Alain de Benoist
On the Brink of the Abyss: The Imminent Bankruptcy of the Financial System
London: Arktos, 2015
Alain de Benoist’s On the Brink of the Abyss is a collection of essays dealing with the capitalist system and its deleterious effects. Written in response to the 2008 crisis, it uses current events as the starting point to investigate how the trends of global neoliberalism, free trade, finance, and the general logic of capitalism have brought the world’s economy to the threshold of destruction, destroying peoples and cultures along the way by eliminating limits and atomizing societies.
Ultimately, what we witnessed in 2008 was the sign of a major collapse, the death throes of the capitalist system. Capitalism is unsustainable, the towers of debt used by the creditors to extract the real wealth of nations can only grow so high before they collapse. We are approaching the self-destruction of the capitalist system, we cannot continue to purchase more and more while wages shrink. This small collection is an incredibly valuable look at the roots of the current problem and it offers much needed insight in order to confront this situation in an age where governments, Left or Right, have essentially abandoned financial sovereignty to the global moneyed elite.
The first essay of the collection addresses the nature of the current economic crisis. It is not something purely cyclical, as described by the models of business cycle given by Schumpeter and Kondratiev. It is an existential crisis of the capitalist system, and moreover “a crisis of liberal globalization, and a crisis of American hegemony.” Globalization lead to the end of the Fordist system, where rising production was accompanied by rising wages. In its place, capitalism became a zero sum game where the profits of management were the losses of labor. To increase profits, high wage labor was replaced by low wage labor, often by outsourcing to foreign countries or using low wage immigrants.
However, to maintain the level of consumption in the age of stagnant and declining wages, purchasing on credit was encouraged. The dominance of credit in combination with the de-industrialization of the American economy as factories were shipped overseas has led to an increasingly financially dominated economy. Thus power flows to the hands of the capital holders from the laborers. Therefore we are left in a situation where consumers are increasingly put into debt to the gain of the financial sector. Their inability to repay this debt has thrown the system into crisis.
However, merely reforming the capitalist system will not ameliorate the problem. Those who wish the make the markets “more responsible” or “more transparent” do not understand the fundamental nature of the market, whose only value is to accumulate the most profit. Benoist states, “The logic of the accumulation of capital is lack of limitation, the rejection of every limit, the rule of the world by the logic of the market, and the transformation of all values into goods, the Ge-stell of which Heidegger spoke.”
The statement that capitalism is capable of regulating itself by the action of “the invisible hand” has been proven to be false by the fact that the capitalist system was only saved in the last crisis by a massive infusion of public funds. This is merely delaying capitalism’s inevitable fate. Ultimately, a system that tries to sell more and more to people who have increasingly less real wealth will collapse.
The next essay “The Dollar, at the Heart of the Crisis” is concerned with the role of the dollar as the global reserve currency and its over issue by the Federal Reserve. The Bretton Woods system instituted in 1944 established the dollar the international reserve currency, convertible to gold at a fixed price, and established a system of fixed exchange rates between currencies. However in 1971 President Nixon declared that the dollar should no longer be convertible to gold, unilaterally, without the consent of other nations. Fixed exchange rates ended in 1976 with the ratification of Jamaica Accords. As the dollar remained the world’s reserve currency, America could merely print dollars to pay foreign suppliers, ignoring the increasing trade deficit. Americans can continue to accumulate debts while forcing the world to use dollars. Yet this accumulation of debt can only happen for so long. Americans debt now represents twelve entire years of agricultural and industrial production.
China, the major holder of American debt, is becoming increasingly frustrated. In 2009 the governor of China’s central bank, Zhou Xiaochuan stated that the financial crisis had exposed the inherent flaws in the dollar system and called for the replacement of the dollar by a supra-national reserve currency based on a basket of different currencies such as the yuan, euro, ruble, and riyal. Since 2008 China has been unloading its holdings of US Treasury Bonds forcing America to purchase their own Treasury Bonds through the Federal Reserve.
Moreover, nations like China, Russia, India, Brazil, Argentina, and Iran have begun to look towards pursuing bilateral trades without the medium of the dollar, using their own currencies. As the world moves way from the dollar, the United States will be increasingly forced to buy its own bonds, leading to inflation. On the geopolitical scale, the emergence of trade outside of the dollar will result in the formation of new blocs of commerce, uncontrolled by the dollar. However, it remains a question as to what speed China will move away from the dollar. It cannot afford to precipitate a sudden collapse, as it would render its dollar reserves worthless. At the same it cannot afford to continually prop up the dollar indefinitely. Yet, one thing is certain, the era of the dollar is going to end.
