The Capitalist Entanglement

Nobody denies the big crisis involving the West. Politicians try to restore confidence pointing to possible solutions by 2020.Yet a complete change is needed now. The evil is of long standing. The author shows the system has been rotting since 1944.

The Capitalist Entanglement

Fernando García Izquierdo

In the past I used to keep some records of events relating directly or indirectly to public finance, not at all exhaustive or in a disciplined way, and I thus filled about a dozen exercise-books which I kept hidden in a drawer. I have recently come across some of these notes and, for what it may be worth, I would try to share with my readers some of the intelligence contained therein. Of course what will appear in this article is not at all limited to those notes of long ago. Hopefully all this may give the reader an interest in the history of those years; for the gurus of our time prefer the younger generations to learn about some hypothetical postindustrial revolution or other which may take place in ten or twenty years’ time and which might give us, they say, renewed prosperity and wealth.

Coincidentally, a few days ago I heard the Mayor of Paris, a highly respected politician, telling us on the radio that the crisis we are all of us involved in has something to do with History. This is what he emphatically pronounced: Nous sommes dans une période historiquement terrible.

Yes, these are horrible times and, moreover, have been horribilis for a long long time, longer than you may think. And this horror has been with us ever since the inception of capitalism; it is inherent to the system. The question now is: how and why has capitalism plunged us into such an inscrutable mess? Et bien, Monsieur le Maire, in order to find the answer, we must begin by studying History, precisely.


Let us begin with 1944, for though most of the present evils (we have just said) originated with the system and go back to the eighteenth century at least, our interest today is in modern capitalism.

Some months before the end of War World II, America, Britain, France, Belgium, Holland and other allied countries (pointedly setting aside the Soviet Union, which had saved them all from fascism) gathered in the American resort of Bretton Woods, on the Atlantic coast, to make sure that, once the conflict was settled, nothing in the realm of wealth, worldly possessions, should escape out of their clutches. At that gathering, then, the Rich decided unanimously (inter alia) that the United States of America (which we shall simply call “America” from now on) would be made the holder of a monopoly, never previously envisaged in all the history of humankind, by which the Americans would be able to print all the paper-money that might be needed to carry out the mission entrusted to them: i.e., to keep and protect the capitalist system everywhere at whatever cost.

In other words, at the said conferences (for there were several of them, in the spring of 1944) the power élite of the United Kingdom, France, Holland, Belgium etc., to a man, made the American currency the universal measure of value, to be used in the Free World and beyond as the “money-god”, so to say, and this was done so that the said Protector of the System (as we have pointed out) could carry out the job of subduing the rest of the world, los pobres de la tierra, who during the war had truly believed that the end of slavery was at hand. The rest of the “free” countries would thereby become vassals of America, in the mentioned task and other tasks of equal importance.


As soon as the said 1939-1945 war was over, Winston Churchill (the British people having kicked him out of power) went to pay a visit to President Truman in his home state of Missouri, and the two embarked at once into an anticommunist tirade, which would be a clear indication of the stuff of which our (freeworld) history would be made thereafter. Churchill spoke of an “Iron Curtain” dividing the Soviet Union and other popular republics from the Free World. The Cold War had just started!

The fifties began with the Korean War, during which the US High Command would have willingly used the atom bomb (they had used it already twice, in Japan), for the West seriously feared the so-called “domino effect”. If Korea fell to the communists, then all of Asia would follow. The world was lucky that President Truman dismissed General MacArthur, who had been the Hero of the Pacific during World War II, and so the Nuclear arsenal would remain untouched. But many other wars (even if not nuclear) would crop up, in Asia and elsewhere.

Simultaneously, during the fifties, America worked hard to save Europe from hunger and poverty. And from any “communistic” contagion (or, as General Franco of Spain had said, in the thirties, “para extirpar el virus marxista”.) Those were years (1945-1955) of rapid reconstruction and capital accumulation.

New patents of invention, new plants, competitive agriculture and many genial individuals in all fields (engineers, builders, administrators, agents of all kinds; but also the workers themselves, division of labour, co-operation, very hard and very efficient work (there was nearly full employment) in agriculture, industry, scientific and mechanical labour, new skills, exploration of the soil and the subsoil, and also much progress in the arts, etc. All to provide for rapid reconstruction and the spread of technology (the spread of wealth through manufacturing, trading became easier; and (last but not least) the extension of credit, the proper use of high finance.

