Immanuel Wallerstein • 2010 | Center for a World in Balance

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Immanuel Wallerstein - 2010

Immanuel Wallerstein is a sociologist, historical social scientist, and world-systems analyst.

Wallerstein began as an expert of post-colonial African affairs, which he selected as the focus of his studies after an international youth conference in 1951, and which his publications were almost exclusively devoted to until the early 1970s, when he began to distinguish himself as a historian and theorist of the global capitalist economy on a macroscopic level. His most important work, The Modern World-System, appeared in three volumes in 1974, 1980, and 1989.

Wallerstein rejects the notion of a Third World, claiming there is only one world connected by a complex network of economic exchange relationships — i.e., a world-economy or world-system, in which the dichotomy of capital and labor, and the endless accumulation of capital by competing agents (historically including, but not limited to, nation-states) account for frictions. This approach is known as the World Systems Theory.

U.S. Concerns: First Germany, Now Japan? (1 January 2010)

The geopolitical strategy of the United States after 1945 was based on what seemed to be a solid rock - control over its two defeated enemies in the Second World War, Germany and Japan. For a long time, each country was governed by a single conservative party - the Christian Democratic Union (CDU) in Germany and the Liberal Democratic Party (LDP) in Japan. The two parties pursued a policy of close alliance with the United States and faithful support of its geopolitical positions.

The unbreakable support began to break down first in Germany. For one thing, the CDU began to alternate power in 1969 with the Social-Democratic Party whose Chancellor, Willy Brandt, launched the Ostpolitik, seeking some sort of détente with the Soviet Union. The weakening of German links with the United States progressed slowly until the significant break in 2003 when Germany allied itself with France and Russia to defeat the U.S.-supported resolution in the U.N. Security Council that would have constituted an endorsement of the U.S. invasion of Iraq.

Nothing similar happened for a long time in Japan, until Aug. 31, 2009, when the Democratic Party of Japan (DPJ), led by Yukio Hatoyama, swept the LDP out of office on a platform that included rethinking Japan's "subservient" relationship with the United States. Hatoyama had published an article in 1996 in which he described the U.S.-Japan Security Treaty as "a Cold War relic" and called for weaning away Japan from "excessive dependence" on the United States.

There had long been a contentious issue in U.S.-Japan relations, which was the existence of, and conditions governing, U.S. military bases on Okinawa. To lessen the discord, the United States was negotiating a new arrangement with the previous LDP government that would transfer some (but not all) U.S. troops from the island of Okinawa to Guam, and relocate the existing military base to a more remote area on Okinawa. Hatoyama, however, seemed to want U.S. troops to leave the island entirely. This was the strongly-voiced view of one of the DPJ's coalition partners, the Social-Democratic Party.

There was an additional complication. Just at this moment, a secret agreement between the United States and Japan came to light. Okinawa had been occupied by the United States since 1945, and under its total control. The United States then agreed to "revert" the island to Japan in 1972, while keeping a base. There was one problem. The United States had nuclear weapons on Okinawa. Japan had an official policy of the "Three Non-Nuclear Principles" - not possessing, not producing, and not permitting the entrance of nuclear weapons into Japan. These principles would now presumably govern the U.S. base. It seems, however, that President Nixon and Japanese Prime Minister Eisaku Sato signed an agreement in 1969 permitting the United States to reenter nuclear weapons to Okinawa in case of an "emergency." Since this was a direct violation of Japanese official policy, it was kept secret and known to very few people in Japan.

In addition, after assuming office, Hatoyama added fuel to the fire by calling publicly for the creation of an East Asian Community, embracing China, South Korea, and Japan, but not including the United States.

The initial U.S. reaction to all of these events was to consider Hatoyama's position the rhetoric of a "populist, inexperienced" government, which was not to be taken too seriously. But as Hatoyama continued to waffle on the proposed new Okinawa agreement, the U.S. government became ever more distrustful of him and worried about the long-term implications of what seemed to be a new turn in Japanese geopolitical strategy. In late December, U.S. Secretary of State Hillary Clinton convened the Japanese Ambassador to tell him bluntly that the United States would not budge on the terms of the proposed new arrangement about the military base. The Washington Post now reports that the United States is "vexed" with Hatoyama, and considers the Japanese position as quite possibly more "problematic" than they had previously thought.

It is true that both leading newspapers in Japan, the Asahi Shimbun and the Yomiuri Shimbun have run editorials and op-eds this last month cautioning against this break with the United States. But so did conservative newspapers in Germany as it moved away from total alignment with the United States. Still, Hatoyama is under some internal political pressure to slow down on his distancing from the United States, and hence he waffles. But waffling is not the same as restoring close links with an ally that previously did not need to worry about the loyalty of its "solid rocks."

It is presently thought that the existing conservative government of South Korea shares this U.S. view about Japan. However, South Korea's own distancing from the United States started long ago, and initially under the leadership of the very same conservative party now again in power. In 2003, the South Korean government admitted that it had been enriching uranium and plutonium in secret for two decades. This process went much further in the process of creating nuclear weapons in violation of the Safeguards Agreement than anything Iran is accused of doing. This was never referred to the U.N. Security Council by the International Atomic Energy Agency, but does reveal a degree of autonomy from dependence on the United States.

If one combines what is happening in Japan and South Korea with China's increasing geopolitical assertiveness, it seems quite probable that the next decade will see considerable movement towards the creation of Hatoyama's East Asian Community.

As Germany (and France) move closer to Russia, and Japan (and South Korea) move closer to China, the United States can no longer count in any way on the two solid rocks on which it built its geopolitical strategy as the (erstwhile) hegemonic power of the world-system.

by Immanuel Wallerstein

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These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

How to Think About China (15 January 2010)

If one asks throughout the world the question, what do you think of the United States as a country and a world power, you will get very clear answers. Everyone has an opinion - North and South, rich and poor, men and women, politically on the right or the left, young and old. The opinions vary enormously from extremely favorable to extremely hostile. But people do feel they know how to think about the United States.

Thirty years ago, the same was probably true about China. But it is no longer true. Many people, perhaps even most people, around the world are no longer sure what they think about China as a country or as a world power. Indeed, it is a subject not only of uncertainty but of sharp debate. It is useful perhaps to review which issues people outside of China tend to debate when they discuss China. There are three principal ones.

The first and perhaps the most well-known debate is whether to think of China as essentially a socialist country or as essentially a capitalist one. China of course still proclaims itself to be socialist. China continues to be governed by the Communist Party. On the other hand, China seems to be basing the actual operations of its internal economic operations, and certainly its world trade, on market principles.

Views on the world political left and the world political right are not at all unified on this issue. There are those on the right who insist that the market operations are a mere facade for what continues to be a government intent on pursuing the historic objectives of a traditional Marxist-Leninist-Mao Zedong ideology. But there are many on the political right who see a country in "transition" to a fully market-based economy and regard the ideology, not the market operations, as the facade.

The same is true on the left. There are those who see China as still governed by the same socialist objectives and see the "market" operations as either a tactical retreat or as the facade. But there are others on the left who are either cynical about China's current policies or openly disillusioned.

The next issue that divides opinion is whether China is still part of the South or has now become part of the North. Thirty years ago, there was no doubt. China attended the Afro-Asian conference in Bandung in 1955. China presented itself everywhere as a militant promoter of the geopolitical views and interests of the South. But today, China is classified as the strongest of the "emergent" nations and the second strongest economy in the world. The world press speaks of the G-2 (the United States and China), who in effect share world power. How different from the late 1960's when China spoke of the United States and the Soviet Union as the "two superpowers" against whom everyone else should unite.

So there are many in both the North and the South who today regard China as essentially part of the North. But there are also others, in both the North and the South, who continue to consider China as a leading voice of the South. After all, they say, a very large part of the population of China still live at a quite low economic level.

Finally, the perhaps most controversial question is whether to continue to think of China as a leading anti-imperialist power or to think of China as itself an imperialist power. This is less debated in the North than in the South. There are many who insist that China continues to play a crucial role in undoing U.S. imperialism, which they say continues to be the major imperialist force in the world.

Furthermore, they point to the ways in which Chinese economic assistance to countries in Asia, Africa, and Latin America is given without the strings that U.S. and European aid is normally given. The Chinese, they say, offer much needed economic leverage for countries in the South - a prime example of socialist cooperation.

But there are others in the South who see Chinese aid as a mode of guaranteeing access to key raw materials in ways that do not necessarily meet the optimal needs of these countries. And there are some who are disturbed by the outflow of small Chinese merchants to these countries, asserting that their activities undermine small local merchants, and constitute a form of settler colonization.

Today the debate is murky and the dividing lines uncertain. This is unlikely to continue for too long. Probably ten years from now, certainly twenty years from now, everyone will know once again how to think about China. Opinions (pro and con) will become firm once again.

by Immanuel Wallerstein

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

The United States Misreads Brazil's World Policy (1 February 2010)

When the United States first realized circa 1970 that its hegemonic dominance was being threatened by the growing economic (and hence geopolitical) strength of western Europe and Japan, it changed its posture, seeking to prevent western Europe and Japan from taking too independent a position in world affairs.

The United States said in effect, although not in words: Up to now, we have been treating you as satellites, required to follow our lead without question on the world scene. But you are stronger now. So we invite you to be partners, junior partners, who will share in the collective decision-making, provided only you don't stray too far on your own. This new U.S. policy was institutionalized in multiple ways - notably the creation of the G-7, the establishment of the Trilateral Commission, and the invention of the World Economic Forum of Davos as a meeting-ground of the "friendly" world elite.

The main U.S. objective was to slow down the decline of its geopolitical power. The new policy worked for perhaps twenty years. It was finally undone by two successive events. The first was the disintegration of the Soviet Union in 1989-1991, which removed the major argument the United States had used with its "partners" that they should not be too "independent" on the world scene. And the second was the self-defeating unilateral macho militarism of the Bush regime. Instead of restoring U.S. hegemony, it resulted in the devastating failure of the United States in 2003 to get U.N. Security Council endorsement of its invasion of Iraq. Bush's neocon policies had backfired entirely, turning a slow decline in U.S. geopolitical power into a precipitate decline. Today, almost everyone recognizes that the United States no longer has the clout it once had.

One would have thought the United States might have learned some lessons from the errors of the Bush regime. But it seems it is trying to repeat the same scenario with Brazil today. It will not take twenty years for this attempt to unravel.

The major geopolitical move that Obama has undertaken was to turn the G-8 meeting into a G-20 meeting. The crucial group that was added to the meeting were the so-called BRIC countries, otherwise called the "emerging" countries. BRIC stands for Brazil, Russia (already included in the G-8), India, and China.

What the United States is offering Brazil is "partnership." This comes out very clearly in the recent report of a Task Force of the Council on Foreign Relations (CFR) entitled U.S.-Latin America Relations: A New Direction for a New Reality. The CFR is the voice of the centrist Establishment, and this report probably reflects White House thinking.

There are two crucial sentences in this report concerning Brazil. The first reads: "The Task Force believes that deepening strategic relationships with Brazil and Mexico, and reformulating diplomatic efforts with Venezuela and Cuba, will not only establish more fruitful interaction with these countries but will also positively transform U.S.-Latin American relations."

And the second sentence deals specifically with Brazil: "The Task Force recommends that the United States build on its existing collaboration with Brazil on ethanol to develop a more consistent, coordinated, and broader partnership that incorporates a wide range of bilateral, regional, and global issues."

The report was issued in 2009. In December, the CFR organized with the Fundação Getulio Vargas (FGV) a seminar on "rising Brazil." By coincidence, the seminar occurred just at the moment of both the Honduran political crisis and the visit of Iran's President Ahmadinejad to Brazil. The U.S. participants in the seminar did not speak the same language as the Brazilians. The Americans believed that Brazil should act as a regional power, that is, as a sub-imperial power. The U.S. participants couldn't understand Brazil's disapproval of Colombia's military and economic links with the United States. They thought also that Brazil should assume some responsibility for maintaining "world order," which meant joining in the U.S. pressure on Iran's nuclear policies, whereas the Brazilians felt that the U.S. position on Iran was "hypocritical." Finally, whereas the U.S. participants saw Chavez's Venezuela as being "far from democratic," the Brazilians echoed President Lula's characterization that Venezuela suffered from an "excess of democracy."

In January 2010, Susan Purcell, a conservative U.S. analyst, published in the Miami Herald a critique of U.S. policy on Brazil, calling it "wishful thinking." She may well be right. In her view, "Washington may need to rethink its assumptions regarding the extent to which Brazil can be relied on to deal with political and security problems in Latin America in ways that are also compatible with U.S. interests."

