On September 17, 2009, John Bellamy Foster appeared on Democracy Now! to discuss the financial meltdown, social change and democracy. Click HERE to read the transcript.

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A conversation with John Bellamy Foster, editor of the US-based socialist magazine Monthly Review, professor of sociology at the University of Oregon and co-author (with Fred Magdoff) of The Great Financial Crisis: Causes and Consequences (Monthly Review Press, 2009). He was interviewed by Farooque Chowdhury for the Bangladesh daily newspaper New Age. It was published on September 8, 2009.

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Farooque Chowdhury: What is the likely impact of the present financial crisis on geopolitics, especially if the crisis is considered in the context of the energy crisis, including the peak oil issue, the food crisis, the environmental crisis and the declining US dollar? Will the world experience war(s) as an effort to survive? Will monopoly-finance capital attempt to create another bubble, as capital is gripped with contradictions within and without?

John Bellamy Foster: The ``Great Financial Crisis'' and the ``Great Recession'' that followed close upon it has uncovered the depth of the contradictions facing capitalism in this phase, labelled ``monopoly-finance capital''. Specifically, the overall crisis has revealed that capitalism, at its vital core, is caught in a stagnation-financialisation trap with no visible way out.

The geopolitical implications of course are vast. Not only is capitalism weakening in many ways at the centre but US hegemony is also compromised. The US dollar at first strengthened in this crisis, but the long-term implications for the dollar are negative. On top of the worst world economic downturn since the Great Depression, we are also facing, as you indicate, the worst environmental threat in history (indeed what might be viewed as the ultimate environmental threat, with the destabilising of the climate), the rapid growth of world hunger and the prospect of peak oil.

Inequality in the world (both between rich and poor countries and within states) is increasing. The occupation in Iraq continues, while the United States under the new Barack Obama administration has expanded the war in Afghanistan, further destabilising Pakistan. Militarisation is growing across the planet. Washington is acquiring seven additional military bases in Colombia alone — aimed at the Bolivarian Alliance for the Peoples of Our America (ALBA) countries.

Behind all of this is an accumulation system that is increasingly geared to finance rather than production. There is no doubt that the policy priority at the centre at present is to restore the financial status quo ante — that is, to promote financialisation or a new series of financial bubbles. This, however, is a reflection of the corruption of the entire accumulation process of capital. We can speak today not only of the financialisation of capitalism, but also the financialisation of imperialism, in the sense that financial control of the periphery is the central economic issue, and the main lever of the centre, backed up in the end by military power. Samir Amin, in particular, saw this coming, emphasising how the centre continues to control the periphery financially, technologically and militarily, even in the face of some industrial advance in the South.

What apprehensions are there for the periphery of the world system due to the impact of the present crisis of monopoly-finance capital — other than ``receiving'' the brunt of war(s), if any?

Being the brunt of militarism, war and naked imperialism is of course bad enough. But there is no doubt that the current period of economic meltdown has brought other dangers. Today’s deep global crisis represents one of those historical events that serves to clarify developments that have been happening over a much longer period, so that it becomes possible to understand better where we are heading. Building on analysis constructed by Harry Magdoff and Paul Sweezy in Monthly Review, I observed a dozen years ago:

In general, monopolisation, imperialism, globalisation, and the shift from production to finance are ways in which capital seeks to break out of the circle of stagnation, though this simply ``shifts the contradictions to a broader sphere, and gives them a wider orbit'' (Marx, Capital , vol. 2)). Today the pace of this entire process is being set largely by the global expansion of financial capital. On a typical day world capital markets move $1.3 trillion or more, while the exports of the entire world add up to only $3 trillion per year. This means that in just over two days world capital markets move as much money as international trade accounts in an entire year. The increasing integration of global financial markets means that if and when the financial bubble bursts it could well encompass the entire world capitalist system — creating new and unprecedented dangers. Given the ``absurd overvaluations'' that characterise the modern financial system (in Japan prior to the 1990 stock market crash price-earnings ratios had risen to 100-1), MIT economist Lester Thurow argues, ``it is only a question of when the market falls and whether the fall is slow or rapid''. Moreover, in contrast to national economies, where the state is able to act as the lender of last resort and thus to stave off cascading defaults, the world system as a whole lacks any single entity capable of intervening on the necessary scale in the face of a sudden financial collapse….

