Friday , July 12 2024
Latest
Home / Economy / The real threat to our security

The real threat to our security

Ukraine and Israel are, to misapply a quote from a former prime minister, “far away places about which we know little” (apparently, at least one of our former prime ministers thought Ukrainia was an island in the Baltic Sea).  And yet the western political class is treating the respective conflicts as if they are existential issues.  To some extent, of course, they are merely the latest round of the western empire’s “forever wars” through which the empire (largely fails to) assert control over planet Earth’s critical resources.  This was much easier several decades ago, when the west was strong, and when its leaders had the wisdom to limit their wars to countries which couldn’t fight back (although even this backfired big time in Asia).  But something changed in the early 1990s, when a mostly American clique wrongly concluded that the collapse of the Soviet Union meant that the USA and its vassals owned the future.

In reality, the Soviet Union was merely the first of the global empires to collapse.  Whereas the west was still basking in the glow of the debt-based super-bubble which burst 17 years later.  Looking at the situation from the bottom up, this is obvious enough.  Anyone in the bottom half of the income pyramid in any of the western states has seen their prosperity shrink since the 2008 crash, even as the one percent have prospered on the back of central bank largesse.  Seen from the top though – and especially through the eyes of those who puppet our politicians – the western empire appears to have continued to prosper.  And so, it is easy enough to imagine that the empire can afford its wars in the same way as it could in the aftermath of World War Two.

The justification is as tiresome as it is old – just the same old rehashing of the story of St. George and the Dragon, with whichever country we want to attack being afforded the role of the dragon while we find a convenient princess – Belgium, Poland, South Vietnam, Kuwait, Ukraine, Taiwan… you get the idea – to legitimise our bombing the dragon back into the stone age.  And it would certainly be less costly – in lives and money – to simply do a deal to secure the resources than to fight over them.

This is nothing new, 114 years ago, Norman Angell famously explained the economic stupidity of war… although he was (wilfully?) misunderstood as having said war was impossible – which events four years later showed was demonstrably wrong.  Angell’s proposition though – and it is as valid today as it was then – was that the economic costs of industrialised warfare would be far greater than any benefits an aggressor might gain.  To be clear, this is very different to the situation in preindustrial economies where the seizure of territory meant capturing new peasants, livestock, agricultural produce, and mineral resources.  In an industrial economy, in contrast, these gains were by far the least valuable – and easily traded for the fruits of industry – compared to the huge cost of an industrialised war.  Indeed, even the imperialist practices of the European states became too costly as the world industrialised.  The British empire, for example, might attempt to paint the map of Africa pink from the Cape in the south to Cairo in the north, but the cost of administering and policing the acquired territories was far greater than the return to the British state, still less to the British people themselves…  Only the banks really benefitted.  In any case, as Angell detailed, by 1910, the majority of Britain’s trade was outside its empire.  And as Historian Paul Kennedy notes, while in the aftermath of the First World War, Britain ruled a quarter of the world, it only generated nine percent of the world’s output.  In short, the cost of empire was bankrupting Britain.

The elites within the USA, who took on the mantle of empire following their victory in the Second World War, no doubt thought that they were different.  In truth though, the massive difference in wealth between post-WWII America and pre-WWI Britain was merely the difference between the exergy obtained by burning oil compared to the exergy from coal.  And America was superrich in oil – having supplied six out of every seven barrels of oil consumed in the course of the Second World War.

Turning swords into ploughshares, it turns out, is far harder to do than it is to say.  This was especially true for the Soviet Union, whose population was hollowed out and industry devastated by the Germans between 1941 and 1945.  Often, the only work that could be found for the millions of Red Army troops who survived was in the arms industries created to fight the war.  And since these provide no value to the wider economy, they are a key reason why the Soviet Union collapsed in the end.

The USA fared better, since its oil-age civilian economy had already been taking off prior to the outbreak of war.  Nevertheless, since the war, the USA has squandered a disproportionate share of its people’s wealth on arms industries which have delivered nothing of value in return.  Moreover, armed to the teeth – and to a far greater extent than all its potential adversaries combined – a dominant faction within the American elite has always preferred to take what it wants by force rather than obtain it peacefully through trade… and so long as they didn’t do anything stupid like get into a proxy war with Russia or the entire Middle East (especially if these are backed by China) they could appear to be invulnerable.