In January also, Valter Pomar, Secretary for International Relations of Lula's party, the PT, said that the U.S. intention in creating the G-20 was "to try to absorb and control alternative poles of power, ...to maintain a multipolarity under control." He insisted that, in the strain between supporting world capitalist interests as a sub-imperial power and supporting "democratic-popular interests," Brazil would end up on the latter side.

Given the increased strength of western Europe and Japan in the early 1970s, the United States offered them promotion to the status of junior partner. France and Germany opted to proceed further to an independent world role in 2003. And Japan, in its national election in 2009 and its mayoral election in Okinawa in 2010, seems to be opting for it now. Brazil, given its increased strength, was offered junior partnership only in 2009. It seems to be insisting on an independent world role almost immediately.

by Immanuel Wallerstein

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

Chaos as an Everyday Thing (15 February 2010)

You know you're living in a chaotic situation when (1) the mainstream media are constantly surprised by what is happening; (2) short-term predictions by various pundits go in radically different directions and are stated with many reserves; (3) the Establishment dares to say things or use words that were previously taboo; (4) ordinary people are frightened and angry but very unsure what to do. This is a good description of the past two years throughout the world, or at least in most parts of the world.

Consider the recent enormous "surprises" - the election of a Republican senator in Massachusetts; the financial collapse of Dubai; the near bankruptcy of various large states within the United States and four or five of the member states of the European Union; severe world currency fluctuations.

These "surprises" are commented on each day in the world press and by leading politicians. They don't agree at all about what is happening, and even less about what one should do to improve the situation. For example, I have seen only two intelligent statements about the election results in the United States.

One was by Barack Obama himself: "The same thing that swept [Republican] Scott Brown into office [in Massachusetts] swept me into office. People are angry, and they're frustrated." And the second was by African-American op-ed columnist in The New York Times, Charles M. Blow. He called his op-ed "Mobs rule." He said: "Welcome to the mob: an angry, wounded electorate, riled by recession, careening across the political spectrum, still craving change, nursing a bloodlust." First they elected Obama; now they're rejecting him. Why? "The mob is fickle."

What are we seeing in California, in Greece, in most of the world's governments? Government revenues are down, primarily because of reduced tax incomes, which are in turn caused by the fact that everywhere people are consuming less out of fear that their money is running out. At the same time, precisely because world unemployment is considerably greater, the demands on the states for expenditures have risen.

So states have less money to meet greater demands. What can they do then? They can increase taxes. But taxpayers are seldom in favor of having their own taxes go up. And states are afraid of the flight of enterprises. Well, then, they can cut expenditures - present ones or future ones like pensions. And then they are faced with popular unrest, if not popular revolt.

Meanwhile, the "market" reacts. But what is this market that reacts - for example, by shifting its currency preferences? It is very large corporations and financial structures like hedge funds, which are working the world financial system for very short-term but significant gains.

As a result, governments are faced with impossible choices, and individuals even more impossible choices. They cannot predict what is likely to happen. They become ever more frantic. They lash out by being protectionist or xenophobic or demagogic. But of course, this solves little.

At this point enters that greatest of world pundits, Thomas I. Friedman, to write a column entitled "Never heard that before." What had he never heard before? He heard non-Americans talking at Davos about "political instability" in the United States. He says that in his past experience such a phrase had been used only about countries like Russia or Iran or Honduras. Imagine that. People actually think the United States is politically unpredictable. And Thomas Friedman never heard it before.

There have been some people who have been writing this, and explaining this, for some forty years at least, but Thomas Friedman never heard it before. That's because he has been living in a self-constructed cocoon, that of the political Establishment in the United States and its acolytes elsewhere. Things must be really bad for them to recognize this basic reality. The United States is politically unstable - and likely to become more so, not less so, in the coming decade.

Is Europe more stable? Only somewhat. Is Latin America more stable? Only somewhat. Is China more stable? Perhaps somewhat, but there are no guarantees. When the giant teeters, many things can come down with it.

So, this is what everyday chaos is like - a situation that is not predictable in the short run, even less in the middle run. It is therefore a situation in which the economic, political, and cultural fluctuations are large and rapid. And that is frightening for most people.

by Immanuel Wallerstein

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

Greek Mess, Euromess, Western Nations Mess, World Mess? (1 March 2010)

Everyone is discussing what Fortune magazine is calling the "Greek maelstrom" and everyone is pointing the finger at someone else. Whose fault is it? The Greek government is accused of cheating and allowing Greeks to live beyond their means. The European Union is accused of having created an impossible structure for the euro.

Or is the fault with Goldman Sachs? It is accused of having enabled the Greek government to falsify its accounts when it sought to join the euro monetary system. It is accused today of engaging in "credit-default swaps" that make the situation of the Greek government even more vulnerable, but to the bank's profits. The head of credit strategy at UniCredit in Munich says this is like "buying insurance on your neighbor's house - you create an incentive to burn down the house." Chancellor Angela Merkel of Germany calls Goldman Sachs' actions in 2002 "scandalous" and Christine Lagarde, France's Finance Minister, calls now for greater regulation of credit-default swaps.

Niall Ferguson says that "A Greek crisis is coming to America." He calls this "a fiscal crisis of the Western world." Ferguson is preaching the evils of public debt and of the concept of a "Keynesian free lunch," which in the end is a "drag on growth." Paul Krugman says it's a "Euromess" because Europe should not have adopted a single currency before it was ready to have political union. But now the euro can't be allowed to break up since it would trigger a worldwide financial collapse.

Meanwhile, it seems everyone is pressuring the Greek government to reduce its budget deficit as a percentage of GDP from over 12% to say 4% in say four years. Can it do this? Should it do this? The Greek government says it will do something. This "something" has been enough to bring about massive strikes of farmers, hospital workers, air traffic controllers, customs officials, and all those who are being asked to reduce their income in the middle of an economic crisis and increased unemployment.

Should Germany do something? The Germans don't want to for two principal reasons. The first is the prospective demand of other states in economic difficulty (Spain, Italy, Portugal, Ireland) for the same thing. The second is the internal pressures of their citizens who see any help to Greece as money that is being taken away from them, when they too are feeling an economic squeeze.

On the other hand, if Greece (and other countries) squeeze their citizens to pay down the debt, it means reduced purchasing power for imports - first of all, from Germany. And this means in turn a downturn for the German economy. Josef Joffe, the editor of Germany's Die Zeit, groans: "Europe has become a huge welfare state for everybody, for states as well as individuals."

Meanwhile, the euro is slumping and the dollar is once again, for a moment, a "safe haven." Ferguson warns us that "US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941."

When an analyst in the Financial Times suggested that Germany was going after all to bail out Greece, a German reader commented: "So what you're saying is give them your money to spend in your shop." But isn't that just what the Chinese do when they buy U.S. Treasury bonds?

What these multiple cross-cutting analyses of short-term blame and short-term gain miss is that the problem is worldwide and structural. Banks exist to make money. The games Goldman Sachs has been playing (and other banks as well) has not only been with Greece, but with many, many countries - even with Germany, France, and the United Kingdom, even with the United States.

This is because governments wish to survive. To do this, they need to spend enough money to prevent a "maelstrom" and civil uprising. And if they don't take in enough taxes to do this (both because they don't want to raise taxes further and because a weaker economy means less overall tax income), they must "massage" their accounts by borrowing. And covert borrowing (from banks, for example) is better than overt borrowing, since it enables governments to avoid criticism, until the day when the secret gets revealed, and there's a "run on the bank."

Greece's problems are indeed Germany's problems. Germany's problems are indeed the United States' problems. And the United States' problems are indeed the world's problems. Analyzing who did what in the last ten years is far less useful than discussing what, if anything, can be done in the next ten years. What is going on is a world-wide game of chicken. Everyone seems to be waiting for who will flinch first. Someone is going to make a mistake. And then we'll have what Barry Eichengreen has called "the mother of all financial crises." Even China will be affected by that one.

by Immanuel Wallerstein

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

Ancient Dilemma of the Left: The Case of Brazil (15 March 2010)

On the occasion of the celebration of the 30th anniversary of the creation of the Partido dos Trabalhadores (PT, the Workers' Party) in Brazil, the principal independent left newspaper, Brasil de Fato, published interviews with four leading left intellectuals in Brazil. All four were once active in the PT, indeed among its founders. Three of them have withdrawn from the PT - the historian Mauro Iasi to join the Partido Comunista Brasileiro (PCB); the sociologist Francisco de Oliveira to join the Partido Socialismo e Liberdade (PSOL); and the historian Rudá Ricci to be an independent leftist. The fourth, the historian Valter Poner, remains in the PT as a leading figure in its left faction.

They came up with strikingly different analyses of what Ricci calls "the ancient dilemma of the Brazilian left--how to be both popular and on the left." But of course this has been the dilemma of the left throughout the world, and remains so up to now.

Brazil is an interesting place to analyze this dilemma and how it plays out. It is a country with a long and active political tradition, and today enjoys very much a multi-party situation. Brazil is also a country whose national economic sitution has much improved in recent years, particularly in the last decade. And Brazil is a country which has been asserting much political leadership in Latin America. So the question becomes how do we measure the "popularity" of a party and how do we assess its left credentials?

The interviewer of Brasil de Fato opened his interviews by noting both that Pres. Luiz Inácio Lula da Silva ("Lula") is a charismatic figure who is the most popular president since the redemocratization of the country and that the PT over its history has increased its support among the poorest strata of the population. In order for the PT to become more popular, he asserted, "it had to make concessions to pragmatism."

How did the four intellectuals react to this premise? For Ricci, "Lulism" has become more important than the party, which inverts the original concept of the PT. The PT has become, he says, "Americanized." It is today simply an electoral machine. The left finds it difficult to be popular because of its "roots in European theorizing." Popular culture, he says, is "complex and conservative," and Lula dialogues with this popular culture. The PT is statist and developmentalist, hence conservative and pragmatic. So the problem is to return to the PT's original "utopia of a democratic left, without becoming elitist."

For Iasi, the PT has become one of two principal parties of Brazil, a party of the center-left with a "petty-bourgeois" program. The price it paid for the size of its support was the "abandonment of the principles and political objectives that were originally there." "Lulism" or "populism" is a mode of getting the masses to agree to policies that are not in their interest.

For Oliveira, the PT which started out with a base in the workers, liberation theology, and democratization movements has simply become part of the "general marmalade" of the Brazilian party system. A socialist perspective is not one based on the "poor" but on a class analysis. As for the PT's program of nationalization (estatizaçao), this is 100 years out of date, part of the "infantile malady of statism." It's a program to strengthen Brazilian industries and has nothing to do with the left or socialism.

Poner sees the situation quite differently. He agrees that at first the Lula government was social-liberal in orientation. But after 2005, the party turned leftwards. Yes, he says, the party is developmentalist. But there are two varieties of developmentalists - conservative and democratic-popular. With the crisis of capitalism, "socialism has returned to the debate."

What is striking about the three critical analyses is the fear of "populism." What is striking about all four analyses is the absence of any discussion of geopolitics.

Just a few days after the article in Brasil da Fato, Fidel Castro published one of his regular "Reflections" in La Jornada in Mexico City. Lula had just been to visit with Castro. Castro said he has known Lula for 30 years, that is, since the creation of the PT. Given Cuba's history and difficulties over the last 50 years, Castro said that what was "transcendentally important for us" was the recent meeting in Cancún where it was decided to create a Community of Latin American and Caribbean States which included Cuba and excluded the United States and Canada. This meeting was in large measure an achievement of Lula.

Castro went on to underline "the importance and symbolism" of this last visit by Lula before he ceases to be president of Brazil. Castro remembered his "emotional meeting with Lula, his wife and his children" in their simple dwelling in the 1980's and commended Lula's "pleasure in the struggle which he conducted with irreproachable modesty." No critique of Lulism here.

Everything that the Brazilian left intellectuals criticized, Castro commended - the technological development of Brazil, the growth of the GDP, becoming one of the ten largest economies of the world. Even on the question of ethanol production, to which Castro says he is opposed, he did not blame Lula. "I understand perfectly that Brazil had no other alternative, faced with the disloyal competition and the subsidies of the United States and Europe, than increasing its ethanol production."

Castro ends on this note: "One thing is indisputable: The metallurgical worker has converted himself into a distinguished and prestigious statesman whose voice is heard with respect in international meetings."

How could Brazilian left intellectuals and Castro draw such different pictures of Lula? It is clear that they were looking at two entirely different things. The Brazilian left intellectuals were looking primarily at the internal life of Brazil and bemoaning the fact that Lula was nothing but at best a left-of-center pragmatist. Castro was looking primarily at Brazil's and Lula's geopolitical role, which he sees as one undermining the primary enemy, United States imperialism.