If not to benefit the people at large, at least Wealth (in the abstract) increased considerably. Some favourites of Goddess Fortune benefitted tremendously. New fortunes appeared in the City, new monopolies were created, capital circulation improved, as well as the internationalism of finance and commerce. The earth was being conditioned for further exploitation of its riches (waiting there for the brave and the smart) with the easier extraction of raw materials; as also from the seas. And let us add that the power of the atom was developing at a quick pace.

And all the time the rich were keeping an eye on the Wealth of the earth’s five continents. President Patrice Lumumba of Congo was murdered just as the sixties began. Exactly when both Britain and France (the great colonising powers) began to talk seriously (it appears) of putting an end to their empires.

On the very positive side, America during these years was sending across the Atlantic Ocean much of its surplus produce (Marshall Plan). The famished West Germans, just to cite one of our nations, as an example, benefitted so much from this aid (and from not having to keep an army) that at the end of the fifties they were already a big European Power. More importantly and simultaneously American corporations were setting, all of them, a firm foot in western Europe. (I shall mention in passing that the western allies had decided by then that east Germany should be cut off from the rest of what had been the German III Reich, which would be reconstituted with Bonn as its capital.)

Talking now mainly of the Western Hemisphere, America, as it was to be expected after the agreements of 1944, a period of rapid consolidation of Yankee Capitalism set in. American industry, commerce and finance became transnational, which is another way of saying that America became imperial. Already with the Marshall Plan (aid to famished Europe) the bases were set for world-domination in industry, finance and trade. From then on American growth would never cease. Soon, the wealthy Americans would consume more raw materials, more of the riches extracted from the earth’s subsoil, the oceans and the soil than a large portion of the rest of humanity put together

And yet, the inveterate exploiters (also in Europe) of the poor peoples of the earth, and of the earth itself, rejoiced; and still were not wholly dissatisfied. Now they knew that, as a matter of course, their different indigène nations (as the French say) would go on being exploited per secula seculorum. They wanted more.

Because of this, the colonial wars would continue and be amplified (we have already spoken of Lumumba’s end of which the United Nations General Secretary was a witness, if not directly involved.) The subjection of the native peoples, the possession (and at times exhaustion) of the riches of the soil and the subsoil by a few, all that and much more would continue unimpaired. To assure the continued supply of cheap raw materials was of paramount importance for our industries and armies.

But a disturbing factor arose, which was more noticeable in Europe, for the moment, than in America. It had to do with the 1944 treaties. To begin with, there was rising productivity all the time. Apparently we were rich. Our way of life was envied by many people around the world. But it isn’t gold all that glitters. There was much misery, here too, and I personally believed that this was due to the fact that it never occurred to our capitalists that production must imply distribution. What could have been a really prosperous Europe was a complete mess. I was a boy of fifteen to nineteen then, and lived miserably. I saw, that yes, that elsewhere there was Paradise. It was simply “make-believe”, Hollywood’s American Dream.

Productivity grew, I have said. The crumbs were duly distributed. A minority took up the surplus value, and became richer all the time. People were in employment. There were protests, so many injustices! Crises (which were not new to capitalism, of course) were seen everywhere. The very system was the cause for so-called overproduction, which (unbelievable though it sounds) began to cause great trouble. Overproduction, Good God, Mon Dieu, Dios mío!, when there were extensive areas of poverty everywhere.

In the financial-economic aspect of the situation, more problems. For one thing, there was strong and continuous inflation, at times galloping inflation. And no wonder, for when there are wars, on the one hand, and banditry, on the other, there is huge expenditure. War, besides, entails much destruction. All the rules of vulgar-economy cease to apply. “The law” of supply and demand, for instance, is not operative, not normally. There is so much of the increase in production that goes into continuous destruction! And there was, in consequence, creeping hardship all over, even if we feigned to ignore it. Money for the few, accumulation, that yes; but sooner or later the European people (and not only the people of the underdeveloped world) would pay, and pay dearly for the wars.

