The announcement on April 15 by President Biden that this administration was expelling 10 Kremlin diplomats and imposing new sanctions for alleged Russian interference in the 2020 US elections — to which Russia replied with a tit for tat — came just days after the Pentagon conducted military drills in the South China Sea. These actions were but the latest escalation of aggressive posturing as Washington ramps up its “New Cold War” against Russia and China, pushing the world dangerously towards international political and military conflagration.

Most observers attribute this US-instigated war to rivalry and competition over hegemony and international economic control. These factors are important, but there is a bigger picture that has been largely overlooked of what is driving this process: the crisis of global capitalism.

This crisis is economic, or structural. One of chronic stagnation in the global economy. But it is also political: a crisis of state legitimacy and capitalist hegemony. The system is moving towards what we call “a general crisis of capitalist rule” as billions of people around the world face uncertain struggles for survival and question a system they no longer see as legitimate.

In the United States, the ruling groups must channel fear over tenuous survival away from the system and towards scapegoated communities, such as immigrants or Asians blamed for the pandemic, and towards external enemies such as China and Russia. At the same time, rising international tensions legitimate expanding military and security budgets and open up new opportunities for profit making through war, political conflict and repression in the face of stagnation in the civilian economy.

All around the world a “people’s spring” has taken off. From Chile to Lebanon, Iraq to India, France to the United States, Haiti to Nigeria and South Africa to Colombia, waves of strikes and mass protests have proliferated and, in many instances, appear to be acquiring a radical anti-capitalist character. The ruling groups cannot but be frightened by the rumbling from below. If left unchallenged, the New Cold War will become a cornerstone in the arsenal of US rulers and transnational elites to maintain a grip on power as the crisis deepens.

The crisis of global capitalism

Economically, global capitalism faces what is known in technical language as “overaccumulation”: a situation in which the economy has produced — or has the capacity to produce — great quantities of wealth but the market cannot absorb this wealth because of escalating inequality. Capitalism by its very nature will produce abundant wealth yet polarize that wealth and generate ever greater levels of social inequality unless offset by redistributive policies. The level of global social polarization and inequality now experienced is without precedent. In 2018, the richest one percent of humanity controlled more than half of the world’s wealth while the bottom 80 percent had to make do with just five percent.

Such inequalities end up undermining the stability of the system as the gap grows between what is — or could be — produced and what the market can absorb. The extreme concentration of the planet’s wealth in the hands of the few and the accelerated impoverishment and dispossession of the majority means that the transnational capitalist class, or TCC, has increasing difficulty in finding productive outlets to unload enormous amounts of surplus it accumulated.

The more global inequalities expand, the more constricted the world market becomes and the more the system faces a structural crisis of overaccumulation. If left unchecked, expanding social polarization results in crisis — in stagnation, recessions, depressions, social upheavals and war — just what we are experiencing right now.

Contrary to mainstream accounts, the coronavirus pandemic did not cause the crisis of global capitalism, for this was already upon us. On the eve of the pandemic, growth in the EU countries had already shrunk to zero, much of Latin America and sub-Sahara Africa was in recession, growth rates in Asia were steadily declining, and North America faced a slowdown. The writing was on the wall. The contagion was but the spark that ignited the combustible of a global economy that never fully recovered from the 2008 financial collapse and had been teetering on the brink of renewed crisis ever since.

Even if there is a momentary recovery as the world slowly emerges from the pandemic, global capitalism will remain mired in this structural crisis of overaccumulation. In the years leading up to the pandemic there was a steady rise in underutilized capacity and a slowdown in industrial production around the world. The surplus of accumulated capital with nowhere to go expanded rapidly. Transnational corporations recorded record profits during the 2010s at the same time that corporate investment declined.

The total cash held in reserves of the world’s 2,000 biggest non-financial corporations increased from $6.6 trillion in 2010 to $14.2 trillion in 2020 — considerably more than the foreign exchange reserves of the world’s central governments — as the global economy stagnated. Wild financial speculation and mounting government corporate, and consumer debt drove growth in the first two decades of the 21st century, but these are temporary and unsustainable solutions to long-term stagnation.

The Global War Economy

As I showed in my 2020 book, The Global Police State, the global economy has become ever more dependent on the development and deployment of systems of warfare, social control and repression simply as a means of making profit and continuing to accumulate capital in the face of chronic stagnation and saturation of global markets. This is known as “militarized accumulation” and refers to a situation in which a global war economy relies on perpetual state organized war making, social control and repression — driven now by new digital technologies — in order to sustain the process of capital accumulation.

