By Greg Godels writing for Marxism Leninism Today in the USA
June 19, 2018
In November 2008, in the midst of the most severe global economic crisis since the Great Depression, I wrote that the era of global internationalism– so-called “globalization”– was coming to an end. “Centrifugal forces” of self-preservation were now operant, pulling apart existing alliances, blocs, joint institutions, and common solutions:
The economic crisis has reversed the post-Soviet process of international integration – so-called “globalization.” As with the Great Depression, the economic crisis strikes different economies in different ways. Despite efforts to integrate the world economies, the international division of labor and the differing levels of development foreclose a unified solution to economic distress. The weak efforts at joint action, the conferences, the summits, etc. cannot succeed simply because every nation has different interests and problems, a condition that will only become more acute as the crisis mounts… It is highly unlikely that the [European] Union will come up with common solutions. Indeed, the unraveling of the EU is a possibility.
A decade later, it should be apparent that this projection anticipated the rise and growth of economic nationalism, a political trend that threatens to sweep away the institutions and policies of free market globalism. Just as the failure of the Keynesian consensus to address a new crisis in the 1970s brought the ascension of market fundamentalism (so-called “neo-liberalism”) and its later international consolidation as the “globalization” consensus, the shock of 2007-2008 brought the weaknesses, shortcomings, and failures of market fundamentalism to the fore. Consequently, the policy of open global markets is now engaged in a life-and-death struggle with economic nationalism. To a great extent, the larger capitalist states are retreating toward aggressive self-interest and intensifying global competition.
The most obvious expressions of these growing rivalries are sanctions, trade barriers, shifting alliances, military buildups, saber-rattling and, inevitably, wars.
That a global consensus has been disrupted is neither widely acknowledged nor accepted. But keen bourgeois observers are beginning to expose the fractures in global economic integration. Mohamed A. El-Erian, a prominent columnist for The Financial Timesand Bloomberg News writes of the “cracks” in the “global policy coordination that can make the whole much larger than the sum of the parts…”. He laments how “…too many years of low and insufficiently inclusive growth… tears at the fabric of society, erodes trust in key institutions, and fuels the politics of anger.” “[S]omething deeper is going on here– a common thread, if you like,” he opines. “And the ramifications will be accentuated by what are now widening inequalities brought about by differing growth rates and policies in advanced economies as the U.S. increasingly outpaces other economies.” (Bloomberg Businessweek, 6-11-18) The “common thread” is intensifying rivalries, a scramble to secure advantage in a global economy increasingly resembling a ‘state of nature.’
Despite the glowing US reports of booming employment, economic growth, rising wealth, and stock market euphoria, serious observers are noting the disparate economic news emanating from the reaches of the global economy. Recent Wall Street Journal headlines underline this reality: Global Growth Loses Steam, Emerging-Market Route Feeds Contagion Fear, U.S. Profit Boom Leaves Europe Behind, Growth In U.S. Leaves World Behind. With competition for fewer and fewer crumbs, the strongest, healthiest economy– the US– is snatching them up at the expense of its friends and allies alike. Ironically, the PRChina and Russia are the staunchest public defenders of the old order of global “cooperation,” while preparing to forge new partnerships and tactics to meet the disintegration of that order.
As Lenin wrote in Imperialism: The Highest Stage of Capitalism:
…in the realities of the capitalist system… alliances, no matter what form they may assume, whether of one imperialist coalition against another, or of a general alliance embracing all the imperialist powers, are inevitably nothing more than a ‘truce’ in periods between wars. Peaceful alliances prepare the ground for wars, and in their turn grow out of wars; the one is the condition for the other, giving rise to alternating forms of peaceful and non-peaceful struggle out of one and the same basis of imperialist connections and the relations between world economics and world politics.
Thus, we are seeing the passing from the global “alliance” moment towards intensifying competition now contained by a regimen of sanctions, tariffs, other “peaceful” forms, and “limited” wars, but with general war looming off-stage.
