In February 2022, many policy analysts, including this author, expected that the saber-rattling on both sides of the Russia-West geopolitical divide was simply a means to strengthen the bargaining position of both parties in the imminent forthcoming negotiations. History has proven that was not the case. Apparently, another decisive force was not accounted for in that policy analysis. With the benefit of hindsight and hints subsequently dropped by Western political retirees, that hidden force was detected to be emanating from the West, most likely from the US. It was previously unidentifiable using then publicly available information, but now its presence is a certainty that needs to be described. This conclusion prompts the investigation of this mysterious force, whose interests required fuelling a war, and its identification will help to shed light on how the current conflict may be terminated.
In one of my previous papers (The Empire Strikes Back), the conflict was described as a competition for power between globalists and nationalists. In one corner, the collective West led by the globalists prepared its response and, in the other — Russia governed by nationalists stood ready. However, the response turned out to be unusual — to fuel an armed conflict in Europe — and its cost-benefit analysis does not show any clear gains that the West can obtain in the short-to medium term, unless it was based on the erroneous assumption of a quick Russian collapse. Thus, could it be that the interests of Western globalists were more long-term and thus evasive in their detection? Or was it another miscalculation after Russia had miscalculated its lightning raid into Ukraine? While the interests of Russian nationalists were always straightforward — to re-establish a sphere of Russian dominance, hidden contradictions appeared to emerge among forces operating in the West that necessitate taking a closer look at how the West is governed.
Liberal Democracy Crude
Speaking in Warsaw in March 2022, President Joe Biden described the current conflict as “a battle between democracy and autocracy”, further specifying that this battle is “between a rules-based order and one governed by brute force.” The last clarification is instructive: a rules-based (presumably global) order is contraposed to brute (evidently local) force, which raises the question of what the referred to ‘brute force’ is fighting for or against.
The status quo is obviously convenient to the West — that is, to the ruling elites who use a democratic form of governance — and hindering to the interests of elites that govern ‘undemocratic’ countries. It is equally obvious that the ‘brute force’ could not resolve its problems within the framework of democratic governance; otherwise, the conflict would not have flared up.
In 2020, when the COVID-19 pandemic became a reality, a number of strange social phenomena — the revealed political impotency of executive bodies in dealing with an unpredictable emergency; the excessive power of the central banks; the abnormally unified message emanating from mass media, coupled with their attempts to stifle dissenting views (see “An Invisible Global Revolution“[1]) — went contrary to the mainstream assumptions of how a modern liberal democracy results in the emergence of a free and efficient society. Other observations stretching back to the Great Recession of 2007 to 2009 were added as well and their composite has pointed to a different underlying frame of the so-called ‘open societies.’ Recall that such societies became the model that all countries worldwide were expected to follow since 1992, when Francis Fukuyama famously proclaimed, “the end of history.” And it seemed, for a while, that the world was smoothly converging towards a single global market with the US-led institutions managing its functions.
However, as soon as the reality of unipolar world seemed to be within reach, the Great Recession shook its foundation. It appeared as if the global system had accumulated imbalances, the resolution of which turned out to be infeasible in the old framework. Starting from 2008, the elites of newly enriched countries — with Russia and China in the lead — have expressed ever vocal grievances about not receiving their ‘fair share’ of the global fruits that their money could buy. These grievances of the at-the-time considered to be ‘emerging’ democracies were directed at the elites of the ‘old’ democracies —embodied by the G-7 countries — who refused to accommodate the growing demands of their ‘younger’ peers. This inability (or unwillingness?) of the ‘old’ elites to attend to the imbalances suggests that certain ‘genetic defects’ were already built into the professed form of democratic governance that had only revealed themselves as time passed. Thus, the dynamics of how the world is governed is also a factor that plays a role and needs to be considered along with the structure.
How may the democratic institutions change over time? The standard structure of a democratic society consists of three branches of government — a legislature, an executive, and a judiciary — whose powers partially overlap. In its crude form, the legislature governs on the behalf of “we the people,” the executive is roughly associated with a hierarchy of subordinates executing orders in a quasi-military manner, and the judiciary plays the role of a supposedly smart mediator who reconciles the conflicts between the other two branches of power.
