Monday, July 24, 2017

Pentagon Study Declares American Empire Is ‘Collapsing’

Report demands massive expansion of military-industrial complex to maintain global ‘access to resources’

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An extraordinary new Pentagon study has concluded that the U.S.-backed international order established after World War 2 is “fraying” and may even be “collapsing”, leading the United States to lose its position of “primacy” in world affairs.

The solution proposed to protect U.S. power in this new “post-primacy” environment is, however, more of the same: more surveillance, more propaganda (“strategic manipulation of perceptions”) and more military expansionism.

The document concludes that the world has entered a fundamentally new phase of transformation in which U.S. power is in decline, international order is unravelling, and the authority of governments everywhere is crumbling.

Having lost its past status of “pre-eminence”, the U.S. now inhabits a dangerous, unpredictable “post-primacy” world, whose defining feature is “resistance to authority”.

Danger comes not just from great power rivals like Russia and China, both portrayed as rapidly growing threats to American interests, but also from the increasing risk of “Arab Spring”-style events. These will erupt not just in the Middle East, but all over the world, potentially undermining trust in incumbent governments for the foreseeable future.

The report, based on a year-long intensive research process involving consultation with key agencies across the Department of Defense and U.S. Army, calls for the U.S. government to invest in more surveillance, better propaganda through “strategic manipulation” of public opinion, and a “wider and more flexible” U.S. military.

The report was published in June by the U.S. Army War College’s Strategic Studies Institute to evaluate the DoD’s approach to risk assessment at all levels of Pentagon policy planning. The study was supported and sponsored by the U.S. Army’s Strategic Plans and Policy Directorate; the Joint Staff, J5 (Strategy and Policy Branch); the Office of the Deputy Secretary of Defense for Strategy and Force Develop­ment; and the Army Study Program Management Office.


“While the United States remains a global political, economic, and military giant, it no longer enjoys an unassailable position versus state competitors,” the report laments.
“In brief, the sta­tus quo that was hatched and nurtured by U.S. strategists after World War II and has for decades been the principal ‘beat’ for DoD is not merely fraying but may, in fact, be collapsing.”
The study describes the essentially imperial nature of this order as being underpinned by American dominance, with the U.S. and its allies literally “dictating” its terms to further their own interests:
“The order and its constituent parts, first emerged from World War II, were transformed to a unipolar sys­tem with the collapse of the Soviet Union, and have by-and-large been dominated by the United States and its major Western and Asian allies since. Status quo forces collectively are comfortable with their dominant role in dictating the terms of international security outcomes and resist the emergence of rival centers of power and authority.”
But this era when the U.S. and its allies could simply get their way is over. Observing that U.S. officials “naturally feel an obligation to preserve the U.S. global position within a favorable international order,” the report concludes that this “rules-based global order that the United States built and sustained for 7 decades is under enormous stress.”

The report provides a detailed breakdown of how the DoD perceives this order to be rapidly unravelling, with the Pentagon being increasingly outpaced by world events. Warning that “global events will happen faster than DoD is currently equipped to handle”, the study concludes that the U.S. “can no longer count on the unassailable position of dominance, supremacy, or pre-eminence it enjoyed for the 20-plus years after the fall of the Soviet Union.”

So weakened is U.S. power, that it can no longer even “automatically generate consistent and sustained local military superiority at range.”

It’s not just U.S. power that is in decline. The U.S. Army War College study concludes that:
“[A]ll states and traditional political authority structures are under increasing pressure from endogenous and exogenous forces… The fracturing of the post-Cold War global system is accompanied by the in­ternal fraying in the political, social, and economic fabric of practically all states.”
But, the document says, this should not be seen as defeatism, but rather a “wakeup call”. If nothing is done to adapt to this “post-primacy” environment, the complexity and speed of world events will “increasingly defy [DoD’s] current strategy, planning, and risk assessment conventions and biases.”

Defending the “status quo” 

Top on the list of forces that have knocked the U.S. off its position of global “pre-eminence”, says the report, are the role of competing powers—major rivals like Russia and China, as well as smaller players like Iran and North Korea.

The document is particularly candid in setting out why the U.S. sees these countries as threats—not so much because of tangible military or security issues, but mainly because their pursuit of their own legitimate national interests is, in itself, seen as undermining American dominance.

Russia and China are described as “revisionist forces” who benefit from the U.S.-dominated international order, but who dare to “seek a new distribution of power and authority commensurate with their emergence as legitimate rivals to U.S. dominance.” Russia and China, the analysts say, “are engaged in a deliberate program to demonstrate the limits of U.S. authority, will, reach, influence, and impact.”

