The West has entered the epicentre of ideological, political and socio-economic crisis

MOSCOW, 27 Dec 2021, RUSSTRAT Institute.

 

The ever-accelerating flow of information is intimidating and distracting from the emerging global trends that will shape the next decade. Civilisational transformations used to take centuries, but in the context of the information society, they occur in the lifetime of one generation. Thus, global trends are being formed right before our eyes.

The current capitalist system exhausted its extensive growth, absorbing the last non-capitalist markets in the 1990s, with the collapse of the USSR. After that, capitalism became truly global and incapable of further development. There were many theories about the end of capitalism, long before this moment, but in the early 2000s, only narrow specialists spoke about the limit of the development of capitalism.

However, later publications on this topic were published in the central media. For example, in 2018, in the birthplace of Capital in the UK, The Guardian published an article entitled “People want homes, jobs, a future: no wonder they distrust capitalism now”. In the same year, a group of scientists commissioned by the United Nations concluded that capitalism as everyone knows it no longer exists. The cause of “death” is the rapid transition to a completely new global economy, caused by predatory, non-renewable consumption of the planet’s resources and the transition to less economical energy sources.

In August 2019, French President Emmanuel Macron spoke about “capitalism gone mad”. He called for a return to a “social market economy where everyone finds their share”, rather than a system that sees “the capture of wealth by a few”.

Two months earlier, Russian President Vladimir Putin said in an interview with the Financial Times newspaper that the liberal model has outlived its usefulness and liberals “simply cannot dictate anything anymore, as they have tried to do over the past decades.”

Already in 2021, the Russian president said at a meeting of the Valdai Club: “Everyone says that the existing model of capitalism, and this is now the basis of the social structure in the vast majority of countries, has exhausted itself. Within its framework, there is no way out of the tangle of increasingly complicated contradictions”. “We will need to rethink how our life is organised, how housing is arranged, how cities are developing or should develop. What are the priorities of economic development of entire states?”

However, the concept of how our world should be was developed long ago in the West. It was formed in the early 70s from the theory of “Limits to Growth” and the environmental movement aimed at containing the USSR.

With the Limits to Growth concept, through the intimidation of limited resources, excessive fertility and excessive consumption, Western elites wanted to explain to their population why Western society should stop growing. In fact, the elites stated their lack of vision for the development of the capitalist system and wanted to freeze the situation in order to eliminate the threat to their elite status.

However, after the saving “Reaganomics” – pumping up consumer demand through lending and winning the Cold War, this concept was forgotten. Western elites revelled in their position. This is easily understood from the 1992 paper by Francis Fukuyama “The End of History“, in which he writes that liberal democracy is the final form of government, so there will be no ideological confrontations, global revolutions and wars.

“The End of History” contradicts natural processes, such as entropy, which extend to social systems. However, the very fact that Fukuyama’s work became mainstream at that time speaks to a conceptual delusion of Western elites. They really believed in their invulnerability and stopped limiting their “appetites”.

Look at the leadership of the United States: President Joe Biden is 79 years old, the first person of the Democratic Party in Congress, Nancy Pelosi is 81 years old, the head of the Democrats in the Senate, Chuck Schumer is 71 years old. Against this background, the average age of members of the US Supreme Court being 67 does not look so big.

Thus, it is no exaggeration to say that the United States is run by real old people, they all had the opportunity to leave their posts, but they did not do this, but used their influence to enrich themselves and their relatives. The success story of artist Hunter Biden here becomes a reference example.

During the reign of this elite, the United States has stagnated, which can be easily traced not only by the decline in the US share in world production, but also by the development of military capabilities and technologies. To date, the United States is lagging behind Russia and China in the development of hypersonic missiles, which offset the former importance of US aircraft carrier strike groups. In the development of conventional weapons technologies, the United States has generally caught up with even countries such as Turkey and Iran.

With the United States losing its former hegemonic power, the world was slowly fragmenting, China was filling the economic vacuum, and Turkey, with its military adventures on the borders with its neighbours, and Iran, with its infiltration of military groups into Iraq, would be a good example. The coronavirus pandemic in 2020 only accelerated the process of disintegration of the former world system by disrupting logistics chains.