This arrangement is theoretically stable — albeit with unstable dynamics as “we the people” implicitly retains their right to revolt against an oppressive power in this structure — as long as the branches compete against each other unrestrained, vying to expand the limits of their power. In practice, however, each branch stays independent only until “we the people,” or regular populace, can make sense of what is going and is sufficiently organized to bring about a change when one of the branches acquires excessive power. In times of prosperity, the interests of the general public diverge, while the complexity of state operations increases unimpeded, invoking the mortal danger of each democracy — corruption — that creeps up the branches via several channels.
First, “we the people” need to organize themselves to make their demands be heard and executed. Self-organization of populace is all but impossible in times of peace as it lacks the required urgency of common action. That is why public interests are normally expressed through not-for-profit organizations, called political parties if they compete for votes to be elected as legislators. As with any organization, the parties need finances to run their day-to-day affairs and this money is rarely collected through crowd-sharing due to the free-rider problem (when everyone benefits from a common action but shirks from paying his or her share.) As such, funds to political organizations come predominantly from those large donors who are interested in politics. Consequently, as time progresses and the general public remains apathetic, these private interests become disproportionably represented in national politics.
Second, the executive branch in open societies becomes emasculated over time due to natural weeding out of public servants bent on innovation, as any failure interferes with their careers. As a result, executive bodies consistently lose appetite for taking initiatives and would rather wait until the winning political organization sets an agenda for them to follow. The political parties are somewhat protected from the danger of becoming passive recipients of whatever policy directive as they have to compete vigorously for power, but they are vulnerable on a different front: they build their agendas by taking clues from issues that alarm the voters. However, the latter, when they have enough ‘bread and circuses,’ simply respond passively to stories told in the mass media, which are commonly confused for ‘the voice of people.’ This inherent ability of mass media to frame political discourse earned it the title of the ‘fourth power,’ but at what cost? The mass media conveys storylines — editorial policies — by taking into consideration the preferences of their clients, the largest among whom are those who can afford advertising. Thus, the ‘voice of people’ as expressed in the press is skewed towards inflating the preferences of those who sponsor the media. Certainly, the set of largest political donors may overlap with the set of wealthiest advertisers; however, as we mention later, the connection between wealth and politics is diffused and never relies on the same names.
Third, the power of the judiciary in open societies becomes blown out of proportion with its real value. Over time, legal regulations turn murkier and the judiciary process — excessively convoluted, opening another channel for corruption. It has been known since the Biblical times that the rich are more likely to prevail in courts.[2] A number of recent clashes in various countries between it and the executive branch, which had been captured through the wave of populism by leaders with authoritarian tendencies — Hungary, Poland, Israel — is a good case in point. Other legal cases that can be seen as politically motivated include the case of former US President Donald Trump, the case of the Supreme Court overturning Roe v. Wade or the now forgotten cases of failed, but politically damaging procedures against former IMF managing director Dominique Strauss-Kahn, former Italian Prime Minister Silvio Berlusconi, etc. What is curious is that the support for ‘judiciary independence’ against ‘political interference’ is often expressed in the form of public rallies that tend to be expensive, hinting that there are wealthy sponsors backing them. As such, those ‘authoritarian’ executives who claim that the judiciary is manipulated by several well-paying individuals are not utterly off the mark and suspicions that some money bags may be interested in politics not for humanitarian reasons are legitimate.
Finally, a comment about the adjective ‘liberal’ — that often precedes the term ‘democracy’ — is in order. In theory, liberalism focuses on the promotion of individual rights; in practice, these rights come at the expense of social responsibilities. The broader the extent of individual rights, that is, the more ‘liberal’ a democracy, the less likely that “we the people” are capable of finding a common ground and, hence, to ‘revolt’ against a government destructive of “Life, Liberty and the pursuit of Happiness.” Therefore, liberalism has the potential to be used as a tool to limit the ability of “we the people” to upend the status quo in ‘old’ democracies that have gradually shifted towards the power of rich, as compared to ‘new’ democracies that, albeit more exposed to the use of unsophisticated ‘brute force,’ are less open to manipulations by rich.