The events of September 11, 2001 marked the start of an era of a permanent global war in which logistics, warfare, intelligence, repression, surveillance and even military personnel are more and more the privatized domain of transnational capital. The Pentagon budget increased 91 percent in real terms between 1998 and 2011, while worldwide, total state military budgets outlays grew by 50 percent from 2006 to 2015, from $1.4 trillion to more than $2 trillion, although this figure did not take into account the hundreds of billions of dollars spent on intelligence, contingency operations, policing, bogus wars against immigrants, terrorism and drugs, and “homeland security.” During this time, military-industrial complex profits quadrupled.

But focusing just on state military budgets only gives us a part of the picture of the global war economy. The various wars, conflicts and campaigns of social control and repression around the world involve the fusion of private accumulation with state militarization. In this relationship, the state facilitates the expansion of opportunities for private capital to accumulate through militarization, such as by facilitating global weapons sales by military-industrial-security firms, the amounts of which have reached unprecedented levels. Global weapons sales by the top 100 weapons manufacturers and military service companies increased by 38 percent between 2002 and 2016.

By 2018, private for-profit military companies employed some 15 million people around the world, while another 20 million people worked in private security worldwide. The private security (policing) business is one of the fastest growing economic sectors in many countries and has come to dwarf public security around the world. The amount spent on private security in 2003, the year of the invasion of Iraq, was 73 percent higher than that spent in the public sphere, and three times as many persons were employed in private forces as in official law enforcement agencies. In half of the world’s countries, private security agents outnumber police officers.

These corporate soldiers and police were deployed to guard corporate property, provide personal security for TCC executives and their families, collect data, conduct police, paramilitary, counterinsurgency and surveillance operations, carry out mass crowd control and repression of protesters, run private detention and interrogation facilities, manage prisons and participate in outright warfare.

In 2018, President Trump announced with much fanfare the creation of a sixth military service, the “space force.” The corporate media duly towed the official line that this force was needed to face expanding threats to the United States. What went less reported is that a small group of former government officials with deep ties to the aerospace industry had pushed behind the scenes for its creation as a way to hype military spending on satellites and other space systems.

In February of this year, the Federation of American Scientists reported that military-industrial complex lobbying is responsible for the decision by the US government to invest at least $100 billion to beef up its nuclear stockpile. The Biden administration announced in early April to much acclaim that it would pull all US troops out of Afghanistan. While US service troops in that country number 2,500, these pale in comparison with the more than 18,000 contractors that US government has hired to do its bidding in the country, including at least 5,000 corporate soldiers that will remain.

The so-called wars on drugs and terrorism, the undeclared wars on immigrants, refugees and gangs — and poor, dark-skinned and working-class youth more generally — the construction of border walls, immigrant detention centers, prison-industrial complexes, systems of mass surveillance and the spread of private security guard and mercenary companies, have all become major sources of profit-making and they will become more important to the system as stagnation becomes the new normal. In sum, the global police state is big business at a time when other opportunities for transnational corporate profit-making are limited.

But if corporate profit, and not an external threat, is the reason for expanding the US state and corporate war machine and the global police state, this must still be justified to the public. The official state propaganda narrative about the “New Cold War” serves this purpose.

Conjuring Up External Enemies

There is another dynamic at work in explaining the New Cold War: the crisis of state legitimacy and capitalist hegemony. International tensions derive from the acute political contradiction in global capitalism in which economic globalization takes places within a nation-state-based system of political authority. To put this in technical terms, there is a contradiction between the accumulation function and the legitimacy function of states. That is, states face a contradiction between the need to promote transnational capital accumulation in their individual national territories and their need to achieve political legitimacy and stabilize the domestic social order.

Attracting transnational corporate and financial investments to the national territory requires providing capital with all the incentives associated with neoliberalism, such as downward pressure on wages, union busting, deregulation, low or no taxes, privatization, investment subsidies, fiscal austerity and on so. The result is rising inequality, impoverishment and insecurity for working and popular classes; precisely the conditions that throw states into crises of legitimacy, destabilize national political systems and jeopardize elite control.

International frictions escalate as states, in their efforts to retain legitimacy, seek to sublimate social and political tensions and to keep the social order from fracturing. In the US, this sublimation has involved channeling social unrest towards scapegoated communities such as immigrants — this is one key function of racism and was a core component of the Trump government’s political strategy — or towards an external enemy such as China or Russia, which is clearly becoming a cornerstone of the Biden government’s strategy.