The premise of this conclusion is that the U.S.-backed “status quo” international order is fundamentally “favorable” for the interests of the U.S. and its allies. Any effort to make global order also work “favorably” for anyone else is automatically seen as a threat to U.S. power and interests.

Thus, Russia and China “seek to reorder their position in the existing status quo in ways that—at a minimum—create more favorable circumstances for pursuit of their core objectives.” At first glance there seems nothing particularly wrong about this. So the analysts emphasize that “a more maximalist perspective sees them pursuing advantage at the direct expense of the United States and its principal Western and Asian allies.”

Most conspicuous of all, there is little substantiation in the document of how Russia and China pose a meaningful threat to American national security.

The chief challenge is that they “are bent on revising the contemporary status quo” through the use of “gray zone” techniques, involving “means and methods falling far short of unambiguous or open provocation and conflict”.

Such “murkier, less obvious forms of state-based aggression”, despite falling short of actual violence, are condemned—but then, losing any sense of moral high-ground, the Pentagon study advocates that the U.S. itself should “go gray or go home” to ensure U.S. influence.

The document also sets out the real reasons that the U.S. is hostile to “revolutionary forces” like Iran and North Korea: they pose fundamental obstacles to U.S. imperial influence in those regions. They are:
“… neither the products of, nor are they satisfied with, the contemporary order… At a minimum, they intend to destroy the reach of the U.S.-led order into what they perceive to be their legitimate sphere of influence. They are also resolved to replace that order locally with a new rule set dictated by them.”
Far from insisting, as the U.S. government does officially, that Iran and North Korea pose as nuclear threats, the document instead insists they are considered problematic for the expansion of the “U.S.-led order.”

Losing the propaganda war 

Amidst the challenge posed by these competing powers, the Pentagon study emphasizes the threat from non-state forces undermining the “U.S.-led order” in different ways, primarily through information.

The “hyper-connectivity and weaponization of information, disinformation, and dis­affection”, the study team observes, is leading to the uncontrolled spread of information. The upshot is that the Pentagon faces the “inevitable elimination of secrecy and operational security”.
“Wide uncontrolled access to technology that most now take for granted is rapidly undermining prior advantages of discrete, secret, or covert intentions, actions, or operations… In the end, senior defense leaders should assume that all defense-related activity from minor tactical movements to major military operations would occur completely in the open from this point forward.”
This information revolution, in turn, is leading to the “generalized disintegra­tion of traditional authority structures… fueled, and/or accelerated by hyperconnectivity and the obvious decay and potential failure of the post-Cold War status quo.”

Civil unrest Highlighting the threat posed by groups like ISIS and al-Qaeda, the study also points to “leaderless instability (e.g., Arab Spring)” as a major driver of “a generalized erosion or dissolution of traditional authority structures.”

The document hints that such populist civil unrest is likely to become prominent in Western homelands, including inside the United States.
“To date, U.S. strategists have been fixated on this trend in the greater Middle East. However, the same forces at work there are similarly eroding the reach and authority of governments worldwide… it would be unwise not to recognize that they will mutate, metastasize, and manifest differently over time.”
The U.S. homeland is flagged-up as being especially vulnerable to the breakdown of “traditional authority structures”:
“The United States and its population are increasingly exposed to substantial harm and an erosion of security from individuals and small groups of motivated actors, leveraging the conflu­ence of hyperconnectivity, fear, and increased vulner­ability to sow disorder and uncertainty. This intensely disorienting and dislocating form of resistance to author­ity arrives via physical, virtual, and psychological vio­lence and can create effects that appear substantially out of proportion to the origin and physical size or scale of the proximate hazard or threat.”
There is little reflection, however, on the role of the US government itself in fomenting such endemic distrust, through its own policies.

Bad facts Among the most dangerous drivers of this risk of civil unrest and mass destabilization, the document asserts, are different categories of fact. Apart from the obvious “fact-free”, defined as information that undermines “objective truth”, the other categories include actual truths that, however, are damaging to America’s global reputation.

“Fact-inconvenient” information consists of the exposure of “details that, by implication, un­dermine legitimate authority and erode the relationships between governments and the governed”—facts, for instance, that reveal how government policy is corrupt, incompetent or undemocratic.

“Fact-perilous” information refers basically to national security leaks from whistleblowers such as Edward Snowden or Bradley Manning, “exposing highly clas­sified, sensitive, or proprietary information that can be used to accelerate a real loss of tactical, operational, or strategic advantage.”

