Capitalism Has Never Been This Irrational – Paul Jay (pt 3/3)

Talia Baroncelli

Hi, I’m Talia Baroncelli, and you’re watching theAnalysis.news. You’re watching part three of my conversation with Paul Jay on global capitalism, the climate crisis, and U.S. competition with China. Before we get to it, it would be great if you could go to our website, theAnalysis.news, to support the work that we do. You could hit the donate button at the top right corner of the screen and get onto our mailing list; that way, you’ll receive an email every time there’s a new episode. You can also go to our YouTube channel, theAnalysis-news, hit the subscribe button and hit the bell. The bell ensures that you’ll get a YouTube notification every time a new episode drops. See you in a bit with Paul.

Well, it seems like the unifying thread throughout all the Biden administration’s foreign policy is not appearing weak. They do not want to appear weak. So you could say that, for example, looking at Biden’s policy on Iran, his whole campaign was about getting the U.S. back into the JCPOA, into the Iran nuclear deal. Even before the protests, he didn’t seem keen on doing that. Then with the protests in Iran, he didn’t want to appear weak by rejoining a deal with a government that was oppressing its own people, or at least that was the perception. He didn’t want to potentially lose the 2024 election. Well, if he runs again, he wouldn’t want to lose the 2024 presidential elections.

It seems like the policy has no real continuity. I’m not advocating any weapons deliveries here, but if you look at the U.S.’s commitment to Taiwan, they have contracts with Taiwan where they need to deliver a certain amount of weapons. They’re not necessarily producing more weapons, they’re sending their weapons stocks to Ukraine, but they’re not necessarily fulfilling their obligations or contractual obligations to the Taiwanese. If there were to be a war with China, let’s hope there won’t be, but if there were to be one, there could be actual issues with weapons deliveries.

Paul Jay

I think the Milleys of this world, the Chair of the Joint Chief of Staff of the Biden administration, anybody that really knows, knows that we are not in any way going to see an imminent threat from China to Taiwan. The Chinese have no plans to invade Taiwan, certainly not anytime soon. Their plan over time is Taiwan will be even more immersed in the Chinese economy. How can they not be? The Chinese semiconductor company, which is, I think, the biggest in the world, one of their biggest plants is in China, mainland China. The Chinese are still a big market for Taiwan, very big. As time goes on, that will increase. Whether it’s 10 years or 20 years, there’ll be a more natural progression.

In fact, if it hadn’t been for the Chinese so coercively cracking down on Hong Kong after it was returned to China. The people I’ve talked to in Taiwan and polling I’ve seen, most of the Taiwanese were resigned or welcomed the idea of one country, two systems. Taiwan would have a special status within China and carry on the way it is because it’s not like China can’t live with a capitalist Taiwan. After that crackdown in Hong Kong, it really changed a lot of the Taiwanese mindsets. Even with that said, there’s no need or impulse for China to start some invasion of Taiwan. I think the American leadership mostly knows that. I don’t know that the Christian nationalist Trumpists would be very rational about that. What I’m describing is a rational imperialist policy where there’s just no point in trying to start something in Taiwan.

Larry Wilkerson has said many times, “Every game, every modelling of a fight over Taiwan that the armed forces have done goes nuclear because they can’t deal with Chinese conventional forces.” There’s no way. So the United States gets to a position where they’re going to be humiliated, and rather than be humiliated, the Americans will use nuclear weapons. I don’t think we’re going down that road with corporate Dems. The finance sector, the Apples, and all these guys, do you really think they’re going to give up on a billion-and-a-half people market? Not easily. That’s not what they want.

The basic problem, I think, for the American elites, excluding the fanatics on the far-right, they don’t know what the hell to do. When you say the policy seems confused, well, it’s very confused. I’ll give you an example. There’s one company that epitomizes the problem, Boeing. One of their important clients or markets is Taiwan. They sell lots of weapons to Taiwan. I think it’s in the top 20 of purchasers. In 2020, at least, that’s the last number I could see, the number one customer for Boeing domestic aircraft was China. So in one company, one division wants ‘almost war’ over Taiwan so they can keep selling shit military supplies. The other side wants to reduce tensions because they want to be able to sell domestic aircraft.

