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Can China save decrepit capitalism in Europe?

As the global financial crisis deepens, China needs to reflect on 'what kind of international system can minimise war and break the power of the top one per cent', writes Horace Campbell. It should see the Occupy Wall Street movement ‘not as a challenge, but as an asset in the fight for social justice and democracy internationally.’


"We will fight to defend Europe and the euro," Nicolas Sarkozy, November 4, 2011

With these words of fighting, President Nicholas Sarkozy gave notice to the world that the European leaders from the right will militarize the planet in order to save the European project. After the meeting of the G20 ended in disarray in Cannes, France with no real agreement on how to develop global rules to rein in the ‘vampire squids,’ the debacle of the creeping coup in Greece was overtaken by the reality of the more precipitous and calamitous state of the Italian economy. Newspapers such as the UK’s Guardian declared that the G20 meeting ended in disarray.

There could be no agreement on global rules at the recent G20 summit when the question of the accountability of bankers was off the table. The assembled leaders issued a contradictory communiqué which in one line called for China and other countries ‘with strong public finances to take steps to boost domestic demand,’ while in another line continued the western chorus on undervalued currency with the call, for countries to move ‘more rapidly’ towards greater exchange rate flexibility, without specifically mentioning China. There was the usual bland statement from the summit on ‘the need reinvigorate economic growth’. Other non binding formulations came from the final communiqué:

- To support the IMF and give it more money if necessary
- Welcomes Italy's invitation to the IMF to monitor its economic reforms
- Welcomes the eurozone's plans to restore confidence and financial stability
- Sets up a task force on youth employment

In the week prior to this G20 summit, the political crisis inside Europe over the future form of this EU had been focused on the imposition of harsh measures on the workers of Greece. In that week, there had been another putting off of the day of reckoning with the European leaders leaning heavily on China after their acrimonious meeting in Brussels. The meeting of the leaders of Europe was barely over on Thursday 27 October when Klaus Regling the chief executive of the European Financial Stability Facility (EFSF), jumped on the plane to fly to Beijing to seek over €60 billion investment from the government of the People’s Republic of China. Even before Klaus Regling landed in Beijing, the same Nicolas Sarkozy was on the phone to President Hu Jintao pleading for the government of the PRC to make a clear declaration of support for the decisions of the leaders of Europe to resolve the Eurozone crisis. European leaders such as Angela Merkel and Nicolas Sarkozy wanted the people of China to throw their money at a political crisis when the real question was the contradictions between the goals of the European project of having a monetary union without a political and fiscal union backed up by a single state called the European Union. The loose formation of leaders who were in a notional EU while trying to save old style national capitalism had deluded themselves that they had a plan and presented to the world a three pronged strategy to save the present arrangements that favor bankers and speculators. Greece had taken a front place in the stage of the drama. Thus that communiqué had narrowly focused on Greece with the following declaration:

a) Private banks holding Greek debt would accept a write-off of 50% of their returns
b) The main euro bailout fund – known as the European Financial Stability Facility (EFSF) – was to be boosted from the €440 billion set up earlier this year to €1 trillion, and
c) European banks would be required to raise about €106 billion in new capital by June 2012.

What was implicit in the third component of this bailout package was that the leaders of Europe were planning to pressure ‘emerging’ nations with large foreign reserves to rescue the Euro, because domestically, it will be very difficult for the European banks to recapitalise and find the billions needed to remain solvent. Overall, the EU rescue plan had hoped to maintain the status quo of the European Banks not having to accept losses, by forcing citizens of European nations like Greece, (with demonstrative effects for Ireland, Italy and Portugal) to pay for their losses with IMF like structural adjustment based austerity measures. Even the ‘successful’ bailed out countries like Ireland saw their real economy in ruins and their people suffering. The so-called rescue plan was simply postponing the day of the final crash of the present configuration of capitalism in Europe.

Chauvinism and hierarchy surged as Sarkozy openly declared that Greece should not have been admitted in the Eurozone in the first place. Within the period of over a week between the Brussels summit and the end of the G20 summit the decision of the Greek government to call a referendum on the package brought home the reality that confused strategies and political scuffles in Europe were all part of the political drama of a region in decline. The amount of the debt relief to Greece is only a small fraction of the total debt Greece owes to foreign creditors. Thus the ‘deal’ was insufficient to actually help Greece to get out of its debt crisis.

