Currency (and imperialism) matters

February 23, 2021
An imperialist currency “arms race” is seeking to re-divide the world financially. Image: Pixabay

Late last year, academics from China (including Hong Kong) wrote in Monthly Review (MR) that “despite having the world’s largest production capacity … China is nevertheless finding it hard to move forward”. Its “socialist road with Chinese characteristics” may falter in the rush towards globalisation, the term used to denote the latest form of capitalism.

The authors argue that a way forward might include a “de-dollarisation” of international trade, made possible via crypto currency, using blockchain technology, and backed by China’s central bank (thus being unlike the speculative bitcoin). They claim that such a currency would not only challenge United States/Western capitalist hegemony, but would “improve the efficiency, transparency, and credibility of industrial and financial chains and make finance finally serve the real economy”.

According to the Australian Strategic Policy Institute (ASPI – check out who pays its bills), apparently everyone is racing to get their central bank to have a digital currency, with China years ahead in its development.

The Bank for International Settlements Committee on Payments and Market Infrastructure noted, in March 2018, that such a currency would be “a central bank liability, denominated in an existing unit of account, which serves both as a medium of exchange and a store of value”. For China, this would mean a digitised renminbi (which translates as “people’s money”, though most people know China’s currency as the Yuan).

Payments in China using Alipay and WeChat Pay apps, valued at US$5.5 trillion in 2016, were 50 times those of the US, with this form of domestic digital payment being at the bottom tier of all possible digital currency/electronic payments (DC/EPs).

For everyday users to access electronic payments of this type, an iPhone app is the minimum requirement, with higher-grade digital wallets linked to an ID or bank card. Greater technological security will apply progressively to each aspiring tier of electronic payment, with data anonymised and personal information protected from other third parties. The DC/EP would ensure the visibility of all financial flows and would be (or will be) apparently highly effective in combating financial crimes, such as bribery and embezzlement.

It seems that China wants to reduce, if not eliminate, financial risk and ensure financial stability. The DC/EP means that China’s central bank would have detailed data for applying to sophisticated monetary policy and macro-prudential supervision. It is claimed that with the DC/EP, the Belt and Road Initiative (BRI) could truly take off.

This worries the ideologues of the ASPI, who say that the DC/EP, with international recognition and uptake, will sit outside the hegemonic medium of trade – the US dollar. Whilst acknowledging that the DC/EP would improve financial governance and streamline international transactions, ASPI’s ideologues fear that, amongst other effects, US-imposed sanctions could be subverted, as well as resulting in China having “the world’s largest centralised repository of financial transactions data”.

ASPI essentially recommends that Western governments, including Australia’s, respond with laws regulating crypto currencies and access speedily a functioning crypto currency (read: a digital US dollar) to remain amongst those dominating international trade.

This “arms race” by Great Powers to create and utilise new monetary instruments means seeking to re-divide the world financially at other’s expense. Such a development would come as no surprise to Vladimir Lenin, who, in his 1916 work Imperialism, the Highest Stage of Capitalism, emphasised the leading importance of finance in the era of monopoly capitalism. Lenin saw that “the monstrous facts concerning the monstrous rule of the financial oligarchy are so glaring that in all capitalist countries” those facts can hardly be ignored – in this case revealed in the public airing of concerns about crypto currencies.

On the other hand, to the extent that crypto currencies substitute for real currencies, then, perhaps apart from increased centralised surveillance of transactions and the convenience of easier access to instantaneous transfer and exchange, these currencies would have no fundamental difference from those used now, which are themselves transferable or exchangeable electronically at the push of a button.

In reality, then, the actual bases and processes of imperialism have not changed from Lenin’s analysis: (1) monopolising industrial capital led by financial capital, acting in concert with the state; (2) the ever-expanding need for raw materials and markets (and, today, cheap manufacturing labour); and (3) inter-imperialist competition seeking the re-division of the world.

Finally, today’s rush towards crypto currencies gives renewed weight to Lenin’s identification of three layers of imperialism’s impact.

1. Economically: “Monopolies, oligarchy, the striving for domination and not for freedom, the exploitation of an increasing number of small or weak nations by a handful of the richest or most powerful nations — all these have given birth to those distinctive characteristics of imperialism which compel us to define it as parasitic or decaying capitalism. More and more prominently there emerges, as one of the tendencies of imperialism, the creation of the ‘rentier state’, the usurer state, in which the bourgeoisie to an ever-increasing degree lives on the proceeds of capital exports.

What is this but, in part, a depiction of the potentially degenerative and parasitic role of state-controlled crypto currencies?

2. Politically: “The intensification of antagonisms between imperialist nations for the division of the world increases this urge [towards 'opportunism in the working-class movement']. And so there is created that bond between imperialism and opportunism”. This means that for socialists “the fight against imperialism … is inseparably bound up with the fight against opportunism."

Currencies, crypto or otherwise, are bound up in this insofar as their relative value, speculation against, and always potential implosion, even in “normal” times, seemingly regulate the standard of living of populations beyond the control of local politicians. This always-present economic instability encourages venal opportunism by all aspiring bourgeois because “Après moi, le déluge!” [After me, the deluge!]

3. Internationally: “Therefore, in the realities of the capitalist system, … alliances, no matter what form they may assume, whether of one imperialist coalition against another, or of a general alliance embracing all the imperialist powers, are inevitably nothing more than a ‘truce’ in periods between wars. Peaceful alliances prepare the ground for wars, and in their turn grow out of wars; the one conditions the other, producing alternating forms of peaceful and non-peaceful struggle on one and the same basis of imperialist connections and relations within world economics and world politics.”

In other words, Great Power struggles (alone or in alliances) for currency, financial, trade or geo-strategic dominance are just abstracted levels of the ultimate outcome of inter-imperialist rivalry, which is how Lenin characterises the Great War: “the war of 1914–18 was imperialist (that is, an annexationist, predatory, war of plunder) on the part of both sides; it was a war for the division of the world, for the partition and repartition of colonies and spheres of influence of finance capital, etc.”

Currency battles are an epiphenomenal symptom of the race towards global inter-imperialist war.

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