In other words, during those years, the fifties and sixties, which could have been of full reconstruction and development, we experienced great unhappinness and grief at being embarked upon colonial and postcolonial wars, even if we did not fully understand what was going on. Master Goebbles had shown the modern imperialists how to tackle the “propaganda business”.

The Fireworks had started in Korea (1950.) And the fire spread nearly all over. In 1954 la guerre d’Indochine, lost by the French most humiliatingly, was transformed into an American conflict with Vietnam. A War which was to spread upon South East Asia. Capital’s greed would not be assuaged, on the one hand; and on the other poor populations everywhere experienced hardship and destructions without number, for almost a quarter of a century in South East asia, and then around the planet. Moreover, the massacres, robberies, injustices and horrors would go on multiplying as time went on, more warring, more and more sophistic bombing. Unendingly.

The capitalists (now imperialists), who from the start of capitalism had been industrialists, builders of this and of that, clever merchants engaged in the circulation of goods, commercial and industrial entrepreneurs… were being metamorphosed into just money-accumulators, financiers, speculators, bankers, prospectors of this and that, well-engaged upon the exploration of jungles and desert, deforestation, exhaustive fishing, etc. The planet, Gaia, became their terrain, in toto, their field of exploration and manipulation.

In order to subdue their workers at home (for there were claims upon the distribution of profits), the transportation of cheap labour from oppressed countries was undertaken in grand scale. “Globalisation” would be the next step, but not yet (i.e., the transfer of whole plants abroad, lock, stock and barrel.)

Let me say a few words about Japan, which constituted, at least at the beginning, a case apart in the Free World. This formerly imperialistic country had been the victim of US atom bomb attacks. It became our ally. In 1953 and 1954, when I was a Spanish student in England, the question which was most peremptorily asked by our leaders was: what should we do to stop Japan from turning communist. “WHICH WAY JAPAN?” I heard from the lips of wisemen in London. As I have intimated, anticommunism won.

On the Financial front also, it is to be noted that by 1961 the United States Treasury had freely printed so many dollars (paper money) that the American currency was by then flooding the entire world, with the exception perhaps of the Soviet Union and other Warsaw-Pact countries. It will be remembered that since the end of the war the dollar had been used everywhere as the substitute of Standard Gold, and that, to the exclusion also of all other values (other precious metals included) and to the exclusion of barter as well. This was the main reason, of course, why the globe was flooded with dollars.

It had been contended at the end of World War II that international trade was urgently and absolutely needed, the dilemma being reconstruction or death. Trying any other measure of exchange but the dollar would have complicated matters. Quick, quick, it was said, more and more trade all the time… and the dollar, everybody knows, is as good as gold!

And the result was already showing by the turn of the decade: there were more US dollars held in central banks and in other kinds of banks, or by financial institutions and in the pockets of persons of foreign (non-US) nationality, all over the planet, than in America itself and/or by Americans. The “eurodollar phenomenon” took place: financial and other institutons in western and central Europe held dollars in preference (at this time) to national currencies. The currency employed by American transnational capitalism was the dollar. It came from all sides, north, east, south and west. This became the important thing: no need any longer to borrow from US banks. The entire world was an immense bank and the US dollar in Europe was not only God, but a very practical one. If anything (here) sounded strange, the Europeans did not worry. When some authorities made a show of courage, demanding an honest conduct in public affairs, the Americans (lip service) introduced some currency-control. The transnationals borrowed capital necessary for expansion in Europe from European banks. European financiers were always ready to oblige. Interest rates shot up, the said borrowing was short-termed almost always. More and bigger profits for speculating funds.

There was full employment at any rate, our industry got cheap raw materials from underdeveloped countries, our armies were stronger under the Americans than they would have been acting separately. There were North Atlantic, South Pacific, East Asian. etc. “defence” treaty-organizations. But others, notably the Africans, were destined to be underdeveloped for evermore, and if you took some original alternative all the worse for you. (Witness what happened to Julius Nyerere of Tanzania, who maybe thought that Africans could aspire to rational economic development.)

