The Volkswagen scandal

It has recently been revealed that the Volkswagen Corporation (1), the world’s largest automobile producer in terms of revenue in 2014, had installed software in its diesel vehicles designed to circumvent U.S. emissions standards.

Motor vehicles of all types are increasingly controlled by computer software. Volkswagen engineers wrote subroutines in Volkswagen’s control software able to detect whether the vehicle was going through an emissions test or was in normal operation. If the software detected a test situation, the engines would strictly comply with the U.S. government’s Environmental Projection Agency guidelines and the vehicle would pass the test with flying colors. If the software determined the vehicle was in normal operation, the emissions restrictions would be ignored. In this way, buyers of the vehicle could enjoy the benefits of a more powerful vehicle apparently complying with the U.S. government’s emission standards while in practice ignoring them.

This was not a question of some accidental damage done by dangerous cost-cutting that is so common throughout capitalist production. The subroutines were not written “by mistake.” Even more than is the case in the U.S., the automotive industry is important for Germany’s industry-centered, export-oriented economy. Unlike the U.S. and Britain, Germany has largely avoided the process of “de-industrialization.” German automobiles are considered among the best in the world. The scandal is therefore a major blow not only to Volkswagen but to the German economy as a whole.

However, what is a loss for Germany is a boon for Germany’s competitors. If the Volkswagen “brand name” should be discredited, or if Volkswagen is forced to reduce its research and development expenditures on the next generation of automobiles because it has to pay costly fines, it could be permanently damaged. In the worst case, it might even go out of business. Rival automobile manufacturers, both present and aspiring ones, including those headquartered in Detroit—and Silicon Valley—are among those who would happily fill the market space vacated by Volkswagen’s demise.

What was the motive of the EPA, an arm of the U.S. government? As far as I know—and I won’t make any allegations I cannot prove—it was the best. Perhaps it wanted to protect the environment from the effects of releasing nitrous oxide, which causes acid rain, threatening countless lifeforms, both plant and animal, on the land and in the sea. Still, an attack on Germany’s export-oriented auto industry, whatever the motive, has the objective effect of undermining Germany’s economy as a whole. And it is also quite in line with Silicon Valley’s plans to invade the auto industry.

Above all, it is quite in accordance with the nature of competition between capitalist nation-states. An important function of a capitalist nation-state is to put its own capitalists in the best possible position relative to rivals headquartered in rival nation-states. A little less than 70 years ago—within the lifetime of many people still living—the efforts of the U.S. to curb Germany’s competitive threat to U.S. industry took the form of open shooting warfare that ended with the U.S. invasion and occupation of Germany. That occupation has never really ended.

Is it possible the U.S. government is using selective enforcement of the law to curb the same economic threat today? In order to explore this question, we should first start with the policies of the U.S. government that made Volkswagen’s crime possible in the first place.

Proprietary software and the U.S. government’s share of responsibility for Volkswagen’s crime

Despite Volkswagen’s motive to maximize the profits of its shareholders, what it did was criminal. In its drive for maximum super-profit—profit above and beyond the average rate of profit—Volkswagen put in danger virtually every living thing on Earth. But why was it able to get away with this? It was possible because the “source code”—the instructions transformed into strings of zeros and ones by special software and then executed by the computers that control the operation of Volkswagen cars—is secret.

Indeed, the EPA specifically opposed the users of automobiles having access to and control over the software in their vehicles, on the grounds that it might enable them to defeat EPA emissions standards. However, the EPA and other Washington regulators “overlooked” the possibility that the profit-driven automobile corporations might do this on their own in order to increase their profits.

“If Volkswagen,” Eben Moglen of the Software Freedom Law Center noted, “knew that every customer who buys a vehicle would have a right to read the source code of all the software in the vehicle, they would never even consider the cheat, because the certainty of getting caught would terrify them.”

How do we know that other automobile companies are not doing the same thing that the folks at Volkswagen did? We don’t. But there is plenty of evidence that Volkswagen was simply doing what its competitors were doing.

This is confirmed in an article by Associated Press writer Michael Biesecker on Sept. 29, who reveals that Volkswagen’s crime is actually a rather common practice in the automobile industry: “Almost since the passage of the Clean Air Act in 1970, major manufacturers of cars, trucks and heavy equipment have been busted for using what regulators call ‘defeat devices’—typically programing a vehicle’s on-board computer to boost horsepower or fuel mileage by belching out dirtier exhaust than allowed.”

Biesecker reports further, “Complying with clean air regulations can add thousands of dollars to a vehicle’s sticker price while diminishing the driving performance that customers demand.” He quotes Donald Stedman, a University of Denver chemistry professor who specializes in testing the real-world emissions of cars and trucks: “Every car company has an incentive to do this. Some of them get caught.”

In the light of these facts, as well as the continuing stubborn “secular stagnation” afflicting the world economy and Germany’s remarkable growth in exports, there is more than a little reason to suspect that the EPA’s exposure of Volkswagen emissions cheating and the accompanying press campaign is motivated by something other than concern about the environment. At the very least, we should demand that the source code of the software of all automobile manufacturers be made public immediately!

How Germany is exporting depression conditions to its competitors

In his blog dated July 17, 2015, our fellow economic blogger—and former chairman of the Board of Governors of the Federal Reserve System—Ben Bernanke complained that Germany has been in effect exporting mass unemployment and depression. Now, the chairperson of the Board of Governors is one of the most powerful positions in the world. Nobody who is not closely connected to and enjoys the confidence of the most powerful U.S. capitalists is seriously considered for the job. So we can assume that Bernanke’s blog posts reflect the views of a considerable section of the U.S. capitalist class.

