Trump’s trade tantrums – free trade or protectionism?

Today, the finance ministers of the top 20 economies (G20) meet in Buenos Aires, Argentina, and the big topic for discussion is trade protectionism and the possibility of an outright trade war between the US and other major economics areas, particularly China.

There is a real concern that all the blustering by President Trump is finally turning into reality and ‘The Donald’ is now going to honour his promise to ‘make America great again’ by introducing a range of tariffs, quotas and bans on various imports from Europe and Asia into the US.  Trade protectionism is coming back after decades of ‘free trade’ and globalisation.

Up to now, Trump has only imposed tariffs (taxes or enforced price rises) on steel and aluminium imports.  But he has also pulled the US out of the Trans-Pacific Partnership (TPP) and demanded a re-negotiation of the terms of North Atlantic Free Trade Area (NAFTA). But there is talk of more measures, including action to stop the free exchange of intellectual property rights by US companies and other countries.

The steel and aluminium tariffs (facilitated by an old GATT loophole, allowing countries to enact barriers for reasons of ‘national security’ (US defence spending consumes 3% of US steel output) are really small beer on their own.  In 2002 when the US last imposed steel tariffs, the US produced almost as much steel as today. But now it produces it with a small fraction of the 2002 workforce. Technology has boosted productivity and created products that use less steel.  So direct job gains for US workers are likely to be small, if any.

Back in 2002, President Bush signed into law tariffs for certain steel products following a spate of mill closures and surging imports. The net effect on employment in the steel production industry was minimal. But, according to a Trade Partnership Worldwide study, businesses that consumed steel products shed approximately 200,000 jobs, compared to the 180,000 employed in steel production.  The pain was born principally by smaller manufacturing firms (smaller than 500 employees), which had limited room to negotiate on prices and similarly restricted space to pass costs on due to price competition. The Bush barriers were only in place for a little over a year, but the impact was immediate as price distortions squeezed end users.

If the impact on the employment figures of effectively raising the cost of steel was uppermost in Trump’s mind, he should have considered the potential net loss of jobs in the car industry, the aviation industry and the countless other manufacturers that depend on cheap steel as a raw material. These companies are expected to pass on the extra cost to their customers and suffer the usual consequences – lower demand and a profit squeeze.

Moreover, since 2002, US steel mills have moved south and west, where unions are weak and labour is cheaper.  But now the industry has fewer workers because it is increasingly automated. The Trump tariffs will not bring any new jobs and certainly not in the old steel ‘smokestack’ regions that looked to him for help. The real hit will be on many emerging economies.  Canada and Mexico are exempt from the tariffs because they are part of NAFTA.  But Brazil is a big exporter to the US.  Canada and Brazil account for around one-third of US steel imports, while China accounts for no more than 3%.  With Canada exempt and China unimportant, Trump’s ‘steel’ protectionist move is both weak and misdirected.

Anyway, Trump’s claimed objective to ‘make America great again’ by boosting steel production and other traditional industries means rolling back the advance of technology to recreate smokestack industries.  It can’t and won’t happen.  Trump’s claim that American workers have been losing jobs in traditional ‘smokestack’ industries because of unfair trade by other countries is bogus.  The loss of US manufacturing jobs has been replicated in other advanced capitalist economies over the last 30 years.  This decline is not due to nasty foreigners fixing trade deals.  It is due to the inexorable attempt of American capital to reduce its labour costs through mechanisation or through finding new cheap labour areas overseas to produce.

The rising inequality in incomes is a product of ‘capital-bias’ in capitalist accumulation and ‘globalisation’ aimed at counteracting falling profitability in the advanced capitalist economies. But it is also the result of “neo-liberal’ policies designed to hold down wages and boost profit share.  Trump cannot and won’t reverse that – on the contrary – with all his bluster because to do so would threaten the profitability of America capital.

Nevertheless, it seems that Trump and his new ‘protectionist’ advisers are going to launch a series of measures against the imports of other countries – particularly against China.  But in the last 20 years, China has moved up the value-added ladder from basic industries into higher and higher tech products.  Indeed, much of the global flow of technological innovation is now coming from China, not the US.