Also very important indeed (but impossible to develop herein) is the fact that during the early sixties there were conferences and treaties conducive to the friendship between the French Republic and the newly constituted Federation of West Germany; to which the new Italian Republic and the Kingdoms of Holland and Belgium and the Grand Duchy of Luxemburg also adhered.

This would lead to eternal peace between the two traditional European enemies, as well as to the confirmation the two formerly fascist allies as “freeworld” countries, plus the creation eventually of a common market.

All for the best in the best of all possible worlds.

But the Bretton Woods’s clauses remained unfulfilled . Currency parity, fixity of exchange rates, stability (all so essential for a healthy economy) did not exist. The intended value of the dollar fell through. Floating, devaluations, inflation, massive attacks on the pound, on the franc, on the lire, etc., became the order of the day. A good method for the financiers and other bandits to make millions. Speculating waves, stock-exchange lotteries, going up, going down and so on…, the ruin of the poor countries, etc., etc. As always the rich gained, gained mountains of money. The vulgar economists, too, rejoiced, telling us original lessons, theories, etc.

In 1964 there were succesive waves of speculation and so-called massive attacks, like in a war: the Italian Lira, Pound Sterling (several times) and other currencies. And again in 1965 and again in 1966. In November 1967 the UK currency was catastrophically knocked down, devalued (I say catastrophically as I could have said comically: the whole thing was a “Comedy”), and other currencies followed suit. Industry, commerce, banking, real-estate, purchasing-and-selling were other names for gambling, like playing in casinos. And all the time the Free World feverishly manoeuvering to save an already moribund dollar. Swaps, Gold Pools, Stabilisation Plans and so on and so forth, anything our statesmen could design. Naturally, all failed.

An important gathering was convened for March 27, 1968, the Washington Conference. By then our “freeworld” capitalists had progressed so much in the task of capital accumulation that as a matter of fact, one way or another, the Earth was theirs. America became wealthier than ever, and Britain, France and of course former “enemies” West-Germany and Japan were models of democracy and the mirrors where other nations should now try to see themselves. Indeed, West Germany and Japan became champions of industry, commerce, agriculture, science and many more things besides.

Labour’s productivity in America, first, then in Europe, too, became proverbial: the efficiency of capitalism; and for a while the workers were to enjoy many rights that the rest of the world would envy us. But our capitalists had already started to import cheap labour from poor countries, as we have intimated. To increase their profits, of course; and so that the workers’ rights could be more easily attacked by CAPITAL.


As for real human progress, SOCIETY, on the contrary, very little. Communal life and understanding was lacking sense in general: any good observer could have detected that all that talk of welfare-state and progress in labour rights (le contrat de travail, etc.) was grossly exaggerated. Poverty persisted even in the wealthy conglomerations of Europe, Paris, London, Liverpool, etc. And the rich in the meantime were becoming richer, then “dirt-rich”. The best qualified among the people were taught the axiom, “You can’t beat them! Then join them!” Instead of a community of interests we were becoming a sauve-qui-peut society.

Nineteen sixty-eight was the year in which the U.S.A. reached its paroxysm of iniquity and madness. All over the world there was war, killings. And the Americans were directly or indirectly involved in the carnage. In South East Asia by then mountains of dollars and other riches had gone into the madness of war. And mountains were being consumed daily! The privileged classes, and consequently those that led the affairs of state everywhere in the Free World, were frightened by the spectre of communism. Chang Kai-chek, allied to the United States, was forced to leave continental China; and if Vietnam “fell”, Americans believed the West would be threatened. “Delenda est Vietnam!”

It became evident that the United States could lose the war. But, like General Franco in Spain in the thirties, the Americans thought God ordered them to fight to extirpate el virus marxista, and all the means and ways that human brains could create, all the inventions of science, the force industry could generate, all the gold and paper-money finance could provide had to be employed to that end. And so, with every defeat inflicted on our Marines by the brave Vietnamese soldiers, a new fear arose, new and more sophisticated weapons were used. Every day more terror and at the end of the day always, always back to square one!

