They all fall down…?

They all fall down…?

 

The total amount West Germany ultimately paid to the Kremlin for reunification is unknown, although it's usually estimated at between 50 and 80 billion marks (25-40 billion euros or $31-50 billion). A price, most would say, that was well worth paying.

 

-       How Kohl and Gorbachev sealed the deal on German reunification, DW News

 

 

By JM Hamilton (10-18-2020)

 

On Christmas day, 1991, the Soviet flag was lowered from the Kremlin, and promptly replaced with the flag of Russia.  As we approach the thirty-year anniversary of the collapse of the Soviet empire, it’s a good time to refresh our memories as to why this superpower collapsed, and exactly, how striking the parallels are in the United States today. 

 

The popular narrative, at that time, is capitalism triumphed over communism, but upon closer inspection, today, the US no longer practices capitalism.  Today, monopolies and utilities – where the means on the production are placed into the hands of a few oligarchs – dominate the American economy, and the 2008 financial crisis and the present pandemic have only accelerated this trend. 

 

U.S. markets are no longer markets, in the traditional sense, but are constantly propped up by Federal Reserve’s (FED) monetary policy.  More specifically, Congress and the FED borrow from the US credit line and send taxpayer money into so-called debt and stock markets, where the transfer of wealth – American style socialism – really takes place (from the 99% into the forever grasping hands of the 1%).  In short, profits are privatized, and losses are socialized… the latter being absorbed by the disenfranchised American taxpayer, via diminished future prospects, austerity, higher taxes, and an economy staggering under a catastrophic debt load.

 

So without further ado, some of the similarities between the conditions and events surrounding the pre & post – Soviet collapse and conditions within the United States, today. 

 

Oligarchical Control:  With the collapse of the Soviet Union, factories and economic assets quickly fell into the hands of oligarchy. Prior to that, these same assets belonged to the Russian people, under the stewardship of the Soviet dictatorship.  Today, in the United States, there is news article after news article on the incredible concentration of wealth, into the hands of a ruling oligarchy. Think the US is a democracy or republic… thanks to campaign finance laws, think again. 

 

A Decrepit and Aged Ruling Body, Impervious to Change:  At the time of Brezhnev’s death, in ’82, the politburo, or Soviet congress, was at a median 70 years of age.  And if you lived through the early 80s, there was a never-ending stream of elderly Soviet leaders, dropping dead w/ great frequency.  Today, in the United States, many within the political class, who stand in for the ruling oligarchy, and keep up the pretense of democracy, are septuagenarians.  The congress today, is one of the oldest on record.  Both ruling bodies – the congress and the politburo - are/were heavily resistant to change.  And in the case of the US, in particular, the congress, all too often, flat out ignores the desires & wishes of the majority of Americans. 

 

National Debt & Banker Rule:  The Soviets and Eastern bloc had racked up considerable debt, owed to Western banks, throughout the eighties.  Much of this debt was unsecured and undercollateralized. And the arms race with Reagan didn’t help matters.  Bankers being bankers, they insisted upon Russian & Eastern bloc austerity, with the public bearing the brunt of reduced government expenditure (see Poland as an example). In fact, one of the key components of German reunification was extensive financial aid and assistance from Western Germany to the Soviet Union, including the cost of repatriating Soviet troops to mother Russia.  The Russian ruble, during this period, was devalued… a common methodology in which nation states deal w/ extraordinary national debt levels, owed to foreign countries.  Of course, today, in the United States, the national debt has grown to extraordinary levels, equal to or greater than annual GDP, and financial crisis are becoming common place w/ greater frequency & severity.  

 

Naturally, the oligarchy and Wall Street advocate austerity at a time of wide-spread unemployment.  In the US, to say that Wall Street banks have considerable sway over the American government, and its fiscal & monetary policies, is an understatement. 

 

Declining living standards, and substance abuse:  In the USSR, by the late eighties, living standards were in decline, and alcoholism and infant mortality were on the rise. In the US today, we can see: the bottom half of society cannot make a $400 emergency payment; wage & wealth inequality can now be characterized as an existential threat; life expectancy is in decline; and underemployment and unemployment are rampant. Moreover, the epidemic of drug and opioid addiction & deaths has not decreased, during the plague.  In fact, American overdose deaths are resurgent. 

 

Consolidation & Privatization Schemes:  With the collapse of the Soviet Union, industry & factories – along w/ natural resources - fell into the hands of oligarchy.  Russian billionaires were made as Soviet era assets were unable to perform in the global economy.  In some instances, little regard was given to displaced workers – see Eastern Germany – and tremendous economic hardship ensued.  State assets were privatized, often to the connected & powerful, and at fire sale prices (aka kopeks on the ruble). This should sound very familiar to Americans.  In the US, connected & powerful business interests have turned privatization into a revenue stream provided by the US taxpayer.  The merits of privatization – oft-cited cost or expense mitigation – are specious at best and rarely, if ever, play out.  Simultaneously, Wall Street and Private Equity oligarchs loot the credit lines of private sector takeover targets and destroy entire industries, leaving the US economy dominated by cartel or monopoly.

 

Empire:  Both the US and the USSR are, and were, well known for their empires and gross foreign policy overreach.  And ironically enough, both countries were (and are, in the case of the US) bogged down in Afghanistan of all places…. The graveyard of empires. Empires require extravagant resources, military expenditure, at the sacrifice of the public; and we know defense/offense spending is a key source of fraud and outright theft (of limited state resources).  Today, defense spending makes up half of US discretionary fiscal spending, at a time that US unemployment is extraordinary, the aforementioned living standards are in decline, w/ women, children, and minorities bearing the brunt of economic hardship & misery. In short, a costly US empire still exists at a time that Americans can least afford a neocon foreign policy.  

 

 

 

 

 

Is the US following the Soviet Union, indeed the arc of all empires, into decline, decay and collapse?   It would certainly appear so.  The US seems incapable of reform, the government has been co-opted and betrayed by a ruling oligarchy, as well as, campaign finance laws that invite, and make legal, unprecedented corruption. 

 

A dynamic capitalism and mixed economy (see FDR and the New Deal), with requisite competition (the checks & balances of capitalism) … have been traded in for financial engineering, Federal Reserve/taxpayer backstopped markets, monopoly, and the exploitation of foreign labor.  All at the cost of declining American standards of living and mass poverty.  Moreover, it appears that president after president are incapable of extricating the US from endless foreign wars, as the national debt, homelessness, economic decline & misery are all on the rise.

 

If we look at the range of economies and political institutions, not as linear, but as a circle, we can quickly see that there is little difference between a Soviet dictatorship, or a post-Soviet dictatorship… And America’s dictatorship of a monied elite.  That there is little difference from a single party state and a highly corrupt two-party state.  In terms of the economy, well… oligarchy is oligarchy.  Isn’t it?  Whether it’s the post-Soviet economy or the US economy, both are characterized by lack of dynamism & stagnation.  Lest we forget, monopoly is the twin of communism, where the means of production are placed into the hands of a single producer; and both – communism & monopoly – are sanctioned by the state. 

 

We can also see that bankers will always insist upon welfare for themselves and austerity for everyone else.  And an atrophied and decaying ruling elite will, generally, place themselves first, until it’s too late. 

 

Copyright JM Hamilton Publishing 2020