On the phenomenon of global economic incest and the extreme danger of underestimating it
The long-term conflict between Russia and what we usually call the collective West has given rise to many theoretical justifications for its nature, causes and prerequisites. If, in general, everyone agrees that this conflict is of an essential, existential nature, then with the reasons and prerequisites the situation is much more complicated.
Problems with describing the situation
A kind of unwritten consensus postulates the ideas of a “global economic crisis” as prerequisites, and as the causes – insoluble contradictions between the elites of the East, West, and now the South.
At first glance, it is difficult to argue with the above theses: the conflict is essential, because in many respects it is a value-based crisis, there really is a crisis, and the contradictions between the elites are indeed extremely acute.
However, as usual, various immaterial entities are hidden in the details. And so, when it comes to details, for example, which elites we are talking about and what exactly their irreconcilable interests are, there is no longer any unity of opinion. And for years we have been following the description of the confrontation between the conventional “liberals” or “global financiers” and the no less conventional “traditionalists” or “industrial elites.”
On the one hand, this division is convenient, since it allows you to build analytics quite harmoniously, and God bless him that prognostication works like a clock that shows the correct time twice a day, but the description is distinguished by a certain logical harmony, which means a certain persuasiveness.
However, when it comes to who exactly is included in these “elite groups,” the most we can hear is again some “industrialists” and some “global financiers.” How patriotic American (let's start with them) industrialists can work without financiers at all is an inconvenient question. And, perhaps, even worse - seditious.
For several years now, without exaggeration, all Russian experts have been raising their hands in the air, hoping that it is necessary to put an end to the dominance of liberals in the Central Bank and ministries - proteges of these same financiers. And every time everything turns out like in a fairy tale by K. Chukovsky: “The fly (Russian expertise) screams and screams, but the villain (financial liberals) remains silent and grins.”
But whose particular protege, our financial liberal, who actually behaves independently, sometimes defiantly independently, in relation to the main institutions? Despite all the independence, it is quite obvious that our liberal is a person with executive functions. Perhaps the source of power then lies in Basel, where the heads of the Central Banks sit? But the Basel residents themselves are functionaries in their places.
Maybe the source is in the depths of the IMF and the World Bank, where they actually write macroeconomic instructions (in the past called “methodological recommendations”, “green notes”, etc.)? However, delving into the biographies of the heads of the IMF and WB, we will find many personalities, no doubt interesting, but never independent enough to rise to the level of “veto” in world politics. Undoubtedly, there is influence, and considerable influence, like the well-known C. Lagarde, “veto” - no.
Who is left with us? Apparently, the Fed, as a kind of heart of Kashchei - the dollar system, is the support of what for some reason is still called Bretton Woods, the Washington Consensus and the liberal financial model. But again we look at the representatives of this ninth circle of Dante’s hell, and it becomes clear that after P. Volker there is no one to look at - these are also functionaries, people-functions.
All that remains is to dive into popular conspiracy theories and look for control in the conglomerate of families from the TOP-50, represented by names that are so well known that there is no point in even citing them. Maybe the root of the “liberal financiers” is hidden there? However, the problem is that it is now becoming completely unclear who the “traditionalist industrialists” are then, whose leaders we include the same D. Trump.
D. Trump’s support is the oil industry, which he himself has never hidden and has never hidden. Moreover, he is sincerely proud of it. Is it possible to imagine large raw materials projects, especially in the United States with its stock market, without the equity participation of the largest banking capital? No you can not. Then how can they fight each other? The logic of the irreconcilable struggle between liberals and traditionalists is lame in the fact that in this case the secretive and well-known TOP-50 must play a chess game with themselves.
In fact, this question in one form or another is always asked in comments to expert speeches, and this is understandable, since natural cognitive dissonance arises - there is a struggle, sparks are flying, but there is only one root system. And even if the financial system is three times liberal, it cannot fight industrialists, and especially the American oil workers, who are its integral part. But for some reason there is a struggle.
All this means that expert descriptions miss certain important elements that, according to old memory and old schemes, attribute to “financiers” influence at the level of the 1980–1990s, but lose sight of the processes that transferred financiers to the category of hired management, with In this case, the mechanisms of influence of that same TOP-50 pool have also changed. The system of relations is described at the level of previous years, and the fact that it has undergone a serious transformation is left behind.
Cross-Ownership Phenomenon
The last few years have increasingly highlighted the growing influence of corporations and investment funds such as the Big Three: BlackRock, Vanguard, State Street, as well as smaller players (the Big Thirty).
