Of global military and political tension

The current global crisis, which has replaced the long-term economic lift of developed countries, is a natural manifestation of the long waves of economic activity known as " Kondratieff waves" [26]. At the core of each of them is the life cycle of the relevant technological paradigm, that is, a reproducible integrated system of technologically interconnected production facilities. The military and political crisis represents, in turn, a manifestation of a change in centennial accumulation cycles, each of which is based on its own institutional world economic paradigm, that is, a system of interconnected institutions that ensures expanded reproduction of capital and determines the mechanism of global economic relations. A superposition of these two cyclical processes in the crisis phase creates a dangerous resonance posing a threat of destruction of the entire system of global economic and political relations.

 

 

Fig. 1. Change of technological paradigms

in the course of modern economic development

(Source: Glazyev S., Kharitonov V. (Eds.) Nanotekhnologii kak klyuchevoy faktor novogo tekhnologicheskogo uklada v ekonomike

[Nanotechnology as a key factor of the new technological paradigm in the economy]. Moscow, Trovant Publ., 2009. (In Russian))

In the history of global development, starting with the industrial revolution in Britain, one can single out the life cycles of five successive technological paradigms, including the information and communication technological paradigm dominating the structure of the modern economy[27].

The key development trends of the new sixth technological paradigm are already visible, the growth of which will ensure a rise of the economy of the advanced countries on a new long wave of economic growth: biotechnology based on the achievements of molecular biology and genetic engineering, nanotechnology, artificial intelligence systems, global information networks and integrated high-speed transport systems.

Fig. 2. Priority objective: outstripping growth of the new

technological paradigm as the economy modernization basis.

The structure of the new (6th) technological paradigm and

the growth rates of its components

 

Their implementation ensures a multiple increase in production efficiency, and a reduction in its energy and capital intensity[28].

Currently, there is a transition of the new technological paradigm from the embryonic phase into the growth phase. Its expansion is restrained by both a small scale and untested condition of the relevant technologies, and the unreadiness of the socio-economic environment for their wide application. However, despite the crisis, the expense on mastering the latest technologies and the scale of their application grow at a rate of about 20-35% per year[29].

The further development of the crisis will be determined by a combination of two processes: destruction (modernization) of the structures of the old technological paradigm and establishment of new structures. The totality of operations along the chain of product life cycle (from basic research to the market) requires a certain amount of time. The market is taken by those who are able to go this way faster and manufacture the product in larger amounts, with lower costs and better quality. The sooner the financial, economic and political institutions are rebuilt in accordance with the needs of the growth of new technologies, the earlier the rise of a new long wave of economic growth will begin. This will involve changes not only in the technological structure of the economy, but also in its institutional system, as well as the composition of leading companies, countries and regions. Those able to enter in less time the trajectory of growth of the new technological paradigm and invest in its component production facilities in the early stages will succeed. And vice versa, the entrance for " outsiders" will become more and more expensive every year and will close with achievement of the maturity phase[30].

Studies show that during periods of global technological change, it becomes increasingly difficult for leaders of the old paradigm to maintain their profitable and already habitual dominant position, since on a new wave of growth, other countries shoot ahead that have succeeded in preparing the prerequisites for its establishment. Unlike the " champion" countries that face the crisis of overaccumulation of capital in obsolete production facilities, the " contender" countries have the opportunity to avoid a massive depreciation of capital and concentrate it as much as possible on breakthrough promising growth trends of the new technological paradigm.

To retain their leadership, the " champions" have to intensify the power component of their foreign policy and economy. First of all, a sharp increase in spending on R& D and investments in shaping the growth trajectories of the new technological paradigm are needed. Given the high risk of pilot research, the main share of its financing should be taken by the state, helping private capital in mastering of new technologies. In the conditions of the liberal democratic politico-economical system that prevails today in the advanced countries, they have no other way of doing this, except for purposes of defense and security. It is no coincidence that during the periods of technological paradigms change, military and political tension sharply escalates, and the risks of major international conflicts increase. An object lesson is the tragic experience of the two previous structural crises of the world economy.

