INTERNATIONAL  INSTITUTE FOR SOCIAL AND ECONOMIC STUDIES 
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The Sino-US Trade War – Winner Takes it SmAll

20.03/2019

Does our history only appear overheated, but is essentially calmly predetermined? Is it directional or conceivable, dialectic and eclectic or cyclical, and therefore cynical? Surely, our history warns. Does it also provide for a hope? Hence, what is in front of us: destiny or future? 


One of the biggest (nearly schizophrenic) dilemmas of liberalism, ever since David Hume and Adam Smith, was an insight into reality; whether the world is essentially Hobbesian or Kantian. As postulated, the main task of any liberal state is to enable and maintain wealth of nation, which of course rests upon wealthy individuals inhabiting the particular state. Hence, if wealthy an individual, the state will rob you, but in absence of it, the pauperized masses will mob you. The invisible hand of Smith’s followers have found the satisfactory answer – sovereign debt. That ‘invention’ meant: relatively strong central government of the state. Instead of popular control through the democratic checks-&-balances mechanism, such a state should be rather heavily indebted. Debt – firstly to local merchants, than to foreigners – is a far more powerful deterrent, as it resides outside the popular check domain. With such a mixed blessing, no empire can easily demonetize its legitimacy, and abandon its hierarchical but invisible and unconstitutional controls. This is how a debtor empire was born. A blessing or totalitarian curse? Let us briefly examine it.

The Soviet Union – much as (the pre-Deng’s) China itself – was farmore of a classic continental military empire (overtly brutal; rigid,authoritative, anti-individual, apparent, secretive), while the US was more afinancial empire (covertly coercive; hierarchical, yet asocial, exploitive,pervasive, polarizing). On opposite sides of the globe and cognition, to eachother they remained enigmatic, mysterious and incalculable: Bear ofpermafrost vs. Fish of the warm seas. Sparta vs. Athens. Rome vs.Phoenicia… However, common for the both was a super-appetite foromnipresence. Along with the price to pay for it.

Consequently, the Soviets went bankrupt by mid 1980s – they crackedunder its own weight, imperially overstretched. So did the Americans – the‘white man burden’ fractured them already by the Vietnam war, with theNixon shock only officializing it. However, the US imperium managed tosurvive and to outlive the Soviets. How? The United States, with its financialcapital (or an illusion of it), evolved into a debtor empire through the WallStreet guaranties. Titanium-made Sputnik vs. gold mine of printed-paper…Nothing epitomizes this better than the words of the longest serving US Federal Reserve’s boss, Alan Greenspan, who famously said to then FrenchPresident Jacques Chirac: “True, the dollar is our currency, but yourproblem”. Hegemony vs. hegemoney.

House of Cards 

Conventional economic theory teaches us that money is a universalequivalent to all goods. Historically, currencies were (space and time- related)locality-dependent. However, like no currency ever before, the US dollarbecame – past the WWII – the universal equivalent to all other moneys of theworld. According to history of currencies, the core component related to thenon-precious metals money is a so-called promissory note – intangible beliefthat, by any given point of future, a particular shiny paper (self-proclaimed asmoney) will be smoothly exchanged for real goods.

Thus, roughly speaking, money is nothing else but a civilizationalconstruct about imagined/projected tomorrow – that the next day (whichnobody has ever seen in the history of humankind, but everybody operateswith) certainly comes (i), and that this tomorrow will certainly be a better daythen our yesterday or even our today (ii).

This and similar types of social contracts (horizontal and vertical) overthe collective constructs hold society together as much as its economy keeps italive and evolving. Hence, it is money that powers economy, but our blindfaith in (constructed) tomorrows and its alleged certainty empowers money.Clearly, the universal equivalent of all equivalents – the US dollar – followsthe same pattern: Strong and widely accepted promise. What does the USdollar promise when there is no gold cover attached to it ever since the timeof Nixon shock of 1970s?