If the situation develops according to the worst-case scenario, then the statement of US Joint Chiefs of Staff Chief Mark Milley on shaping a tripolar world – the United States-Russia-China – still looks like an ideal option. Due to the fact that with the further collapse of the global system of division of labour, individual countries can degrade very quickly and irrevocably lose technological competencies, as we have already seen in the example of post-Maidan Ukraine. In the event that one of the declared three does not have time to make up for the befallen technological chains, they will soon slip to the “second rung”.

In addition, the loss of the ability to project US military power in the role of “world policeman”, which many have become accustomed to after the collapse of the USSR, has geopolitical consequences, as we have clearly seen when American troops left Afghanistan. In the future, this may result in the complete collapse of the “Yalta Peace” system established after World War II, which may lead to the unfreezing of local conflicts stopped under the auspices of the UN, since the guarantor parties will not be able to enforce the old rules due to a lack of resources.

Therefore, it is quite expected that with the advent of Joe Biden, the old Western elites decided to revive the former concept of world development only by changing the environmental signboard to a climate one, emphasising its globality. However, just as in the 90s, Western elites do not adequately assess the situation, as can be seen from the results that their “think tanks” issue.

So, for example, shortly before the 26th Conference of the Parties to the UN Framework Convention on Climate Change, the well-known Foreign Affairs magazine published an article entitled “The International Order Isn’t Ready for the Climate Crisis“, where Stuart Patrick, a senior global governance researcher and director of the International Institutions and Global Governance Program, calls on countries to stop fruitless negotiations at the UN and unite under US global governance – “planetary policy” – for the survival of the biosphere as a central goal of national and international security.

Stewart writes that global trade rules need to be reformed so that countries committed to decarbonisation can discriminate against countries that insist on doing business as usual, such as Russia and Turkey. The concept is simple and unpretentious, which is why it is surprising that such a text could be allowed to be published at all.

American intellectuals still do not realise that the time of the United States as a global centre of unification has already passed. In the US itself, Joe Biden could not overcome the split in his own party over the allocation of funds for “green energy” before he went on a European tour. Naturally, at the conference in Glasgow, Joe Biden could only complain about the absence of the leaders of Russia and China, without them it was impossible to make fundamental decisions, of course.

The United States has already demonstrated the loss of its former coercive power due to the failed withdrawal from Afghanistan, and because of the scandalously created AUKUS alliance, it has shown that it is ready to openly ignore the interests of its close allies in the international arena. The results of the conference in Glasgow only recorded in writing the loss of the authority of the United States and the ability to determine the trajectory of the world community.

It should be recalled that the representative of the British crown Prince Charles before the conference in Glasgow said that it was “the last chance” because “the future of humanity and nature herself are at stake, it is surely time to set aside our differences and grasp this unique opportunity to launch a substantial green recovery by putting the global economy on a confident, sustainable trajectory and, thus, save our planet”.

Only in Glasgow was the last chance not for the planet, but for the Western elites to reset the world economy under their “green standards”. Shortly before this conference, Bank of America published a study stating that to achieve carbon neutrality in the world over the next 30 years, it will take 5 trillion dollars of investment annually – that’s $150 trillion.

Such injections will definitely lead to additional inflation – 3% per year. In addition, about 5% – roughly $2.3 trillion of the value of the global stock market – could be wiped out by a climate policy reassessment (ESG). Already during the conference, US Treasury Secretary Janet Yellen announced the same figures, but without negative consequences, explaining that “Climate change is one of the greatest economic opportunities of our time”.

The point is not even that in Glasgow the developed countries of the West were unable to persuade the developing countries to reduce their emissions, UN Secretary-General Antonio Guterres expressed disappointment about the lack of trust, but that the conference was held in the heat of the energy crisis in Europe. In the EU, to reduce carbon emissions, a “Green Deal” was adopted, which was largely declarative in nature and was supposed to be translated into concrete legislation after the conference in Glasgow, but now the situation is generally hanging in the air.