In a piece entitled “Europe and Greece: Is Europe holding up its end of the bargain?” Bernanke takes note of the “unevenness in economic outcomes among countries within the euro zone.” (2) “What is a problem, however,” Bernanke explains, is not simply the unevenness of economic outcomes but that “Germany has effectively chosen to rely on foreign rather than domestic demand to ensure full employment at home, as shown in its extraordinarily large and persistent trade surplus, currently almost 7.5 percent of the country’s GDP.”

Translating from the language of the professional economist, Germany is exporting itself out of the depression that surrounds it. Instead of generating demand at home, Bernanke complains, Germany is taking markets away from the capitalists of other countries. “Within a fixed-exchange-rate system like the euro currency area,” Bernanke writes, “such persistent imbalances are unhealthy, reducing demand and growth in trading partners and generating potentially destabilizing financial flows.”

In fact, this is true whether exchange rates are fixed or floating, or as in this case trade is within a common currency area where there are no exchange rates at all. As we saw last month, global demand is at any given point in time fixed, which means that the larger the share of the world market of one capitalist nation the smaller the share of other nations. Only if the market is so robust that all countries can sell their entire potential product at least at the price of production will this not be the case.(3) Under the capitalist mode of production, this rarely happens and it is certainly not the case today.

In addition, for relations between them to be non-antagonistic, participants in the world market would have to be guaranteed to grow in step with the rising productive capacities of the nations engaged in capitalist production so they could continue to sell their rising output at their production prices. Though professional economists, relying on such theories as Say’s law, the quantity theory of money and the so-called law of comparative advantage, claim this to be true, as I have explained throughout this blog this is not and cannot be the case under the capitalist mode of production.

According to Bernanke—if you leave Germany out—the unemployment rate in Europe taken as a whole exceeds 13 percent, based on the usual methods of capitalist governments, which greatly understate the problem. Therefore, Europe as a whole, excluding Germany, remains bogged down in a chronic depression and accompanying mass unemployment crisis that shows no signs of ending.

In Germany, however, the official rate of unemployment is below 5 percent. That is even lower than the “low” unemployment rate reported for the U.S. economy. The point is not that there is really “full employment” in Germany, but that unemployment is considerably lower there than in most of the rest of Europe. This is confirmed by the current refugee crisis caused by a combination of U.S.-incited wars and grim economic conditions throughout North Africa and the Middle East, now further aggravated by the low price of oil.

The refugees certainly do not want to settle in the former socialist countries of Eastern Europe, where capitalism was restored a quarter of a century ago, nor in Depression-bound Greece. Instead, they are trying to enter Germany, where unemployment by the current standards of the rest of the capitalist world is low and where welfare state provisions are, by the standards of monopoly capitalist society, generous. They believe that Germany offers them and their children a decent future.

Bernanke’s advice to the Germans

“Germany,” Bernanke writes, “could help restore balance within the euro zone and raise the currency area’s overall pace of growth by increasing spending at home, through measures like increasing investment in infrastructure, pushing for wage increases for German workers (to raise domestic consumption), and engaging in structural reforms to encourage more domestic demand.”

It is particularly interesting that Bernanke advocates raising wages in Germany. Is he perhaps considering taking a job as a trade union organizer in Germany? In reality, what he really means is that the accumulation of capital—the extent to which the German industrial capitalists are transforming their profits—surplus value realized in money—into new capital, particularly new fixed capital, is proceeding much “too fast” in Germany.

As a result, German capitalists are taking more and more scarce “consumer dollars” away from the capitalists of other countries, including those of the United States. Bernanke’s advice to reform the German economy is actually similar to the reforms the U.S. capitalist media and capitalist economists regularly demand that China carry out. Despite the vast differences between Germany and China, the reason is the same. Both German and Chinese industrial capitalists have been taking markets away from the U.S. capitalists.

Bernanke’s complaint against the German industrial capitalists is an old one for Germany’s competitors. In the late 19th and early 20th centuries, Germany was doing exactly the same thing. Pre-World War I recessions were relatively brief and mild in Germany because Germany was able to export itself out of them at the expense of its capitalist competitors. Indeed, from the 1880s until the coming of the “Great War” in August 1914, Germany experienced no major economic crises.

The rapid growth of German industry fueled the growth of the classic German Social Democracy and made possible the financing of Germany’s pioneering “welfare state.” This convinced many of the German Social Democratic and trade union leaders that prosperity, at least for Germany, was permanent. Therefore, they reasoned, German capitalism would gradually evolve into something that could be called a socialist society without any major disruptions, not to speak of revolutions. What they didn’t reckon with was the fact that Germany’s competitors, which were coming up second best in the economic competition, were not going to stand idly by while the German capitalists stripped them of more and more of their markets.

Britain, which had been the strongest industrial power since the industrial revolution of the late 18th century, was particularly alarmed by Germany’s growing industrial power. It responded by forming alliances with France and czarist Russia in an attempt to contain Germany. The result was the Great War and the horrors that flowed directly from it, which included the Great Depression of the 1930s and the rise to power of fascism in Germany. Now it seems that history is beginning to repeat itself, at least on the economic plane.

“Nobody,” Bernanke writes, “is suggesting that the well-known efficiency and quality of German production are anything other than good things, or that German firms should not strive to compete in export markets.” But you can almost hear Bernanke mumble, but why do the Germans have to be so much better at producing such high-quality products more cheaply than anybody else, and who won the last two world wars anyway.

The ‘reich’ of today

Referring to growing speculation that U.S.-based Apple Inc.–formerly Apple Computer, Inc.—is planning to enter the automobile business by introducing a robotic self-driving car, Dieter Zetsche, CEO of the the giant German automaker Daimler, stated, “What is important for us is that the brain of the car, the operating system, is not iOS or Android or someone else but it’s our brain.” Volkswagen also insisted that the software controlling its engine emissions be “our brain.”

