Historic Resonance Between the National Revival Cycle and the World Economic Cycle: National Geopolitical and Currency Strategy

2006/9/23 21:26:40

Compiled from an old post originally written in 2003

I. The Striking Similarities in Chinese Dynastic Succession and the Major Opportunity Facing the Chinese Nation

History always possesses a mysterious and striking similarity. For example, almost all the most critical events in China in the last century were related to the number 9. In the succession of Chinese dynasties, there is a particularly notable pattern: after a great period of chaos, a brief unifying dynasty (always lasting only two reigns) is immediately followed by a long and powerful dynasty. Before the true peak arrives, there is always a so-called "female calamity." For instance, after the Spring and Autumn / Warring States period came Qin (only two reigns), followed by Han, the Empress Lü, then the prosperity of Emperors Wen and Jing leading to the great zenith under Emperor Wu. After the Three Kingdoms, the two Jin dynasties, and the Northern and Southern Dynasties came Sui (only two reigns), followed by Tang, Empress Wu Zetian, then the great zenith under Emperor Xuanzong. From 1840 onward there was a great period of chaos, the Republic unified the country—also two "reigns" (Sun and Chiang), then the People's Republic was established, Jiang Qing, and then a true period of national strength should emerge. Clearly, the Chinese nation is in the historical grand uptrend of surging toward the third peak since Emperor Wu of Han and the Kaiyuan era of Tang.

II. From Marx's Five-Stage Theory: The Current Historical Stage of the World

1. Marx's five-stage theory is built on a complete classification of real-world relations between people, and between people and nature.

This unified classification is based on the circumstances of real people in real society—their relations with each other and with nature: 1. Society has no subordination of one group to another, but the whole of society must collectively depend on nature—this is primitive society. 2. Under dependence on nature, one group of people is subordinate to another based on personal bondage—this is slave society. 3. Under dependence on nature, subordination of one group to another no longer requires personal bondage but is instead mediated through external things such as land, titles, etc.—this is feudal society. 4. Subordination of one group to another no longer exists in society; instead, all people without exception are subordinate to a non-natural external thing: capital—this is capitalist society. 5. Remove that final subordination from stage 4, achieving complete reconciliation between real people and society, and between people and nature—this is communist society.

2. Leninist socialism is a strategically nationalist misreading; it is an anti-capitalist capitalist process.

Lenin probably—whether intentionally or not—misunderstood the phrase "abolish private property" in the Communist Manifesto, taking public vs. private ownership as the distinguishing criterion (here one can see the Hegelian character). But Marx analyzed this question from the standpoint of the two real relations—between people, and between people and nature. The two approaches are fundamentally different. The public/private criterion is merely an inference under specific premises—necessary but not sufficient. Socialism must be public ownership, but public ownership is not necessarily socialism. If an inference is turned into a premise—or even the sole premise—it becomes a limping maxim that ultimately obscures the truth.

Leninist socialism always jumped directly from feudal society, and all inevitably tended toward the Stalinist model. Simply replace "capital" in the definition "capitalist society is where subordination of one group to another no longer exists, and all people without exception are subordinate to a non-natural external thing: capital" with "power" or "power-capital," and you get the best definition of Stalinism. From this, the following seemingly incredible statement becomes clear: Stalinist socialism is merely a certain type of capitalism. And from this, an even more startling statement follows: the Leninist socialist revolutions that swept across the twentieth century were, in essence, merely a certain type of capitalist process. The rapid conversion of power or power-capital into capital after the Soviet-Eastern European upheavals demonstrates their common origin.

The historical significance of Leninist socialism lies in its being the best nationalist strategy available at the time. A backward feudal nation, under the conditions of that era, would face annihilation following the conventional path. Lenin's—whether intentional or not—strategy saved the largest majority of backward nations in the world at that time, giving them a chance to catch their breath and catch up. In essence, Leninist socialism is a nationalist process—an anti-capitalist capitalist movement by backward nations to avoid being devoured by nations that entered capitalism first. In this respect, Lenin is immortal—the teacher of all the weak nations of the world.

3. The rebellion against the fate that Leninism necessarily leads to Stalinism constitutes the most basic logic of Mao Zedong's Cultural Revolution thinking.