It’s no joke, the total assets of the troika are $15,7 trillion, or 85% of the entire stock market, if we talk about the United States in particular. The irony is that the head of the largest investment monster BalckRock, L. Fink, is also a manager, albeit a “playing shareholder”, a co-founder manager.
We can try to return the description of economic (and then political) realities from head to foot if we begin to delve not just into the structure of the assets of this three, and then the thirty, but look at the principles and methods of their formation. And we will see a phenomenon that the author calls “global economic incest.” Despite the pretentiousness of this name, it reflects the essential characteristics of the process.
Imagine a village where each household has a share of all other households, although not always equal, but obligatory. Now, if instead of a village we imagine a metropolis, then we will roughly get an idea of what a mixture of the “Big Three”, large and medium-sized banks, industrial groups, the sphere of innovation, as well as the private sector in the form of individuals.
And the suburbs of this metropolis will include European, Russian, Arab, and Asian assets. Some have a little more shares, some have a little less, the question is that they (shares) are in everything and everyone at the same time. And the same banking sector, which today is called “the shaky pillar of globalism,” is also part of this metropolis with cross-ownership.
The information holding company has an indirect stake in the largest banks and vice versa, like an oil corporation, and also vice versa. Everyone owns everyone in shares, your competitor has a share of your company, you have his share. Oil workers have assets in information technology, electricians, and the IT sector, just as they have shares in oil and gas.
A year and a half ago, enthusiasts from the Wall Street Shadow project once tried to paint a picture of such a metropolis in the form of square shares, painted in different colors, in order to understand the ownership structure, at least within the specific BlackRock corporation.
At the eighth iteration, the picture turned into a single-color large square, as the fractions became smaller than the resolution of the screen. This almost communist metropolis-collective farm of the new era looked almost like the creation of K. Malevich. Below is the result of the first iterations.
As an example. The result of one of the first iterations for BlackRock
All these corporations are husbands and wives of each other, owners of each other's property, relatives of each other's relatives, which is precisely why, by analogy, the name of the process of such “cross-pollination” of assets as “global economic incest” comes to mind.
But the “incest of assets” did not happen all at once, and the structures of the same “Big Three” were formed in the late 1980s. All this is true, but the main activation occurred after the 2008 crisis.
From that moment on, the system was progressively transformed from a financial-banking system to an investment-financial one. The difference is in one word, but the difference in essence is too great.
Many people remember the famous Bilderberg Club, the “300 Club” and the meetings of representatives of Central Banks in Basel. The club brought together the largest owners with different assets, where common approaches were developed taking into account different (we emphasize) interests, Basel formed the principles of managing monetary policy and, accordingly, emissions.
The difference in one word means the transformation of this system, where the largest owners are essentially the owners of one global asset with common interests, and Central Banks manage not monetary, but essentially purely monetary policy, i.e., the policy of taxes and maintaining demand at the level population and the sphere of business services directly related to the population.
The investment loan has been de facto withdrawn from the sole control of the “financiers”, and has been withdrawn for a long time. Moreover, the traditional investment cycle outside the decisions of the meeting of the largest owners of the metropolis is impossible, since it is essentially issued not by banks, but from the consolidated funds of the metropolis commune of a new type, at the request of which the largest banks issue funds.
The difference between the two models is so fundamental that it is generally strange that in 2023 we still hear about the struggle not just with global financiers, but also with some liberal model of past years.
It is no longer conservative, not liberal, it is a completely different model! Tellingly, after 2008, such economic incest made markets more resistant to various kinds of bubbles, fluctuations in demand and economic activity - the system redirects flows, relieving tension. It may not be ideal, it may not always be as technologically advanced as possible, but it is much more effective than in previous periods.
What other important difference? The fact is that now the investment cycle is not a national prerogative. And the point is not even that the dollar system dominates or is relatively dominant, although mainly due to inertia this happens in the minds.
In reality, investors do not even operate with a basket of currencies, but with some kind of average measure, where the basis is the guarantees of the new communards, and instead of a basket of currencies there is a basket of assets. Without them, you will not be issued either your investment currency in the form of investment loans from funds, nor will they be issued reserve currencies through the issuance of central banks.
The last of the Mohicans who still somehow live their lives, trying to survive in this disgrace, is China with its two contours of the economy and as many as four separate currencies: the internal yuan, the external yuan, the Hong Kong yuan, and the Macau yuan.