That is, Zetsche insists that the software that controls Daimler automobiles be proprietary “closed-source” software just as the case with Volkswagen’s software. The German auto boss went on to observe, “We do not plan to become the Foxconn of Apple.” While it is alright, Zetsche implies, for Chinese workers to slave away producing vast amounts of surplus value with the lion’s share going to the shareholders of the Silicon Valley-based Apple Inc., such a relationship would be altogether unsuitable for the German capitalists and for the imperialist German nation.

­Zetsche’s remarks tell us a lot about the relationship of forces in today’s imperialist-dominated world. First, it shows that despite the tremendous progress China has made since the victory of its great people’s revolution of 1949, it remains very much an exploited nation. Foxconn is owned by Chinese capitalists based not on the mainland ruled by the People’s Republic of China—though they carry out their production there—but rather in Taiwan, a part of China still effectively controlled by the United States. (4)

This shows that even in the political sense the liberation of China from imperialist dismemberment is incomplete and won’t be complete until Taiwan, and Hong Kong as well, are fully integrated into the People’s Republic of China. The nature of the political social, and economic institutions of the future fully united China is the business of the Chinese people themselves and not of the imperialists, or for that matter well-meaning Western leftists who believe they “know” what is best for the Chinese people. Zetsche’s observations should also put to rest claims that today’s China is the new imperialist superpower ready to impose its rule over our planet.

The main theme of this blog is crisis theory, but a secondary theme has been the rise and development of the U.S. world empire, whose realm—or “reich” in German—has spread throughout the world. This is the real reich we have to deal with today and not an imaginary reich where Germany won World War II and the swastika flag flies over the White House. (5)

As we have explained in earlier posts, the American empire has an inner and outer core. The realm—or reich—of the dollar is the globe. No country, not even Cuba or North Korea, can escape the dollar’s reich. When the Open Market Committee of the U.S. Federal Reserve System meets, all countries hold their breath. There is also the smaller empire of NATO and its allied institutions such as the U.S.-Japan Security Agreement and the “special relationship” with Israel.

The U.S. empire is increasingly moving to merge these auxiliary alliances into the structure of NATO. When I say NATO, I mean unless otherwise noted NATO plus these auxiliary alliances. All NATO countries, as defined here, are under the effective military control of the United States. While the governments of these countries are more than puppet governments, they are unable to take major decisions involving peace and war without the approval of the government of the United States.

A recent example is the decision of the U.S. government to gradually lift the economic blockade of Iran in exchange for Iran reaffirming its decision not to produce nuclear weapons, accepting restrictions on its civilian nuclear energy program, and agreeing to inspections. Despite Israel’s strong objections to this agreement, and Netanyahu’s direct appeal to the U.S. Congress, the agreement is going ahead.

Another example is the decision of the U.S. to impose sanctions on Russia over the Ukrainian crisis. Though it is obvious the governments of most of the West European countries, especially the German government, are not enthusiastic about these sanctions, which hurt their own capitalists, they cannot override Washington’s decision. Within “the NATO reich,” these subordinate countries have what amounts to consultative votes while Washington alone has a decisive vote.

The civilian governments of the NATO countries—again broadly defined—lack full control over their armed forces and face ouster if they defy the will of the Empire in any matter that the U.S. government considers vital. This situation has long been the case with many Latin American countries, even before the rise of the modern NATO. Latin American countries have a long history of military coups that have ousted many a government that has defied the will of Washington. In more recent years, Washington has used the coup weapon more sparingly in the face of growing mass resistance to U.S. domination, but many a Latin American government knows very well that a pro-U.S. military is looking over their shoulders. This fact limits how far these governments can go in following policies that Washington does not approve of.

This situation, largely limited to Latin American counties before World War II, now includes all the NATO countries of both Western and Eastern Europe, Japan, some former Soviet republics, and not least Germany. The former Soviet Republic of Georgia—Stalin’s homeland—and now the Ukraine are de facto members, though not formally members of NATO. However, NATO does not include Russia, the largest of the former Soviet Republics, nor does it include the government of the former Soviet republic of Belarus.

A British coup?

Among the NATO-controlled countries is Great Britain, which as recently as 1914 was considered the world’s most powerful country. The election of Jeremy Corbyn, who has a long history of opposing the U.S. world empire, as Leader of the British Labor Party has sent shock waves through British and global politics.

What would happen if Corbyn, or somebody like him, was elected prime minister and attempted to take Britain out of NATO?The Sunday Times reported, quoting a top serving general: “‘There would be mass resignations at all levels and you would face the very real prospect of an event which would effectively be a mutiny,’ the general said. ‘Feelings are running very high with the armed forces. You would see a major break in convention with senior generals directly and publicly challenging Corbyn over vital important policy decisions such as Trident, pulling out of NATO and any plans to emasculate and shrink the size of the armed forces. The Army just wouldn’t stand for it. The general staff would not allow a prime minister to jeopardise the security of this country and I think people would use whatever means possible, fair or foul to prevent that. You can’t put a maverick in charge of a country’s security.'” (Sunday Times, Sept. 20, emphasis added)

In other words, the British people are free to elect anybody they want as prime minister, as long as that person is approved by NATO—and the Pentagon and White House, which ultimately control NATO! Otherwise, the “iron heel” of the NATO reich will descend on the British people—unless they can defeat NATO through revolutionary means, for example by winning over the rank and file of the British armed forces and preventing an invasion of the country by Britain’s NATO allies.

If this is the case in Great Britain with its centuries of uninterrupted parliamentary government and “rule of law,” what is the situation in other NATO countries such as Germany that don’t have such traditions?