Efforts to punish China with tariffs could quicken this trend. Typically, such businesses are highly adaptable in the face of restrictions, shifting investment and capacity overseas. And China is already moving in this direction with a huge rise in outward FDI. China now ranks second only below the US in terms of outward investment. Its stock of direct investment assets has been growing 25% annually hitting a value of $1.3trn (see graph below). Two thirds of this outflow is directed towards Asia (blue line). China is also pushing aggressively into ‘the belt’ countries of its ‘one road’ project. That’s reflected in its exports, with sales to these states double those to the US. So any restrictive measures taken by the Trump administration against China can only accelerate this reallocation process.

Also, while Trump and his new ‘protectionist’ advisers want to take action against China and other ‘unfair’ trading nations, European and Asian economies, along with the international agencies, want to hold the line for ‘globalisation’ and ‘free trade’.  The rest of the world is still trying to lower barriers. The EU completed free trade agreements with both Canada and Japan at the end of last year. Meanwhile Japan, Canada, Australia, New Zealand, Mexico, Malaysia, Vietnam, Peru, Chile, Brunei and Singapore ratified a revised TPP without the US.

And what Trump forgets is that now in world capitalism, it is not so much trade, or even services trade rather than goods trade, that matters; it is capital flows.  And any full trade war would seriously threaten US foreign investment just at a time when China is expanding its overseas flows.

Foreign trade now contributes relatively little to US corporate profits. Back in the 1940s, foreign subsidiaries of US-based corporations accounted for only 7% of all US profits – the same proportion as exports. Globalisation of US corporate operations and capital investment has changed that in the last 35 years. In 2016, the share of domestic profits has shrunk to 48% of total profits, while the shares of foreign operations and exports have grown to 40% and 12%, respectively.

Stimulated by Trump’s protectionist talk, the debate in mainstream economics over whether free trade is better for every country and the people living in them has also revived.  The longstanding neoclassical view is based on David Ricardo’s law of comparative advantage.  In his book On the Principles of Political Economy and Taxation (1817), now over 200 years old, Ricardo argued that, although Portugal could produce both cloth and wine with less amount of labour than England, both countries would benefit from trade with each other. Because the comparative advantage for Portugal with England is greater in the production of wine than in cloth, it would still make sense for Portugal to produce excess wine and trade that for English cloth. England in turn would benefit from this trade, because while it still costs the same to produce cloth, the price for wine would fall considerably.  So free trade is a win-win situation.

And yet the historical evidence for this ‘law’ is the opposite.  Over the last 30 years or so, the world capitalist economies have move closer to ‘free trade’ with sharp reductions in tariffs, quotas and other restrictions – and many international trade deals.  But economic growth since the 1980s has been slower than in the 1960s.

Another conclusion of the mainstream theory is that free trade will eventually lead to harmonisation and equilibrium in trade balances through the adjustments in international exchange rates and production costs.  And yet there has been little such harmonisation.  The US has continually run a goods and services trade deficit over the last 30 years; and so have many supposedly ‘comparatively advantaged’ emerging economies.

And as for harmonisation of incomes and employment, inequality of incomes and wealth between countries and within them has worsened in the last three decades, while 1.5bn workers globally are still without a regular job or income.

Free trade has been no great capitalist success.  And now globalisation seems to have paused or even stopped. World trade ‘openness’ (the share of world trade in global GDP) has been declining since the end of the Great Recession.

This has led to various mainstream voices suggesting that maybe protectionist policies by individual countries might better for them.  Dani Rodrik has been pushing this line; reminding us that the US itself protected its domestic industry in the 1870s onwards to get it going; and Germany did similarly in the 1890s, while Japan and other Asians followed suit in the post-war period.

Rodrik, Stiglitz and other ‘leftist’ mainstream economists who now denounce the failure of globalisation really do so from the point of view that free markets are fine as long as they are really free.  But they are not and so governments must intervene to reduce monopoly and other distortions and to control and regulate financial speculation.  And internationally, you need proper and ‘fair’ agreements on trade to protect the weaker national economies.  Apart from this being a utopian aim, this ‘alternative’ to unbridled ‘free trade’ is really an admission that Ricardo’s win-win theory is faulty and disproved, even if there were fully ‘free trade’.