At the Cannes, summit all eyes were on China as the assembled leaders looked to Chinese resources to calm the ‘international markets.’ However, the government of China which had been a strategic partner with European capitalist was trapped. As a major exporter to Europe, it had built up large foreign exchange reserves, yet if the Euro crashed; China would be losing some of the $US800-1,000 billion invested in Euros and European government bonds. The so called ‘Eurozone Crisis’ or the ‘European Debt Crisis’ is both another symptom of a crisis in global capitalism, because it again reflects that Europe’s banks were just as much in trouble as the American banks were in 2007/2008 but simply in a different way.

Europe is China’s biggest trading partner so under the current model of the international division of labour, it would be in the interests of the current Chinese policymakers to ensure that the ‘notional’ European Union does not fall apart with a breakup of the Euro. But the Euro was comatose and only a new direction of democratic control could save the idea of a united Western Europe.

Trade wars, currency wars (disguised as quantitative easing) and populist anger directed against the RMB were emerging as components of this capitalist depression. There is now a fundamental shift in the axis of the international political economy with the centre of gravity moving to Africa, Asia and Latin America. For that section of the Chinese political leadership that had been fixated on the United States model of economic management, the capitalist crisis has now weakened that faction of the Communist Party. Those in the Communist Party who were calling for transformation of the conditions of the lives of 800 million poor had been struggling to be heard. Now this side is winning the argument that transformation of the world economy must begin with transformations inside of China.

At the same time as this debate was bubbling inside of China there was the emergence of a worldwide movement of workers mobilising to oppose unemployment and the one per cent that dominated the global economy. There was a new super power in the world, that of the oppressed majority who comprise the 99 per cent of the 7 billion citizens on the planet. The Occupy Wall Street (OWS) protests that started on 17 September in the United States had cascaded into a worldwide inclusive movement for social justice and world peace. While the media sought to portray the OWS as an event associated with a demonstration or a strike, the maturation of this grassroots mobilisation demonstrated that it was serious about basic rights for humans.

This movement had grown so fast internationally that the Vatican in Rome and the Archbishop of Canterbury in London were issuing statements calling for a Financial Transaction Tax. By the time the Vatican had issued their call for an overhaul of the international financial system, the political crisis in Greece brought home the fact that the military option was now on the table against the workers of Europe. After the military intervention of regime change in Libya, the military planners in NATO were scheming. With a whiff of this scheme, the Greek Prime Minister Papandreou dismissed his chief of national defense, the Greek Army general staff chief, the heads of the Air Force and the Navy, along with 12 other senior officers. This may not be the end of that story because the citizens of Greece are slowly finding out that their pensions have been cut in half and that the austerity measures will intensify the suffering of the people. ‘Austerity measures’ of the sort that are being imposed can only be implemented by anti-democratic and authoritarian regimes. Papandreou himself was consumed by the political upheaval and had to step aside.

A new realisation is coming in all parts of the world that this is not simply a financial crisis, but one that could be remedied if the mass of the people of the world mobilised to break the political power of the corporate plutocrats. Bill Gates of Microsoft also appeared on the stage joining the Vatican and issued his report on Innovation with Impact: Financing 21st Century Development.

This report was too late; the Occupy Wall Street Movement had now shone light on the fact that Ubuntu was a superior idea to private property rights. That the Vatican has caught on to this reality is in no small measure due to the massive movement that has grown to be a world force. We know that with political will there are enough resources to transform the present economic arrangements and give a new sense to the meaning of work in the 21st century. The Occupy movement in all parts of the world has demonstrated that it is a political force in this moment and that it is serious about restoring decency and justice to those who have been oppressed and manipulated by the one per cent. The major victory of this Occupy movement lay in the fact that in the highest reaches of governments all over the world, including China there is fear as to the long-term implications of a worldwide movement of the majority of the citizens of the world. In this global struggle, the Occupy Wall Street and occupy movement will be tested because the long history of racism, chauvinism and religious intolerance is being brewed by the discredited rulers in Europe as the right-wing parties seek to benefit from the frustration of the workers in Europe


The answer to this question is no.

When the leaders of the G20 countries met in Cannes, France, they were prolonging the indecision of those who dithered about tinkering around the edges of the Washington Consensus and those who understood that it was necessary or establish new international regulations to rein in the ‘financial instruments of mass destruction.’

Since the full-blown nature of the capitalist crisis and its political derivatives spread throughout the world on 15 September 2008, the G20 meetings had become a kind of safety valve for the international system. In 2009, the leaders of the G20 failed to break with the neoliberal ideas about ‘Shared Growth’ and simply sought to save the dollar-based system by promising an increase in the resources of the International Monetary Fund (IMF) and embarking on stimulus packages to prevent absolute collapse. With the memory of the consequences of the depression of the 1930s, the G20 summits since 2008 had discussed how to avoid protectionism, increasing the voting rights of the ‘emerging nations’ and establishing financial safety nets working through regional financial arrangements. But, in the face of the inability of European and US leaders to challenge the power of the bond-holders, the G20 summit of 2011 was held under the shadow of the rising power of the mass of oppressed who are organising under a new sense of international solidarity.

