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Thursday, December 28, 2017

Economic Nationalism: What it Means

In the throes of the 2007-2008 economic collapse, I projected that the global economy would be irrevocably and qualitatively marred by the unfolding events. I foresaw a shift in the structure of international relations, a shift away from the so-called “globalization” interlude. Writing in November of 2008:

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.

A crisis of the severity of 2007-2008 understandably challenges some earlier verities, but more importantly, it renders some economic roads now impassable. My view was that the era of completely open, free, and secure international exchange fueling dramatic growth in trade was not a new stage of capitalism-- as many wished to argue-- but a phase created by politically contingent factors and spurred by the intensified international competition of the last thirty years of the twentieth century. Moreover, that phase-- unhelpfully called “globalization”-- was both fortuitous and disastrous for the fate of capitalism. I elaborated on this further in April of 2009:

To simplify greatly, a healthy, expanding capitalist order tends to promote intervals of global cooperation – enforced by a hegemonic power – and trade expansion, while a wounded, shrinking capitalist order tends towards autarky and economic nationalism. The Great Depression was a clear example of heightened nationalism and economic self-absorption. Most commentators acknowledge this fact, but attribute it to the predilections of national leaders. It was said that Roosevelt “sabotaged” the London Economic Conference, for example. Earlier, he said: “Our international trade relations, though vastly important, are in point of time and necessity secondary to the establishment of a sound economy.” It is my contention, and I believe essential to a Marxist understanding, that Roosevelt’s reaction was an expression of the logic of capitalism under stress; the structural development that led to intense nationalism throughout Europe, especially in Germany and Italy, and ultimately to war.

The stress of the 2007-2008 economic collapse created “centrifugal forces,” forces pulling apart the institutions, the regulations, and the commitment to an open, unified, and universal global marketplace. In its place would come a growing national partisanship, a commitment to winning-against-adversaries, rather than partnership. This process of “de-globalizing,” of going it alone would gain against both the process and ideology of economic integration.

I believe these projections have been borne out. My February, 2017 article New Developments in Political Economy: The Demise of “Globalization”, makes the case that the trade internationalism of the post-Soviet era is in profound decline. Moreover, emergent and growing nationalism enjoys its vitality from the reaction to the failure of the global order. Events in the months since the article appear only to underscore that claim.

Rising Economic Nationalism

President Trump has substantially called the World Trade Organization (WTO) irrelevant to US trade policies. But skepticism about the WTO precedes his political rise as a nationalist. The once heralded WTO Doha (Doha Development Agenda) was mired in dispute and ineffectiveness from its inception in 2001 and especially after 2008. The annual number of WTO trade disputes has more than doubled since 2008 even though trade growth has been tepid (below global GDP growth for the last 3 years), a sure sign of growing protectionist sentiments. The recent December 10-13 meeting of the WTO was largely a failure. “The trade body’s 164 members didn’t reach full consensus on any of the major objectives it had set itself before the meeting,” in the words of Bloomberg’s Bryce Baschuk and Charlie Devereux, with the EU blaming failure on “destructive behavior by several large countries.”

But the European Union (EU) is itself enduring a burst of economic nationalism. While the popular press and liberal pundits stress the role of xenophobia in Brexit, the economic ills that fueled the growth of nationalism in the UK vote against EU membership are largely neglected. Also, the breadth of the rejection of open market policies throughout the EU are largely missed.

A recent The Wall Street Journal article (12-14-17) affirms my projections made in 2008 and 2009 for the EU:

The financial crisis that erupted in 2008 caused a drop in trade between EU countries, with little rebound since beyond precrisis levels. As Europe’s swoon dragged on, many politicians strove to prop up their economies with fixes that prioritized domestic markets over the EU. (The EU, a Disciple of Free Trade, is Erecting Barriers)

The WSJ author, Valentina Pop, choses the example of Emmanuel Macron, the new French President, to highlight the trend in the EU. Macron ran for office as a passionate advocate for Europeanism and free markets. Nonetheless, he nationalized a shipyard to block its purchase by an Italian firm, he supports limiting foreign employment, and he “gutted” dairy imports from EU countries. Further evidence for the retreat from border-free markets and the embrace of nationalism comes from the growth of trade barriers: legal actions against violators of the EU market openness more than tripled last year.