Ignoring the provisions of the “Green Deal” in Europe is already becoming commonplace. The EU Court of Justice has ordered Poland to pay €500,000 daily until coal production stops at the Turów mine. But in the face of the energy crisis, even Germany is now using coal-fired power plants intensively. According to experts, in 2021, German coal imports will amount to about 39 million tons.

For comparison, in 2020, as reported by Reuters, Berlin bought 31.8 million tons. Thus, it will not be possible to fulfil the conditions of the “Green Deal” and reduce carbon emissions by at least 55% (from 1990 figures) by 2030, since in 2021 there will be more emissions than in 2020.

In addition, the criteria for “green energy” in the EU have not yet been finalised. Germany opposes the inclusion of nuclear generation in this concept, while France considers nuclear power plants as a tool for achieving carbon neutrality and suggests Poland will build 6 power units with a total capacity of 6-9 GW.

The reason for European countries to forget the “green deal” is quite simple: no government wants social unrest, everyone remembers the example of France, where the “yellow vests” riots began due to rising diesel fuel prices. Many governments have directly subsidised gas and electricity prices.

In the context of a spiralling dollar inflation, and therefore global inflation, it will be difficult to force citizens to pay extra for “green energy”, which is more expensive than traditional energy. The Swiss Credit Suisse has already calculated how the standard of living of the average European will change in order to comply with the norm of carbon emissions in accordance with the Paris agreement – it will fall sharply.

The rise in gasoline prices in the United States is very clearly hitting the approval rating of Joe Biden. In addition, food banks in the United States that distribute food to those in need are already experiencing difficulties with certain types of food, ABC News reports.

Another typical example of the current reality is the “Dollar Tree” network of American stores where all goods were sold for $1, the network rose prices by 25%, to $1.25 – this may be a delayed price increase, but real inflation in the United States is definitely already double-digit. In such circumstances, it is better for politicians not to mention the mandatory costs of “green energy” for the population at all if they want to be re-elected.

An increase in social tension will be a general trend in the world, as with sharp inflation, the old rule “rich get richer, poor get poorer” applies. When the coronavirus pandemic was only gaining momentum in April 2020, the Financial Times wrote in its article “Virus lays bare the frailty of the social contract” that governments would have to accept a more active role in the economy.

“Redistribution will once again be on the agenda. Policies that until recently were seen as eccentric, in the form of taxes on wealth and basic unconditional income, will be applied,” the publication wrote.

At the same time, the French Minister of Public Action and Accounts, Gerald Darmanin, said: “In a world in crisis, the distribution of wealth is one of the most important issues. The interaction of capital and labour is the solution to respond to the newly emerging class struggle.”

Protests against anti-coronavirus legislation have already swept through almost all Western countries and in some places turned into mass riots. If to add to this the general decline in income of the population, and not just the middle class, which was pressured by periodic lockdowns, it is not difficult to imagine the severity of the consequences.

In such circumstances, the current liberal ideology, where one of the pillars is the climate agenda, will sharply lose its relevance, and the ideas of socialism, which have been growing strongly recently in the West, will gain popularity.

The Communist Manifesto, one of the main program documents of scientific communism, written by Karl Marx and Friedrich Engels, was included in the list of books that are most actively studied in higher education institutions in the United States, the Open Syllabus Project website, which is a full-scale database of university curricula around the world, reported back in 2016.

Among the breakthroughs of the socialists, the victory of the Socialist Workers’ Party in Spain in 2019 can be noted. The Bundestag election held in October 2021 showed the victory of the Socialists in Germany. However, these are only harbingers of future changes – if people do not find social justice, if their living standards fall, they will become radicalised.

In the future, this may lead to the reign of nationalists who will offer tempting, quick and simple solutions to long-overdue issues. It will be easier for nationalists to introduce totalitarian methods of governance to suppress dissent and force people to abandon their former standard of living.

We must admit that the elements of totalitarianism can be seen already now, the freedom of action of citizens during the pandemic is already limited and this is clearly not the limit. In a post-industrial society, for elites who cannot meet the conditions of the old “social contract” on the growth of the population’s welfare, the main thing will not even be the ownership of material objects, but direct control and management of people’s behaviour, since the old management methods will no longer work.