The point here is not to predict such a financial collapse. Indeed, predictions should be avoided because it is the task of anti-systemic movements to alter the status quo in order to escape from this irrational world order. The point rather is that the system is inherently irrational and on an expanding scale. Globalisation in the face of stagnation only gives the crisis ``a wider orbit''. — (``The Age of Planetary Crisis'', Review of Radical Political Economics, Fall 1997).



There is no doubt that this general way of looking at things, rooted in a Marxist tradition long associated with Monthly Review, has proven to be correct in its broad outlines. Despite the strengthening of capitalist relations in a few ``emerging'’ economies, the system as a whole is in finding itself in a deeper and deeper crisis. I am convinced that we are somewhere in the middle — no longer at the beginning but also far from the end — of a long-term structural crisis of capitalism; one that threatens the continued existence of the accumulation system itself.

At the same time, of course, we are facing grave threats to the planet as we know it and to human civilisation, the very survival of which is in question if present trends continue. In this sense the current economic crisis may prove fortuitous in helping humanity to understand the need to abandon the destructive logic of capital.

History teaches us that the main resistance can be expected to come from the bottom rather from the top of the world system. The negative forces of stagnation and financialisation, emanating from monopoly-finance capital at the centre of the world economy, has a mixed message for the periphery. In the past the periphery has been made to bear the greater part of the adjustment in a crisis, but today that may not be possible. Successful resistance is now conceivable in the global South (as we are seeing today in areas as widely separated as Venezuela and Nepal).

Europe, broadly, watched transfixed while Wall Street was melting down. They talked twice. Then there was trans-Atlantic meeting of finance ministers in Washington DC producing a very brief and vague statement on ways to face the crisis together. Was the whole episode of trans-Atlantic discussions and consultations a show of unity meant to disguise an undercurrent of disunity within monopoly-finance capital?

You are right about the façade of unity. The European ruling elites did not act in unison — indeed they seemed incapable of doing so — nor did the United States and Europe work together. Yet, neoliberal globalisation had linked these economies over the years, in a process that hit at the remnants of the Keynesian social-democratic ``compromise'' within the core capitalist countries. And there was a broad understanding of how to combat the deflationary tendencies that suddenly appeared.

It is hardly surprising, therefore, that they all operated in a kind of indirect collusion (resembling oligopolistic corporations), with the United States as the financial-price leader, so to speak. The universal response was to bail out the financial system, with the object, it soon became apparent, of getting the financialisation process going again — since there was little hope for capital otherwise. In this sense, there were common dimensions to this crisis of monopoly-finance capital that took precedence, over and beyond the inter-imperialist rivalries that had been developing — without generating real cooperation among the leading states.

Nevertheless conflicts have emerged within Europe between countries with current account deficits, notably Britain, and countries with current account surpluses, notably Germany. The former have been accused of being profligate consumers, while the latter have been accused of neo-mercanitilism. (See the interesting analysis by Joseph Halevi, ``G20 and Inter-capitalist Conflicts'', MRzine, April 7, 2009.) The conflicts dividing capitalist states may become still more apparent in the recovery phase of the cycle, as countries feel greater latitude to chart their different courses, and as the strengthening of the dollar in early the crisis, increasingly gives way to its opposite.

What impact will the financial crisis have on the US body-politic?

That of course is the big question in the United States. There is no doubt that the economic crisis is so serious as potentially to threaten the stability of the ruling capitalist regime. So far there is no evidence of a serious rift at the top. Capital as a whole seems to be united in this crisis in bailing out the financial system and restoring what Henry Kaufman, one of the leading financial analysts in the United States, has called ``the financial-industrial complex''.

