like the weather. 

Perhaps there is something fascinating about war, given that Hollywood has devoted billions of dollars producing war films depicting nothing less than the worst in human nature, yet, managing to romanticize and honor it as though to tell the audience that mass destruction is just another aspect of life. After all, if human are innately aggressive like other animals. War makes perfect sense.   Of course we are not so sure what other species regards mass destruction as an honorable enterprise and takes pride at it, deriving a sense of power as though it is a godly trait to kill people for no reason other than the government said “they are the enemy”.  Some psychologists blame not the soldiers doing the killing, but the personality disorders in the leaders. After all, it could not possibly be the fault of the Nazi soldier carrying out atrocious acts in WWII, but it was all Hitler and the blame stops there and goes no father. 

Thinkers embracing pessimistic assumptions about human nature – Machiavelli, Hobbes, for example – conclude that human beings are capable of just about any atrocity the mind can conceive, so aggression in human nature finds expression in all forms, including war.  Life itself is a struggle, according to Thomas Hobbes who lived during the bloody English Civil War (1642- 1650) witnessed the destruction of his country owing to a war based on political, religious and socioeconomic differences that failed to find consensus until the Glorious Revolution of 1689. Unlike Hobbes who saw war as an innate or instinctive human trait, perhaps because human beings fall from grace and committed sin against their own creator according to Christians, Jon Locke living a generation after Hobbes insisted that war is an aberration of the human condition while harmony is the norm.  

Needless to say, the topic is far too complex for any one academic discipline to explain without taking into account every other’s perspective. In the absence of devoting an encyclopedia to this topic, it is simply not possible to do justice to it. For that reason, I will focus my analysis here on certain aspects that reveal underlying causes of war and its continuity in society throughout the history of the world. 

Ancient Beliefs about War: Classical Greece, Rome, India and China

Wars – organized and institutionalized conflict under the aegis of the state - began with the dawn of civilization when the earliest tribal invaders known as Sumerians took over the lower Mesopotamian region, an area that has endured thousands of wars in the last five thousand years and remains in turmoil to this day.  Unlike modern day politicians making pretenses about the causes of war, ancient Sumerians were honest about why they engaged in conflict with other tribes and city-states; the goal was to capture trade routes, loot them, secure slaves for labor, and impose hegemony upon them. 

The war s between Athens and Sparta – Peloponnesian Wars – created a pacifist trend as revealed in the works of Thucydides (Peloponnesian Wars), Aristophanes (Lysistrata, 411),  and Euripides (Trojan Women, 415 BC) all critical of militarism amnd from the perspective of the victims rather than the conquerors.  Plato and his pupil Aristotle argued that war was an integral part of state structure, a concept that Alexander the Great put into practice by ruling through perpetual warfare.  

The concept of honor and duty in war was introduced by the Hindu faith and later by the ancient Greeks. In the Homeric epics – Trojan War - war becomes a virtue, while the ancient Spartans, themselves invaders of the indigenous population of southern Greece, linked warfare to the highest noble aspect of human nature and the greatest pursuit for humanity. By the fifth century B.C., Athens under a democratic city-state, discovers that war can be justified in the name of freedom and democracy – as we see in the work of Thucydides, The Melian Dialogue. The concept of war for the sake of freedom and democracy became popular with the US from the Woodrow Wilson presidency (under missionary diplomacy) until the present when every military and covert intervention that the US has undertaken is nothing less than a crusade to “save the people invaded and placed under some type of hegemonic control”.

To explain why human beings kill each other in organized conflicts sanctioned by the state, philosophers and scholars of various disciplines argued that it is inevitable to have organized conflict between societies because it is a reflection of innate aggressive traits in human nature, and symptomatic of military, political, economic and social conditions that reflect antagonism rather than harmony and coexistence.  Plato, Aristotle, Roman and Christian thinkers accepted the view of war as necessary, even acceptable, as did the Hindus in India.  In China, however, the status of the soldier was lowly, equated with that of a dog, despite the fact that China also has a long history of organized conflict and internal colonization, just like Russia – Eurasia. 

Closer to the Spartan worldview on war, the Roman intellectuals and politicians identified war with civic duty, and the soldier is a symbol of reverence rather than a necessary evil as some Chinese intellectuals saw it. Death in the battlefield was a virtue, rather than a dreaded reality. Despite an ideology of war that the political social and military elites used to justify it, the fundamental causes and goals were no different for Rome than they were for Sumeria and Athens. As was the case in Athens, there were pacifists in Rome. Philosophers of Stoicism, a cosmopolitan school of thought reflecting the cultural structure of Rome, contended that all humanity is one. Therefore, war is unacceptable because it destruction of humanity. However, this was in the early stages of Stoicism. Once Stoicism became the official school of thought for the Roman Empire, war became acceptable. 