Musk’s Starlink global satellite system for broadband Internet and Zuckerberg’s Metaverse are on the way. Even in those Western countries where the standard of living will inevitably fall to previously unacceptable levels, the control of citizens using these and other digital tools will continue. Therefore, the 1980s cyberpunk motto “high tech low life” will be quite relevant.

As Forbes points out, by 2025, the global volume of data will grow 10-fold and reach 163 zettabytes, and various expert estimates in the Nature journal and scientific studies conducted in the summer of 2021 show that the electricity needs for data storage and processing centres will grow at least 2-fold by 2030 compared to 2016. The extreme forecast shows an increase in central banks’ electricity consumption to 8% of global consumption, from the current 1.3%. Thus, the growth of electricity consumption in the world of the digital future will be inevitable.

Further, those countries that maintain internal stability – pass through the “failed state test” and find a “new normality” based on their specific resource stability – will search for a post-capitalist economic and political formation. The rational direction of the search is a fairer redistribution of wealth, while maintaining a balance between expanded social guarantees, stability and economic development opportunities.

However, even the country that finds this path first is not at all sure that it will be able to make a leap into a new technological order. Depending on the scale and depth of the current economic crisis that has disrupted production chains, a new form of globalisation may be required to transition to a new technological order. All this will take not only a certain period of time, but will also require a new balance in international relations, but it goes far beyond the decade taken for forecasting.

Conclusions.

1. The current model of the world system, the foundations of which were laid in the “Yalta Peace” after the Second World War, is definitively cracking. The United States, which even after the victory in the Cold War pretended to adhere to the established rules and the role of the UN in international relations, is no longer able to maintain the former balance of power and remove the former burden of responsibility.

2. The final collapse of the “Yalta Peace” may lead to the unfreezing of local conflicts stopped under the auspices of the UN, since the guarantor parties will not be able to enforce the old rules due to lack of resources.

3. The post-Cold War Western community is no longer a single monolith. In addition, the United States, realising this, is breaking its former unity by creating the AUKUS alliance.

4. Western elites are unable to offer the world a new economic model of development. Instead, they propose the old concept of “Limits to Growth” with the addition of a climate agenda, with the hope of resetting the global economy with “green standards”. All of this for the sake of freezing their current position and preserving their elite status. However, as the Glasgow Climate Conference has shown, Western elites are clearly overestimating their capabilities in this regard.

5. If the situation develops according to the worst-case scenario, then the formation of a tripolar world – the United States-Russia-China – will look like an ideal option. Due to the fact that with the further collapse of the global system of division of labour, individual countries can degrade very quickly and irrevocably lose technological competencies, as we have already seen in the example of post-Maidan Ukraine. In the event that one of the declared three does not have time to make up for the befallen technological chains, they will soon slip to the “second rung”.

6. In the context of the coronavirus pandemic, spiralling inflation, as well as the energy crisis in Europe, Western elites cannot even force their own population to pay extra for “green energy”, because under such conditions they will not be able to be re-elected within the framework of democratic procedures. Therefore, in the EU, countries are already openly violating the agreements of the “Green Deal”.

7. With inflation accelerating, rising social tensions in the world are inevitable, and mass protests against coronavirus restrictions are just the beginning. In the face of falling living standards and the fiasco of the “climate agenda”, the liberal ideology will decline and the ideas of socialism will be revived.

8. In the event of increased crisis phenomena, the public will become radicalised and reach out to the nationalists, who will offer quick and simple solutions to the urgent problems.

9. In a post-industrial society, for elites who cannot meet the conditions of the old “social contract” on the growth of the population’s welfare, the main thing will not even be the ownership of material objects, but direct control and management of people’s behaviour, since the old management methods will no longer work.

10. The country that is the first to find the optimal variant of the post-capitalist economic and political formation will not necessarily become the founder of a new technological order, since, depending on the scale and depth of the economic crisis that has occurred, a new form of globalisation may be required for the transition to a new technological order.

Institute for International Political and Economic Strategies – RUSSTRAT

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