Financialised chaos
Immanuel Wallerstein (2003) has argued that the US has declined as a hegemonic power over the past 50 years. His argument tends to suggest that key defining moments – from the mass resistance of 1968, defeat in Vietnam to, more recently, the War on Terror – have contributed to the decline of the US. Although Wallerstein is alive to contingency, his argument does not take on board a crucial attempt by the US to remake the material basis of its global power, and particularly, to centre this on controlling global finance. While this has been a tenuous coefficient of power, it has increased the complexity, reach and systemic leverage that the US has over the global capitalist system. And, in this regard, Gowan’s (1999) analysis of the evolution of the Dollar-Wall Street Regime from the 1970s to the 1990s is crucial. The Dollar-Wall Street Regime has not only remade post-World War II international finance, but has also built up and articulated a complex mix of institutions, financial power, the dollar and US power. These dynamics have been further strengthened by global neoliberal restructuring, which has placed high finance at the centre of the global political economy and with free rein to do as it pleases.
This means that financialisation has ensured that the structural power of finance capital is embedded in three important ways to ensure speculation and short-term profit making. Firstly, financial structures are now part of the systemic dynamics of global accumulation. So, if banks or finance houses fail, this has ramifications on a global scale. In the 2007–2009 financial crisis, banks lost over US$140 billion through sub-prime loans, and the value of credit default swaps was estimated at US$62.2 trillion. The combination of these losses broke confidence in the financial system. Secondly, most state structures, except those that have opted out of the logic of global financialisation, manage their macro-economies to ensure that the risk to financial capital is mitigated. Macro-economic frameworks and regulatory interventions are governed by the imperatives of globalised markets (such as foreign-exchange markets, housing markets, stock exchanges, government debt and commodity markets). Therefore, the state ensures that capital’s interests are maintained. Thirdly, the frontiers of financialisation and its crisis-engendering effects span spatial boundaries – extending from households to countries, national and global economic sectors, disaster zones and even war zones.5
The global political economy has been driven by the process of financial overaccumulation as a systemic dimension of global capitalism, spreading financialised chaos and instability. Financialised chaos has been registered in the following events: the Latin American debt crisis of 1982; the US stock-market crash because of junk bonds (1987); the 1997 Asian crisis; Russia and Brazil (1990–1999); the bursting of the dot.com bubble because of overinflated values (2000–2001); Argentina and Turkey (2000–2002); and the global financial crisis from 2007/08 until the present, which has engulfed the entire global political economy.
Capital has responded to the crises of 2007/08 with a renewal of the conjunctural project of neoliberalisation. Financial overaccumulation has been rescued through state intervention and austerity, without jettisoning the rationalities, institutional structures or practices of neoliberalisation. Global financial markets are now more deeply integrated and driven by information technology, essentially guaranteeing financialised chaos in the global political economy. Although this historical tendency thrives on its own, it also inter-locks with other tendencies through neoliberalisation and commodification, which is evident in relation to the climate crisis, peak oil, food-system crisis and securitisation of democracy.
Climate crisis
Ever since the Industrial Revolution, humans have been emitting large quantities of greenhouse gases into the atmosphere. By the mid twentieth century, human influence had become the dominant cause of observed global warming through greenhouse-gas emissions despite natural variability. The US was for a very long time the leading emitter of carbon emissions in aggregate and per capita terms.6 At a systemic level of the global capitalist system, this means production, consumption, distribution, exchange and social reproduction are implicated in causing human-induced climate change. More specifically, capital as a geological force has been implicated in emitting greenhouse gases and causing climate change in three respects. First, through the extraction of fossil fuels and their use in economic processes. Second, through ongoing accumulation and growth driven by fossil fuels, greenhouse-gas emission rates are increasing. According to the fifth Intergovernmental Panel on Climate Change report (IPCC 2014), over the past two decades carbon emission rates have not been declining, while planetary temperatures are increasing. Third, with growing income inequality on a planetary scale, the wealthy have a higher carbon footprint and are therefore, as a class, a major contributor to greenhouse gases and climate change (Hertwich and Peters 2009). In short, the global capitalist system and capital as a geological force are driving the destruction of human and non-human life through human-induced climate change. The climate crisis is systemically driven and caused. Put differently, it is a capitalist-induced crisis, and not a human-induced one.
The US, supported by transnational capital, has failed to address the climate crisis. It did not sign the Kyoto Protocol, which was an attempt to ensure that the rich, carbon-polluting countries took legal responsibility to reduce their emissions. In fact, the Kyoto Protocol has been the harbinger of financialised, green neoliberal solutions, such as carbon trading (Satgar 2014). The protocol does little to address the climate crisis – and yet it was still too much for the US to commit to. Moreover, in 2009 at the UN-led Copenhagen Summit, the US (under Obama’s leadership), scuttled any attempt to find binding legal targets to reduce carbon emissions. Instead, a ‘pledge-and-review’ approach, embodied in an accord without binding targets, was agreed to between the US and other leading emitters, including China, Brazil, India and South Africa. This has become the dominant approach to solving the climate crisis, and more recently a similar agreement was reached between the US and China on the eve of the COP20 UN summit in Lima, in 2014.7 This is the approach that will be consolidated at the 2015 COP21 UN summit in Paris.
However, despite the global media hype about the US–China deal, both the Kyoto Protocol and the pledge-and-review approach embodied in the US–China deal affirm a corporate-led method of addressing climate change, and embed green neoliberal solutions in the UN multilateral process, such as carbon trading and offsetting. Where they have been adopted, these green neoliberal solutions have thus far failed to address the climate crisis. The window of opportunity to avert catastrophic climate change is closing very quickly (Bond 2011). Since these solutions have been put forward, carbon emissions have still increased over the past two and a half decades. The carbon dioxide concentration in the atmosphere has exceeded the threshold limit of 400 parts per million, which means we are heading for a planetary temperature increase of 2 °C. Continuing on the current trajectory, we will experience the impact of dramatic climate change within the next 20 years.
And crucial climate-change phenomena are already beginning to have an impact (see IPCC 2014). For instance, the western part of the Antarctic is going through irreversible collapse; methane emissions from the receding Arctic ice sheet are on the increase; glaciers are receding dramatically;