The fundamental thing is capitalism has always been basically irrational, but it’s never been as irrational as it is now. So you can’t get a coherent strategy because there’s such conflicting interest. This is what differentiates, to some extent, corporate Dems and the finance sector from the Trump types. They know there’s a climate crisis. You can hear John Kerry, you can hear Al Gore, you can even hear Biden. They know how to describe it. They know how dangerous it is. They know it’s coming. They also know, but won’t say, that the only way to deal with it is central planning, government regulation, and intervention. They know the market mechanisms aren’t going to work within a time frame that matters, if at all. They’re not against central planning. I mean, what was the bailout of the banks if not central planning? What is the Pentagon if not central planning? What is the Fed if not central planning? Central planning in their interests and under their control is okay. But government regulation and central planning that’s going to start transforming the economy to phase out fossil fuel, which probably means having to nationalize the fossil fuel companies and then phase them out, and then a real impetus of government planning for sustainable energy, they don’t want to go there. They being the financial sector or the corporate Dems. As I said before, they hate socialism more than they hate the end of the world or the risk of the end of the world because they think they’re so rich they won’t really be hurt by it anyway.

Their policy towards China and many other ways is confused because there is no answer for them within the paradigm they’re used to working in. You can’t use force against China that’s going to matter. So it doesn’t matter how many bases, aircraft carriers, or whatever you got, it ain’t going to help because you cannot overthrow the Chinese Communist Party and the government. It ain’t happening. You can’t invade. Even if you were to defend Taiwan, which is a ridiculous thing to try, but let’s say, then what? Does it stop China from being the major trading partner of practically every country on Earth? It doesn’t change the fundamental equation. China has a billion and a half people, a very successful capitalist economy run by a state. I’m not going to right now get into an argument about whether it’s toward socialism or not. I don’t see it, but whatever. Either we’re going to get there, or we aren’t going to be here. What we need is for some sections of American capital to wake up and say as FDR did in the ’30s. It’s not like there’s no precedent for it. They need to say, “For the sake of the capitalist system, we need to mitigate what’s going on here. We got to find a way to cooperate with China on climate. We got to nationalize or pass regulations.” The easiest way would be to pay or buy these fossil fuel people out. Who are the fossil fuel people that need to get bought out? It’s Wall Street. Who the hell owns the fossil fuel companies? It’s primarily the same financial institutions.

Talia Baroncelli

Asset managers.

Paul Jay

Yeah.

Talia Baroncelli

Yeah, I did see a report; this is more in the E.U. context, but there was a report on, I think it was BlackRock, State Street, and Vanguard and how they’re heavily invested in Chevron and Exxon.

Paul Jay

All of them. Name the oil company, every one of them.

Talia Baroncelli

Exactly. In essence, they’re contributing to the climate crisis by investing in these companies. The effects of these companies that are contributing to climate disasters, to climate migration, and so European policymakers are so acutely aware of the fact that a lot of people will have to flee African countries because of the climate crisis. In turn, European lawmakers are investing more in border and surveillance technologies to patrol their borders to ensure that it will be much more difficult for people to arrive in Europe. It’s crazy because these same asset managers are also involved in these border and security companies such as Accenture and all these other surveillance companies. They’re exacerbating the climate crisis that they’re invested in, but they’re also invested in the companies that have the so-called dual-use technology solutions for this crisis. They’re just perpetuating it all, and obviously, someone needs to put a stop to it. I don’t think that will happen until people seriously organize and put pressure on the politicians, whether it be in the European context or the American context.

That also brings me back to what we were talking about with the oligarchic system in the U.S. and the two-tiered justice system there. A racialized poor person can go to jail for possessing a bit of marijuana, but the bankers and other white-collar criminals will commit crimes with impunity, and they won’t get prosecuted. You’re older than me. What was it like in the ’80s when you saw bankers going to jail during the savings and loans crisis? Comparing that to today, where I feel like so many of these crimes are legitimized, encouraged, and are so part of the system that if you were to prosecute all of them, the whole thing would completely crumble.