Which priority then for left politicians? This is not merely a Brazilian question. It is a question that can be asked almost everywhere, taking into account of course the history and the geopolitical status of the country in question.

by Immanuel Wallerstein

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

Winners and Losers in the Israeli-Palestinian Deadlock (1 April 2010)

Anyone who thinks there is going to be any significant change in the status quo in Israel/Palestine is suffering from multiple delusions. The Israeli government is dead set against the creation of a Palestinian state, even a weak Palestinian state, and this view has the support of a very large majority of the Israeli Jews. The Palestinian leaders are more divided. But even the most accommodating are not willing even to consider anything less than a state based on the 1967 frontiers, with East Jerusalem as its capital. The rest of the world cannot budge either side. This is called deadlock.

The question is who gains and who loses by deadlock? The Israeli political elite seem convinced that they will gain. There is a very large group who are so resolutely irredentist that they would consider a peace agreement a veritable disaster. The Israelis have always thought that if they dug in their heels, eventually the rest of the world (including even the Arab Palestinians) would yield to what they call "realities on the ground."

This policy has worked now for a long time. So why change it? However an increasing chorus of friendly supporters are warning them that the world political climate has been changing, and not to the advantage of the Israelis. They are pointing out that the alternative to a two-state solution is a one-state solution, and that in a single state Jews will very soon become a minority of the population. In this case, if there is universal suffrage, the state can no longer be a "Jewish state." And if suffrage is denied to non-Jews, the state cannot be considered even remotely democratic.

Just last month, one very well-known friendly supporter, Thomas L. Friedman, wrote an op-ed in The New York Times, which caused a big stir. Entitled "Driving Drunk in Jerusalem," he reprimanded U.S. Vice-President Joseph Biden for not leaving Israel immediately when his arrival was greeted with the insulting announcement of new Jewish housing being planned in East Jerusalem. Friedman said Biden should have told Israelis: "Friends don't let friends drive drunk. And right now, you're driving drunk."

A second long-time friendly supporter, Leslie H. Gelb, published a blog entitled "Israel Plays with Fire." In it, he predicted: "Israeli leaders will not like the way their little power slap [of Biden] plays out."

So why didn't Biden do what Friedman suggests? There are two kinds of answers. One was by Uri Avnery, one of the few Israelis consistently critical of his government's positions on these issues. He said that the Israeli government once again spat in the face of the United States. He closed his article with the old saying: "When you spit in the face of a weakling, he pretends it is raining. Does this apply to the president of the most powerful country in the world?"

The second is to talk of the realities of U.S. politics. Obama, like U.S. presidents before him, hasn't yet done anything serious except reiterate eternal support for Israel, even though many Israelis think that the few overtures to the Arabs that he does make (like his speech in Cairo) is already too much. Just recently, the Israeli Prime Minister's brother-in-law went on the Israeli Army radio to accuse Obama of being an anti-Semite because of that speech.

The U.S. government does not do anything much, and never has, because support for Israel's hard line is widespread in the United States. It is not merely the strength of what is an important and aggressive pro-Israeli lobby, AIPAC. It is not only that the Christian right has adopted a super pro-Zionist position. It is that leading Democratic politicians are deeply committed to such support, and Obama has enough problems with many Democratic politicians that he is not anxious to struggle with them on yet one more front.

Will the U.S. government continue this policy? Support for Israel has slumped seriously in western Europe in the last decade, because of the obduracy, the callousness, and the oppressiveness of Israeli behavior towards the Palestinian Arabs - most notably, but not only, in Gaza. Support for Israeli hard line positions has weakened also among significant segments of the Jewish population in the United States. But now it seems there may be a new source of criticism.

Marc Perry has revealed in an article in Foreign Policy that, on Jan. 16, a team of senior officers from the U.S. Central Command or CENTCOM (responsible for the Middle East) briefed the Chairman of the Joint Chiefs of Staff, Adm. Michael Mullen, on the worries of Gen. David Petraeus, head of CENTCOM, about the Israeli-Palestinian deadlock. It seems that Petraeus and his officers have been getting a consistently critical message from all the Arab leaders they meet. Petraeus apparently concluded: "America was not only viewed as weak, but its military posture in the region was eroding." In short, the deadlock was hurting the U.S. military's efforts in Iraq and Afghanistan.

Perry's conclusion: There are several very powerful lobbies in Washington--the National Rifle Association, the American Medical Association, the lawyers, and AIPAC of course. "But no lobby is as important, or as powerful, as the U.S. military." So Petraeus was warning Mullen: "America's relationship with Israel is important, but not as important as the lives of American soldiers." Since Petraeus was put into his position by George W. Bush and has been seen by the American right as a tough hard-liner on the military role of the United States in the Middle East, they can hardly now accuse him of being a sell-out.

Israeli intransigence has paid in the short run. But it is suicidal in the middle run - as Friedman and Gelb were implicitly pointing out, and Petraeus was underlining. The Israeli hardliners have been ready to denounce anyone who doesn't support them 101%. But if they think they can win by now calling Friedman and Gelb "self-hating Jews" and Petraeus an "anti-Semite," they are even more deluded than I think they are. Gelb ended his blog by warning: "This is no time for Israel's leaders to test the depth and stability of America's support for their country."

Netanyahu went to Washington to see if he could appease an angry President Obama. It seems he didn't succeed.

The world is moving inexorably towards the one-state solution (as in South Africa), whether or not this is wise, whether or not the U.S. government is ready to take a truly tough line with the Israelis, and whether or not the Israeli leadership finds it remotely acceptable.

by Immanuel Wallerstein

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

Ahmadinejad says, Thank you America (15 April 2010)

Relations between Iran and the United States have been turbulent for almost 60 years now. Before the Second World War, the Shah of Iran, Reza Shah Pahlavi, sought to maneuver between the outside demands and pressures of Great Britain, the U.S.S.R. and Germany. When the war broke out, he proclaimed neutrality. This led to an allied Soviet-British invasion in 1941. The allies forced the Shah to abdicate in favor of his son.

The Soviet forces remained in northern Iran and in 1946 made demands for an oil concession there. The British considered Iran to be part of their sphere of influence and controlled the very profitable Anglo-Iranian Oil Company (AIOC). The Cold War had started and the British did not wish to countenance such a demand. The Soviet forces withdrew from Iran, more or less as part of the implicit Yalta agreement on division of spheres of influence.

In 1951 however, Mohammed Mossadegh became Prime Minister, as head of a nationalist party, and he nationalized the AIOC, a move to which the Shah, Mohammed Reza Shah Pahlavi, was opposed. In the struggle between the two, Mossadegh obtained enough popular support to marginalize the Shah and force him into de facto exile.

The British were at this point in effect turning over their role everywhere in the Middle East to the United States. It was thus the CIA that orchestrated a coup in Iran on August 16, 1953 and arranged that the Shah return to Teheran and resume full political control. The oil nationalization was cancelled and the British firm reinstalled.

The Shah of Iran became a firm ally of the United States, suppressing all opposition. At this time, the United States was not objecting to the Shah's nuclear ambitions, nor even was Israel. The Shah's regime was increasingly oppressive and this resulted eventually in the nationalist revolution of 1979 led by Ayatollah Ruhollah Khomeini. One of the main grievances of the revolutionaries was the subordination of Iran's national interests to U.S. policies, as incarnated in the CIA coup of 1953.

The Shah fled and soon thereafter, on November 4, 1979, the U.S. embassy was invaded. The diplomats inside it were held hostage by the Iranian regime. They remained hostage for 444 days. Relations between the two countries have been hostile ever since. In 1980, the Iraqi government of Saddam Hussein attacked Iran, supported materially by the U.S. government.

The war was long and bloody and ended after eight years more or less in a draw. Soon thereafter Iraq invaded Kuwait, in part to alleviate the costs of the war. Iraq expected U.S. "understanding" of its actions, and instead found itself in the first Gulf War.

The United States was now at odds both with Iraq and Iran at the same time. When Al Qaeda launched its attack of September 11, the Bush administration accused both Iraq and Iran of being in collusion with them, whereas Al Qaeda was in fact hostile to both regimes. The United States invaded Afghanistan in 2001 and Iraq in 2003 in the presumed hope of obtaining friendly regimes in both countries and their support in its ongoing struggle with Iran, which had begun serious efforts to obtain nuclear weapons.

So, where are we today? The Iraqis have just held elections and are currently negotiating the future government. When the various parties with a strong base in Shi'a areas wanted to hold political bargaining discussions, they went to Teheran. One of the reasons adduced was that they didn't want to be overheard by U.S. listening devices. They apparently weren't worried about being overheard by Iranian listening devices. The largest party that has strong support in the Sunni areas has just announced that it will visit Iran as well. And the Iranian government has urged Shi'a parties to include the Sunni politicians in any government that was formed.

It isn't that Iran is controlling Iraqi politics. Far from it. But after a long U.S. occupation, the outcome seems to be that Iran has more influence in Iraq than the United States. Iran is especially thankful to the United States that it eliminated the one fearsome enemy it had in Iraq, Saddam Hussein.

In Afghanistan, the United States installed in power Hamid Karzai. He was, from the U.S. point of view, the ideal person, indeed the only one who could possibly hope to resist successfully the Taliban and hold Afghanistan together. He was himself a Pashtun by ethnicity, and was someone willing to make deals with the various warlords dominating non-Pashtun zones.

After recent elections, there were charges that Karzai had manipulated the results and was highly tolerant of both corruption and drug cultivation. The United States put strong pressure on him to modify some of his policies. What did he do? He invited Ahmadinejad to visit Kabul, said he might himself join the Taliban, and openly denounced the U.S. military for its wanton killings of civilians.

Since the United States has no one else who can fill the bill, it has backed down and tried to restore relations with Karzai. This is particularly true of Gen. Stanley McChrystal, the commander of U.S. forces there, who has much invested in achieving at least a partial victory over the Taliban. After nine years of U.S. (and NATO) involvement in Afghanistan, their surest ally plays the Iranian card against Washington, and there seems to be not much the United States can do about it.

Meanwhile, at home, Ahmadinejad faces a strong opposition which he has been working hard to suppress. And the United States is engaged in a major campaign to obtain sanctions against Iran because of its refusal to abandon the development of nuclear reactors. What results have there been for the campaign for sanctions (or more), led by the United States and vociferously supported by Israel?

At home in Iran, it has strengthened the internal political hand of Ahmadinejad greatly, as it enables him to pose as the defender of Iranian sovereignty. And despite all the pressure of the United States, it seems doubtful that Russia and China (especially China) will support serious, as opposed to nominal, sanctions. Meanwhile, as the Israelis correctly state, time is on Iran's side in the attempt to become a nuclear power.

Thirty years of U.S. foreign policy vis-à-vis Iran seem to have backfired terribly. (Or perhaps we should talk of almost 60 years.) Iran is today stronger than ever, in large part because of U.S. policies. If you were Ahmadinejad, would you not say, thank you America?

by Immanuel Wallerstein

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

Is Europe Imploding? (1 May 2010)

Europe has had its nay-sayers since it started on the long road to unification. There were many who believed it impossible. And there were many who thought it undesirable. Still one has to say that, in the long and sinuous path it has taken since 1945, the project of European unification has done remarkably well. After all, Europe had been torn apart by nationalist conflict for at least 500 years, conflict which culminated in the particularly nasty Second World War. And revenge seemed to be the dominating emotion. As of 2010, what is now called the European Union (EU) houses within it a common currency, the euro, which is used by 16 countries. It also has a zone with 25 members, called Schengen, which permits somewhat free movement without visas. It has a central bureaucracy, a human rights court, and is on track to having a president and a foreign minister.

One shouldn't exaggerate the strength of all these structures, but one shouldn't underestimate the degree to which all this has represented, for good or ill, the overcoming of nationalist resistance throughout Europe, especially in some of the stronger states. Yet, it is also the case that right now Europe seems in some important ways to be imploding. The code words for this implosion are "Greece" and "Belgium."

Greece, as all the world is aware, is undergoing a severe sovereign debt crisis. Moody's has declared Greek state bonds to be junk bonds. Prime Minister George Papandreou has said, very reluctantly, that he would probably have to turn to the International Monetary Fund (IMF) for a loan, a loan that would imply the usual IMF conditions requiring specific forms of neoliberal restructuring. This idea is very unpopular in Greece - a blow to Greek sovereignty, Greek pride, and especially Greek pocketbooks. It was also greeted with dismay in a number of European states that feel that financial assistance to Greece should come first of all from other EU members.

The explanation of this scenario is quite simple. Greece has a big budgetary deficit. Because Greece is part of the eurozone, it cannot devalue its currency to alleviate the problem. So it needs financial aid. Greece asked for European aid. The biggest and wealthiest European country, Germany, has been highly reluctant, to say the least, to give such aid. The German public is strongly opposed to helping out Greece, basically out of a protectionist reflex in a time of European stress. They also fear that Greece is the first of a line of others (Portugal, Spain, Ireland, and Italy) who will make similar demands if Greece gets such aid.