The following essay “Free Trade and Protectionism” is a critique of the free trade dogma that dominates most mainstream economic and political discourse. Even raising the question of protectionism induces a hysterical response among the acolytes of the system, as Benoist notes, “it is the entire New Class, of the Right and the Left, which never tires of thundering against the ‘protectionist menace,’ the very words ‘barriers,’ ‘protection,’ ‘regulation’ becoming synonymous for them with isolationism, nationalism, and even xenophobia.” This near religious fanaticism flies in the face of mounting evidence against free trade. Production has been moved overseas, to countries whose living standards are far below those of the consumers, where wages are a fraction of the cost, while consumption at home is increasingly credit fueled as wages stagnate due to the competitive advantage of outsourced labor. The profits end up in the hands of a small elite, often in the financial sector, in both the country where the jobs have moved from and the country where the jobs have moved to. Moreover, the formerly industrial countries see their industrial bases move overseas, furthering this financialization of the economy, at the expense of unemployment in the manufacturing sector. Free trade between two structurally different economies proves to be detrimental to both, as Nobel Prize winner Maurice Allais remarked, “A liberalization of all exchanges and movements of capital is possible and desirable only within the scope of regional groups uniting countries which are economically and politically related, and with comparable economic and social development.”
The solution to this unrestrained globalization is protectionism. Europe could form a bloc of economic regulation that prevents outsourcing to low income countries, which would allow wages to rise, and to prevent the dumping of cheaply manufactured foreign goods into its markets at the expense of domestic production. This could be achieved through import quotas, anti-dumping taxes, limiting foreign investment, the establishment of wage and safety standards, and subsidies to national industry among other measures. To avoid the type of protectionism that isolates a country economically and leads to the creation of narrow business interests guiding policy, protectionism could happen across large geographic, geopolitical zones, on a continental level. Benoist remarks on the political as well as economic utility of the continental protectionist model, “There is evidently a strong congruence between a protectionism organized on the continental level and the movement towards a multipolar world, where the different poles would also play a regulatory role in relation to the globalization in progress. Protectionism, in this sense, is not only an economic weapon, but also a political weapon which permits the imposition of borders on a sphere of influence or on a cultural or civilizational bloc.” In this sense protectionism serves the political goal of helping liberate peoples and cultures from the American hegemony fueled by globalization. Indeed, a return of protectionism may signal a shift in the mindset of people, who have become accustomed to a world with borders, unfettered individual freedom, and resistance to collective identities.
The next essay “Death on Credit” traces the perception of usury from antiquity to the modern age. In Ancient Rome, lending money at interest was condemned, as it was by Aristotle, who condemned “interest, the birth of money from money” as a “most unnatural” mode of wealth acquisition. The Church reiterated the condemnation of money lending at the Council of Nicaea, and again with Aquinas’ Aristotelian critique of usury. Protestantism was the turning point in economic theology, Calvin being the first to accept the practice. With the French Revolution, banking became completely unfettered by religion, and this furthered the growth of capitalism. Moreover, history has seen the definition of usury change from the mere charging of any interest, to the charging of exorbitant interest. Yet, in its most insidious definition it can mean the mechanism by which the real goods of the borrower are seized to repay a debt. This is the situation of today, where the real goods of the world are mortgaged at values far outstripping the ability of the debtor to repay. With the expansion of credit the world has essentially been put under the rule of the lenders, who can take whatever they want, whenever they want, even seizing the assets of entire indebted nations. However, this financial parasitism cannot continue indefinitely, finance will kill itself off.
The following essay “Public Debt: How States Have Become Prisoners of Banks” details how states have essentially mortgaged their assets to private institutions, often same ones they have been forced to bail out. The bailouts resulting from the 2008 financial crisis caused the governments of the United States, the United Kingdom, the European Union, and Japan to inject about 5000 billion dollars into the global economy between 2008 and 2010. Much of this came from money borrowed off the market, which they will be forced to repay at interest, further increasing their indebtedness and forcing further borrowing. The financialization of the economy at the root of the crisis, is reinforced as the other sectors are left to go bankrupt but the banks are bailed out. This is compounded by the fact that banks borrow from the state reserve institutions such as the ECB at ridiculously low interest but then loan that money to the states at whatever interest they deem necessary. As the situation worsens, the more indebted countries are forced to borrow at shorter terms and higher interest rates, and then forced to adopt austerity, raising taxes, cutting services, selling state assets, and using the money to pay debts. The Greek crisis we recently witnessed is only a prelude to the future of all Europe. Benoist remarks that “a general policy of austerity is on the way in Europe, who principal victims will be the working classes and the middle classes, with all the risks inherent in such a situation. As new countries find themselves in a state of bankruptcy, the citizens of the entire European Union will be asked to pay the bill.” The states are entirely enthralled to their creditors.
