James Petras' "Rulers And Ruled In The US Empire"
By Stephen Lendman
10 October, 2007
Petras is Binghamton University, New York Professor Emeritus of Sociology
whose credentials and achievements are long and impressive. He's a noted
academic figure on the left, a well-respected Latin American expert,
and a longtime chronicler of the region's popular struggles as well
as being an advisor to the landless workers (MST) in Brazil and unemployed
workers in Argentina. Petras is also a prolific author. He's written
hundreds of articles and 63 books (and counting), published in 29 languages,
including his latest one and subject of this review - "Rulers and
Ruled in the US Empire."
The book is information rich
on a core issue of our time. It discusses the US empire's "systemic
dimensions," evolving changes in its ruling class, its corporatist
system, myths about its coming collapse, contradictions in the current
debate on immigration and market liberalization policies, the use of
force and genocidal carnage, corruption as a market penetrating tool,
the Israeli Lobby's power and influence, Latin American relations and
events in the region, social and armed resistance, and much more in
four power-packed parts under 17 subject chapter headings.
It's all covered below giving
readers a detailed sampling of Petras' thoroughly documented, powerful
and insightful account of his subject - who rules America, who's ruled,
the US imperial role in the world economy and politics, and challenges
to it in China, Latin America and the Middle East. This is another must-read
book by a distinguished intellect and major figure on the left who writes
dozens of them. This is his latest.
Part I: The US Empire As
Petras distinguishes between
who sets policies and rules America and whose interests are served.
He defines the ruling class as "people in key positions in financial,
corporate and other business institutions" with rules "established,
modified and adjusted" as the composition and "shifts in power"
within the ruling class change over time. One example is manufacuring's
decline (from outsourcing to low cost countries) as a "multidimensional
financial sector" (finance capital) rose in prominence with Wall
Street's influence especially dominant.
Petras defines "finance
capital" to include investment banks, pension funds, hedge funds,
saving and loan banks, investment funds and many other "operative
managers" of a multi-trillion dollar economy they've all benefitted
hugely from. They've been the driving force powering real estate and
financial markets speculation, agribusiness, commodity production and
manufacturing. Petras calls "finance capital" the "midwife"
of wealth and capital as well as a "direct owner of the means of
production and distribution."
He stratifies it into three
sub-groups from top to bottom in importance: big private equity bankers
and hedge fund managers, Wall street executives, and senior officials
of private and Wall Street public equity funds as well as major figures
in top law and accounting firms. Political leaders are drawn from their
ranks with Wall Street in the lead and one firm in particular standing
out - Goldman Sachs. Today, its former CEO Henry Paulson is the de facto
US economic czar in charge of proving doomsayers wrong about the US
economy with Federal Reserve Chairman Ben Bernanke's money creation
power partnered with him. Both of them must also navigate around the
powerful Israeli Lobby and its pro-war agenda that could lead to catastrophic
consequences if the US and/or Israel attack Iran and the Middle East
explodes and disrupts oil flows.
Petras sees an inevitable
split between wealth-first financial ruling class objectives and militarists
in the Bush administration, their counterparts in Israel, and the Lobby
representing Israeli interests with a stranglehold on most of Congress.
The battle lines shape up over Israeli Middle East dominance at the
cost of imperial overreach, an escalating trade deficit, a ballooning
national debt, decreasing capital inflows to offset it, and a declining
dollar as other nations move to euros, yen and pounds sterling. Something
has to give, says Petras, as both sides support opposing agendas that
only a crisis-provoking widespread backlash may resolve.
For now, however, things
couldn't be better for the ruling class (despite their disrupted plans
in Iraq and Afghanistan) with the top 2% of adults in the world owning
half its wealth, the top 10% with 85% of it, and the bottom half with
just 1%. The result is an unprecedented wealth disparity with corporate
CEO's on average earning over 400 times the median income of wage and
salaried workers, and for top-earning speculators and hedge fund managers
the ratio is 1000 to one with some having incomes topping a billion
dollars a year. In addition, corporate wealth was at a record 43% of
2005 national income accruing to profits, rents and other non-wage/salary
sources compared to a declining percentage of it to individuals, except
for those at the top gaining hugely.
Petras states: "The
growth of monstrous and rigid class inequalities reflects the narrow
social base of an economy dominated by finance capital" with the
US redistributing far less to its people than other developed nations
like those in Western Europe. Democrats are as culpable as Republicans
with both parties tied to big monied interests through campaign funding
and the power of lobbies. It makes everyone in the political power structure
unwilling to change things so they don't. The result is working Americans
suffer hugely while those at the top never had it so good. It signals
warnings of a potential worker backlash ahead that for now have gone
unheeded. Elitists ignore it at their peril, so far without negative
consequences to their dominance, but watch out.
