[THS] Chossudovsky & Marshall: The Global Economic Crisis

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http://www.globalresearch.ca/index.php?context=viewArticle&code=CHO20100506&articleId=19025


The Global Economic Crisis, The Great Depression of the XXI Century.
Preface
by Michel Chossudovsky and Andrew Gavin Marshall
Global Research, May 9, 2010

The following text is the Preface of  The Global Economic Crisis. The Great Depression
of the XXI Century, Michel Chossudovsky and Andrew Gavin Marshall (Editors),
Montreal, Global Research, 2010, which is to be launched in late May.

Each of the authors in this timely collection digs beneath the gilded surface to reveal
a complex web of deceit and media distortion which serves to conceal the workings
of the global economic system and its devastating impacts on people's lives.

The complex causes as well as the devastating consequences of the economic crisis
are carefully scrutinized with contributions from Ellen Brown, Tom Burghardt, Michel
Chossudovsky, Richard C. Cook, Shamus Cooke, John Bellamy Foster, Michael
Hudson,  Tanya Cariina Hsu, Fred Magdoff,  Andrew Gavin Marshall, James Petras,
Peter Phillips, Peter Dale Scott, Bill Van Auken, Claudia von Werlhof and Mike
Whitney.

Despite the diversity of viewpoints and perspectives presented within this volume, all
of the contributors ultimately come to the same conclusion: humanity is at the
crossroads of the most serious economic and social crisis in modern history.

For details on the book click here. The book can be ordered directly from Global
Research

The Global Economic Crisis. The Great Depression of the XXI Century
Michel Chossudovsky and Andrew Gavin Marshall (Editors)
Montreal, Global Research Publishers. Centre for Research on Globalization (CRG),
2010.
ISBN 978-0-9737147-3-9   (416 pages)

PREFACE

In all major regions of the world, the economic recession is deep-seated, resulting in
mass unemployment, the collapse of state social programs and the impoverishment
of millions of people. The economic crisis is accompanied by a worldwide process of
militarization, a "war without borders" led by the United States of America and its
NATO allies. The conduct of the Pentagon's "long war" is intimately related to the
restructuring of the global economy.

We are not dealing with a narrowly defined economic crisis or recession. The global
financial architecture sustains strategic and national security objectives. In turn, the
U.S.-NATO military agenda serves to endorse a powerful business elite which
relentlessly overshadows and undermines the functions of civilian government.

This book takes the reader through the corridors of the Federal Reserve and the
Council on Foreign Relations, behind closed doors at the Bank for International
Settlements, into the plush corporate boardrooms on Wall Street where far-reaching
financial transactions are routinely undertaken from computer terminals linked up to
major stock markets, at the touch of a mouse button.

Each of the authors in this collection digs beneath the gilded surface to reveal a
complex web of deceit and media distortion which serves to conceal the workings of
the global economic system and its devastating impacts on people's lives. Our analysis
focuses on the role of powerful economic and political actors in an environment
wrought by corruption, financial manipulation and fraud.

Despite the diversity of viewpoints and perspectives presented within this volume, all
of the contributors ultimately come to the same conclusion: humanity is at the
crossroads of the most serious economic and social crisis in modern history.

The meltdown of financial markets in 2008-2009 was the result of institutionalized
fraud and financial manipulation. The "bank bailouts" were implemented on the
instructions of Wall Street, leading to the largest transfer of money wealth in
recorded history, while simultaneously creating an insurmountable public debt.

With the worldwide deterioration of living standards and plummeting consumer
spending, the entire structure of international commodity trade is potentially in
jeopardy. The payments system of money transactions is in disarray. Following the
collapse of employment, the payment of wages is disrupted, which in turn triggers a
downfall in expenditures on necessary consumer goods and services. This dramatic
plunge in purchasing power backfires on the productive system, resulting in a string
of layoffs, plant closures and bankruptcies. Exacerbated by the freeze on credit, the
decline in consumer demand contributes to the demobilization of human and material
resources.

This process of economic decline is cumulative. All categories of the labor force are
affected. Payments of wages are no longer implemented, credit is disrupted and
capital investments are at a standstill. Meanwhile, in Western countries, the "social
safety net" inherited from the welfare state, which protects the unemployed during
an economic downturn, is also in jeopardy.

The Myth of Economic Recovery

The existence of a "Great Depression" on the scale of the 1930s, while often
acknowledged, is overshadowed by an unbending consensus: "The economy is on
the road to recovery".

While there is talk of an economic renewal, Wall Street commentators have
persistently and intentionally overlooked the fact that the financial meltdown is not
simply composed of one bubble ­ the housing real estate bubble ­ which has already
burst. In fact, the crisis has many bubbles, all of which dwarf the housing bubble
burst of 2008.