“Fact-toxic” information pertains to actual truths which, the document complains, are “exposed in the absence of context”, and therefore poison “important political discourse.” Such information is seen as being most potent in triggering outbreaks of civil unrest, because it:

“… fatally weakens foundational security at an international, regional, national, or personal level. Indeedfact-toxic exposures are those likeliest to trigger viral or contagious insecurity across or within borders and between or among peoples.”
In short, the U.S. Army War College study team believe that the spread of ‘facts’ challenging the legitimacy of American empire is a major driver of its decline: not the actual behavior of the empire which such facts point to.

Mass surveillance and psychological warfare The Pentagon study therefore comes up with two solutions to the information threat.

The first is to make better use of U.S. mass surveillance capabilities, which are described as “the largest and most sophisticated and inte­grated intelligence complex in world.” The U.S. can “generate insight faster and more reliably than its competitors can, if it chooses to do so”. Combined with its “military forward presence and power projection”, the U.S. is in “an enviable position of strength.”

Supposedly, though, the problem is that the U.S. does not make full use of this potential strength:
“That strength, however, is only as durable as the United States’ willingness to see and employ it to its advantage. To the extent that the United States and its defense enterprise are seen to lead, others will follow…”
The document also criticizes U.S. strategies for focusing too much on trying to defend against foreign efforts to penetrate or disrupt U.S. intelligence, at the expense of “the purposeful exploitation of the same architecture for the strategic manipulation of perceptions and its attendant influence on political and security outcomes.”

Pentagon officials need to simply accept, therefore, that:
“… the U.S. homeland, individual American citizens, and U.S. public opinion and perceptions will increasingly become battlefields.”
Military supremacy Having mourned the loss of U.S. primacy, the Pentagon report sees expanding the U.S. military as the only option.

The bipartisan consensus on military supremacism, however, is not enough. The document demands a military force so powerful it can preserve “maximum freedom of action”, and allow the U.S. to “dictate or hold significant sway over outcomes in international disputes.”

One would be hard-pressed to find a clearer statement of imperial intent in any U.S. Army document:
“While as a rule, U.S. leaders of both political parties have consistently committed to the maintenance of U.S. military superiority over all potential state rivals, the post-primacy reality demands a wider and more flexible military force that can generate ad­vantage and options across the broadest possible range of military demands. To U.S. political leadership, maintenance of military advantage preserves maximum freedom of action… Finally, it allows U.S. decision-makers the opportunity to dictate or hold significant sway over outcomes in international disputes in the shadow of significant U.S. military capability and the implied promise of unac­ceptable consequences in the event that capability is unleashed.”
Once again, military power is essentially depicted as a tool for the U.S. to force, threaten and cajole other countries into submission to U.S. demands.

The very concept of ‘defence’ is thus re-framed as the capacity to use overwhelming military might to get one’s way—anything which undermines this capacity ends up automatically appearing as a threat that deserves to be attacked.

Empire of capital Accordingly, a core goal of this military expansionism is ensuring that the United States and its international partners have “unimpeded access to air, sea, space, cyberspace, and the electromagnetic spectrum in order to underwrite their security and prosperity”.

This also means that the U.S. must retain the ability to physically access any region it wants, whenever it wants:
“Failure of or limitations on the ability of the United States to enter and operate within key regions of the world, for example, undermine both U.S. and partner security.”
The U.S. thus must try to minimize any “purposeful, malevolent, or incidental interruption of access to the commons, as well as critical regions, resources, and markets.”

Without ever referring directly to ‘capitalism’, the document eliminates any ambiguity about how the Pentagon sees this new era of “Persistent Conflict 2.0”:
“… some are fighting globalization and globalization is also actively fighting back. Combined, all of these forces are rending at the fabric of security and stable governance that all states aspire to and rely on for survival.”
This is a war, then, between US-led capitalist globalization, and anyone who resists it.

And to win it, the document puts forward a combination of strategies: consolidating the U.S. intelligence complex and using it more ruthlessly; intensifying mass surveillance and propaganda to manipulate popular opinion; expanding U.S. military clout to ensure access to “strategic regions, markets, and resources”.

Even so, the overarching goal is somewhat more modest—to prevent the U.S.-led order from collapsing further:
“…. while the favorable U.S.-dominated status quo is under significant internal and external pressure, adapted American power can help to forestall or even reverse outright failure in the most critical regions”.
The hope is that the U.S. will be able to fashion “a remodeled but nonetheless still favorable post-primacy international order.”