Talk of regulating finance was always rather empty and is receding now that the outward symptoms of the crisis fade. The US government, which in the present crisis has seen both Republican and Democratic administrations in power, has consistently emphasised salvaging the most powerful banks over all else, with more than $12 trillion in cash infusions, loans, guarantees, subsidies, etc., poured mainly into the financial sector by early 2009 — and more since then. In this respect, there was absolutely no difference in the response of the Bush and Obama administrations.

Things are more complex when the issue of the underlying population is raised. There is no doubt that the economic crisis, the rise in unemployment, the lost wages, the cutbacks in state support, have left much of the population in a state of hopelessness and growing rage. Based on the experiences of the 1930s one might think naturally enough that this would generate a working-class revolt on the left, including growing trade union organisations, strike waves, marches of the unemployed, street demonstrations, etc. The election of what is seen as a ``centre-left'' president might serve to feed such struggles.

There has been a lot of talk on the left of a new ``New Deal''. But the left is weak organisationally due to a long history of repression that goes back to the McCarthy era, and it is effectively invisible in society, due to the media propaganda system’s normal sorting process, which hides any genuine dissent. Hence, the right, with its money, power and media dominance, has been much more effective at visibly channelling the widespread alienation of workers than has the left.

This has been apparent in the right’s attacks on the healthcare changes promoted by the Obama administration, which is seen as strengthening the hand of an oppressive government. Liberals are dismayed by this but most socialists are not surprised in the least. The fact that the government has been bailing out the banks to the tune of trillions and letting them run off with bags of money and exorbitant bonuses while the population has been suffering only served to promote distrust of the state.

Dispatched to the town halls to calm the masses down, Larry Summers, Obama’s chief economic adviser, defended the corporate bonuses, disdainfully saying (to a population that was seeing its retirement pensions disappear, along with jobs, healthcare, etc.), ``We are a country of law. There are contracts'' (quoted by Robert Kuttner, ``Rage the Left Should Use'', Washington Post, August 19, 2009). Ironically, given the stranglehold of the two business parties (in reality two factions of a single party) on US politics, many in the working class are drawn to the Republican Party and its anti-government stance, since they see the state, not entirely without reason of course, as an oppressor — and it at least gives them something to attack.

Whether this will continue, we don’t know. The left as I said is in a weak position, but this is not inevitable or permanent. If a sense of crisis continues, explosive developments could occur weakening the system of political control. Socialists need to speak the truth as they see it, rather than forever trying to be social democrats or ``left liberals'', thereby obscuring and undermining their own message.

You and Fred Magdoff discussed in The Great Financial Crisis the US House of Representaives’ rejection of the bailout plan, when it was originally tabled in October 2008. Was the only reason behind that rejection, the one that you observed in your book (p 112): ``The outburst of grassroots anger and dissent'', i.e. a reflection of pressure from the bottom in the society? Or along with that outburst and dissent was there also an inability, in that moment of cascading financial meltdown, of all the fractions of the system to reach a consensus? And, is that failure to reach a consensus — if that was the case — a result of the blame game immediately after the voting (when the bailout plan was initially tabled) — directed at blaming Nancy Pelosi, the house speaker? Was that in itself a manifestation of an erosion in the dominating political culture; a failure of the system to hold together during the crisis of the dominating capital?

The ``failure to reach consensus'' should not entirely surprise us of course. Marx argued that the antagonism of the principal classes in English society constituted ``the framework of English society'' (New York Tribune, June 7, 1856). The same principle applies today, particularly in periods of deep crisis, during which the normal antagonism, often just beneath the surface, comes to the fore. When we talk of consensus in this context we are speaking of a hegemonic-consensual order designed to integrate the population as a whole into the ruling project, against their own interests.

There is no doubt that in the unexpected and severe financial meltdown that followed the collapse of Lehman Brothers in September 2008, the US ruling class had no thought at first of the exercise of hegemonic power. Faced with a full-fledged financial panic, there was simply one immediate objective: bailing out financial institutions, and corporate capitalism as a whole. When the secretary of US Treasury, Henry Paulson, proposed his bailout plan he was doing exactly what was required of him (and what Obama’s appointee to the same post, Timothy Geithner, continued with no essential change).