Dating back five thousand years, Hinduism does not object to armed conflict if it is carried out in the name of protecting property and people from evil and injustice. Hinduism as well as Buddhism as an offshoot after the 6^th century BC adamantly oppose war for the purpose oppressing people and causing violence against them. More so with Buddhism, non-violence is essential for spiritual transcendence and salvation possible only through meditation and wisdom.  

Like most religions, Hinduism condemns war on moral grounds but also insist it is a matter of honor and duty, while cowardice is infamy. Hindus throughout their history conducted  warfare, despite the taming influence of some pacifist voices against it. In a conversation regarding the morality of war between Ajuna and Krishna in the Bhagavad Gita (Hindu “Bible”), the following passages reveal the contradictions.  “I do not see how any good can come from killing my own kinsmen in battle, nor can I desire any subsequent victory…I would consider it better for the sons of Dhrtarastra to kill me than to fight with them. … Consider your specific duty, you should know that there is no better engagement for you than fighting for religious principles. If however, you do not fight this religious war, you will certainly incur sins for neglecting your duties and thus lose your reputation as a fighter.”

While Hinduism like all religions respects all life, this does not mean that the followers and especially the leaders who espouse religious doctrines and a body of ethics rooted in pacifism follow such a path. On the contrary, religion is invariably used to justify mass violence. A power-rooted if not crusader mentality takes precedence in those who rule because the ethics of pacifism entails weakness, if not manipulation or some type of subjugation by the strong. The great warrior king Ashoka (269-232 BC) is a good example in ancient Indian history as one of the bloodiest rulers who in embracing Buddhism realized that there is no glory, victory or justice in war.

Pacifism was an underlying pacifist trend among all religions, but most pronounced about the oneness of humanity so characteristic of Indian religions can be found in Guru Nanak (1469-1534), the first Sikh Guru who wrote a hymn regarding the sacredness of life and peace.
‘No one is my enemy
No one is a foreigner
With all I am at peace
God within us renders us
Incapable of hate and prejudice.’

The importance of non-violence and the equality of all humans is a belief that decries war while promoting the spiritual reverence of humans and their creativity that wars obviously destroy. If human beings are special because of their creative potential, then war is their enemy.  

Some scholars contend that China’s history is not militaristic, like that of the West. However, China had its share of wars, especially from the 10^th to the 13^th century, an era that coincides with the zenith of Arab civilization. Wars also characterize Chinese history during the Ming dynasty from the mid-14^th to the mid-17^th century, an era when Europe experiences its Commercial Revolution and expands outward in search of colonies. In The Art of War, Sun Tzu outlines various aspects of warfare that influenced the Chinese from ancient times to the present. China’s wars focused on its internal politics and internal colonization similar to Russia, and mostly of defensive mode against Japan and the West. This is unlike the West where the object was to take trade routes and conquer colonies. 

The Han Dynasty (206BC-220 AD) may be pointed to as an exceptionally enlightened, but it lived and declined by the sword as the Roman Empire. China’s history is one of wars, especially from the 10^th to the 13^th century, an era that coincides with the zenith of Arab civilization. Wars also characterize Chinese history during the Ming dynasty from the mid-14^th to the mid-17^th century, an era when Europe experiences its Commercial Revolution and expands outward in search of colonies.  

Living in China five centuries before Christ, Confucius provided a moral guide for institutional and individual practices. A moral guide that has prevailed in much of East Asia for twenty five centuries, the system Confucius laid down has had far reaching influence in East Asia for the past 25 centuries. Unlike Christ, Mohammad and the Buddha, Confucius did not focus on afterlife. It is believed he stated that he would only worry about the “next world”, only after figuring out the proper way to live in this one.  More interested in social relations and maintaining order in society without overturning the status quo, he believed that war has no place in society if everyone just follows their proper role – clearly an optimistic way of thinking. If there is war, then Confucianism has failed. 

Confucianism has shaped a certain perception of Chinese security strategy, symbolized by the defensive, nonaggressive Great Wall. Many believe China is antimilitary and reluctant to use force against its enemies. It practices pacifism and refrains from expanding its boundaries, even when nationally strong. They adopted defensive strategies when their country was weak and pursued expansive goals, such as territorial acquisition, enemy destruction, and total military victory, when their country was strong. Despite the dominance of an antimilitarist Confucian culture, warfare was not uncommon in the bulk of Chinese history. Grounding his research in primary Chinese sources, Wang outlines a politics of power that are crucial to understanding China's strategies today, especially its policy of "peaceful development," which, he argues, the nation has adopted mainly because of its military, economic, and technological weakness in relation to the United States.

Ancient Rome and Medieval Christianity

The Roman militarist ideal, also found in other ancient societies, becomes an important legacy of Western Civilization passed on through Christianity. The history of Rome was roughly 1000 years of war with interval of peace, a history that left a legacy on the Barbarians who inherited Rome’s militarist legacy and passed it on to European Christendom.  Like Stoicism in its early stage, Christianity was pacifist and more non-violent than any humanist philosophy. However, in its institutional stage, Christianity advances numerous justifications for war, adding God into the equation, making it war a holy affair instead of a secular one as it really is. St. Augustine, a Platonist, was the first Christian theologian to advance arguments in favor of war, arguing that defense necessarily entailed going to war. 