The above description outlines the hidden dangers lingering in Western ‘open societies.’ The democratic form of governance in undisturbed societies facilitates the coming to power of those entrepreneurs who employ money to attain political ends. Historically, such form of governance is known as plutocracy, or the power of rich, who normally do what they know best — that is, to set a price on every human affair regardless of anything including ethical constraints — and, for such societies to stay viable, “we the people” need to rise from time to time to sort out the accumulated social waste.[3]
Could it be that some global moneyed interests are the concealed force that flared the Ukrainian conflict? On one hand, it is possible. It is instructive that the West has chosen two global financial institutions, the IMF and World Bank, to finance its war efforts in Ukraine. This fact is perplexing because it constitutes a clear break with what these institutions were established in the first place to do. Recall that the IMF was created to balance international money flows (to prevent global financial crises) and the World Bank was put in charge of financing infrastructural projects (deemed to be important for the West) in developing countries. Thus, their reincarnation as war financing machines could indicate that the global financial circles play an active role in the conflict, albeit suicidal. However, bankers are generally believed to shy from belligerent actions, so why would they choose to support a war?
Gold Attacks and Iron Defends… or the Other Way Around?
In 1816, a short anonymous epigram appeared in the Saint Petersburg journal «Anthologie française» written in French, later attributed to Russian poet Alexander Pushkin who popularized its translation in the following form:
“All is mine on earth,” said gold.
“All is mine,” said iron cold.
“I will buy it all,” said gold.
“I will take,” said iron cold.
As is clear from this imaginary dialogue, the gold and iron argue about their prospective power to control the world. Recent history tells that both types of power are intricately intertwined; however, that was not always the case. In Ancient Greece, the power alternated between nobles and demagogues, who relied on two different but related species of the same iron, namely the power of organized military aristocracy and the power of numbers within the populace. In the late Roman Republic, the distinction was worded differently, but its form remained the same: the power of optimates, or “best ones” (aristocracy,) was counterpoised by the power of populares, or “supporters of the people” (democracy.) It was not until the appearance of bourgs, or cities dedicated to commerce and crafts, in Central and Western Europe in the 11th century when the power of wealthy urban dwellers, known as the bourgeoisie, became a force different from the power of iron. Unlike the military rulers that come to the helm using the iron fist, the bourgeoisie comes to power using the appeal of gold —that is, the purchasing power of money.
While Great Britain is recognized as the first place where gold managed to score a tie with iron (as shown below); the US was the first country explicitly formed as a bourgeois republic. The American Revolution of 1775 was initiated against the obligation to pay taxes to the king of England (the power of iron) and its famous battle cry “no taxation without representation” expresses the clear preference of the American settlers for a greater power of gold. Eventually, this power grew in such importance that American writer Mark Twain used the term “the Gilded Age” to call the epoch in his namesake novel written in 1873. This US trend towards consolidating the power of the rich was somewhat reversed in the first half of 20th century: first, by popular anti-trust movements that broke the largest monopolies and, second, following the Great Depression in the 1930s, when “we the people” found, through widespread misery, a common ground to push towards the introduction of progressive taxation via the establishment of relevant enforcement agencies (the iron.) Since then, the power of gold in the US has been limited, but the establishment of the Federal Reserve System in 1913 — to serve as a coordinating center of the power of gold — left a strong holdout untouched that the gold has successfully exploited after World War II to sprout out onto the global scene through akin international financial institutions. The collapse of the Soviet Union in 1992 led to subsequent downgrading of military forces worldwide and the power of gold became seemingly uncontested anywhere, but for how long?
Within this context, the Ukrainian conflict could be presented as a competition for global power between the proverbial ‘gold’ and ‘iron,’ but then President Biden’s “battle between democracy and autocracy” should be rephrased as a ‘battle between plutocracy and autocracy.’ The problem is that the power of arms (the iron) is visible in this battle on both sides— making it look like a routine fight for global dominance — but the power of money (the gold) is not. What is missing in this picture? A potential answer to discovering the role of gold in wars can be found in a famous quote attributed to the medieval Italian general Gian Jacopo Trivulzio: “to carry on war, three things are necessary: money, money, and yet more money.”
That was the issue that sovereign creditors tried to address since antiquity. The problem is that kings could take on any loans and then renege on their debts without going bust. One way to protect themselves against powerful debtors was found by London merchants in 1694: they pressed the new king of England to grant exclusive power to manage royal finance to the Bank of England. As a result, the power of the king (the iron) was bound by the power of rich London merchants (the gold) and the UK financial system became independent from the king’s court and, subsequently, flourished. However, that arrangement protected only those debt holders who became a part of the state (fiscal authorities) and left behind the creditors who preferred to maintain their freedom from the state like the “Court Jewry” (Jewish bankers of royal families) of the 17th century. The latter were not allowed to join the state, unless they converted to Christianity, and could face expropriation or execution instead of recouping their investments when their sponsors died. Such creditors needed a different protection mechanism.
