Why War?

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The economic and political failure of the US

A dual, contradictory and complementary political and economic process is underway: the state and (US) politics are forcefully asserting their sovereignty through war (including civil war) and genocide. While, at the same time, they exhibit their complete subordination to the new face that economic power has assumed since the dramatic financial crisis of 2008, promoting an unprecedented financialization, every bit as illusory and dangerous as that which produced the subprime mortgage crisis. The cause of the disaster that led us to war has become a new elixir to exit the crisis — a situation that can only be a harbinger of more catastrophes and more wars. An analysis of what is happening in the United States, the heart of capitalist power, is crucial because it is from its bosom, its economy and its power strategy, that all the crises and all the wars that have ravaged and, to this day, still ravage the world have started.

The crux of the problem lies in the failure of the US economic and political model that necessarily drives it to war, genocide, and internal civil war (for now only creeping, but which has already materialized a first time on Capitol Hill at the end of Donald Trump's presidency). The US economy should have declared bankruptcy long ago, if the rules that apply to other countries applied to it. At the end of April 2024, the total public debt — known as the Total Treasury Securities Outstanding, that is, the sum of the various bonds and government debt securities — was $34,617 billion. Twelve months earlier, that sum was 31,458 billion. In one year, the public debt increased by $3,160 billion, almost equal to the public debt of Germany, the world's fourth-largest economic power. Its exponential progress is now completely uncontrolled, with an increase of one trillion every hundred days. Today, we are already at one trillion every sixty days.

If there is one nation that lives off the backs of the entire world, it is the USA. The rest of the world pays its debts (the insane expenditures of the "American way of life" — from which, evidently, only a portion of Americans benefit — on its huge military apparatus) in two main ways. Through the dollar, the world’s most traded commodity, the US exerts seigniorage over the entire planet, because its national currency functions as the currency of international trade, allowing it to incur debt like no other country. After the 2008 crisis, the US found another way to pass along the costs of debt onto others through a reorganization of finance. Capital (mainly from allies and, among them, mainly Europe) is transferred to the US to pay the rising interest rates on debt, thanks to investment funds. After the financial crisis, a concentration of capital was established, thanks to fifteen years of quantitative easing (zero-cost liquidity) operated by central banks, resulting in a monopoly on a scale capitalism had never known before. With the political help of the Obama and Biden administrations, a very small group of US investment funds has assets (i.e., the collection and management of savings) of between $44 trillion and $46 trillion. To get an idea of what this monopolistic centralization means, one can compare it to the GDP of Italy — $2 trillion — or that of the entire European Union — $18 trillion. The "Big Three," as the three largest investment funds are called (Vanguard, Black Rock, State Street), constitute, in fact, a single entity, because the funds are cross-owned between each other and difficult to attribute.

The fortunes of this "hyper-monopoly" have been built upon the destruction of the welfare state. For pensions, health, schooling, and any other kind of social service, Americans are forced to take out insurance of all kinds. Now it is the Europeans’ turn, along with the rest of the Western world (but also of Milei's Latin America), to put themselves in the hands of the investment funds, at a pace dictated by the dismantling of social services (the indirect wages guaranteed by Welfare are transformed into burdens, costs and expenses that everyone must assume to ensure their own reproduction). The US has a dual interest in continuing and intensifying the worldwide dismantling of welfare: an economic interest, because it induces investment in securities funds (which in turn serve to buy Treasury bills, bonds and shares of US companies) and a political interest, because the privatization of services means individualism and financialization of the individual, who is transformed from a worker or citizen into a small financial operator (and not into an entrepreneur of himself, as the dominant ideology recites). Tax policies are also converging in the project of undoing the welfare state. Neither the rich nor businesses are made to pay taxes, and the progressivity of taxes is set at zero; therefore, there are no more resources for social spending and, as a result, there is an incentive to buy private policies that end up in investment funds. The plan to destroy everything that had been granted through two hundred years of struggle is, at last, being realized.