Within this overall pattern of control, the U.S. has put increasing pressure on the European powers (including Germany) and Japan to increase their military spending. As the international monetary system centered on the U.S. dollar (6) grows more unstable and the economic drain of its huge military expenditures puts increasing strains on the U.S.’s own declining economy, the U.S. wants other members of the NATO reich to share the financial burden. There is always the “danger” from the U.S. point of view that if NATO falls, these countries, some of which like Germany and Japan fought wars against the U.S. in the past, might turn their weapons once again against the U.S. The history of the rise and fall of empires is full of this sort of thing.

For now, however, the U.S. keeps tight control over the military forces of the other NATO countries, especially those of Japan and Germany. It is no accident that the main opponents of the U.S. in World War II are thoroughly networked with U.S. military bases. In addition, thanks to the bravery of Edward Snowden, we know that Germany is under intense NSA surveillance, including the mobile phone of German Chancellor Angela Merkel.

Despite their alleged “friendship” and alliance, there is no trust and no true friendship and there never can be between rival imperialist robber states. However, as long as the military spending of Germany and other European countries, as well as Japan, remains low relative to U.S. spending, their capitalists can convert more of their profits into new productive capital than the U.S capitalists can. This puts the U.S. industrial capitalists at a disadvantage in the struggle for the scarce consumer dollar.

The U.S., therefore, wants the other imperialist countries—especially Germany and Japan—to convert some their profits instead into means of destruction. To the extent this happens, the capitalist development of such dangerous economic competitors as Germany and Japan is slowed down allowing U.S. corporations to convert more of their profits into means of production, thus improving their competitive position relative to the Germans and Japanese while the U.S. remains in overall control of the Empire’s military forces. It has the further advantage for the U.S. government that it faces less domestic opposition to colonial wars to the extent German and Japanese solders do more of the fighting.

The government of Japan has just agreed to revise its U.S.-imposed “peace constitution” to enable the Japanese government not to fight wars in its own interest against the U.S. but rather fight wars beside the United States, much like German forces fought under the command of the U.S.-dominated reich against Yugoslavia in the 1990s and more recently in Afghanistan.

This is a very dangerous development, especially in light of moves by the U.S. to encircle China, which are all too reminiscent of Britain’s attempts to encircle Germany before 1914. We all know how that turned out.

After World War II, the United States was determined to bring all the imperialist countries under its military control—first the defeated Axis powers of Germany, Japan and Italy and then increasingly its “victorious allies,” Britain and France, through the NATO alliance.

NATO proper increasingly includes not only the imperialist countries but oppressed countries. The first such country to be granted formal membership was Turkey, which has special importance because of its control of the Dardanelles, linking the Black Sea with the Mediterranean Sea. The Empire’s control of the Mediterranean would be seriously undermined if Turkey were to escape clutches of NATO.

Israel, today’s “white colony” of the U.S. and an unofficial NATO member also plays an important role in the Empire’s control of the Mediterranean.

At the end of the Cold War, the newly capitalist oppressed countries of Eastern Europe were signed up as formal NATO members, violating the meaningless assurances that George H.W. Bush gave to Gorbachev that NATO would not expand eastward. In fact, NATO has been expanding ever deeper into what was the Soviet Union. NATO’s most recent addition, though so far unofficially, is the grain and natural gas-rich Ukraine—minus Crimea and so far the Peoples Republics of largely Russian-speaking Donetsk and Lugansk. This fact is important because Washington and its NATO satellites are not obliged by treaty obligations to automatically defend the Kiev junta under the doctrine that an attack on one NATO member is an attack on all NATO members.

If, however, Ukraine becomes an official NATO member, this would not be the case. Fortunately, there is still time to fight the Kiev’s junta’s attempt to become an official member of NATO. If Kiev does achieve this goal, the chances of a shooting war at some point between the United States and its NATO satellites (including Germany) and Russia would rise considerably.

How NATO works

NATO formally came into existence in 1949, but its real origins can be traced back to the D-Day of the invasion by the United States and Britain of Nazi Germany-dominated Europe on June 6, 1944. As the U.S.-British forces advanced eastward across France and into Germany, all of Europe west of the advancing Soviet army fell under the domination of proto-NATO. However, the growing proto-NATO empire came to a halt on a line drawn by the Soviet army, which was advancing on Berlin from the east.

As NATO was formalized after World War II, its members were given a voice in its decision-making, but it is the U.S. government that ultimately decides. An example of this came in 1990 as the wave of counterrevolutions swept Eastern Europe and what was soon to be the former Soviet Union. The Socialist Unity Party (SED) government that had ruled the German Democratic Republic—East Germany—had been overthrown with the direct assistance of the Gorbachev regime. No realistic observer at the time had any doubt that the overthrow of the SED would mean the restoration of capitalism in the GDR. But the question remained, would the German Democratic Republic continue to exist as a third German state alongside the Federal Republic of Germany—West Germany—and Austria, or would it be merged with the Federal Republic of Germany in a united Germany—excluding Austria?

France was opposed to the merger of the GDR and the Federal Republic of Germany. It wanted to keep Germany as weak as possible, both as an economic competitor and a potential military enemy. But the final decision was Washington’s. It decided to give the green light to the merger of the GDR with the Federal Republic of Germany.

But the U.S. insisted that the new united Germany would have to be a member of NATO. The Warsaw Pact, the answer of the European socialist countries to NATO, was to be dissolved as NATO was extended. France had no alternative but to agree—unless it wanted to go to war with Germany and the United States and with the other NATO countries. And that, of course, was out of the question.

When Washington agreed to the Federal Republic swallowing the German Democratic Republic, Washington insisted that the Federal Republic in exchange had to drop its demands for the return of its lost eastern territories, mostly in Poland, that had been part of Germany before World War II.