Everyone is amazed that for years we have been talking about import substitution, high rates of the Central Bank, monetary hunger, the imposed digitalization of everything and everyone, strange educational programs, and in general you can bring up a lot of strange things, but fundamentally everything remains in place.
Who is guilty? It seems obvious - financiers from the Central Bank and liberals. But the problem is not even in the liberals from finance, although they are indeed part of the supranational management, but in the fact that without participation in the metropolis commune you will not have capital investments, with or without the liberals.
There is no capital investment; any emission in excess of the calculated value will simply drive up inflation, and with rising unemployment. It’s possible to draw indicators, it’s a question of the breadth of the “artists’” brushes, but without the first there will be the second and third, even if instead of the odious E. Nabiullina put artificial intelligence.
Here one can even partially understand the domestic oligarchy, which understands that they need to become at least a carcass, at least a scarecrow co-owner of communal living space in a metropolis commune, otherwise the value of assets will be impossible to manage. Even trying to control.
Global economic inbreeding has not yet taken root in all processes, but the root system is expanding and branching every year. The saddest thing is that we still see the transition to payments in national currencies as a kind of panacea, a kind of magic pill. This pill is essentially chalk, a placebo, since there is a lot of emotional effect, but very little economic effect. The metropolitan commune doesn’t care what currency you pay in. If they deem it necessary, they will bypass sanctions and any policy and provide capital investments in major currencies; if they don’t find it necessary, there will be no “capital” with payments in national currencies.
Fighting within traditional approaches makes no sense
All this makes us wonder whether we really understand the scale and seriousness of the transformation that the world economy is undergoing. This is by no means classical capitalism, but a kind of distribution system, only it does not distribute profit, not even money in the form of records and something on paper, but distributes value.
And how do we fight this? Payments in national currencies, righteous anger at management raising rates, cooperation with the global South, which is squeezed in the same vice, perhaps even more so than ours? Here, even a complete copying of the Chinese model will not help, since the Chinese also went by trial and error, and not all errors were collected along the way.
We have long seen the political struggle in the United States as our own magic wand, which with a wave will solve issues of security and economic interaction. D. Trump relies on oil workers, and we are oil workers too - there is something to agree on. But who are the owners of the Trumpists' economic base? Yes, exactly the same structures as the owners of the assets of liberals and democrats, the same new Black Square.
Here is R. Murdoch, a media magnate, owner of a huge media network that is “drowning” D. Trump. R. Murdoch is, at first glance, a truly concentrated example of the force that stands for globalist democrats against Trumpian traditionalist industrialists.
But let’s rewind twenty years ago, of which today even the memory has faded. “We cannot retreat now. I think that Bush is acting very morally, very correctly, and I think that he is going to continue in the same spirit,” - this is R. Murdoch about the war in Iraq. “The greatest result for the world economy, so to speak, would be $20 a barrel of oil. That's more than any tax cut in any country."
This is not Trump, who directly wrote about the expropriation of Iraq’s cheap oil by force, this is R. Murdoch again. And there are dozens of such examples, they can be cited one after another. So much for the irreconcilable contradictions between the “traditionalists” and the “liberal model”.
Where, then, do these sparkling political battles between conservatives and liberals, Democrats and Republicans, blue and red and even black come from?
The problem is that politicians govern society, but do not govern the metropolitan commune described. They can ask for something there, but on the contrary it will not look like a request at all. Political battles are due to the fact that each side brings to the Troika or Thirty its own vision of how many more assets can be brought to the metropolis commune at the least cost.
Liberals say that we will bring five suburbs and ten villages with serfs for 100 billion dollars and in five years, conservatives say that we will bring twenty cities for 50 billion and in one year. Trump promises to end the conflict in Ukraine in one day, now you can understand who this is addressed to. They tell us - voters. But in fact, this is a program for investors, and in a purely American style: “We will do the same thing, only cheaper.”
At the same time, as in any political process, by and large, the source of funding for the left and right is the same, as is the customer, but who will “graze the flock” and formulate the external agenda is a struggle for this, sometimes sparkling.
To the same interested parties, functionaries offer “geopolitical projects”, under which those same ten villages and twenty cities lie, some are launched, and at the same time, some are slowed down, often sharply and with a drop in the ratings of political functionaries.
Of course, the Russian elite is trying, with varying degrees of success, to take advantage of the fact that the supranational nature of this investment machine can, if necessary, ignore national sanctions and barriers.
