Russian-Chinese New World Order. Part 2. Global Depression


May 12, 2015

Mikhail Delyagin

Translated by Kristina Rus

The familiar world has crumbled. Russia and China must create a new one. A report about the need to unite the potential of both countries

The article is based on the report at the scientific-practical conference “China and Russia in a changing world” in Beijing, on May 4, 2015.

Click here for Part 1: Basic trends of global development: the end of the market

The world in a global depression: two poles, three currencies

The economic crisis is caused by a formation of a global market, fueling the growth of global monopolies and their subsequent decay. A direct manifestation of this decay – contraction of commercial demand. To prevent a plunge into depression major economies are forced to replace the shrinking commercial demand with growing public demand (at the expense of money emission).

Developed countries do not have the capabilities of mass manufacturing investments, so the increased public demand is not an investment, but a distribution of money and is reflected in the growth of debt.

Throughout the entire 2000s the U.S. herded the world capital into their bonds by “exporting chaos”, but after the crisis of 2008-2009, this strategy failed (most of debt growth was funded by the Fed). The U.S. strategy towards the Islamic State and Ukraine suggests the transition from debt financing to the strategy of debt write off by fomenting WWIII. This is the main threat of our time.

But the decay of global monopolies makes demand – the main value, and countries are defending it by increasing protectionist barriers, which objectively leads to the collapse of the global market into macro-regions.

This process will be completed with the plunge of the world into a global depression. However, its results – a kind of “interim balance” – are already visible. In politics it is a restoration of a bipolar confrontation in the form of U.S. and China competition, with Russia, the EU, Japan, and India functioning as “second grade powers” containing this stand-off from becoming destructive. At the global level it will be expressed in a confrontation of Chinese capital (including national capital) and Western capital in the framework of the global management class.

In the economy a shaping division of a global financial market into the dollar, Euro and yuan zones is already evident. It will be a very tense and unstable order.

China will slow its growth due to a combination of internal processes, which will become a catalyst for the plunging of the world into a global depression and will force a collapse into macro-regions, striking China itself, limiting its access to Western markets.

This scenario requires a preventive response project on the basis of deepening and streamlining comprehensive cooperation with Russia.

Part 3. Cooperation

Part 4. Our Friends and Enemies

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