Capitalism or US Workers
Petras notes how for years
many on the left and some in the financial community have been predicting
the "coming collapse, decline or demise of capitalism" as
though (for some) wishing would make it so. They're still predicting,
but it hasn't happened, and Petras explains why not. It's because business
and government partnered (especially since the 1980s) to let workers
take the pain so business could gain and prosper. It's done it hugely
and continues to despite the resurgent summer doomsday predictions still
In a letter to clients, noted
investment manager Jeremy Grantham explained why business is resilient
by comparing the global financial system (with its US anchor) to a giant
suspension bridge. Thousands of bolts hold it together, so when some
of them fail, even a lot of them, it's not enough to bring it down.
Short of "broad-based....financial metal fatigue," even more
bolts may fail, but he's betting the bridge will hold, supported by
amazing "animal spirits," at least for now.
Grantham is likely right
in the near term, while Petras takes a longer view, and his arguments
are compelling. He sees labor today in crisis with living standards
declining the result of reduced or eliminated business benefits, government
services and stagnating wages. He also lists popular myths predicting
doom ahead - the growing budget and current account deficits; ballooning
national debt; excess speculation; weakening dollar; high energy costs;
outsourcing of jobs at all levels, and more. Petras maintains these
problems aren't as serious as claimed because:
-- budget deficits declined
in 2006 as tax revenues rose from high-end earners' greater income at
the expense of labor getting less;
-- foreign investment in
the US remains high;
-- the dollar remains the
world's reserve currency; over time, it weakens and strengthens based
on interest rates, political events, and the overall level of economic
activity; nonetheless, the dollar weakened considerably after the Fed
cut interest rates and depreciated to an all-time low against a basket
of six of its major peer currencies that include the euro, pound and
yen; in addition, the New York Board of Trade index hit its weakest
level since it came out in 1973, and the same is true for the Fed's
trade-weighted dollar index since its creation in 1971; what's ahead?
Likely more of the same until everyone believes the dollar is dead;
then, watch out;
-- a decade-long trade deficit
hasn't caused apocalypse;
-- strong economic underpinnings
(Grantham's giant suspension bridge) offset excess speculation, and
workers, not capital, take the pain;
-- high energy profits overseas
are recycled back into dollar-based investments and have been for years
although countries like Iran, Venezuela and others are moving away from
the dollar at least for now;
-- the potential of new technologies
-- corporate profits have
had their longest ever run of double-digit gains; the number of millionaires
and billionaires is growing; the rich are becoming super-rich; and the
beneficiaries are largely in North America, Western Europe (plus Russia)
Petras concludes that as
long as worker exploitation continues, the fundamental law of "casino
capitalism" applies - the house never loses, or in this case the
neighborhood (of developed nations) with some in it doing better than
others and the US their anchor. The weakness of US labor and its history
of overpaid, underperforming, corrupted leaders explains why with only
7.4% today in the private sector organized compared to 34.7% in the
1950s. Unless new social and political movements surface under activist
leaders, Marx's "dirty secret" and Adam Smith's "vile
maxim of the masters of mankind" will continue proving "the
wealth of all nations" depends on the rich taking it "all
for ourselves and (leaving) nothing for" the working class.
Market Liberalization and
Migration and so-called illegal
immigrants make headlines but never the reasons why that are two-fold:
fleeing political strife (as in Iraq) or for economic reasons that the
imperial globalized market system causes horrifically. The latter forces
millions of Mexicans el norte because of NAFTA. Its disastrous effects
on their lives leaves them no choice - emigrate or perish.
Petras explains when protective
trade barriers come down, millions of small farmers and entrepreneurs
are no match for the power of subsidized agribusiness, big manufacturers
and corporate service providers. They're displaced when their livelihoods
are lost, and that creates a huge surplus army of labor on the move
and an opportunity for business to exploit for profit. It affects all
skill types and levels (farm workers to computer specialists to doctors),
undermines unions, and allows management to replace higher-paid US workers
with low-wage immigrants at their mercy and getting little. Pay is kept
low, benefits few or none, working conditions unsafe, unions weakened,
and dare complain and be sent home.
Petras notes that as imperial
power grows, "the massive movement of dislocated workers toward
the imperial center multiplies," and there's no end in sight nor
will there be as long as highly exploitative sectors like agriculture,
construction and low-end manufacturing and services thrive on it. Workers
lose and so do "sender" countries. They bore the costs of
raising, educating, training and providing services for millions with
"receiver" nations getting the benefits. It amounts to multi-billions
in the form of critically needed skilled areas lost that include professionals
like doctors, nurses, teachers and others. This won't ever change unless
worker movements unite against it.
