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Title: Soros and China: the Vocabulary of Neoliberal Diplomacy in Today’s New Cold War
Source: [None]
URL Source: https://www.unz.com/mhudson/soros-a ... lomacy-in-todays-new-cold-war/
Published: Sep 15, 2021
Author: Michael Hudson
Post Date: 2021-09-15 09:22:14 by Ada
Keywords: None
Views: 11

Mr. Soros has thrown a public sissy fit over the fact that he can’t make the kind of easy money off China that he was able to make when the Soviet Union was carved up and privatized. On September 7, 2021, in his second mainstream editorial in a week, George Soros expressed his horror at the recommendation by BlackRock, the world’s largest asset manager, that financial managers should triple their investment in China. Claiming that such investment would imperil U.S. national security by helping China, Mr. Soros stepped up his advocacy of U.S. financial and trade sanctions.

China’s policy of shaping markets to promote overall prosperity, instead of letting the economic surplus be concentrated in the hands of corporate and foreign investors, is an existential threat to America’s neoliberal priorities, he spells out. President Xi’s “Common Prosperity” program “seeks to reduce inequality by distributing the wealth of the rich to the general population. That does not augur well for foreign investors.”[1] To neoliberals, that is heresy.

Criticizing China’s “abrupt cancellation of a new issue by Alibaba’s Ant group in November 2020,” and “banishment of U.S.-financed tutoring companies from China,” Mr. Soros singles out Blackstone’s co-founder Stephen Schwarzman (Note that Blackstone under Schwartzman is not to be confused with BlackRock under Larry Fink) and former Goldman Sachs President John L. Thornton for seeking to make financial returns for their investors instead of treating China as an enemy state and looming Cold War adversary:

The BlackRock initiative imperils the national security interests of the U.S. and other democracies because the money invested in China will help prop up President Xi’s regime … Congress should pass legislation empowering the Securities and Exchange Commission to limit the flow of funds to China. The effort ought to enjoy bipartisan support.

The New York Times published a prominent article defining the “Biden Doctrine” as seeing “China as America’s existential competitor; Russia as a disrupter; Iran and North Korea as nuclear proliferators, cyberthreats as ever-evolving and terrorism as spreading far beyond Afghanistan.” Against these threats, the article depicts U.S. strategy as representing “democracy,” the euphemism for countries with minimal governments leaving economic planning to Wall Street financial managers, and infrastructure in the hands of private investors, not provided at subsidized prices. Nations restrict monopolies and related rent-seeking are accused of being autocratic.

The problem, of course, is that just as the United States, Germany and other nations grew into industrial powers in the 19th and 20th century by government-sponsored infrastructure, progressive taxation, and anti-monopoly legislation, the post-1980 rejection of these policies has led them into economic stagnation for the 99 Percent burdened by debt deflation and rising rentier overhead paid to the Finance, Insurance and Real Estate (FIRE) sectors. China is thriving by following precisely the policies by which the former leading industrial nations grew rich before suffering from the neoliberal financialization disease. This contrast prompts the article’s thrust, summarized in its summary of what it hopes will become a Congressionally supported Biden Doctrine of escalating a New Cold War against non-neoliberalized economies, juxtaposing U.S.-sponsored liberal-democratic imperialism against foreign socialism:

Last month, Mr. Blinken warned that China and Russia were ‘making the argument in public and in private that the United States is in decline – so it’s better to cast your lot with their authoritarian visions for the world than with our democratic one.[2]

Mr. Soros had seen the ending of the Cold War open the path for him and other foreign investors to use “shock therapy” to provide easy pickings in Russia, followed by the much broader Asian Crisis of 1997 as a grab-bag opportunity to buy up the most lucrative rent-yielding assets. He is upset that President Xi is not emulating Boris Yeltsin and letting a client kleptocracy emerge in China to carve up Russia’s economy – which made Russia’s stock market the world’s darling for a few years, 1995-97.

Right after the Asia Crisis, Bill Clinton’s administration admitted China to the World Trade Organization, giving U.S. investors and importers access to low-priced labor able to undersell U.S. industrial labor. That helped stop U.S. wage gains, while China used foreign investment as a means of upgrading its technology and labor to become economically self-reliant. It has not let its monetary system or social organization become financially dependent on “markets” functioning as vehicles for the U.S. control that Mr. Soros hoped would occur when he began investing in China.