Although there is no fundamental disagreement among mainstream analysts on the
occurrence of an economic recovery, there is heated debate as to when it will occur,
whether in the next quarter, or in the third quarter of next year, etc. Already in early
2010, the "recovery" of the U.S. economy had been predicted and confirmed
through a carefully worded barrage of media disinformation. Meanwhile, the social
plight of increased unemployment in America has been scrupulously camouflaged.
Economists view bankruptcy as a microeconomic phenomenon.

The media reports on bankruptcies, while revealing local-level realities affecting one
or more factories, fail to provide an overall picture of what is happening at the
national and international levels. When all these simultaneous plant closures in towns
and cities across the land are added together, a very different picture emerges:
entire sectors of a national economy are closing down.

Public opinion continues to be misled as to the causes and consequences of the
economic crisis, not to mention the policy solutions. People are led to believe that the
economy has a logic of its own which depends on the free interplay of market forces,
and that powerful financial actors, who pull the strings in the corporate boardrooms,
could not, under any circumstances, have willfully influenced the course of economic
events.

The relentless and fraudulent appropriation of wealth is upheld as an integral part of
"the American dream", as a means to spreading the benefits of economic growth. As
conveyed by Michael Hudson, the myth becomes entrenched that "without wealth at
the top, there would be nothing to trickle down." Such flawed logic of the business
cycle overshadows an understanding of the structural and historical origins of the
global economic crisis.

Financial Fraud

Media disinformation largely serves the interests of a handful of global banks and
institutional speculators which use their command over financial and commodity
markets to amass vast amounts of money wealth. The corridors of the state are
controlled by the corporate establishment including the speculators. Meanwhile, the
"bank bailouts", presented to the public as a requisite for economic recovery, have
facilitated and legitimized a further process of appropriation of wealth.

Vast amounts of money wealth are acquired through market manipulation. Often
referred to as "deregulation", the financial apparatus has developed sophisticated
instruments of outright manipulation and deceit. With inside information and
foreknowledge, major financial actors, using the instruments of speculative trade,
have the ability to fiddle and rig market movements to their advantage, precipitate
the collapse of a competitor and wreck havoc in the economies of developing
countries. These tools of manipulation have become an integral part of the financial
architecture; they are embedded in the system.

The Failure of Mainstream Economics

The economics profession, particularly in the universities, rarely addresses the actual
"real world" functioning of markets. Theoretical constructs centered on mathematical
models serve to represent an abstract, fictional world in which individuals are equal.
There is no theoretical distinction between workers, consumers or corporations, all of
which are referred to as "individual traders". No single individual has the power or
ability to influence the market, nor can there be any conflict between workers and
capitalists within this abstract world.

By failing to examine the interplay of powerful economic actors in the "real life"
economy, the processes of market rigging, financial manipulation and fraud are
overlooked. The concentration and centralization of economic decision-making, the
role of the financial elites, the economic thinks tanks, the corporate boardrooms:
none of these issues are examined in the universities' economics programs. The
theoretical construct is dysfunctional; it cannot be used to provide an understanding
of the economic crisis.

Economic science is an ideological construct which serves to camouflage and justify
the New World Order. A set of dogmatic postulates serves to uphold free market
capitalism by denying the existence of social inequality and the profit-driven nature of
the system is denied. The role of powerful economic actors and how these actors are
able to influence the workings of financial and commodity markets is not a matter of
concern for the discipline's theoreticians. The powers of market manipulation which
serve to appropriate vast amounts of money wealth are rarely addressed. And when
they are acknowledged, they are considered to belong to the realm of sociology or
political science.

This means that the policy and institutional framework behind this global economic
system, which has been shaped in the course of the last thirty years, is rarely
analyzed by mainstream economists. It follows that economics as a discipline, with
some exceptions, has not provided the analysis required to comprehend the
economic crisis. In fact, its main free market postulates deny the existence of a crisis.
The focus of neoclassical economics is on equilibrium, disequilibrium and "market
correction" or "adjustment" through the market mechanism, as a means to putting
the economy back "onto the path of self-sustained growth".

Poverty and Social Inequality

The global political economy is a system that enriches the very few at the expense of
the vast majority. The global economic crisis has contributed to widening social
inequalities both within and between countries. Under global capitalism, mounting
poverty is not the result of a scarcity or a lack of human and material resources.
Quite the opposite holds true: the economic depression is marked by a process of
disengagement of human resources and physical capital. People's lives are destroyed.
The economic crisis is deep-seated.

The structures of social inequality have, quite deliberately, been reinforced, leading
not only to a generalized process of impoverishment but also to the demise of the
middle and upper middle income groups.

Middle class consumerism, on which this unruly model of capitalist development is
based, is also threatened. Bankruptcies have hit several of the most vibrant sectors of
the consumer economy. The middle classes in the West have, for several decades,
been subjected to the erosion of their material wealth. While the middle class exists in
theory, it is a class built and sustained by household debt.