Indeed, if you look at the map of present-day Germany, you find that its capital, Berlin, is not more or less in the center of the country like it was before 1914 but in the far east of Germany almost tucked up against the Polish border. But Poland, just like Germany and France, is now part of NATO. As long as NATO lasts, this means that if Germany wants to get back the territories it lost to Poland, it would have to either get Washington’s permission or go to war not only with Poland but with NATO as a whole, including the United States. This, at least, given the current balance of forces is not feasible. Washington as the master of NATO therefore emerges as Poland’s protector from an economically resurgent but NATO-constrained Germany.

Farther east, a similar situation is emerging. In 1939, as part of the short-lived non-aggression pact between Nazi Germany and the Soviet Union, the non-Polish territories that Poland had taken from the Ukraine and Belorussians as a result of the Versailles Treaty and the Soviet-Polish war of 1920 were to become part of the Ukrainian and Belorussian republics, then part of the Soviet Union. Today, Warsaw is looking eastward, and we can assume some in Poland would like to get back Poland’s lost territories in Ukraine and Belarus. But as Ukraine is now being integrated into NATO, Poland will not be able to get these territories unless Washington agrees or Poland is prepared to go to war with the U.S. and NATO. Just like Poland enjoys Washington’s protection from its fellow NATO member Germany, the Ukraine as a de facto member of NATO in turn “enjoys” Washington’s protection from NATO member Poland.

A potentially dangerous situation exists in the Baltic states of Estonia, Latvia, and Lithuania. These countries were part of the Russian Empire and won their independence during the Russian Revolution. They did not join the Soviet Union but functioned as independent capitalist states between the two world wars. Fearing with good reason that they as capitalist states would ally themselves with Nazi Germany—much as democratic-capitalist Finland actually did—the Soviet government in 1940 occupied them and put the local Communist Parties in power. The new Communist governments quickly joined the Soviet Union.

As a result, the local capitalist classes were expropriated and the people of the Baltic states enjoyed all the rights that came as members of a socialist society under construction, such as guaranteed jobs, health care and education, as well as sacrifices that went with the building of socialism in a capitalist-dominated world and with another world war looming. And with these social rights came the full political rigors of the Soviet dictatorship as practiced under the leadership of J.V. Stalin.

When Nazi Germany occupied these countries after its invasion of the Soviet Union in June 1941, those parts of the population that were the losers—the capitalists and their middle-class supporters who had become accustomed to a much higher standard of living than was possible under Soviet power in those years—became the Nazi occupiers’ enthusiastic supporters. They eagerly joined in the hunting down and murder of Communists as well as Jews.

When the Nazis were driven out in the course of World War II, and Soviet rule was restored in the Baltic republics, there continued to be bourgeois-nationalist resistance. This resistance, which took the form of armed struggle for a while in some areas, never went away entirely. However, in the decades after World War II these areas became more and more integrated into the rest of the Soviet Union and an increasing number of people of the Russian nationality took up residence.

Then came Mikhail Gorbachev and the bourgeois counterrevolutions that restored capitalism throughout what had been the Soviet Union and Eastern Europe. Right-wing nationalist movements reemerged in the Baltic states and soon came to power. These extreme right-wing governments declared their “independence” and were admitted as full official members of NATO. However, the restoration of capitalism has brought only misery and mass unemployment to the working classes of the “liberated” Baltic states. The NATO governments have responded with persecution of the members of the Russian nationality who are resident in these countries. The right-wing governments insist that all problems the peoples of the Baltic states face are not the fault of restored capitalism but “communism” and the “Russians.” The worse things get the more the Russian population is scapegoated.

As a result, the Russian government comes under domestic pressure to defend Russians from the Baltic nationalists—just like it is under pressure to defend Russians that live in Ukraine. But unlike Ukraine—so far at least—the Baltic states are official members of NATO. If an increase in the persecution of the Russian population in the Baltic states—perhaps as a result of a particularly nasty recession—were to oblige Moscow to intervene, the Baltic countries claiming that they were being attacked by Russia would appeal to NATO and its doctrine that an attack on one NATO country is an attack on all. NATO, including Germany and the United States, would then be at war with Russia. (7) This is just one of the many ways that the NATO alliance could trigger World War III.

The ‘reich’ of the dollar system

The countries that remain outside of NATO’s grasp, including the Russian Federation and the People’s Republic of China, are forced to participate in such Washington-controlled organizations as the World Trade Organization and the International Monetary Fund. Recently, the non-NATO countries led by the BRICS (Brazil, Russia, India, China and South Africa) have created parallel organizations to the International Monetary Fund and the World Bank. However, so far there are no moves to create parallels to the the U.S. dollar, and above all, there is no move to create a parallel military alliance that could stand up to NATO. As a result, the BRICS countries are obliged to remain members of the WTO.

All WTO members have to give up key elements of their sovereignty such as what tariff policy they can follow and, very importantly, their control over patents and copyrights, including software copyrights. This allows U.S. corporations to sue companies in other countries on the ground that they are violating intellectual property rights. For example, Apple recently sued the South Korean-based Samsung, claiming that Samsung smart-phones violated Apple’s patents. Not surprisingly, the U.S. federal jury found in favor of Apple’s claims.

When such lawsuits are filed, a U.S. jury—an organ of the state—decides whether or not a foreign company can or cannot produce a given commodity and how much money the foreign company is obliged to pay the U.S. company if it is found to be in violation of the U.S. company’s “intellectual property.”

Apple is now the richest corporation in terms of stock market valuation. If you buy an Apple computer, whether a powerful desktop or a laptop, it comes with the latest OS X operating system pre-installed. OS X is actually a variant of the UNIX operating system, which was first developed by programmers at AT&T’s Bell Labs in 1969, well before Apple existed.

For many years now, Apple’s desktop and laptop computers have used the same CPU—the computer’s “brain”—as all other brands of office and home computers. As a result, you can purchase a copy of the Microsoft Windows operating system and run it on an Apple Computer or you can purchase a copy of Microsoft Windows, obtain another version of the Unix operating system like BSD or Solaris Unix, or download a free copy of a GNU/Linux distribution and run that on an Apple computer.