Empire-Building and Corruption
Petras notes how empire-building
"is the driving force of the US economy (especially post-9/11),"
corruption a key corporate predator tool to re-divide the world, and
nations with the greatest firepower get the choicest slices. Business
profit growth depends on exploiting overseas opportunities for their
resources, markets and cheap reserve armies of labor with four so-called
"BRIC" countries especially targeted:
-- China for its cheap labor
and opportunities in finance, insurance and real estate;
-- India for its low cost
information technology services;
-- Brazil for its high interest
rates that hit 19.5%, were then greatly cut, but are still around 11%;
-- Russia for its high profit
oil and gas reserves, transport and luxury goods markets with booming
opportunities in real estate once political leaders are bought off in
a country rife with corruption as is China.
Petras notes that today over
half the top 500 transnational corporations earn most of their profits
overseas, and for many it's 75% of it. This trend will continue, he
says, as these companies shift most of their operations abroad for greater
cost savings. In addition, "political corruption, not economic
efficiency, is the driving force of economic empire-building (with)
the scale and scope of Western pillage of the East....unprecedented
in recent world history." It's from business-friendly legislation
on low wages, pensions, job tenure, land use, worker safety and health,
all designed for maximum profit. Political leaders are bought off to
get state-owned businesses privatized, markets deregulated, wages kept
low, with a huge reserve army of exploitable labor the payoff for "the
US Imperial System."
Hierarchy of Empire and Use
Petras explains the US imperial
system in terms of its "hierarchy of empire" rankings. Imperial
powers top it (the US, EU and Japan) followed by emerging powers (China,
Russia, India), semi-autonomous client regimes (Brazil, South Korea,
South Africa), and collaborator regimes on the bottom (Egypt, Mexico,
Colombia). Then come independent "revolutionary" (social democratic)
states like Venezuela and nationalist ones like Iran as well as "contested
terrain and regimes in transition (Iraq, Afghanistan, Somalia, Palestine)."
Client regimes provide "a crucial link in sustaining imperial powers"
by allowing them to project and extend their state and market reach.
One "anomaly" in
the hierarchy is Israel. It's a colonialist and nuclear power and world's
fourth largest military power and arms exporter that's breathtaking
for a country of 7.1 million and 5.4 million Jews. It's influence over
US Middle East policy, however, inordinately outweighs its size with
Iraq exhibit A and Iran moving up fast. More on this below.
Petras notes the constant
flux within the imperial system the result of wars, national struggles
and economic crises. They bring down regimes and elevate others with
examples like Russia, the Eastern European states, South Africa and
Venezuela. It shows "no singular omnipotent imperial state....unilaterally
defines the international or....imperial system (that in the case of
the US) proved incapable of....defeating popular....resistance in Iraq
Even in Somalia, a US proxy
war is in trouble, but it's too early to predict the outcome. The easy
2006 overthrow of the popular Islamic Courts Union (ICU) put an unsupported
warlord regime in charge (that plundered the country from 1991 - 2005)
with predictable results - strong resistance against the US puppet regime
and its deeply corrupted Transitional Federal Government (TFG) "president,"
Washington backed a hated
regime and an equally detested Ethiopian government that's been "prop(ping)
up its Somali puppet" with a lift from US-supported force. Earlier
in 1993-94, the Clinton administration's intervention failed. It spawned
mass opposition, took thousands of Somali lives in retaliation, and
ended in defeat and a humiliating US pullout. That may repeat despite
Washington's establishing an African Command (AFRICOM) to solidify its
hold on the continent and its strategically important Horn. So far,
it's very much up for grabs with US presence in the region unwelcome
and greatly destabilizing. The "empire" never learns, so it's
on to the next target that looks like Iran. More on that below.
Imperialism and Genocide
Petras explains how Korea,
Vietnam and other wars hid their true cost in lives, devastation and
human wreckage. It's the way of all empires sweeping over populations
like crabgrass. It becomes "an accelerating predisposition to genocides
to accomplish political aims," and in an age of "shock and
awe," it can come with "awesome" speed. An example is
from the latest O.R.B. British polling data reporting 1.2 million Iraqi
deaths since March, 2003 alone plus another 1.5 million up to that date.
The true toll may be even higher with huge uncounted numbers of daily
violent and non-violent deaths that one estimate by Gideon Polya places
at 3.9 million from 1990 to the present. No one knows for sure, and
his estimate may be as good as any other. All of them are horrific.
Petras notes the "quantity"
of killings elsewhere - six million Jews and 20 million Soviet civilians
in WW II as well as 10 million Chinese civilians in Asia. He explains
genocide as policy from a "state (promoted) racialist-exterminationist
ideology (as well as from) an historical antipathy of one culture to
another." This allows ruling classes to legitimize their ideology
and achieve "uncontested dominance" and ability to economically
exploit domestic and overseas markets. An omelet requires breaking eggs.
Mass human slaughter is the frequent fallout from consolidating empires
with living beings having no more worth than egg shells.