Capitalism does not tend to equilibrium in the process of accumulation.  As Adam Smith put it, in contrast to Ricardo, “When a rich man and a poor man deal with one another, both of them will increase their riches, if they deal prudently, but the rich man’s stock will increase in a greater proportion than the poor man’s. In like manner, when a rich and a poor nation engage in trade the rich nation will have the greatest advantage, and therefore the prohibition of this commerce is most hurtful to it of the two”. Capitalism does not grow globally in a smooth and balanced way, but in what Marxists have called ‘uneven and combined development’.  Those firms and countries with better technological advances will gain at the expense of those who are behind the curve and there will be no equalisation.

Free trade works for national capitalist states when the profitability of capital is rising (as it was from the 1980s to 2000) and everybody can gain from a larger cake (if in differing proportions).  Then globalisation appears very attractive.  The strongest capitalist economy (technologically and thus competitively in price per unit terms) will be the strongest advocate of ‘free trade’, as Britain was from 1850-1870; and the US was from 1945-2000.  Then globalisation was the mantra of the US and its international agencies, the World Bank, the OECD and the IMF.

But if profitability starts to fall consistently, then ‘free trade’ loses its glamour, especially for the weaker capitalist economies as the profit cake stops getting larger.  ‘Populism’ and nationalism rears its head and mainstream economists opposed to ‘free trade’ become more prominent.  That was the situation in the 1870s and 1880s.  That was the situation in the 1930s Great Depression.  That is the situation since the early 2000s and especially since the end of the Great Recession.

US capitalism has lost ground relatively, not only to Europe and Japan, but even more worryingly to the rising economic juggernaut that is China, where foreign investment is strictly controlled and subservient to the state sector and to an autocratic Communist elite.  The US is now in the same position as the UK was in the 1880s, only worse.  Trump is the consequence of that.

Marx and Engels recognised that ‘free trade’ could drive capital accumulation globally and so expand economies, as has happened in the last 170 years.  But they also saw (as is the dual nature of capitalist accumulation) the other side: rising inequality, a permanently floating ‘reserve army’ of unemployed and increased exploitation of labour in the weaker economies.  And so they recognised that rising industrial capitalist nations could probably only succeed through protecting their industries with tariffs and controls and even state support (China is an extreme example of that).

But is free trade or protectionism better for labour and the working class?  It depends.  Perhaps the answer is best summed up by Robert Tressell in famous book, The Ragged Trousered Philanthropist, written in 1910 in the UK: “We’ve had Free Trade for the last fifty years and today most people are living in a condition of more or less abject poverty, and thousands are literally starving. When we had Protection things were worse still. Other countries have Protection and yet many of their people are glad to come here and work for starvation wages. The only difference between Free Trade and Protection is that under certain circumstances one might be a little worse that the other, but as remedies for poverty, neither of them are of  any real use whatever, for the simple reason that they do not deal with the real causes of poverty”.

American workers can expect nothing from Trump’s trade tantrums – indeed it can make things worse.

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23 Responses to “Trump’s trade tantrums – free trade or protectionism?”

  1. standardstuff101 Says:

    “Indeed, much of the global flow of technological innovation is now coming from China, not the US.”
    – evidence??

    • michael roberts Says:

      Well that may be an exaggeration but the trend is there. In 2016, the largest number of patents in force was in the United States of
      America (2.8 million), followed by Japan (2 million), China (1.8 million) and the Republic of Korea (1 million). Combined, these four jurisdictions accounted for around 63% of the world total. However, there are more trademarks in force (12.4 million) in China than in any other
      country. Similarly, China accounts for 38% of all industrial design registrations in force worldwide and 91% of all utility models in force. The rate of patent filings in China exceeds the US by 40%. Of the top five IP offices receiving 84% of the 3.1 million patent applications filed worldwide in 2016, a considerable share (42.8%) of them was filed in China alone, primarily by Chinese residents. The next largest shares went to the offices of the U.S., Japan, the Republic of Korea and the European Union. EPOChina received more patent applications than the next four ranked offices combined. Applicants from China, Japan and the Republic of Korea filed most intensively for patents related to electrical machinery, whereas the top technology field was transport for those from Germany and computer technology for U.S. applicants. More here at http://www.wipo.int/edocs/pubdocs/en/wipo_pub_943_2017.pdf

  2. Arthur Says:

    “If the impact on the employment figures of effectively raising the cost of steel was uppermost in Trump’s mind, he should have considered the potential net loss of jobs in the car industry, the aviation industry and the countless other manufacturers that depend on cheap steel as a raw material.”