The trouble is that the knowledge that the western empire would only pick on small states with backward militaries, fed into the widespread grift in the western arms industry.  Seen from the fringes of empire, this is obvious enough in the shape of aeroplanes that don’t work, aircraft carriers which can’t get beyond the Isle of Wight without breaking down, missiles that roll over the side of the submarines trying to launch them, and desert fighting vehicles lacking sand filters, to name but a few.  Since its economic recovery in the 2000s, Russia (along, one suspects, with China and Iran) went in a different direction – focussing a much smaller military budget on the most effective weapons… notably hypersonic missiles and cheap but effective drones.

Behind this, however, is a divergence of economic philosophy.  Although Kissinger probably didn’t say it, the western elites have internalised the belief attributed to him:

“Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world.”

Certainly, even now, the US dollar is far and away the most valuable currency within the global economy.  Although it is here in the UK where the sentiment has been taken to extremes – the wider economy rapidly imploding even as the City of London continues to prosper… for now.  Then again, the contemporary Eurodollar system is very different to the Bretton Woods system which gave the USA economic dominance over the non-communist world in the aftermath of the Second World War.  And as I have pointed out elsewhere, it is no accident that the collapse of the Bretton Woods system coincided with the USA’s loss of global oil dominance.

Insofar as there was any truth to the statement attributed to Kissinger, it is surely that a global superpower must maintain control of the food and energy as well as the money.  But that is the part that the western elites misunderstood.  To a greater or lesser extent across the empire, we have hollowed out our food and energy systems along with the manufacturing base that we permitted to be offshored.  The UK is a basket case in this respect, importing half of the food consumed (and around 60 percent of the calories) together with 20 percent of its electricity.  And things get far worse when it comes to agricultural and energy supplies.  A major reason for the high UK food inflation in 2022 and 2023, was that our elites in their infinite wisdom decided we did not need Russian gas or Russian fertiliser – the former being used extensively in greenhouses both for heating and for additional carbon dioxide, the latter being essential to maintaining UK crop yields.  Less obviously, the Cameron-Osborne 2010-2015 UK government closed the UK’s last diesel refinery because Russia could provide diesel cheaper – so that the cost of operating agricultural machinery is now also prohibitively high… it is no accident that farmers’ protests are mushrooming across Europe as costs rise even as affordability plummets.

This, of course, is the real security issue.  In the same way as an individual has a hierarchy of needs, so a civilisation must secure for itself basics like energy and food, raw materials, and a relatively healthy population before it can add the kind of complexity we have come to take for granted in the developed world.  Where, for example, the Anglo-Saxons may have made do with a herbalist for healthcare, and peasants armed with agricultural tools for defence, the modern world requires an expanded division of labour along with complex supply chains – many working on a just-in-time basis – to provide defence, healthcare, transport, fuel, electricity, and all of the other utilities and critical infrastructure upon which the civilisation can thrive.

This though, is precisely what half a century of neoliberal policy has hollowed out.  In the UK, everything is broken… including the social cohesion needed to rally a population behind its government in support of change at home or war abroad.  And as outgoing prime minister Rishi Sunak discovered following his insane proposal to conscript 18-year-olds into the military, most of the younger generations (who have been screwed more than most by neoliberalism) would rather risk jail time than turn up at the army recruiting office.  But even if enough conscripts were to turn up, having handed our weapons stocks to Ukraine to be quickly destroyed by the Russians, they won’t have much to fight with.  Nor – because we hollowed out our manufacturing base decades ago – can our arms industry increase production to supply an expanded military.  Indeed, the closure of the UK’s last capacity to make virgin steel (at a time when there is a global shortage of scrap steel, and when Russia is the main alternative supplier) eliminates the raw materials which the arms industry would need even if they wanted to expand production.  Same goes for energy, since the UK is already dependent upon imported electricity and gas and faces stiffer competition to secure non-Russian supplies of oil and gas.  As the UK’s energy security continues to decline, it will be increasingly difficult for governments to justify prioritising the arms industry ahead of such things as hospitals, water and sewage treatment plants, and even banking and food shopping. 

As Gail Tverberg wrote recently, declining energy and resources limit countries like the UK from outcompeting their potential rivals:

“I suggest that if these [biological – Maximum Power Principle] principles are applied to the competition between the Advanced Economies and the less advanced economies of the world, the Advanced Economies will lose. For example, the Advanced Economies have been falling behind the less advanced economies in industrial output.