Genocides also result from
revolutionary challenges to unpopular puppet rulers with Korea, Indo-China
and Iraq Exhibits A, B, and C. Up to eight million perished in Asia,
and three (or maybe four) million could be reached in Iraq in 2008 at
the present pace. There's no end to it in sight with billions funding
it, and no reporting on the carnage in the mainstream.
Petras reviews examples of
imperialism becoming genocide with the Reagan administration alone responsible
for its share. It committed multiple proxy genocides in Africa, Afghanistan
and Central America, but you'd never know it from reports at the time
about a president being prepped for Mount Rushmore with a spot for George
Bush beside him until Iraq got him in trouble.
Another unreported genocide
is Israel's six decade-long crusade against the Palestinians with predicable
results. It caused many thousands of deaths, mass population displacement,
and excessive use of detentions and torture to deny a people freedom
and justice in their own land. The policy continues because Israel has
a powerful ally in Washington and an even more influential Lobby working
on its behalf. More on that below.
Petras notes genocides are
"repeated, common practices," impunity for committing them
the norm, and no effective international order is in place to stop them.
Victors justice prevails so victims face kangaroo tribunals like the
ICTY for Yugoslavia and the equally corrupted one for Iraq. Genocides
will only end when imperial powers are defeated and their leaders held
to account for their crimes, but that goal is nowhere in sight.
The Global Billionaire Ruling
The number of world billionaires
reached 946 in March, 2007, they have an estimated combined wealth of
$3.5 trillion, and over half of them are in three countries - 415 in
the US, 55 in Germany and 53 in Russia where never did so many people
lose more so a handful of others could gain so hugely in so short a
time. India ranks high as well with 36 billionaires with China next
in the region at 20. The number of millionaires exploded as well with
close to 10 million in 2007, and in 2006 their numbers grew by an estimated
Balzac was right saying behind
every great fortune is a crime (and most often a small fortune as seed
money) but likely nowhere more rapaciously than in Russia. Petras notes
"Without exception, the transfers of (state) property were achieved
through gangster tactics - assassinations, massive theft, and seizure
of state resources, illicit stock manipulation and buyouts." They
strip mined over a trillion dollars of Russia's wealth into private
predatory hands who, in turn, stuffed them in offshore accounts. It
happens everywhere with the US exhibit A. The Rockefellers, Morgans,
Fords and Carnegie's didn't amass wealth by being neighborly or nice.
They got it the old-fashioned way - by strong-arming and stealing.
In developing countries,
it came faster under Washington Consensus rules favoring capital over
people with billionaires coming out on top. Latin America has 38 of
them, mostly in Brazil (with 30) and Mexico (with industrialist Carlos
Slim Helu now the world's third richest man). These "two countries....
privatized the most lucrative, efficient and largest public monopolies,"
and benefitted hugely from regressive taxes, tax exemptions, deregulation,
big subsidies, and the ability to hike prices and make vital services
unaffordable to millions who can't pay for them.
"How to become a billionaire,"
Petras asked. No need for an MBA or market savvy when the "interface
of politics (aka friends in high places) and economics" works much
better. The road to super-riches came from privatized state assets that
began with bloody military coups in Latin America. In countries like
Chile, Colombia and Argentina, results were always the same - great
riches at the top, stagnant economies, vast poverty, high unemployment,
two-thirds of the region's population with "inadequate living standards,"
and the long shadow of US involvement backing military dictators, business
elites, and neoliberal politicians to assure lucrative ties to corporate
interests in America. More on this below.
Part II - The Power of Israel
and Its Lobby in the US
Petras covered how the Israeli
Lobby defeated the Jim Baker Iraq Study Group's (ISG) proposal released
December 6, 2006. Its alternative US Middle East agenda lost out to
the Israeli Lobby's influence on Congress, a massive supportive propaganda
campaign in the major media, and Israeli Prime Minister Ehud Olmert
being as able to "have the US president under our control"
as Ariel Sharon once boasted.
For a time it looked like
the ISG plan would prevail with top Bush advisors recommending dialogue
with Iran; high-ranking military, active and retired, wanting a phased
withdrawal for a failed effort; and the Army, Navy and Marine Corps
weekly publications wanting Defense Secretary Rumsfeld sacked shortly
before he resigned. Even Big Oil interests backed Baker because stable
conditions favor business more than conflict (at least to pump oil),
and that won't happen without a change of course now off the table.
Iran wants rapprochement
as well but not on the usual US terms - making demands and offering
nothing in return. Iran's objectives are simple and reasonable - normalized
relations and an end to Washington's confrontational stance and military
threats. They're off the table because the "Israel-First power
structure (Lobby-Congress-Mass Media-Democratic Party Donors)"
reject them. Syria is just as compliant, but its overtures are also
rebuffed for the same reason.
