The twenty years of Western hegemony is ending fast. For twenty years, the West imposed its will on the governments and peoples of the South using agencies like the International Monetary Fund (IMF), the World Bank (WB), the World Trade Organisation (WTO), and the World Intellectual Property Organisation (WIPO). The most outstanding success of the Western offensive was that most of the leaders of the South, as well as the post-1989 leadership of Russia, accepted the “triumph” of Western ideologies and methods of work. But now, Western ideologies are being seriously questioned not only in the South, but also within the countries of the North.

This is where we are now. The assault on America on September 11, 2001 has put the US and its citizens in a state of panic and paranoia. The bursting of the dot-com bubble soon after blew the whistle against the hazards of financialised speculative capitalism -- a warning that was largely ignored by the euphoric ruling political and corporate elite. Predictably, the sub-prime house mortgage crisis broke surface in September 2007. Since then, financialised capitalism is swallowing down its own authors, like a snake swallowing its own tail.

Speculative finance capital has left behind a trail of misdeeds, among them the following:

• It has mopped up all the small savings of the people through credit institutions, and the securitisation process that evolved into the so-called "democratisation" of the stock exchange, the emergence of the “Casino Society”, and the bubbling of the speculative capital. The 1990s dot-com bubble and the housing bubble (post 2005) are concrete outcomes of this "democratisation" of wealth.

• It internationalised securities as a way of expanding the shrinking national base of Western economies into the emerging countries of the South  and "dematerialised" the commodity market through, for example, the Chicago Mercantile Exchange, thus robbing commodities of their real value, creating highly volatile, unpredictable and unsustainable productive base in the commodity-exporting countries of the South, many of which (especially in Africa) are now critically on the verge of collapse. 

• It is now at a point where, using state power and "public savings" to back the "value" of fictitious capital, the political leaders of the West are in dilemma, having been captive of finance capital for over 120 years and deciding whether to win the confidence of the banks or the people.

The North is looking in the mirror only to see its less than 300 years of capitalist civilization crumbling. From the fall of Constantinople in 1453 to 1914, it took 460 years for the Ottoman Empire to finally collapse. From Adam Smith (1723-90) to Alan Greenspan (former head of the US Federal Reserve who admitted on October 24, 2008 that he found a serious “flaw in the free market theory” which he had been nursing for forty years) it has taken barely 260 years for “free market imperialism” to begin to sound its own death knell.

The crisis of confidence, the loss of moral high ground, the utter non-functionality of the neoliberal paradigm that has created chasms between nations and within nations, the ruinous exploitation of the environment, and the fear of the rise of China, India and Latin American countries on the historical train of the Bolivarian revolution – are making the political and corporate leadership in the North extremely jittery, anxious and nervous.

The 250 years of Renaissance (c.1340 to 1600) that helped Europe to jump out of its dark hole has sadly turned into its opposite – the North is sinking into another hole of its own making. The question for us all is: what next? Should the people of the South take delight in this?  Should the working classes in the North rejoice in the impending demise of capitalism? Before we answer these questions, it is necessary to examine the main blind spots of the Western response to the looming crisis so that the same mistakes are not repeated on the way forward.

Blind spots of Western response to its looming civilization crisis

The first blind spot is that the pundits of finance capital who advise the political leadership in the West (and now among them some of the leaders of the South sitting with the West in the G 20 gatherings) have not fully  acknowledged the scale of the crisis and gravity of the situation. The fire-fighting measures put in place by the US and European governments, such as the bailing out of banks, deficit financing, and other countercyclical measures, touch barely the surface of the crisis. The present crisis is not a trade cyclical phenomenon, nor a simple “recession” that will be “turned around” in a couple of years, as they believe. The crisis is deeply embedded within the very fabric of capitalist production and distribution.

Those who are turning to Keynes for “answers” to the present crisis should be reminded that Keynesianism was an answer to the Empire in crisis, and it achieved its purpose for fifty years. But it has come to the end of its mission. In any case, Keynesianism addresses superficial aspects of a crisis that is more deeply rooted in the capitalist system than is generally understood or appreciated. Keynesians talk about restoring the regulatory function of the state, forgetting that in the now all too familiar cant about the “greed” of corporate managers, the capitalist state has been complicit all along.

A second blind spot of the West (shared by many political leaders in the South as well) is to continue to believe that the private sector is the “engine of growth.” This is now belied by facts. The private sector is now maligned as “greedy, corrupt, selfish, and parasitic.” The latest (March 2009) debacle with the AIG is tragic-comic; some US Congressmen have suggested that the AIG directors who paid themselves hefty bonuses for their “failure” should offer to commit “hara-kiri,” or suicide Japanese style.

Beyond economics, there are other blind spots. These include attempts to:

• maintain nuclear monopoly;

• hold back immigration from the South;

• maintain ideological hegemony and moral high ground – for example, with reference to democracy and human rights (in the case of Darfur, for example);

• fight that ill-defined enemy called “terrorism” in what is described by Western military intelligentsia, with obvious irony, as “asymmetric war”;

• buy off the political and business leadership in the South by promises of 0.7 per cent of their GNPs as “development aid”, and securing their consent to neo-colonisation of their economies in the name of “aid effectiveness” under the World Bank–OECD led “Paris Declaration” that was thrust on Southern leaders in Accra in September 2008;

• pass on to the South the burden of rectifying the historical damage inflicted on the climate by Northern profligacy in callous consumerism;

• enforce a “two states solution” on the unwilling Jewish and Arab populations of Palestine. Israel is a guilt-ridden blind spot of the West, especially in Germany.

Each of these responses to the multiple crises the West faces is very short-sighted and selfish. Take the attempt to hold back immigration from the South. I find this reaction on the part of the Western general public and workers understandable except its most virulent and racist expressions.

The matter has to be put in proper perspective. All history can be written as migration of people from resource-deficit to resource-surplus countries and from war-torn to relatively peaceful surroundings. This is nothing new. What is new in the present epoch is that whereas the migration of the people of the North to the South continues relatively unrestricted, as indeed also between North and  North, that between the South and the North (and indeed between South and South) is substantially blocked by border controls, barbed wire fences, police patrols, and ghettoized refugee settlements. 

Excerpted from Yash Tandon's speech during Die Linke Im Bundestag and Rosa Luxemburg Foundation conference on “Left Ways Out of the Crisis” Berlin, March 20, 2009.The author is Former Executive Director of the South Centre, and Chairman of SEATINI