But the working population in the United States was outraged by this plan to bail out the banks — at a time when people everywhere were suffering the loss of their jobs and houses. The Republican congressional representatives (House Republicans) saw this as a grand opportunity in the context of an election that was bringing the Democrats to power, and in which they were afraid of losing their seats. They immediately catered to this grassroots sentiment, attacking the government — always the target of their criticisms — over the bailout plan. John McCain, who was running for president on the Republican ticket, was partly swept along by this, while Barack Obama, who, unlike McCain, had the support of all the big financial interests, backed the bailout wholeheartedly — if somewhat quietly given the public sentiment — thereby presenting himself as the responsible party.

Within days, naturally, the House Republicans had been brought back into line, and the normal hegemony of capital reasserted. But in the meantime, these actions had served to highlight to everyone throughout society the widespread outrage amongst the population. A few left democrats also opposed the bailout, but they were far outnumbered by the Republicans who opposed it.

In retrospect, there is no doubt that the House Republicans, although cynically directing their criticisms at the state, were much more effective in exploiting working-class anger than were the Democrats, who had no such goal and were concerned simply with propping up the system. The fact that Nancy Pelosi, the Democrat leader of the House, was turned into a major target — at a time when a Republican administration was still in power and the overall political current was favouring the Democrats — was an indication of the general effectiveness of these tactics.

Although the great majority of the population in the United States has been and remains opposed to the massive bailout, the system has moved to take care of its own: that is, the financial interests. The ruling class as a whole has been able effectively to ignore the masses, who have no economic and no real political power, lacking any organised basis. Now with the crisis ebbing, the media propaganda system is working overtime to convince the public at large that Paulson, Bernanke, Geithner and company saved the financial system and the economy.

There are news reports of sporadic protests and demonstrations by different sections of the people in the United States. News agencies reported protests against the bailout plan, against the auction of homes, against layoffs and demanding compensation, against taxes, and in many other areas. Months ago a group of workers in Chicago occupied a factory, probably unprecedented in recent US history. President Obama offered token support to these factory-occupying workers, one news report said. A number of political commentators have expressed opinions that more protests could arise in the United States. There were protesters in Sacramento holding placards with hard sounding words. A commentator has declared that the elites are aware of the possibility of civil unrest. Is there any real likelihood of major resistance while labour is unorganised, while consumers are hard pressed?

There are certainly a lot of spontaneous protests and demonstrations of all kinds going on in the United States in response to the crisis and the war. I don’t think anyone really knows how much protest is occurring because the media makes a point of not covering left protests, as much as possible.

Strikes have taken place, including, as you note, the dramatic occupation of a factory by members of a United Electrical, Radio and Machine Workers local union early in the crisis. But organised labour can hardly be said to be engaging in struggle.

The AFL-CIO seems almost dormant in this crisis. One is inclined to think that organised labour in the United States today is organised for something else other than struggle. In the 1930s, the Communist Party backed by other smaller left parties played a big role in getting mass protests going. There is nothing equivalent in the United States today.

Still, there are plenty of reasons to believe that resistance could grow dramatically in present circumstances. It is well to remember that although the Great Depression began in October 1929 it wasn’t until 1934 that one saw the truly massive strike waves that constituted what has been called ``The Great Revolt from Below'’, associated with the rise of industrial unionism and the CIO. (The best short account of these developments is to be found in David Milton’s book, The Politics of US Labor.) This happened after unemployment had bottomed out in 1933 and what was to turn out to be a slow economic recovery was beginning.

Today, there has been no bottoming out yet of job losses. Unemployment is still rising and the economic conditions promise to be extremely difficult for workers in the years ahead. It may take some time, possibly years, before we see the development of organised revolt from workers. The New Deal in its more radical phase, it should not be forgotten, was an effect rather than a cause of the revolt from below from 1934 on. It is the responsibility of the left in this crisis to help open the way to such possibilities, by drawing on the lessons of the past. Monthly Review Press has just reissued Nancy Rose’s book, Put to Work, on the federal job programs of the 1930s — the WPA and others — so that those engaged in struggles can learn from the past.