The Cultural Revolution was Mao Zedong's great attempt to break free from the historical fate that the Leninist model inevitably leads to Stalinism; its failure carries a cruel historical inevitability. Lucidity is often painful—Mao Zedong's Cultural Revolution rebellion was destined to fail within that lucidity. Resisting Stalinization was in fact also resisting a process of capitalization. But in the two real relations between people and between people and nature, the latter plays the decisive role. The former certainly has a reactive effect, but attempting to resist a certain real tendency in the people-nature relation by adjusting the people-people relation—the impossibility of this constitutes the inevitability of failure for all Cultural Revolution-type movements. Any contingent factors are irrelevant before this inevitability. In this respect, Mao Zedong was undoubtedly tragic—but it was the tragedy of a hero.

From feudal to capitalist society, the key change is that subordination of one group to another no longer exists. The old dependency relations are broken. All people without exception become subordinate to a non-natural external thing: X. However many realistic possibilities there are for X, that's how many types of capitalism exist. From the 17th century to the present, all changes and struggles have merely been the process by which different types of capitalism emerge, grow strong, and compete through struggle for ultimate dominance. All ideological disputes at the level of real nation-states are, fundamentally, conducted within the capitalist premise. The essential meaning of the Cold War in the second half of the twentieth century then becomes clear: it was the struggle between Anglo-American capitalism and Stalinist capitalism for ultimate dominance. Mao Zedong saw through all of this and proposed the Three Worlds theory—but fundamentally, this was a nationalist strategy, unrelated to socialism.

4. The inevitability of the Cultural Revolution's failure means that facing capitalist globalization has become an inescapable reality.

Socialism in Marx's sense—as the initial stage of communism—cannot be achieved in a single country alone. It can only be a global event following the globalization of capital. Lenin's strategy was a nationalist strategy, and Deng Xiaoping's "socialism with Chinese characteristics" and "primary stage of socialism" strategy should likewise be understood as a nationalist strategy.

Capitalist globalization is an inescapable reality that must be faced—it is the inevitable trend of capitalism's internal developmental logic. How to make one's own voice heard within this grand trend, or even guide this process, is the most important, core question.

III. The Historic Resonance Between China's National Revival Cycle and the World Economic Cycle Has Produced a Historic Opportunity

In the economic cycles of capitalism, the overall saturation level has a relationship with population that exhibits a structure of 5x quantum-like increments—resembling electron orbital quantization. Populations of 10 million and 50 million were the two basic population thresholds for achieving so-called great-power status in the medieval and early modern periods. After Great Britain completed its hegemony at the 50-million level, the United States and the Soviet Union completed their historical performances at the 250-million level. The next level is 1.25 billion. Current alliances among world economic entities are preparations for capital-globalization competition at the 1.25-billion level.

In 1929, the old 50-million-level dominant cycle of Britain and Germany ended, and the 250-million-level dominant cycle of the US and USSR began. This 90-year cycle formed the mid-cycle oil crisis correction at its halfway point in 1974. The same-level competition between these two different types of capitalism—the US and USSR—ended with America's victory. However, the peak of this cycle already appeared in 2000. The enormous correction ahead will reach 1929-level severity by 2019, thereby declaring the end of this level and the beginning of the 1.25-billion-level world economic cycle. (To keep this article from getting too long, the detailed economic analysis is omitted here; only the conclusions are given.)

After 1949, China's explosive population growth was one of Mao Zedong's greatest historical contributions. China thereby automatically entered the competition as a powerful contender for the 1.25-billion-level world economic cycle. The synthesis of China's national revival cycle with the world economic cycle has produced a historic opportunity. How to seize it is the most important question before us.

IV. Geopolitical and Currency Strategy Under This Historic Opportunity

The current strategy—centered on the Yangtze River basin, with North and South China as two flanks—is coordinated with the so-called "hiding capabilities and biding time" approach and conciliatory diplomacy. It cannot achieve anything great and harbors enormous hidden dangers. From a long-term perspective, the strategic triangle should be constructed from the Bohai Rim region, the Pearl River Delta region, and the Qinchuan (Wei River Plain) region. Starting from the Pearl River Delta to connect Southeast Asia; starting from the Qinchuan region along the ancient Silk Road to connect Central and West Asia—together forming a two-pronged pincer around India. Starting from the Bohai Rim to connect Northeast Asia—suppressing Japanese and Russian influence in the region. Using this grand triangle as its foundation, China will gradually become the king of Asia. Its territory (or vassal-like sphere of influence) should extend from the Ural Mountains eastward to the sea facing the Americas, from the Arctic Ocean down to the Pacific looking over Australia—forming the world's axis, with Europe and the Americas as its two wings.