Earlier this year, the European commission moved legally against Romania and Hungary and, in June, against Poland over economic disputes.

Nothing shows the fraying of the one-global-market consensus and the turn to economic nationalism more than the dispute escalating between the US and Canada and waged though their corporate surrogates, Bombardier and Boeing. Boeing lodged a complaint against Canadian aircraft firm Bombardier with the US Commerce Department. With typical US arrogance, Commerce slapped a 300% tariff on Bombardier planes sold in the US.

Indignantly, the Canadian government cancelled its plan to purchase $5.2 billion of new Boeing fighters to supplement its existing Boeing fighter jets. Instead, it will accept bids in 2019 for a purchase of 88 new fighters, but with the pointed caveat that any bidder causing injury to Canada’s interests would be disadvantaged, a not very subtle slap at Boeing.

Further, as Canada grows increasingly unhappy with renegotiations over NAFTA, the government has turned to the People's Republic of China (PRC) to craft an alternative free-trade agreement (Canadian merchandise exports to the PRC have more than doubled since 2007). Clearly, one of history’s oldest and most intimate trading partnerships is under increasing stress from economic nationalism.

Elsewhere, I have demonstrated the qualitative changes in global energy markets, along with the dramatic intensification of competition and associated hostilities. The shifting energy alliances, the swings in market share, and the political instabilities that are commonplace have spurred the turn to economic nationalism.

What does it Mean?

The hasty conclusion that expansion of global markets along with universal homage to a new global community constituted an irreversible change in capitalist relations is now thoroughly discredited by the realities of imperialist aggression and economic crisis. In fact, the “globalization” moment coincided with the vast inclusion of new economies – the former socialist community – and the absolute hegemony of a capitalist power – the US. History has known other moments, but theorists – including many on the left – were too awed by capitalist triumphalism, drawn to knee jerk anti-Communism, and desirous of facile answers to recognize this continuity with the logic of state-monopoly capitalism. Well before World War I, a similar moment occurred with the massive expansion of markets under the global hegemony of the British Empire, a period followed by economic decline spurring extreme nationalism.

As I stress in the above passage, written in 2009, the normal course of global economic relations in the era of state monopoly capitalism is intense competition, pressure on profitability, accumulation crises, rising nationalism, and conflict. This is the norm in the age of imperialism. This is the logic of late capitalism.

Appearances may suggest to some a different narrative-- enduring prosperity in the mid-twentieth century, peace guaranteed by economic internationalism at the turn of the new century-- but the reality is different, far different. Reality is imposed by crisis. And the upheaval of 2007-2008 exposed the reality of fierce competition and national self-interest.

For some, the rise of nationalism is strictly a political phenomenon anchored in demagogy and ignorance; they see no linkage with the course of capitalism. But the economic base for this phenomenon cannot be denied. Liberal markets produced the crisis and the resulting human suffering sparked a political response.

And ruling classes, faced with pressure on profits from increasingly desperate and cut-throat competition in the unprecedented slow-growth recovery, are inexorably driven towards economic nationalism. While economic nationalism is a natural fit with the far right’s ultra-patriotism, it attracts centrist forces as well. Elements of the US trade union movement and Democratic industrial state politicians have warmed to economic nationalism since the days of bashing Japanese imports. Liberal Senators like Sherrod Brown have quietly worked with President Trump around overturning trade deals like NAFTA-- “strange bedfellows” in the words of The Wall Street Journal.

We do not have to press the parallel too hard to recognize that the economic nationalism of today threatens to spark disastrous wars, as did the rabid economic nationalism of the European powers in the prelude to World War I (and World War II). As in both eras, hostility and tensions are smoldering. And as in that era, war promises to follow, with devastation well beyond the comprehension of a complacent, self-absorbed population. The threat of general war, nuclear war, is possibly greater than any time in my lifetime, excepting the early Cold War years of General Curtis “Dr. Strangelove” LeMay and the US nuclear monopoly.

While extreme right nationalism is a serious political danger, the rise of economic nationalism, a growing policy consensus with capitalist rulers, threatens the very existence of millions, if not the planet.