One aspect of the US situation that is not well understood is the level of internal repression marked by a vast growth in the numbers of police and prisons. This is of course a system of racial and class control, with blacks and Hispanics representing the biggest share of inmates. This penal state has been growing rapidly during the last 20 years — the whole period of neoliberal policy associated with the growth of monopoly-finance capital. While India, I believe, has an incarceration rate of around 50 per 100,000, the United States, with the highest incarceration rate in the world, has one of around 750 per 100,000. This a system of social repression that may even expand in the crisis. (See ``The Penal State in an Age of Crisis'' written by Robert W. McChesney, Hannah Holleman, R. Jamil Jonna and myself for the June 2009 Monthly Review).

Is going to war one of the tendencies of military Keynesianism?

Military Keynesianism is the doctrine that military spending can help lift a capitalist economy that is faced with demand shortfalls. This should not be identified directly with Keynes’s views themselves, though he did co-author a famous pamphlet called How to Pay for the War. Rather, the first military Keynesian, even before the publication of Keynes’ book (as Michal Kalecki and Joan Robinson both pointed out), was Hitler, who managed to restore the German economy to a large extent by rearming it, with of course barbaric consequences.

In the post-World War II US system, expenditures on militarism and imperialism were directed mainly at maintaining and enhancing the US empire. But this was also seen as having the secondary benefit of promoting economic demand and profits. In the past half-century or more the United States has devoted vast resources to the military and carried out numerous interventions and regional wars, mostly in Asia. There is no doubt that this has been an important boost to the economy.

Acknowledged US military spending in 2007 was $553 billion. But Hannah Holleman, Robert W. McChesney and I recently did an empirical study (``The US Imperial Triangle and Military Spending’', Monthly Review, October 2008) that determined that the actual amount spent was $1 trillion. This is nearly three times the federal budget stimulus for a single year provided by the Obama administration in order to counteract the current crisis, so the numbers are very significant.

At present the administration is accelerating the war in Afghanistan as part of its larger imperial strategy for controlling the Persian Gulf and Central Asia. But military Keynesian considerations (i.e. economic ends) also enter in at some level to reinforce these imperial objectives. There is what Kalecki in The Last Phase in the Transformation of Capitalism called the ``imperial triangle'' of (1) state-financed military production, (2) a media-propaganda system that supports imperial adventures and (3) the real/imagined employment-income effects. This form of ``Pentagon capitalism'', as it has been called, also feeds into US arms sales, which fuel wars throughout the world.

In 2008 sales of US armaments constituted more than two-thirds of total international arms sales, with the US share amounting to $37 billion in all. This is crucial to the US current account balance.

Is there any geopolitical division within monopoly-finance capital? How does such a division, if it exists, manifest itself globally in ``camps'', alliances, ``surrogate'' countries, etc.? How does it affect countries in the periphery? Are there weak links in the chain of monopoly-finance capital that fastens the globe?

I think of monopoly-finance capital as a new phase, essentially, of the monopoly stage of capitalism (which Lenin said was ``the briefest possible definition'' of imperialism). The combined centrifugal and centripetal tendencies of imperialism that come more and more to the fore under monopoly capital are still there, in magnified, increasingly complex, and largely unpredictable forms.

Simply, because there is and can be no overall state of the capitalist system, developments at the global level are always more contingent and problematic. Wars and inter-imperialist rivalries are part of the system, along with the domination of the periphery by the centre. In terms of the global political economy, we have witnessed, since the resurfacing of stagnation tendencies in the mid-1970s, the rise of the whole era of neoliberal globalisation, which has been a mechanism for re-establishing the control of the global North over the South, and for shifting the main costs of stagnation from centre to periphery.

But this period has also seen the growth of some ``emerging'' capitalist countries, which have been able to benefit from the global sourcing of resources and commodities — thereby also increasing the profit margins of global corporations.