It is a mistake or a witting mischaracterization to see the break-up of the global open market consensus as merely the result of crackpot policies of Trump and his ilk. It is a serious error to associate sanctions, tariffs, and sharpening rivalries simply with the tactics of the rightwing populist parties and their partisans.
In the first place, the nationalist, protectionist policies emerging today are not rooted in policy whims or ideological dispositions alone. Instead, they are urged on by a badly performing capitalism. While the prevailing paradigm– the globalism consensus– has served capitalism well, generating profits and growth, it is profoundly in need of repair or replacement. The ruling class recognizes this failing and is searching for a solution, a process expressed, in one way, through the political confrontation between traditional centrist parties and upstarts.
Secondly, the struggle is trivialized and obscured if it is posed as a struggle between reaction or fascism and the forces of enlightenment or progress. Economic nationalism has no necessary ideological link to either. In the Great Depression, autarky– economic self-sufficiency, isolationism– was as identified with Roosevelt as it was with Hitler. The fact that the creepy politics of Trump, Farage, Le Pen, and Salvini most vigorously embrace economic nationalism is historically contingent. While the US media have portrayed Trump’s tariff-mania as an affront to economic sanity, they fail to portray the other weapons of economic nationalism– sanctions and wars– similarly. While the Obama administration hewed to the orthodoxy of foregoing new tariffs, it briskly accelerated the use of sanctions and war.
Thus, the sanction/tariff initiative in the US is often not a matter of pro or con, but rather who is targeted. Senator Schumer, the leading Democratic Senator and harsh critic of Trump, is not against tariffs per se. Instead, he differs from Trump only on which countries should be attacked. He is sharply critical of tariffs against NATO allies or Japan, but enthusiastic for punitive tariffs (and other maneuvers) against Russia, the PRC, Venezuela, and other rivals or perceived delinquents.
The current ZTE controversy demonstrates how economic nationalism infects both US parties. ZTE, a leading Chinese multinational telecommunications corporation, is accused of defying US sanctions against the PDRKorea and Iran. Trump, the arch-America-First warrior negotiated a $1 billion penalty and an outrageous arrangement that would make ZTE pay for a team of on-site US inspectors! This insulting affront to Chinese dignity is opposed by leading Senators of both parties who hope to go further and put ZTE completely out of business by denying it access to essential US components.
While the US ruling class may be debating how to address disappointment with the reigning paradigm, it fully understands that the US is still the world’s leading economic and imperialist power. The clash between Trump and his European counterparts is over how best to engage and expand that power with or without concessions to international cooperation.
In the 1970s, capitalism suffered a severe crisis of inflation, stagnation, and declining profit rates. The tools that had stabilized and steered capitalism from The Great Depression until the 1970s (popularly identified with JM Keynes) proved to be largely ineffective against the particular mix of problems then afflicting the global economy. In the US, a new paradigm (rather, the revival of an older paradigm) of unfettered, unregulated markets gained political traction as an answer to that failure, first in the second half of the Carter administration, and then more intensely in the Reagan administration. By the mid-90s, the new market-centered paradigm dominated both US political parties, attained broad ideological hegemony, and reached into every crack and crevice of life in the US, from public services to cultural production. With the disappearance of the Soviet Union and the European socialist countries, and the reorientation of the many socialist-oriented countries, market-obsession and deregulation spread worldwide like a virus.
With a market-based answer to every problem, ruling classes began to dismantle the protective and social-maintenance structures that had been hard won by generations of working people. Market fundamentalism clashed with the very notion of social guarantees or a welfare safety net.
Understandably, the left rallied to defend these gains against the full assault on living standards. To a great extent, the left initiative was an attempt to achieve a broad popular front to defend the twentieth century victories– limited as they were– of the broad masses.
The left failed. It failed at great cost.