The German public seems to wish it would all go away, or at least that Greece somehow be thrown out of the eurozone. Aside from the fact that this is legally impossible, the country that would suffer most as a result, besides Greece, is surely Germany, whose own economic health is largely based on the strong export market it has within the eurozone. So, for the moment, we seem to be at an impasse. And the market vultures are hovering over all the eurozone countries that are in sovereign debt trouble.

In the midst of this, the now perennial Belgian crisis has reared its head in a particularly acute way. Belgium, as a country, came into existence as a result of pan-European politics. The collapse of the Habsburg empire of Charles V resulted in the partition of the so-called Burgundian Netherlands into the United Provinces in the north and the Austrian Netherlands in the south. The Napoleonic Wars led to the two parts being put together again in the restored Kingdom of the Netherlands. And the European conflicts of 1830 led to the two parts being split apart again, with the creation of Belgium in more or less the erstwhile Austrian Netherlands, with a king imported from elsewhere.

Belgium was always a composite of Dutch-speaking "Flemish" and French-speaking "Walloons," largely but imperfectly located in two different geographical sectors (the north and south of Belgium). There was also a small German-speaking zone.

Up to 1945, the Walloons were the more educated, wealthier ones, and they controlled the major institutions of the country. Flemish nationalism was born as the voice of the underdogs fighting for their political, economic, and linguistic rights. After 1945, the Belgian economy underwent a structural shift. Walloon areas lost strength and Flemish areas gained strength. Belgian politics became as a consequence a never-ending struggle of the Flemish to obtain more political rights - devolution of powers, with the ultimate objective for many of dissolving Belgium into two countries.

Bit by bit, the Flemish got more and more of their way. Today, Belgium as a country has a common monarchy, a common foreign minister, and very little more. The sticking-point in this arrangement is that Belgium is now a confederal state with three, not two, regions - Flanders, Wallonie, and Brussels (the capital).

Brussels is not only the capital of Belgium. It is the capital of Europe, the locus of the European Commission. Brussels is also a very bilingual city. And the Flemish are insisting on making it less so. The problem is that, even if there were to be agreement on the dissolution of Belgium, there would be no easy way to arrange the fate of Brussels.

The latest negotiations were so intractable that Le Soir, Belgium's leading French-language newspaper, proclaimed that "Belgium died on April 22, 2010." Their lead editorialist asked "Does this country make sense anymore?" At the moment, the king is trying, perhaps vainly, to recreate a government. He may have to call new elections, without much hope that the elections will produce a really different parliament. On July 1, Belgium assumes the rotating six-month presidency of the EU, and it is not certain there will be a Belgian Prime Minister to preside over it.

The Greek problem is the problem of spread. Will Greece's difficulties not be replicated - are they not already being replicated - elsewhere in Europe? Can the euro survive? The Belgian problem presents however an even greater problem of spread. If Belgium comes apart, and both parts are then members of the EU, will not other states consider coming apart? There are after all important secessionist or quasi-secessionist movements in many EU countries. Belgium's crisis could easily become Europe's crisis.

Of the two threatened implosions, the one symbolized by Greece is easier to solve. It basically only requires that Germany realize that its needs are better met by European protectionism than by German protectionism.

The Belgian crisis poses a much more fundamental question. If Europe were ready, right away, to move forward to a truly federal state, it could accommodate the break-up of any of its existing states. But it has not been ready up to now. And the world's collective economic difficulties have much strengthened the narrow nationalist elements in virtually every European country, as all the recent elections have shown. Without a strong European federation, it would be extremely difficult for Europe to survive a stream of break-ups. Amidst the political havoc, Europe could go down the drain.

There is a certain Schadenfreude among U.S. politicians about Europe's difficulties. What may however save Europe from any implosion is precisely the ever-increasing threat of the implosion of the United States. Europe and the United States are on a seesaw, on which as one goes up the other goes down. How this will play out over the next two to five years is not at all clear.

by Immanuel Wallerstein

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

The Anatomy of Fear (15 May 2010)

Fear is the most pervasive public emotion in most of the world today. This fear is not irrational, but it doesn't necessarily lead to wise ways of handling the presumed dangers. The way it operates can be clearly perceived in two notable events of the recent past. The first was the dramatic plunge of stock market values on the New York Stock Exchange on May 6 - a plunge that astonished everyone and lasted a mere few minutes. The second was the riots in Athens that have already led to three deaths and which are still continuing.

What happened on the Stock Exchange? It seems that on that morning the Dow Jones industrial average had gone down some 300 points. This was a considerable downturn (about 3%), but one that seemed a not unusual reaction to a combination of bad news on various fronts in the United States plus the growing uncertainties about Greece's likelihood of avoiding bankruptcy.

But then, in late afternoon, the Dow went down another 700 points with incredible rapidity. It was the largest intraday decline on record. It was totally unanticipated and apparently left the traders "dumbstruck." Some major stocks fell 90% to being worth a penny. Then, as traders "watched open-mouthed" and almost as quickly as the plunge happened, the Dow went up again, ending at a loss of "only" 371.80 points - to the market traders' seeming relief.

Of course, everyone sought an explanation. The first one offered was that a single trader had a "fat finger" and may have entered a trade in billions when he meant millions. The problem with this explanation is that no one has been able to locate this person or demonstrate that he exists or did indeed have a "fat finger."

Then, an alternative explanation began to circulate. The N.Y. Stock Exchange has a slowdown mechanism when trading seems to be too rapid. But other exchanges do not have the same mechanism. So, some suggest, traders faced with the slowdown on the N.Y. Stock Exchange decided to shift trading to other exchanges. Some suggest a further twist on this explanation: it was the fault of so-called algorithmic trading strategies, which involve automatic trading mechanisms pre-programmed to make such a shift. The lack of coordination between the various exchanges, it is said, is a fault with the regulations, and now some argue that all exchanges should have joint slowdown mechanisms. For others, the plunge might have been caused by an automatic mechanism, so one can blame machines and not persons.

All these explanations may or may not be valid. But they omit the fact that at various points, human decisions intervened - to react to the beginning of the plunge, to slow down the trading, to begin to buy again and allow the Dow to rise. And here is where the fear factor enters in.

A stock exchange involves by definition risk and uncertainty. But traders depend fundamentally on the sense that the fluctuations are relatively minor, that they occur within a certain expectable range. When the fluctuations begin to be wild, which means extensive and sudden, traders understandably panic. And when they panic, they inevitably accentuate further the fluctuations. It is a vicious circle.

At the very moment that the traders in New York panicked, they could view on their screens the riots in Athens. This upset them even further, for two reasons. They were deeply uncertain how the European Union countries would finally decide to aid Greece (or even if they would). They were deeply uncertain what the implications for U.S., west European, and Japanese banks of European action (or inaction) about Greece's problems were. And they were deeply uncertain about whether Greece's potential bankruptcy would entail a global unraveling of the world market.

But most of all, they were right to be fearful of the riots. The riots were the result of Greek fears. What concerned most Greeks was the distinct likelihood that their real income would be radically reduced in the coming years. They were angry about this and very afraid. And they were not at all convinced that this was somehow their fault, a fault for which they should pay.

But the fears of Greek citizens are clearly only the tip of a world iceberg, as government leaders around the world, and stock market traders, are well aware. The Greek government's problem is quite simple. Its tax revenue is too small and its expenditure level too high for its current and prospective future income. So it must either raise taxes (if it could collect them) or cut expenditures or both - and drastically. This is however also the problem of Germany, France, Great Britain, the United States, and the list goes on. Nor are the few countries that seem to have their fiscal heads above water at the moment (such as Brazil or China) exempt from this contagion. The Greeks are taking to the streets to protest. But this will spread. And, as it spreads, the world market will become ever more volatile, and the fears will expand, not contract.

The major policy response everywhere has been to buy time with paper money that is borrowed or printed. The hope is that, somehow, during the borrowed time, renewed economic growth will occur and restore confidence, ending the real and latent panics. Politicians grasp every little sign of such growth and overinterpret it. A good example is applauding recent job creation in the United States, when that job creation was less than the size of the population growth in the same period.

The fear is not irrational. It is the consequence of the structural crisis of the world-system. It cannot be solved by the band-aids that governments are using to treat the serious ailments we confront today. When fluctuations get too great and too rapid, no one can rationally plan. So people no longer act as reasonably rational actors in a relatively normal world-economy. And it is this degree of heightened fear that is the fundamental reality of the present era.

by Immanuel Wallerstein

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

Iran and North Korea Again: The Perils of Brinkmanship (1 June 2010)

The United States has been clamoring for almost two decades that it is determined to prevent Iran and North Korea from becoming nuclear powers. In-between more urgent issues, the U.S. government regularly reasserts the importance of this objective. Since both Iran and North Korea are clearly unwilling to cede to these periodically-reasserted U.S. demands, the United States constantly makes threats of further action of some sort.

After all this time, should we take this seriously? What has been going on is best summarized as brinkmanship, sometimes called a "game of chicken." Each time the game is replayed, it is always a question of who will blink first, and call off the implied ultimate escalation into warfare. Usually the United States plays this game with Iran and North Korea one at a time. Right now, it is playing it with both simultaneously. On the one hand, the simultaneity makes it more difficult to believe the seriousness of U.S. intent. On the other hand, it makes the game more perilous.

What are the current stories? In the case of Iran, the United States has been trying for some months now to obtain from the U.N. Security Council a new resolution imposing further sanctions on Iran for refusing the Security Council's resolution demanding that Iran suspend the enrichment of uranium. To get such a further resolution, the United States has been negotiating with Russia and China for their support. At the moment, these two countries seem to have agreed to support a resolution, but one weaker than the one the United States wants, and in return for diverse concessions on other issues.

The United States has assumed up to now that once it got the support of Russia and China, it would be able to get a unanimous resolution from the Security Council. Suddenly, two of the non-permanent members - Brazil and Turkey - entered the picture and engaged in very public diplomacy on this issue. Their leaders arranged with Iran to swap about half its low enriched uranium for nuclear fuel. Brazil, Turkey, and Iran argued that this deal goes a long way towards meeting U.S. demands. The United States does not agree at all and has said it will proceed with pushing for its resolution in the Security Council.

The United States does not know how to deal with the Brazilian/Turkish entry into the public game. They are both supposed to be friendly countries. They are both supposed to be junior nations who should leave such matters to the permanent members of the Security Council. It seems the United States may even have endorsed their initiative on the assumption it would fail and the U.S. argument would be fortified. This didn't happen. Brazil and Turkey succeeded. At least they think so. And they don't intend to be treated as junior nations who have to wait on their elders. They actually think that the United States should hail their agreement with Iran as a success and withdraw the resolution.

In the meantime, all eyes are on Korea. There, on March 26, a South Korean warship sank. At first, the South Koreans said they thought it was an accident. But then, two months later, which is a suspiciously long time, they announced they have proof that a North Korean submarine sank the ship with a torpedo. Some South Korean analysts suggest that the ship, which was engaged in a joint military exercise with the United States, was actually sunk in error by a U.S. submarine. This suggestion has been ignored by the world press, which rather is debating the motives of North Korea for doing this. Hillary Clinton says she can't understand why they would do such a thing.

Whatever the case, South Korea has broken its existing ties with North Korea, which has reciprocated. South Korea's present conservative government has now scuttled whatever remained of the previous president's "sunshine policy" toward North Korea. The United States wants a Security Council resolution. North Korea says that, if one is passed, they will withdraw from cooperation with international inspections of their nuclear facilities.

So, we're into high-level brinkmanship. And the world's markets reflect extreme nervousness. What will happen now? Obviously, everyone is playing to their home audience. The U.S. government wants to show the U.S. Congress that it is "doing something" serious. So does the South Korean government. So do the Iranian and North Korean governments. And so, no doubt, do the Brazilian and Turkish governments.

Who will blink first? I don't believe any of the front-line nations actually wants a war. There is too much to lose for each of them. The real decison however lies with none of these actors but with the Chinese government. China is calling the shots. What kind of a resolution will the Chinese support now in either of the two cases? China obviously wants very much for everyone to calm down, and to keep calm. The problem is that brinkmanship can be a dangerous game when the world - its geopolitics and its economy - is so chaotic and volatile. Accidents could happen. Some military officer somewhere, with his hand on the trigger, could make a mistake - either accidentally or deliberately.

We are living in interesting times.

by Immanuel Wallerstein

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

Impossible Choices in a World Depression (15 June 2010)

As the world's leaders and pundits continue to deny the reality of the world depression - they won't even use the word - the impossible choices that are faced by government after government become more and more obvious every day. Consider what has happened in just the last month.

