Ukraine and Dynastic Capitalism

Paul Krugman - CaricatureBy Wade Lee Hudson

Following the death of Mao and the collapse of the Soviet Union, Dynastic Capitalism has taken over the world. Every country of any size is dominated by a handful of extremely wealthy elites who pass on their wealth and power to their heirs, as Paul Krugman and Bill Moyers addressed in their discussion of Thomas Piketty’s explosive new book, Capital in the Twenty-First Century. This global social system is fundamentally unified, though different factions compete with one another for advantage, like teams in a global sporting competition.

Nations belong to more than one faction and from time to time the competition between two particular factions emerges as primary. At the moment, the conflict between the West and Russia over Ukraine is receiving primary attention. But the economies of all nations are now so thoroughly intertwined, war between the major powers is unlikely because the 1% in each nation know they would suffer severely as a result.

Western Dynastic Capitalism is trying to gain an edge over Emerging Dynaistic Capitalism by using the International Monetary Fund to pressure emerging nations to open their borders to the free flow of capital and goods. Historically emerging nations, including the United States, have used restrictions on the flow of capital and goods to protect their own industries. But today, for the sake of their own self-interest, developed nations are opposing such measures.

Particularly important is freedom of capital. The largest financial institutions instantly buy and sell huge quantities of financial instruments every day. These transactions are non-productive. They don’t benefit the real economy. But they generate enormous profits. So Western Dynastic Capitalism administrators are pressing Emerging Crony Capitalism administrators to lift restrictions on the flow of capital into and out of their nations.

The West has managed to maintain stability by wedding liberal democracy with its economy. China has developed a more blatantly totalitarian model. Russia is taking that same path. Most people when given the choice understandably prefer the liberal model. The Russian 1% are well aware of this reality. What they are most afraid of is not the West and its military, but the threat of internal political turmoil demanding liberal democracy, which could threaten their dominance.

Meanwhile, the West is far from being fully democratic. Dynastic Capitalism dominates here too. This reality calls for the rest of us to resist getting sucked into choosing sides in the smoke and mirrors of manufactured crises, these momentary struggles between teams that play the same game. The corrupt machinations of the various players only divert us from the fundamental problem: the whole world is dominated by a global social system that sorely needs to be restructured.