Petras explained that AIPAC
wants war with Iran as its top priority objective. In addition, the
publications, conferences and press releases of the Conference of Presidents
of the Major American Jewish Organizations (CPMAJO) asked their members
"to go all-out to fund and back candidates (mostly Democrats) who
supported Israel's military solution to Iran's nuclear enrichment program"
even though IAEA agrees it's in total compliance with Nuclear Non-Proliferation
Treaty rules while Israel violates them with impunity.
In the end, Prime Minister
Olmert co-opted George Bush, got him to reject the ISG proposal and
ally with Israel's aim to solidify its Middle East dominance by removing
a non-existent Iranian threat with Syria also targeted. In many respects,
this flies in the face of logic as many influential US figures know.
Petras believes Iran is a key interlocutor for a Middle East settlement
that might let Washington retain its strategic Arab allies. Tehran is
willing to cooperate but not when its government is lumped with Al-Queda,
the Taliban and Iraqi resistance and is being threatened with war. That's
the current condition with renewed Bush administration efforts to prep
the public to accept more of it if it comes.
Hamas also has been conciliatory.
Its leaders made two peace proposals as a show of good faith, is willing
to recognize Israel if Palestinians get justice, pledged a cease-fire
in the face of Israeli attacks, and was rebuffed with rejection and
an Israeli blockade of Gaza along with frequent hostile incursions.
Conflicts rage in Iraq and occupied Palestine, more war threatens in
Iran, and the road to peace in the region runs through Jerusalem providing
Washington concurs. But it's not possible, in Petras' judgment, unless
foreign military bases are closed, there's public control or nationalization
of the region's resources, and Israel ends its colonial occupation of
Palestine. So far, those objectives are nowhere in sight.
The Lobby and Media on Lebanon
In Petras' powerful 2006
book, "The Power of Israel in the United States," he documented
how this power derives from a vast pro-Israel Lobby in the country supporting
all aspects of its agenda. It's position is firm - "Israel is always
right, Arabs and Muslims are a threat to peace," and the US should
unconditionally support Israel across the board. In Petras' view, that's
the main reason why the Bush administration attacked Iraq and may now
target Iran and Syria. Israel perceives these countries as threats,
Washington seems willing to remove them, and a chorus of media-driven
They always support Israel
and jumped right in last summer backing "Operation Change of Direction"
against Hezbollah and "Operation Summer Rain" against Hamas
that caused many hundreds of deaths and mass destruction. It was all
papered over in the major media and characterized as Israel's "defensive,
existential war for survival against Islamic terrorists." It was
pure baloney. In fact, and unreported, Israel launched dual long-planned
aggressive wars with Hezbollah's capture of three IDF soldiers in Lebanon
the pretext and Hamas taking one Israeli corporal the justification
in occupied Palestine. Never mentioned are the many thousands of Palestinians
illegally abducted, imprisoned and tortured, and that unprovoked aggressive
wars and their fallout are war crimes and crimes against humanity.
Also unmentioned is that
if Hezbollah and Hamas hadn't provided the pretexts, Israel (as it's
often done) would have manufactured them to launch its summer aggression.
With full US support and backing from its Lobby and dominant media,
these type actions continue at the expense of their victims with US
taxpayers duped into funding them generously.
US Empire and the Middle
Petras notes key factors
help explain US Middle East policy that in his judgment are "challenged
from within and without, are subject to sharp contradictions,"
and are likely to fail.
First, is the influence of
the Israeli Lobby he documented powerfully as have Mearsheimer and Walt
in their work. It's likely the most potent lobby in Washington and can
practically mobilize the entire Congress, every administration and the
dominant media to back pro-Israeli policies even when they run counter
to US corporate interests that in Middle East means those of Big Oil
The Lobby wanted war with
Iraq and got it. Now its top priority is stiff sanctions and war on
Iran, and if the orchestrated media hate frenzy targeting President
Mahmoud Ahmadinejad's Columbia University address September 24 is an
indication, it may get it. As Petras notes, the Lobby's fanatical support
for Israel is so extreme and uncompromising, it's even willing to risk
world war and economic collapse to get its way.
Another key factor is the
US ability to enlist and co-op client states and proxy forces to serve
our interests - the Kurds in Northern Iraq; the Abbas-Dahlan Fatah militants
in Palestine; the Sinoria-Hariri-Jumblat pro-US/Israel, anti-Syria/Hezbollah/Hamas
alliance in Lebanon; Mubarak in Egypt; King Hussein in Jordan; pro-US
regimes in Turkey; the Saudis and others.
Petras then explains how
the Israeli Lobby's influence runs counter to the US "Arab agenda."
It shows up in Washington's failure to construct a NATO-style power-sharing
alliance in the region, except for Turkey and Israel, and the former
may not prove solid. The Iraq policy has been disastrous, each tactic
tried failed, resistance is unabated, the Arab street overwhelmingly
rejects occupation, and Arab leaders offer tepid support.
