History ended in 1991. That, at least, was the myth put about by a certain triumphalist brand of neoliberal. The West had won the cold war. The communist beast had been slayed. And the looming twenty-first century would be an American one. From that point on, there would be just one globalised system in which states traded and played according to the values and rules of the USA and its western vassals. This was, if you will, the New World Order 1.0 – the new American century and the economic Great Moderation.
There were detractors of course. The late Immanuel Wallerstein pointed out that peak America happened in 1945 not 1991, while the late Chalmers Johnson argued that the true meaning of 1991 was that the USSR had merely collapsed first, and that the USA would surely follow suit – not least as the consequences of its – often violent – attempt to dictate the global rules came home to roost. Although broadly correct, the detractors tended to mistake inevitability for imminence, and were disappointed by the two decades of western, debt-based economic growth which followed. Indeed, even the unravelling – following the peak of conventional oil production in 2005 and the resulting banking and financial crash in 2008 – has also proceeded at a snail’s pace. Nevertheless, the 2008 crash and the ensuing depression spurred the western elites to re-imagine their New World Order.
The New, New World Order was the somewhat amorphous Fourth Industrial Great Green New Reset promoted by western oligarchs like Mr Gates and by the disciples and minions of real-life Bond villain Herr Schwab and his World Economic Forum. This was the fantasy of a highly technological economy powered entirely by the solar energy arriving on Earth moment by moment rather than by the millions of years of solar energy stored in the oil, gas and coal which still provide 85 percent of the energy that drives the global economy. And as with climate change itself, so long as it was all a long way in the future, and so long as the costs didn’t have to be paid up front, the majority of western populations could buy into the narrative.
I say “western,” because our inward-looking worldview, fuelled by a narrow and imperialistic media and an intellectually bankrupt political class, tended to gloss over the fact that the overwhelming majority of the world’s states never bought into our imagined New World Order 2.0. Indeed, and for good reason, the majority of the world’s people had learned to despise a western empire which has systematically syphoned the wealth from their countries while thwarting – often violently – any attempt on their part to develop governments that act in their national interests. Not that this, in and of itself, would have been a problem for the western states – the USA is still by far the biggest military spender on the planet, and is fully capable of bombing a small country back to the stone age.
Largely ignored by an arrogant western technocracy though, was the fact that immediately after the 2008 crash, the non-western major economies of the world – Brazil, Russia, India, China and others – began planning the eventual move away from the dollar currency and trading system which has dominated global finance since the end of the Second World War. It is this dollar system, remember, that as early as 1968, Jacques Rueff, economic advisor to De Gaulle, called an:
“Exorbitant privilege [to run a] deficit without tears, [to] lend without borrowing, and purchase without paying.”
So long as the world had to trade in US dollars – and woe betide any leader or country that tried an alternative – the people of the non-western economies had to provide America with the equivalent value of a dollar for every dollar of imports they needed. Between 1944 and 1971, this meant providing exports worth a thirty-fifth of an ounce of gold for every dollar of imports. Later, after the Nixon administration’s deal with the Saudi royal family, it meant whatever the going dollar value of oil happened to be. For the USA in contrast, the only cost in obtaining a dollar’s worth of imports was the cost of the paper and ink used to print new dollars – and in the current system merely the additional bytes on a central bank computer somewhere. The USA getting something for nothing from everyone else – including developed vassals like France, which is why Reuff was so annoyed – was the very essence of empire, syphoning the world’s wealth back to the motherland where its elites could enjoy lifestyles which would have made the Gods of Olympus jealous.
For an undeveloped or developing country though, the dollar system was, and is, far more punitive. Without tradable goods to exchange for dollars, the only way of funding imports – including of commodities and goods required for economic development – was to go to western investors or to US-backed institutions like the World Bank and the International Monetary Fund to borrow the dollars they needed. But in addition to wanting interest, these lenders have imposed stifling western, neoliberal austerity on these countries which, in practice, have worked to impoverish indigenous populations.