But against the backdrop of capitalist globalization, a nation's currency strategy is even more important. All modern wars are fundamentally currency wars—determined by the high degree of capitalization in modern society. For a highly capitalized society, any activity detached from capital is fundamentally meaningless, and war is no exception.

From the perspective of the 1.25-billion-level world economic cycle, the most competitive currencies will be the US dollar, the euro, the rupee, and the renminbi. For the renminbi to ultimately prevail in this currency war—like the drafting technique in distance running—China must at the current stage insist on a "non-pegged peg" policy toward the US dollar, firmly and persistently maintaining renminbi-dollar exchange rate stability. On this foundation, China should gradually expand its influence over the Asian region, subtly supplanting the yen's position and progressively becoming the de facto Asian currency. Then, leveraging the enormous differential built up during the first phase and in coordination with the world economic cycle, China should choose the right moment to release it—destroying the US dollar in a single carefully orchestrated strike. Finally, in a long, grueling, back-and-forth process, China should leverage the new 1.25-billion-level world economic cycle to establish its lead over the United States, becoming the true frontrunner of the 1.25-billion-level world economic cycle and completing the great national revival.

Appendix: This ID's Old Post — Explaining the Mechanism of Exchange Rate Formation and America's Currency Strategy in the Simplest Possible Terms

Some bookworms, the moment exchange rates are mentioned, start reciting a pile of definitions—but that's useless. It's like talking about P/E ratios in the stock market—all boring tricks. Exchange rates, put plainly, are a game among great powers, no different from a market maker manipulating stocks. Some might say: with such enormous daily currency trading volumes, how can it be manipulated? If you think market manipulation always requires money to pump prices, that's the crudest method. Manipulation ultimately means manipulating human psychology—wherever there are people, there can be manipulation. If you don't understand this in financial markets, losing money is only to be expected.

The US is a master of exchange rate manipulation, but exchange rate manipulation ultimately serves its overall interests. The biggest crisis facing the US economy is bubble-ization, and America's current below-zero savings rate has pushed its economic danger to unprecedented levels. In a sense, America the stock has been pumped to dizzyingly cold heights. Like a manipulated stock, the key now is preventing large-scale capital flight—otherwise there'll be consecutive crashes. Because the decline from 2000 was extremely rapid, most hot money couldn't exit effectively, so large-scale capital flight hasn't yet occurred. The current large-scale rebound is creating the opportunity for capital flight. Once the rebound peaks, the anticipated large-scale capital flight will truly begin.

To prevent the above scenario, America's only viable currency strategy is to devalue the currency to a corresponding low level before this major rebound completes. This prevents dollar-denominated capital from cashing out and fleeing at a high exchange rate. In effect, it's putting a collar on dollar capital at the currency level, so that the resolve and magnitude of cashed-out dollar capital flight will be greatly reduced. This is America's only non-war viable method to prevent the crash of America-the-stock.

But this strategy has one achilles heel: if there's a currency with enormous capacity that tightly tracks the dollar, then all the dollar's devaluation calculations fall apart—and the renminbi is precisely that currency. The renminbi's peg to the dollar gives dollar assets a smooth escape channel after being cashed out. The renminbi economy's greatest advantage over the dollar economy is extremely low bubble-ization and an extremely high savings rate—this is a mortal threat to the American economy. As long as the renminbi strategy is maintained and the pool is dug sufficiently deep, the dollar's devaluation strategy will be completely thwarted. Once that strategy is thwarted, the American economy will face the most enormous shock. This is also the practical basis for the prediction in previous posts of the 90-year-cycle world economic crisis in 2019—the correct renminbi strategy will accelerate and deepen this process.

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缠中说禅 2006/9/23 21:49:21
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