China recognized from the beginning that its insistence on maintaining control of its economy – steering it to promote overall prosperity, not to enrich a client oligarchy fronting for a foreign investor class – would create political opposition from U.S. Cold War ideologues. China therefore sought allies from Wall Street, offering profit-making opportunities for Goldman Sachs and other investors whose self-interest has indeed led them to oppose anti-China policies.

But China’s success has creating so many billionaires that it is now moving to curtail exorbitant wealth. That policy has sharply cut prices for the leading Chinese stocks, prompting Mr. Soros to warn U.S. investors to bail out. His hope is that this will bring China to heel and reverse its policy of raising living standards at the expense of sending its economic gains to U.S. and other foreign investors.

The reality is that China does not need U.S. or other foreign money to develop. The Peoples’ Bank of China can create all the money that the domestic economy needs, while its export trade already is flooding it with dollars and pushing up its exchange rate.

John McCain characterized Russia as a gas station with atom bombs (neglecting to acknowledge that it is now the world’s largest grain exporter, no longer dependent on the West for its food supply – thanks largely to U.S.-sponsored trade sanctions). The corollary image is the United States as a financialized and monopolized economy with atom bombs and cyber threats, in danger of becoming a failed state like the old Soviet Union but threatening to bring the entire world economy down with it if other countries do not subsidize its debt-ridden New Cold War economy.

Presenting itself as the world’s leading democracy despite its financial oligarchy at home and its support of client oligarchies abroad, the United States has consolidated financial power in the wake of the 2008 junk-mortgage and bank-fraud.

Policy making and resource allocation have passed out of the hands of meaningful electoral politics into those of the Finance, Insurance and Real Estate (FIRE) sector, and what Ray McGovern has called MICIMATT the Military-Industrial-Congressional-Intelligence-Media-Academic-Think Tank complex, including the major foundations and NGOs. These institutions seek to concentrate income and wealth in the hands of a FIRE-sector oligarchy just as the Roman Senate blocked reform with veto power over popular legislation, and Europe’s upper houses of parliament such as Britain’s House of Lords used similar chokehold power to resist government control in the public interest.

The rise of U.S.-sponsored neoliberalism means that the 19th-century’s fight to free markets from predatory finance sponsoring rentier parasitism and has failed. This failure is celebrated as a victory for the rule of law, democracy, property rights and even free markets over the authority of public power to regulate private wealth-seeking. Integrating the global economy along unipolar lines enabling U.S. financial interests and those of allied NATO economies to appropriate the most profitable and highest rent-yielding assets of foreign countries is idealized as the natural evolution of civilization, not as the road to neoliberal serfdom and debt peonage embodied in what U.S. officials call the Rule of Law.

What is the Rule of Law?

The United States refuses to join the World Court, or any international organization in which it does not have veto power. And it simply withdraws from international treaties and agreements that it has signed if its vested interests believe that these no longer serve their interests. This always has been U.S. policy, from the many treaties with Native American tribes broken by Andrew Jackson and his successors down through the U.S.-Soviet agreements ending the Cold War in 1991 broken by Bill Clinton to the treaty removing sanctions on Iran broken by Donald Trump. This policy has introduced a new term into the world’s diplomatic vocabulary to describe U.S. diplomacy: non-agreement-capable.

The evangelistic neocon administration of George W. Bush , effectively run by his Vice President Dick Cheney, followed the principle that “We’re an empire now, and when we act, we create our own reality.”[3] To impose this reality on other countries, U.S. “intelligence” is selected, invented or censored to give the appearance of whatever reality is deemed to serve U.S. interests at any given moment of time. Past and present reality is redefined at will to provide a guide for action. Whatever U.S. diplomacy dictates is claimed to reflect the rule of law, giving the United States the right to definite what is legal and what is not when it imposes economic and military sanctions against countries that do not follow pro-American policies. The resulting dictates laying down the law are always wrapped in the rhetoric of free markets and democracy.

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