France, the host of this G20 summit was faced with the real challenge of which direction the society will go; Nicolas Sarkozy in his closing press conference offered one roadmap that was based on the continued militarisation of Africa to save Europe. Africans were not surprised by the fighting words of Sarkozy that France is willing to fight to save the Euro and Europe. When the dictator Ben Ali of Tunisia was falling, France had offered to send military help and in 2011 France has been the most vigorous in advancing the militarisation of Africa to save European financial and corporate forces. France was being challenged in Africa by Turkey whose leaders were dreaming of a new Ottoman empire in the 21st century. At the end of 2010 the Turkish Foreign Minister Ahmet Dawud indicated that Turkey will be challenging Europe in Africa. On 24 November 2010 Dawud Oglo stated that:

‘I have given my orders to the Turkish foreign ministry that [French Prime Minister Nicolas"> Sarkozy, whenever he raises his head in Africa, sees a Turkish embassy with a Turkish flag.’

French banks and oil companies shudder when they heard these challenges. French banks are exposed and the collapse of the Belgian bank Dexia is an indication of more bank failures to come. The ‘crisis’ of capitalism in Europe is that Europe’s biggest banks in Germany, France, Britain and some US financial institutions (like big US banks and the financial firm of John Corzine – MF Global Holdings – which just filed for bankruptcy) are holding the sovereign and private debts of several European nations and those nations (governments and businesses) do not have the money to repay the debts.

These banks lent money to the other nations, as an element of the structure of the EU model where Germany/France were the exporters in the EU and the other nations were the importers/consumers of the EU. This structure reached its limits years ago, but financialisation allowed it to be extended via credit and debt, just as we saw in America where credit and debt extended the life of the consumption-based economic model, even though it had reached its limits decades ago, when the wages and incomes of the 99 per cent stopped rising in America, even as productivity and profits continued to rise with the one per cent capturing most of the gains in income.

As French banks (such as Société Générale, Crédit Agricole and BNP Paribas) are downgraded or put under review by credit rating agencies, French workers know that their medicine of ‘austerity’ is not far away. What has compounded the political elements of this quagmire for capital is that the German, French, British and American banks ‘refuse’ to take losses, because it could potentially put some of these bankers out of business. Conservative leaders such as Angela Merkel and Nicolas Sarkozy are insisting on passing the costs onto the shoulders of workers all over the world. Simultaneously, these conservative leaders are providing the political space for the far right chauvinists in Europe. In France, Marie Le Pen is waiting to present a feminine touch to the neo-fascist right ring forces in France. Racism, religious intolerance and arrogance fuel confusion in the ranks of the workers. Unsurprisingly, a new report by UK thinktank Demos documents the rapid of the right wing nationalist forces in Europe.

With the old trade union left compromised by their support for national capitalism, it required a new international force such as the Occupy Wall Street movement to give solidarity to workers. While right-wing politicians manage the old machinery of representative politics in societies such as Spain and Portugal, extra parliamentary forces were calling themselves the ‘indignants.’ It is this new political force that is calling for accountability and transparency in the financial services industry. The governments of Britain, France and Germany are forcing the other European governments to punish their own citizens by making the debts sovereign, and repaying the banks in Germany, France, England and the US with money they are ‘borrowing’ and which they will repay by imposing austerity on their own societies.

Both the leaders of France and Germany want to follow the model of the United States of 2008 where the banks were bailed out. After the fall of Lehman Brothers and the collapse of the financial institutions the government of the United States took the tax dollars of the citizens (plus changed the accounting rules and provided trillions in loans and loan guarantees) to ‘bailout’ the banks so that they would not have to admit losses on their various home mortgage loans and trading of investment products.

What compounds this crisis is that such actions increased the public debt (which now become a rationale for imposing austerity on the 99 per cent because reducing defence spending is not an option) and by saving the banks without any conditions, the banks used the help to enrich themselves and their ‘investors’ again without even ‘lending’ money to the real economy, because in the financialisation of capitalism era financial services institutions make a larger share of their profits by ‘trading’ financial instruments as opposed to lending money to support the real economy.


