Trade Wars: The obsolescence of the nation state

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President Trump said Friday that tariffs on another $267 billion in Chinese goods are ready to go and could be rolled out on short notice, reinforcing earlier threats and signaling no end in sight for the growing trade dispute. Speaking aboard Air Force One en route to Fargo, N.D., Mr. Trump said the tariffs would be in addition to the tariffs on $200 billion in Chinese goods the administration has been preparing, which he said will ‘take place very soon, depending on what happens.’” Wall Street Journal, 8/9/18.

On the same page you can watch a video speculating on how the Chinese might hit back[1]. The Trump administration has also announced severe tariffs on imports from the EU – described by Trump on his recent European visit as a “foe” – and even from its neighbours and partners in the so-called North American Free Trade Agreement, Mexico and Canada.

The spectre of an accelerating trade war is haunting capitalism. It may seem difficult to understand in a period where production has never been so global and the “free movement of capital and labour” has been an almost unassailable credo of the world’s leading politicians and economists for decades. But it is precisely the inherent contradiction between capital’s thrust towards conquering the globe, and the inhibiting framework of the nation state, which is behind this new surge of protectionism. 

Global v national: an insurmountable contradiction

In the Grundrisse Marx provides us with a key to grasping why the nation state,  as a political expression of capitalist social relations, must itself become a fetter on the global development of the productive forces: the universality towards which it (i.e. capital) irresistibly strives encounters barriers in its own nature, which will, at a certain stage of its development, allow it to be recognised as being itself the greatest barrier to this tendency, and hence will drive towards its own overcoming”[2]. In 1916, in the wake of the clearest possible expression of this barrier – the first imperialist world war –Trotsky could be more precise: “The nation state has outgrown itself – as a framework for the development of the productive forces, as a basis for class struggle, and especially as the state form of the dictatorship of the proletariat.” (Nashe Slovo, 4 February 1916) 

The very survival of the nation state had become an added element in the growing contradictions of capital at both the economic and military levels

These contradictions have grown sharper over the past 100 years despite all the efforts of the bourgeoisie to contain them. In the 1930s, the protectionist response of the US to the depression, alongside the rise of the fascist and Stalinist siege economies, deepened the world crisis of overproduction by further restricting the global market. Fortunately for the bourgeoisie, but tragically for humanity, capitalism confronted a defeated working class and was able to “solve” the problem through a gigantic military mobilisation and the subsequent reorganisation of the world market. 

The post-1945 world order was, in part, based on the recognition that limits had to be imposed on national competition. Formally this was expressed in the establishment of the United Nations Organisation, but in reality it was the two-bloc system founded on the rule of the bloc leader and the subordination of its allies that lay at the heart of the new order. Since it was aimed at the rival bloc, it contained the permanent threat of nuclear war and endless conflict at the peripheries, but it also ensured a certain discipline in these conflicts; at the same time, combined with Keynesian economic management and real expansion into new areas following the demise of the old empires like Britain and France, it allowed for a certain stability and economic development.

The crisis of this phase of state capitalism manifested itself first at the economic level: “stagflation” and the beginnings of open unemployment towards the end of the 1960s. The critics of what they called “socialism” or the “mixed economy” argued that direct state management obstructed the free operation of market forces (and there was indeed some truth in this, as we noted in our theses on the crisis in the eastern bloc[3]). The new approach pioneered under Thatcher, Reagan etc was called neo-liberalism because it presented itself as a return to 19th century laisser-faire; in reality, as we always insisted, it was a new version of state capitalism (the German term “ordo-liberalism” is perhaps a more honest description) which was directed by a highly repressive central state

The international face of neo-liberalism is “globalisation”, which began to be a common term in the 90s, i.e. following the collapse of the eastern bloc. There is a deep falsehood in this concept, since it is based on the argument that capitalism had only become global once the “socialist” countries had disappeared: in reality, the Stalinist regimes were a particular form of the world capitalist system. Nevertheless, the end of the autarkic model of the eastern bloc countries made a real economic expansion possible: not so much into the old countries of the Russian bloc, but into areas like India, China, South East Asia etc. This expansion had a number of underlying elements: the technological developments that allowed a much faster circulation of capital and a reorganisation of global industrial networks; a more directly economic dimension, in which capital was able to penetrate new extra-capitalist areas and make use of much cheaper labour power, while at the same time making gigantic profits through the swelling of the financial sector; and also a social element, since the break-up of industrial concentrations in the “old” capitalist countries, driven by the hunt for new sources of profit, also had the effect of atomising centres of class militancy.  

The US looks to bail out of its own world order

This new post-Cold War order remained one under the aegis of the US despite the increasing erosion of US domination at the imperialist level, especially around events in the Middle East. International organisms created in the previous period (IMF, World Bank, WTO) survived and were still US-led. Rival trading blocs, in particular the EU, were accepted as necessary by the US.