So the horror and the money put in the hands of those directing the war machine continually multiplied, without end: flying monsters were created, napalm (or fire from hell) was constantly discharged from the air on people and land alike. Terrible elements and mysterious “agents” were used, more and more often by American pilots (confused, fearful or simply irrational) to burn or otherwise destroy lives and matter, the pilots probably proud of having in their hands the absolute disintegrating power of god Zeus himself. Apocalyse Now! Nothing was too much (or too expensive) for imperialism, if it was a question of defending our civilisation from communism. Those were the days when the Pentagon simply recorded the deaths of children, women and men as collateral damage.

Nevertheless, the Americans were losing the war!! A war which altogether lasted thirty years, from 1945 to 1975. The corpses of American soldiers were now arriving home in great numbers from Saigon. In our backyard at last! In the Free World at large the youth were demonstrating against such imperialist carnage. In Washington some minds were beginning to think that enough was enough. Searching for disentanglement at last? We would see.

In the meantime other wars would continue everywhere. Even the Portuguese would spend a good chunk of their national budget on subduing Africans.

At the beginning of the seventies hardly a day passed without a new financial catastrophe: the Market (our most sacred institution) was daily ebbing and flowing, like the rollers in the roaring oceans. Of course not much was left by then of the terms stipulated at Bretton Woods in 1944, and nothing of that bombastic decision relating to the value of the dollar. Thirty-five dollars being exchangeable for an ounce of gold!?

Some years earlier there had been massive attacks against the Sterling Pound once again, for the attacks had never ceased. Also on the Canadian dollar (which could not keep its parity with the US dollar.) Then, there were currencies being overvalued. Some measures were imposed on West Germany. Switzerland and Holland followed suit. The Italian lira was a laughingstock (hotel owners came into your room to ask for cash in dollars, Swiss or French francs or whatever.) And a thousand big and little problems, like these, kept on creeping up all over.

The year 1971 came and it was the sacrosanct US dollar itself that was being attacked! There were so many, many dollars “on the market” that the value had shot down. Right from the beginning, the economist Jacques Rueff, sometime General De Gaulle’s finance minister, had been taking advantage of the B.W. agreements to secure quite cheaply American gold for the Banque de France, and by the seventies the whole capitalist world had learned something (everybody would have liked to imitate Rueff.) The US Government had to do something. It had taken the Treasury twenty-seven years to wake up! Conferences, agreements, restrictions, compromises and all the parafernalia which goes with Freeworld Comedy was essayed among pals, and again and again to no purpose, and everything constantly went from bad to worse. The whole world could see that Capitalism (as represented at that moment by America) was moribund, “A king without clothes.” The power élite had to act quickly.

On the fifteenth day of the month of August nineteen seventy-one, mid-summer in the northern hemisphere, the world at large got to learn that there had been an official Gold Standard for the previous twenty-seven years. There was no Gold Standard any longer.

We, western Europeans, who many years afterwards would be the main victims of all this chicanery, had accepted it quite happily. All this game. Free World. Trade, trade, trade. The superabundance of dollars. Our having been saved from communism. Stop-gap measures had been taken continuously, for days, for months, for years. All done to save the day and keep the dollar as the universal measure of value. Strict control of the movements of capital was introduced at times. Other times other decisions were taken, laws and directives issued, lie after lie: parity of exchange, floating, and again fully reviewing the situation. Every month, every fortnight, every day… You were in a Bureau de Change one morning, to cash your traveller’s cheques, and if the queue was long you could exchange your dollars into three, four or five hundred francs, the value was varying every minute! All that just because America, the champion of the freeworld, was wavering.

Brains were brushed up, nobel-prize winners were solicited, and other heroes became necessary. Nothing served at all. The dollar was wavering, wavering, wavering. And so, on the mentioned pleasant summer day (I was on the beach in the Costa Brava when I heard the news on my transistor radio) President Richard Nixon unilaterally declared to the world that America would not respect the terms of Bretton Woods (which had been so favourable to Western Imperialism.) Thus, America did away with the Gold Standard, which was meant to be a fiction (in any case) from the very beginning. The US currency, of course, would continue to be the universal measure of exchange and trade, the currency used in international trade and for determining the value of everything in the whole world would be the US dollar. Nothing about exchanging dollars for gold. The dollar PAPER MONEY would be the universal measure.


Fernando García Izquierdo
9, rue Vernet


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