Petras calls Washington's
permanent war strategy (next targeting Iran and Syria) "an irrational
gamble comparable to Hitler's attack on Russia" that doomed him.
Today in the Middle East, attacking these two countries may only compound
the Iraq failure with "greater defeats, greater domestic rebellion"
and still more wars without end promising gloomy prospects ahead.
Part III - The Possibility
Petras discusses China and
the "general consensus (it's) emerging as the next economic superpower"
to challenge US dominance. Petras expresses doubts that can only be
summarized briefly. He notes Chinese capitalism not only depends on
growth and the ability to generate jobs, but also on "the social
relations of production, circulation and reproduction." They come
at a high price - ferocious labor exploitation, rampant corruption and
nepotism, mass small farmer displacement, firing millions of workers
from state-owned and bankrupt enterprises, ending social services, and
higher living costs increasing class warfare in the streets against
billionaire kleptocrats and foreign investors profiting hugely at the
expense of most Chinese.
Petras then distinguishes
between "made in China" and Chinese-owned and whether the
former enhances China's growth or foreign investor profits instead.
He sees China taking on "features of both a neo-colony and an emerging
imperial power," but mostly the former. He notes the standard of
living for most Chinese "declined precipitously;" air, water
and ground pollution greatly increased; the quality of life for most
Chinese suffers; class inequalities are vast; and gains from a consumerist
society for a minority of the population are offset by dirty air, loss
of leisure, job security, near rent-free housing, state-provided health
care and education, deteriorated working conditions and more. Paradise
it's not, at least for workers, and conditions aren't improving.
Petras then discusses China's
transition from state to "liberal" capitalism. As it deepened,
trade barriers were dismantled; protective labor laws abolished; price
controls lifted; the countryside ravaged; a massive new army of unemployed
workers created; and an export-driven market strategy followed. The
result today is a new class of billionaires and about 2900 former party
"princelings" who control around $260 billion of wealth. In
addition, property, real estate and construction boomed, an export strategy
concentrated development on coastal regions, and domestic consumption
is relatively constrained.
In contrast, "millions
of construction workers, miners, domestic servants and assembly-line
workers (labor) under the most abominable conditions" - long hours,
low pay, awful sanitary conditions and little regard for safety in an
unregulated environment structured for maximum profit. China today is
a "magnet for capitalists and investors worldwide," a free
market paradise that's hell on workers paying hugely for the country's
Petras envisions China's
capitalism deepening and mainly benefitting foreign investors. He sees
their "initial beachheads as minority shareholders" extending
into production, distribution, transport, real estate,
telecommunications, consumer goods and services, entertainment, finance
and more and eventually gaining more control. As a result, he believes
China's next great leap forward will be from liberalism to neoliberalism,
the country will lose its national identity, it will become a "territorial
outpost" for foreign-owned transnationals, and the country's bid
for world power status will be subverted.
Petras sees 21st century
China emerging as a "gigantic proxy for imperial powers,"
but China won't be one of them. Its "Great Leap Backwards"
will be consummated when the nation's "share of profits shifts
from the national bourgeoisie" to foreign investors in a process
But it won't come easily
as a new generation of China's leaders may stop or curtail it. In addition,
growing mass resistance has now emerged for obvious reasons cited above.
Already, close to 100,000 mass demonstrations have occurred involving
millions of Chinese protesting a workers' hell. Social crisis is deepening,
class struggle has returned, and the government has taken note. It's
beginning to address concerns but giving back pathetically little considering
China's massive population. Petras calls these remediating actions "too
little and too late." Ahead he sees decentralized protests becoming
organized urban worker movements that when joined with displaced farmers
may set off a new rebellious period. This may then blossom into "a
new revolutionary struggle" that will determine China's future
and its climate for investors.
The US and Latin America
Petras has studied Latin
America for decades and knows the region as well as anyone. Here he
dispels notions of a revitalized regional populism with US dominance
waning. His case is compelling as he argues Washington's influence has
increased in recent years (though not to the level of the 1990s) despite
the success of Hugo Chavez and his ability to thwart US efforts to unseat
The Bush administration lost
out on FTAA but has had other successes:
-- bilateral trade agreements
with numerous Latin American states from the Caribbean to Chile;
-- an expanded number of
military bases despite the possible loss of one in Ecuador ahead;
-- US business interests
in the region flourishing, including in Venezuela where they're booming;
-- neoliberal free market
policies intact despite campaign rhetoric promising change.
Aside from Venezuela and
maybe Ecuador (where it's too soon to tell), the left's appraisal of
progressive change is nowhere in sight, so what are they seeing that's
Petras assesses the current
state of things in the region after reviewing its recent history readers
can get from the book. He notes signs of Washington's declining influence
that's had no adverse affect on corporate interests except in Venezuela
where taxes are now fair compared to earlier when they were too low.