Greg Godels

Saturday, December 16, 2017

The More Things Change, the More they Stay the Same

Some fifty years ago, ruling elites throughout the capitalist world settled into their overstuffed chairs and poured drinks to celebrate victory over the aspirations for independence held dear by formerly colonial peoples. In one case-- Ghana-- a popular leader, a venerated leader of African independence and African unity-- was deposed in a 1966 coup sponsored by foreign powers and carried out by national traitors. In the other case-- Guyana-- the most popular political party for decades, the most determined advocate for independence, was subverted and defeated in the rigged elections prior to the 1966 granting of formal independence.

Both Ghana and Guyana were long subjected to colonial rule, Ghana as part of Britain’s African colonial possessions and Guyana as part of the British empire’s Caribbean colonies. As pressures for independence mounted after the Second World War, both countries spawned dedicated and diligent leaders who had earned the trust of the people. Kwame Nkrumah and his Convention People’s Party (CPP) and Cheddi Jagan and his People’s Progressive Party (PPP) had led their respective country’s fight for independence from the beginning, suffering imprisonment, threats, and trials.

Nkrumah and Jagan shared another characteristic as well, a characteristic that made them the pressing target of imperialism: a vision of social development outside of the confinement of capitalism. They knew that centuries of capitalist exploitation proved that escaping colonial domination would require a parallel break with capitalism and its institutions. In fact, Nkrumah wrote a pioneering work on the inevitable economic subjugation of newly liberated peoples who chose to continue on the capitalist road, Neo-Colonialism: The Last Stage of Imperialism. Kwame Nkrumah’s work was both brilliant in its application of Marxism and prescient in anticipating the lingering dependency of the former colonies that choose to remain tangled in the capitalist web.

Dark Days in Ghana

In his 1968 book (Dark Days in Ghana) recounting the circumstances of the coup, Nkrumah noted that many forces were arrayed against his programs from the day of formal independence in 1957. Nonetheless, he and his party were able to implement initiatives to rapidly bring social, cultural, and educational achievements to a high level. By 1961, technical and secondary school enrollment had increased 437.8% and university students 478.8% from pre-independence. In the same period, hospital beds had increased 159.9% and doctors and dentists by 220.5%. Roads increased around 50%, telephones 245.2%, and electrical power generated 38.4%. Ghana had achieved the highest per capita standard of living and highest literacy rate in Africa. And Ghana’s Seven Year Plan was to create a dramatic increase in industry, building upon the increased electrification flowing from the country’s massive Volta dam project.

But Ghana could only move forward if it escaped the raw material trap that nearly all former colonies suffered as the legacy of colonialism and dependency. For Cuba, it was sugar cane, for Chile it was copper, for Guyana, it was bauxite, and for Ghana it was cocoa. Today, of course in Venezuela it is oil. In every case, the colony existed in the past only as a supplier of inexpensive raw materials for the industries of the European colonizers.

In the late 1950s the international price of cocoa rose inordinately. Nkrumah’s party shrewdly taxed the growers to utilize the surplus for social advancement, stabilizing the cost of food and other consumer goods, and supporting the diversification of the Ghanaian economy. But by 1965 the price had collapsed, thus fueling the popular discontent sparked by the enemies of socialism. Raw material prices in the international market became a weapon against socialist development. The parallel with modern day Venezuela, the collapse of oil prices, and the escalation of opposition on all fronts cannot be missed. The economic hardships in Ghana were skillfully transformed into violence. In Nkrumah’s words:

An all-out offensive is being waged against the progressive, independent states. Where the more subtle methods of economic pressure and political subversion have failed to achieve the desired result, there has been a resort to violence in order to promote a change of regime and prepare the way for the establishment of a puppet government.

In addition to manipulating the price of cocoa exports (and Ghana’s import prices of finished goods necessary for industrialization), “..imperialism withheld investment and credit guarantees from potential investors, put pressure on existing providers of credit to the Ghanaian economy, and negated applications for loans made by Ghana to American-dominated financial institutions such as the I.M.F.”

By way of self-criticism, Nkrumah reflects:

We expected opposition to our development plans from the relics of the old “opposition”, from the Anglophile intellectuals and professional elite, and of course from neo-colonists… What we did not perhaps anticipate sufficiently was the backsliding of some of our own party members… who for reasons of personal ambition, and because they only paid lip-service to socialism, sought to destroy the Party.

