Capitalism has no solution to the global economic crisis!

After the crazy escalation of the last few months over customs duties and the resulting stock market and dollar crashes, the world is hanging on Trump's every move, wondering what decisions he will or will not take, which ones he will backtrack on... For the vast majority of the bourgeoisie, the current US administration's policy is ‘absurd’ and Trump's decisions are ‘crazy’; they threaten the development of an already faltering global economy, and first and foremost of the US economy. According to recent IMF forecasts, US economic growth will fall by nearly 1% compared to previous forecasts, the Chinese economy by 0.6% and finally the global economy by 0.5%.

In reality, what fundamentally threatens the global economy and humanity is decadent capitalism, which has entered its final phase of decomposition, where the effects of the economic crisis, wars, the climate crisis and all the manifestations of the rottenness of this society are now combining. Trump, like populism, is nothing more than a product of this dynamic.

The foundations of the great economic disorder

Since the reappearance of the historic crisis of capitalism in the late 1960s, a product of capitalism's fundamental contradictions, the bourgeoisie has implemented palliative measures to try to postpone the most severe effects of the recession. The effectiveness of such policies depended on the ability of the major industrialised countries to agree on a certain level of international cooperation, based on the implementation of mechanisms of state capitalism which, in particular, formed the framework for the globalisation of the economy and initially enabled economic exchanges to escape the chaos raging, for example, on the imperialist front and in the political life of the bourgeoisie. Thus, at the height of the economic turmoil of 2007-2008, which had already hit the United States hard, and that of 2009-2011 with the ‘sovereign debt’ crisis, the bourgeoisie was able to coordinate its responses, which made it possible to mitigate the blows of the crisis somewhat and ensure an anaemic ‘recovery’ during 2013-2018.

But such a policy reached its limits in the growing tendency of the different national factions of the bourgeoisie to go it alone, making them less and less capable of providing a minimally concerted response, through palliative measures, to the global crisis of capitalism. Such an ‘evolution’ was the hallmark of the expansion of the decomposition of capitalism, in particular of the ‘every man for himself’ mentality at all levels of society, including the management of capital by the bourgeoisie. This was confirmed in a striking way with the 2020 pandemic and then the wars in Ukraine and the Middle East, which led to the closure of borders and gave rise to a very significant trend in favour of measures to ‘relocalise’ production, preserve key sectors in each national capital, and develop barriers to the international movement of goods and people. All this has contributed to sowing chaos in monetary, financial and trade policies.

Trump2 as a factor exacerbating economic destabilisation

It is in this minefield that Trump is returning to business with his uninhibited, irrational, changeable and completely unpredictable populist policy. While being a product of the rottenness of capitalism, Trump is in turn an active factor in its decline. This is illustrated most convincingly by his actions at the head of the US executive in the trade war he has launched against the world. The ‘economic’ justifications put forward by the Trump administration in its crusade to increase tariffs on most imported goods are either bluff, ridiculous, or both.

One of them, almost laughable, is that until now the United States had been too generous with its partners, who never tired of taking advantage of Uncle Sam's largesse (‘The whole world is taking advantage of us’). It was therefore necessary to ‘set the record straight’ by charging hefty customs duties on certain imported goods.

Another justification invokes the fight against inflation, which is a sensitive issue in the United States since the surge in prices under the Biden presidency had largely contributed to the Democrats' electoral defeat in the last elections. It is not clear how higher prices for imported goods could lower prices in the United States, except through mysterious compensatory mechanisms. But that is not the point: what is really going on here is an attempt to mask the real cause of inflation. The increase in customs duties will certainly not prevent inflation, which has a completely different cause: “The fundamental causes of inflation are to be found in the specific conditions of the capitalist mode of production in its decadent phase. Empirical observation allows us to see that inflation is fundamentally a phenomenon of this epoch of capitalism and that it manifests itself most sharply in periods of war (1914-1918, 1939-45, Korean War, 1957-8 in France during the Algerian war…) i.e. at times when unproductive expenditure is at its highest. It is thus logical to consider that it is by beginning with this specific characteristic of decadence, the immense role of armaments production and unproductive expenditure in general in the economy that we can attempt to explain the phenomenon of inflation”.[1]

In short, if the cost of living is rising in the United States as elsewhere, it is largely to pay for (unproductive) military spending. Indeed, maintaining a huge military lead over all its imperialist rivals – including the most powerful among them, China – comes at a cost that is far from negligible and has to be paid by the population.

The consequences of the tariff war

The ‘tariff war’ is just one economic illustration of the questioning of the world order established after 1945, which has already largely fallen apart on the imperialist level with the ‘transatlantic divorce’, in favour of a totally irrational and unpredictable policy of everyone against everyone else. However, in economic terms, the lack of visibility about the future is a factor that inhibits economic activity for capitalism. In the case of Trump's policy, it is more than a lack of visibility; it is the impossibility of predicting anything, since he is capable of changing his position overnight and several times in a row, depending on his immediate interests. His approach, which consists of trying to score points at the expense of his opponents of the moment, is not limited to economic issues such as customs duties, as we can also see it at work on the imperialist front in the peace negotiations in Ukraine.

Furthermore, responding to the economic depression by lifting customs duties completely ignores the lessons that the bourgeoisie learned from the Great Depression of the 1930s, namely that protectionism can only aggravate the crisis of overproduction by further reducing markets.

Finally, the Trump administration's aberrant and authoritarian methods, often completely irrational not only in terms of the proper functioning of capitalism but also in terms of the United States' own interests, project the image of a world power that is unpredictable and can no longer be trusted. As the world's leading economic power, far ahead of all its rivals, particularly in economic and military terms, the impact of Trump's policies on relations between nations across the globe can only be devastating.

The heaviest and most devastating effects of this global destabilisation will be felt first and foremost by the class exploited under capitalism: the working class. This will happen directly through inflation, which will severely erode its purchasing power and therefore its ability to survive in the current situation. But national capital will also have to find ways to compensate for the increased costs associated with the reconfiguration of production flows resulting from globalisation and relocations. To do this, they will have no choice but to attack the proletariat, cut jobs, worsen working conditions to reduce marginal costs, and slash wages and indirect income linked to social protection. The announcements by various European governments about the ‘efforts’ to be made to ‘save’ the national economy are nothing more than ideological preparation for the blows that will rain down on the proletariat.

The working class everywhere must expect to be the first to pay for this plunge into uncertainty and chaos. The attacks will intensify and will inevitably be accompanied by ideological campaigns that will shift the blame for the situation onto Trump, onto the attack on ‘democracy’, onto the warmongers in America, Russia and no doubt elsewhere when necessary. The trade war will also serve to amplify nationalist rhetoric about protecting ‘our values,’ defending ‘our economic heritage’ and ‘the greatness of our nation.’ We must not fall for this. The decomposition of capitalism is dragging the system in all its dimensions into the abyss. Nothing can pull humanity out of the abyss, neither the measures that have been tried time and again and have always generated more crises and wars, nor the workers sacrificing their wages or working conditions to cheapen the costs of production. Nothing, except a total and radical questioning of this system, its overthrow in favour of a society free from the domination of capital and for the sole benefit of humanity and its environment. This society, communism, is a project in the hands of the proletariat, which, in fighting against the attacks launched against it by the bourgeoisie, will increasingly be able to recognise its own power and its historical responsibilities. The road ahead is undoubtedly still very long, but the perspectives outlined by the current situation only serve to highlight the urgency of developing the struggle.

Syl. D.

 

 

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[1] Overproduction and Inflation, ICC Online, and quoted in Report on the economic crisis for the 25th ICC Congress, International Review 170