Thus, the Great Depression of the 1930s, caused by achievement of the growth limits of the " coal and steel" technological paradigm that dominated the beginning of the 20^th century, was overcome by militarization of the economy, which resulted in its technological restructuring based on extensive use of internal combustion engine and organic chemistry, transition to oil as the main energy carrier and to automobile as the chief vehicle. The transition of the economy of the leading world countries to the new technological paradigm passed through the catastrophe of the Second World War, which entailed a drastic change in the entire world order: destruction of the European colonial system and formation of two opposing global politico-economical systems. The leadership of the U.S. capitalism in entering a new long wave of economic growth was ensured by the extraordinary increase of defense orders for mastering of new technologies, as well as by the inflow of world capital to the U.S. with destruction of productive potential and depreciation of capital of the main competitors.

The depression of the mid-70s and early 80s preconditioned by exhaustion of the potential of this technological paradigm, entailed the arms race with the extensive use of information and communication technologies, which formed the core of the new 5th technological paradigm. The subsequent collapse of the world socialist system which failed to transfer the economy in time to the new technological paradigm, provided to the leading capitalist countries a possibility to use the resources of the former socialist countries for a " soft transition" to the new long wave of economic growth. The export of capital and the brain drain from the former socialist countries along with colonization of their economies facilitated the structural reorganization of the economies of the core world capitalist system countries. The same wave of growth of the new technological paradigm served for rise of the new industrialized nations that managed to create its key production facilities and lay the groundwork for their rapid growth on a global scale. The political result of these structural transformations was liberal globalization with the U.S dominance as the issuer of the main reserve currency.

By its geopolitical consequences, the structural crisis of the 1970s and 80s and the arms race associated with it had consequences comparable to the Second World War. The U.S. and NATO emerged victorious from this crisis, having established control over the gigantic resources of the disintegrated global socialist system. Their victory was achieved by a combination of information and psychological weapons, which the Soviet security system was not ready to repel. Although this war was of a " cold" nature, there were no bloody battles, and the victims were mainly due to the colonial policy of genociding the population of the former Soviet republics, in its historical, geopolitical and geo-economical significance it should be regarded as the Third World War. Accordingly, the current aggravation of military and political tension that takes place according to the same logic of long cycles, should be regarded as the appearance of symptoms of the Fourth World War.

Exhaustion of the growth potential of the dominant technological paradigm has caused the global crisis and depression that engulfed the leading world countries in recent years[31]. The current phase of birth of the new technological paradigm appears on the surface of economic phenomena as a combination of financial turbulence, accompanied by formation and collapse of financial bubbles, economic depression characterized by a decrease in profitability and volumes of customary production, a drop in incomings and prices, including the price of main energy carriers and construction materials, as well as by rapid spread of fundamentally new technologies that are at the initial stages of their research and production cycle.

Fig. 3. Lifecycle of the dominant

technological paradigm

 

The way out of the current depression will be accompanied by large-scale geopolitical and economic changes. As in the previous cases, the " champion" countries show their inability to implement joint fundamental institutional innovations that could channel the released capital into structural reorganization of the economy based on the new technological paradigm, continuing to reproduce the existing institutional system and serve the economic interests embodied in it.

Countries that are on the front line of scientific and technological progress act as " engines" of global economic development, at the same time using the benefits associated with this. Other countries are compelled to follow the achievements of the global leaders on the conditions of international exchange imposed on them. This exchange is nonequivalent, as advanced countries actualize their technological superiority in establishing advantageous price proportions, standards, and other norms of international economic cooperation ensuring that they appropriate intellectual rent on a global scale.

Global competition takes place not so much between nations as between transnational reproduction systems, each of which unites, on the one hand, the national systems of education, accumulation of capital, organization of science in the countries concerned and, on the other hand, the productive, entrepreneurial and financial structures operating on a global market scale. Several such systems, tied closely together, determine global economic development. They form the core of the world economic system that concentrates intellectual, scientific, technical and financial potential. The countries falling outside form a periphery devoid of internal integrity and opportunities for independent development.