Narcissism Like all U.S. Army War College publications, the document states that it does not necessarily represent the official position of the U.S. Army or DoD. While this caveat means that its findings cannot be taken to formally represent the U.S. government, the document does also admit that it represents “the collective wisdom” of the numerous officials consulted.

In that sense, the document is a uniquely insightful window into the mind of the Pentagon, and how embarrassingly limited its cognitive scope really is.

And this in turn reveals not only why the Pentagon’s approach is bound to make things worse, but also what an alternative more productive approach might look like.

Launched in June 2016 and completed in April 2017, the U.S. Army War College research project involved extensive consultation with officials across the Pentagon, including representatives of the joint and service staffs, the Office of the Secretary of Defense (OSD), U.S. Central Command (USCENTCOM), U.S. Pacific Command (USPACOM), U.S. Northern Command (USNORTHCOM), U.S. Special Operations Command (USSOCOM); U.S. Forces, Japan (USFJ), the Defense Intelligence Agency (DIA), the National Intelligence Council, U.S. Strategic Command (USSTRATCOM), and U.S. Army Pacific [US­ARPAC] and Pacific Fleet [PACFLT]).

The study team also consulted with a handful of American think-tanks of a somewhat neoconservative persuasion: the American Enterprise Institute, the Center for Strategic and International Studies (CSIS), the RAND Corporation, and the Institute for the Study of War.

No wonder, then, that its findings are so myopic.

But what else would you expect from a research process so deeply narcissistic, that it involves little more than talking to yourself? Is it any wonder that the solutions offered represent an echo chamber calling to amplify precisely the same policies that have contributed to the destabilization of U.S. power?

The research methodology manages to systematically ignore the most critical evidence surrounding the drivers undermining U.S. primacy: such as, the biophysical processes of climate, energy and food disruption behind the Arab Spring; the confluence of military violence, fossil fuel interests and geopolitical alliances behind the rise of ISIS; or the fundamental grievances that have driven a breakdown in trust with governments since the 2008 financial collapse and the ensuing ongoing period of neoliberal economic failure.

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A large body of data demonstrates that the escalating risks to U.S. power have come not from outside U.S. power, but from the very manner in which U.S. power has operated. The breakdown of the U.S.-led international order, from this perspective, is happening as a direct consequence of deep-seated flaws in the structure, values and vision of that order.

In this context, the study’s conclusions are less a reflection of the actual state of the world, than of the way the Pentagon sees itself and the world.

Indeed, most telling of all is the document’s utter inability to recognize the role of the Pentagon itself in systematically pursuing a wide range of policies over the last several decades which have contributed directly to the very instability it now wants to defend against.

The Pentagon frames itself as existing outside the Hobbesian turmoil that it conveniently projects onto the world—the result is a monumental and convenient rejection of any sense of responsibility for what happens in the world.

In this sense, the document is a powerful illustration of the self-limiting failure of conventional risk-assessment approaches. What is needed instead is a systems-oriented approach based on evaluating not just the Pentagon’s internal beliefs about the drivers of risk?—?but engaging with independent scientific evidence about those drivers to test the extent to which those beliefs withstand rigorous scrutiny.

Such an approach could open the door to a very different scenario to the one recommended by this document?—?one based on a willingness to actually look in the mirror. And that in turn might open up the opportunity for Pentagon officials to imagine alternative policies with a real chance of actually working, rather than reinforcing the same stale failed strategies of the past.

It is no surprise then that even the Pentagon’s apparent conviction in the inexorable decline of U.S. power could well be overblown.

According to Dr Sean Starrs of MIT’s Center for International Studies, a true picture of U.S. power cannot be determined solely from national accounts. We have to look at the accounts of transnational corporations.

Starrs shows that American transnational corporations are vastly more powerful than their competitors. His data suggests that American economic supremacism remains at an all-time high, and still unchallenged even by an economic powerhouse like China.

This does not necessarily discredit the Pentagon’s emerging recognition that U.S. imperial power faces a new era of decline and unprecedented volatility.

But it does suggest that the Pentagon’s sense of U.S. global pre-eminence is very much bound up with its capacity to project American capitalism globally.

As geopolitical rivals agitate against U.S. economic reach, and as new movements emerge hoping to undermine American “unimpeded access” to global resources and markets, what’s clear is that DoD officials see anything which competes with or undermines American capitalism as a clear and present danger.

But nothing put forward in this document will actually contribute to slowing the decline of U.S. power.

