This article in Foreign Affairs by Robert Kagan addresses the current geopolitical crisis in historical context using the standard analysis of national security and international relations. However, I think Kagan misses the tail that wags the dog that will shape the near future of geopolitics. That would be the hegemonic role played by the US$, and by association with the C5 central banks in the West over the international monetary system.
Finance unleashes centripetal forces on the flows of capital, concentrating capital in the core of the market system, which, in the case of US$ policy, is the US financial system. All those dollars created over the past 30-40 years must flow back to the US in some way to be reinvested in US$ assets. What this does is suck capital from the periphery.
The capital-starved periphery has relied on the cheap cost of labor relative to the developed world, but about 35 years ago that began to be sucked up by China’s liberalized mercantilist trading policies. So the periphery has been starved of both capital and labor income. This leads to political strive and eventually to armed conflict along the borders of these periphery countries. In some cases, like Mexico, Afghanistan, and Columbia, it has led to failed democracies being transformed into narco-trafficking states run by criminal enterprises that control the governments of these countries.
Russia has been on the wrong side of this widening divide between rich and poor. So have countries like Iran, Iraq and North Korea. The continuation of US$ central bank easy credit policies and the CCP labor policies will only aggravate geopolitical conflict across the globe. And some will still wonder why. The global pandemic has merely thrown gasoline on the fire.
It’s also important to note that these two forces operate at the micro as well as national and international levels, causing a growing divide between the asset-rich and the asset-poor within nations as well as between nations. We’ve seen the imbalance grow in our own cities and communities between rich and poor. More billionaires, more poverty, and a hollowing out of the middle class. We can expect more conflict to come as the direct consequence of our misguided monetary, credit, and fiscal policies snd the Ukraine is just another canary in the coal mine.
The Price of Hegemony
Can America Learn to Use Its Power?
By Robert Kagan, May/June 2022
For years, analysts have debated whether the United States incited Russian President Vladimir Putin’s interventions in Ukraine and other neighboring countries or whether Moscow’s actions were simply unprovoked aggressions. That conversation has been temporarily muted by the horrors of Russia’s full-scale invasion of Ukraine. A wave of popular outrage has drowned out those who have long argued that the United States has no vital interests at stake in Ukraine, that it is in Russia’s sphere of interest, and that U.S. policies created the feelings of insecurity that have driven Putin to extreme measures. Just as the attack on Pearl Harbor silenced the anti-interventionists and shut down the debate over whether the United States should have entered World War II, Putin’s invasion has suspended the 2022 version of Americans’ endless argument over their purpose in the world.