Benoist proposes a number of solutions. First, forcing the banks to write off debts accrued by exploitative loans. Next, isolating commercial finance from savings in the mode of the Glass-Steagall act would prevent banks from looting the savings of average people when their speculation fails. Furthermore, the law forbidding the Bank of France from purchasing treasury bonds rather than having to lend to banks that lend to the state should be abolished. More radically, the banks could be nationalized and credit could be used for social purpose rather than profit. However, given the current political situation these options are off the table. Attempts for a petty national economy from the Right, which preserves capitalism on the national level will fail. Reformism from the Left on the basis of “humanitarian” platitudes, will fail. Benoist starkly remarks, “Only the resolute intervention of the working and middle classes in the battle can give to the ‘indignation’ that the practices of the capitalists of the capitalist system arouse, or to the widespread discontentment with the banks, the social basis that they lack – so that the action to be conducted is situated below or beyond the limits of bourgeois reality.”
The essay “The Euro Should Be Made a Common Currency” discusses the flaws in the Euro system and proposes some possible solutions. One of the most important deficiencies of the Euro was that it united structurally different economies, forcing them to abide by one policy. The single interest rate lead to the ballooning of debt in the weaker Southern European economies. Having aligned the value of the Euro with the old Deutschmark, this arrangement favored the economy of Germany disproportionately. This lead to a situation where the Southern economies were forced to unsustainably borrow from the countries of Northern Europe, leading the austerity crisis we see today in Greece, which presages further instability in the Eurozone. To ameliorate this crisis, Benoist proposes a massive devaluation of the Euro, to allow an exit to national currencies without having to assume the massive debt still denominated in Euros. The Euro could remain as a European currency representing the average of all the currencies in the Eurozone, for use outside the European Union in relation to the other major world currencies. Yet, Benoist warns us that a return to national currencies will not be a panacea, for so long as the nations still operate under the logic of capitalism they will never recover financial sovereignty.
“Middle Classes and Working Classes: A Politics of Poverty” discusses the growing inequality between the super rich and the rest of society, culminating in the gradual impoverishment of the middle and lower classes. The disparity has been growing for some years, in 1980 in the US the average CEO made 20 times the salary of the average worker, in 2000 that multiple was 531 times. The bailouts resulting from the financial collapse intensified that tendency, preserving the profits of the financial sector and its masters, while ignoring the suffering of the average man. What has resulted is the emergence of a global “hyperclass” of about 6,000 incredibly rich people, who live international “jet set” lives segregated from their countrymen. They have more interest in common with other members of this elite globally than they do with the poor or working classes who share their nationality. Yet, on a smaller level this economic segregation hits within the nation as well, as the wealthy and upper classes move to communities isolated from the lower classes, Michel Pinçon and Monique Pinçon-Charlot write, “They mobilize to preseve the integrity of their roads, their quarters, their chic suburbs, their holiday spots. . . . The families see to it, particularly in school, that their children associate with the youth of other social milieus as little as possible.” For the lower classes, the gains made during the Fordist years, where increases in average wages followed increases in production, are being eroded. We are now seeing “downward mobility” where new generations have a lower standard of living than their parents, this effects 25% of people aged 35-39, compared to 18% twenty years ago.
This situation is a result of the changing economic and political system. From 1930s to 1970s, Fordism dominated, the growth of industry aided the growth of middle classes, along with the emergence of strong social welfare systems. Its success was so great that the radical socialist and Communist parties in Western Europe and the United States saw their support disintegrate and the middle classes align with capitalism. However, since the 1970s, the rise of globalization, the deindustrialization of the economy, and the neoliberal policies of Thatcher and Reagan that eroded the welfare state, the middle class has become endangered. Nobel Prize winner Maurice Allais has estimated that globalization and free trade has destroyed a third of French income. In addition to the economic consequences, there have been social ones as well. Families can no longer survive on a single income, women are increasingly entering the workplace, which increases competition and exerts further downward pressure on incomes. The old aristocratic disdain for the nouveaux riches has decreased in Europe, concurrent with the increasing domination of Anglo-Saxon and American values society. Democracy has been turned into a sham of an elected oligarchy as the financial and political elites collude. The Right has become openly neoliberal, while the Left has abandoned the traditional working classes in favor of immigrants who drive wages lower. The idea of class struggle is derided as archaic. The tepid turnouts in elections reveals a lack of faith among the common people. A renewed class struggle is needed, but so far only the rich have waged one on the lower classes.
