The If Only Theory of Contemporary Capitalism

 

According to the International Energy Agency (IEA), the closure of the Strait of Hormuz has precipitated “the largest oil supply disruption in history”, eclipsing the oil shocks of the 1970s in severity.

We are like the characters in the film On the Beach (about Australians waiting for the radiation from a nuclear war to reach them), biding our time before the effects seep through. Clearly, not only industries that directly consume oil will be affected. As fertilizers rely on natural gas for their production, decimated crop yields and ensuing food shortages – in addition to flight cancellations and severe inflation – will become the norm.

Bankers JP Morgan predict global oil inventories will hit “Operation Floor” – when oil production stops functioning – in September.

Already faced with 1970s-style stagflation (weak GDP growth and inflation), economies will soon have to deal with slumpflation (falling growth and inflation) says economist Michael Roberts.

This will happen regardless of whether there is a “final agreement” with Iran.

But doom-laden concentration on the inevitable effects of war clouds our judgement. It leads to the feeling that if only these random geopolitical shocks didn’t happen, everything would be fine.

But maybe, rather than being the root cause of crisis, a ‘shock’ like the closure of the Strait of Hormuz is merely exposing fault-lines that were already there.

And maybe there’s a mutually reinforcing dynamic at work. In that the weakness of the economic system generates geopolitical responses which have the effect of further enervating the economy.

Looking again at the oil shock of October 1973 – up until the halting of shipping in the Strait of Hormuz, the worst disruption of the global oil industry in history according to the IEA – is instructive. This older shock involved an oil embargo on countries like the US and UK and a fourfold increase in the price of oil.

Unquestionably this ‘triggered’ a financial crisis and a recession in 1974-75, the first year-on-year fall in output in the West since the Second World War.

But if the problem was merely external (a large increase in the price of oil) once it abated, things should have returned to ‘normal’ i.e. steadily increasing growth and prosperity. But that’s not what happened.

According to historian David Gibbs, the crisis resulted decades’ long flat productivity growth in the US and impaired economic performance in most of the rest of the world

“If you look at long-term rates of GDP,” he says, “it was quite high up until 1973 and in 1973 you see a big drop. And rates of economic performance have never fully recovered from the earlier period.”

It was “a historic break point”.

The same illusion of the primacy of the external cause can be seen in attitudes towards the Global Financial Crisis of 2008. The crisis was caused, so goes the official story, by reckless bank lending leading to a seizing up of credit that the rest of the economy relies on. Now those causes no longer apply, businesses can get credit and the big banks, largely thanks to huge doses of Quantitative Easing, are no longer insolvent.

But if you look at UK economic growth in the pre- and post-crisis period, it is clearly debilitated, less than half as strong. In the 18 years since the 2008 crisis, the economy has grown by 22% compared to 53% growth in the 18 years before it.

Why should this be? Why, once the causes of the crisis are dealt with, should the crisis linger on, not in full-on crisis mode but in enfeebled performance?

Possibly because there was far more to the crisis than revealed by its surface ‘causes’.

To take medical analogy, if a person survives a heart attack but goes on to suffer worsening heart failure – not being able to walk far with running out of breath – the underlying problem should obviously be put down to heart disease, not sought in the particular circumstances that brought on the original heart attack.

But we do precisely this with the economy, continually, as economist Harry Shutt once said, mistaking symptoms for causes.

The former head of Goldman Sachs says he can “smell” a new financial crisis in the offing. This won’t happen, 2008-style, through the banks but in the burgeoning private credit industry where companies, such as private equity firms, lend to other companies.

If it does erupt, what will provoke this crisis will be a rise in interest rates to try and tamp down the inflation caused by the closure of the Strait of Hormuz.

According to chief economist of the World Bank, “the war is hitting the global economy in cumulative waves: first through higher energy prices, then higher food prices, and finally, higher inflation, which will push up interest rates and make debt even more expensive.”

But the external cause won’t explain the crisis. To do that we first need to explain why the global economy in the 21^st century is so much more dependent on trade (i.e. globalised) than it was 50 years ago. Trade now represents about 60% of world GDP compared to 25% in 1970.

Then we need to consider the fact that the economy is much more deregulated than last time, a process which is ongoing. Finally, we need to factor in that the economy runs on huge levels of corporate and personal debt, which makes it so much more susceptible to any increase in the cost of debt (i.e. through higher interest rates).