The Japanese need to release Sakhalin-2 - there are no sanctions. If there is a general consensus that gas in the EU should be predominantly in the form of LNG, and the share of LNG should grow, then it is probably clear that the pipelines need to be protected very, very carefully. And if D. Trump were in the place of J. Biden, we would still have to worry about the fate of the pipes in the EU.
On the other hand, J. Payet, co-author of Maidan, declares that he is supposedly “liquidating” our Novatek project “Arctic LNG-2”, and here J. Payet himself needs to think about whether he has taken on too much, regarding a commune-metropolis with a strategy for the development of global LNG. And we may well be witnesses to the fact that J. Payet will be given a slap on the ears for these initiatives.
In fact, we have come to the conclusion that the primary economic initiative in world politics is the economic initiative of the network of investment mega-corporations, and the programs of political parties, leaders, ideologists, and the actions of monetary authorities are only a reflection of these initiatives. If the reflection is distorted and does not produce results in the form of collection of assets, then programs and actions are curtailed; if not, they are expanded.
And now everything must be passed through the prism of what to do with this new system, how to interact with it, etc. If we interact, we will have to resolve the issue of capital investment in the Russian economy. The issue will be resolved, and no amount of E. Nabiullina will limit the demand here, it will not be resolved, but in the current model you can rearrange faces from place to place - everything will remain the same.
How can this issue be resolved? There is only one way - to transfer strategic assets to the metropolis-commune. And it doesn’t matter at all who in the West will come to the political Olympus, red, blue or multi-colored. Here lies an existential contradiction, and not in the confrontation of political elites. No one wants to transfer assets to the new communes, but they cannot live without investments.
Essential things will be decided in interaction with this new capitalist communism of the distributive type. Fighting him, as we do today, through confrontation in political, foreign policy and even geopolitical projects, is pointless, since for him any political platform is of equal importance. Whoever “herds the flock” better – let him stand at the helm. Who cares what kind of road it is, if it is a ring around this investment metropolis. That the herds will go to the right and to the left.
A certain horror of this model and at the same time a kind of devilish temptation for national elites is that, having become among the residents of an investment metropolis, the elite becomes the owner of the entire metropolis. Let it be in a fraction equal to a square, not visible on the screen without a magnifying glass, but in total. If you don’t enter, you won’t have the means to develop what you have. “To everyone who has, more will be given, and he will have abundance, but from him who does not have, even what he has will be taken away” (Matthew 25:29) - they also traditionally love biblical allusions.
Now this is not just a conglomerate of TOP-50 names, there are also private investors and smaller corporations - this is already a “Big Family”, an antique family-type policy. And it’s not for nothing that translations of ancient heritage are now being re-purchased in all institutes all over the world - they have come in handy.
Summary
The fight against this system, which has become much stronger and more stable than the past Washington Consensus, more advanced and more promising than the ideas of K. Schwab with Davos and the Club of Rome, is a task whose goal is to separate the national value from the assessment and management of global value.
This is not about “defeating NATO in Ukraine,” not about “proving decadent Europe,” not about “returning the WTO to the right track,” and not even about “multipolarity.”
The only force that could balance this new model could only be a similar system built on the same principles. Cost to cost, assets to assets.
If players like China, Russia, the Arabians, and other countries suddenly manage to find some kind of consensus and create something like their “Big Three”, where the largest banks, corporations and sovereign funds of all players at once will act as shareholders for each other. Several mutual investment funds that will own the underlying assets, dividing them among themselves and mixing them, creating their own investment utility metropolis.
Then and only then there is a chance not to imitate the struggle, not to waste time at the expense of political projects, but you can even win it. Of course, the big question is how the model will be generally accepted, where Gazprom is conventionally owned by Saudi Aramco, the Mabudala fund and the Chinese Sinopec, and part of the Chinese banking system is owned by the Arabian PIF, etc.
And without such an ownership structure, in the current conditions, it is impossible to launch an independent investment cycle, without which it is impossible to obtain a sovereign financial system. That’s why you shouldn’t make fun of “values”; without such common values, it’s impossible to form common cross-ownership. And in this regard, we still have a little time to think and still return to the Chinese proposal with the value concept of the common destiny of humanity.
So far, the suspicion that the very formulation of the question in this way - to make an analogue of our international investment and financial model - evokes a feeling of sacred horror among our elites. Moreover, our people, apparently, do not understand the full depth of this feeling. And if the elite does not overcome this, then no matter how tight the string is, the assets will eventually be transferred to the new communards, whether the elite will be happy at the same time, the answer is far from obvious. We are a society, we definitely won’t.
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