“Immigration, the Reserve Army of Capital” details how immigration is part of the capitalist system and shows that it cannot be opposed without opposing capitalism itself. In France, mass immigration was encouraged by the Pompidou at the behest of several large capitalists, who were seeking a cheap labor force unconcerned with the politics of class struggle that had characterized labor relations with the native born working class. However, employers seeking out foreign labor to undercut a rebellious working class demanding far predates the Pompidou regime. In 1924, French employers created the General Society for Immigration to recruit foreign labor for the coal industry and large scale farming. Until the 1980s, the French Communist Party had opposed mass immigration onto the grounds of defending the French working class from having their wages undercut by foreign labor. However, the modern far Left has abandoned that struggle, now they fight for immigration, even defending illegal immigration, yet in the end this serves the interests of the employers and the international mafias driving human trafficking and illegal immigration. Benoist remarks that the head of the Trotskyite New Anticapitalist Party and the head of the French employers union are fighting for the same thing. The elimination of borders advocated for by the far Left is the same as the capitalists desire to eliminate all impediments to the flow of labor and capital globally. Indeed many Leftists, such Hardt and Negri, are now looking towards international capitalism as “the natural framework for international citizenship.” Ultimately, the struggle against mass immigration is against capitalism and globalization. Alain de Benoist admonishes in a now classic quote, “One who criticizes capitalism while approving of immigration, which the working class is its first victim, would do better to remain silent. One who criticizes immigration while remaining silent regarding capitalism should do the same.”
The following essay “Should a Citizenship Income Be Instituted” deals with the idea of giving every citizen in a country a minimum guaranteed income, unattached to work, as a basic right of citizenship. In this system every citizen would be paid an income, unconditionally, equally, enough to guarantee a basic standard of living outside of working. This idea actually has a long heritage. In Athens, Pericles instituted the misthophoria, a special salary that allowed citizens to participate in political functions without fear of losing income from their jobs outside of service to the state. Thomas More’s Utopia essentially advocated a basic citizenship income, as did Thomas Paine in Agrarian Justice. In C. H. Douglas’ social credit system, every citizen would receive a dividend, newly minted currency would be directly given to the people through this citizen’s dividend. From the Keynesian wing of mainstream capitalist economics the citizen’s income was defended by John Kenneth Galbraith, and even libertarians such as Milton Friedman and Charles Murray have proposed a citizenship income as a replacement for the welfare state. There have been some basic incomes instituted on a limited scale; in Alaska every citizen receives an equal but small share of the state’s oil revenue; in Bolivia, the elderly are guaranteed a basic income. Today, in the face of rising permanent, structural unemployment the utility of a basic income to prevent the impoverishment of the unemployed is being recognized. De-industrialization and automation have reduced the need for actual labor. Even a growing economy no longer creates the necessary amount of good paying jobs. Employment opportunity has been permanently reduced. The institution of a citizenship income would give the unemployed a level of purchasing power to afford a basic standard of living, and reduce income inequality. Moreover, it would give the workers more leverage bargaining with capital as they would no longer be forced to work out of fear of impoverishment.
On a deeper social level, a citizenship income would alter our relationship with labor. With a basic income, people could survive with a job. This would allow people to pursue interests unrelated to the machinery of the market, for example pursuing cultural or artistic pursuits that are not generally well paid. Moreover, on a moral level it would no longer make having a job seem like the arbiter of virtue, that being unemployed was a sign of laziness or incompetence. Yet, it would not encourage people to not work, as workers would receive the citizenship income as well. Indeed it would be better than many of the current social safety net programs that reduce benefits upon employment, thus discouraging people from seeking employment for fear of losing benefits. The citizenship income will not turn the populace into a mass of idle welfare recipients, as it does not discourage work, rather it gives people a freer choice in the work they could perform, as their choice of career would be freed from economic pressure to survive, which forces many people to adopt lives of drudgery performing meaningless “make work” jobs. Nor would a country that institutes a citizenship income necessarily become a magnet for immigrants seeking to escape the poverty of their home countries. Limiting the citizenship income to actual citizens and restricting the conditions by which someone could gain nationality would prevent such abuse of the system. Another critique leveled at the citizenship income is that it would discourage more radical change against the capitalist system. The counter-argument against it is that a citizenship income would allow people to live and pursue activities outside of capitalism and its modes of production.
