The Hypocrisy of NATO's Illegal War On Iran - Part 14

The conflicts arise where one bloc, and its regulatory regime butts up against another, the example of the border in Ireland, being a minor, but recent and local example. The same applies with the way the EU butts up against the developing Eurasian bloc. The petty-bourgeois moralists, again, try to portray these conflicts as being about peoples seeking national self-determination, or seeking to be part of a modern bourgeois-democracy, but, that is never the real basis of such conflicts, which are always driven by the interests of capital, by the interests of the bourgeois ruling-class, and its state. On the periphery of the large economic blocs, those interests are always less clearly determined, because, the economies on that periphery, also, have historically and geographically determined trading relations with other economies outside the bloc. The relation between Britain and the US, as identified by DeGaulle, is an example of that.

Where the economies on the periphery are weak, and the pull of the economic bloc they seek to join is strong, the dynamic towards centralisation is obvious. It is an obvious advantage of the EU, particularly seen, after the fall of Stalinism in Central and Eastern Europe, which brought about the rapid expansion of the EU in the 90's, and early 2000's. But, as I have set out, elsewhere, the further East you go, the weaker this dynamic operates. The more a rising Chinese imperialism drives forward a burgeoning Eurasian bloc, encompassing Russia, and large parts of Central Asia, the more the existing trading relations and draw towards the East asserts itself. It is being played out in Ukraine, Georgia and elsewhere, as well, as in Hungary and the Balkans. But, it is also playing out in the Middle-East and North Africa.

As Trotsky noted, in the age of imperialism, the process of combined and uneven development within the global economy is massively accelerated. Huge reserves of loanable-money capital slosh around financial markets, which can be used to finance real capital investment/accumulation of industrial capital, as well as being diverted into financial speculation. In Capital III, Marx and Engels describe the way huge reservoirs of loanable money-capital, in Britain, were used in these various ways. British capital, for example, was used by British companies, in India and elsewhere, to develop industrial capital. The capital took the form either of money-capital used for direct investment, or of actual capital equipment. In addition, British loanable-money-capital was sent overseas to be loaned to foreign capitals, and states, who then used it to accumulate their own industrial capital.

In the first instance, the British company uses the money-capital to accumulate industrial capital, and so, obtains profits from its exploitation of the Indian or other labour it employs. It might produce, steel or coal and so on, as well as locomotives. The profits, in whole or in part might return to Britain. In the second instance, British money-capital may be loaned to an Indian company, or the Indian government, who use it to accumulate industrial capital. As part of that, they make profits on their operation, and it is only the interest on the loan that returns to Britain. But, the Indian company or government, might, also, use the money to buy British locomotives, to be used on their own railroads. A large part of development aid, and loans to governments has been used, in this way, to provide markets for producer goods from developed economies.

But, Marx and Engels also describe the way, notably in 1847, even as a huge economic expansion was underway, and masses of profits were produced, and poured into real capital investment, there was also, a huge financial bubble created on stock markets. It centred around Railway shares, much as, in similar conditions, in 2000, there was the huge financial bubble created around technology shares. In both cases, a large rise in profits, and the rate of profit, driven by a technological revolution, caused interest rates to fall, and drive asset prices into a bubble, which bursts as interest rates rise. In both cases, however, this financial crisis is not fundamentally, an economic crisis, i.e. it is not a result of a crisis of overproduction of capital, or of commodities.

In 1847, the opposite was true. There were huge profits, not an overproduction of capital, which is a consequence of a sharp drop in profits, as capital is overproduced relative to labour supply. Rather than an overproduction of commodities, the crisis was sparked by crop failures, which meant that food had to be imported, and as a result of the misguided banking regulation, introduced by the 1844 Bank Act, saw the outflow of gold to pay for it forcing the Bank of England to curtail the currency supply, leading to a credit crunch, and sharply rising interest rates. As soon, as that error was corrected, the crisis ended, and the real capital accumulation, and expansion of the railway network, proceeded apace, once more.

A similar thing applies to the financial crash of 2000. There is a sharp rise in profits and the rate of profit, from the 1980's onwards, generated by the technological revolution created by the microchip. The huge rise in the supply of loanable money-capital causes interest rates to fall, and asset prices to rise, creating a financial bubble that grows ever larger in the 1990's, marked in the astronomical rise in stock markets, but also in property and bond markets. It was again a rise in interest rates that sparked a crash in those asset prices, but, as with railways, in the 19th century, once the effects of the financial crash had dissipated, the accumulation of industrial capital, and expansion of the global telecommunications networks continued apace, at least until it was interrupted by the global financial crash of 2008.

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