Paul Jay

Well, I don’t know about crumbling, but there’s a process that’s been going on since the early development, late 19th century and early 20th-century development of American capitalism. Because of the needs of modern industry for capital for these massive factories and machines, banks became much more dominant in their role in the economy. You can even see that by the 1920s. The banks had so much money they didn’t know what to do with it. They encouraged speculation. Everybody was supposed to buy stock. They would loan money left, right to anybody who would go buy stock, and the whole thing became a shell game. It reduced during the crash, which was, to a large extent, caused by this.

Since World War II, the size, importance, and dominance of the financial sector have gone up like a rocket ship if you look at the charts. Well, the concentration of ownership has never been as concentrated. The amount of wealth in fewer and fewer hands has never been as it is, which means there are less places to invest in productively. The financial sector has gotten more and more parasitical investing in crazy synthetic investments. Subprime was an example. I think the global size of the global derivatives market, which is all these crazy things they create to invest in. The size of the derivative market is like five or six times larger than the whole global GDP. It’s insanity.

I did a report earlier. The Bank for International Settlements did a report which got some coverage in the Business Press but almost nowhere else. It warned that there was an impending disaster. There are these swaps that take place between currency swaps where, for example, the Japanese loan to the Europeans, and they agree, okay, we’ll pay each other back later. For now, what’s at this exchange rate, and later you get the euros, and we get the yen. Anyway, they warned that there is somewhere between 60-70$ trillion outstanding in these swaps. The Bank for International Settlements, which is described as the Central Bank for Central Banks, says, “Well, what happens if, when it comes time to reverse the swap, this side doesn’t have the money? What if we get into a bit of an 07/08 situation where more than one of these swaps that can be millions and millions of dollars, what if this starts cascading, and these big sovereign wealth funds, pension funds, and governments can’t fulfill their side of the swap?” The whole thing unravels. The BIS was warning that this is like another financial 07/08 waiting to happen. That’s just one. It is what they call the financial architecture.

Look at what just happened with this Silicon Valley Bank. There are all kinds of weak points, fracture points in the global finance system because so much of it is bullshit. So much of it is smoke and mirrors. So much is a shell game. They have so much money they don’t know what to do with it. So that parasitism goes right into politics because these are the guys who can afford to buy Congress or much of Congress. These are the guys that can afford to fund presidential runs, presidential campaigns, and then at every level of the state, national assemblies, and every state senator. The clause of the financial sector and how they manipulate the political system, I don’t know if they get involved in the race for dogcatcher, but it comes pretty close. It wouldn’t surprise me if someday they’ll start financing the dogs. The system itself is getting corruptor and more parasitical. So they get myopic. They don’t want to see past how much money I can make today. It’s not just the internalized worldview if there’s something real to it.

Larry Fink from BlackRock made this great speech about getting out of coal. He made this speech saying, “Oh, we’re going to reduce our coal use.” Even then, it was mostly BS. But let’s say they did it, and they got out of coal. Well, Vanguard gets into coal. They’ll pick up what BlackRock sells.

In fact, there is a group of Republican governors that was created by a guy named Mark Carney. He used to be President of the Bank of Canada, and then he was Head of the Bank of England. Now he’s a Special Advisor to the UN on climate. He put together a group of financial institutions to develop investing in green, sustainable stuff. From what I know, it’s a lot of greenwashing and a lot of nice talk, but nice talk is better than no talk. Anyway, a group of Republican governors told Vanguard and the elders that if you don’t get out of this and stop getting on this climate change train, our states won’t do business with you anymore. Vanguard pulled out of this group which was supposedly going to save the Earth.

They know that only with government intervention, the government saying, “Get out of coal,” the market can’t get out of coal. Only state regulation and central planning for unfolding green stuff can. We need to tell people this and say don’t vote for somebody except, as I say, it can get complicated with a Christian theocrat. We have to go knock on doors and talk to people, including people who vote for Trump. Talk about what’s at stake.