What makes both situations of European and Unites States financial health a true reflection of a fundamental turning point is that the one per cent are basically saying that the 99 per cent must pay for the losses of wealth by the one per cent, even if it costs the entire capitalist system (which is supposed to be the best system at producing the best quality of life for human beings). In a sense, for the status quo of the one per cent to be maintained, the current unequal distribution of wealth which characterises the current system itself, must be made even more unequal even ii that means imposing new political, economic, human and environmental consequences and costs on the 99 per cent. This includes subsidising the military costs of repressing the 99 per cent. The G20 was being called upon to endorse this politico/military arrangement at the global level.

The political leaders of the societies of Brazil, Russia, India, China and South Africa are being forced to decide whether their integration into this global steering committee for the international system will predispose them to save the bankers or to work for a new international financial architecture that serves humans. For the decade of the nineties, the leaders of the United States unleashed the rules of Wall Street on the world. Even during and after the Asian financial crisis the same barons of finance intensified the push to dismantle the regulations that had been in place since the 1930s to separate investment banking from commercial banking. Under this financialisation, the speculators worked with former manufacturers to push through new rules that created an international imbalance where manufacturing took place in low wage economies that sent back surpluses to the financial wizards. China, Mexico, Indonesia and India became bases for transnational corporations where factories operated with low wages, sub standard health and safety records. There was ‘economic growth’ for some of the emerging countries under this model, but this system of international capital could not be sustained indefinitely.

Sections of the newly emerging economies became tacit allies and subordinates of the financial oligarchs of the West. Although the G20 was formed in 1999, by 2008, the international financial barons had integrated the capitalists in India, Brazil and China into the system so that there was no fear that expanding the G8 to G20 would challenge the Washington Consensus. The importance of the G20 grouping re-emerged after the crash of September 2008. As allies of the financial oligarchs, the leaders of the G20 were supposed to accept institutionalised neoliberalism at the global level.


In the past I have written on the slow death of the IMF and it is not necessary to revisit the relationships between the IMF, the US dollar and the US military here.

Suffice to say that when the communiqué of the G20 call for more money to the IMF, the G20 is in principle seeking to give resources to a dying institution. Moreover, the G20 was being called on to support the old neoliberal ideas that dominated the IMF since Ronald Reagan. Essentially for 60 years, this body has been a tool of Anglo-American imperial financial order. Even though Alan Greenspan admitted in 2008 that he found a flaw in his libertarian views on free markets, this did not deter the US oligarchs from returning to the practices that brought about the crash. The IMF had been international police to impose structural adjustment packages in order to force changes in economic policies in the Third World. The Barack Obama administration had campaigned on the basis of ‘change’ but once in the White House, the barons of high finance flexed their muscle and Obama was too timid to challenge these oligarchs. Hence, the Obama administration became a tool for these forces and the administration could not even call to account the fraudsters who had stolen billions.

After throwing trillions at Wall Street, these forces were emboldened and demanded even more power. Wall Street as the global power with control over the US government wanted the same control over the Chinese government. In Europe, Wall Street dominated the governmental apparatus and when former Goldman Sachs operative Mario Draghi assumed the European Central Bank (ECB) presidency last week, the international power of the bankers was more open.

China had escaped the long arm of Goldman Sachs into the politburo of the Communist Party. Despite the obvious intellectual influence of Wall Street in the business schools across China, the society continued to escape the structural adjustment measures by organising a command economy following the socialist revolution of 1949. Despite escaping the destructive effects of liberalisation and privatisation, under a programme of ‘reform’ that had been adopted in the 1980s, foreign capital played a huge role in the Chinese economy, especially in the manufacturing industry. In the face of demands by workers in the USA for better living standards, the capitalists outsourced jobs from the USA and turned US citizens into consumers laden with debt. The same capitalists in North America working with local allies in China transformed China into an export driven economy, with the ratio of exports to GDP climbing from 16 per cent in 1990 to over 40 per cent in 2006. Additionally, the share of foreign produced exports also grew from 2 per cent in 1985 to 58 per cent in 2005. Throughout the process of China’s reforms over the 1990s, Chinese accumulation dynamics became increasingly dependent on transnational corporate investment and export activity. As a result, the Chinese economy became increasingly embedded in the broader process of global accumulation – one that was built on cheap labour without the backward and forward linkages inside the economy that was supposed to characterise a transformed society. The Chinese branch of global capital with its low wage system reproduced a disarticulated economic system for China so that the surpluses were sent back to North America and Western Europe with China accumulating more than US$3 trillion in foreign currency reserves, far more than any other nation. While this model was disarticulated for China it was consistent with the new international finance that had no national loyalties.