He also explains so-called center-left regimes in Brazil, Argentina,
Bolivia, Uruguay and elsewhere tamed mass social movement demands while
embracing 1990s neoliberalism. In Brazil, if fact, President Lula da
Silva actually deepened and extended the privatization and restrictive
budget policies of the preceding Cardoso regime, and despite his Workers
Party background, demobilized mass movements and trade unions instead
of supporting them as people expected. Many now see him for what he
is - a traitor, but sadly, he's got company, too much of it.
Of great significance is
the way Petras explains four competing regional power blocs representing
varying degrees of accommodation or opposition to US policies and interests.
1. The Radical Left
-- the FARC guerillas in
Colombia (active since 1964); some trade union sectors; and peasant
and barrio movements in Venezuela;
-- the labor confederation
CONLUTAS and sectors of Brazil's Rural Landless Movement (MST);
-- sectors of the Bolivian
Labor Confederation (COB) and the Andean peasant movements and barrio
organizations in El Alto;
-- peasant movement sectors
(CONAIE) in Ecuador;
-- teachers and peasant-indigenous
movements in Oaxaca, Guerrero and Chiapas, Mexico;
sectors in Peru;
-- trade unionist and unemployed
sectors in Argentina; and
-- other Central and South
American social movements and some Marxist groups in several countries.
2. The Pragmatic Left
-- Hugo Chavez in Venezuela
who combines grassroots participatory democracy and redistributive social
policies with support for business interests;
-- Evo Morales in Bolivia;
-- Fidel Castro in Cuba;
-- various large electoral
parties and major peasant and trade unions in the region; leftist parties
including the PRD in Mexico, FMLN in El Salvador, CUT in Colombia, Chilean
Communist Party, Peru's nationalist parliamentary party, sectors of
Brazil's MST, Bolivia's MAS governing party, CTA in Argentina, and PIT-CNT
3. The Pragmatic Neoliberals
(the most numerous political block)
-- Lula in Brazil;
-- Kirchner in Argentina;
-- the major trade union
confederations in Brazil and Argentina;
-- business and financial
elite sectors providing subsistence unemployment doles and food aid;
-- similar groups in Ecuador,
Nicaragua (the Sandinistas and their split-offs), Paraguay and other
4. The Doctrinaire Neoliberal
-- Calderon in Mexico;
-- Uribe in Colombia;
-- Bachelet in Chile (in
spite of her being imprisoned and tortured under Pinochet);
-- the Central American countries:
El Salvador, Honduras, Costa Rica and Guatemala;
-- Garcia in Peru;
-- Paraguay with the region's
largest military base;
-- Uruguay's ex-leftist regime
-- US-occupied Haiti through
proxy thuggish paramilitary UN peacekeepers; and
-- the Dominican Republic.
The notion that populism
swept Latin America in the new century is pure fantasy. In fact, there's
a "quadrangle of competing and conflicting" regional forces
with Washington having less market leverage than in the 1990s "Golden
Age of Pillage" but still enough to be dominant and able to keep
Petras continues his analysis
with detailed examples of key center-left regimes in Brazil under Lula,
Argentina under Kirchner, Uruguay under Vazquez, Bolivia under Morales
plus some comments on Peru and Ecuador under leaders preceding their
current ones. Each case substantiates the fantasy that these regimes
represented "new winds from the Left" sweeping the region.
Hot air maybe, but little, if anything, in the way of progressive change
despite the beliefs of many intellectuals on the left.
However, that's not to say
leftist forces aren't strong enough to bubble up and bring change. Insurrectionary
forces brought Evo Morales to power in Bolivia and can take him down
if he fails them as he's now doing. The same is true in other countries
with Hugo Chavez their model. He challenged US imperialism, brought
real social change, has mass public support and thus far withstood US
efforts to oust him. In Cuba, Fidel Castro thwarted every Washington
effort against him since 1959 and is still in charge, larger than life,
although frail and weak following his protracted illness from which
he's still recovering. Petras sees a new generation of young committed
leaders emerging in the region. "They are the 'Left Winds' of Latin
America," and it's in them that hope lies.
Foreign Investment (FI) in
Petras demystifies FI's impact,
explains the risks in attracting it, and exposes six myths about its
It's untrue FI creates new
enterprises, market opportunities and more. Most, in fact, aims to buy
privatized and other enterprises while crowding out local capital and
FI doesn't increase export
competitiveness. It buys mineral resources for export with little done
to create jobs or stimulate the local economy.
It's false to think FI provides
tax revenue and hard currency. An FI export model creates more indebtedness
and a net loss.
It's false believing debt
repayments to international lenders is key to a good financial standing.
Much foreign debt is odious and repaying it harms borrower countries.
It's false believing FI provides
developing countries needed capital. It's used instead to buy local
companies and control a country's markets.
It's false believing FI attracts
further investment. Capital freely moves to wherever it gets the best
returns and is anchored nowhere.