It should come as no surprise then, that the majority of the world’s population are fearful as well as sceptical about the various New World Orders that the western empire claims are universal when, in reality, only around twenty percent of the world’s countries have bought into them. Indeed, the majority of the world’s states have been looking for an alternative to the western empire’s version of a world order for decades.
For an increasingly tired and economically fading western empire, there were two geopolitical imperatives after 1991. The first was similar to Bismarck’s in 1891 – to prevent the empire from becoming a minority among the world’s Great Powers. Bismarck’s successors’ failure was the Germany ended up allied to the weakest Great Power – Austria – while Britain, France, and Russia drew closer into an alliance. Their twentieth century US equivalents made the same mistake by gradually alienating both China and Russia to the point that both, previously hostile, countries began to have more in common with each other than with the western empire.
Crucially, both China and Russia have developed a common interest in mutually supporting one another in any conflict with the western empire, whether economic or military – the western empire increasingly expanding its European borders eastward while simultaneously threatening a military clash with China over Taiwan. More importantly, and despite western perceptions to the contrary, there has been growing recognition that while the Eurasian (and African and Latin American) economies can get along just fine without the western empire, the same is not true in reverse. Central to the neoliberal turn within the western empire from the late 1970s, a large part of European and American manufacturing was offshored. At the same time, investment was pulled from commodities – including energy – leaving the western empire largely dependent upon the wider world for energy, commodities and part-finished components.
The theory – which is currently being tested to destruction – was that whoever controlled the world’s currency ruled the world. This is classic energy-blindness, of course, since it views currency separate from the material real wealth that ultimately gives it exchange value. Without the dollar oil trading system, the US dollar is just another middle-ranking piece of paper, while the European currencies derived from it are – most likely – of more use for setting fires now that the electricity and gas are going away.
It is only the dollar-based banking and financial system – itself on the life support of quantitative easing and low interest rates – which has kept the western empire in the game since 2008. And in such a weakened state it was paramount that the western states avoid doing anything foolish like, say, crashing their just-in-time supply chains or, even more catastrophically, starting an undeclared economic war with the new, resource-rich Eurasian-centred coalition. Even the vehemently neoliberal and Russophobic Guardian has begun to notice that the western empire may have inadvertently embargoed itself:
“The days when solidarity with Ukraine meant putting a blue and yellow flag on your social media profile and watching TikToks of farmers merrily stealing Russian tanks are over. Britain is not strictly speaking at war, but ours is now a wartime economy. This country has entered a new and unfamiliar form of conflict which does not risk the lives of British soldiers, but effectively puts our economic wellbeing on the frontline instead. Withstanding the economic storm now buffeting us, as war pushes the price of both oil and wheat ever higher, is the contribution most ordinary Britons didn’t quite realise we were going to be making to the war effort.
“Life is already tough for millions thanks to the soaring fuel and food prices, which have driven up what would have been rocketing inflation anyway (caused globally by countries roaring back to life post-pandemic, and exacerbated in Britain by Brexit). But it’s going to get tougher when the weather gets cold enough to put the central heating on…”
This though, is only the tip of the iceberg, because while the shooting war in Ukraine is likely to be over before the clocks go back, the damage to the western empire is permanent. The many countries that have chosen not to sanction Russia are increasingly being drawn into a new trading bloc based around Russia, India, and China (the 11th, 5th and 2nd largest – in dollar GDP terms – economies respectively) the bloc (in blue in the chart) accounting for more than 75 percent of the world’s population:
You don’t have to like or agree with Vladimir Putin to take seriously the speech he made to the St. Petersburg Economic Forum last week. Five paragraphs – from an otherwise long and somewhat dull presentation – stand out:
“Many trade, industrial and logistics chains, which were dislocated by the pandemic, have been subjected to new tests. Moreover, such fundamental business notions as business reputation, the inviolability of property and trust in global currencies have been seriously damaged. Regrettably, they have been undermined by our Western partners, who have done this deliberately, for the sake of their ambitions and in order to preserve obsolete geopolitical illusions…
“When I spoke at the Davos Forum a year and a half ago, I also stressed that the era of a unipolar world order has come to an end. I want to start with this, as there is no way around it. This era has ended despite all the attempts to maintain and preserve it at all costs. Change is a natural process of history, as it is difficult to reconcile the diversity of civilisations and the richness of cultures on the planet with political, economic or other stereotypes – these do not work here, they are imposed by one centre in a rough and no-compromise manner.