On the contrary, the Pentagon study’s recommendations call for an intensification of the very imperial policies that futurist Professor Johan Galtung, who accurately forecasted the demise of the USSR, predicts will accelerate the “collapse of the U.S. empire” by around 2020.

As we move deeper into the “post-primacy” era, the more meaningful question for people, governments, civil society and industry is this: as the empire falls, lashing out in its death throes, what comes after?

Study reveals gutting of health care and pensions for US workers

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A recent study by the global risk management firm Willis Towers Watson, “Shifts in benefit allocations among U.S. employers,” details the results of the decades-long assault on workers’ retirement and medical benefits by Corporate America and both big business parties.
The study draws on a database of retirement and health care programs of over 500 companies with at least 200 employees from 2001 to 2015, as well as a survey of 4,721 full-time employees from 2015 to 2016.
The global risk management firm notes the precarious situation facing both older workers—who have little resources for retirement—and younger workers who have only recently become employed. The writers note, “Whether it’s the baby boomers behind on retirement savings or the millennials trying to keep up with student loan debts, sluggish wage growth is making their financial burdens heavier. Many employees are worried about paying today’s bill and about financing tomorrow’s retirement.”
Employers reduced their expenditures on retirement benefits by a staggering 25 percent between 2001 and 2015, the report notes. In addition to cutting retired and current workers’ benefits, corporations have essentially eliminated traditional employer-paid “defined benefit” retirement benefits for newly hired workers, replacing them with “defined contribution plans,” such as 401 (K) plans, which are funded by workers with set contributions from employers, with the final payout not “defined” but largely determined by the vagaries of the stock market. According to the study, the percentage of employers offering DB plans plummeted from 45 percent to just seven percent between 2001 and 2015.
To offset rising employee medical costs, the report notes, employers have reduced pension and post-retirement medical expenditures. This “reflects a seismic shift in the allocation of benefit dollars,” the report declares. “In 2001, active health care costs comprised about two-fifths of benefits while retirement benefits made up the remaining three-fifths. By 2015, the ratio had flipped, with active health care benefits accounting for slightly less than two-thirds of the costs and the retirement share dropping to slightly more than one-third.”
The rise in employer expenditures for current workers’ medical care has also spurred on the drive to force workers to pay higher deductibles and co-pays. This process was accelerated under Obama’s misnamed Affordable Care Act, which initially included a “Cadillac Tax” on corporations, which provided supposedly overgenerous health care packages.
The corporate and financial elite have long complained that workers are living too long after retirement and that the costs of “legacy workers”—i.e., retirees—has become unsustainable.
In 2005, then CEO of GM spin off Delphi parts maker declared, “We are witnessing the slow death of defined benefits as industrial compensation policy.” The “social contract inherent in defined-benefit programs perhaps made some economic sense when you worked for one employer till age 65 and then died at age 70,” Miller said. Now, he complained, “people can start work at age 20, retire at age 50, and expect full pensions and health care till age 90 or so.”
The Willis Towers Watson study shows the devastating results of this “social contract” being ripped up and the four-decade social counter-revolution waged by the capitalist class to return to the “good old days” when workers essentially labored until they dropped.
According to the study, “44% of older workers (age 55+) who are concerned about their future finances and 64% of those who are struggling financially expect to work to age 70 or later.”
Pew Research Center recently noted that the number of American aged 65 or over who are working jumped from 13 percent in 2000 to nearly 19 percent in 2016, and was expected to increase to 32 percent in the next five years.
Over 25 million Americans 60 years or older are economically insecure—living at or below 250 percent of the federal poverty level or $29,425 a year for an individual—according to the National Council on Aging. This will only worsen as the Trump administration and the Democrats move to destroy Medicaid and prepare the way to slash Medicare and Social Security too.
Far from opposing the attack on pensions and post-retirement medical care, the unions—including the United Auto Workers, Teamsters, United Steelworkers and United Mine Workers—have colluded with management to cut these benefits in the name of boosting the “competitiveness” and profitability of US corporations. While looking the other way as corporations have looted retiree benefits to fund ever-higher dividend payouts, stock buybacks and mega-mergers and acquisitions, the union bureaucracy has increasingly benefit from management of multi-billion-dollar pension and retiree medical care trusts.
In exchange for agreeing to the halving of new hire wages, the expansion of part-time and temporary labor and the destruction of thousands of jobs, the Obama administration handed the UAW control of a massive Voluntary Employees’ Beneficiary Association (VEBA) fund, valued at $50 billion. The UAW executives have a financial incentive to reduce benefits and accelerate the demise of hundreds of thousands of retirees and their dependents to keep their VEBA slush fund and investment vehicle thriving.
The number of impoverished senior citizens could potentially skyrocket this year as 22,600 retired coal miners and the United Mine Workers Health and Retirement Funds nears bankruptcy and the temporary federal fix ends. The Central States Pension fund, which covers 407,000 Teamster truck drivers and warehousemen in the Midwest and South, is also near bankruptcy.
Roughly one million workers are currently covered by multi-employer pension funds that are likely to run out of money in the next twenty years.
The survey of workers notes that since the financial crash of 2008, the desire for retirement guarantees has been rising steadily, up 17 percentage points since 2009. At the same time, only a third of respondents “would accept a smaller paycheck in exchange for more generous health benefits or lower, more predictable costs when using health care services.”
Many employees, the report notes, “appear to have reached the limit of how much they are willing or able to pay for health care benefits, which raises the question: Have we gone too far in cutting retirement support at a time when escalating health care costs—among other factors—are making it difficult to save more?”
The existence of employer paid pensions and retiree medical benefits was not the result of the beneficence of the industrialists and bankers. On the contrary, these social rights were won through fierce industrial battles of the working class in the 1940s and 1950s, and defended in struggles into the 1970s. The suppression of the class struggle by the unions, which reduced strike activity to historic lows during the eight years of the Obama administration, has allowed the ruling class to turn the clock backwards and send millions to an early grave.
The study by the London-based “global risk management” company is not primarily a celebration of the success in robbing workers of their retirements. Noting that survey results “suggest a disconnect between employees’ primary concerns, needs and preferences, and the reshuffling of employer dollars,” the report is also a warning that stagnating wages, impossibly high healthcare costs and working increasingly longer years is provoking enormous anger and that will inevitably find expression in a sharp escalation of the class struggle.