The concentration of transnational capital and production has reached a qualitatively new level, allowing us to talk about the emergence of a new world order in which the decisive role belongs to international capital, transnational corporations and international organizations linked to the core of the global economic system. The countries falling outside form a periphery devoid of internal integrity and opportunities for independent development. The relationship between the core and the periphery of the world economic system is characterized by an nonequivalent economic exchange, in which the peripheral countries have to pay the intellectual rent contained in imported goods and services at the expense of natural rent and labor costs contained in primary and low-technology goods exported by them.

Dominating the periphery, the core " extracts" from it the most qualitative resources – the best intellects, scientific and technological achievements, property rights to the most valuable elements of national wealth. Having a technology advantage, the core countries impose on the periphery the standards that are convenient for them, securing their monopolistic position in the technological exchange sphere. Concentrating the financial potential, the core imposes on the periphery the capital movement conditions and the use of its currencies, including those used for the formation of foreign exchange reserves, thereby establishing control over financial systems of peripheral countries and appropriating issuance revenues on a scale of the entire global economic system. Deprived of the main internal sources of development, the countries of the periphery lose the opportunity to pursue a sovereign economic policy and manage their own growth, turning into an economic space to be developed by international capital.

At the present time, the basis for the global competitiveness of the U.S. is represented by a combination of technological, economic, financial, military and political superiority. Technological leadership allows the U.S. corporations to be the most competitive in the global market and to appropriate intellectual rent, financing R& D through it to outstrip competitors on the broadest possible frontage of scientific-technological progress. Holding a monopoly on the use of advanced technologies, the U.S. companies have a competitive advantage in world markets both in terms of production efficiency and offer of new products. Economic superiority creates a basis for the dominant position of the U.S. currency, which is protected by military and political methods. In turn, due to the appropriation of the global seigniorage from issuance of the world currency, the U.S. funds bloated military expenses, including those allocated for promising R& D projects. This way, a positive feedback is maintained between all components of the competitiveness of the national economy.

The U.S. and its G7 allies have exhausted by now their ability to extract resources from post-socialist countries, in which their own corporate structures have formed, which privatized the remainder of their productive potential. The financial war that Washington is waging against unprotected national financial systems, tying them to the dollar through imposition of a monetarist macroeconomic policy with the help of dependent IMF, rating agencies, influence agents etc., has also exhausted itself. The capital inflow into the U.S. economy, artificially stimulated in this way, is no longer sufficient to service the avalanche-like growing liabilities of the federal government, the expenditure on which approaches a third of the U.S. GDP.

Fig. 4. Dynamics of the U.S. national debt.

 

At the same time, the countries that managed to retain economic sovereignty (China, India) do not open their financial systems, demonstrating confident growth in the crisis. Their example is followed by the biggest countries of Latin America and Southeast Asia that resist the absorption of their assets by speculative capital. Through creation of bilateral currency swaps, China is rapidly forming its international settlement system. The U.S. Federal Reserve room for maneuver is inexorably shrinking, as the U.S. economy has to bear the brunt of the depreciation of capital concentrated in obsolete and redundant industries, financial pyramids and obligations of countries in distress.

Based on the above, we can conclude that the crisis will be evolving further in accordance with the internal logic of development of the current global economic system. Theoretically, three forward-looking scenarios are possible.

1. The optimistic scenario of quick transition to a new long wave of economic growth. It involves conversion of the crisis to a managed mode that will allow leading countries to channel a decline in outdated sectors and peripheral regions of the world economy, sending these resources to an upswing of innovative activity and boosted growth of the new technological paradigm. In this case, the architecture of the global financial system will change dramatically, becoming a multi-currency one, with revision of the composition and relative weight of the leading countries. There will be a significant strengthening of state institutions of strategic planning and regulation of financial flows, which includes the global level. Globalization will become more manageable and balanced. The sustainable development strategy will replace the liberal globalization doctrine. The goals uniting the world’s leading countries will include countering terrorism, global warming, mass hunger, diseases and other threats to humanity.