Developing countries benefit
most by relying less on FI and more on national ownership and investment.
The former is predatory. The latter accrues profits to the national
treasury and grows the country's economy. FI demands conditions favoring
capital over labor that results in a widening economic gap and greater
inequalities in political and social power. The 20 year (1980 - 2000)
record of Latin American FI is socially disastrous. Living standards
plunged while unemployment and poverty soared. Hardly reasons to attract
it and clear ones to stay away or restrict it.
Part IV - An Agenda for Militants
Petras considers FI economic
alternatives and ways to buck its strategic countermeasures. FI generally
threatens disinvestment when a country wants to enhance its own economy
and benefit popular living standards. Hardball tactics cut both ways,
and the state can use its own effectively to counter capital flight
threats as well as adopt policies in advance serving its needs first
ahead of those FI wants to have things its own way.
Petras notes that FI "is
incompatible with any notion of an independent, socially progressive
country" even though at times it can be useful in a regulated environment
controlling it. He explains a country's own financial and economic resources
can be used instead of FI to enhance its internal development and technological
advance by reinvesting profits from export industries; controlling foreign
trade to increase retention of foreign exchange; investing pension funds
productively; imposing a moratorium on debt payments; recovering stolen
public treasury funds and unpaid taxes; maximizing under-employed labor,
Most countries can avoid
FI by relying on multiple sources of its own capital. They can also
employ alternative effective strategies when outside help is needed
by minimizing its ownership, employing short-term contracts on favorable
terms, imposing stiff penalties on capital flight, and barring it from
returning if it leaves. Petras concludes: "The historical and empirical
evidence demonstrates that the political, economic and social drawbacks
of (FI) far exceed any short-term benefits perceived by its defenders."
The Middle Class and Social
Movements in Latin America
Petras observes that middle
class attitudes in the region depend on the "political-economic
context" confronting it. It's attracted to the right under expanding
right-wing regimes and to the left in times of economic crisis. On the
other hand, under a "popular, anti-dictatorial, anti-imperialist
populist government, the middle class supports democratic reforms"
but not radical policies harming it for the benefit of the working class.
Three examples make his case - in Brazil under Lula when it took over
his Workers Party; in Argentina when it benefitted under Menem and Cardoso
and later under Kirchner; and in Bolivia under Morales who combines
"political demagogy" to his base and neoliberal IMF austerity
in his policies attractive to middle class and business interests.
Petras notes social movements
failed by not developing political leadership or a program for state
power and depended instead on "electoral politicians of the upwardly
mobile professional middle class." The Left's key challenge, he
believes, is to "convert the public sector middle class from anti-neoliberalism
to anti-capitalism and anti-imperialism, and to combine urban welfare
(with) agrarian reform."
Iraq and Afghanistan's Importance
in Defeating the Empire
Petras concludes by noting
Washington's imperial wars were stopped in their tracks in Iraq and
Afghanistan by resistance too powerful to contain. A "shock and
awe" blitzkrieg failed when Iraqis wanted a say in running, rebuilding
and transforming their country and rejected its US-installed puppet
regime. The country is a wasteland, the nation creation project bankrupt,
and the prospect for success bad and worsening with multi-billions expended
and nothing gained except huge profits for administration favored contractors
that always benefit whoever wins or loses.
The same situation holds
in Afghanistan. An easy five week walkover turned into an endless debacle
with no end in sight. Washington planned successive wars for unchallengeable
world dominance, but local resistance in two countries stopped it cold
(so far), may defeat its proxies in Somalia, and resilient opposition
in Palestine and South Lebanon may prove equally formidable as well.
The US is now over-extended
and its "imperial grand strategy" weakened. It's made preemptive
wars against Iran and Syria and trying again to topple Hugo Chavez less
likely, but none of these possibilities are off the table. Cornered
and facing defeat, rhetoric is heated making anything possible, and
the September 20 Lieberman-Kyl "Sense of the Senate" (no legal
force) resolution/amendment to the FY 2008 Defense Authorization bill
ratchets up the possibility of attacking Iran and its regional "proxies"
with potentially catastrophic fallout the risk.
For now, emboldened resistance
and strong anti-war opposition are matched against an administration
desperate to turn things around and willing to try anything to do it.
How this may end is a crapshoot, the stakes on its outcome too great
to risk but may be waged anyway, and the world trembles as it waits
and watches. Stay tuned and hope Petras is right believing Iraq and
Afghanistan thwarted the empire and prevented further aggression against
Iran and beyond, now off the table. Or maybe not. When wounded and cornered,
desperate animals and politicians may try anything with nothing to lose.
Keep a close watch.
lives in Chicago and can be reached at firstname.lastname@example.org.
Also visit his blog site
at sjlendman.blogspot.com and listen to The Steve Lendman News and Information
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