That mechanism was found by Jewish bankers in the 18th century and perfected by the Rothschild family. They reasoned that even if iron can take their money through sheer force, the power of iron is diffused. As long as there are rivalries amongst warlords (the iron) but not amongst creditors (the gold), the latter can form a cartel to play against the former. The trick was to establish a presence on both sides (as the Rothschild family did during the Napoleonic Wars) and to support military campaigns on both ends: for example, to pay the expenses of the British army in Spain with gold transferred by Jewish bankers from France. As a war neared its end, the creditors would convene and jointly determine the losing side from which to withhold further funds. In this case, while some money is initially lost on the losing side, the winner receives sufficiently rich rewards to pay to his own creditors with a gain on top and these creditors would compensate the losses of their peers who lent to his rival. But that approach is only operational if two conditions are met: first, the banking cartel must have a wider geographic reach than any warring party and, second, that wars must continue unimpeded to keep warriors in constant need of even more money.
The necessity of a wider geographic reach explains why the power of gold is commonly associated with the globalists: they should not serve the same political market. However, when wars expand infinitely, the power of iron will also consolidate as the constant wars bring the world closer to the birth of a global empire built through conquest. This perpetual struggle for power between the gold and iron shows the unity of their goals and opposition in means. Who will prevail in the end?
The Unity of Opposites
In 1807, German philosopher Georg Wilhelm Friedrich Hegel published “The Phenomenology of Spirit,” an influential book that introduced a new method of how social developments may be analyzed. He posited that “every actual thing involves a coexistence of opposed elements” and reasoned that such combinations are formed by des Geistes — the German term that can be translated as either ‘spirits’ or ‘minds’ — that perpetually strive “to comprehend an object … as a concrete unity of opposed determinations.” While this statement may sound highly abstract and of little practical use, the idea of conflict resolution through convergence has proved to be fruitful in various fields. Hegel used the method to depict history developing as a spiral: each semicircle of which starts from a stable situation (thesis), turns towards its negation (antithesis) and winds up in another stable situation (synthesis) that contains elements of both thesis and antithesis merged together. Since thesis and its opposite, antithesis, compete until their momentum is jointly exhausted to create a new entity, this end result is called the unity of opposites. This entity becomes the next starting point (the new thesis) and the cycle repeats itself.
To illustrate this concept, consider a conquest, after which a warlord establishes his authority over local residents (thesis.) The residents start challenging the ruler’s authority (antithesis) and through a series of clashes both parties arrive at a new social structure (synthesis) that equilibrates the efforts of opposing parties. This synthesis lasts for some time until the next set of contradictions accumulates and then the cycle repeats itself.
The method of Hegelian dialectics has been used extensively, but a caveat is in order: when defining the ultimate goal of this perpetual change, Hegel was prudent to use metaphysical term des Geistes, as the end result can never be predicted using this strictly backward-looking method. Many of his followers, who were more ambitious and less cautious, employed his dialectics by denying its backward nature and their ideas eventually ended up being discarded. For example, Karl Marx, another German philosopher, investigated the conflict between capitalists and hired factory labor, and predicted another “end of history,” namely the appearance of gigantic factories. He reasoned that their workers would become sufficiently organized to overcome the free-rider problem, will get rid of capitalist masters and form workers’ communities (communism) instead. Unfortunately for Marx, des Geistes were of a different opinion. The victory of workers in the East, in what became known as socialist countries, provoked the dissipation of class solidarity and led to ever increasing coercion on the part of their leaders (totalitarianism), emblematic of the power of iron. At the same time, the sharp edges of the capitalist system in Western countries smoothened by introducing social safety nets while technological advances prompted a greater specialization among employees and the appearance of a vibrant middle class who enjoyed a higher standard of living than workers in the socialist countries. As a result, the socialist dream, promoted by now strongmen, lost its appeal against the idea of consumerism, promoted by now ‘socially responsible’ rich: in this particular instance, the gold of the West scored a clear win against the iron of the East by employing its newly invented ‘soft’ power of persuasion. Can it work in this new conflict between the West and East?