    It is quite bizarre the degree to which “analysis” of current US politics ignores what the government is ACTUALLY preoccupied with and fantasizes instead about what “should” be happening.

    The steel tariffs exempt Canada and Mexico so potential effects will be minimal. What was uppermost in Trump’s mind was a special election in a rust-belt state that he almost avoided losing.

    Trump was elected in direct opposition to both major parties, the media and the bureaucracy. He did not have a majority of the popular vote and essentially no party in Congress. He cannot do much at all without first establishing a party. Naturally he and his government are totally preoccupied with doing that.

    So far they have been wildly successful. The Democrats and media have been reduced to wild ranting in the hope of some sort of coup from the “deep state” intelligence agencies. One could hardly hope for a less effective opposition than one which puts so much hope on a Special Prosecutor coming up with something.

    The Republican party has largely capitulated. Trump has 80%-90% approval among likely voters in the Republican mid-term primaries this November. There will be a large Trumpist party in the House of Representatives in 2019 and at least a significant one in the Senate.

    Very likely the Democrats will have a majority in the House and will devote all their energies to impeaching Trump, despite having no chance whatever of getting the two-thirds majority needed for the Senate to actually remove him from office.

    THAT is the context in which US trade policy must be analysed.

    I have read the ASSA 2018 thread linked from here for references to “Rodrik, Stiglitz and other ‘leftist’ mainstream economists”.

    The paper linked there from Stiglitz displayed the same staggering blindness towards the realities of US politics:

    From footnote 12 “Ironically conservative think tanks have been especially critical…”

    Anyone not blinded by Democrat partisanship would be aware that there has always been far more support for protectionism from Democrats than Republicans and that there is nothing ironic about conservative think tanks being genuinely hostile to it. The Bernie Sanders wing and unions are quite open about their support for protectionism. The Republican incumbent supporters of globalism and their Clintonite counterparts are both in complete disarray. Democrats will be running candidates supportive of protectionism in the “purple” states as they just successfully did in Pennsylvania and idiots focused on “identity politics” or “culture wars” in the blue states. They will have great difficulty uniting about anything except hatred for Trump.

    Although the President does have far more power over trade policy than Stiglitz imagines, Trump doesn’t need to do more than posture and create an atmosphere between now and 2020. By then it looks likely that the US will have moved from a two party system with both corporatist parties naturally globalist (and only posturing from Democrats like Clinton campaigning against TPP), to a temporary three or four party system arising from splits in both Republicans and Democrats.

    A very likely outcome is a two party system with both parties protectionist. THAT is when there will be real and serious consequences. Whoever wins in 2020 will be running as a protectionist.

    Certainly the sort of arguments presented in this post and in the paper by Stiglitz contribute little to understanding how to deal with that situation.

  3. ucanbpolitical Says:

    Good article and opportune now that the recent survey of companies find 74% have turned negative on the world economy. This is the most dangerous of times. China’s industrial capacity may be three times that of the USA , but it is the issue of the US’s diminishing technological lead that is decisive. Time is not on the side of the USA. Xi has become a Bonapartist for two reasons. Growing tensions with the US and also the fact that the impending and unavoidable mechanisation of Chinese manufacturing (ala Foxconn) will cost Chinese workers over a hundred million jobs.

  4. Arthur Says:

    “As Adam Smith put it, in contrast to Ricardo, “When a rich man and a poor man deal with one another, both of them will increase their riches, if they deal prudently, but the rich man’s stock will increase in a greater proportion than the poor man’s. In like manner, when a rich and a poor nation engage in trade the rich nation will have the greatest advantage, and therefore the prohibition of this commerce is most hurtful to it of the two”.”

    “But is free trade or protectionism better for labour and the working class? It depends…”

    Not quite up to scratch compared with Marx. As Marx put it in contrast to Adam Smith and Michael Roberts:

    “If the Free Traders cannot understand how one nation can grow rich at the expense of another, we need not wonder, since these same
    {p. 465} gentlemen also refuse to understand how in the same country one class can enrich itself at the expense of another.