Concerns grow over Fed interest rate policy

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A further fall in the US inflation rate announced last Friday is certain to fuel growing concerns in financial circles about whether the Federal Reserve should continue with its policy of tightening interest rates.
Following a rise in the base rate in June, the Fed is set to lift rates again before the end of the year and has laid out a policy for winding down its holdings--$4.5 trillion worth of government and corporate bonds largely accumulated through its program of massive asset purchases following the financial crisis of 2008.
But with inflation showing no sign of meeting the Fed’s target rate of around 2 percent, opposition is being voiced to further increases.
The latest data shows that the core personal consumption expenditures index, which excludes food and energy prices and is regarded by the Fed as its key price metric, rose at an annual rate of 1.4 percent in May, down from 1.5 percent the previous month and well below the 1.8 percent for February.
While short-term interest rates have lifted, in the expectation that the Fed will stick to its policy of rate rises, long-term bond rates, which tend to indicate the views of investors on the longer term prospects for the economy, have been falling.
This has given rise to what is known as a “flattening of the yield curve,” in which the short and long rates converge, possibly leading to an inversion of the yield curve, with the long-term rate falling below the short-term yield. Such a situation is regarded as a reliable indicator of recession. The last such occurrence was at the end of 2007.
Last week, Joachim Fels, an economic adviser for the $1.5 trillion global bond trading firm Pimco, issued a note warning that, while the Fed was lifting rates in order to have some ammunition to fight a future recession, “the risk is that by raising rates too fast and too far, the Fed brings about exactly what it is so afraid of--the next recession.”
He wrote that the US economy was only “one major adverse shock away from a serious deflationary scare,” and that there was a “substantial risk that the Fed’s opportunistic tightening campaign is a hawkish mistake.”
In an editorial comment last week, the Financial Times added its voice to those disagreeing with the Fed’s present agenda. “As the Federal Reserve marches on with its slow but steady campaign of increases in interest rates, the bond markets are sending a warning about the risks of advancing further,” it said, noting the flattening of the yield curve.
“One by one, sound arguments for the Fed continuing its expected series of rate rises are falling away. Real growth in the economy has been weaker than expected of late. Core inflation, and inflation expectations, remain stubbornly below the Fed’s target. And now a relatively reliable indicator of future recession is sounding an increasingly strident warning siren.”
The Fed’s rationale for pressing on with interest rate rises in order to return to what is regarded as a more normal monetary policy is based on an economic model known as the Phillips curve. First developed in 1958, this purports to show a relationship between the unemployment rate and inflation. As unemployment falls, it argues, the push for wage rises increases, leading to a lift in inflation.
The Fed, as the central financial instrument of the corporate-financial elite, is concerned above all with preventing a surge in wages as the labor market tightens and workers feel themselves in a stronger position to resume their struggle for better wages and working conditions. The explosive growth of stock prices and corporate profits over the past several decades, and the record increase in the ratio of corporate profits to labor income over this period, have depended on a relentless offensive against the working class, carried out by the entire political establishment, Democratic no less than Republican.
In this, the trade unions have played the central role, artificially suppressing the class struggle through their unbroken efforts to prevent strikes and isolate and sabotage them when they break out, while maintaining the political domination of the capitalist two-party system over the working class. To this point, despite being widely despised by workers, the trade union apparatuses, acting on behalf of the ruling class, have been able to continue to hold back the working class, as reflected in the continued stagnation in wages.