The United States had its worst unemployment figures in quite a while. Yes, there were some new jobs, but 95% of them were of temporary census workers. Private employers added just 10% of the jobs they were expected to add. Despite this, it has now become politically impossible to get further stimulus money voted by Congress. And the Federal Reserve has ceased to buy Treasury securities and mortgage bonds. These had been the two main strategies to increase jobs. Why? The call for deficit cuts has grown too strong.

The most immediate consequence can be seen at the level of the budgets of the separate state governments. The cost of Medicaid has gone up because of the economic crisis. This cost is borne by the separate states. They have been helped in the past year by increased federal subsidies of state spending on Medicaid. Congress won't renew this. Gov. Edward Rendell of Pennsylvania says this will increase his state's budgetary shortfall by two-thirds, and force it to lay off 20,000 teachers, police officers, and other government workers. Of course, this is in addition to lost medical services for many people.

In Great Britain, the new Prime Minister, David Cameron, says that cutting down on borrowing is "the most urgent issue facing Britain today." The Financial Times sums up his proposals in its headline: "Cameron pitches an age of austerity." Its assessment of this policy: "If the government is to make such steep reductions in spending, it cannot avoid visibly damaging frontline services. The cuts will be more savage than anything contemplated by even the Thatcher government."

Germany's Chancellor Merkel has announced her version of austerity: deep public spending cuts immediately, rising in amount each year for the next four years. She has also announced new taxes on airlines, which the world's airlines immediately announced would seriously hurt their ability to reduce their negative balance-sheets and save them from bankruptcy. Germany's unemployment rates will increase, but its unemployment benefits will be reduced. Other governments in Europe plus the United States have been urging Germany to spend more and export less, in order to restore world demand. Merkel rejected these demands, saying that debt reduction was her priority.

Japan's new Prime Minister, Naoto Kan, warned the country that the debt situation is so bad that Japan could face a situation comparable to that of Greece. To remedy this, he proposed some increased taxation, more regulation of the financial arena, and new kinds of public expenditures.

In the middle of all this super-austerity in the North, a most remarkable thing has occurred, which seems to have escaped almost all notice. As everyone knows, Spain is one of the many European countries now in economic difficulty because of very large debt ratios. On May 30, Fitch Ratings joined other ratings companies in reducing Spanish bond ratings from AAA to AA+. The question is why. Just the day before, the Spanish parliament had voted the country's deepest budget cuts in 30 years.

Budget cuts are presumably what Germany and others have been calling for in Greece, Spain, Portugal, and other countries threatened by too much debt. Spain responded to this pressure. And just because it did, Fitch Ratings downgraded it. Brian Coulton, Fitch's person in charge of ratings for Spain, said in the statement downgrading Spain: "The process of adjustment to a lower level of private sector and external indebtedness will materially reduce the rate of growth of the Spanish economy over the medium-term."

So there it is - damned if you do, and damned if you don't. The financial speculators have created a disastrous fall in the world-economy. The ball was then thrown to the states to solve the problem. The states have less money and more demands on them. What can they do? They can borrow, until those who lend money won't do it, or demand too high a rate of interest. They can tax, and the businesses say that this will cut back their ability to create jobs. They can reduce expenditures. And in addition to the terrible pain this inflicts on everyone, but especially on the more vulnerable, this action also will reduce the possibility of growth, as Mr. Coulton points out for Spain.

Of course, there is one big place to reduce expenditures - the military. Military expenditures do provide jobs but far fewer than if the money were used otherwise. This does not apply only to the biggest spenders like the United States. A virtually uncommented aspect of Greece's debt problems was its heavy expenditure on the military. But are governments ready to reduce significantly military expenditures? It doesn't seem too likely.

So, what can the states do? They are trying one thing today, and another thing tomorrow. Last year, it was stimulus. This year, it's debt reduction. The year after, it will be taxation.

In any case, the overall situation will be worse and worse.

Can China save us? Stephen Roach, Morgan Stanley's very acute analyst, seems to think so, provided the government "stimulate(s) private growth." In that case, rising wages will be offset by higher productivity. Maybe. But the Chinese government has been resistant to such a policy up to now, not for economic but for political reasons. Its drive to maintain political stability has been paramount up to now. Furthermore, even Roach has one great fear - China-bashing in Washington leading to trade sanctions. Myself, I think that's a high probability, as the U.S. economic situation continues to deteriorate.

The way out of all of this is not some small adjustment here or there - whether of the monetarist or the Keynesian variety.

To emerge from the economic box in which the world finds itself requires a fundamental overhaul of the world-system. This will surely have to come, but how soon?

by Immanuel Wallerstein

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

Why McChrystal Did It (1 July 2010)

Gen. Stanley McChrystal, the U.S. commander in Afghanistan, gave an interview to Rolling Stone magazine in which he and his staff insulted the civilian leaders of his country. He was fired for insubordination by Pres. Obama. Even his defenders said that McChrystal's remarks were impolitic and a mistake. Given the fact that McChrystal is an exceptionally intelligent and very ambitious person, why did he do it?

McChrystal gave the interview in order that he be fired. And why did he want to be fired? He wanted to be fired because he knew that the policies he was pursuing and championing in the war in Afghanistan were not working, could not work. And he didn't want to be the one tarnished with the public blame.

Consider the long history that led up to this interview. The military strategy the United States forged in Afghanistan and Iraq was originally that imposed by then U.S. Secretary of Defense, Donald Rumsfeld. The policy was one of unlimited machismo. Bomb the enemy from way up high and don't worry about who gets killed. Use torture on those you capture. Don't consult with anyone, even if they are so-called allies. Occupy the country, indefinitely.

Stanley McChrystal was a one-star general at the beginning of these wars, working in Washington as one of Rumsfeld's "golden boys." He had a long history, since his West Point days, of being a daring rebel who knew just when to stop - contemptuous of superiors he did not respect but always seeking to advance himself. Rumsfeld placed him in charge of the military's most secretive elite units, engaged in "special operations" and known to be a "killing machine." He performed brilliantly, as usual.

Then in 2006, if we still remember, the military, the politicians, and the press all began to say that the United States was losing the war in Iraq. Resistance seemed too strong, and the number of U.S. lives lost was steadily going up month by month. The Republicans did very badly in the elections of 2006. Something had to be done.

Something was done. Rumsfeld was fired by President Bush. Vice-President Cheney, Rumsfeld's strongest defender, lost influence to Sec. of State Condoleezza Rice and Rumsfeld's successor, Robert Gates, who championed more "moderate" views, emphasizing diplomacy. A new military strategy suddenly gained ground, counter-insurgency (referred to by an acronym COIN). It was developed by a previously obscure military officer, David Petraeus.

Petraeus is as ambitious and as driven as McChrystal but a quite different personality. He is what might be called a military intellectual. He won the award as the top graduate of the U.S. Army Command and General Staff College in 1983. He got a Ph.D. in international relations from Princeton in 1989. He taught international relations at West Point. At the same time, he has a long record as a seasoned combat officer. And he cultivated favor with Washington politicians.

Since the 1980s, his published articles and reports advocated counter-insurgency as a doctrine. He drew on the experiences of the French using it in Algeria and the United States using it in Vietnam. As Petraeus' right-wing critics note, these were not notable successes. COIN emphasizes the need for "winning hearts and minds," which means necessarily incorporating diplomatic and political considerations into military tactics. The writer of the Rolling Stone interview, Michael Hastings, described COIN this way: "Think the Green Berets as an armed Peace Corps."

Pres. Bush turned to Petraeus in 2006 and allowed him to implement COIN in Iraq. This was the famous "surge" that involved increasing the number of U.S. troops in Iraq and changing strategy. Basically, Petraeus did two things that did indeed reduce the amount of violence against U.S. troops. The first was to bribe Sunni tribal elders in central and western Iraq to cease their tacit support of non-Iraqi al-Qaeda units. Since the Sunni sheikhs had never liked the al-Qaeda units, they were willing to forget their dislike of the Americans - for a price.

The second thing that Petraeus did was to permit ethnic cleansing in Baghdad, turning a multi-ethnic city into two segregated zones, a larger Shi'a zone and a beleaguered smaller Sunni zone. This reduced violence against the U.S. troops at the expense of increased inter-Iraqi violence. It also served the political interests of the most persistent and effective opponent of U.S. interests in Iraq, Mokhtar al-Sadr, who is emerging as the key broker in the newly-elected Iraqi parliament.

As Hastings said in an interview with the Huffington Post about his article, "Petraeus is sort of a genius. He managed to turn what could have been catastrophic defeat in Iraq into a face-saving withdrawal." But of course, a face-saving withdrawal is not a victory, even if Sen. John McCain insisted so when running for president in 2008 - unsuccessfully.

When Barack Obama ran for office, he said quite clearly that he was against the war in Iraq and for the war in Afghanistan. So obviously he had to pursue it. He promoted Petraeus, adopted COIN, and named McChrystal commander in Afghanistan. True to his "rebel" style, McChrystal publicly demanded 40,000 more troops from Obama who, after months of reflection, gave him 30,000 - plus a withdrawal date.

At this point, however, McChrystal abandoned his previous machismo style and became the enthusiastic, perhaps over-enthusiastic, implementer of counter-insurgency in Afghanistan. He issued super-strict directives to avoid civilian casualties, a policy not at all appreciated by U.S. infantry units. He developed warm relations with Pres. Hamid Karzai, whom other U.S. leaders held at a distance. He thought he could win a quick victory in Marja and turn the area over to Afghan forces. Instead, it was a failure. And he recently announced that the key operation in Kandahar province, heartland of the Taliban forces, had to be postponed until September.

Even McChrystal's Chief of Operations, Maj. Gen. Bill Mayville, says Afghanistan will be like Vietnam: "It's not going to look like a win, smell like a win or taste like a win....This is going to end in an argument." Hastings ends his article this way: "Winning, it would seem, is not really possible. Not even with Stanley McChrystal in charge."

So, what would you do if you were McChrystal? You'd invite a reporter for a rock-and-roll magazine, considered to be on the left, to accompany you on airplanes and to drink fests, and sneer at the government. This was guaranteed to get you fired. And it meant that the future "argument" would not involve you.

What could Obama do? He had to fire McChrystal. Then, he tossed the hot potato to Petraeus, who couldn't refuse it. The next year or two are going to be a fast-moving game in which Obama and Petraeus are going to try to shift the public's blame for the defeat on the other.

The far right, the friends of Cheney and Rumsfeld, are not fooled. Diana West, one of their pundits, says: "The COIN nightmare continues." For her, COIN means ordering troops "to exercise fantasies of cultural relativism that makes lefty sense in a PC classroom, but are nothing short of appalling on the front line." A slightly less acerbic view was that of retired Col. Douglas Macgregor: "The idea that we are going to spend a trillion dollars to reshape the culture of the Islamic world is utter nonsense."

Of course, Macgregor is right. What are the policy choices? The far right wants perpetual war. The only alternative is early and complete withdrawal. Obama doesn't want the first and is politically afraid to embrace the second. So he sends CIA Director, Leon Panetta, out to give ABC News an interview, saying that making progress in Afghanistan is "harder" and going more slowly than anticipated. Indeed, it is.

by Immanuel Wallerstein

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

Whose Taxes Are Going Up? (15 July 2010)

Everyone knows the old saying that there is nothing inevitable except death and taxes. But most of us spend a lot of energy trying to postpone both of them. Taxes are a very unpopular idea, everywhere. Few people complain that they are not being taxed enough. The problem is that almost everyone wants many of the things paid for by taxes.

Just recently, there were amazing poll results in France. France has one of the highest tax rates in the world, yet a majority of the population believes that further tax rises are inevitable. Even more surprising, despite the fact that France now has a rightwing government, more voters on the right expect a rise in taxes than voters on the left, more well-to-do voters than poorer voters.

The simple fact is that there is hardly any government in the world today, national or local, that has enough income to meet the level of expenses that are mandated by law plus those desired by the majority of their constituents. So, these governments borrow money and get (further) into debt, which is unpopular, and/or they reduce expenses at the expense of someone. However, the reality is that neither borrowing nor cutting expenses seems to be enough.

The net result is that all governments, everywhere, are increasing taxes, and will continue to do so in the coming years. But most of them are denying that they are doing this. How can one hide raising taxes? There are multiple ways to do this.

Way number one is to increase the cost of government services. If a government raises an application fee for a document or a license, that is a tax increase on the applicant. If the government postpones the age of eligibility for a pension, that is a tax increase on the prospective pensioner.

Way number two is for a government to eliminate a subsidy to which it previously committed itself. If this was a subsidy to an enterprise, that is a tax increase on the enterprise, which often (but not always) can be passed on to consumers. If the subsidy went to an individual - for example, unemployment insurance - eliminating or reducing it is a tax increase on the individual.