And these causes are in turn related to the ending, caused by the oil shock of October 1973, of the “thirty glorious years” of strong economic performance after World War Two, and why that turned out to be a “historic break point”.

You cannot understand external shocks like the interruption of the ‘life-blood’ of oil supplies without also understanding how, internally, we are more vulnerable to their effects.

Come you Masters of War ... I'm just want you to know I can't see through your masks

The Peter Jackson edited Get Back Beatles documentary is a fascinating insight into the way the most famous band in the world worked together a year before splitting up for good. It forces a revision of the idea that their rehearsals were marked by a simmering acrimony as suggested by the contemporary – and now suppressed – film Let It Be, which was based on the same footage. The much longer Jackson compiled film suggests they actually got on quite well, despite George Harrison flouncing off at one point. We see the Beatles working as a group on songs – such as Harrison’s 'All Things Must Pass' and Lennon’s 'Gimme Some Truth' – that would later become some of their authors’ most famous solo efforts.

It’s easy to forget you are watching fly on the wall footage that is over half a century old. And some of the most innocuous scenes, on closer inspection, reveal their age. Take the debate in the film over the idea ؘ– proposed by original filmmaker Michael Lindsay-Hogg – that the Beatles should hire a ship to take them to Libya where they would perform in a Roman amphitheatre on the coast (the Get Back sessions were meant to prepare for a TV performance which would eventually morph into the rooftop concert). “How are you going to get a ship in a couple of days?” asks Ringo Starr. “We got the American Navy for How I Won the War” says John Lennon, a reference to a 1967 film he acted in. To which Starr responds, “Yes but they were passing by and you only got them for a few hours”. Cue images from the film of the actors disembarking from a D-Day style landing craft.

Toy Story

To utilize a popular phrase, that could never happen nowadays. Something that is made painfully evident from the documentary Theaters of War which shows how the US military now meticulously controls the content of films and TV programmes, to the extent of insisting on line by line script changes to make sure they appear in a desirable light. In 2023, the PR savvy U.S. Navy would never allow their ‘toys’ to be used in a film as subversive as How I Won the War. Director Richard Lester said the film was an “anti-anti-war film” in that it portrayed war as intrinsically hostile to humanity itself rather than just being against the war crimes of the other side. The plot shows the battalion coming to the conclusion they have to kill their commanding officer as his incompetence is leading them to their deaths (unfortunately they don’t and it does). The effect is rather muted by the fact that he is played by Michael Crawford, later to become famous as Frank Spencer in Some Mothers Do ‘Ave ‘Em (although to be fair people wanted to kill him too).

According to Theaters of War, thanks to incredibly persistent Freedom of Information requests, it’s clear that “thousands upon thousands” of films and TV shows have been “rewritten at script level” by the Pentagon and the CIA. If the filmmakers want military cooperation – access to all those aircraft carriers, fighter jets and troop extras – they have to hand over their entire script for vetting. If they don’t, they don’t get to use the military equipment, which is usually essential for box office success. If they do agree, they have to sign a contract and the Pentagon “are effectively like another producer”.

This ‘help’ is most obvious in blockbuster movies like Top Gun (which according to the Pentagon “completed rehabilitation of the military’s image which had been savaged by the Vietnam War”) and its 2021 sequel, Pearl Harbor, or The Hunt for Red October. And it’s evident in TV series like 24 and Homeland which bear the hallmarks of the CIA’s decision to follow the Pentagon’s lead and open an office to liaise with television and cinema in 1996.

The Pentagon Universe

The national security state is also integral to the greatest ‘cinematic’ innovation of this century – super hero movies. The original script for Iron Man, for example, had its hero, Tony Stark, battling against the arms industry. But by the time the film went into production this had entirely flipped. In the actual 2008 film, he inherits his father’s arms business and the subsequent franchise is “an outright celebration of the arms industry”.

In fact, super hero movies like Man of Steel or Captain Marvel are the perfect advertisement for new military ‘toys’. And the Transformers franchise is little more than a showcase for new weapons. Until 1988, rules stated that the Department of Defense should only help films achieve “authenticity” and “dignity”. Subsequently, however, these were enlarged to allow promotion of “public understanding”, help with recruitment and support of government policy.