St. Thomas Aquinas, an Aristotelian, argued that peace is preferable, but war is necessary to defend the integrity of the realm. Between Augustine writing during the Fall of Rome in the 5^th century, and Aquinas writing in the late Middle Ages, St. Gregory of Tours and Einhard, both representing Barbarian Christendom, argued that war was moral only if carried out in defense of the faith and its institutions, but immoral for any other reason.  Religious institutional interests transcend any other consideration, including individual life. Therefore, killing Barbarian pagans who refuse to yield to Christianity is moral, whereas harming Christians or church property in the course of war is immoral. This was the birth of Christian ‘exceptionalism’ that would lead to Christian imperialism and it would be used as the doctrine to justify the crusades from the 11^th to the 13^th century.  

To glorify God the Papacy and Christendom, many thousands of European knights rushed to “save the Holy land”, a place dripping with blood for more than a thousand years.  Of course, the real goal of the crusaders was to capture trade routes of the Near East, the Arab gold trade and set up colonies at the core of Muslim territories, not far from Byzantium.  Crusader thinking about trade, gold and hegemony finding expression in religious wars would ultimately shape European thinking about wars of colonization in the 15^th, 16^th and 17^th century.

A significant consequence of religious wars between Christians and Muslims – the Crusades -  was not just the wars of colonialism by Portugal and Spain in the late 15^th and early 16^th century, but northwest Europe and Russia. Northwest Europe’s colonial exploits through warfare are well documented, as they launched a new era in North-South, East-West divisions of the planet, along with racism thinly veiled behind the cloak of Christianity and Western civilization. Russia too began wars against Muslim-dominated Ottoman Empire, and just like its European counterparts, Russia under Catherine the Great in the 18^th century (Enlightenment) passed laws legally discriminating against minorities, including Jews. In other words, wars against distant lands and non-Christian religions had reverberations back home where war became both a catalyst for national unity and conformity to the regime, as well as a pretext for the domestic elites to consolidate power and isolate minorities deemed a threat to the status quo.

Were there any voices of reason and pacifism amid such strong institutional tides of war from the Iberian to Eurasia? In 1510, Dutch theologian Disiderius Erasmus published ANTI-POLEMUS, or the PLEA OF REASON, RELIGION, AND HUMANITY AGAINST WAR. Arguing that war was antithetical to human nature because people are not born with an innate proclivity to destroy, Erasmus believed that humans wish to love and serve their fellow man. A Christian humanist, Erasmus represented a minority view, considering that German theologian Martin Luther  had no problem with war as long as it was NOT carried out by the Church or against Christians. Luther made an exception even for Christians during the German Peasants War in the mid-1520s.   

A few decades later, Marx and Engels argued that war s an instrument of the elites trying to exert control over the masses at home and abroad. According to Marist thought, war is symptomatic of the class system in which the socioeconomic elites control the state and determine policy to advance their interests against the working class that does the actual fighting, killing and dying in war. A few decades after Marx and Engels, V.I. Lenin (Imperialism: the Highest Stage of Capitalism) argued that war is inevitable owing to the global struggle for markets between the hegemonic nation-states. This thinking makes sense if one considers that Lenin was a product of the Age of New Imperialism (1870-1914) that witnessed a series of regional conflicts ultimately leading to the First World War. 

If we accept that WWI led to WWII, then 19^th century wars of Imperialism were the genesis of 20^th century global wars. The Marxist-Leninist war theory includes social, economic, political and cultural factors, rather than isolating causes of war on human nature or environment as determining factors. As followers of the rationalist tradition that assumes human nature is prone to harmony rather than conflict, the Marxist school of thought dismisses the psychological factors that it sees as products of societal conditioning and symptomatic of the uneven conditions between social classes.    

In contrast to Marxist theory on war, there were 19^th and 20^th century thinkers mesmerized by war, depicting it as a mythological transcendent experience. Most of these thinkers came from the German militarist tradition that celebrates the warrior-hero as much in myth and folklore as in politics given that German unification came not as a result of diplomacy and  compromise , but war against Austria first and then France as a catalyst to rallying support behind Otto von Bismarck’s Prussian foreign policy. In The Will to Power and in Thus Spoke Zarathustra, F. Nietzsche indicates that war is the essence of human nature that allows humans to transcend the mediocrity of Christian pacifist morality. 