American savings are no longer enough to feed the annuity circuit, so investment funds are now assaulting European savings. For example, the $35 trillion that Enrico Letta would like to allocate to a large European investment fund would operate on the same principles: producing and distributing annuity, shaping the same huge class differences found in the US. The reason for Europe's rapid and unbelievable impoverishment is to be found in the economic strategy implemented by its US ally. The negative gap with the United States has increased from fifteen percent in 2002 to thirty percent today. The more Europe gets robbed, the more its political and media classes become Atlanticist and warmongering, supinely prone to those who are marginalizing them dramatically, pushing them to war with Russia (which, incidentally, they are not even able to sustain). The European states have substituted themselves for China and East Asia in buying US Treasury bonds and, continuing the demolition of the welfare state, are forcing people to take out insurance policies that end up in the accounts of investment funds. In this way, the euro is transformed into the dollar, thereby rescuing dollarization from the threat of the South's refusal to submit to the domination of the American currency.

This transfer of wealth also affects Latin America, where Milei is the vanguard of the new financialization that aims to privatize everything. Milei’s neo-fascism is a laboratory for adapting the American robbery techniques adopted in Europe, Japan, and Australia, even to weaker economies. It is not classical fascism, it is the new “libertarian” fascism of annuity and investment funds that Milei embodies, a poor ideological copy of the Silicon Valley fascism born out of his “innovative” enterprises. 

Biden's economic policy, which wants to repatriate industries that had been decentralized, further impoverishes the rest of the world and especially Europe, which sees companies implanted in its territory trying to cross the Atlantic. The enormous tax breaks this necessitates are financed with debt, as are the billions of dollars of bombs that the US ceaselessly sends to Ukraine and Israel, which means that, ironically, Europe is yet again bankrolling the very policy designed to reduce its productive capacity, just as it pays twice for war and genocide: once by buying US Treasury bonds and insurance policies that allow the US to go into debt, a second time by forcing it to build a war economy (accepted and accelerated by political classes bent on suicide).

As Kissinger said, "Being an enemy of the US may be dangerous, but being a friend of it is fatal." This enormous liquidity has enabled investment funds to buy, on average, twenty-two percent of the entire Standard & Poors list, which contains the top 500 companies listed on the New York Stock Exchange. The funds are already present in the most important European companies and banks (especially in Italy where they are being sold off at an accelerated pace) and their speculations practically decide the fate of the economy by directing the choices of “entrepreneurs.”

There were once those who raved about the autonomy of the cognitive proletariat, the independence of the new class composition. Nothing could be more false. Those who decide where, when, how, and with what labor-power to produce (waged, precarious, servile, enslaved, female, etc.) are, once again, those who hold the necessary capital, those who possess the liquidity and power to do so (today it is certainly the "Big Three"). It is certainly not the weakest proletariat of the last two centuries. Far from autonomy and independence, class reality is subordination, subjugation and submission, as never before in the history of capitalism. Being "living labor" is a disgrace, because it is always commanded labor, like that of my father and grandfather. Labor does not produce "the" world, but the "world of capital," which, until proven otherwise, is a very different thing because it is a world of shit. Living labor can win its autonomy and independence only through refusal, rupture, revolt, and revolution. Without it, its impotence is assured.

The internecine clash of US finance capital

In an article in Dynamo Press, Luca Celada asserts that Robert Reich once called him a "progressive" because he was a former minister in the Clinton government who, as a good Democrat, intensified financialization (and the consequent destruction of welfare) and entrenched abysmal class inequalities, laying a firm foundation for the 2008 disaster, the origin of the current wars.¹ The actions of Musk and Thiel, Silicon Valley entrepreneurs and allies of Trump, are often seen as the threat of a new monopoly; yet little consideration is given to the unprecedented centralization of power of the investment funds that have been “calling the shots” [fanno il bello e cattivo tempo] for fifteen years, with the active complicity of the Democrats who, together, create the conditions for the next financial catastrophe.

Perhaps not entirely coincidentally, "the entry into politics" of the silicon tycoons coincided with the first hints of more vigorous regulatory action by the Biden-Harris administration, including the first real antitrust lawsuits against giants such as Google, Amazon, and Apple filed by Federal Trade Commission Chairwoman Lina Khan (whose dissertation was on Amazon's monopoly) and the equally fierce Assistant Secretary of Justice Jonathan Kanter. It is perhaps unsurprising, then, that some “silicon barons” are banking on the candidate most likely to issue them a new blank check, or even appoint some of them to their own cabinet.

