In 2008, the worldwide capitalist economy experienced a significant downturn, a major collapse, highlighted by the spectacular fall of large multinational corporations like Lehman Brothers. The capitalist world became engulfed by the most serious economic catastrophe since the great depression of the 1930s. Four years after the collapse of major financial institutions in the United States, the European Union is experiencing a similar economic contraction. Greece, Spain, Portugal, Italy, Romania, the Baltic states – all are going through severe economic problems and depression.

Four years on, the capitalist institutions and their political parties have thrown everything they can think of to shore up the tottering financial architecture. Has anything been resolved? Well, someone who knows is Sir Mervyn King, the governor of the Bank of England. He delivered a speech recently where he stated that Europe, and the capitalist world in general, is still going through a worsening economic crisis, and we are still on the edge of a precipice. King stated that there is ‘a large black cloud of uncertainty hanging over not only the euro area but our economy too.’ He stated that the big banks right around Europe are in need of ‘major recapitalisation’ – which is economist-speak for major inflows of public money into the private banks to prop them up.

King explained that over the last few years, the financial and political authorities have ‘thrown everything bar the kitchen sink’ at the economic problems of capitalism. He spoke of a large black cloud of uncertainty hanging over the Euro area, and also over the British economy. In today’s circumstances, King opined, we need a ‘temporary bank funding scheme’ to tide us over the bad times. In other words, we need to re-nationalise the failing banks, without actually calling it nationalisation, and then return the financial institutions to the private control of that class responsible for the creating the economic crisis.

But there is another explanation that King seems to be missing, and one that helps us understand the economic and political quagmire that we are in today.

Veteran political commentator for The Guardian Seumas Milne states it plainly; the era of the ‘new world order’ is over. The end of this ‘new world order’ means that the era of unregulated, financialised capitalism is over. The consequences of unfettered capital movement, the removal of all restrictions on private investment and financial speculation, is now quite clear. The position of the United States as an unchallenged hegemon is finished, with the emergence of a multipolar world, and the rise of Russia, China, India, Brazil (BRIC countries) as an alternative economic pole. Milne highlights a number of factors that have led to the current capitalist crisis, one of them being the disastrous war in Afghanistan. The United States and its allies are still there, eleven years on, with no end in sight, and it is getting worse. Barack Obama, posing as the antiwar candidate in the elections of 2008, is responsible for a major escalation of that conflict, and the US-backed Afghan authorities are tottering, with their control barely extending beyond the capital city, Kabul. Lesley Smith, writing in the Socialist Worker online newspaper, details the ongoing problems of the US occupation of that country:

The U.S. government has spent nearly $600 billion on the war, yet the Taliban insurgency is unbowed. Afghan National Security Forces, which the U.S. is training, hold their overlords in contempt. In a wave of “green-on-blue attacks,” Afghan soldiers have killed 51 American GIs so far this year. And the Afghan people continue to suffer extreme poverty, disproving claims about the successful reconstruction of the country.

The main objective of the US war on Afghanistan was to establish bases in that country, and extend America’s imperial reach into the oil-rich regions of Central Asia, pushing back against Russia and China.  With a stronger US presence, US policy-planners intended on influencing the development of the oil reserves in the Caspian Sea and monopolise the energy resources of that region for the benefit of the US economy. But the stubborn resistance in Afghanistan has meant that US troops and money have been tied down in an unwinnable war, draining vital resources from the United States and demonstrating the limits of US power.

Milne also highlights another important event that signaled the decline of US military power – the 2008 Russia-South Ossetia war. In that year, the US-sponsored regime of Georgian President Mikhail Saakashvili launched a military attack on Russian forces in the breakaway region of South Ossetia. The latter had separated from Georgia back in the early 1990s, refusing to live under a Georgian regime that denied its autonomy and preferring to be ruled by Moscow. Saakashvili, having come to power in a US-orchestrated regime change ‘Rose Revolution’ in 2003, quickly oriented to the West, loudly proclaimed Georgia’s intention to join NATO, and made repeatedly belligerent pronouncements about confronting ‘Russian aggression’ and reconquering the South Ossetian region. Saakashvili quickly became the favourite former-Soviet republic political leader, feted in London, Paris, Brussels, and other European capitals. Well, there was one other Georgian political leader who was once hailed by Western politicians, but let’s not get into that subject right now….

Saakashvili’s government wasted no time on building up its military forces, with one-third of the regime’s budget dedicated to the military. In flowed weapons, training and technical assistance from the United States, Israel and NATO countries, all with the goal of pushing their proxy-darling regime into a war with Russia.  Fanatical right wing US Republican Senator John McCain early on declared his support for Saakashvili, and egged on the latter to attack Russian forces in South Ossetia. McCain still professed his support for Saakashvili well after the Georgian defeat, and the US neoconservatives vociferously defended the Georgian regime as its loyal proxy. But something unexpected happened – the proxy dutifully went to war, and lost.

Now a number of political commentators have noticed that the ‘rose’ has lost its petals. Last month, the dutiful US puppet Saakashvili conceded electoral defeat and pledged to cooperate with the new government. The 2008 episode reveals that not only do the US empire’s flunkies eventually fail, but that there services are no longer required if the empire fails to meet its objectives. The failure of the Georgian offensive indicated that the days of uncontested US military power were over. The aura of US invincibility had been punctured, most clearly in the case of Iraq and Afghanistan, but tellingly in the South Ossetia-Georgia conflict. No longer would ex-Soviet states be easily absorbed by the principal imperialist military bloc, NATO.

In an interesting revelation, Wikileaks that the US embassy in Tbilisi, the capital of Georgia, not only fully supported initiating Georgia’s war with Russian forces in South Ossetia, but also willingly lied on behalf of its Tbilisi  client in international forums to protect Saakashvili from any repercussions that such a war might incur. The Georgian government had exceptionally close ties with Washington and received billions of dollars in military support and financial aid. The US embassy was the hub of a conspiratorial enterprise to initiate a war with Russia to expand the criminal predatory ambitions of US imperialism.

In this ongoing crisis of the neoliberal capitalist economic model, Milne advises that we need to build a new economy from the ashes of the old one along more democratic, egalitarian lines. The economic catastrophe and growing ecological crisis are warnings that the capitalist system is not only destroying itself, but is also threatening life on the planet. The insoluble contradictions of capitalism are making social ownership ever more urgent and possible.

Go read Seumas Milne’s full article here.