    Do not imagine, gentlemen, that in criticising freedom of commerce we have the least intention of defending Protection.

    One may be opposed to constitutionalism without being in favor of absolutism.

    But, generally speaking, the Protective system in these days is conservative, while the Free Trade system works destructively. It breaks up old nationalities and carries antagonism of proletariat and bourgeoisie to the uttermost point. In a word, the Free Trade system hastens the Social Revolution. In this revolutionary sense alone, gentlemen, I am in favor of Free Trade.”

    http://www.marx2mao.com/M&E/PP47.html#m2

    It is as absurd to take Adam Smith’s remarks as showing that poor nations should not trade with the rich because the rich would lose more than the poor from the prohibition of such trade.

    Even more absurd to imagine Marx advocates that workers should not work for the rich because the rich would lose more than the poor from that being prohibited.

    Marx was looking forward, to communism via modern industry and globalism, not back to subsistence agriculture with greater “equality”.

    • mandm Says:

      Arthur, you equate free trade with “globalism”. Marx did not. Even in the 19th century “globalism” didn’t equal free trade but militarily enforced unequal trade. In a letter, written in 1887, to the “Editor of the Notes of the Fatherland” (which advocated free trade) Marx wrote, regarding Russia’s future development:

      “If Russia continues to pursue the path she has followed since 1861 [free trade within the global system], she will lose the finest chance ever offered by history to a nation [revolutionary change via the village soviets] in order to undergo all the fatal vicissitudes of the capitalist regime.”

      You tend to tie Marx down within his analysis, as he put it, of but one little corner of historical time and space–the development of the capitalist mode of production in England/Western Europe circa 1700 to 1883.

      By the way, today, “globalism” is financialized, corporately directed imperialism: capitalism’s hopefully last countervailing effort against having reached it’s structural limits some years before Tressell wrote his famous book in 1910–not globalism or protectionism, but permanent war, beginning in 1914 and ending, not with the full development of capitalism (which exists zombie-like in a destructive state of devolution), but with its overthrow, the sooner the better.

      • Arthur Says:

        mandm, I will reply to your main points later but for now will just take up the opportunity to not “tie down Marx within his analysis”. It is rare that I get an opportunity to disagree with Marx and of course it is only with a more than one and a half centuries of hindsight that it is totally absurd to quote Marx holding out the possibility of Russia not continuing to persue the path she had followed since 1861 skipping capitalism via the village communes.

        The passage you quote is discussed far more adequately than I could in Engels 1894 Afterword to “On Social Relations in Russia” which also links to the original letter.

        Both can be found along with lots more, including the well known correspondence between Marx and Vera Zasulich (a leader of the Russian populist “Narodniks” who hoped to avoid capitalism) here:

        https://www.marxists.org/archive/marx/works/subject/russia/index.htm

        It should hardly be necessary to add that Vera herself ended up a founder of the first Russian Marxist organization which replaced Narodnism as the real movement of Russian revolutionaries. Lenin’s thorough study “The Development of Capitalism in Russia” fully confirmed Engels 1894 discussion. By 1917 the “Socialist Revolutionary Party” descended from the Narodniks was itself insisting on the program of bourgeois democratic revolution “land for the peasants” as the peasants had long since lost their communal land. The Bolsheviks naturally adopted that slogan in forming a coalition government with them to carry it out.

        I won’t continue on this theme but only provide the reference above because it is sadly true that many people claiming to be “Marxist” do actually pretend that Marx would agree with their reactionary populism in support of Latin American “anti-imperialist” Caudillos like Hugo Chavez:

        (Link in separate message below as 2 links in 1 message results in “awaiting moderation”)

      • Arthur Says:

        Whoops, above URL has links censored by copyright fascists. Here is a mirror:

        http://www.connexions.org/CxArchive/MIA/marx/works/subject/russia/index.htm

      • Arthur Says:

        Here is sample of populism pretending to be Marxist:

        http://readingthemaps.blogspot.com.au/2007/09/chavez-is-not-marxist-but-neither-was.html

        Above gets digression off my chest. Will get back to main point later, with no further inclination to discuss Marx’s views rather than current situation regarding globalism and free trade.