This model of accumulation slowly supported the expansion of a well-heeled capitalist cadre inside of China itself so that by 2005, in a society ruled by a Communist party, China had 250,000 US dollar millionaire households. Although this group made up only 0.4 per cent of China’s total households, it held 70 per cent of the country’s wealth. According to the China Daily newspaper, by September 2011, the number of US dollar millionaires in China had grown to 960,000 persons. In the same month it was reported that China had counted 271 dollar billionaires, up from 130 in 2009. China was the second largest economy in the world China after the United States and boasted the second most billionaires in the world, after the United States with more than 400.

This class differentiation was leading to a situation where global capitalists had firm allies within the Chinese society with implications for the political process. These millionaires in China sent their children to schools in North America and Western Europe and became intellectually and ideologically submissive to the consumption model of North America. Nicolas Sarkozy had been wooing this stratum even though four years earlier he had been the champion of the call for human rights in China. It was allies such as Sarkozy that accepted the western argument that the economic depression was not severe but simply a reflection of a cyclical phase of capitalism. Hiding behind the power of the state to accumulate wealth, these social forces argued that China was immune to the crisis because of the years of economic growth of over nine per cent. These allies of international capital accepted the rosy picture of those in Wall Street who wrote about ‘Green shoots’ and argued that, ‘Everything is cyclical, this too shall pass.’ These Chinese social forces were building alliances within the newly emerging societies of Brazil, Russia India and South Africa. This was a transitional arrangement because within China there were those in the leadership who aspire towards an interdependent and multi-polar world and there are those in China with dreams of China replacing the United States as the world’s only superpower.

Currently in this transition period, the leaders of the People’s Republic of China enter into barter arrangements and other novel forms of trade settlements with other members of BRICS and do not see it in their strategic interest for the RMB to become an alternative fully fledged globally traded currency. Such a move would require additional changes in domestic and international economic policy that China has not yet developed. This includes the full human and institutional capabilities to effectively make the currency an international reserve currency. When the US credit rating was downgraded in July 2011, the real implications of the devaluation of the US dollar were speeding up the question of the internationalisation of the RMB and the issue went beyond the cautious planning of Beijing. Moreover, the opening up of offshore markets for the RMB in Hong Kong, Singapore and Taiwan gave these more sophisticated capitalists the leverage to increase their influence with those who in China were calling for liberalised financial markets.


The fact that the most recent G20 meeting in France ended in disarray was one more indication that the G20 cannot save a system that has been delegitimised. There is a shift of power from Europe and the USA to Asia. The social, economic, demographic and environmental aspects of this depression demanded comprehensive answers not simply discussions about financial rules and regulating banks. Floods in Thailand that threatened Bangkok as a result of short-sightedness, greed and profit called out for global attention competing with the Tsunami, earthquake and nuclear meltdown in Japan. These were warnings that environmental questions of global warming were far more important than ‘modernisation and industrial growth.’

It is the disarray in Cannes that points to the continuity in the failure of the G20 meetings since 2009. At the end of the G20 summit held in London in April 2009, the assembled leaders issued a communiqué declaring inter alia:

‘We face the greatest challenge to the world economy in modern times; a crisis which has deepened since we last met, which affects the lives of women, men, and children in every country, and which all countries must join together to resolve. A global crisis requires a global solution’.

There could be no global solution because the resolutions of the G20 were not binding on any of the major international bodies such as the Security Council of the United Nations or the Basel Committee on Banking Supervision. Despite pledges to restore confidence, growth, and jobs; repair the financial system to restore lending; strengthen financial regulation to rebuild trust; fund and reform our international financial institutions to overcome this crisis and prevent future ones; promote global trade and investment and reject protectionism, to underpin prosperity; and build an inclusive, green, and sustainable recovery, there was no political and international mechanism to give teeth to these resolutions.

In reading through the Cannes Action plan for growth and jobs there was a repetition of the same old ideas of growth under long winded statements on ‘Building our common future: Renewed Collective Action for the benefit of All’.

A false sense of recovery had been promoted the G20 meetings in 2009 but with the clear and present danger of the global meltdown, there was gloom in all the financial papers. One British member of the House of Lords warned that the current Eurozone crisis can ‘trigger events way beyond the borders of Greece or even Europe.’ President Obama said of the situation in Europe: ‘Put simply, the world faces challenges that put our economic recovery at risk.’

David Cameron, the conservative Prime Minister of Britain issued a warning about the failure of the meeting saying that:

‘Every day that the Eurozone crisis continues and every day it is not resolved is a day that it has a chilling effect on the rest of the world economy, including the British economy. I am not going to pretend all the problems in the Eurozone have been fixed. They have not. The task for the Eurozone is the same as going into this summit. The world can't wait for the Eurozone to through endless questions and changes about this…

‘We like the rest of the world need the Eurozone to sort out its problems. We need more to happen in terms of detail on the European firewall.’