But the most important reduction of subsidy, because the least obvious, occurs when a national government reduces one of the pervasive monetary transfers to a local government. What this does is simply shift the locus of the tax increase from the national level to the local level. The local government has then two choices. It can increase its taxes to make up the shortfall, say by increasing property taxes. Or it can reduce its expenditures, say by reducing what it invests in education at the local level.

If the local government spends less on public education, it is reasonable to suppose that the quality of education being offered is thereby lowered. This may lead to a response by the better-off residents, those who can afford to provide privately for the cost of education of their children. The poorer people get poorer education or no education. The better-off people get increased costs, which are in effect a tax increase, but one that does not benefit the whole of the population.

Taxes are inevitable indeed, and no time more so than when the world-economy is in poor shape, as at present. What is not inevitable is the group or groups on whom the greater burden lies. It's all a question of whose ox is being gored. Some people audaciously call this the class struggle. It is being waged rather ferociously these days.

The only slogan to which no one should give credence is the slogan, "lower taxes." There is no way whatsoever to do this. There are however fairer and less fair forms of taxation. The question we all face is whose taxes will be raised, and via which channel. This is one of the key political battles of our time.

by Immanuel Wallerstein

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

Ponzi Solitaire (1 August 2010)

Reading newspapers can be a startling experience. On July 26 this year, U.S. papers ran two quite contradictory stories. In the first news article, USA Today reported on its quarterly forecast of economists. The headline read: "Economists' optimism wanes." It seems that the combination of "turmoil in Europe, lackluster job growth, a weak housing market and a slowdown in factory output" make it very unlikely that the United States can recover the lost 8.5 million jobs "at a more-than-glacial pace." In addition, they fear "global financial instability."

So, quite reasonably, they are not optimistic. One could say that the economists' congenital optimism about the world market has finally hit the hard rock of reality. Some of us came to this conclusion a lot earlier. So how is it possible that, the very same day, the New York Times ran a front-page story about the "surging profits" of U.S. industries?

The answer is again in the headline: "Industries find surging profits in deeper cuts." It is not that the industries are selling more products. They are indeed selling fewer. But they have been cutting costs - that is, they have been firing workers.

They have found that, if they fire enough workers and make the remaining workers work harder, they may have fewer sales but they have greater profits. This is called a "triumph of productivity." Ethan Harris, chief economist at Bank of America Merrill Lynch, is quite honest about it: "Companies are squeezing their labor costs to build profits."

However, as the Times notes, the result is that "the benefits are mostly going to shareholders instead of the broader economy." And the industries do not intend this to be a temporary solution. For even if sales improve, they are not planning to hire more workers. On the contrary, according to one chief executive of a large firm, "the last thing we're worried about is when we are going to have to add more capacity." Rather, we're "reconfiguring our entire operational system for greater flexibility."

So, have U.S. industries (and industries elsewhere in the world) found the magic bullet that will enable them to expand profits ever into the future? You've got to be kidding. In the 1920's Henry Ford famously paid his workers higher wages than was the norm because, he said, he wanted them to be his customers. His successors at Ford today have reduced their North American work force by over 50 percent in the last five years. More profits - but fewer customers.

There's the little problem of what Keynes and Kalecki wrote about - effective demand. In any medium-run calculation, if there are not enough customers, there will not be enough sales, and very soon the profits will dry up. The industries that are increasing their profits by reducing their work force and squeezing their remaining laborers are going to have surging profits for a very short run until they run into the hard brick wall of serious deflation. And then they'll crash.

Can't they see this? Sure, some can, but they are operating on the hedonistic principle of eat, drink, and be merry, for tomorrow we may die. It might be called "Ponzi solitaire." In ordinary Ponzi schemes, the operator bilks other people until the house of cards collapses - as it did for Bernie Madoff. In Ponzi solitaire, you bilk yourself until you crash. And just as the investors in an ordinary Ponzi scheme (potential victims) hope that the crash will come only after they have gotten their profits, so the players of Ponzi solitaire (industry executives) hope they'll escape with their personal profits before the whole industry collapses. Good luck!

by Immanuel Wallerstein

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

Contradictions in the Latin American Left (15 August 2010)

Latin America has been the success story of the world left in the first decade of the twenty-first century. This is true in two senses. The first and most widely-noticed way is that left or left-of-center parties have won a remarkable series of elections during the decade. And collectively, Latin American governments have taken for the first time a significant degree of distance from the United States. Latin America has become a relatively autonomous geopolitical force on the world scene.

But there has been a second way in which Latin America has been a success story of the world left. Movements of the indigenous populations of Latin America have asserted themselves politically almost everywhere and have demanded the right to organize their political and social life autonomously. This first gained world attention with the dramatic uprising of the neo-Zapatista movement in the Mexican state of Chiapas in 1994. What has been less noticed is the emergence of similar kinds of movements throughout Latin America and the degree to which they have been creating an inter-American network of their local organizational structures.

The problem has been that the two kinds of lefts - the parties that have achieved power in the various states and the indigenista movements in the various states - do not have identical objectives and use quite different ideological language.

The parties have made as their principal objective economic development, seeking to achieve this objective at least in part by greater control over their own resources and better arrangements with outside enterprises, governments, and intergovernmental institutions. They seek economic growth, arguing that only in this way will the standard of living of their citizens be enhanced and greater world equality achieved.

The indigenista movements have sought to get greater control over their own resources and better arrangements not only with non-national actors but also with their own national governments. In general, they say their objective is not economic growth but coming to terms with PachaMama, or Mother Earth. They say they do not seek a larger use of the Earth's resources, but a saner one that respects ecological equilibrium. They seek buen vivir - to live well.

It is no surprise that the indigenista movements have been in conflict with the few most conservative governments in Latin America - like Mexico, Colombia, and Peru. Increasingly, and quite openly, these movements have also come into conflict with the left-of-center governments like Brazil, Venezuela, Ecuador, and even Bolivia.

I say even Bolivia because that is the one government that has elected an indigenista president with massive support from the indigenista population of the country. And nonetheless, there has been a conflict. The issue, there as elsewhere, is whether and how natural resources are developed, who makes the decisions, and who controls the revenue.

The left parties tend to accuse the indigenista groups that come into conflict with them of being, wittingly or not, the pawns (if not the agents) of the national right parties, and of outside forces, in particular of the United States. The indigenista groups who oppose the left parties insist that they are acting only in their own interests and on their own initiative, and accuse the left governments of acting like the conservative governments of old without real regard for the ecological consequences of their developmentalist activities.

Something interesting has recently happened in Ecuador. There, the left government of Rafael Correa, which had won power initially with the support of the indigenista movements, subsequently came into sharp conflict with them. The most acute division was over the government's wish to develop oil resources in an Amazonian protected reserve called Yasuni.

Initially, the government ignored the protests of the indigenous inhabitants of the region. But then President Correa invented an ingenious alternative. He proposed to the wealthy governments of the global North that, if Ecuador renounced any development in Yasuni, these wealthy governments should compensate Ecuador for this renunciation, on the grounds that this was a contribution to the world struggle against climate change.

When this was first proposed at the Copenhagen climate summit in 2009, it was treated as being a fantasy. But after six long months of negotiations, five European governments (Germany, Spain, Belgium, France, and Sweden) have agreed to create a fund to be administered by the U.N. Development Program to pay Ecuador not to develop Yasuni on the grounds that this contributes to the reduction of carbon emissions. There is talk of inventing a new verb, yasunize, to denote such deals.

But how many such deals could one make? There is a more fundamental issue at stake. It is the nature of the "other world that is possible" - to use the slogan of the World Social Forum. Is it one based on constant economic growth, even if this is "socialist" and would raise the real income of people in the global South? Or is it what some are calling a change in civilizational values, a world of buen vivir?

This will not be an easy debate to resolve. It is currently a debate among the Latin American left forces. But analogous situations underlie much of the internal strains in Asia, Africa, and even Europe. It may turn out to be the great debate of the twenty-first century.

by Immanuel Wallerstein

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

Xenophobia All Over the Place? (1 September 2010)

The dictionary defines xenophobia as "fear or hatred of strangers or foreigners or of anything that is strange or foreign." It seems to be an endemic plague everywhere in the world. But it infects larger numbers of people only sometimes. This is one of those times.

But who is a stranger? In the modern world, it seems that the strongest single loyalty is that to the state of which we are a citizen. It is called nationalism or patriotism. Yes, some people put other loyalties ahead of patriotism, but it seems they are in a minority.

Of course, there are many different situations in which people express their nationalist feelings. In a colonial situation, nationalism expresses itself as a demand for liberation from the colonial power. It seems to take similar forms in what some call a semicolonial situation, which is one in which the country is technically sovereign but lives under the shadow of a stronger state, and feels itself oppressed.

Then there is the nationalism of the strong state, which expresses itself in an assertion of technical and cultural superiority, and which its proponents feel give them the right to impose their views and values on weaker states.

We may applaud the nationalism of the oppressed as something that is worthy and progressive. We may condemn oppressive nationalism by the strong as unworthy and retrogressive. There is however a third situation in which xenophobic nationalism rears its head. It is that of a state in which the population feels or fears that it is losing strength, is somehow in "decline."

The sentiment of national decline is inevitably particularly exacerbated in times of great economic difficulty, such as the world finds itself in today. So it is no surprise that such xenophobia has begun to play an increasingly important role in the political life of states around the world.

We see it in the United States, where the so-called Tea Party wants to "take back the country" and "restore America and...her honor." At the rally in Washington on Aug. 28, the organizer, Glenn Beck, said: "As I look at the problems in our country, quite honestly, I think the hot breath of destruction is breathing on our necks and to fix it politically is a figure that I don't see anywhere."

In Japan, a new organization, the Zaitokukai, last December surrounded a Korean elementary school in Kyoto, demanding to "expel the barbarians." Its leader says he has modeled his organization after the Tea Party, sharing the sense that Japan now suffers from a loss of respect on the world scene and has gone in the wrong direction.

Europe, as we know, has seen in almost every country the rise of parties which seek to evict foreigners from the country and return the country to the exclusive hands of the so-called true citizens, although how many generations of continuous lineage it takes to define a true citizen seems to be an elusive question.

Nor is this phenomenon absent from the countries of the South - from Latin America, Africa, and Asia. There is no point in spelling out the multiple and repeated instances of when and where xenophobia has reared its ugly head.

The real question is what, if anything, can be done to counter its pernicious consequences. There is one school of thought which essentially argues that one has to coopt the slogans, repeat them in a watered-down form, and simply await the cyclical moment when xenophobia will have died down because economic times are better. This is the line of most of what may be called the Establishment right and center-right parties.

But what about the parties of the left and center-left? Most, although not all, of them seem to be cowed. They seem to be fearful that once again they will be tarred as "unpatriotic," as "cosmopolitan," and worry they may be swept away by the tide, even if the tide may recede in the future. So they speak, feebly, of universal values and of practical "compromises." Does this save them? Sometimes, but often not. They are often swept away by the tide. Sometimes, they even join the tide. The past history of fascist parties is replete with the numbers of "left" leaders who became fascists. This was after all the story of the man who virtually invented the word, fascist - Benito Mussolini.

The willingness fully to embrace egalitarian values, including the right of all kinds of communities to observe their autonomy, in a national political structure that accommodates the mutual tolerance of multiple autonomies, is a politically difficult position both to define and to sustain. But it is probably the only one that offers any long-term hope for humanity's survival.

by Immanuel Wallerstein

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

Democracy - Everywhere? Nowhere? (15 September 2010)

Democracy is a very popular word these days. There is virtually no country in the world today whose government does not claim to be the government of a democracy. But at the same time, there is virtually no country in the world today about which others - both inside the country and in other countries - do not denounce the government as being undemocratic.

There seems to be very little agreement about what we mean when we say a country is democratic. The problem is clear in the very etymology of the word. Democracy comes from two Greek roots - demos, or people, and kratia, or rule, the authority to decide. But what do we mean by rule? And what do we mean by the people?

Lucien Febvre told us it is always important to look at the history of a word. The word, democracy, was not always so universally popular. The word first came into common modern political usage in the first half of the nineteenth century, primarily in western Europe. At that time, it had the tonality of terrorism today.

The idea that the "people" might actually "rule" was considered by all respectable people as a political nightmare, dreamed up by irresponsible radicals. In fact, the principal objective of respectable people was how to make sure that it was not the majority of the people who had the authority to decide. This authority had to be left in the hands of people who had interests in preserving the world as it was, or as it should be. These were people with property and wisdom, who were considered competent to make decisions.

After the revolutions of 1848, in which the "people" rose up in social and national revolutions, men of property and competence grew frightened. They responded first with repression, and then with calculated concessions. The concessions were to admit people, slowly and bit by bit, to the ballot. They thought that the ballot might satisfy the demands of the "people" and in effect co-opt them into sustaining the existing system.