But this new order also corresponded to the advancing decomposition of capitalist society, creating powerful centrifugal forces that tended to undermine the state and inter-state structures of the ruling class. Decomposition not only pits nation against nation in an increasing free-for-all, but even precipitates the disintegration of nations, starting with the “failed states” at the peripheries but spreading towards the centre (cf the Catalonia crisis in Spain, even the drive towards Scottish independence in the UK). At the political level, these tendencies are the soil for the growth of populism, a form of reaction against the parties and institutions tied to the “neo-liberal” world order which has overseen a massive increase in inequality, the ruin of whole areas of traditional production and a growing inability to deal with the problems posed by the refugee crisis and the terrorist “blowback” in the capitalist centres. These latter phenomena were to a large extent the unwanted results of imperialist wars in the Middle East and elsewhere – in turn the product of the USA’s efforts to preserve its world hegemony through the application of its undisputed military superiority.

At the economic level, the growth of populism can be linked to the financial crash of 2008, which was the first major sign of the limits of the new economic world order with its growing addiction to speculation and debt. The fragility of the “recovery” since 2008 can be gauged by the fact that most of the remedies adopted by the capitalist states have been founded on the same basic policies that led to the crash in the first place: a state supported bail out of the centres of global speculation – the big banks, the printing of money, and an even greater recourse to debt. Even China, which has been presented as the new workshop of the world, a place where real production is the basis of the economy, is now facing a debt crisis which threatens its huge economic and imperialist ambitions. [4]

Thus the rise of populism expresses the attempt to turn away from the “globalised” order and withdraw behind national borders, increasingly combining neo-Keynesian social measures with vicious policies of exclusion. Most of these policies are anathema to the common sense of the mouthpieces of globalisation, as we saw with the reaction of a large panel of economic experts to the latest shots in Trump’s trade war, recalling the lessons learned from the utter failure of similar policies in the 1930s[5].

There have been real counter-attacks to the populist upsurge by those who still uphold the old order (the Macron election, the investigations into Trump in the US, the united response of Europe to Trump’s trade tariffs, etc) but the populist upsurge continues to grow and to have increasing effects on the economic crisis and imperialist conflicts. Trump has had to back-track again and again (on Russia, on China, North Korea, migrants) but his policies are supported by a significant section of the ruling class who want to continue the policy of tax cuts and favours to certain industries, as well as by a “base” kept on board by his culture wars positions, but also by economic bribes (tax bonuses, social programmes, tariffs on foreign goods that raise hopes of reviving jobs in old industries).

The ICC’s June report on imperialist tensions[6] emphasises that we shouldn’t underestimate the method in Trump’s madness, aimed at imposing a situation in which the US is at the very heart of ‘every man for himself’, but including a network of deals and bilateral agreements which aim at pulling apart existing alliances. Yanis Varoufakis, the ex-Syriza economist who now uses his knowledge of Marx to advertise ways of saving capitalism, provides some backing for this argument in a recent article in The Guardian: “Armed with the exorbitant privilege that owning the dollar presses affords him, Trump then takes a look at the trade flows with the rest of the G7 and comes to an inescapable conclusion: he cannot possibly lose a trade war against countries that have such high surpluses with the US (eg Germany, Italy, China), or which (like Canada) will catch pneumonia the moment the American economy catches the common cold[7].

Furthermore, the capacity of Trump to survive and pursue his methods is giving heart to populist solutions elsewhere, above all in Europe: Britain, Hungary, the Czech Republic, Poland, Austria, Germany, and now Italy. Italy’s new regime above all represents a threat to the euro and the EU itself. Italy’s huge debts can be used as a basis for blackmail because the EU cannot allow Italy’s economy to fail, while an Italian exit would be a huge disaster for the EU; at the same time as a main landing post for the refugee problem its current stance threatens to undermine any unified response to the migrant crisis[8].

This doesn’t mean that the warnings of the “experts” about the dangers inherent in the return to protectionism are ill-founded. Populism is, in part at least, a product of the economic crisis but its policies cannot fail to deepen it – the short term benefits protectionism may bring to this or that national economy will have destructive long term effects on the world system. But neither can the “globalists” create a truly world order since capitalism is irrevocably tied to competition between national units organised around the bourgeois state. The necessity of communism, of a world human community without borders and states, is continually highlighted by the present international crisis, even when the proletariat itself, the bearer of the communist project, seems to be very far from grasping this perspective.   Amos 8/9/18



[2]. Notebook IV, the Chapter on Capital

[4].  See the Financial times article “China’s debt threat: time to rein in the lending boom”, https://www.ft.com/content/0c7ecae2-8cfb-11e8-bb8f-a6a2f7bca546  . On China’s ambitions, see our new article “China’s Silk Road to imperialist domination”, http://en.internationalism.org/icconline/201809/16572/china-s-silk-road-...

[7]. https://www.theguardian.com/commentisfree/2018/jun/11/trump-world-order-.... Of course, Trump is not looking very far ahead. Another Guardian article, “Trump can cause a lot of harm before he learns it’s hard to win a trade war”, by the economics writer Larry Elliot, looks at some of the longer term effects of his tariffs on global trade and the US economy itself: https://www.theguardian.com/business/2018/jul/01/trump-will-soon-find-th...

[8]. For an analysis of the recent Italian elections, see http://en.internationalism.org/icconline/201808/16506/elections-italy-po...

 

 

Rubric: 

Economic crisis