2. The catastrophic scenario involving collapse of the U.S.-centered financial system that emerged after the Second World War, with formation of relatively self-sufficient regional monetary and financial systems, destruction of a large part of international capital, a drastic drop in the standard of living in the " golden billion" countries, deepening recession and erection of protectionist barriers between regions.

3. The inertial scenario involving growth of chaos and destruction of many institutions, both in the core and on the periphery of the world economy. While some institutions of the existing global financial system will be preserved, new centers of economic growth will appear in countries that will have managed to get ahead of others in establishment of the new technological paradigm and " ride" a new long wave of economic growth.

The inertial scenario, combining elements of the optimistic and the catastrophic scenarios, might be catastrophic for some countries and regions and at the same time optimistic for others. It should be understood that the institutions of the global financial system core will try to survive by drawing resources from peripheral countries through establishment of control over their assets. This will be achieved by exchanging the issuance of world reserve currencies for the property of the countries that accept these currencies. If necessary, strong-arm political practices will be used to maintain this exchange, as has already happened with the assets of Iraq, Afghanistan and Libya, transferred by the occupation authorities under the control of the U.S. corporations. Nowadays, the same process is observed in Ukraine, where the puppet government brought to power by the U.S. secret services announced mass privatization of the country’s remaining property in favor of the U.S. capital.

So far, the events are unfolding by the inertial scenario, which is accompanied by stratification of the leading countries of the world according to the crisis depth. The greatest damage is taken by open economy countries, where the decline in industrial production and investment reached 15-30% in the acute crisis phase. Countries with an autonomous financial system and a capacious domestic market, protected from attacks by financial speculators, continue to grow and increase their economic weight.

To achieve the optimistic scenario, it is necessary to quickly form global regulatory institutions able to curb turbulence in global financial markets and authorized to adopt universal rules for financial institutions. Among other things, such rules would provide for liability of managers, transparency of stock options, elimination of internal conflicts of interest in institutions that assess risks, credit leverage limitation, financial products standardization, conduct of cross-border bankruptcies, etc.

In any scenario, the economic recovery would occur on a new technological basis with new production capabilities and qualitatively new consumer preferences. The crisis will end with the cross-flow of the capital remaining after collapse of the dollar financial pyramid and other financial bubbles into production facilities of the new technological paradigm[32].

As already mentioned above, the basis of the new (6th) technological paradigm is the complex of nanotechnology, information, communication and biotechnology. And, although the main field of application of these technologies pertains to the sphere of healthcare, education and science, which is not directly related to the production of military machinery, the arms race and the increase in military spending customarily becomes the chief method for the state to encourage formation of the new technological paradigm.

Unfortunately, Russia missed the historic opportunity to put forward at the G20 leaders’ meeting in St. Petersburg in September 2013 a plan for broad international cooperation in the joint development and deployment of key establishment areas of the new technological paradigm that would have become a peaceful alternative to the arms race as a mechanism stimulating innovation activity. The initiative to launch an international program to protect the Earth from space threats proposed by the Scientific Council of the Russian Academy of Sciences on the integrated problems of Eurasian economic integration, modernization, competitiveness and sustainable development[33] was not taken in by the officials who were preparing the G20 meeting in St. Petersburg. They preferred to follow the U.S.-proposed policy of talking round the key problems of the global crisis, concentrating the attention of the world’s leading countries on the secondary issues of increasing the sustainability of the world monetary and financial system operating for their benefit. Meanwhile, the U.S. itself was laying in Ukraine the groundwork for launching a new world war based on new technologies, trying to retain their leadership within the inertial scenario of the global crisis.

The liberal ideology that dominates the ruling groups of the U.S. and its NATO allies leaves no other grounds for the state to expand intervention in the economy, other than its defense needs. And so, facing the need to use government demand in order to stimulate growth of the new technological paradigm, the leading business groups resort to escalating military and political tension as the main way to increase public procurement of advanced machinery. It is from this perspective that the reasons for Washington’s whipping up the war in Ukraine should be considered, which is not the goal, but a tool for implementing the global mission of preserving the predominant U.S. influence in the world.