Nietzsche the existentialist thinker was focusing on the individual and the pursuit of the individual transcending experience through the kind of exercise of power. According to Nietzsche, this ideal existed among the pre-Socratics – for example, we read in Heraclitus that: One must know that war is common and justice is strife, and that all things happen by strife and necessity.  War is father of all and king of all: some he shows as gods, others as men; some he makes slaves, others free.  This kind of realism (ethical realism) in the world of the constant becoming, Heraclitus demonstrates that the essence of being is change and that does not come harmoniously because even harmony is the result of opposing forces coexisting.  Heraclitus did not advocate war any more than Nietzsche, regardless of how the German philosopher’s views were twisted by the militarist racist Nazi regime. 

More important German thinkers than Nietzsche contributing to German, European and US militaristic psychology were Heinrich von Treitschke, Friedrich von Bernhardi and Karl von Clausewitz, the latter in the group by far the most celebrated among Western politicians, military analysts and fans of warfare.  A rationalist and realist coming out of the Age of Reason, Clausewitz argued that "War is the continuation of Politik (policy) by other means". We could assume that there is a sense of stark realism here because indeed where diplomacy ends war may indeed start because it is but an instrument of policy in the hands of those conducting diplomacy to achieve a certain goal. While this is a view that hard realists may accept as unavoidable, some could argued against his view that the interplay between national character and military functions defines the nation in the modern world. This Prussian militaristic view would leave a far reaching mark on Prussia and later Germany and it would define its history until the end of WWII.

 A contemporary of Bismarck and witness to the “Blood and Iron” route that Germany followed, Treitschke argued that if the duty of the state is to maintain relations with other states, than the bounds of the state are not confined to the sovereign territory. Ignoring the right of national sovereignty and right to exist under self-determination that war obviously upsets, he argued that armed conflict is a manifestation of a great society.   This kind of nationalism (the individual must submit to the duties of the state) as expressed in the age of Social Darwinism (blatant racism) and European colonialism in Africa and Asia represents the euphoria that Treitschke projected in his work and the spirit of nationalists.

Not too far from such views, Bernhardi was also a product of Prussian militarism, best known for his book, Deutschland und der Nächste Krieg where he argued that war is merely a function by which civilized nation-states express their true greatness. In fact, he had no regard for international treaties and believed that there was “divinity” in armed conflict between nations.  

Existentialism and War

Precursors to Existentialism are found in 19^th century Europe, varying in views from Soren Kierkegaard to F. Nietzsche.  After World War I when Europe was thoroughly devastated and the rationalism of the Enlightenment proved futile against the reality of mass destruction, Existentialism became popular. Anxiety and despair hovered over the European middle class that lost any sense of security as a result of the war, followed by the Great Depression. Existentialists merely reflected this sense of anxiety and despair, especially Jean-Paul-Sartre.

 Before WWI, the search for meaning was not questioned because religion for the traditionalists, science and technology for the modernists offered solutions, and for both sides there was an assumption of the Hegelian upward line of steady progress in civilization. All of it was destroyed by war and the Existentialists stepped in to make sense of the human condition, of the absence of dignity and security in society.  The “glory and honor” of WWI had resulted in total destruction and chaos where order was simply assumed as a given in Western Civilization that assumed itself superior to all others on the planet. Suddenly, nothing made sense, nothing was clear, as Albert Camus was trying to establish; everything including creative endeavors like art questioned, for if life is so cheap as to easily destroy it en masse, how can there be purpose. The Decline of the West (Oswald Spengler)reflected not only Hollow Men (T.S. Elliot), but a hollow civilization. 

 Late 20^th century existentialist thinkers have argued that war is a destructive human tendency, for it provides the illusion of meaning, honor and greatness, a transcending experience of the individual who identifies with the nation-state that is presumably eternal while the individual is finite. For existentialists, engaging in war where the object is to destroy other people and their property, presumably to conquer them and their territory, affords the individual militarist with numerous illusions that provide a sense of satisfaction for the self.

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             War can be a god-like experience because killing other people that the soldier has never met and has no motive other than ideological, entails constructing animosity inside the human mind that fills the void with a sense of high purpose.    

2.    
          War is the ultimate sense of adventure to feel like an animal hunted down and at the same time a hunter doing the hunting against the other to be killed. This reveals a sense of self-hatred and self-destruction as well as a sense of daring or trying to defy death thus testing finiteness of life.

3      War affords the illusion that by killing the other under legal cover the individual transcends atomistic goals because duty and service in the name of patriotism are eternal while the individual is temporary. In short, there is the illusion from ancient times to the present that eternity is somehow guaranteed through carrying out soldier duties – in conventional military force, or guerrilla type where the individual feels the same sense of inner reward. 

4.       Killing en masse indiscriminately, while enjoying legal cover under the legitimacy of the state at the individual and societal level, killing indiscriminately en masse affords the illusion of spiritual cleansing, removing evil and restoring good as though life is a myth of Barbarian tribes killing each other for the sake of achieving hero– worship status- Beowulf, Attila the Hun, etc. Deeply rooted in cultural values, the hero-soldier myth inculcated into the mind of the young man as a destructive machine reflects the sense of helplessness at the individual and societal level to the degree that salvation is sought through a hero-destroyer. 