You know, West Virginia, which was primarily a pro-Trump state, they have a very active union movement. There are lots of people organizing there. You look at West Virginia and what’s coming at two degrees of global warming. Half the state is going to be flooded. I know we’re talking global warming and droughts, but in some places, it’s severe storms and severe weather. You look at the weather map, and there ain’t much left of West Virginia. They got to get how immediate the threat to their own families and livelihood this is.

Talia Baroncelli

How do we prevent Big Oil from continuing to engage in enhanced oil recovery? Which means using carbon capture and storage to get more oil out of the ground. They have all these ESG and nice terms that they use, and they’re getting money. The IRA, the Inflation Reduction Act, allocates some money to these companies so that they can engage in policies or practices that would get them to net zero by 2030 or by 2050. But if so much of what they’re doing is actually contributing to more combustion, which is the case, then we’re all screwed. How do we get out of this conundrum and rein in Big Oil? That’s the big question, right?

Paul Jay

Yeah. Biden’s plan relies way too much on carbon capture of one sort or another to meet the target. As far as I understand the situation, there is no evidence that this can be done on a scale, at least in a time frame that’s meaningful. We’re talking seven, eight years to supposedly not get to 1.5 and then two. As I said, James Hansen and others think two might already be baked into the system. It’s not just carbon capture. I ran into two guys at the airport when I was flying to go see Ellsberg.

Talia Baroncelli

You shouldn’t have been flying out there. [Laughs]

Paul Jay

There were two tech guys sitting and waiting for our plane, which kept getting delayed. I listened to them, and they’re obviously at a very senior level. So I said, “Listen, I can hear you guys talking, and you guys are senior executives in tech. You must make a lot of money. You must be very smart because I assume people at senior levels are very smart.”

Talia Baroncelli

Although a lot of people fail upward. They just know how to play the system, sorry.

Paul Jay

Well, maybe, but I think a lot of them are smart. When you’re talking hard technology, it’s not like Procter & Gamble, which is a lot of bullshit marketing. But anyway, let’s assume they’re smart. I said, “Are you guys not concerned about the climate crisis?” One guy starts going on about, oh, this tech solution and that tech solution is coming. Then the other guy is sort of nodding his head along with him. I said, “Okay, let’s say you’re right, and there’s some great tech coming. Is there a single piece of evidence that it’s going to come in a time frame that wouldn’t require us to phase out fossil fuel? Maybe some of this tech stuff will do something?” He was dumbfounded. He didn’t know what to say. He was kind of, “Well, I guess not.” Then to the other guy, I said, “Well, don’t you guys in tech have to take a stand on this? It doesn’t matter. Sure, let’s have some great tech solutions. If it’s possible, who would be against it? But every single piece of evidence is that none of it could be effective without phasing out fossil fuel quickly.” He agreed.

I said, “I made this film about wrestling.” I said, “You, and I guess I include myself too, and others.” I said, “When you go to a wrestling show, you suspend disbelief. You don’t believe it’s real hitting and kicking, but enjoy it and get on with your life. You suspend your disbelief, and then you talk yourself into believing it really is.” Well, I said, “That’s what we’re doing with climate.” We know these guys, the government and the elites, are not going to deal with it. Market forces aren’t going to deal with it, but we suspend that disbelief and get on with our lives. So we have to get people to stop doing that. This whole culture is based on suspended disbelief. When everybody in their heart of heart knows, maybe some people don’t believe in climate, but they also don’t think the elites that do believe in climate are going to do anything good. So wake up.

Talia Baroncelli

Yeah, we need to somehow communicate that to people because I think over several decades some climate movements have thought that you don’t want to scare people too much because then that will make them not want to do anything. It will make them passive, or it will just incapacitate them, and they’ll get so frustrated or lose all sense of hope that they won’t do anything whatsoever. I don’t know. I hope that the younger generations as well, that they really realize that they don’t own the means of production. The amount of assets that they have, especially people who are 20 to 25, compared to previous generations, they really are in a terrible financial position. They have an incredible amount of debt. I think they’re really acutely aware of how expensive things have become and how scarce resources are. I think that is definitely the generation who hopefully will put more pressure on politicians to do something. But again, if these politicians are completely bought out by the Big Oil lobby, then what do you do? That’s the big question.