The shifts in economic power in the period have thrown up the whole question of international hegemony, today exerted by the United States (which in the 1990s following the fall of the Soviet Union became the sole superpower) – but increasingly under circumstances that look anything but stable, with the rise of various major, regional powers. To be sure, no state can yet challenge the United States economically or militarily on a global basis. Nevertheless, in the United States, this perceived impending threat to its global rule has resulted recently in calls to create the basis for a ``new American century'', and has led to the growth of naked imperialism, i.e. the increased use of US military power to change the rules of the game in its favour: geopolitically and economically.

There is no doubt that, to use terms introduced by Richard Haass, formerly in the Bush administration and now head of the Council on Foreign Relations, that the United States is the sheriff and that Western Europe and Japan are its posse, or junior partners.

There are outlaw states, from the standpoint of the sheriff, such as Iran, North Korea and Venezuela. The sheriff is not above carrying out lynchings without the approval of the system of justice (in this case the United Nations), and with or without the direct help of the posse.

Geopolitically, there are of course camps, alliances, and sub-imperial powers. The United States under Obama, as already mentioned, has recently helped expedite a coup in Honduras that is aimed at the ALBA countries, of which Honduras was a member. It is leasing/building seven new bases in Colombia, which is its main military platform in South America. At the same time this is a recognition that certain weak links have appeared — that a socialism of the 21st century is arising challenging both capitalism and US hegemony.

As explained in The Great Financial Crisis, Marx used the shorthand M [Money]-M' for the circuit of money capital, in which money begets money all by itself, as opposed to what he called the ``general formula of capital'' in which a produced commodity intervenes between M-M' (p 133). Is this the dominant form of monopoly-finance capital, whereby ``productive'' M is increasingly subordinated to ``exotic'' financial instruments? Can it be said that this process signifies: (1) that this is the way capital, as a whole, degenerates, (2) that this degeneration is part of the decline and decay of the whole system, and (3) that we can now hear the sounds of its last nail?

I would not say that we can hear the sounds of capitalism’s last nail. But certainly we are seeing all sorts of signs of global social and economic decay. Capitalism’s famous ``creative destruction'', so celebrated by Schumpeter (in which he was referring not to our present age but to the entrepreneurial age he saw as disappearing) has now given way to an enormously distorted and uncontrollable destructive creation: financialisation, environmental destruction, war, etc.

As Keynes once suggested, things are likely to be done badly when production becomes a bubble on a whirlpool of speculation. The last shreds of rationality of the system are quickly disappearing. On the one hand, economic stagnation finds its counter in a growing casino economy and military expansion; on the other hand, this expansion is threatening the environment of the planet.

We are living in a time of financial bubble (M-M'), but also an environmental bubble, in which the economy is overshooting sustainability by rapidly using up the last remaining ancient sunshine (fossil fuels). Now the climate is threatened, and world hunger is accelerating with the growth of ``agrofuels'' since the ``free market'' requires that those with money, who desire fuel, will always prevail over those without money who need food. The sheer scale of irrationality of this system of accumulation has become unspeakable, unfathomable.

Cash was infused in the asset bubble to keep it expanding as that was the only way to keep the bubble ``alive''. But is there not a limit to such expansion, as we find in the law of elasticity? Or to put it more dialectically, can expansion reach its limits so that it bursts out? Should the mainstream economics expect expansion forever with cash infusion … expansion without limit?

It is true that asset bubbles by definition expand until they burst. There are obviously limits to the growth of debt and speculation, particularly when the real economy is stagnant. But no one can say for sure what those limits are at any given time, and the situation keeps on changing.

Under monopoly-finance capital the whole system is propped up by the central banks, which are charged with keeping the game going as long as they can, and with protecting the big financial speculators when the bubble bursts. This is even clearer today with the present financial crisis, where a ``too big too fail'' policy has explicitly been adopted.

Today this has resulted in such large amounts of ``lender of last resort'' debt coming into being in the United States, Japan and the UK that — given simultaneous vast budget deficits — any rise in interest rates for the foreseeable future is out of the question. Nothing like this has ever happened before, and no exit path from this extraordinary situation is visible.

But a collapse has been avoided, and future problems are for the future to solve. In the irrational class society in which we live it is ``rational'' for the individual units of capital to proceed as before, in their own interests, with an ``after me the deluge'' philosophy. And the state has no choice but to back this.