However, fears are mounting within ruling class circles that this long period of suppressed class struggle is coming to an end, with signs of intense social anger and political radicalization of working people increasing.
According to the Phillips model, with the official US unemployment rate at the historically low level of 4.3 percent, wages and inflation should now start to rise and interest rates should be lifted, if only at a slow rate. The Fed maintains that the absence of price increases is due to temporary factors and therefore “looks through” the present data to what it regards as longer-term processes that will eventually push up inflation.
But this view ignores that the fact that what were regarded for a long period as “normal” economic conditions and relations no longer exist. Price changes are, to be sure, affected by temporary fluctuations--a fall in cell phone charges has been cited as a cause of the most recent price slowdown--but the overall trend is down.
Furthermore, there has been no significant increase in wages, with pay levels continuing to fall in real terms. As the International Monetary Fund noted in its most recent assessment of the US economy, more than half of US households have a lower real income today than they did in 2000.
And the unemployment rate no longer signifies what it once did. This is because any newly created jobs are increasingly low-paid, part-time, casual and contract employment, not the full-time jobs which prevailed when the Phillips model was developed in the midst of the post-war capitalist boom.
The breakdown of the Phillips curve, on which the Fed seeks to base its decisions, points to far-reaching changes in the very structure of the US economy.
In analysing these changes, it must always be borne in mind that the driving force of the capitalist economy is not the expansion of economic output as such, but profit. And the mode of profit accumulation has undergone vast changes in recent decades--a process that began with the rise of financialisation in the 1980s, accelerated in the 1990s, and then took a further leap in the wake of the financial crisis of 2008.
Increasingly, the profits of major corporations are no longer derived from direct investment in productive activities, involving the employment of more workers, leading to wage increases, but through the appropriation of wealth produced elsewhere.
This takes place by two means: the siphoning off of wealth by financial means, and the monopolisation of scientific advancements via the establishment of so-called intellectual property rights by hi-tech firms such as Google, Apple and others, and by giant pharmaceutical and bio-tech companies.
At the heart of this process stand the banks, the investment funds and hedge funds, which dominate the shareholdings of major corporations. It has been calculated that whereas in 1990 the 10 biggest financial conglomerates controlled 10 percent of US assets, they now control 75 percent.
These financial behemoths do not directly produce surplus value--they appropriate it from other areas of the economy in a form of parasitism.
And just as in biology the parasite depends on the flow of life resources from the host, so these corporations depend, in the final analysis, on the flow of surplus value from other areas of the economy. Hence their very mode of accumulation--in which money seems to simply beget money--results in an ever more frenzied drive for the extraction of additional surplus value from the areas of the economy on which they feed, through the lowering of wages, more intensive exploitation and the destruction of previous working conditions.
The restructuring of the US economy to meet these demands has shattered the so-called Phillips curve and all other nostrums on which the Fed and other major policy-making bodies based themselves.
But even more significantly for the working class, it means that political perspectives of the past, based on the possibility of some kind of reform of the capitalist system, have been ground to dust. This poses the objective necessity for a program, starting with the struggle for political power, the bringing of the “commanding heights” of the economy under public ownership, and the complete reorganisation of economic relations to meet human needs.