While the Chinese and Russian ruling classes must also face the economic and political fallout of global crisis, their national economies are less dependent on militarized accumulation and their mechanisms of legitimization rest elsewhere — not on conflict with the US. It is Washington that is conjuring up the New Cold War, based not on any political or military threat from China and Russia, much less from economic competition, as US- and Chinese-based transnational corporations are deeply cross-invested, but on the imperative of managing and sublimating the crisis.

The drive by the capitalist state to externalize the political fallout of the crisis increases the danger that international tensions will lead to war. Historically wars have pulled the capitalist system out of crisis while they serve to deflect attention from political tensions and problems of legitimacy. The so-called “peace dividend” that was to result in demilitarization when the original Cold War ended with the 1991 collapse of the Soviet Union evaporated almost overnight with the events of September 2001, which legitimated the sham “War on Terror” as a new pretext for militarization and reactionary nationalism. US presidents historically reach their highest approval ratings when they launch wars. George W. Bush reached an all-time-high of 90 percent in 2001 as his administration geared up to invade Afghanistan, and his father George H. W. Bush achieved an 89 percent approval rating in 1991, right as the US declared the end of its (first) invasion of Iraq and the “liberation of Kuwait.”

The battle for the post-pandemic world

We are currently witnessing a radical restructuring and transformation of global capitalism based on a much more advanced digitalization of the entire global economy and society. This process is driven by so-called fourth industrial revolution technologies, including artificial intelligence and machine learning, Big Data, autonomously driven land, air and sea vehicles, quantum and cloud computing, 5G bandwidth, bio- and nanotechnology and the Internet of Things, or IoT.

The crisis is not only economic and political, but also existential because of the threats of ecological collapse and nuclear war, to which we must add the danger of future pandemics that may involve much deadlier microbes than coronaviruses. The pandemic lockdowns served as dry runs for how digitalization may allow the dominant groups to step up restructuring time and space and to exercise greater control over the global working class. The system is now pushing towards expansion through militarization, wars and conflicts, through a new round of violent dispossession and through further plunder of the state.

The ruling classes are also using the health emergency to legitimate tighter control over restive populations. The changing social and economic conditions brought about by the pandemic and its aftermath are accelerating the process. These conditions have helped a new bloc of transnational capital, led by the giant tech companies, interwoven as they are with finance, pharmaceuticals and the military-industrial complex, to amass ever greater power and to consolidate its control over the commanding heights of the global economy. As restructuring proceeds, it heightens the concentration of capital worldwide, worsens social inequality and also aggravates international tensions and the dangers of military conflagration.

In 2018, just seventeen global financial conglomerates collectively managed $41.1 trillion dollars — more than half the GDP of the entire planet. That same year, to reiterate, the richest one percent of humanity led by 36 million millionaires and 2,400 billionaires controlled more than half of the world’s wealth while the bottom 80 percent — nearly six billion people — had to make do with just five percent of this wealth. The result is devastation for the poor majority of humanity.

Worldwide, 50 percent of all people live on less than $2.50 a day and a full 80 percent live on less than $10 per day. One in three people on the planet suffer from some form of malnutrition, nearly a billion go to bed hungry each night and another two billion suffer from food insecurity. Refugees from war, climate change, political repression and economic collapse already number into the hundreds of millions. The New Cold War will further immiserate this mass of humanity.

Capitalist crises are times of intense social and class struggles. There has been a rapid political polarization in global society since 2008 between an insurgent far-right and an insurgent left. The ongoing crisis has incited popular revolts. Workers, farmers and poor people have engaged in a wave of strikes and protests around the world. From Sudan to Chile, France to Thailand, South Africa to the United States, a “people’s spring” is breaking out everywhere. But the crisis also animates far-right and neofascist forces that have surged in many countries around the world and that sought to capitalize politically on the health calamity and its aftermath. Neofascist movements and authoritarian and dictatorial regimes have proliferated around the world as democracy breaks down.

Such savage inequalities are explosive. They fuel mass protest by the oppressed and lead the ruling groups to deploy an ever more omnipresent global police state to contain the rebellion of the global working and popular classes. Global capitalism is emerging from the pandemic in a dangerous new phase. The contradictions of this crisis-ridden system have reached the breaking point, placing the world into a perilous situation that borders on global civil war.

The stakes could not be higher. The battle for the post-pandemic world is now being waged. Part of that battle is to expose the New Cold War as a ruse by the dominant groups to deflect our attention from the escalating crisis of global capitalism.