‘Soft’ Power of Glamour and Discourse
The Oxford English Dictionary defines ‘soft power’ as “a way of dealing with other countries that involves using economic and cultural influence to persuade them to do things” useful for the country exercising such power. Its opposite, ‘hard power,’ is defined as “an aggressive way of dealing with other countries that involves using the threat of military force to make them do what you want.” This contraposition of influence — be it economic affluence or cultural diversity — against military force is very reminiscent of the tools used by the gold to keep the iron at bay. Is there any pattern in projecting ‘soft power’?
In 2006, Russian writer Victor Pelevin published the fantastic novel “Empire V, a Story about a Real Superman,” in which he presented vampires as the real elite of the world. The vampires’ food, however, is not blood, but bablos (Russian slang term for money) that humans produce. The people themselves are unaware of all this as their perception of reality is limited by their elites — who serve the vampires — by means of glamour and discourse. The first, glamour, makes people feel inferior and pushes them to incessantly chase for money that they spend on what the mass media advertises. The second, discourse, draws people’s attention away from thinking about the true order of the world and directs them towards wasting intellectual energy on petty issues.
While this story is fantasy, it presents a reasonable account of how ‘soft power’ functions in reality. Examples abound. Latin American migrants come to the US-Mexico border expecting to achieve a higher standard of living in the US. Residents of Africa cherish the same hope by imperiling their lives while sailing to the European shores across the Mediterranean. It would not be outlandish to state that the current Ukrainian conflict has been ignited by the craving of many Ukrainians to join the seemingly affluent EU. And the same charm of the Western ‘soft’ power attracts some Russians to wish their country to be defeated in the current conflict as they expect a better living within the ‘old’ global system. Are such expectations reasonable or are they just pipe dreams?
Experimental test results show that expectations are inherently unstable suggesting that their effects are also transitory. Hence, to maintain the ‘soft’ power, the gold needs to constantly support the initial expectations with new images; otherwise, those expectations wither, disillusionment spreads and the populace starts longing for a superman to come in and soothe the pain of false expectations.
In fact, the opposite is likely. The seemingly strange nature of the current conflict that flares up and down does not produce flashy images that the gold favors. On the contrary, current observations of the behavior of US authorities since the beginning of the conflict indicate that the iron has taken a greater command in the citadel of gold’s power. Washington behaves in an increasingly authoritarian mode. In an unusual manner for a ‘soft power,’ it sets hard demands for its allies to follow its vision for Ukraine with an iron will. It is informative that two consecutive Italian Prime Ministers, Mario Draghi and Giorgia Meloni — who came to power from completely opposite sides of the Italian political spectrum — competed to show who provides the fullest support for Kyiv, regardless of what ordinary Italians were thinking about the issue.[4] Whatever the actual cause may be, the Western mass media have stopped providing a forum where new ideas can be freely debated; instead, it repeats incessantly the same unquestionable storyline — the upcoming victory of the Ukrainian army on the battlefield. The political scene in the West has turned out to be so homogeneous that there is talk of the end of traditional parties; moreover, the supporters of former President Donald Trump openly affirm the arrival of a ‘one-party system’ in their country, like it was in the former USSR.
Thus, the current historical semicircle that started in 1992, when gold took the global helm, seems to be coming to its synthesis. For the time being, there is not much that gold can do. The ‘new’ force of ‘soft’ power has exhausted its momentum and the ‘old’ force of employing a wider geographic reach than the iron is non-operational in this globalized world. In retrospect, Western financiers lost a chance to make a draw in this battle, when they acquiesced to the cut-off of their Russian peers from the global financial system and allowed judicial persecution of their assets in the West. Now, the gold cannot hedge risks by maneuvering across the frontlines and it cannot revive the appeal of a consumerist society. In this round of the global conflict, the gold is a victim of the Ukrainian conflict — which is even beginning to look like a canny trap for plutocrats set by the nascent strongmen of the West — and not its benefactor.
[1] As time passes, it appears that the word ‘revolution’ in that article was misleading: what looked like a decisive change has turned out to be preliminary tremors directed against the existing order. As John Harington wrote astutely in 1600s “Treason doth never prosper, what’s the reason? For if it prosper, none dare call it treason.”
[2] “Do not quarrel with the rich, lest they pay out the price of your downfall. For gold has unsettled many” (the Bible, Sirach 8:2.)
[3] Or “drain the swamp” as the followers of former President Donald Trump would say.
[4] This author uses Italy as a predictor of forthcoming changes as specific historical experience of this country has made it particularly adept at changing alliances within the context of global political uncertainty.