Pentagon promises that the oceans’ sea lines will remain opened (read:controlled by the US Navy), pathways unhindered, and that the most tradedcommodity in the world – oil, will be delivered. So, it is not an oil or itsdelivery what is a cover to the US dollar – it is a promise that oil of tomorrowwill be deliverable. That is a real might of the US dollar, which in returnfinances Pentagon’s massive expenditures and shoulders its supremacy.Admired and feared, Pentagon further fans our planetary belief in tomorrow’sdeliverability – if we only keep our faith in dollar (and hydrocarbonsenergized economy), and so on and on in perpetuated circle of mutualreinforcements.

These two pillars of the US might from the East coast (the USTreasury/Wall Street and Pentagon) together with two pillars from the West coast – both financed by the US dollar and spread by the open sea-lanes(Silicone Valley and Hollywood), are an essence of the US posture.

This very nature of power explains why the Americans have missed totake our mankind into completely other direction; towards the nonconfrontational,decarbonized, de-monetized/de-financialized and depsychologized,the self-realizing and green humankind. In short, to turnhistory into a moral success story. They had such a chance when, past theGorbachev’s unconditional surrender of the Soviet bloc, and the Deng’sCopernicus-shift of China, the US – unconstrained as a lonely superpower –solely dictated terms of reference; our common destiny and direction/s to ourfuture/s.

Winner is rarely a game-changer

Sadly enough, that was not the first missed opportunity for the US tosoften its forthcoming imminent multidimensional imperial retreat. The veryepilogue of the WWII meant a full security guaranty for the US: Geoeconomically– 54% of anything manufactured in the world was carrying theMade in USA label, and geostrategically – the US had uninterruptedly enjoyednearly a decade of the ‘nuclear monopoly’. Up to this very day, the US scoresthe biggest number of N-tests conducted, the largest stockpile of nuclearweaponry, and it represents the only power ever deploying this ‘ultimateweapon’ on other nation. To complete the irony, Americans enjoy geographicadvantage like no other empire ever. Save the US, as Ikenberry notes:“…every major power in the world lives in a crowded geopoliticalneighborhood where shifts in power routinely provoke counterbalancing”.Look at Russia or China and their neighbors. The US is blessed withneighboring oceans – all that should harbor tranquility, peace and prosperity.

Why the lonely might, an empire by invitation did not evolve intoempire of relaxation, a generator of harmony? Why does it hold (extrajudicially)captive more political prisoners on Cuban soil than thebadmouthed Cuban regime has ever had? Why does it remain obsessed witharmament for at home and abroad? One of the leading architects of theAmerican foreign policy, Simon Serfaty laments: “The irony is plain for all tosee. Ten years after the fiasco in Iraq, the global demand for American powerhas never been higher, but its credibility rarely lower and its reliability morein doubt…a preponderant power must be right…for its enemies it must bestrong, it must inspire trust…” What are we talking about here – theinadequate intensity of our confrontational push or about the false course ofour civilizational direction?

Indeed, no successful and enduring empire does merely rely oncoercion, be it abroad or at home. However, unable to escape its inner logicsand deeply-rooted appeal of confrontational nostalgia, the prevailingarchrival is only a winner, rarely a game-changer.

When the Soviets lost their own indigenous ideological matrix andmaverick confrontational stance, and when the US dominated West missed totriumph although winning the Cold War, how to expect from the imitator toscore the lasting moral or even a momentary economic victory?

Neither more confrontation and more carbons nor more weaponizedtrade and traded weapons will save our day. It failed in past, it will fail againany given day.

Interestingly, China opposed the I World, left the II and ever since Bandungof 1955 it neither won nor joined the III Way. Today, many see it as a maincontestant. But, where is a lasting success?

Greening international relations along with greening of economy(geopolitical and environmental understanding, de-acidification andrelaxation) is a way out. Historically, no global leader has ever emerged froma shaky and distrustful neighborhood and by offering little bit more of thesame in lieu of an innovative technological advancement. Ergo, it all startsfrom at home. Without support from a home base, there is no game changer.China’s home is Asia.

Hence, it is not only a new, non-imitative, turn of technology what isneeded. Without truly and sincerely embracing mechanisms such as the NaM,ASEAN and SAARC (eventually even the OSCE) and the main champions ofmultilateralism in Asia, those being India Indonesia and Japan first of all,China has no future of what is planetary awaited – the third force, a gamechanger,lasting and trusted global leader.

Source: Vision & Global Trends