Along with the structural crisis of the world economy brought about by the change in the dominant technological paradigms, at present there is a transition to a new global economic paradigm associated with a change in the centennial cycles of capital accumulation, which further aggravates the risks of unleashing a world war[34]. It was shown above that the previous transition from the colonial empires of European countries to the U.S. global corporations as the key world economy organization form occurred through unleashing of two " hot" and the third " cold" world wars, the outcome of which was always accompanied by cardinal changes in the world political order. As a result of the First World War, the monarchical order collapsed that had held back the national capital expansion. The Second World War resulted in collapse of colonial empires that had restrained the international movement of capital. With the breakup of the USSR as a result of the Third " Cold" World War, free floating of capital spread across the entire planet.

But history does not end here. Contrary to Fukuyama’s popular opinion about the end of history[35], the U.S. hegemony is undermined by internal contradictions irresolvable within the framework of the existing system of capital reproduction institutions. Theoretically, we can assume that they will continue to be resolved through inflow of capital from the outside. The U.S. may keep unleashing new wars in order to write off its debts and misappropriate somebody else’s assets. But the growth center of the world economy has already moved to East and South Asia. Its expanded reproduction is ensured by the powerful institutional systems of communist China and democratic India that reliably protect their national economies from being taken over by the yesterday’s colonialists.

Unlike the U.S. institutional system targeted at servicing the interests of the financial oligarchy, parasitizing on issuance of the dollar as the world currency, the institutional systems of China, India, Japan, Korea, Vietnam, Malaysia, Iran and other countries of the new development center emerging before our eyes are oriented toward ensuring public interests of socio-economic development. They are aimed at harmonizing the interests of various social groups, as well as building partnership relations between business and the state for the sake of achieving socially significant goals.

The development of mankind requires new forms of organizing the global economy that would ensure a sustainable development and parrying of planetary threats, including environmental and space threats. In the context of liberal globalization arranged to serve the interests of transnational corporations, mostly the Anglo-American ones, these challenges to the existence of mankind remain unanswered. Moreover, the over-concentration of capital and global influence in the hands of several hundred families, given the absence of democratic control mechanisms, creates the threat of emergence of a global dictatorship that would secure domination of the world oligarchy by oppressing all mankind. This aggravates the risks of global power abuse, fraught with destruction of entire nations and catastrophes of a planetary scale. The objective necessity of curbing the global oligarchy and ordering the movement of world capital is achieved in the East Asian model of the modern economy organization. With the rise of China, India and Vietnam following Japan and Korea, the outline of transition from the Anglo-American to the Asian world economic paradigm is increasingly apparent, showing a completely different system of institutions conforming to the interests of a stable and harmonious development of mankind, which opens the way for a new centennial cycle of capital accumulation.

Expansion of the new center of global economic development sets a limit to reproduction of institutions of the current world economic paradigm, targeted at ensuring the interests of the U.S. capital. It would be naï ve to assume that the financial oligarchy occupying the central position would voluntarily abandon its global domination. It is in order to preserve this domination that it unleashes a world war, forcing the U.S. military and political machine to destroy the segments of its economic periphery that are not controlled by it.

In light of the global changes described above, it is clear that the struggle for world leadership in the economy is unfolding between the U.S. and China, in which the U.S., in order to preserve its dominance, implement the usual scenario of unleashing a world war in Europe, trying once again to enhance its standing at the expense of the Old World. To do this, they use the old British " divide and rule" principle, resurrecting the subconscious Russophobia of the political elites of European countries and betting on the Drang nach Osten so traditional for them. At the same time, following Bismarck’s precepts and Brzezinski’s advice, they use Ukraine as the main split-off line, counting on the one hand, on the weakening and aggressive reaction of Russia, and on the other hand, on the consolidation of European states in their traditional proclivity for the colonization of Ukrainian lands. The retention of control over Europe and Russia could give the U.S. the geopolitical and geoeconomic strength margin necessary to maintain its global dominance in competition with China. This is what the U.S. geopolitical strategy is aimed at.

 

The U.S. strategy

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