In the latter case, as is the case with most home computers on the market today, you might need additional proprietary software to access all the features of the computer, so an Apple computer is probably not the best choice if you want to run a fully free (as in free speech) GNU/Linux operating system distribution. A list of the fully free versions of the GNU/Linux operating system can be found here.

Since the operating system determines the “personality” of the computer, you can decide when you turn on the computer whether you want to boot into an “Apple computer,” a Windows PC, or the free GNU/Linux. But if you want the OS X operating system—and many people do—you have to buy a computer from Apple. Why can’t you buy an ordinary x86-type computer at a lower price and put OS X on it? In a word, because the U.S. government will not allow you to do this. And this is true regardless of the country you live in.

Building a Hackintosh may be okay, but selling a Hackintosh is not allowed

Like Microsoft Windows, OS X is a largely “closed-source” proprietary operating system. In addition, OS X comes with a feature that Microsoft Windows does not have: subroutines that check whether it is “running” on a computer sold by Apple.

If you are willing to spend a huge number of hours at it—and you won’t do it unless you are a “hacker” who enjoys this sort of thing—it is possible by purchasing components that are as close as possible to ones that Apple uses, plus using some special software that you can download from the Internet that “tricks” OS X into “thinking” that it is running on a certified Apple computer, it is possible to run the OS X operating system on a non-Apple computer. You might even be able to save a few dollars doing this—though you would still have to purchase a copy of OS X from Apple.

You then end up with a rather unreliable “Hackintosh” computer that appears to be an Apple computer. The legality of doing this is doubtful. However, so far no one has been sued by Apple for doing this as long as they produce such machines for their own personal use. Indeed, Apple probably sees the individuals that are willing to go to such lengths to run Apple’s OS X software on a non-Apple computer as potential future Apple engineers.

However, what you cannot do is to put your Hackintosh on the market. If you do, the government of your country will shut you down. Again, it does not matter what country you live in. The reason is that any country that would tolerate the commercial production of Hackinstosh’s would be accused of violating Apple’s so-called intellectual property, which would violate World Trade Organization rules. As a result, such a country’s access to world markets would be severely restricted. In the worst case, it might run into military trouble with NATO, but that’s another matter.

The kind of monopoly that Apple represents should be distinguished from a situation where due to the centralization of capital that is the inevitable consequence of free competition, a single firm—or a few firms—achieve a monopoly of the market. In this case, the monopoly indicates that the productive forces based on free competition have outgrown the capitalist relationships of production.

The kind of monopoly that bans the production of Hackintosh’s is a different type of monopoly. This monopoly depends on the intervention of the state. (8)

Swollen with super-profits, the richest capitalists become politically extremely powerful, since political power in capitalist society is largely a function of

money. To return to our Hackintosh example, if the government stepped aside, an increasing number of industrial capitalists would produce Hackintoshs until the market became flooded with them. Apple would still be able to make a profit, but its super-profits would disappear unless it managed to establish a new monopoly based on the centralization of capital that arises out of free competition and not government intervention. In this way, the development of the productive forces would be advanced as different industrial capitalists compete with one another to produce the best Hackintosh at the cheapest possible price until they reach the limits set by the capitalist relationship of production and a new monopoly based on

the centralization of capital.

How this reactionary state intervention is justified

“If you build a better mousetrap, the world comes to your door” was the slogan of capitalism in the age of free competition. Since a mousetrap is a simple device, anybody with normal mechanical intelligence can figure out how the better mousetrap works. The inventor of the better mousetrap obtains a patent and either manufacturers the mousetrap as an industrial capitalist or sells the patent to an industrial capitalist in exchange for some of the super-profits. In either case, it is understood that the super-profits the state-granted monopoly enables the industrial capitalists to appropriate is temporary. During the period of the patent, nobody is allowed by the state to manufacture the mousetraps with these particular improvements, but they are free to study how the mousetrap works and when the patent expires use their understanding to extend and improve them, perhaps obtaining a patent themselves based on the earlier improvements. In this way, the forces of production are spurred on by free competition somewhat modified by the patent system.

Even as late as the 1950s, you didn’t have to a genius to figure out how a radio or TV worked. You simply had to be able to read a wiring diagram and the relatively simple and publicly available explanations. Today, however, in the age of computers, circuits made up of microscopic transistors, diodes, capacitors, and resistors are extremely complex. No engineer can hold in his or her head the knowledge on how these circuits work in detail. Only the general principles are known by the individual engineer. Computers chips have to be used to design the next generation of computer chips.

In addition, unlike mousetraps or old-time radios and TVs, computer chips can do nothing on their own but have to be fed instructions called software. Today’s software is incredibly complex. Programmers who write new software write relatively few instructions that bind existing software written by earlier generations of programmers together. No programmer can hold in his or her head a detailed picture of how all but the most “trivial” of the modern programs work. The combination of the complex micro circuits and complex software means that the capitalists can increasingly keep secret the knowledge of how the commodities they produce work and then treat this secret knowledge as a commodity.

Working with corrupt capitalist governments—the U.S. government being the most corrupt of all—monopoly corporations brazenly treat the knowledge of how things work as their private property. This is particularly repulsive because the capitalists claiming this knowledge as their private “intellectual property” rarely have anything to do with actually creating this knowledge. They can get away with this only because they can rely on the state power with its police and prisons—and on the largest scale, NATO—to enforce it.

It is exactly this kind of “intellectual property” that gave Volkswagen the ability to design and build motor vehicles to violate the U.S. government’s environmental standards. But as we know, Volkswagen or the German capitalists are hardly the only capitalists who use “intellectual property” in pursuit of their only real aim—the appropriation of monopoly super-profits. Indeed, here the German capitalists are at a positive disadvantage, because they don’t have nearly the political power that U.S. capitalists have. Things would have been quite different in this respect if the Third Reich had won the war.