Without using the militaristic language of Sarkozy, Cameron referred to the long-term consequences, describing this as only ‘a stage of the global crisis.’ The Financial Times newspaper went to the heart of the political and military consequences and editorialised:

‘From the economic point of view, the Eurozone has what it takes to solve its crisis without any external help. It must do so. The 20th century started with a small Balkan state blowing up the world. History must not be allowed to repeat itself in the 21st. There is something deeply wrong with the global economy if a small country like Greece can become such a big threat.’

The panic in Europe led to calls for the leaders of BRICS to let their voices be heard, but the voice the European capitalists wanted to hear was that the countries such as China and Saudi Arabia would bail out the EFSF. It was the calculation of Nicolas Sarkozy that his relationship with China would influence the Chinese government to work through the G20 agree to increase IMF resources by as much as US$250 billion (£156 billion) to more than US$1 trillion. Disagreements about the wisdom, structure and size of the boost to the fund and over who would contribute meant the decision was left to a meeting of G20 finance ministers next February. More importantly, the IMF managing director Christine Lagarde made it clear that the IMF ‘lends money to countries, not to legal entities.’ The EFSF was not a legal entity and the Germans were being forced to rethink their version of influencing world politics.

In desperation, Sarkozy and other Europeans sought to persuade China and Brazil to establish a special investment vehicle that was to prop up the EFSF.

All of these superficial efforts came to nought because these discussions on the future of the EFSF were overshadowed by the awareness that the Italian dimensions of the crisis were more profound. ‘Italy faces new tests in further auctions of its debt this month – it has to raise €30.5bn in November, and a further 22.5bn in December.’ The impending financial collapse of the Italian economy threatened the future of the single currency in the Eurozone.


Since 2008, the day of reckoning between the people and the bankers had been pushed down the road. But the crisis could not be papered over and the ‘debt’ crises in Iceland, Latvia, Ireland, Portugal and Greece kept the matter of the financial crisis on the front pages of the news. The Eurozone debt crisis clarified the reality that the financial crisis was only one symptom of a larger systemic crisis that had spun out of control and lurched toward a full-scale political and economic conflagration. Yet, in the midst of the deteriorating global environment with the real experience of high unemployment and social dislocation, the paralysis created by neoliberal thinking had been compounded by the refusal to see this depression for what it is, a full-scale meltdown of the capitalist mode of production. In the effort to calm ‘markets’ vague and meaningless formulations are issued calling for policies ‘supporting growth, implementing credible fiscal consolidation plans, and ensuring strong sustainable growth.’ Some commentators within Europe such as William Hutton have gone beyond the usual discourse on recession and have stated starkly that, ‘The ailing euro is part of a wider crisis’, ‘Our capitalist system is near meltdown’, ‘A 1930s-style crash threatens us and our financial partners. Collective action is the only solution.’ What commentators such as William Hutton and George Soros wanted were ‘reforms’ to maintain the dominance of the Atlantic powers.

In the case of China, the political leadership of the People’s Republic of China were bombarded with daily emissaries to Beijing seeking ‘bailout funds for the European banks.’ These emissaries were aware of the class divisions inside of China and were massaging the egos of those sections of the political leadership that had embarked on a ’strategic partnership’ with Europe at the start of the war against Iraq. But the request for bail-out funds represented an act of desperation because the political leaders of Western Europe had no clear strategy other than to continue the transfer of wealth from the poor to the rich.

Conscious of the social divisions within China, there was a private and public discourse over bailing out Europe. In the public discourse, Prime Minister Wen Jiabao in September 2011 speaking at the World Economic Forum in Dalian stated that China is willing to help European nations, but wants them to recognise the mainland as a ‘full market economy’ at the WTO. Wen Jiabao also told Europe and the United States ‘to get their house in order.’ Details of the private discourse is not known but newspapers in Europe were reporting on behind-the-scenes negotiations over ‘human rights’ and that China‘s ‘economic weight be properly reflected at the leading international financial institutions.’

Leaders of France and Germany retorted that Chinese bailout was necessary for Europe to get its house in order. However, jealous of their new-found clout, the Chinese political leaders were cautious, insisting that the Europeans clearly define the future of the European project. The European rulers, with their deep and ingrained arrogance, wanted assistance from China while scheming to intensify the currency war by inserting in the communiqué the call for China to move ‘towards greater exchange rate flexibility.’ This was an extension of the continued attack on the Chinese which had reached the point where the US Senate passed a bill accusing the Chinese of Currency manipulation. Under this bill, The Currency Exchange Rate Oversight Reform Act of 201, there would be high tariffs on Chinese goods because the US considered currency manipulation as a foreign subsidy.