Corruption proved to be a major problem in Ghana, as it does in every former colony, every emerging nation. The lack of robust democratic institutions-- denied by colonial and neo-colonial domination-- inevitably produces a corrosive contempt for the common good. Nor do the colonial masters leave proper mechanisms for reining in corruption after they reluctantly accepted independence. Countries like Venezuela, Brazil, and Argentina that choose the path of national independence are plagued by this conundrum.

Of course, it is the security services of the imperialist countries that plant the seeds of reaction, nourish the seeds, and organize the harvest. In Ghana, they stirred secessionist sentiments of people in Ashanti, Togoland, and the Northern region. Previously, they had used the secessionist forces in Katanga to destabilize Congo and overthrow the patriot Patrice Lumumba. In our time, ethnic and religious differences were stoked in the former Yugoslavia and throughout the Middle East, including Iraq, Libya, and Syria to destabilize independent governments.

And the monopoly media in the capitalist countries unified around the joint themes that Nkrumah was an unpopular “dictator” and his government was entirely too close to the socialist countries, particularly the Soviet Union. In the aftermath of the coup, a sham event was contrived to demonstrate Nkrumah’s unpopularity.

Much publicity was given in the imperialist press and on T.V., to the pulling down of the statue of myself in front of the National Assembly building in Accra. It was made to appear as angry crowds had torn the statue from its pedestal...But it was not for nothing that no photographs could be produced to show the actual pulling down of the statue… In fact when the statue was pulled down… no unauthorized person was allowed into the area. All those who were there at the time were those brought in by the military… Even the jubilant imperialist press evidently saw nothing strange in publishing photographs of bewildered toddlers, tears running down their checks sitting on a headless statue, while the same imperialist press extolled what it described as a “most popular coup”.

One cannot miss the parallel, thirty-seven years later, with the contrived, but dramatic overturning of the statue of Saddam Hussein in Firdos Square, a staged media extravaganza engineered by US authorities to demonstrate Saddam’s unpopularity.

In retrospect, Nkrumah asserts:

In fact, the fault was that, from the very circumstances in which we found ourselves, we were unable to introduce more “dangerous ideas”... What went wrong in Ghana was not that we attempted to have friendly relations with the countries of the socialist world but that we maintained too friendly relations with the countries of the western bloc.

The champions of national independence, especially the advocates for socialism need to heed this lesson, embracing those “dangerous ideas” that drive the revolutionary process forward, strengthening the hand of the revolutionaries and weakening the hand of the opposition. Backtracking and accommodation are not options.

The West on Trial

If Nkrumah’s Ghana is an example of the engineered coup sponsored by imperialism and its toadies, if the 1966 coup is a repeat of Iran in 1953 and a precursor of Chile in 1973, then the rigged election in Guyana was the prototype for the so-called “color revolutions” sponsored by the US and its allies in the period since the demise of European socialism.

As the leading figure in the post-war independence struggle of what was then the colony known as British Guiana, Cheddi Jagan soon realized that aspirations for independence were thwarted not only by the British administration, but more decisively by the US government. After his party’s sweeping victory in the 1953 House of Assembly elections, the British sent troops and suspended the colonial constitution out of hysterical fear of a Marxist takeover.

Writing in his post-mortem account, The West on Trial: The Fight for Guyana’s Freedom, Jagan noted: “…the main cause, I believe, for the suspension of our constitution was pressure from the government of the United States… We were not surprised, therefore that the US government gave its blessing to the British gunboat diplomacy… Ostensibly, the United States was urging the colonial powers to grant independence to colonial territories. But in reality, the independence was nothing more than the nominal transfer of powers to those who either conformed or showed signs of conforming to US policies.”

From the 1961 elections, where Jagan’s PPP won its third consecutive election, gaining 20 of 35 seats, until formal independence on May 26, 1966, the US poured millions of dollars into every imaginable plan to erode the popular support of the PPP. The opposition promised huge investments and loans that would be forthcoming with a pro-capitalist government. The opposition boycotted or refused to collaborate with any and all development programs or social measures, including a budget.

The capitalist media echoed the opposition with a shrill anti-Communist campaign. “All of this was written at a time when it is alleged that we had destroyed the freedom of the press! We did not own our own daily newspaper to counter the distortions and lies of the press. This is a problem which confronts all national governments interested in change,” Jagan remarked.