The afterword “Confronting the Capitalist System” is a piece written for the magazine Rébellion detailing how the capitalist system undermined the traditional communal values of society and how the capitalist system can be attacked, along with its various philosophical baggage of liberalism, individualism, and the geopolitical hegemony of the United States. Traditionally, the mercantile elements of society were subservient. However the progression of European history has been one towards domination by the bourgeoisie. This has led to a distinct shift in the values of our culture. “It was with the bourgeoisie, as a class bearing values that were characteristic of it, that ‘merit’ lies in having established the economic sphere, at the same time it asserted itself and precisely in order to assert itself, first as an autonomous and then as the dominant sphere. From this point of view, all European history can be read as a history of the rise of the bourgeoisie, in favor of whom the ideas that they bore were progressively established: individualism (against the significance of social relations), the cult of efficiency and utility (against the ethic of honor), and the normalization of interest (against charity and gifting.)” All social relations have been reduced to economic transactions, eliminating bonds based on custom, honor, belief, reducing the value of man to the value of his bank account. The elimination of the old social ties and the resulting atomization of society has led to a culture of alienated, one-dimensional consumers with no interest beyond satisfying materialist desires, the “Last Men” of Nietzsche.
Against this increasingly dismal situation Alain de Benoist writes of the possibility of a resistance, that will usher in a transformation of the system. He endorses the idea of moving beyond Right and Left, while reminding the Right and the Left of their failures, which have resulted in the modern predicament. He warns of idealizing the working classes as naturally good, of repeating the naive Enlightenment optimism that liberalism arose from. On the Right, figures such as Sorel and Péguy have been forgotten, and the fight against communism fooled the Right into aligning with capitalism. Rather than attacking capitalism as the root of the loss of national borders and the cause of mass immigration, they fall into petty xenophobia, Islamophobia, and buy into the “Clash of Civilizations” that distracts from social conflicts at home.
On the Left, four main flaws are identified, political universalism, the absence of a concrete anthropology leading to unrealistic assumptions about human nature, a belief in progress, and a moralism focused on the complaints and grievances of victim groups. Therefore, the Left disregards things such as national borders, ignores the value of pre-capitalist modes of production, and has fallen into the trap of fighting for various identity politics groups at the expense of class struggle. Instead of attacking capitalism, the Left now focuses on “anti-racism” or “sexual liberation,” which only serve to break down the barriers impeding the flow of capital and lead to further individualism in the social sphere.
To challenge the capitalist system, a new class consciousness must reappear, against individualism a “collective will” must be formed. This will must come from the bottom up, being built locally, against the global hyperclass. It must be intransigently revolutionary. Benoist repeats the advice of Sorel to the revolutionary syndicalists “to take the early Christians as their example: those who absolutely rejected the world they were fighting against.” Finally, he identifies the target of this new struggle, “The principal enemy is at once the most harmful and, above all, the most powerful. Today it is capitalism and the market society on the economic level, liberalism on the political level, individualism on the philosophical level, and the United States on the geopolitical level.” He calls for an alliance from forces as disparate as Castroism and Christianity to challenge these enemies: “The enemies of my enemies are not necessarily my friends, but they are necessarily allies. I am notoriously not a Castroist, but I will always support Castro in his fight against American imperialism. I am notoriously not a Christian, but I will always support Christians every time they struggle against the power of money. Those who reason otherwise do not have a sense of the priorities or the stakes. They are quite simply accomplices.”
In conclusion, On the Brink of the Abyss is an absolutely indispensable book for the enemies of the system. Anyone who wishes to see the return of traditional communities and a life with natural limits, must assimilate Alain de Benoist’s devastating critique of capitalism, liberalism, and globalism, and heed the call to rebellion. This is particularly necessary for those in the English speaking world who fancy themselves as radicals, yet still operate according to the logic of the market that is so dominant in those nations. There can be no compromise with capital, it is the part of the world that we must bring to an end. He has clearly shown us where the enemies stand, and where we must take aim.