5.       The supernatural element and the warrior-hero mentality invariably go hand-in-hand, as the warrior lives inside his own mind and has illusions of grandeur and believes that he has the power to ‘save’ the world by eliminating ‘enemies’ and making the world safe from ‘evil’, although the means – mass destruction through war -to achieve the goal are unquestionably evil. 

Conclusions

There is a legitimate philosophical and political question of whether war is as inevitable as the progress of science and technology that actually helps to make war possible in more destructive manner than ever.  Those who embrace the Freudian view, with Thomas Hobbes among others as precursors, that humans are irrational and fundamentally aggressive conclude that indeed there will always be wars until the end of the human species. These scholars argue that because humans are the only species that enjoys killing for sport, deriving pleasure from the pain and destruction of the other, this is a manifestation of the essential destructive core in human nature.   

On the other side, there is the rationalist camp beginning with John Locke as a precursor of the Age of Reason that denies human beings are innately evil and wish to cause harm to the other because reason dictates that leads to self-destruction.  In this camp, there are those who maintain that human nature is subject to conditioning by society, its culture and institutions.  If this is so, war is symptomatic of any given social and political structure. The only area of agreement between the rationalist school of thought and that of the Hobbes=Freud line is the pessimism about the end result, which is war is inevitable.  

Written in the 1860s, Leo Tolstoy’s War and Peace romanticizes the innocent common people and demonizes the elites for causing wars that plague the innocent. Representing a long-standing tradition among Russian intellectuals that deplored violence in any form and longed for harmony in society, Tolstoy believed that the way to change society was through a cultural revolution rather than a political one, that is to say, society can change through education the arts, and culture in general. As much as I find this solution desirable, I am pessimistic that anything but the solution Jean-Jacques Rousseau offers in dictating that people must be forced to be free makes sense.  In other words, there is only a political solution to war and it cannot be subject to an open debate. There is always a segment in society that profits from the war-machine industry, a segment that glorifies war for ideological reasons, a segment that is nationalistic, etc. Therefore, peace must be imposed upon a reluctant humanity that may choose otherwise.

ARGENTINA: FOREIGN DEBT AND EXTERNAL DEPENDENCE

Defaulted bonded debt, the US and the UN
Argentina has been a target of the international financial institutions, US government and G-7, multinational corporations, and the mainstream pro-business media in the last fifteen years. The reason is not because it opted to become Communist, but rather to embrace a nationalist solution to the domestic credit crisis, instead of submitting to an austerity regime that the US, International Monetary (IMF), Paris Club, European Central Bank and Wall Street and multinational corporations wanted. The issue is not the size of Argentina’s economy, because it is tiny in terms of the global GDP. 

The core of the issue is that Argentina did not submit to austerity as the markets demanded. Even if it paid the creditors every single dollar it owed, but it still opted for a multilateral foreign economic policy with a heavy dose of economic nationalism, the reaction from the US and the markets would have been just as condemnatory. Public debt is a pretext, because there are a lot more countries that owe a lot more than Argentina, but because they follow the dictates of the markets and neoliberal policies, there is no criticism.   
For many reasons, ranging from ideological to very practical and geopolitical, the US as well as the G-7 creditor nations cannot demonstrate any leniency toward a Latin American republic defaulting on its debt and deciding to break the traditional mechanisms of economic integration that link the national economy to the transnational banks and corporations under the terms the latter dictate. Clearly, the issue here from the Cuban Revolution onwards has been to prevent economic nationalism and multilateral foreign economic policy. 

Public debt is one of the most effective means to keep a country well integrated into the international political economy. This has been the case for Argentina that the US and the G-7 want to punish as severely as possible, sinking its economy into another economic crisis so that the world can learn a lesson of what not to do. The debt crisis of Argentina has been dragging on for more than a decade and a half (late 1990s to the present), and there seems to be no resolution to it, given that the courts in the US have become involved ruling in favor of creditors in a case that is as much financial as it is political.

The worst thing for the US and the G-7 creditors is if Argentina actually prevails with its nationalist path and terms that have allowed it to break off the tentacles of the IMF, New York and EU-based creditors. Argentina’s punishment means greater rewards for creditors in the future, and this is not just my opinion, but the conclusion of the United Nations Conference on Trade and Development agency.

·         First, by removing financial incentives for creditors to participate in orderly debt workouts, the rulings will make future debt restructuring even more difficult, in particular for outstanding bonds without a Collective Action Clause, the actual amount of which is unknown but is likely to be large.

·         Second, obligating third-party financial institutions to provide information about assets of sovereign borrowers will have a significant impact on the international financial system as it forces financial service institutions to provide confidential information on the sovereign borrower's global financial transactions to facilitate the enforcement of debt contracts for the creditors.

