global geopolitics

Why your wages buy less, your factories are closing, and the talk of war keeps growing

How a rentier oligarchy extracts wealth through the cost of financing, deindustrialises its own productive base, and prepares populations for conflict over the world’s resource-rich periphery

Editorial Analysis | October 2026

The economic condition of the advanced capitalist states presents a contradiction that conventional analysis cannot resolve. Labour productivity in the European Union remains among the highest in the world, yet nearly half of all European households report that they struggle to make ends meet, and Eurostat data confirm that 41.6 per cent of EU households faced such difficulty in 2024 (Eurostat, 2025). The United States exhibits a similar pattern, with productivity gains accruing disproportionately to capital while median wages stagnate. The resolution to this paradox lies not in the sphere of production but in the sphere of circulation, where the cost of financing extracts a surplus that the productive economy generates but does not retain. The mechanism is deceptively simple, because borrowing to build productive capacity frequently costs more than the capacity itself, and the resulting debt service transfers the surplus to a creditor class that performs no productive function.

Marxist political economy provides the categories through which this transfer can be understood. Marx distinguished between productive capital, which is invested in the production of surplus value through the exploitation of wage labour, and interest-bearing capital, which consists of claims on future revenue streams without any corresponding productive activity (Marx, 1894). The bank that records a loan as an asset on its balance sheet performs no labour and creates no value, yet it acquires a claim on the surplus value that the borrower’s enterprise will generate. When the cost of servicing that claim exceeds the surplus that the enterprise can retain, the borrower is reduced to a position of debt servitude, compelled to extract more from his own workers in order to meet his obligations. The entrepreneur who builds a factory with borrowed money ends up working for the banker, and the workers who operate the factory end up working for an enterprise whose surplus is pledged to creditors before it is produced.

The empirical evidence for this mechanism is substantial, though it is rarely presented in these terms. Studies of corporate finance indicate that the cost of funding economic activity frequently outweighs the cost of the production facilities themselves, and that loan repayments, fees, and interest charges can in some cases reach multiples of the original principal. The Western oil industry provides an instructive case, because McKinsey analysts reported that throughout most of its history the industry barely managed to cover its cost of capital, which implies that the bulk of the surplus generated by oil extraction accrued to creditors rather than to the operating companies (McKinsey, 2006). This finding is consistent with the broader pattern that financialisation has shifted the distribution of surplus value toward rentiers and away from productive enterprises, with the consequence that the latter must compress wages and intensify labour to remain solvent.

The distributional consequences of this transfer are visible in the wealth statistics of the advanced economies. The top decile of households in the United States holds approximately 67 per cent of household wealth, while the bottom half holds approximately 2.5 per cent, and similar concentrations are observable across Europe (Federal Reserve, 2024). The creditors who hold government and corporate bonds are drawn disproportionately from the upper tail of this distribution, which means that the interest payments that constitute a fiscal burden for the general population constitute a revenue stream for the wealthy. The cost of financing is therefore not a neutral market price but a mechanism of class transfer, and the productive economy’s subordination to it is the contemporary form of the separation between the producers and the means of production.

The historical record of European colonialism demonstrates that this logic has never been confined to the domestic economies of the advanced states. The British Empire’s administration of India provides a case in which the extraction of revenue through land taxes and the disruption of indigenous economic structures produced a series of famines of extraordinary lethality, with Victorian demographers recording 34 separate famines in British India compared with 17 recorded instances in the prior two millennia of Indian history (Sheldon, Duffield and Hewitt, 2009). Mortality estimates for the half-century following the final military conquest of 1857 range between 30 and 40 million persons, and the Bengal famine of 1769–70 alone killed approximately 10 million people, or a third of the population (Sheldon, Duffield and Hewitt, 2009). The Irish famine of 1845–52 exhibits a comparable structure, because Ireland continued to export grain, livestock, and dairy produce to England under armed guard while its own population starved, and the administration of relief was explicitly framed by officials as a mechanism for reducing surplus population (TheJournal.ie, 2014). These were not natural disasters in any meaningful sense, because food was abundant and the machinery of export was protected by military force.