“In addition, the Advanced Economies of the world have fallen behind in the bidding for oil supplies…  Furthermore, the NATO allies seem unable to pull ahead of Russia in the Ukraine conflict. In theory, this should have been an easy war to win, but with limited manufacturing capability, it has been hard for the allies to provide enough weapons of the right kinds to win.

“To me, this all points to the conclusion that in a conflict over scarce resources, the Advanced Economies are likely to lose.”

In any case, armaments are a hard sell to a population which sees its living standards decline with each passing month, and with little respite in sight.  Defence – the euphemistic name we give to war – is considered an important election issue in the UK by just 18 percent of us… and perhaps unsurprisingly, it scores far higher among the over-50s, i.e., those who will never have to fight.  Among those Sunak proposed to conscript (the 18-24 age group) just six percent (presumably mostly those already serving) think defence is an important issue.  This is a long way behind housing (23% of us, and 39% of the 18-24 age group); health (49%, 39% of the 18-24 age group; and the economy (52% of us, 58% of the 18-24 age group) as a political priority.

To return to that Kissinger quote, because of the actions of half a century of recklessness on the part of the ruling elites, the UK in particular – and increasingly the western empire as a whole – no longer controls the food with which to control the people, nor does it control the energy with which to control its continents (mostly Europe and North America).  But it does, for the immediate future, still control the money… although even this has been in decline since the 2008 crash.  It is surely only a matter of time before we discover to our cost that without the energy and resources to back it up, the money on its own is close to worthless.  As Tim Morgan writes:

“… we’re living in a fantasy world in which, whilst economic inflexion is disregarded, no potential harm is seen in the growing quantum and worsening risk-profile of credit in a borrowing-addicted economy.  Few (if any) observers have, for instance, recognized the obvious connection between ‘growth’ of $675bn (2.5%) in the US economy during 2023 and the $2.1tn (8.8%) fiscal deficit which alone made this ‘growth’ possible.

“If we look at the propositions put forward by even the most sober of governments, everyone seems to promise ‘growth’, but nobody has any idea about how to deliver it without ramping up public and private debt.”

Most of the countries of the world are now actively seeking a way out, with the BRICS trading system emerging as a serious alternative to the fiat dollar system.  With the Saudis abandoning their commitment to a dollar monopoly on oil sales, and with many world leaders and business people chastened by the sanctions and confiscations applied to Russians in Europe, London and New York, countries like the UK, which has been far too focused on “financial services” to the detriment of the wider economy, are bound to face a serious reckoning in which they will be asked to pay the full price for the food, energy, resources and manufactured imports that they have thus far taken for granted.

Even this week we have seen the first AAA-rated derivatives (the ones which blew up the system in 2008) going bad, with some investors losing everything.  Unsurprising in its way, the fund was based upon the interest on loans given to UK shopping malls… malls whose shops have been closing in droves because of unaffordable rents and business taxes.  But also, a harbinger of things to come, since all debt is ultimately connected to a real economy which is going backward.  So that, as businesses and individuals in the real economy can no longer afford the purchases, rents, and repayments, it is only a matter of time before the entire house of cards comes tumbling down… after which we will get to see whether negative interest rates can work.  More importantly though, after the coming crash, nobody in the wider world will be in a hurry to exchange real goods for our funny money.

If we manage to avoid nuclear Armageddon – which, given the USA’s neocon leadership, is far from certain – it will be the BRICS who come out controlling the food, the energy, and the money.  But hardly anyone in the western political class is prepared even to mitigate the ensuing shock.  Indeed, in the UK, we are allowing fundamental steel, transport, agricultural land, and energy to close despite having no idea from where we will replace it… just the vain hope that our increasingly discredited currency will continue to buy it from elsewhere… making the political elite the real threat to our security.

As you made it to the end…

you might consider supporting The Consciousness of Sheep.  There are seven 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 FacebookThird follow my channel on YouTubeFourth, 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.  Fifth, if you enjoy reading my work and feel able, please leave a tip. Sixth, buy one or more of my publications. Seventh, support me on Patreon.

Check Also

A world without growth

In a world without growth, old evils which we thought we had overcome will begin to return.