      • Arthur Says:

        But first I cannot resist explaining that the path Marx was referring to from 1861 referred of course to the development of capitalism following the 1861 abolition of serfdom. Your interpretation that he was referring to “[free trade within the global system]” suggests something like dropping tariffs.

        In case you have any doubt about whether it is worth your time to actually read the material I linked for you, just consider that you also explained that Marx was referring to an alternative of “[revolutionary change via the village soviets]”.

        What you call “village soviets” were what I politely corrected to a less anachronistic translation “village communes”. Like other forms of “primitive communism” these were of course utterly backward. The specific form under Russian serfdom in which the serfs belonged to the land of the landowner is accurately described in the wikipedia entry:

        “The rural population lived in households (dvory, singular dvor), gathered as villages (derevni; a derevnya with a church became a selo), run by a mir (‘commune’, or obshchina)—isolated, conservative, largely self-sufficient and self-governing units scattered across the land every 10 km (6.2 mi) or so. Imperial Russia had around 20 million dvory, forty percent of them containing six to ten people.[citation needed]

        Intensely insular, the mir assembly, the skhod (sel’skii skhod), appointed an elder (starosta) and a ‘clerk’ (pisar) to deal with any external issues. Peasants within a mir shared land and resources. The fields were divided among the families as nadel (“allotment”)—a complex of strip plots, distributed according to the quality of the soil. The strips were periodically redistributed within the villages to produce level economic conditions. The land however, was not owned by the mir; the land was the legal property of the 100,000 or so landowners (pomeshchiks, an equivalent of “landed gentry”) and the inhabitants, as serfs, were not allowed to leave the property where they were born. The peasants were duty-bound to make regular payments in labor and goods. It has been estimated[by whom?] that landowners took at least one third of income and production by the first half of the nineteenth century.[4]”

        https://en.m.wikipedia.org/wiki/Emancipation_reform_of_1861

        Naturally that is of great appeal to modern reactionary romantic populists like greenies, and the disgusting brown attempts to combine red with green. Good luck to the Chavistas in their efforts to promote it to modern workers.

  5. Charles A. Says:

    “American workers can expect nothing from Trump’s trade tantrums – indeed it can make things worse.” This is a backhanded way of punching U.S. workers in the face with globalization. After all, you provide no other perspective, no direct challenge to globalization.

    • Arthur Says:

      Charles A.,

      Your link provides a clear account of the sort of actual political discussion going on right now involving Trumpists, Clintonites and others, which the post for this thread provides no help with. I won’t quote it but do agree its well worth reading. But here is what you immediately follow that excellent description with:

      “Slap a Wage Gap Tariff on cheap-labor imports

      A workers’ demand on trade is simple: a Wage Gap Tariff (WGT) – a charge on imports equal to the gap between the wage paid the workers who made the product in China or wherever and the U.S. wage. If it took two hours to make the product, multiply the hourly wage gap by two, and that is the charge per item. A WGT tells businesses that it will not pay to bring in products whose principal market advantage is cheap labor.”

      That “workers demand” in no way challenges the AFL-CIO position fully supporting Trump’s tariffs. It just provide a more sophisticated version of the propaganda pretending that mobilizing against “foreign” products is some kind of solidarity against “cheap labor” rather than solidarity with “our capitalists” against theirs.

      That has ALWAYS been the “labor” propaganda of protectionists.

      In practice your demand is for the same outcome as other protectionists – bigger barriers between the workers of different nations instead of breaking down those barriers.

      Here is the AFL-CIO position:

      https://aflcio.org/press/releases/steel-and-aluminum-tariffs-good-working-people

      BTW for protectionist propaganda even closer to your slogan you should watch Trump’s trade Czar, Peter Navarro’s video “Death by China” narrated by Martin Sheen. Google.

      There are reasons why they are cheering for “Director Navarro”.

  6. Arthur Says:

    mandm, returning to your main points, not side issue of Marx’s views:

    1. “you equate free trade with “globalism”. … Even in the 19th century “globalism” didn’t equal free trade but militarily enforced unequal trade.