The City of London’s institutional architecture emerged from this history of plunder and continues to function as the organisational centre of finance capital. Parliamentary evidence records that the Corporation of the City of London, which until the late twentieth century possessed narrow local government functions, was reorganised into a systematic lobby for London finance, and that the business vote in the City was retained and expanded in 2002 so that it now outnumbers the residential vote (House of Commons, 2013). The same evidence documents the close relationship between the City and the machinery of the British state, including the appointment of City grandees to chair bodies managing the state’s banking assets and the dependence of both major parties on City donations (House of Commons, 2013). The City is not merely a financial centre but a parastate institution with significant capacity to shape financial governance, and its interests are structurally aligned with those of the rentier class that the global debt system enriches.

The geopolitical expression of this configuration is the drive to subordinate resource-rich states to the discipline of international finance. Russia possesses natural resource wealth estimated at between 75 and 90 trillion dollars, which represents the largest concentration of energy, minerals, and timber in the world (TASS, 2025). Western corporations have historically served as vehicles for collateralising these resources, because a company that obtains a lease for oil exploitation can use the resource as collateral for a loan from a City or Wall Street bank, and the bank records the loan as an asset without performing any productive activity. The loan is repaid at multiples of its original value, and the bulk of the proceeds from resource extraction therefore accrues to the bankers rather than to the operating companies or to the host state. This mechanism explains why the Western oil industry’s returns have historically been so poor despite the enormous value of the resources it extracts, and it explains why a sovereign state that refuses to open its resources to this arrangement becomes an obstacle to be removed.

The case of Vladimir Putin illustrates this dynamic with unusual clarity, though the interpretation of his conduct requires care. Putin was initially installed with Western approval, and former MI6 chief Richard Dearlove has acknowledged that British intelligence had a hand in bringing him to power, while Henry Kissinger’s approval was reportedly required for the appointment (Dearlove, 2024). Western leaders met with Putin repeatedly during his first years in office, and he received a state visit to the United Kingdom, the first for a Russian leader in over a century. The relationship soured when Putin subordinated the oligarchs to state authority, imprisoning Mikhail Khodorkovsky on tax evasion charges in 2003 after the latter had challenged him politically. Khodorkovsky later testified that Jacob Rothschild served as the “protector” of Yukos, a figure with authority to transfer control of the company under specified conditions, and that this arrangement activated when Khodorkovsky was arrested (Strana.news, 2024). The imprisonment of Rothschild’s protégé signalled that Putin was not willing to function as a trustee for Western financial interests, and from that moment the campaign to remove him became inevitable.

The deindustrialisation of Europe follows from the same logic, though its mechanics are mediated by energy policy and military strategy. European industrial electricity prices in 2024 were approximately 0.199 euros per kilowatt-hour, compared with 0.075 euros in the United States and 0.082 euros in China, which places European manufacturers at a decisive disadvantage in energy-intensive sectors (European Commission, 2025). Industrial production has contracted in Germany and other member states, and energy-intensive industries have relocated or closed. The immediate cause is the disruption of cheap Russian gas supplies and the policy decisions that accompanied it, but the deeper cause is the subordination of European industry to a financial system that privileges short-term returns over long-term productive capacity. A prosperous and industrial Europe would be difficult to mobilise for war, because populations with secure employment and rising living standards have little incentive to sacrifice themselves for geopolitical objectives, and the destruction of that prosperity is therefore a precondition for the recruitment of soldiers and the manufacture of consent.