Is this rational from the standpoint of society as a whole? Of course not. But forging a socially rational society is not the goal of private capital: rather the object is one of self-aggrandisement. And as a whole this is still working for the ruling elites. In this sense, Naomi Klein is right; a kind of ``disaster capitalism'' is now in place, in which the promotion of growing economic, social and environmental disasters has become the basis of the accumulation of riches for a privileged few.

Class in monopoly-finance capital is discussed in The Great Financial Crisis (p 85). Is there any contradiction, especially because of the autonomy of finance, and due to the progressive shift in gravity from production to finance, between financial capital and manufacturing capital — in class or class-fraction terms? Similarly, is there any tension/contradiction between the class having financial control and capital directly engaged in exploiting cheap labour by outsourcing, engaged in export processing zones/special economic zones, etc. in the periphery?

These are good questions and I have to say that I don’t have entirely satisfactory answers, since a great deal of research needs to be done in this area. The term monopoly-finance capital is meant to refer to a hybrid system of monopoly capital (that is the economy of the giant corporations) and an increasing reliance on financial expansion with the attendant increase in financial control. So far it has not appeared to be a case of a conflict between financial and industrial capital (or between ruling class fractions in that sense).

Rather the dominant tendency, judging by the United States, seems to be the growth of the financial-industrial complex. Even what we consider industrial corporations now have their own financial subsidiaries and are increasingly directed at growth through asset speculation rather than production. I wouldn’t say that financial and industrial capital has melded together entirely, but there also does not appear to be a sharp contradiction between the two sectors in this period. This is because the expansion of speculation (the casino economy) has become the major stimulus, such as it is, to the real economy, which otherwise would sink deeper into stagnation; so objectively all of capital has an interest in keeping the financialisation process going. At the same time there is a stagnation-financialisation trap that embraces the whole system.

A number of things can be said with a fair degree of certainty about the power dimensions of all of this. First, a growing portion of those at the very top of the society in the United States in the last couple of decades have owed their wealth primarily to finance, real estate and insurance (FIRE) and relatively fewer to other areas such as manufacturing, technology, natural resources, transportation, etc.

Second, financial concentration is occurring very rapidly, and in ways that may alter the entire structure of the political economy. Thus, while the top five financial institutions in the United States owned 10 per cent of all financial assets in 1990, today they own 50 per cent of all financial assets. In two decades or so the United States has seen its financial sector radically transformed, so that the major banks are far more powerful vis-à-vis other economic interests than was true 20 years ago. The long-term impact of this is yet to be seen. The same kind of development has been occurring on global level. And much of this is not even taking into account the ``shadow banking'', i.e. financial interests that transcend the traditional banking structure. Neoliberalism reflects this shift toward finance and the need for constant cash infusions to keep a given bubble going, so the result is a system that is more rapacious than ever before — or, as Marx frequently said, more Vampire-like in the sense that it sucks the lifeblood from its victims day by day.

At the global level Samir Amin wrote in his Capitalism in the Age of Globalisation of the ``five monopolies'' that are now key to the dominance of centre over periphery, despite industrialisation of important parts of the latter: (1) technology, (2) financial control of worldwide financial markets, (3) monopolistic access to the planet’s natural resources, (4) media and communications monopolies and (5) monopolies over weapons of mass destruction. I think that this is a good way of understanding the imperial power of monopoly-finance capital. The most important and volatile of these today are (2) and (5), i.e. world financial markets and nuclear weapons, both of which point to possible catastrophic meltdowns/firestorms.

The issue of global outsourcing that you raise is enormously important. The logic behind this development is of course clear. Due to unequal exchange globally — which Amin somewhere defines as a situation where the difference between wages is greater than the difference between productivities — global corporations are able to super-exploit low-wage workers in poor countries, selling the goods at prices that are meanwhile determined in the centre of the world economy, thereby generating enormous profit margins. (This has also propelled the growth of big box stores like Wal-Mart, which through more effective global sourcing is able to sell goods at relatively lower prices, driving smaller competitors out of business, while still enjoying widening profit margins.)