There is one body of opinion inside the intelligentsia in China who understand that as the austerity measures take root in Europe, demand will drop and unemployed European citizens will not have money to purchase China’s exports. These forces understand that the old model of an export-led economy is coming to an end. If China were truly pursuing its national economic interests and decided to ‘bail out’ the European Union by helping to recapitalise some of Europe’s banks for strategic reasons to both save capitalism and to maintain the Euro as a viable alternative to the US dollar, its first/best option would be to bail out European banks under the condition that the banks write down by 50 per cent or outright eliminate all of the sovereign debts they hold by the governments, so that the European governments would not have to implement austerity measures which hurt the growth of their real economies and cut the incomes of their people and thus their ability to consume imported goods from China.

This condition would be far more beneficial for China than either the public or private conditions discussed in relation to China providing the EU with a financial bailout. With further open debate it would become obvious that an even superior condition would be to bail out the EU under the condition that a new international financial architecture be pursued based on the premise of global capital being subordinated to a role of financing ‘developing’ in the poorest societies of the world, especially Africa and Latin America. This would include stringent regulations to curb capital flight from poor nations to the rich and supporting the Stolen Assets Recovery Initiative. Offshore banks and money laundering syndicates would be brought under international control so that the G20 communiqué on ‘our fight against corruption’ would have meaning.

Suborned by ideas of ‘modernisation,’ some of the leaders of China and India could not take the lead to renew the call for a new international economic order. It is against this background of internal class and political differences in China that predisposed the Chinese President to respond with a non-committal statement issued through the media in China that said, ‘China hopes all these measures will help stabilize the European financial market and conquer the current difficulties and promote economic recovery and development’.

Hu Jintao was also looking internally in the face of those sections of the population who had been critical of past bad investment calls that were made in 2008.

Through the lobbying efforts of the international supporters of Wall Street, the leaders of Western Europe had been calling for other countries of BRICS to bail out Western Europe. Probably the most laughable of this call for bail out from BRICS came from the Finance Minister of South Africa who after the recent IMF meetings in Washington argued that as a member of BRICS, it was part of the responsibility of South Africa to pitch in to bail out the bankers in Europe. A spirited exchange between the Governor of the Reserve Bank of South Africa and the Finance Minister brought this discussion of South Africa assisting the bailing out Europe out in the open. South African workers were not quiet, there were protests as the streets of Johannesburg and Durban became part of the 900 cities worldwide that had been inspired by the will to resist the one per cent that dominate the international system.


It is in the midst of the dead end alternatives offered by both the Obama administration and the leaders of Europe when the oppressed found a new form of politics in the Occupy Wall Street Movement. In less than two months the ideas and forms of organisation of this force opposing the concentration and centralisation of power in the world had grown to change the political calculus globally. This movement has moved to new levels of organising to the point that war veterans and members of the military are now openly supporting this mass movement of 99 per cent. A general strike in Oakland, California echoed across the United States with General Assemblies of the peoples debating how to extend the liberated spaces in order to expand the movement for real political change. A National Bank Transfer Day in the United States registered another front and demonstrated that the Occupation movement is not simply about massing and occupying public spaces.

In the past, the corporate barons and their thinktanks dominated the political discourse and turned teachers into parrots repeating the standard lines of the linkages between free markets and prosperity. However, people were seeing economic deterioration and regression before their eyes and the tenacious and pedantic work of this Occupy Wall Street movement now engaged the reality of the dominance of the one per cent oligarchy. It was this change along with the police repression that gave more visibility to the movement. Bill Gates of Microsoft had been recruited by Sarkozy to give legitimacy to the call for the FTT and Gates prepared a report Innovation with ‘Impact: Financing 21st Century Development’. But the crisis had gone beyond taxes and Gates was ignored while militarism hung over Greece.

The statement from the Archbishop of Canterbury, the head of the Church of England said:

‘There is still a powerful sense around – fair or not – of a whole society paying for the errors and irresponsibility of bankers; of impatience with a return to 'business as usual’ – represented by still-soaring bonuses and little visible change in banking practices. The best outcome from the unhappy controversies at St Paul’s will be if the issues raised… can focus a concerted effort to move the debate on and effect credible change in the financial world.’