Over the next 150 years, this concession (and others) worked to a considerable degree. Radicalism was muted. And after 1945, the very word, democracy, was co-opted. Everyone now claimed to be in favor of democracy, which is where we are today.

The problem, however, is that not everyone is convinced that we are all living in truly democratic countries, in which the people - all the people - are truly the ones who are ruling, that is, making the decisions.

Once the representatives are chosen, they quite often do not fulfill the demands of the majority, or they oppress important minorities. The "people" often react - by protest, by strikes, by violent uprisings. Is it "democratic" when the demonstrations are ignored? Or is it "democratic" when the government backs down and submits to the will of the "people"?

And who are the people? Are they the numerical majority? Or do major groups have rights that should be guaranteed? Should important groups have some relative autonomy? And what kinds of compromises between the "majority" and important "minorities" constitute "democratic" results?

Finally, we must not neglect the ways in which the rhetoric about democracy is used as a geopolitical instrument. Denouncing other countries as undemocratic is regularly used as a justification for intrusion into politically weaker countries. The results of such intrusions are not necessarily that more democratic governments come to power, just different ones with perhaps different foreign policies.

Perhaps we should think of democracy as a claim and an aspiration that has not been realized anywhere yet. Some countries may seem to be more undemocratic than others. But are any countries demonstrably more democratic than others?

by Immanuel Wallerstein

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

Does Social-Democracy Have a Future? (1 October 2010)

This past month, two important events marked the world of Social-Democratic parties. In Sweden, on September 19, the party lost the election badly. It received 30.9% of the vote, its worst showing since 1914. Since 1932, it has governed the country 80% of the time, and this is the first time since then that a center-right party won reelection. And to compound the bad showing, a far right, anti-immigrant party entered the Swedish parliament for the first time.

Why is this so dramatic? In 1936, Marquis Childs wrote a famous book, entitled Sweden: The Middle Way. Childs presented Sweden under its Social-Democratic regime as the virtuous middle way between the two extremes represented by the United States and the Soviet Union. Sweden was a country that effectively combined egalitarian redistribution with internal democratic politics. Sweden has been, at least since the 1930s, the world poster child of Social-Democracy, its true success story. And so it seemed to remain until rather recently. It is a poster child no more.

Meanwhile, in Great Britain on Sept. 25, Ed Miliband came from far behind to win the leadership of the Labour Party. The Labour Party under Tony Blair had engaged in a radical remaking of the party under the label "the new Labour." Blair had argued that the party should also be a middle way - one not between capitalism and communism but between what used to be the social-democratic program of nationalization of the key sectors of the economy and the unbridled dominance of the market. This was quite a different middle way than that of Sweden in the 1930s and afterwards.

The choice by the Labour Party of Ed Miliband over his older brother David Miliband, a key associate of Tony Blair, was interpreted in Great Britain and elsewhere as a repudiation of Blair and a return to a somewhat more "social-democratic" (more Swedish?) Labour Party. Still, in his first speech to the Labour conference a few days later, Ed Miliband went out of his way to reassert a "centrist" position. He did however lace his statements with allusions to the importance of "fairness" and "solidarity." And he said: "We must shed old thinking and stand up for those who believe there is more to life than the bottom line."

What do these two elections tell us about the future of social-democracy? Social-democracy - as a movement and an ideology - is conventionally (and probably correctly) traced to the "revisionism" of Eduard Bernstein in late nineteenth-century Germany. Bernstein argued essentially that, once they obtained universal suffrage (by which he meant male suffrage), the "workers" could use elections to win office for their party, the Social-Democratic Party (SPD), and take over the government. Once they won parliamentary power, the SPD could then "enact" socialism. And therefore, he concluded, talk of insurrection as the road to power was unnecessary and indeed foolish.

What Bernstein was defining as socialism was in many ways unclear but still seemed at the time to include the nationalization of the key sectors of the economy. The history of Social-Democracy as a movement since then has been that of a slow but continuous shift away from a radical politics to a very centrist orientation.

The parties repudiated their theoretical internationalism in 1914 by lining up to support their governments during the First World War. After the Second World War, the parties algined themselves with the United States in the Cold War against the Soviet Union. And in 1959, at its Bad Godesburg conference, the German SPD officially repudiated Marxism entirely. It stated that "from a party of the working class, the Social-Democratic Party has become a party of the people."

What the German SPD and other social-democratic parties came to stand for at that time was the social compromise called the "welfare state." In this objective, in the period of the great expansion of the world-economy during the 1950s and 1960s, it was quite successful. And at that time, it remained a "movement" in the sense that these parties commanded the active support and allegiance of very large numbers of persons in their country.

When, however, the world-economy entered into its long stagnation beginning in the 1970s, and the world entered the period dominated by neo-liberal "globalization," the social-democratic parties began to go further. They dropped the emphasis on the welfare state to become the advocates merely of a softer version of the primacy of the market. This was what Blair's "new Labour" was all about. The Swedish party resisted this shift longer than others, but it too finally succumbed.

The consequence of this, however, was that Social-Democracy ceased to be a "movement" that could rally the strong allegiance and support of large numbers of persons. It became an electoral machine that lacked the passion of yesteryear.

If however social-democracy is no longer a movement, it is still a cultural preference. Voters still want the fading benefits of a welfare state. They regularly protest when they lose still another of these benefits, which is happening with some regularity today.

Finally a word about the entry of the far right, anti-immigrant party into the Swedish parliament. Social-democrats have never been very strong on the rights of ethnic or other "minorities" - still less on the rights of immigrants. Social-democratic parties have tended to be parties of the ethnic majority in each country, defending their turf against other workers whom they saw as undercutting their wages and employment. Solidarity and internationalism were slogans that were useful when there was no competition in sight. Sweden didn't have to face this issue seriously until recently. And when it did,a segment of social-democratic voters simply moved to the far right.

Does social-democracy have a future? As cultural preference, yes; as movement, no.

by Immanuel Wallerstein

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

Afghanistan: Does Anyone Want the Burden? (15 October 2010)

It is no secret that a lot of countries think they have interests in who governs Afghanistan. And, over the past thirty years, a lot of countries have been sending troops or military hardware or a lot of money in order to get the kind of government in Afghanistan they prefer.

It is not hard to show that the degree to which outsider countries have in fact gotten their way is very limited. And the prospects don't look good for the outsiders. There is an increasing sense among outsiders that perhaps they should reduce their active involvement. Intrusion creates a burden that doesn't seem to have too many rewards.

The Soviet Union was burned badly in the 1980s and finally withdrew its troops completely. The president they thought they were sustaining was hanged publicly by a grateful nation. The mujahideen that the United States supported in their resistance to Soviet intervention showed their gratitude by breeding and supporting a movement, al-Qaeda, which has ever since devoted its energies to a jihad against the United States and all those whom al-Qaeda considers allies of the United States.

The Afghan civil war, which has had more than two sides, has continued unceasingly during all this time. One major force, called the Taliban, has had its ups and downs during these wars. Currently, they seem to be on a considerable upswing again. Since almost all the outsiders, except Pakistan, endlessly repeat their negative views about the Taliban, the ability of the Taliban to persist and to gain ground within has led to a lot of private rethinking among all concerned outside countries. The question "should we continue to be involved?" is on the agenda everywhere.

The neighbors to the north and west - Uzbekistan, Tadjikistan, Russia (although it has no direct border), and Iran - all are concerned. They do not want a government dominated by militant, largely Pashtun, Taliban in power. They fear, probably correctly, that it would oppress in various ways the zones in the north and west which are ethnically tied to their countries. But none of these neighbors seems ready to send in troops. All therefore favor some intra-Afghan political negotiations that would end up with some protection of the zones in the north and the west.

The United States currently has a large number of troops in Afghanistan. It is theoretically committed to begin a withdrawal of such troops by July 2011. In theory too, the United States government is hoping for a defeat, or at least a taming, of the Taliban forces, and a strengthening of the official Afghan army under the authority of the formally legal government presided over by President Hamid Karzai.

U.S. troops are assisted by a NATO force from several NATO countries. If the United States is waiting until mid-2011 to draw down troops, most of the NATO countries are anxious to get out sooner, or to announce now the certainty of their eventual withdrawal.

In the case of the United States, withdrawal presents an internal U.S. political question. President Obama is weighing whether he will lose more support by withdrawing troops or by not withdrawing troops. Public opinion polls point to the steadily increasing number of voters who are tired of what they see as an unwinnable war in a faraway country. My prediction is that the isolationist thrust is winning over the interventionist thrust in U.S. politics.

That leaves two other outsiders - Pakistan and India. These two countries are of course locked in a long ongoing political (and often military) struggle with each other. And each regards the situation in Afghanistan primarily in terms of its implications for their struggle.

Pakistan, via the army's intelligence service, the ISI, has supported the Taliban over the whole period. These days, they tend to deny this because it exasperates the United States, but no one is fooled. Pakistan thinks it can control the Afghan Taliban and that a re-established Taliban government in Kabul would be a bulwark against India.

The Indian government has, for the last decade, been an active supporter of the Karzai regime, seeing it as a way to defang Pakistani influence in the country and, over the long run, help create the infrastructure needed to obtain energy resources from Iran and Russia.

Both India and Pakistan may be reconsidering their options. There are at least some Indian government analysts who think that, by withdrawing and turning over Afghanistan to the Pakistanis, they would be feeding Pakistan a poison pill that would sap Pakistan's energy and military resources. These analysts are counting on the redoubtable independence of the Afghans, especially the Pashtuns, thinking they would no more tolerate Pakistani control than Soviet or United States control.

And what about Pakistan? There are not only Afghan Taliban but, somewhat separately, Pakistani Taliban. While the ISI may appreciate and support those in Afghanistan, they are scarcely enthusiastic about the local variety. Dealing with Pakistani Taliban may do more to distract Pakistan from dealing with India than anything else. Withdrawing from too much involvement in Afghanistan may reduce the internal tensions somewhat.

So, one possible outcome of the ongoing civil wars in Afghanistan is that, within five years or so, everyone may be tired of the burden of involvement and just leave the Afghans alone - "to stew in their own pot," to use a popular phrase.

What would such an Afghanistan look like? It's very hard to know. It could look ugly, with the infliction on all Afghans of the least palatable versions of shar'ia law. Or it may surprise us all with the kind of relative live-and-let-live ambiance that Afghanistan has had at some moments of its history. In any case, will the rest of the world care? The next five to ten years is going to be a terrible time economically and politically everywhere. There may be no time or energy to worry about Afghanistan.

by Immanuel Wallerstein

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

Currency War? Of Course (1 November 2010)

Currencies are a very particular economic problem. For currencies are the one true win-lose relationship. Whatever the merits of revaluing or devaluing a particular currency, these merits are only wins if others are losers. Everyone cannot devalue simultaneously. It is logically impossible and therefore politically meaningless.

The world situation is well-known. We have been living in a world in which the U.S. dollar has been the world's reserve currency. This of course has given the United States a privilege that no other country has. It can print its currency at will, whenever it thinks that doing so solves some immediate economic problem. No other country can do this; or rather no other country can do this without penalty as long as the dollar remains the accepted reserve currency.

It is also well-known that the dollar has been losing its value in relation to other currencies for some time now. Despite the continuing fluctuations, the curve has been downward for perhaps thirty years at least.

The countries of northeast Asia - China, Korea, and Japan -have pursued currency policies that other countries have criticized. Indeed this is the subject of constant media attention. However, to be fair, it is by no means easy to establish the wisest policy at the moment, even from the selfish perspective of each country.

I consider the underlying issue simpler than the convoluted explanations of most policy analysts. I start with a few assumptions. The status of the dollar as the reserve currency of the world-system is the last major advantage that the United States has in the world-system today. It is therefore understandable that the United States will do what it can to maintain this advantage. In order to do so, it requires the willingness of other countries (including notably those of northeast Asia) not only to use the dollar as a mode of calculating transfers but as something in which to invest their surpluses (particularly in U.S. treasury bonds).

However, the exchange rate of the dollar has been steadily slipping. This means that surpluses invested in U.S. treasury bonds are worth less as time goes by. There comes a point at which the advantages of such investment (the principal advantage being that it sustains the ability of U.S. enterprises and individual consumers to pay for imports) will eventually be less than the loss of real value of the investments in the treasury bonds. The two curves move in opposite directions.

The problem is one which is posed in any market situation. If the value of a stock is falling, owners will want to divest before it becomes too low. But rapid divestment by a large stockholder can impel a rush to divest by others, thus causing even greater losses. The game is always to find the elusive moment to divest that is neither too late nor too soon, or not too slowly but not too fast. This requires perfect timing, and the search for perfect timing is the kind of judgment that quite frequently goes awry.

