FEBRUARY 17 2023
One year has passed since the start of Russia’s invasion of Ukraine, and nothing seems to indicate that the flames of war are dying. Why does the war still continue? Why are military tensions rising in the world?
We reject the thesis of a “clash of civilisations”. Rather, we need to recognise that the contradictions in the deregulated global economic system have made geopolitical tensions more acute (Opinion, February 14).
One of the worst faults of the present system is the imbalance in economic relations inherited from the era of free-market globalisation. We refer to international net positions, where the US, the UK and various other western countries have large external debts, while China, other eastern countries, and to some extent Russia are in an external credit position.
A consequence of this imbalance is a tendency to export eastern capital to the west, no longer only in the form of loans but also of acquisitions leading to a centralisation of capital in eastern hands.
To counter this trend, the US and its major allies have for several years abandoned their previous enthusiasm for deregulated globalism and have adopted a policy of “friend shoring”: an increasingly pronounced protectionist closure against goods and capital from China, Russia and much of the non-aligned east. The EU too has been joining this American-led protectionist turn.
If history is any guide, these uncoordinated forms of protectionism exacerbate international tensions and create favourable conditions for new military clashes. The conflict in Ukraine and rising tensions in the Far and Middle East can be fully understood only in the light of these major economic contradictions.
A new international economic policy initiative is therefore required to head off the threat of further wars.
A plan is needed to regulate current account imbalances, which draws on John Maynard Keynes’s project for an international clearing union.
A development of this mechanism today should start from a double renunciation: the US and its allies should abandon the unilateral protectionism of “friend shoring,” while China and other creditors should abandon their espousal of unfettered free trade.
The task of our time is urgent: we need to assess whether it is possible to create the economic conditions for world pacification before military tensions reach a point of no return.