The effects of global sourcing on the restructuring of imperialism — disarticulating economies in both the global South and the global North — are enormous, and are beyond what can be addressed here. Still, to answer your question, I don’t think the internal conflict over outsourcing between sectors of capital is very significant in the United States, because the dominant monopoly (or monopoly-finance) capital is for all practical purposes identical with multinational capital, which is simply monopoly capital abroad.

Can it be assumed that monopoly-finance capital will find itself in a difficult situation as the capacity and authority of the state as the lender of last resort gradually gets eroded, and due to contradictions that arise in the body politic?

It is possible. But we have to understand that this is not a stable system in the first place, so it is already in a difficult situation, and is taking the whole world down a difficult path. When the Lehman Brothers bankruptcy occurred and there were fears that the whole system would meltdown, one fairly rational first response, even for some on the left, seemed to be to bail out the banks and salvage the financial system no matter what it cost. No one really wanted a depression. And that of course is what the system did with the support of almost the entire bourgeoisie, apart from a few gold bugs.

In this respect, the response of the majority of the population, which was against bailing out the banks, was looked at as representing total anarchy and disaster, possibly leading to another second Great Depression. But the truth is that the solution adopted puts off the problem at best, reinforcing long-term stagnation tendencies, and leading to the certainty of far worse crises in the future. The lender of last resort function of the government has become both the saviour of the system in the short run and, quite possibly, its nemesis in the long run.

The problem of servicing (or retiring) the immense debt created in the last year would seem sooner or later to require sharp commodity inflation and/or a sharp rise in the rate of exploitation through cutbacks in social services, hikes in consumption taxes, etc. Such ``solutions'' are destabilising. Already workers are suffering: jobs are vanishing, pension agreements are being abandoned by corporations, workers are losing their houses, wages are declining, hunger is expanding, education is being privatised and downsized, etc. The United States has ended up with both the bailout of the banks and a devastating crisis the effects of which will linger.

What is really important, from a social standpoint is the welfare of the population as a whole. While the financial institutions have been bailed out, the people are suffering worse than ever, with very little done to ease their pain. In fact, the whole direction of social policy is to increase exploitation. It is well to remember that the vast majority of working people are the body politic. The rest are usurpers, from a social and democratic standpoint.

What is the significance of the theory/formulation of monopoly-finance capital: its genesis, its character and its crisis, in the centre and periphery?

This is what we have been talking about more or less all along, so I can be brief. The genesis and character of monopoly finance capital are treated in a forthcoming article entitled ``Monopoly-Finance Capital and the Paradox of Accumulation'', which I have written with Robert W. McChesney for the October 2009 Monthly Review. What we have not addressed sufficiently at this point is the relation of all of this to the global system as a whole. I think what we need today is not so much a theory of the ``new imperialism'' as some have called it, but a theory of the changed economic context of imperialism, rooted in the stagnation-financialisation trap endemic to monopoly-finance capital.

We also need a better understanding of how this relates to the struggle over hegemony in the world economy and to geopolitics (the most dangerous realm of state action since it relates to the strategic control of territory and resources through war or the threat of war). Under monopoly-finance capital the growing industrialisation of parts of the periphery has done less to change the relations of power within the world system as a whole than is sometimes supposed. This is because the rules of the game have been changing, with global corporations and financial institutions of growing importance. At the same time we are seeing a new age of revolution, in Latin America in particular.

Nevertheless, it is important to note that the most significant historical change of the last quarter-century has had relatively little to do with changing relations of power within the system, but has arisen from the changing ``external'' relations to the Earth. The age-old choice of ``socialism or barbarism?'' — raised by Rosa Luxemburg — is giving way today to an even more momentous choice of ``socialism or exterminism?'’ as the prospect annihilation of the Earth, as we know it, lies before us under business as usual.

In this sense, the call for a new socialism for the 21st century, now emanating from the Third World and aimed at overcoming the depredations of capitalism, represents humanity’s best and perhaps only chance.