The world is made up of armed nation states, and some of those states have nuclear and biological weapons that could easily kill several hundred million people. We don't like to think that these weapons would ever be used, but it's safe to say they'll be used all the same. Weapons are always used. This is not because of some dark conspiracy to use them. They are used because they exist to be used, and the occasion for using them - though unwelcome by most of us - nonetheless recurs through time. People always seem ready to hate somebody, to blame somebody, and to unleash destruction on somebody. The reasons for hatred may be ethnic, religious or ideological. We can see these reasons falling from the lips of al Qaeda spokesmen, from Latin American dictators and Chinese generals. Everyone knows that war plans were drawn up in Washington and Moscow long ago. But war did not come when the two sides were carefully watching one another; mainly on account of the nuclear "balance of terror." Such balances, however, do not last forever. In fact, a major economic disruption might overthrow the "balance of terror."
Could such a "disruption" be around the corner? Consider the Bank for International Settlement's 77th Annual Report. The report concludes that "economics is not a science." That much being admitted: "The consensus forecast for the global economy, which is obtained through a poll of economists, anticipates that recent high levels of growth will continue, that global inflation will stay quite subdued, and that global current account imbalances will gradually moderate." This would be good news if economic forecasters could actually forecast the future. As the BIS Report noted, the majority of economists failed to predict the Great Depression of the 1930s and the great inflation of the 1970s. Despite the prevailing economic optimism, the BIS Report noted some troubling developments in the world economy. First, there is the "possible resurgence of global inflation." Connected with this, global energy and commodity prices are continuing to rise. Companies impacted by rising energy prices may not be able to cope indefinitely. In the world's leading economy, the United States, inflation is now combined with declining productivity growth. In terms of the U.S. trade deficit, "a further and perhaps substantial decline in the dollar might also be part of the adjustment process...." Worse yet, the easy credit terms of the last few years, "especially in the mortgage market," encouraged more debt and higher housing prices. "The latter, in turn, provided both the collateral to justify more lending and the perception of increased wealth to justify more spending." According to the BIS Report, "The concern is that this might all reverse."
Credit inflation and the outright inflation of currency, along with rising energy prices, are having an impact. The average person feels his wallet shrinking faster than before. If he goes looking for a house to buy, he is likely turned back by the asking price. On a gut level we all know that something has to give. And then look at the ever-growing welfare state. It barely manages its budget in prosperous times. How could it possibly survive a severe recession? And then there is a moral dimension to the emerging crisis. America's long prosperity has weakened something deep within the soul. A slacking spirit has emerged in our midst, full of excuses, imagined hardships and conceits. What happens to this spirit when genuine hard times begin? The rosy prediction of the economists sidesteps what has been taking place in our midst, on the level of the soul. We are not what we were. The rosy vision of the economists doesn't take any of this into account.
Global financial disaster - the so-called "crisis of capitalism" - has a special place in modern political thought. The creepy crawlies of the intellectual underworld look forward to a global economic fiasco. They see it as an opportunity. For example, the founder of modern communism, Karl Marx, wanted to become the revolutionary dictator of Germany. And so, he looked forward to an economic crash and resulting social chaos as his window of opportunity. His theoretical work was an intellectual armament for propelling his revolutionary career. He was not the first of his kind and not the last. History records the lamentable success of figures like Lenin, Stalin and Mao. Today we can see Marx's egotism and ambition in Venezuela's Hugo Chavez. Any country that suffers an economic disaster is vulnerable to this species of opportunist. A global economic dislocation signals danger on a global scale. The malicious nobodies of the world, who dream of seizing power, look forward to economic troubles and the resulting social chaos. The anti-Semite, the fascist and the communist are all the same. Their ambition is to take and hold power. (Probably as a salve to their own insignificance.) A global financial crash, therefore, isn't simply an economic problem. It is also a political problem.
If the world suffers a serious economic setback in the near future, there will be a political implosion. The United States is thought to be one of the most stable, successful societies in history. A severe economic setback today, however, would be occurring in a highly charged, partisan environment, in which the public has already been divided one from the other according to race, ideology and social class. As Julien Benda pointed out in his book, The Treason of the Intellectuals, "Our age is the age of the intellectual organization of political hatreds. It will be one of its chief claims to notice in the moral history of humanity." Hatred fuels ambitious demagogues and revolutionary agitators. It propels the anti-Semitism of the neo-Nazi and the class hatred of the socialist firebrand.
Writing between the First World War and the Second, Julien Benda wrote, "Indeed, if we ask ourselves what will happen to a humanity where every group is striving more eagerly than ever to feel conscious of its own particular interests, and makes its moralists tell it that it is sublime to the extent that it knows no law but this interest - a child can give the answer. This humanity is heading for the greatest and most perfect war ever seen in the world, whether it is a war of nations, or a war of classes."
Here lies the path of dissolution.