·         Third, the ruling will erode sovereign immunity.

http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=7

Besides the UN, even the IMF was astounded at the US Supreme Court decision, claiming that it poses problems in international financial relations. It appears that the IMF is concerned that a single Hedge Fund is allowed to prevail over a sovereign nation-state that has demonstrated willingness to negotiate with its creditors. After all, Argentina came to terms with the Paris Club, a long-standing international lender to governments, as well as the Spanish-based oil company REPSOL, thus proving that it is seeking negotiated solutions and not outright expropriations.

Hedge Funds, Public Debt  and Public Interest                                                                                        
There is an assumption in the mass media, on the part of businesspeople and mainstream politicians that anything good for business is good for society (1920s mentality in the US), and anything that is in the public domain is inherently evil, invariably associated with Communism. Therefore, the solution to all problems in society is to privatize everything from public transportation and utilities to public health and education. The assumption here is that private sector efficiency necessarily translates to social justice.

Obsolete after the Great Depression, this mindset prevailed in the Western World from the early 1980s and it really took off in the 1990s when the euphoria of the end of Communism was believed to be the vindication of neoliberalism. Does the fact that Communist regimes – bureaucratic Communism with an elite party class – failed in the Eastern bloc necessarily entail that unchecked capitalism under neoliberal policies and a corporate welfare state is a great thing for society as a whole? The answer is that this is the assumption of mainstream politicians from right to left-center, media, academia and hired-gun analysts interested in securing a salary. Argentina’s public debt problem took place against such a background.

In June 2014, the government in Buenos Aires requested that a US court hold its ruling in favor of creditors (mainly a single hedge fund), so that the country would avoid yet another default that would not be in anyone’s interest, least of all the people of Argentina on the receiving end of the crisis. The US court had decided that it was illegal for Buenos Aires to be paying bondholders who had not agreed to the debt restricting plan under such plan struck in 2005 and 2010.

Fearing a precedent that could spell disaster for debtor nations, the UN trade agency UNCTAD stated that the US court ruling is in violation of the US Sovereign Immunities Act, and it contributes to the erosion of Argentina’s sovereign immunity. The concern of the UN-UNCTAD is that the US court ruling strengthens the creditors and weakens the debtors who may not be solely responsible for the debt default. The IMF did not go as far as the UNCTAD, but it was troubled that the courts role intervenes in cases where international financial institutions historically negotiate with governments.

The concerns of UNCTAD as expressed above illustrate very clearly the sharp division between debtors and creditors, between rich and poor, between a predominantly northern hemisphere that is rich and southern hemisphere that is poor. At the heart of this issue is not only the world division of labor and fair practices on international loans, trade and investment, but whether 19^th century-style imperialist practices will continue to hold true in the 21^st century in democratic societies. 

Under restructuring, capital was reduced, interest capitalized, and time payments extended. Although 93% of the bondholders have accepted the government’s debt restructuring arrangement that entailed shaving off a third of the bonds’ original value, the US has been using the defaulted debt issue to engage in what President Cristina Fernadnez has called “vultures”, creating financial instability and driving the middle class into poverty by using the debt issue. Because the US Supreme Court refused to hear the case, the cost of borrowing and the value of the currency are tied to the court decision. Furthermore, investment decisions, the pace of the country’s economy and living standards are impacted immediately.

Argentina's government ran up against the powerful NML Capital, a subsidiary of Elliot Capital Management, run by billionaire Paul Singer who has experience in law suits against Third World governments (Republic of the Congo and Peru) for defaulted bonds. One could argue that no one forced these countries to borrow, let alone to spend loans unwisely until they fail to service the loans. True enough, though the lender knows the risks when making the loans.

Unlike the majority of creditors who accepted the bond swap Buenos Aires offered, Singer refused, knowing that the politicians, media and markets are on his side. Managing a $17 billion Hedge Fund, Singer is a Republican Party activist and according to news stories a very generous contributor to journalists who shape public opinion to suit his views. A true patriot interested in the US national interest in every respect, Mr. Singer is using the Cayman Islands as the base of his Hedge Fund operations. These are the same Cayman Islands well known for individuals interested in escaping paying taxes in their own countries and laundering money. 

Less than two years ago, the Cayman Islands, under Singer’s influence held an Argentine ship for two months in Ghana. The ship was finally released only after the UN International Tribunal for Law of Sea ordered the ship released. How did the mainstream news organizations report this story? Simple, Argentina is a debtor nation not paying its creditors seized the ship; a lesson for debtors everywhere. The media made no mention about Singer the Hedge Fund manager, about the infamous Cayman Islands. There was no mention about the manipulation of the legal system in the islands and Ghana by Hedge Funds firm. In short, the media only reported what obviously served Singer’s interests. 