“The flaw is in the concept itself, as the concept says there is one, albeit strong, power with a limited circle of close allies, or, as they say, countries with granted access, and all business practices and international relations, when it is convenient, are interpreted solely in the interests of this power. They essentially work in one direction in a zero-sum game. A world built on a doctrine of this kind is definitely unstable…
“Russia will never follow the road of self-isolation and autarky although our so-called Western friends are literally dreaming about this. Moreover, we are expanding cooperation with all those who are interested in it, who want to work with us, and will continue to do so. There are many of them. I will not list them at this point. They make up the overwhelming majority of people on Earth. I will not list all these countries now. It is common knowledge…
“We believe the development of a convenient and independent payment infrastructure in national currencies is a solid and predictable basis for deepening international cooperation…”
What we are being told here – and what is obvious enough to anyone who has been paying attention to what the rest of the world has been up to since 2008 – is that the emerging economic bloc has chosen this moment of self-inflicted economic injury by the western empire to accelerate plans for a New, New, New World Order which claims to be a fairer, gold and commodities-backed system than the fiat US dollar system which had dominated – and exploited – the planet for the past eight decades.
To be clear, this is not about the BRICs system replacing the dollar. Rather, it is about the emergence of a multi-polar world similar to that of the late nineteenth century. Rather than a single currency backed by the threat of violence – what we euphemistically refer to as the military-industrial complex – the New, New, New World Order will operate multiple currencies whose value will be backed by commodities and determined by the true strength of the economy where they are issued.
This spells serious economic woes for western economies which have depended upon dollar privilege to enjoy wealth and lifestyles far in excess of anything their real economies could hope to achieve. Britain, for example – whose biggest export good is Scotch whisky – will struggle to find anything with which to trade with the New World Order 3.0 states once it becomes obvious to all concerned that the things we “manufacture,” like Nissan cars or pharmaceuticals are merely the final assembly of components made elsewhere. As someone once noted, “if you import and assemble all of the parts of a car, then spray it with paint before re-exporting it, you are not exporting cars, you are exporting paint!” Take away Britain’s re-exports in a post-dollar system in which our money-laundering banking and financial system no longer has value, and it is difficult to see how we pay our way in the world.
On the bright side though, as we shiver in the dark, our bellies gnawed with hunger, we can console ourselves with the fact that the human population is only in overshoot because of the excess consumption within the western economies in general and the affluent regions of the USA in particular. Only those exporting states with negative embedded energy trade scores (in blue in the chart) stand to thrive in the future. Those in orange will have to adjust their standard of living closer to the global average:
Moreover, since the obscene wealth of the western elites is about to be inflated and/or defaulted into oblivion, they will finally be able to look the rest of the world in the eye when they discuss carbon reduction without that nagging New World Order 2.0 feeling that they are viewed as inveterate hypocrites by everyone else… Collapse, it seems, is the greenest option of all!
As you made it to the end…
you might consider supporting The Consciousness of Sheep. There are five ways in which you could help me continue my work. First – and easiest by far – please share and like this article on social media. Second follow my page on Facebook. Third, sign up for my monthly e-mail digest to ensure you do not miss my posts, and to stay up to date with news about Energy, Environment and Economy more broadly. Fourth, if you enjoy reading my work and feel able, please leave a tip. Fifth, buy one or more of my publications