And how to resist it

While a lot of people are now gloating how Trump is destroying the economy, it’s important to keep in mind that economic crashes can serve as a strategic tool for the oligarchs to consolidate power. They will use the resulting chaos as an opportunity to restructure society in their favor. There is a calculated logic here of using destruction as a tool for entrenching elite dominance.

The key idea is to expand the reserve army of labor by engineering mass unemployment and flooding the labor market with desperate workers. Availability of surplus labor suppresses wages, erodes workplace rights, and dismantles collective bargaining power. This forces workers into accepting worse conditions allowing the rich to maximize their profits. The 2008 financial crisis serves as a recent example where mass layoffs and austerity measures significantly weakened labor power.

Rising cost of living also forces people to let go of their assets such as homes and businesses as workers and small businesses start defaulting on their debt. Oligarchs, insulated by their massive capital reserves, swoop in to acquire these assets at a fraction of the cost. David Harvey referred to this process as accumulation by dispossession. During the 2008 housing crash, private equity firms like Blackstone purchased over 200,000 foreclosed homes, converting them into a rental empire. Similarly, during Covid, billionaire wealth surged by $4 trillion while millions faced eviction and bankruptcy.

Naomi Klein’s Shock Doctrine provides a solid analysis of how disasters are inevitably weaponized to privatize public goods, slash taxes for the wealthy, and dismantle regulations. As an example, the bailouts in 2008 prioritized banks over homeowners further entrenching “too big to fail” institutions. Similarly, corporate lobbyists pushed for liability shields and austerity during Covid. Such policies consolidate oligarchic control, ensuring future crises disproportionately benefit the elites.

Finally, political volatility during a crisis can be leveraged to promote right-wing populists, and justify increasingly draconian measures such as measures forcing striking workers back to work. Just as fascist politics gained momentum during The Great Depression, modern oligarch funded politicians and media weaponize xenophobia and anti-labor rhetoric to fragment working-class solidarity.

The important part to keep in mind is that the oligarchs are able to easily weather the crisis by moving their vulnerable assets into offshore tax havens, getting to state bailouts, and so on. Their wealth will not suffer during the collapse. Bezos saw his wealth grow by $75 billion during Covid lockdowns, while the working majority was pushed further to the margins. Likewise, quantitative easing after 2008 crash inflated asset prices, enriching shareholders while wages remained stagnant. Each time a crisis happens, the oligarchs only emerge stronger with and with deeper control of the restructured economy. The collapse that’s currently being engineered through the trade war is an an opportunity for the rich to reset the system in their favor.

  • GreatSquare@lemmygrad.ml
    13·
    3 days ago

    Rising cost of living also forces people to let go of their assets such as homes and businesses as workers and small businesses start defaulting on their debt. Oligarchs, insulated by their massive capital reserves, swoop in to acquire these assets at a fraction of the cost. David Harvey referred to this process as accumulation by dispossession.

    Yep. IMHO assets aren’t going to fall in price actually. Because rich people will sink their spare money into property. Property can dip in price in the short term but it bounces back. Rich people want land which creates the demand and increases the price. They will buy it all if allowed.

    Australia is a good example of this. People thought because they managed to hold onto their assets, which are rising in value faster than the cost of living, that they are getting wealthier. Unfortunately when their kids get old enough to want to buy a home, it’s often way out of reach of their kids’ salary. Then they have to borrow against their asset to support their kids purchase.

    I believe most Australians and Americans will not do the only real long term solution: Take assets from the rich class. Give/sell cheap those assets to the working class. They don’t have the stomach to take assets from the rich. You can’t let rich people accumulate assets. If working class people are too broke to buy a home, then the country is broke.

    • ☆ Yσɠƚԋσʂ ☆@lemmygrad.mlOP
      8·
      3 days ago

      I very much agree with that. There might be a near term dip, but the prices will keep climbing in the long run because physical assets are a safe investment vehicle.

  • cfgaussian@lemmygrad.ml
    17·
    3 days ago

    First of all I want to commend you (or whoever is the author of this text) on an excellent post. This analysis is clear and logical and most likely correct, and we should all keep these facts in mind.

    But all of this is only part of the picture. What is being described here are the domestic effects of these policies, and certainly these matter, yet for the majority of the world it is the impact on the US’ external capabilities that they are primarily interested in when they analyze the downstream effects of US policy. And while these policies of controlled demolition help the oligarchy further entrench domestic control they also weaken the US state as a whole, they weaken its economic and industrial capabilities, and by extension reduce its ability to project military and soft power.

    An impoverished, borderline pauperized working class does not make for an effective work force. Productivity will plummet. Diminished living standards will not attract foreign talent. Innovation will dry up. Again we see here the myopic short term thinking of neoliberal capitalism, wherein they will cannibalize their own economic base in order to consolidate monopolies and raise asset/stock prices, yet they have no plan for how to rebuild those capabilities that enabled them to achieve their global position of dominance in the first place.