And this mission creep has had tangible effects. Captain Marvel was “a recruiting bonanza, a vehicle for the Air Force to reach young women”, channelling, according to its star, Brie Larson, “the spirit of the Air Force”. 2021’s The Suicide Squad has an assortment of super-hero bad asses overthrow a fictional anti-American government in Latin America. Any similarity to actual events is strictly coincidental.

These are just stupid films for kids, you might object, and besides anti-war films do get made. Both demurrals have some validity but don’t erase the basic problem. Super-hero films have a cultural impact way beyond their immediate fan base. Apart from being some of the highest grossing movies of all time, they reach a far wider audience by being constantly repeated on prime time TV. Critical war films – for example Platoon, Born on the Fourth of July or possibly 2005’s Jarhead – do get produced but they are swimming against the current. Oliver Stone’s Vietnam films were delayed for years because of their “unacceptable themes”.

Rehabilitating Nukes

We are talking about a gradual cultural seepage. According to one interviewee, filmmakers are well aware their films are going to get vetted, so “they write their scripts in ways they know will ultimately please the Pentagon …. People self-censor and tone down any potential critical view.”  Much like journalists, you might say.

This process of cultural acclimation can be sent in a frankly scary (pun intended) segment about what happened to Godzilla. In the original 1954 Japanese film, Godzilla was literally created by hydrogen bomb testing and survivors of the monster’s attacks had radiation poisoning. Godzilla was “an allegory for the U.S. nuclear bombing of Japan”. This association survived in the 1998 Roland Emmerich version but by the 2014 iteration the U.S. Department of Defense was involved. A passage in the original script where a character recalls how their father survived the Hiroshima bomb was replaced by musings about the “arrogance of man”. And far from being the source of the mutation, nuclear weapons were the solution. Nuclear tests in the 1950s were actually attempts to kill Godzilla.

Revealingly, the 2019 reboot Godzilla: King of the Monsters was made without Pentagon assistance but stuck with the “nukes as heroes theme”. The filmmakers conclude: “It’s hard to imagine a more complete reversal. This long time warning about the dangers of proliferation is now an extension of the U.S. military and something of an advertisement for the bomb”.

Essentially, and terrifyingly for the future of humanity, nuclear weapons are being ‘rehabilitated’ and Hollywood is integral to that redemption. The subdued reaction to the possibility that nuclear weapons may be used in Ukraine may be evidence that it is having the desired effect.

That’s Entertainment

What Theaters of War unmasks is just how PR-saturated our popular culture is. With all due respect to Noam Chomsky, this is not about manufacturing consent through news and current affairs coverage. It is a form of propaganda that works through the slow accretion of subconscious associations and acquiescence with outwardly fictional, often absurd, depictions. “This is more insidious than state control and state-produced propaganda,” one interviewee notes, “because it passes off as just entertainment.”

As one internal Pentagon document observes, “Features films reach far greater audiences than any single news media story about the actual events. Audiences will voluntarily sit through a two hour ‘infomercial’ [about an army operation]”.

The contrast with the 1960s and How I Won the War could not be starker. That decade and the following one were laden with overtly critical, and fundamentally subversive, films about war. Paths of Glory, Dr Strangelove, The Hill, The Battle of Algiers, The Bed Sitting Room, Oh! What a Lovely War, The Charge of the Light Brigade, Catch-22, M*A*S*H and Apocalypse Now all reached large audiences. Sure, they were outnumbered by celebratory depictions of war (invariably involving daring exploits against nefarious Nazis), but the point is they existed and competed with standard fare. Nowadays, in an era when PR has hugely extended its tentacles, if they ever got made in the first place they’d be shunted off to the art house sector and only seen by people who attend film festivals.

This affects TV as well. In the 1980s the BBC could produce the nuclear war docu-drama Threads and the basically seditious Monocled Mutineer. Whereas now we are treated to The SAS: Rogue Heroes. For assorted cranks and weirdoes, the former are available on DVD.

It might seem strange to say in the aftermath of the Corbyn and Sanders insurgencies but, as Theaters of War demonstrates, the long march of PR is making our societies more and more conservative and averse to change. If the Left cannot find a way to counteract this tendency and reach mass audiences, it – and maybe humanity as a whole – will not have a future.