How did the debt crisis originate and evolved?
From the Napoleonic era when the republics south of the Rio Grande began to secure their independence, until the early 21^st century, cyclical debt crises have been a part of Latin America’s political economy and an instrument of external hegemony of the national economies. Foreign debt has meant external trade dependence and uneven terms of trade inevitably forcing Argentina and its sister republics into cyclical debts.
In the mid 20^th century – from the 1940s until the 1960s – import substitution combined with a reliance on funding imports with receipts from raw materials exports ran its course as a growth and development strategy. 

Heavy borrowing financed by raw materials exports to modernize the economy while at the same time emphasizing the manufacturing sector was costly partly because financing came from external sources but also because the economy was not “inward-looking” with the goal of sustainability. Moreover, the vast value difference between raw materials exports and expensive imports and luxury items geared for the elite domestic market failed to make Argentina and its sister republics more self-sufficient. Raul Prebisch, the Keynesian advocate of Argentina’s and Latin America’s “inward development”, would be disappointed not because theory never matched reality, but because so much went wrong along the way owing to domestic and international political and economic obstacles. 

As far as many were concerned, Argentina’s vast natural resources, agriculture and animal husbandry provided the illusion of never ending prosperity, considering that other republics are not nearly as rich in such natural assets. After the era of military US-backed dictatorships in the 1970s, and the Falklands/Malvinas war ending in 1982, Argentina, like many Latin American economies, experienced hyperinflation because there was an interest to catch up with many economic and social development programs neglected by the pro-US dictatorship. The result of “easy money” was inflation, until the IMF advised Buenos Aires to “hold a dollar for every national currency unit” issued by the Central Bank. Inflation had started rising sharply under the military junta, but it reached very high levels at the end of 80s-early 90s.

Borrowing patterns reached a point during the Latin American debt crisis of the 1980s that the republics were securing new loans to finance servicing existing ones, a process that entailed draining of national capital and the eventuality of a major debt crisis. This was great as long as banks and investors were making money. However, hyperinflation meant that Argentina was under enormous pressure to accept IMF stabilization measures.

The decade of the 1990s was in many ways similar to that of the 1920s that some have described as "the dance of the millions" in terms of public loans and foreign investment. At the same time, that first decade of the post-Cold War global environment coincided with enthusiasm for neoliberal policies where the state took a back seat and permitted corporations to reap as many benefits with as low taxation as possible and without many conditions on reinvesting to strengthen the economy and secure jobs growth.

In October 1994, Argentina’s President Carlos Menem and Bankers Trust to issue sovereign debt in of New York entered into an agreement on the sovereign debt of $82 billion. In return for the agreement with the bank, Menem agrees to privatization and a series of neoliberal policies intended to attract foreign investment and presumably secure enough revenue for the government to service the debt. The Menem regime assumed that embracing neoliberal policies and handing over the debt issue to commercial bankers in New York would solve Argentina's problem and make it competitve with neighboring Brazil. On the contrary, the move was an unmitigated disaster.

Toward the end of the decade, much of the region south of the Rio Grande, including Argentina faced a deep crisis, created in large measure because creditors and International Financial Institutions, public and private decided to cut off credit and force the debtor nations into an austerity regime that entailed devaluation of all assets and massive capital outflows from the periphery to the core. For Argentina, the debt crisis started with a deep recession from 1999 until 2002 when the country could not possibly service $82 billion bonded debt, half of which was issued amid the deep recession. Argentina defaulted and de-linked the national currency from the US dollar as a reserve currency, largely to make sure that the needs of the domestic economy were met. In December 2001, Argentina declared a moratorium on foreign debt, and began arrangements for debt restructuring in the years thereafter. The Argentine government plan essentially asks the bondholders to take a substantial loss, something that a number of institutional investors agreed, ending the controversy with 93% of investors. 

The immediate reaction to Argentina’s default was massive flight of capital, foreign and domestic, thus creating a massive gap in the banking system and fear spreading across the country. The nationalist solution that favors domestic producers and larger enterprises went along with the government’s plan to maintain assets under national control. As practical as the default option may have been, the question is whether the solution of economic nationalism was socially just and one that distributed the burden of the crisis evenly across all sectors of the population. On the other hand, what would have been the fare of the majority of the people if the IMF had come in to impose austerity?

Dr. Raul García Heras, Senior Research Fellow in economics at the University of Buenos Aires, has done extensive work and written in Buenos Aires newspapers and journals about the Argentine foreign debt, the IMF, and foreign creditors since the regime of Juan Domingo Perón. Reflecting majority opinion in his country, Raul's view is that the IMF, foreign creditors, the Argentine government, and local businesses are jointly responsible for the debt crisis. About half of the population has been living at poverty level during the past five years. Debt forgiveness means that someone has to pay, but Latin America paid more than twice the capital inflows in debt service during the 1980s debt crisis.