    And under different geopolitical circumstances this race to the bottom may perhaps not be such a poor strategy, if they were able to drag down the rest of the world along with them. But they can’t. Not anymore. Not when there are alternatives, when there are other societies that embrace real growth and development over neoliberal de-growth for the sake of establishing a neo-feudal dystopia. The US oligarchs can drag the US and their most loyal vassal states down with them (though some of those may even wise up and jump ship), but it is becoming increasingly clear that the global majority will not go along with this civilizational suicide.

    And given that the US exists in this global context, given that the domestic power of the western ruling classes and their ability to maintain control and keep their populations docile has historically relied on the ability to extract super-profits from the global south, if this ability vanishes due to falling behind the rest of the world technologically and economically, then it is only a matter of time until we will see an internal revolt. There is only so far you can push people before they snap. The question we should be asking is do they, meaning the ruling classes, even have any other alternative at this point? And if not then we need to be prepared for what we know will follow as a consequence of these policies of deliberate destruction.

    • ☆ Yσɠƚԋσʂ ☆@lemmygrad.mlOP
      13·
      3 days ago

      Thanks, I’ve just been chatting with some friends about this and saw the article, so felt inspired to expand on it. Completely agree that foreign policy is a whole different beast from the domestic aspect. I do think there are clear signs of retrenchment happening though. Rubio openly said that unipolar world was an anomaly, and it’s now dead. That’s a clear sign that the US is accepting that it is just one great power amongst several now.

      I expect that the US will be focusing on carving out its sphere of influence hence why all the talk about Panama Canal, Greenland, and so on. And as long as labor costs are cheaper in the sphere it controls than domestically, then the system can keep humming along.

      As you correctly point out, the real question is how US will be able to maintain this sphere of influence in practice. They do have a big military, but it’s nowhere big enough to subjugate all of Latin America for example. And so far they don’t really have a carrot, and just want to use a stick to beat their vassals into submission. That’s likely to provoke the opposite reaction of the one they’re hoping for.

      All that said, the fact that the goals are not achievable is not the interesting bit here. Rather, it’s whether the leadership in US think they will be able to do it. Balkanizing Russia was also never gonna happen, but it didn’t stop the west from trying. Similarly, this could be another desperate throw to try and hold on to key parts of the empire. If that backfires, then I very much agree that things could get very messy domestically.

      • cfgaussian@lemmygrad.ml
        10·
        3 days ago

        Rubio openly said that unipolar world was an anomaly, and it’s now dead. That’s a clear sign that the US is accepting that it is just one great power amongst several now.

        Yes. I saw that. Very interesting for a rabid diehard imperialist like Rubio to admit that. It certainly appears to signal that the Trump administration intends to wind down the global empire and retreat into a more manageable, smaller but more well fortified position.

        I believe Arnaud Bertrand recently also made this point, while also warning that this doesn’t mean the US will stop its aggressive, destabilizing action across the world. On the contrary, it may begin to sow even more chaos now that it is no longer interested in maintaining the stability of the post-war system.

        My argument is that its ability to do so will be directly proportional to the degree to which it can hold on to its economic and industrial power. The US’s addiction to the neoliberal financialized model will make this very difficult for them, it will be a constant struggle against the natural tendency of this system to destroy its own industrial base.

        For the time being they still have a buffer in the form of their vassal states, in particular the EU, whose industries they can absorb after having made the economic conditions (energy prices first and foremost) in these countries sufficiently hostile to industry. But there’s only so much blood you can suck out of Europe before it runs dry.

        • ☆ Yσɠƚԋσʂ ☆@lemmygrad.mlOP
          6·
          3 days ago

          Very much agree with all that. I think that the US underestimates the effort involved in rebuilding domestic industry. China didn’t do this overnight, they literally spent decades of sustained effort to get where they are today. Doing this would require creating whole new supply chains, building factories, infrastructure, and so on. All of that requires massive capital investments, and it’s not clear where they would come from. They’d also have to create a trained workforce to operate all that somehow, which would mean providing services like education. I don’t see any realistic path towards doing any of these things in the current political climate in the US.

          So, what we’re likely to see is that the standard of living will keep dropping across the west, and that will likely cause at least some of the vassals to reconsider their allegiances. It seems like this is already starting to happen in Europe. Once the war ends, I think it’s now highly likely that at least some European countries might join BRICS.

          We’re headed for some very interesting times ahead I imagine. The good news seems to be that the US is starting to recognize the limits on their power which might mean we avoid a world war after all.

          • bobs_guns@lemmygrad.mlEnglish
            5·
            2 days ago

            Moldbug apparently admires Deng Xiaoping and his views are adopted more or less in whole by the current regime. But Deng’s strategy depends on the people’s democratic dictatorship to develop the productive forces. We don’t have that here and the infighting and lack of coordination between the companies and billionaires that will be running the country directly in the present and near future likely means the plan for reindustrialization won’t work, even if prison slavery is substantially expanded to make labor costs more acceptable to the American ruling class.

            • ☆ Yσɠƚԋσʂ ☆@lemmygrad.mlOP
              5·
              2 days ago

              Exactly, they want to copy what China did at superficial level without actually understanding the fundamental structural differences between the two systems.

              • bobs_guns@lemmygrad.mlEnglish
                6·
                2 days ago

                The strategy of the regime is to let the CEOs figure things out, as if they could ever figure anything out besides how to lay people off.