The wealthy rather than the middle class are rapidly becoming the consuming class,
leading to the relentless growth of the luxury goods economy. Moreover, with the
drying up of the middle class markets for manufactured goods, a central and decisive
shift in the structure of economic growth has occurred. With the demise of the
civilian economy, the development of America's war economy, supported by a
whopping near-trillion dollar defense budget, has reached new heights. As stock
markets tumble and the recession unfolds, the advanced weapons industries, the
military and national security contractors and the up-and-coming mercenary
companies (among others) have experienced a thriving and booming growth of their
various activities.

War and the Economic Crisis

War is inextricably linked to the impoverishment of people at home and around the
world. Militarization and the economic crisis are intimately related. The provision of
essential goods and services to meet basic human needs has been replaced by a
profit-driven "killing machine" in support of America's "Global War on Terror". The
poor are made to fight the poor. Yet war enriches the upper class, which controls
industry, the military, oil and banking. In a war economy, death is good for business,
poverty is good for society, and power is good for politics. Western nations,
particularly the United States, spend hundreds of billions of dollars a year to murder
innocent people in far-away impoverished nations, while the people at home suffer
the disparities of poverty, class, gender and racial divides.

An outright "economic war" resulting in unemployment, poverty and disease is
carried out through the free market. People's lives are in a freefall and their
purchasing power is destroyed. In a very real sense, the last twenty years of global
"free market" economy have resulted, through poverty and social destitution, in the
lives of millions of people.

Rather than addressing an impending social catastrophe, Western governments,
which serve the interests of the economic elites, have installed a "Big Brother" police
state, with a mandate to confront and repress all forms of opposition and social
dissent.

The economic and social crisis has by no means reached its climax and entire
countries, including Greece and Iceland, are at risk. One need only look at the
escalation of the Middle East Central Asian war and the U.S.-NATO threats to China,
Russia and Iran to witness how war and the economy are intimately related.

Our Analysis in this Book

The contributors to this book reveal the intricacies of global banking and its insidious
relationship to the military industrial complex and the oil conglomerates. The book
presents an inter- disciplinary and multi-faceted approach, while also conveying an
understanding of the historical and institutional dimensions. The complex relations of
the economic crisis to war, empire and worldwide poverty are highlighted. This crisis
has a truly global reach and repercussions that reverberate throughout all nations,
across all societies.

In Part I, the overall causes of the global economic crisis as well as the failures of
mainstream economics are laid out. Michel Chossudovsky focuses on the history of
financial deregulation and speculation. Tanya Cariina Hsu analyzes the role of the
American Empire and its relationship to the economic crisis. John Bellamy Foster and
Fred Magdoff undertake a comprehensive review of the political economy of the
crisis, explaining the central role of monetary policy. James Petras and Claudia von
Werlhof provide a detailed review and critique of neoliberalism, focusing on the
economic, political and social repercussions of the "free market" reforms. Shamus
Cooke examines the central role of debt, both public and private.

Part II, which includes chapters by Michel Chossudovsky and Peter Phillips, analyzes
the rising tide of poverty and social inequality resulting from the Great Depression.

With contributions by Michel Chossudovsky, Peter Dale Scott, Michael Hudson, Bill
Van Auken, Tom Burghardt and Andrew Gavin Marshall, Part III examines the
relationship between the economic crisis, National Security, the U.S.-NATO led war
and world government. In this context, as conveyed by Peter Dale Scott, the
economic crisis creates social conditions which favor the instatement of martial law.

The focus in Part IV is on the global monetary system, its evolution and its changing
role. Andrew Gavin Marshall examines the history of central banking as well as
various initiatives to create regional and global currency systems. Ellen Brown focuses
on the creation of a global central bank and global currency through the Bank for
International Settlements (BIS). Richard C. Cook examines the debt-based monetary
system as a system of control and provides a framework for democratizing the
monetary system.

Part V focuses on the working of the Shadow Banking System, which triggered the
2008 meltdown of financial markets. The chapters by Mike Whitney and Ellen Brown
describe in detail how Wall Street's Ponzi scheme was used to manipulate the market
and transfer billions of dollars into the pockets of the banksters.

We are indebted to the authors for their carefully documented research, incisive
analysis, and, foremost, for their unbending commitment to the truth: Tom
Burghardt, Ellen Brown, Richard C. Cook, Shamus Cooke, John Bellamy Foster,
Michael Hudson, Tanya Cariina Hsu, Fred Magdoff, James Petras, Peter Phillips, Peter
Dale Scott, Mike Whitney, Bill Van Auken and Claudia von Werlhof, have provided,
with utmost clarity, an understanding of the diverse and complex economic, social
and political processes which are affecting the lives of millions of people around the
world.

We owe a debt of gratitude to Maja Romano of Global Research Publishers, who
relentlessly oversaw and coordinated the editing and production of this book,
including the creative front page concept. We wish to thank Andréa Joseph for the
careful typesetting of the manuscript and front page graphics. We also extend our
thanks and appreciation to Isabelle Goulet, Julie Lévesque and Drew McKevitt for
their support in the revision and copyediting of the manuscript.

Michel Chossudovsky and Andrew Gavin Marshall, Montreal and Vancouver, May 2010