Countries outside of NATO and its unofficial extensions have considerably more room to resist the control of their industrial production by the U.S. state. For example, South Korea is very much a U.S. neo-colony notwithstanding its considerable degree of industrialization. It is in no position to seriously resist U.S. government control of their production in the profit interests of U.S. corporations. They are largely forced to defend their interests in U.S. courts, where they are at a considerable disadvantage.

The People’s Republic of China, in contrast, stands outside of NATO. The U.S. press periodically runs articles complaining that Chinese companies are “counterfeiting” Apple’s iPhones and other iThings. As we know, Apple’s “legal products” are also assembled in China, but it seems that this does not give Chinese capitalists the right to compete with Apple in the spirit of free competition.

These reporters have apparently forgotten their Adam Smith. The great classical Scottish economist explained that all that keeps the individual capitalist honest and prices anywhere near their “natural price”—price of production—is the ability of other competing capitalists to manufacture and sell competing products. This is why Smith advised the government to stay out of the business of telling individual capitalists what commodities they are not allowed to produce and sell.

What would the old Scottish economist have thought of the concept of “counterfeit products”? He no doubt would have explained that there is quite a difference between the economic effects of counterfeiting currency and freely producing commodities of a given use value! If a commodity is “counterfeited” as a result of free competition, he would have explained, its “value in use” is in no way impaired. Instead, the profit rates of the capitalists engaged in producing it are reduced to more or less the average rate. He further explained that this was a very good thing. If paper currency, in contrast, is freely counterfeited, its “value in use”—to represent money in circulation—is destroyed. That, of course, is a very bad thing.

Adam Smith’s principles are far more respected in the People’s Republic China these days than in the U.S. This shows that capitalism is not yet as outlived in China as it is in the U.S. The U.S. and the U.S. media take for granted not only the fact that the government can tell the capitalists what they are and are not allowed to produce and sell but that the U.S. state—and its organs like U.S. juries—can tell the capitalists of any other country in the world what they are allowed and not allowed to produce.

In this way, the principle of the national sovereignty of other countries is violated as well as the basic principles of “perfect liberty,” as Adam Smith called free competition. However, even China as far I know would not allow any of its industrial capitalists to produce and sell a Hackintosh, not even for domestic consumption on the home market and certainly not for export. The U.S. government-dominated WTO will not allow Adam Smith-style free enterprise to be fully practiced in the People’s Republic of China—or anywhere else. Free enterprise is the American Way, but super-profits are what the game is all about.

The unique evils of the Third Reich

More than 70 years have passed since Adolf Hitler committed suicide in a Berlin bunker to avoid capture by the Soviet forces fighting their way into central Berlin, or what was left of it. Two generations of imperialist propaganda have mystified the reality of the Third Reich. Nowadays, the policy of Hitler’s government of killing every Jewish man, women and child has been emphasized at the expense of all the other features of the Third Reich. Worse, it is done in a way to justify the establishment of apartheid Israel.

As a result, younger people who are finding out that the imperialists lie about practically everything may suspect that they are lying about Nazi Germany to justify Israel’s crimes against the Palestinian people. There is, however, no doubt whatsoever that Hitler’s policy of killing every Jewish man, women, child, and baby is a crime unique in history—“Jewish” defined in terms of race and not religious belief. Atheist and Christian “Jews” were defined as “racial” Jews by the laws of the Third Reich. This crime must never be forgotten or trivialized by making false analogies.

The U.S. government and media are guilty of constantly trivializing the crimes of the Third Reich—which included not only those against Jewish people—whenever U.S. imperialism attacks an independent country and its leader is equated to Hitler. Young people who are taught relatively little about European history and are learning to distrust with good reason the history they are taught are encouraged to draw the conclusion that perhaps Adolf Hitler was not really that bad. Perhaps, they think, Hitler’s only real crime was that he opposed the drive to world domination by the United States in the interest of his country, much like was the case with Yugoslav President Slobodan Milošević, Iraqi President Saddam Hussein, Libyan leader Colonel Muammar Gaddafi, or Syrian President Bashar al-Assad today.

Particularly outrageous is the growing tendency of Anglo-American professors of history to group Hitler with China’s Mao Zedong as examples of the most evil dictators in world history. (9) These professors, “historians,” and journalists should be called to order by all who care about the truth of what really happened in the 20th century. Such comparisons are, of course, deeply offensive to the people of China. You would think the leaders of Jewish organizations would feel the same way. But unfortunately the official leaders of the Jewish world are so committed to Zionism and defending the crimes of the state of Israel against the Palestinian people that they allow these outrageous comparisons between Mao and Hitler to pass as though it was the most natural thing in the world.

Bad as were the crimes of the Third Reich against the Jewish people, the Roma people—the so-called “gypsies”—homosexuals, and people with disabilities, they form only a part of its crimes. A central feature of fascism in general and German fascism—so-called National Socialism—in particular—is its hostility to all forms of organization of the working class. The Nazis were determined to destroy all forms of “Marxism.” In Nazi terminology, this referred to both Social Democrats and “Bolshevism”—the Communist movement. They even abolished the anti-Marxist Catholic trade union movement.

It is easy to see why this aspect of the Third Reich is played down or more often ignored altogether nowadays. Unlike the case during the Cold War, the media largely ignores the trade union movement today. And when they do mention it, they treat it as a marginal remnant of the past with no future. Yet those who have studied the real history of the Third Reich know that before Jews were being thrown into concentration camps, not to speak of death camps, Communists to be followed by Social Democrats and trade union leaders were. Only after the workers’ movement was smashed in Germany were the Jews and other victims rounded up and murdered in the death camps.