Violence was sparked and fanned by the opposition, loudly labelling the PPP “authoritarian.” Racialism between African-origin and Indian-origin Guyanese was stoked. The US labor movement’s infamous AIFLD (a collaboration with the CIA) fomented strikes built upon lies and distortions.

Well-connected US columnist Drew Pearson, writing in March of 1964 explained the US involvement:

The United States permitted Cuba to go Communist purely through default and diplomatic bungling. The problem now is to look ahead and make sure we don’t make the same mistake again… in British Guiana, President Kennedy, having been badly burnt in the Bay of Pigs operations, did look ahead.

Though it was not published at the time, this was the secret reason why Kennedy took his trip to England in the summer of 1963… [It was] only because of Kennedy’s haunting worry that British Guiana would get its independence in July, 1963, and set up another Communist government under the guidance of Fidel Castro.

…[T]he main thing they agreed on was that the British would refuse to grant independence to Guiana because of the general strike against pro-Communist Prime Minister, Cheddi Jagan.

The strike was secretly inspired by a combination of US Central Intelligence money and British intelligence. [A]nother Communist government at the bottom of the one-time American lake has been temporarily stopped.

Pearson acknowledges the massive and determined campaign of destabilization that culminated in a US-sponsored coalition of US-friendly parties edging out the PPP in a calculated, delayed independence. The orchestrated campaign of rumor, lies, and promises was whipped into a powerful counterforce to a popular, independent government. In this regard, Guyana was not different from the many so-called “color revolutions” that are brought to a boil by heavily foreign-funded, non-government organizations. The Defunct AIFLD has been supplanted by Solidarity Center, USAID, the National Endowment for Democracy, the Republican and Democratic Institutes, and myriad other acronymic NGOs that serve US foreign policy in a government-funded, surreptitiously government-funded, or privately funded fashion. Their footprints are all over Georgia, Ukraine, and a host of other countries targeted by US foreign policy.

Lessons from the Past

It should be crystal clear that there is nothing new in the meddling of the US and its allies (and other imperialist centers) in the trajectory of smaller, less powerful countries; neo-colonialism and imperialism are the dominant forms of late monopoly capitalism. Nkrumah details twenty interventions in the affairs of African states alone between December 1962 and March 1967. From the Greek war of national liberation in the aftermath of the Nazi defeat to the latest CIA move, the latest sanction, the latest military threat, the US, in particular, has been promoting and forcing dependency at the expense of the national sovereignty of the peoples.

But lessons can be drawn from the long, difficult struggle for national independence, a history of great sacrifice, fierce and selfless battle, but treachery as well. Nkrumah was right: The only absolute guarantee of national independence is to break the chains to capitalism, to choose the path to socialism. Among the best examples of success are the Democratic Republic of Vietnam (DRV), Cuba, and the Democratic People's Republic of Korea (DPRK), all small nations defying the most lethal power ever assembled. When faced with the full brunt of imperialist aggression, the three governments found resolve from their faith in working people, their confidence that working people would unite and fight for a clear, radical vision of social justice, and their refusal to retreat even an inch from principle.

Moreover, borrowing Nkrumah’s words, it is necessary to embrace and press “dangerous ideas,” most necessarily, the idea of command of the state by the agents of change; independence is not possible with the enemies of independence nested in the state.

Nkrumah prefaced his book with excerpts from a letter to him from Richard Wright, the expatriate US author. Wright’s complex, often contradictory relations with progressive movements did not deter him from writing with a feverish intensity:

I say to you publicly and frankly. The burden of suffering that must be borne, impose it upon one generation!  ...Be merciful by being stern! If I lived under your regime, I’d ask for this hardness, this coldness…

Make no mistake, Kwame, they are going to come at you with words about democracy; you are going to be pinned to the wall and warned about decency; plump-faced men will mumble academic phrases about “sound” development; men of the cloth will speak unctuously of values and standards; in short, a barrage of concentrated arguments will be hurled at you to persuade you to temper the pace and drive of your movement…

And as you launch your bold programmes, as you call on your people for sacrifices, you can be confident that there are free men beyond the continent of Africa who see deeply enough into life to know and understand what you must do, what you must impose…

Plus ça change, plus c'est la même chose.

Greg Godels