Paul Jay

Well, what the Biden administration has done on climate is far, far from what’s needed; it is something. This last big piece of legislation, this anti-inflation thing– I don’t know why they called it that– it is more money into sustainable energy, electric cars, and this and that. There are some other policies that are reducing carbon emissions in the United States. It’s certainly not nothing, but it’s not enough. It’s not climate science denial.

Going back to where we started this conversation, if you get Christian nationalist Trump or Trumpism without Trump in power, say goodbye to all that, any kind of climate legislation. Say goodbye to anything to do with reducing fossil fuel and so on. The rollback will be enormous if they start getting more power again in state governments. Recently this abortion issue and some other issues, some of the far-right have lost elections. Trump didn’t win the last election. In certain states like Michigan, they were able to defeat the far-right. It’s not nothing. The other issue is maybe it won’t be in the United States, not maybe, but more than likely, where a breakthrough will happen. Maybe in Brazil if Lula gets it together there. Maybe there’ll be some other big economies. The economy, in some ways, I don’t quite understand why they don’t do more, for example, China.

China is not a fossil fueling fuel producing country. They don’t have something so direct to gain. I know they seem to have a plan to transition, but it’s, from all accounts, as I understand, not nearly quickly enough. They’re still building what is a new coal electric outfit every week. They’re still producing and buying coal. The U.S., in many ways, is worse, but it doesn’t matter. The U.S., I think, is the number one producer of fossil fuel in one way or the other. They say natural gas is so much better, but my understanding is maybe it’s better than coal, but it’s still not helping us avoid the crisis that we’re heading towards. Again, it’s funny. China is in the position, for its own narrow self-interest, to be far more of a leader on this than it is. Right now, I don’t think there’s any climate negotiation between China and the United States going on at all.

Talia Baroncelli

Which Is nuts because we all live on the same planet. The West needs to actively negotiate with China to meet any climate goals in the future. There’s no way around that, especially after years of outsourcing emissions to China by exporting all the manufacturing jobs to China. The West has essentially outsourced all of its emissions to China; that’s why China is the largest emitter. If you want to include China in that to tackle climate change, you have to work together with China.

Paul Jay

Yeah, there’s no doubt. It’s not all on the American side. The Chinese could be doing more to try to negotiate and make more of an issue out of it than they are. What would that mean with Russia? It’s mostly a fossil fuel economy. One can just hope that by supporting those organizers, that amongst ordinary people everywhere, there’s a movement that embraces the climate crisis, the risk of nuclear weapons, and people’s economic issues not just in the U.S. but in other countries. We need to try to tone down the war hysteria that’s going on because it’s drowning out the dire threat we’re facing.

Talia Baroncelli

Well, I do wonder if the war hysteria is actually just more apparent where we are in the West. I have a feeling that people in other parts of the world maybe don’t pay attention to that as much. They’re more acutely aware of some of the economic issues they’re facing, and they know that that’s, of course, tied to the global economy, to the war in Ukraine, and other issues. They probably have a completely different perception of it, and maybe they’re not–

Paul Jay

Yeah, I think you’re right. I think people in the Global South, large numbers get the climate threat, and they’re going to be immediately affected or are already being immediately affected. Yeah, I agree with you. I think the war hysteria over Ukraine is far more in Europe and North America than a lot of other places. It’s understandable, but I don’t know how we break through the fog except to do what we’re doing.

Talia Baroncelli

Well, it was great talking to you, Paul.

Paul Jay

Same, thank you.

Talia Baroncelli

Thanks for making time for this conversation. Thank you for watching theAnalysis.news. If you’re in a position to donate, please go to our website, theAnalysis.news. Hit the donate button at the top right corner of the screen, and most importantly, get on the mailing list. Sign up for the mailing list so that you’ll be informed every time a new episode is published. Also, go to our YouTube channel, theAnalysis-news. Hit the subscribe button and hit the bell. Make sure that you select all episodes so that you’re notified every time an episode drops. See you next time. Bye.