Kamala Harris is bound hand and foot to the will of the investment funds, as the major shareholders in all (and really all) of the enterprises that Celada mentions are precisely the funds. It is not easy to see how she could ever counter their monopoly, given that the salvation of the US and that of her party ("Democrats for Genocide") depends upon it. The justification for the blindness to "progressives" is to be found in Trump's neo-fascism. If he is elected, we will go from the frying pan to the fire; but, we must not forget that already with the election of Biden, we fell from the frying pan to the fire of war and genocide. We were assured that Nazi violence was a parenthesis, but the Democrats reminded us that genocide is, in reality, merely one among many tools by which capitalism has operated since its birth. American democracy is founded on genocide and slavery. Racism, segregation, and apartheid are among its structural components. Complicity with Israel has deep roots in the history of the "most political" of democracies, as Hannah Arendt put it.

Small monopolists like Musk have taken action because the big monopolies won’t let him breathe, but he and others like him remain completely subordinate to their logic. In reality, what we are seeing is an internal clash within American finance capital: small monopolists would like to represent the "animal spirits" of capitalism, harnessed, according to them, by the Democrats' alliance with the big investment funds. While they agitate for their futurist fascism (again, nothing really new if one thinks of historical fascism, where the futurism of speed, war, and machines harmonized smoothly with anti-proletarian and anti-Bolshevik violence), transhumanism, and a delirium even more oligarchic and racist than that of fund finance, these small monopolists are in fact in agreement with the big ones on the crucial question: private property, i.e., the alpha and omega of capital strategy. Their common agenda is to financialize everything, which means privatizing everything. Problems arise, however, over how to divide this huge pie. To understand the limits of the progressive analysis, we need to quickly delve into the inner workings of monopolistic financialization by investment funds after 2008. 

The subprime mortgage crisis was sectoral, and speculation was concentrated in real estate. These days, by contrast, finance is pervasive. From Obama to Biden, Democratic administrations have condoned the infiltration of investment funds throughout society, with the result that there is no sphere of life today that is not financialized.

Financialization of reproduction: there is a lot of talk about the centrality of reproduction in our movements, but it lags abysmally behind the action of the investment funds, the precondition for which was the destruction of welfare. The Democrats have abandoned all vague ambitions of a new welfare program, betting everything on the privatization of all social services. They have openly theorized it: the democratization of finance must result in the financialization of the middle class. The funds, facilitated in every way by the Democrats, would provide a secure financial investment, so that Americans who buy the securities they produce are forced to secure the income and services that labor no longer provides (that is, those who can afford to in the first place, given that the poor, single women, and the vast majority of working people cannot; in a recent survey, 44% of American households are unable to manage an unexpected expense of $1,000).

The middle class for Kamala Harris goes up to an income of $400,000,000 a year. This is a significant figure for understanding the social composition that the Democrats take as a reference. Labor and workers have completely disappeared from their horizon, as well as the "left" in general. The miracle of the multiplication of the loaves and fishes, replicated by finance and already failed in 2008, is now being proposed again as a solution to the “social question.” To say it again, this is a process of financialization of welfare, as bonds and policies are now intended to replace services provided by the state. One might also cite the Italian case: faced with the state's disinvestment from the territories devastated by the climate crisis, the Minister for Civil Defense revived the idea of compulsory flood insurance. Matteo Salvini intervened by saying that "the state can give directions, but we do not live in an ethical state where the state imposes, prohibits, or obliges action" and, instead, proposed a new law to oblige employees to invest part of their severance pay (TFR) in pension funds, in order to obtain, at the end of their careers, a supplementary pension. Obviously, he said this without understanding the relationship it has with US investment funds (whether out of naiveté or sheer idiocy) since, in reality, seventy percent would end up converted into dollars in the US.

Financialization turns businesses into financial agents. This also affects companies that produce real profits, lay off staff, and whose huge dividends are not invested, but largely distributed to shareholders or used to buy their own shares to grow their value and increase their capitalization (which has, by this point, little relation to what they actually produce and sell). This goes hand in hand with the financialization of prices: it is not the market (relations of supply and demand for goods) that sets prices, but the bets placed by traders (through derivatives) who have no relationship with either production or real trade. Prices are set by financialized firms that control the energy, food, commodities, pharmaceutical, etc., sectors from a position of absolute monopoly or oligopoly (the main shareholders of these firms are always large investment funds). The inflation that has erupted recently is the outcome of price speculation, and is in no way dependent on increased wages or social spending. The combination of these financializations that invest "life" (although the term is ambiguous) results in explosive differences in income, and of wealth above all, of which workers and the entire population who cannot themselves afford to buy stocks are the primary victims.

