Greece And The Endgame Of The Neocolonial Model Of Exploitation
With the bankruptcy of Greece now undeniable, we’ve finally reached the endgame of the Neocolonial-Financialization Model.
We all know how old-fashioned colonialism worked: the imperial power takes physical control of previously independent lands and declares its ownership of the region as a newly minted colony.
What’s the benefit of controlling colonies?In the traditional colonial model, there are two primary benefits:
1. The imperial power (the core) extracts valuable commodities and low-cost labor from its colony (the periphery)
2. The imperial power sells its own high-margin manufactured goods to the captured-market of its colony.
This buy low, sell high dynamic is the heart of colonialism, which can be understood as one example of the The Core-Periphery Model (June 11, 2013).
The book Sweetness and Power: The Place of Sugar in Modern History is an excellent history of how this model worked for Great Britain.
The tensions this model generated in the colonial elites of America are brought to life in Tobacco Culture: The Mentality of the Great Tidewater Planters on the Eve of Revolution.
This traditional model of colonialism was forcibly dismantled in the 1940s-1960s.Former colonies established their political independence, a process that diminished the wealth and global reach of former colonial powers.
In response, global financial powers sought financial control rather than political control. This is one dynamic of what I call the Neocolonial-Financialization Model (May 24, 2012), which substitutes the economic power of financialization (debt, leverage and speculation) for the raw power of political conquest and control.
The main strategy of financialization is: extend cheap credit to those with limited access to capital. Those with limited access to capital will swallow the bait of cheap credit whole, and willingly agree to penalties, high interest rates, etc.
Then, when the credit expansion reaches levels that cannot be supported, the lenders demand collateral and/or favorable trade and financial concessions.