The result was a sharp drop in real wages, income redistribution from the bottom up and from the south to the north. Clearly, there is no socialism here just because a nationalist option was adopted in a country with a deep past of nationalism intertwined with Peron’s legacy. Billionaire George Soros, among other reform-minded enlightened capitalists, agrees that the International Financial Institutions (IFIs) have been part of the problem and not the solution with regard to managing the world economy under the Bretton Woods system that was established to benefit creditors. Should the Argentine workers and middle class suffer even sharper reduction in their living standards so that creditors recover their money right now? Should the US government bail out the creditors now?

The US and creditor countries, though not necessarily the individual creditors, will receive far more than the $100 billion that the Hagens Berman Law firm is demanding by virtue of re-integrating Argentina back into the hemispheric economy, strengthening its finances, and stabilizing the region by allowing Argentina to trade and to generate jobs and income growth. However, in a climate of neoliberal policies that the IMF, World Bank and G-7 central banks are pushing in order to strengthen capitalism in the core nations, the US court decision is hardly a surprise.  

ARGENTINA'S PROSPECTS

All the promises that the apologists make about following the orthodoxy of monetarist policies and neoliberalism are meaningless because history has demonstrated again and again in all corners of the earth where IMF-austerity has been imposed that these promises never ever come true. On the contrary, the only ones benefiting from austerity are the domestic business elites and foreign corporations.

It is short-sighted to demand such an amount of money at the risk of alienating the entire Third World watching the Argentine case, especially considering the record of capital inflows to the Third World versus outflows to the G-7 in the past 50 years. Yet, the IMF, with the US and the G-7 behind it, has no problem making Argentina an example for others to follow and never dare try to follow its nationalist example.
Unfortunately, the transfer of capital from the southern hemisphere to the north will continue for the next 50 years at the expense of perpetually low living standards and endemic poverty. One could argue that the population rise is a source of the economic problem. However, with the exception of Central America, the South American republics have not seen population growth much above one percent. 

A nation of 40 million and the agricultural capacity to feed more than half a million, Argentina also has a highly trained, low-cost labor force makes for a very attractive investment environment  once the default issue is settled. Therefore, the argument that population pressure vs. limited natural resources is at the root of the problem is not valid.Argentinians believe that their situation is unique, partly because in its modern history Argentines always believed they were unique among Latin Americans. In reality, their situation is symmptomatic of how global capitalism operates and how private and public institutions react when a government opts out of pre-existing mechanisms to repay its public debt. If there is something unique about Argentina at this juncture, it is that its provinces continue to borrow at double-digit interest rates, causing somewhat of an alarm among financial analysts and political observers.

Whereas it is true that investment has slowed to almost nil in the last fifteen years or so, domestic large enterprises have benefited, despite the numerous instability problems. The same has not been true for the middle class and labor that has paid the price of default while running up against the police, armed forces, and the Peronist-dominated trade union bureaucracy. Pro-market and pro-Western integration policies without many checks to account for fair income distribution among various social sectors were at the center of the debt question that exploded at the end of the 1990s. As long as creditors provided liquidity, there was no problem, but when they turned off the easy credit, that is when the problems began, as they have always with creditor-debtor relations. Moreover, the debtor is always at fault, regardless of what the UN-UNCTAD states about responsibility of creditors in part to blame for creating the debt crisis.

No economy can possibly survive, even the US with its nearly self-sufficient economic base, if it does not have support from trading partners. Even North Korea has China behind it to continue going along as it does.  Political and business leaders in Argentina realize that global interdependence holds true for their country and they realize that if it were not for Asian markets, the country would not be able to withstand the kind of pressure it has endured from the US and to some degree Europe in the last decade. China’s emergence as the world’s number two economy and its intense interest in Latin America has come at just the right time to give Argentina a breather until it settles the debt question with its American creditors. Therefore, this is not an issue of capitalism vs. Socialism, but international capitalism under old-style imperialist tactics vs. national capitalism.

Government collects taxes, which is a way of punishing and rewarding, redistributing income from one social group to the other, and it spends thus deciding how to run society and where to place priorities. A redistributive policy such as the one of Norway may be an extreme example, but it is one model under the market system. In the last decade and a half, Buenos Aires has followed a mixed policy that included some redistributive measures, but it is hardly anything radical. Moreover, given the failure of neiliberalism in Argentina in the 90s, the majority of the population does not have the stomach to return there and try its luck with unchecked integration into the global economy, regardless of the consequences to the middle class and workers. 

Is there a possibility that Argentina will someday become more self-reliant, follow a more inward development path with greater control over its own destiny as Raul Prebisch once envisioned? Is there a possibility that a billionaire with money to spread around for politicians, journalist and individuals in the judicial system would be checked by the state of a sovereign nation whose interests transcend those of a profiteer? For now at least, the road for Argentina is compromise with the "holdout creditors" and a development strategy that takes into account new powerful non-Western players in the world economy. Longer term, if another debt crisis hits in 20-30 years, there may be a revolution and that would entail structural changes.