By the end of the twentieth century, every center-left political party of consequence had fully embraced market fundamentalism and had become wholly untrustworthy allies in the defensive battle against deregulation, privatization, and the evisceration of the welfare state. This left the anti-capitalist and revolutionary left to fight alone for the historical center-left program. In the US, we like to joke that this was the era when Democrats became Republicans, and socialists, even Communists, became Democrats. Nonetheless, the Democratic Party programs– the 1930s New Deal and the 1960s Great Society — continue to erode.
Most of the anti-capitalist and revolutionary left placed the socialist program aside in the interest of an ephemeral unity with the center-left. The option of a serious replacement of capitalism was shelved to achieve a united defense of working-class gains, a common defense that never materialized. Consequently, a generation of rebellious youth– scorched by poverty, unemployment, underemployment, and student debt– are searching for a radical alternative, but finding anarchism, ersatz socialism, and other miraculous potions.
Today’s fight between the market fundamentalists, the globalists and the economic nationalists is not our fight. It is a fight over how to maximize profits and sustain capitalism. The working class has no stake in its outcome. Unlike the dismantling of the welfare state, there is no defensive battle to be waged.
Market fundamentalism and globalism were disasters for the working class, allowing capitalism to drive down the price of labor power to its historically determined cost of production and reproduction– wages in the US have been stagnant for nearly 50 years. Economic nationalism, on the other hand, offers workers nothing but ephemeral gains at the expense of brothers and sisters in other countries or the destruction of war.
When liberal pundits attack Trump’s tariff plans they are defending profit and growth, not the working class. When Krugman, Reich, or Stiglitz defend the sanctity of unfettered global markets, they are making “trickle down” promises, promises that have not been delivered in the many decades of expansive trade growth.
And when self-styled populists offer protectionism for jobs, they are protecting corporations and not jobs; they are selling snake oil to workers while seizing competitive advantage for corporations and their CEOs.
Nothing demonstrates the shell game of economic nationalism, of protectionism, better than the machinations of generations of class collaborationist trade union leaders who latched their careers to protectionism. Preaching the approach of “identity of interest,” they became cheerleaders for corporate success. When faced with rank-and-file stirrings, they join the chorus of “unfair competition.” Joined at the hip with corporate bosses, they discover foreign countries that don’t “play by the rules.” It should not go unnoticed that US union leaders typically point to “cheaters” in predominantly non-white countries– Japan, the RoKorea, and now the PRChina.
Eventually, this no-struggle, blame-foreigners strategy as an explanation of stagnant wages and job loss backfires. For decades, the United Steelworkers Union has blamed the plight of steelworkers on foreign steel. So now, with President Trump promising a large tariff against the largest exporter of steel to the US, USW president, Leo Gerard, is in a quandary. His union represents the steelworkers in Canada, the largest exporter of steel to the US.
“‘The steelworkers believe in tariffs. We just believe they should be brought against countries that cheat,’ Mr. Gerard said, adding that is clearly not the case with Canada.” (Pittsburgh Post Gazette, 6-13-18). Of course it is hard to square this response with the fact that PRC only accounts for 2% of US steel imports. To this, Gerard uncovers a conspiracy: PRC surreptitiously ships its steel through third-party countries, thus, “masking the real country of origin.”
If true, how would tariffs targeted directly at the PRC change the flow of disguised “cheating” steel to the US? Wouldn’t the imports still sneak through?
Gerard followed up with a lengthy op-ed in the Pittsburgh Post Gazette (6-17-18) notable for its transparent appeal to crude patriotism and relentless China-bashing. As for the leading threat to the US steel and aluminum production industry, Gerard weakly reminds us that “American steel is used to make some cans in Canada that are then shipped to the United States where they are filled by American food companies.”
Hopefully, steelworkers are beginning to see this ruse designed to distract union members from the continuing rapacious exploitation of workers by the corporations.
For the left, there is, as there always has been, a third way: the fight for socialism. Those wedded to reforming capitalism and social democratic programs will, indeed must, choose between greasing the skids of global capitalism or closing the borders to foreign competition. Those are false choices for the working class. Those choices are dead ends for the left.
The struggle for socialism is neither a false choice nor a dead end.