by MICHAEL HUDSON
George Soros has thrown a public hissy fit over the fact that he can’t make the kind of easy money off China that he was able to make when the Soviet Union was carved up and privatized. On September 7, 2021, in his second mainstream editorial in a week, George Soros expressed his horror at the recommendation by Black Rock, the world’s largest asset manager, that financial managers should triple their investment in China. Claiming that such investment would imperil U.S. national security by helping China, Mr. Soros stepped up his advocacy of U.S. financial and trade sanctions.
China’s policy of shaping markets to promote overall prosperity, instead of letting the economic surplus be concentrated in the hands of corporate and foreign investors, is an existential threat to America’s neoliberal priorities, he spells out. President Xi’s “Common Prosperity” program “seeks to reduce inequality by distributing the wealth of the rich to the general population. That does not augur well for foreign investors.”[1] To neoliberals, that is heresy.
Criticizing China’s “abrupt cancellation of a new issue by Alibaba’s Ant group in November 2020,” and “banishment of U.S.-financed tutoring companies from China,” Mr. Soros singles out Blackstone’s co-founder Stephen Schwarzman and former Goldman Sachs President John L. Thornton for seeking to make financial returns for their investors instead of treating China as an enemy state and looming Cold War adversary:
The BlackRock initiative imperils the national security interests of the U.S. and other democracies because the money invested in China will help prop up President Xi’s regime … Congress should pass legislation empowering the Securities and Exchange Commission to limit the flow of funds to China. The effort ought to enjoy bipartisan support.
The New York Times published a prominent article defining the “Biden Doctrine” as seeing “China as America’s existential competitor; Russia as a disrupter; Iran and North Korea as nuclear proliferators, cyberthreats as ever-evolving and terrorism as spreading far beyond Afghanistan.” Against these threats, the article depicts U.S. strategy as representing “democracy,” the euphemism for countries with minimal governments leaving economic planning to Wall Street financial managers, and infrastructure in the hands of private investors, not provided at subsidized prices. Nations restrict monopolies and related rent-seeking are accused of being autocratic.
The problem, of course, is that just as the United States, Germany and other nations grew into industrial powers in the 19th and 20th century by government-sponsored infrastructure, progressive taxation, and anti-monopoly legislation, the post-1980 rejection of these policies has led them into economic stagnation for the 99 Percent burdened by debt deflation and rising rentier overhead paid to the Finance, Insurance and Real Estate (FIRE) sectors. China is thriving by following precisely the policies by which the former leading industrial nations grew rich before suffering from the neoliberal financialization disease. This contrast prompts the article’s thrust, summarized in its summary of what it hopes will become a Congressionally supported Biden Doctrine of escalating a New Cold War against non-neoliberalized economies, juxtaposing U.S.-sponsored liberal-democratic imperialism against foreign socialism:
Last month, Mr. Blinken warned that China and Russia were ‘making the argument in public and in private that the United States is in decline – so it’s better to cast your lot with their authoritarian visions for the world than with our democratic one.[2]
Mr. Soros had seen the ending of the Cold War open the path for him and other foreign investors to use “shock therapy” to provide easy pickings in Russia, followed by the much broader Asian Crisis of 1997 as a grab-bag opportunity to buy up the most lucrative rent-yielding assets. He is upset that President Xi is not emulating Boris Yeltsin and letting a client kleptocracy emerge in China to carve up Russia’s economy – which made Russia’s stock market the world’s darling for a few years, 1995-97.
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