The failure of neoliberal governance and the war

The affirmation of monopoly enshrines the end of neoliberalism and market ideology, and therefore  is deserving of a few remarks. We speak of ideology with regard to competition, because the process of economic verticalization has continued unperturbed since at least the late 19th century. Indeed, it exploded precisely during neoliberalism.

Investment funds, as noted already, have today become essential to the centrality of American power, more than any other institution. At the same time, these funds need the government's fiscal policies (not taxing finance, while taxing labor), ordinances, and concessions, which were generously bestowed upon them by Obama (a Black president, but in perfect continuity with the white one that preceded him and the one that followed him) and, even more decisively, by Biden. A theoretical and political problem emerges here: finance, which should represent the most abstract mode of value and the perfectly fulfilled cosmopolitan form of capitalism is, in the West, commanded and managed by apparatuses that sport the US flag. American investment funds act in concert with US administrations, pursuing their interests at the expense of the entire world. Currency is in the same situation. There is no such thing as a supranational currency; currency is always national because it is closely tied, especially the dollar, to the policies decided by the state that issues it. It can be said that currency and finance represent the tendency to move outside the territorial limits of states and its inability to do so. The relationship between the US and investment funds organizes a global action that is favorable to a few Americans and its oligarchies.

The second observation concerns the reading of neoliberalism, which many still believed to be in force when, in fact, it is dead: killed by fascisms, wars, and genocide. The same end befell its illustrious predecessor, liberalism, which was supposed to avoid the minor inconveniences it caused (the two world wars and Nazism) and instead necessarily wound up reproducing. Much of this analysis is due to Michel Foucault's account of biopolitics, which has exerted a baleful influence on critical thought. Foucault reads neoliberalism as a theory of enterprise and its subjectification, a process in which we become "entrepreneurs of ourselves." He never mentions, even en passant, the credit, currency, and finance apparatuses on which capitalist strategy has been built since the late 1960s. The main instrument of the counter revolution is the "great indebtedness of the state, of households, of enterprises," as Paul Sweezy would say, and not production. Enterprise is an ordoliberal ideology and idea that belongs to the industrial West, the 1930s and the postwar period — a world that is decidedly dead. Ordoliberalism sees the economy as an instance that brings about the death of the "sovereign," as when finance brings to fruition large monopoly (the economic sovereign). But in the context of capitalism, the economic sovereign needs the political "sovereign" (the state) to constitute itself. The head of the sovereign has not been cut off from the economy, but merely doubled, making the centralization of the power of capital and the state an enormously successful strategy.

Foucault has, quite simply, misconstrued [confuso] an epoch, as have his pupils who have reproduced the master's blunders, e.g., Dardot and Laval above all. The market has never functioned as Foucault believed and as ordoliberals believed, that is, on the basis of competition. On the contrary, its truth is represented by the functioning of finance, which sets prices from a speculative monopoly that has nothing to do with the supply and demand of real goods (recently, the price of energy has increased tenfold, but without any relation to its real availability; the same is true of grain, etc.). Subjectification is not represented by the entrepreneur, but by the illusory transformation of individuals (not all, as we said) into financial agents. For finance, the "population" and the world are made up of creditors, debtors, and investors in securities, stocks, and bonds. The financialization of the middle class, pursued by the deal between the Democrats and the investment funds, is the last chimera destined to vanish into thin air in the next collapse.

The inevitable war of the US

Today, the process that was not even glimpsed by theorists of biopolitics has now reached its zenith. Growth in the West is exclusively financial (while it is real in the global South). Its production (money producing money, like the "pear tree producing pears," as Marx said) is a fiction, a fabrication of scrap paper which, however, engenders real effects. Investment funds drive up the prices of the securities of the companies whose shares they hold in order to collect dividends to be distributed to subscribers. This is not new wealth but only the appropriation, capture, and robbery of value that already exists, and is merely transferred from the rest of the world to the US — from a class point of view, one could say from labor to speculative capital. Were this "theft" of wealth produced in the rest of the world to stop, the whole system would collapse.