The Occupy Movement had reached the City of London and religious leaders were being forced to take a stand on the evil spirits of greed and fraud. However, by the time the Vatican and the Church of England caught on to the power of this movement, the depth of the contagion had moved so fast that it was not only the workers with Greece who were at a crossroads, but workers in Spain, Portugal and especially Italy. In the midst of this bad news of the spread of the depression, the International Labour Organization in Geneva published its report on the World of Work that three years after the crash of 2008, ‘economic growth in major advanced economies has come to a halt and some countries have re-entered recession, notably in Europe,’ The ILO noted. ‘Growth has also slowed down in large emerging and developing countries.’ In order to deflect from this ILO report the final communiqué of the G20 summit dishonestly stated, ‘we commit to promote and ensure full respect of the fundamental principles and rights at work.’

Such declarations contradicted the essence of the push for ‘austerity.’ Bad news from the ILO on the state of the World economy came after the news from the Congressional Budget Office of the United States that the richest one per cent of US households saw a 275 per cent increase in their income between 1979 and 2007 and more than doubled their share of the national income. While the income of this layer nearly tripled, the income of the middle 60 per cent of the population rose only 40 per cent over 28 years, and the income of the poorest 20 per cent rose by only 18 per cent.

These figures from the International labor Organization and the Congressional Budget Office validated the slogan of the Occupy Wall Street movement that the system favoured a transfer of wealth from the poor to the rich. In every area of social life, whether health care, access to housing, employment, environmental protection, police brutality, education, student loans and the escalating costs of higher education or the prison industrial complex, the demands of the occupy Wall Street movement were clear but the corporate media attempted to dismiss this new global force for change. These OWS forces were learning that usual political engagement through established political parties was not having an impact and daily became creative to build a new politics. It is this political movement that is using extra-parliamentary forms of expression to move the goal post of what is necessary to bring social justice.

Suddenly, it was in the public domain that the monies held in Swiss bank accounts and other offshore accounts could be taxed to ensure that no more austerity measures were unleashed against European workers. Germany, as an industrial society that remained connected to a ‘real economy’ supported the Tobin Tax, but the United States and Britain whose economies were dominated by the financial services sector opposed taxing the bankers.

China, Brazil and South Africa were being forced to take a clear position to go back to the call for stronger regulation of international system because the crisis had gone beyond a matter of regulation. In the particular case of the Chinese government, the class orientation of the new millionaires had privileged liberalism over the ideas of socialism, but the seriousness of the crisis and the new social movement created cause for pause in China. After initially noting the rise of the Occupy Wall Street Movement there is now fear of the long-term consequences internationally if this movement were to take root and affect policy making in all institutions.

The Chinese leadership is always looking over its shoulders because its legitimacy rests on a contract with the Chinese people to transform China from a poor underdeveloped society to one with a better standard of living for the majority. Social transformation in China with outreach to the oppressed of the Afro-Asian bloc will enhance the turn away from the old imperial financial dominance.

Africans and oppressed peoples everywhere are paying close attention to the calls for bailout funds from China. These forces in Africa and Latin America are aware that the calls are really part of a push to deepen the political alliance between the Chinese millionaires and their allies in Europe. This alliance would mean that Chinese capital would follow the path of Europe in its relations with Africa. In this way the Chinese would cooperate with leaders such as Sarkozy to support his fight to save the European Union and the Euro.

I will end with the challenge raised by Samir Amin on the future of China more than a decade ago.

‘My central question is this: is China evolving toward a stabilized form of capitalism? Or is China's perspective still one of a possible transition to socialism?

‘Under what conditions the capitalist approach triumph can and what form of more or less stabilized capitalism could it produce? Under what conditions could the current moment be deflected in directions that would become a (long) stage in the (even longer) transition to socialism?’

Samir Amin further argued that:

‘The Chinese ruling class has chosen to take a capitalist approach, if not since Deng, at least after him. Yet it does not acknowledge this. The reason is that its legitimacy is rooted in the revolution, which it cannot renounce without committing suicide.

‘The real plan of the Chinese ruling class is capitalist in nature and "market socialism" becomes a shortcut whereby it is possible to gradually put in place the basic structures and institutions of capitalism while minimizing friction and difficulties during the course of the transition to capitalism.’

With the unfolding of the depth of the crisis, those sections of the Chinese leadership who want to avoid the mistakes of Stalin in the last depression need to reflect on what kind of international system can minimise war and break the power of the top one per cent.

In this way the leaders of China will see the Occupy Wall Street movement not as a challenge, but as an asset in the fight for social justice and democracy internationally.


* Horace Campbell is professor of African American Studies and Political Science at Syracuse University. He is the author of ‘Barack Obama and 21st Century Politics: A Revolutionary Moment in the USA’ and a contributing author to ‘African Awakening: The Emerging Revolutions’. He is currently a visiting professor in the Department of International Relations at Tsinghua University, Beijing, China.
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