I see this as the basic picture of what is happening and will happen with the U.S. dollar. It cannot continue to maintain the degree of world confidence that it once enjoyed. Sooner or later, economic reality will catch up with it. This may happen in a five-minute shock or in a much slower process. But when it does, the key question is, what then happens?

There is no other currency today poised to replace the dollar as a reserve currency. In that case, when the dollar falls, there will be no reserve currency. We shall be in a multipolar currency world. And a multipolar currency world is a very chaotic world, in which no one feels comfortable because the constant swift shifts of exchange rates make minimally rational short-term economic predictions very precarious.

The managing director of the International Monetary Fund, Dominique Strauss-Kahn, is at the moment warning publicly that the world is plunging into currency wars, whose outcome "would have a negative and very damaging longer-run impact." One real possibility is that the world may revert, it seems to me is already reverting, to de facto barter arrangements - a situation that is not really compatible with the effective functioning of a capitalist world-economy.

Caveat emptor!

by Immanuel Wallerstein

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

Brazilian and U.S. Elections: Opposite Outcomes (15 November 2010)

On October 31, President Luis Inacio "Lula" da Silva won a sweeping victory in the Brazilian elections. On November 2, President Barack Obama was soundly defeated in the U.S. elections. The curious thing is that neither one of them was standing in the elections. In Brazil, Lula had had two terms, the maximum allowed, and was supporting Dilma Rousseff as his successor. In the United States, the 2010 elections were midterm legislative elections, not a presidential election.

There are some striking similarities in the two men and the two political situations. Lula was elected president of Brazil in 2002 as the candidate of hope and change. Obama was elected president of the United States in 2008 as the candidate of hope and change.

Both men were outsiders in terms of the traditional political processes of their countries. Lula was the first president of working-class background and of little formal education. Obama was the first African-American president of his country.

In their campaigns, both rallied large-scale popular support. In Lula's case, this was not his first, but his fourth attempt to become president. He had been a trade-union leader and the leader of a workers' party, the Partido dos Trabalhadores (PT). Obama has been a community organizer and a senator with a very left ("liberal") voting record in the legislature. Both received support from militants in social movements and appealed particularly to young voters. Both emphasized the misdeeds of the previous president in their country - Fernando Henrique Cardoso in the case of Brazil and George W. Bush in the case of the United States - and in both cases their election was seen as a repudiation of the policies of the previous president.

In neither case did the newly-elected president have a clear path in the legislature. In the Brazilian case, the electoral system led to a legislature with multiple parties and the PT had no more than a quarter of the seats. In the U.S. case, the rules of the U.S. Senate allowed the opposition party to block or force major concessions in any legislation the U.S. president wanted to see enacted. Both men felt they had to make political compromises.

In both cases, a major fear of the newly-elected president was that the already difficult economic situation of their countries would turn to disaster. Lula feared runaway inflation and runaway investors. Obama feared collapse of the banks and runaway unemployment. The way each responded to these fears was to turn to a relatively conservative ("neoliberal") economic approach and the appointment of relatively conservative people in the key economic positions of their administration.

This almost immediate "neoliberal" approach dismayed a large part of their electoral base. In each case, the two men sought to reassure their more left supporters that this "neoliberal" approach was essential but transitional, and that they would see that eventually their hopes for more fundamental change would be realized.

These assurances were taken with increasing skepticism and public dissent by these supporters, and particularly by leading left intellectuals and leaders of social movements. In the Brazilian case, some of them publicly resigned from the PT and threw their support to smaller left-wing parties. The response of both Lula and Obama was to point to various kinds of programs they had put into effect which were intended to improve the lot of the poorer parts of the population, such as the campaign against hunger in the case of Brazil and the new health legislation in the case of the United States. The skeptics pointed in each case to the important benefits that had accrued to the wealthier segments of their countries.

When, however, the actual elections took place, many of the left skeptics returned to the fold. In Brazil, a group of very prominent left intellectuals issued a public appeal to vote for Dilma Rousseff 0n the grounds that her opponent would wreak disaster for Brazil. A similar position was taken by the most important social movement, the Movimento dos Trabalhadores Sem Terra (MST), which had been badly let down by Lula but nonetheless thought that things would be still worse if Rousseff were not elected.

In the U.S. case, intellectuals who had supported the third-party candidacy of Ralph Nader in 2000 because they felt that there was no significant difference between Al Gore and George W. Bush publicly repented of this approach and argued for supporting Democrats in the legislative elections. So did leaders of social movements - among African-Americans, Latinos, and gays - despite their public disappointment with the limited fulfillment of Obama's promises.

All this seems remarkably similar, yet the outcome could not have been more different. Rousseff won handily in Brazil and Obama, in his own words, received a "shellacking." Why? It could not be clearer. There was one enormous difference in the two situations. Brazil's economic situation had markedly improved in the past few years, and the U.S. economic situation had become markedly worse. There could not have been a clearer demonstration of the Carville thesis: "It's the economy, stupid."

It was not Obama's "centrism" that explains why voters turned against him. Lula has been every bit as "centrist" in his politics. It was not Obama's lack of charisma. He had seemed very "charismatic" in 2008. Lula was popular because things seemed to be going well. And Obama was unpopular because they seemed to be going badly. It is not that one sold out and the other did not. It was not a question of their true political convictions. Sometimes, the overall structural situation overwhelms the abilities of talented politicians to do much about them.

by Immanuel Wallerstein

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

Shall We Discuss Poverty? (1 December 2010)

For the fifteen to twenty years that the Washington Consensus dominated the discourse in the world-system (circa 1975-1995), poverty was a taboo word, even as it was increasing by leaps and bounds. We were all told that the only thing that mattered was economic growth, and that the only road to economic growth was to let the "market" prevail without any "statist" interference - except, of course, that of the International Monetary Fund (IMF) and the U.S. Treasury.

Great Britain's Mrs. Thatcher famously gave us the slogan, "There is No Alternative" (TINA), by which she meant there was no alternative for any state other than the United States and, I suppose, the United Kingdom. The benighted countries of the global South just had to abandon their naive pretensions at controlling their own fate. If they did, they would one day (but who could say when?) be rewarded with growth. If they did not, they were doomed to - dare I say it? - poverty.

The glory days of the Washington Consensus are long since over. Things did not improve for most people in the global South - quite the opposite - and rebellion was in the air. The neo-Zapatistas rose up in Chiapas in 1994. The social movements brought the World Trade Organization's meeting in Seattle to a halt in 1999 (from which it has never recovered). And the World Social Forum began its expansive life in Porto Alegre in 2001.

When the so-called Asian financial crisis exploded in 1997, causing vast economic damage in east and southeast Asia, and spreading to Russia, Brazil, and Argentina, the IMF pulled out of its pockets its threadbare set of demands for these countries, if they wanted any help. Malaysia had the courage to say no thank you, and Malaysia recovered the most swiftly. Argentina was even bolder, offering to pay its debts at about 30 cents on the dollar (or else nothing).

Indonesia however buckled under, and soon thereafter the long-standing, seemingly very stable dictatorship of Suharto was ended by a popular uprising. At the time, no less a person than Henry Kissinger bellowed at the IMF, saying in effect how stupid can you be? It was more important for world capitalism and the United States to keep a friendly dictator in power in Indonesia than to have a country follow the rules of the Washington Consensus. In a memorable 1998 op-ed, Kissinger said that the IMF is acting "like a doctor specializing in measles [who] tries to cure every illness with one remedy."

First the World Bank and then the IMF learned their lesson. Forcing governments to accept neo-liberal formulas as their policy (and as the price for financial assistance when their state budgets are out of kilter) can have nasty political consequences. It turns out that there are alternatives after all: People can revolt.

When the next bubble burst and the world entered what is now referred to as the financial crisis of 2007 or 2008, the IMF became even more attuned to those unpleasant masses who don't know their place. And lo and behold, the IMF discovered "poverty." They not only discovered poverty, but they set out to provide programs to "reduce" the amount of poverty in the global South. It is worth understanding their logic.

The IMF publishes a sleek quarterly magazine called Finance & Development. It is not written for professional economists but for the wider audience of policymakers, journalists, and entrepreneurs. The September 2010 issue features an article by Rodney Ramcharan whose title tells it all: "Inequality Is Untenable."

Rodney Ramcharan is a "Senior Economist" in the IMF's African Department. He tells us - the new IMF line - that "economic policies that simply focus on average growth rates could be dangerously naive." In the global South, high inequality can "limit growth-enhancing physical and human capital investments and increase calls for possibly inefficient redistribution." But even worse, high inequality "giv[es] the rich a relatively greater voice than the less homogeneous majority." And this in turn "can further skew the income distribution and ossify the political system, leading to even graver political and economic consequences in the long run."

It seems the IMF has finally heard Kissinger. They have got to worry about both the unwashed masses, especially in countries of high inequality, and of their elites, who also delay "progress" because they want to maintain their hold on unskilled labor.

Has the IMF suddenly become the voice of the world's left? Don't be silly. What the IMF wants, as do the world's more sophisticated capitalists, is a more stable system in which their market interests prevail. This requires twisting the arms of elites in the global South (and even in the global North) to give up a little of their ill-gotten gains in "poverty" programs that will appease enough of the ever-expanding poor to calm their thoughts of rebellion.

It may be too late for this new strategy to work. The chaotic fluctuations are so very great. And "untenable inequality" is growing daily. But the IMF and those whose interests it represents are not going to stop trying.

by Immanuel Wallerstein

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

Mr. Putin Makes an Audacious Offer (15 December 2010)

Prime Minister Vladimir Putin of Russia visited Germany in the end of November. Before arriving there, he published an op-ed in the German newspaper, Süddeutsche Zeitung, which commented on this interview under the headline, "Putin hugs Europe."

The contents of the op-ed were quite remarkable. Putin said that the lesson to be drawn from the severest economic crisis of the world economy in eight decades was the need for Russia to work more closely with the European Union. "We propose the creation of a harmonious economic community stretching from Lisbon to Vladivostok." He said that "in the future, we could even consider a free trade zone or even more advanced forms of integration." He suggested that such a continental market would be worth trillions of Euros.

Putin suggested that the EU and Russia needed to work closer together in the fields of industry and energy. He said that they should consider "what we can do to enable a new wave of industrialization on the European continent." He mentioned such fields as shipbuilding, the airplane and automobile industries, environmental technologies, pharmaceuticals, nuclear energy, and logistics. He called for common undertakings by European and Russian entrepreneurs.

In the field of energy supplies, Putin called for "active exchanges." It was necessary, he said, to work together at "all phases of the technological value creation chain - from the uncovering of demand for energy resources up to the delivery to the consumer." Thereupon, Russia and the EU can move forward to the elimination of visas which would manifest "not the end but the beginning of a true integration of Russia and the EU."

When Putin arrived in Germany he got a warm reception from some leading German bankers and industrialists. He spoke to them as his "friends," and in return the CEO of Siemens said, "We are at home in Russia." He said that "Russia was a clear example of how the emerging nations are giving an impulse to growth in the world economy."

Putin continued his "charm offensive" with the German economic elite. He suggested they stood together on currency questions. "We need a new multipolarity in the currency system. We must break the excessive dollar monopoly." He spoke of the example of the Roman Empire, whose policies led to a 500-year-long economic stagnation. He then gave a strong endorsement to the euro, which he called an important balance to the dollar in the world economy. He suggested the possibility of trade being denominated in rubles and Euros, and not in dollars.

Chancellor Angela Merkel's response to these proposals was cautious but not negative. Germany's Foreign Minister, Guido Weterwelle, said that Putin's proposals show "how close we are in terms of our strategic goals." The strongest endorsement came from some of Germany's leading economic managers. Press response in Germany was mixed.

In France, Le Monde noted: "This appeal to economic opening by someone more noted for his nationalist character than his commitment to ideas of free trade is truly innovative. This is all the more the case since the development of industrial cooperation between the two sides has been repeatedly held back for political reasons."

It should be observed that Putin was not offering a deal to the "West" but rather to "Europe." It seems a quite specific attempt to encourage a strengthening of ties with Europe at the expense of the United States. While this is not entirely new in terms of Russia's geopolitical stance, it has up to now not been stated so publicly and so boldly. It should be noted too that Putin has given a strong endorsement to the euro at a time when the euro is in need of some political reinforcement. Note too that Putin is not talking of remaining merely or even principally an energy-exporter to Europe. Putin is talking of a new wave of industrialization in which Russia will participate fully.

This open diplomacy by Putin should probably worry U.S. leaders more than the modest revelations of Wikileaks.

by Immanuel Wallerstein

These commentaries, published twice monthly, are intended to be reflections on the contemporary world scene, as seen from the perspective not of the immediate headlines but of the long term.]

2011 Center for a World in Balance