Scientists warn of “biological annihilation” as Earth’s mass extinction accelerates

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A study published Monday in the Proceedings of the National Academy of Sciences of the United States of America (PNAS) indicates that human activity is precipitating “biological annihilation” and a mass extinction event.
The peer-reviewed paper, “Biological annihilation via the ongoing sixth mass extinction signaled by vertebrate population losses and declines,” argues that the severity of the ongoing biodiversity crisis is often underestimated by looking primarily at extinctions (the loss of all individuals in a species). The study looks more broadly at species’ population decline and argues that “Earth’s sixth mass extinction episode has proceeded further than most assume.”
The study was coauthored by Gerardo Ceballos of the Instituto de Ecología at the Universidad Nacional Autónoma de México in Mexico City and by Paul R. Ehrlich and Rodolfo Dirzo of Stanford University’s Department of Biology.
The authors argue that while the extinction rate is already alarmingly high—including at least two vertebrate species per year for the past century—this does not tell the full story. Even if species have not yet gone extinct, their numbers and geographic distribution are decreasing dramatically, signaling an accelerating trend toward eventual extinction.
Detailed historical data from 1900 to 2015 is available for about 200 mammals, which are often major components of their ecosystems. Most of these key species are in crisis, even though they are not extinct: “In the 177 mammals for which we have detailed data, all have lost 30 percent or more of their geographic ranges and more than 40 percent of the species have experienced severe population declines (>80 percent range shrinkage).”
Because population declines presage extinction, the study concludes that the planet has already begun its sixth mass extinction—the first since humans evolved.
The last mass extinction was at the end of the Cretaceous Period, about 66 million years ago, which saw the end of the dinosaurs, paving the way for mammals to dominate on land. The end-Cretaceous extinction was caused by an asteroid colliding with Earth, creating nuclear winter-like atmospheric effects.
The most catastrophic known mass extinction occurred at the end of the Permian Period (252 million years ago), and is known as “The Great Dying.” Approximately 70 percent of terrestrial species died during this cataclysmic event, which is thought to have occurred due to massive volcanic eruptions.
The fact that PNAS, one of the top science journals worldwide, published an article raising the possibility of events along the lines of “The Great Dying” is a sign that the ecological crisis is far advanced.
The paper, which is only about five pages long, not counting graphs or references, uses the word “annihilation” six times, “catastrophic” twice and a variety of “decimation” three times. Ceballos told the Atlantic that such frank language is warranted. “It would be alarmist if we didn’t have the data,” he said. “Now it would be irresponsible on our part to not use strong language. I wish we could say we are wrong but unfortunately, this is what is happening.”
The breakthrough made by Ceballos, Ehrlich and Dirzo is their thorough examination of populations, rather than staying at the level of species. A population is a group of individuals separated from other populations, usually by geography. Each species is made up of one or more populations.
If a species is losing several key populations but its overall numbers have not collapsed, it often will not be recognized as being in crisis. However, if a species is atomized into disparate, isolated populations, with its overall habitat shrinking, that makes its eventual extinction more likely.
In other words, the loss of each population of a species is one major step toward its overall extinction, unless measures are taken to restore the population and reverse the crisis.
Because most studies focus on extinction and not the loss of populations, they understate the scale of the crisis. Not only is the decline in populations a prelude to a significant number of extinctions, but the pace of population loss is accelerating.
Moreover, many species with decreasing populations are not yet recognized as being endangered. Of all land vertebrates with decreasing populations, about 70 percent have been recognized as endangered by the International Union for Conservation of Nature (IUCN). However, less than half of decreasing bird species are recognized as endangered by the IUCN.
Because of the complexity of the environment, removing even a seemingly minor population or species can severely impact other species—if enough species go extinct, it can damage whole ecosystems. Human life as we know it relies on an increasingly strained ecological balance, and may be impossible if biodiversity is reduced too much. The loss of this dynamic balance, once it reaches a certain point, can cascade into a catastrophic, possibly irreversible collapse.
The study identifies “the proximate causes of population extinctions” as “habitat conversion, climate disruption, overexploitation, toxification, species invasions, disease and (potentially) large-scale nuclear war—all tied to one another in complex patterns and usually reinforcing each other’s impacts.”
These factors are all caused or greatly exacerbated by humans’ unplanned and irrational interaction with the environment, rooted in the subordination of all social and economic life to private profit. It is worth noting in this context the mention of the potential environmental consequences of a nuclear war, which could be set off by any number of conflicts around the world caused by the division of the world into competing capitalist nation-states.
The authors identify “the ultimate drivers of those immediate causes of biotic destruction” as “human overpopulation and continued population growth, and overconsumption, especially by the rich.” One need not agree that population growth itself is the problem to recognize that human activity, without scientific planning, places immense strains on the environment.
Ceballos, Ehrlich and Dirzo conclude their paper by noting that “the window for effective action is very short, probably two or three decades at most.” Their article should serve as a notice that the clock is ticking for humanity to establish a social system in which life is scientifically organized around human need, including the need to be in harmony with the natural environment. Only through the conscious effort to place humanity on such a rational basis can ecological collapse be prevented.