The historical record of Western warfare provides evidence that the infliction of mass casualties has frequently been a matter of policy rather than accident. General Sir Douglas Haig studied the Maxim gun at Enfield before departing for the Sudan in 1898, actively promoted its use during his later service in India, and was fully aware of its capacity to destroy infantry formations (H-Net, 2006). Yet he repeatedly ordered waves of British soldiers to advance into German machine-gun fire on the Western Front, and the scale of the casualties suggests that the preservation of manpower was not his primary consideration. The firebombing of approximately 80 Japanese cities and the atomic bombings of Hiroshima and Nagasaki occurred after Japan had sought a means of capitulation, and the deliberate targeting of urban infrastructure designed to prevent firefighting constituted a form of violence that cannot be explained by military necessity alone. The Russian Civil War was not a spontaneous working-class uprising but a conflict shaped by foreign intervention and the financial interests that supported it, and the millions of deaths that accompanied it were the consequence of a struggle over the control of Russian resources and territory.

The present conjuncture is one in which these historical patterns are converging. The advanced capitalist states are characterised by high productivity alongside widespread hardship, because the surplus is extracted through the cost of financing before it reaches the productive economy or the households that depend upon it. The deindustrialisation of Europe and the demonisation of Russia are not separate phenomena but two aspects of a single strategy to reopen the Russian resource base to Western capital and to mobilise European populations for the conflict that this objective requires. The population’s awareness of its own immiseration is a new variable that the architects of this strategy did not anticipate, because a herd that knows it is a herd behaves differently from one that believes itself to be free. The outcome of this conjuncture remains uncertain, but the structural pressures that produced it show no sign of abating, and the most plausible trajectory is one of intensified conflict and further concentration of wealth.

“There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt.”

John Adams is widely credited with the observation that there are two ways to conquer and enslave a nation: by the sword and by debt. The analysis above suggests that these are not alternative instruments but successive stages of a single strategy. The debt mechanism hollows out the productive base and transfers the surplus to a creditor class; the resulting immiseration destroys the material basis of resistance; and the sword is then drawn against the resource-rich periphery that the creditors wish to reopen to extraction. Europe is being made poor on purpose because a prosperous Europe would not fight, and the debt that impoverishes it is the same debt that finances the war.

Karl Marx, writing in Capital, Volume III, saw debt as a fictitious commodity that extracts surplus without producing value:

“Interest-bearing capital always being the mother of every insane form, so that debts, for example, can appear as commodities in the mind of the banker.”

Authored By: Global GeoPolitics

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References

Dearlove, R. (2024) Remarks on MI6 and the appointment of Vladimir Putin, cited in The Krainer Report, 27 October.

European Commission (2025) Energy prices and costs in Europe. Brussels: European Commission.

Eurostat (2025) Key figures on European living conditions: 2025 edition. Luxembourg: Statistical Office of the European Union.

Federal Reserve (2024) Financial accounts of the United States. Washington, DC: Board of Governors of the Federal Reserve System.

H-Net (2006) ‘Haig and the machine gun’, H-War Discussion Network, 1 August.

House of Commons (2013) Written evidence: The role of the Corporation of the City of London. London: The Stationery Office.

Marx, K. (1894) Capital: A Critique of Political Economy, Volume III. London: Penguin Classics (1991 edition).

McKinsey & Company (2006) ‘The McKinsey Quarterly 2006 Number 1’, McKinsey Quarterly.

Sheldon, R., Duffield, M. and Hewitt, V. (2009) ‘Development, poverty and famines: The case of British Empire’, in *Empire, Development and Colonialism*. Woodbridge: Boydell & Brewer.

Strana.news (2024) ‘Khodorkovsky revealed that Lord Jacob Rothschild was the protector of Yukos’, Strana.news, 23 May.

TASS (2025) ‘Sechin estimates the total value of Russia’s natural resources at nearly $100 trillion’, TASS, 25 November.

TheJournal.ie (2014) ‘Irish people asked to observe a minute’s silence for victims of the Great Famine’, TheJournal.ie, 2 May.

Marx, K. (1991). Capital: A critique of political economy (Vol. 3). (D. Fernbach, Trans.; F. Engels, Ed.). Penguin Books. (Original work published 1894)