The real name for this process is annuity. Its circuit is guaranteed and secured by dollarization, which is why the US can never truly accept a multipolar world. It is necessarily forced into unilateralism, obliged to rob their allies because the global South is no longer willing to function as a colony (a role completely taken over by Europe, Japan, and Australia). The oligarchies that rule the West are the fruits of financialization and function exactly like the aristocracy of the ancien régime. Today, therefore, we need a new night of August 4, 1789, during which the privileges of the feudal aristocracy were abolished.

The United States finds itself in a cul-de-sac: it is forced to raise interest rates to attract capital from around the world, otherwise the financial system collapses; but the same rise in rates strangles the US economy. When it lowers them, as it has now for electoral reasons (during the election campaign, in fact, the Democrats were accused of stifling the economy), only speculators (first and foremost, investment funds) who bet on their evolution benefit. Just as the large amount of liquidity made available to the economy by central banks has never trickled down into real production, because it has stopped in the financial sector, this lowering of rates will also have no influence on the real economy but will only activate speculation within it. The US is incapable of getting out of the vicious circle of annuity, so war is the only solution. As early as 2008, it was clear that the US economy was based on the production and distribution of financial annuities. Hence the willingness to pursue and expand war, to continue to finance and legitimize genocide, to bring new fascisms to power everywhere. The near future will necessitate more of this, as confirmed by a document that surfaced in the US Congress in July of this year, entitled Commission on the National Defense Strategy, which states in no uncertain terms that the US must prepare for the "great war" against the Global South, at the center of which are Russia and China. In the coming years, every sector of society must be mobilized, modeled on what was done before and during World War II, in order to eviscerate the threat to its existence, which “are the most serious and the most challenging the nation has encountered since 1945.”²

The first goal, however, is to transform its industrial base (which no longer exists) into a wartime industry: 

The Commission finds that the U.S. defense industrial base (DIB) is unable to meet the equipment, technology, and munitions needs of the United States and its allies and partners. A protracted conflict, especially in multiple theaters, would require much greater capacity to produce, maintain, and replenish weapons and munitions. Addressing the shortfall will require increased investment, additional manufacturing and development capacity, joint and coproduction with allies, and additional flexibility in acquisition systems. It requires partnership with an industrial base that includes not just large, traditional defense manufacturers but also new entrants and a wide array of companies involved in sub-tier production, cybersecurity, and enabling services.3

The state and its administrations must be coordinated in the direction of what the authors call "integrated deterrence."⁴ Special attention must be given to manpower to retrain it for a war economy; this, after its dismantling by financialization and the subsequent dismantling of industry. The various departments of the state must coordinate in preparation for the war, including the State Department and the US Agency for International Development (USAID), economic departments (including the Treasury, Commerce, and the Small Business Administration), and those that support the development of an important portion of the stronger and better-prepared US workforce, such as the Department of Labor and Education. Just as it was in the Cold War, these departments and agencies must have a strategic focus on competition, now in particular with China.

In keeping with the precepts of rent and oligarchy, the large investments needed must be private so as to flood the monopolies with billions of dollars. There is clear talk of a bipartisan "call to arms" by Democrats and Republicans who must educate a public unaware of the mortal danger it is in and prepare it to bear the costs of a world war (the huge percentage of GDP invested in weapons during the Cold War is cited): 

The U.S. public are largely unaware of the dangers the United States faces or the costs (financial and otherwise) required to adequately prepare. They do not appreciate the strength of China and its partnerships or the ramifications to daily life if a conflict were to erupt. They are not anticipating disruptions to their power, water, or access to all the goods on which they rely. They have not internalized the costs of the United States losing its position as a world superpower. A bipartisan “call to arms” is urgently needed so that the United States can make the major changes and significant investments now rather than wait for the next Pearl Harbor or 9/11. The support and resolve of the American public are indispensable.5

As Ernst Jünger would have said, they are preparing for "total mobilization." However, they have one small problem, because the economy and wealth they have imposed is for the few, while the many have been impoverished, marginalized, precarized, and then blamed, as if they were to be held responsible for their condition. Now, they seem to realize that they need the many, that a "strong and prepared" workforce is needed to defend the nation and the national spirit — the economy and property of the very few. With a country as divided as ever, we can only wish the best of luck to the oligarchies promoting total mobilization for the war they want to fight against three-quarters of humanity and which they will as surely lose as they are losing in the Middle East and Eastern Europe. It is only a matter of time.

First published by Derive Approdi, October 1 2024.

Images: Maen Hammad