For this reason, I will examine the Third Reich and the circumstances both economic and political that led to its rise and fall. In what ways did Hitler’s German empire resemble the other imperialist empires of Britain, France, Belgium and the present U.S. global empire and in what ways was it truly unique?

Of special interest is the role the Third Reich played in the rise of the present-day reich—the U.S. world empire.

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1 Volkswagen was founded in Nazi Germany by the Nazis in 1937. In a future post that will examine the nature of Nazi Germany, I will examine how and why this company came into being. The main problem with Volkswagen today, however, is not that it was founded by Nazis who are now long dead, but rather that it is a profit-driven corporation whose aim is to make a super-profit above and beyond the average rate of profit, just as all the other capitalist automobile companies are. (back)

2 Lenin stressed in his pamphlet “Imperialism” that uneven development is one of the most important characteristics of capitalism. It is interesting to see the former chairman of the U.S. Federal Reserve System—and our fellow blogger, the Republican Ben Bernanke—confirming Lenin on this point. (back)

3 The price of production, or production price for short, is the price that enables capitalists to realize the average rate of profit on their—or its, in the case of a corporation—total advanced capital. (back)

4 Taiwan was a part of China for centuries but was seized by Japan in 1895. The population of the island is overwhelmingly Han Chinese. It was returned to China in 1945 as a result of Japan’s defeat in World War II. In 1949, the KMT—founded as a bourgeois nationalist party by China’s first president, Sun Yat-sen—and headed by Chiang Kai-shek after Sun’s death—were driven off the mainland and withdrew to Taiwan. There they continued to rule under U.S. protection as the “Republic of China.”

During the Cold War, the U.S. media referred to the Chiang regime as “free China” or “nationalist China,” while the People’s Republic of China was referred to as “Red China.” Chiang’s regime continued to “represent” China in the U.N. until 1971. In the early 1970s, as the first steps toward normalized relations between the People’s Republic of China and the United States were underway, the U.S. media dropped the term “Red China” and began to refer to China by its proper name the “People’s Republic of China” or simply “mainland China”—or when they want to induce a feeling of hostility to China as “Communist China.” The term “Red China” is no longer used.

The term “free China” or “nationalist China” has also disappeared from the U.S. media to be replaced by “Taiwan,” which is treated as a separate country, though the government on Taiwan still calls itself the “Republic of China.” The U.S. has encouraged the growth of a “pro-independence” party on Taiwan that claims that Taiwan is a separate country. The People’s Republic of China insists that Taiwan is very much a part of China—a position also supported by the KMT.

The People’s Republic of China hopes that peaceful reunification will occur in the future. However, it reserves the right to use force if peaceful means to bring about the reunification of China fail. Beijing’s policy has since the days of Mao Zedong been to wait until China’s rising military power obliges the U.S. to recognize in practice that Taiwan is indeed a part of China. At that point, Beijing hopes that a peaceful reunification of Taiwan with the rest of China will occur.

The U.S. for its part does not actually say it will and is not obliged by any treaty to defend Taiwan’s “independence” in the event of armed conflict with the People’s Republic of China. But it has hinted it might go to war to defend the “independence” of Taiwan. This is a brazen violation of China’s right to self-determination and is one of the ways, though not the only one, that a shooting war could erupt between China and the U.S. (back)

5 Would a victory by Nazi Germany have resulted in the swastika flag of the Third Reich flying over the White House? A victory by the Nazis might well have occurred if bourgeois forces socially and politically analogous to those represented by Mikhail Gorbachev and Boris Yeltsin had taken over the USSR not in the 1980s, as occurred in real history, but rather in the 1930s and 1940s. I will examine this interesting question in the coming post that will examine the economics and politics of the Third Reich. (back)

6 An example of the growing instability of the dollar system is the current global economic slowdown—including the failure of U.S. industrial production to increase this year for the first time since the end of the Great Recession, despite strong auto sales and a recovering residential housing market. The immediate cause of this slowdown is the U.S. Federal Reserve Board’s decision to end “quantitative easing.” The Federal Reserve knows that if it resumes the quantitative easing policy, sooner or later a run on the dollar will occur that would put into question the continued rule of the “dollar reich” over the international monetary system and with it the “NATO reich” that the dollar reich finances. (back)

7 The danger that a local war can be transformed into a general war through alliances is illustrated by the events of 1914. The war began as a local war between Austria and Serbia. Germany came to the aid of its ally Austria. Russia then declared war on Germany and invaded Germany—with disastrous results for Russia—in an attempt to help its ally Serbia. Republican France then declared war on Germany in a move to protect its ally czarist Russia. And Britain then declared war on Germany in order to defend its allies Belgium, France and Russia. (back)

8 U.S. liberals—not to be confused with economic liberals—distinguish themselves from conservatives by advocating a larger role for government in the economy. U.S. conservatives, in contrast, are supposed to want to hold government intervention in the economy to a minimum.

But not all government intervention in a capitalist economy is progressive. Outlawing Hackintosh’s in the interest of preserving Apple’s super-profits is an example of a thoroughly reactionary form of state intervention. State intervention under capitalism can be progressive if it enables the productive forces to develop or at least be sustained. Similarly, state intervention that limits the workday, for example, is also progressive. But it can’t be said that intervention by government is good in and of itself anymore than it can be said that it is always bad in and of itself. It all depends on the concrete circumstances. (back)

9 Just to name one these differences, Hitler fought a war of conquest against most of the other European nations, leading to the death of tens of millions of people. Mao fought a war for the liberation and unification of China. Perhaps only a professor who is a resident of a country whose territory has not been invaded by a foreign power for centuries can overlook this “tiny” difference between Hitler and Mao. There are many other differences as well, but this is not the place to list them since if I did I would have to write a large volume and not a footnote. (back)