    Yes I am broadly using the two terms together as that is the way they are used in current politics. People who claim to support or oppose one do the same for both. I am not aware of any usage of “globalism” in the nineenth century. My impression is that the banner of “Free Trade” was typically the term used to defend military conquest (eg Opium wars etc).

    If I was to make a distinction it would be that globalism is understood as far more extensive – even to world government whereas “Free Trade” can be and is supported by people with a more nineteenth century (or eighteenth or earlier) conception of relations between nation states as opposed to the twentyfirst reality of a world economy so extensively globalized that underdevelopment of a global state has become a live problem in a way possibly comparable to the lack of effective national governments even in relatively advanced countries like Germany and Italy had become a live problem in the nineteenth century and remained a big problem in much of Asia, Africa and Latin America even in the twentieth century.

    One could also make a distinction that globalism is a stronger term in the same direction as the previous standard term on the left, “internationalism”. Indeed the far right in Europe has “trumped” the pseudoleft by raising its banner against the evil globalists while claiming to be for a “Europe of nations” that sounds a bit more like the old Common Market free trade bloc within Europe than the modern EU moving towards “more Europe” including banking, monetary and fiscal (transfer) union hence ultimately political union as the only way that a single European economy can be effectively governed.

    2. “By the way, today, “globalism” is financialized, corporately directed imperialism: …”

    BTW that is pretty much what Marine Le Pen says. I won’t respond until you flesh it out as something more substantive than a throw away “by the way”. If it was meant to be obvious common ground that doesn’t need elaboration, that may be true for others here or for anybody you have encountered on what you regard as the “left” but it certainly isn’t for me.

    3. “capitalism’s hopefully last countervailing effort against having reached it’s structural limits some years before Tressell wrote his famous book in 1910–not globalism or protectionism, but permanent war, beginning in 1914…”

    I rather liked the quote from “Ragged Trousered Philanthropists” in Michael’s posts, and its author certainly wasn’t the only one who thought capitalism had reached its structural limits before the first world war. That was a pretty widely held view among people who were very seriously and genuinely on the left.

    But a century later? That isn’t even pseudoleftism. Its just flatly refusing to discuss what is actually going on in the world and what should be done about it.

    Permanent war, beginning in 1914? Is that supposed to sound militantly oppositional? It doesn’t. It says “don’t try to discuss anything with me I’m just posturing”.

    4. “…not with the full development of capitalism (which exists zombie-like in a destructive state of devolution), but with its overthrow, the sooner the better.”

    Wow! That really DOES sound militantly oppositional!

    “zombie-like in a destructive state of devolution” is really great stuff!

    Makes me think of the pseudoleft “anti-globalist movement” that used to exist before their brains got eaten by the far right “anti-globalist movement” that exists as a real “undead” reality right now.

    • mandm Says:

      “But a century later? …It’s just flatly refusing to discuss what is actually going on in the world and what should be done about it.”

      By the way…what’s been “going on in the world” has been (to repeat) a permanent state of imperial wars (I’ll deny you the pleasure of a comprehensive list of these crimes which you and most other posters here already know) against the world’s laboring populations, beginning with the imperial-fomented civil war against revolutionary Russia, the kind of imperially manipulated “civil war” you and other real socialists still support against “reactionaries” like the Chavistas and all others who might in some way stand in the way of (post destruction) profitable investment or be suspected of communist/fascist tendencies…

      Your perverse inversions of the terms of political discourse would make the most jaded cynic among the “West’s” intelligence operatives fart with envy.

      • Arthur Says:

        mandm,

        “Your perverse inversions of the terms of political discourse would make the most jaded cynic among the “West’s” intelligence operatives fart with envy.”

        It ought to be possible to actually discuss different views on globalism and free trade here. They are real current issues which anyone actually engaged in politics has to be able to argue about.

        There is no way that anybody could actually be taking part in such discussions by attempting to convince people that “capitalism reached its structural limits” more than a century ago.

        Nor by claiming that there has been a state of permanent war for more than a century.

        Such opting out of actual political discourse into a fantasy world accessible only to others with a like mind necessarily results in an empty space where most people keep the ideas they have developed through interaction with opposing ideas. Letting this empty space become a complete vacuum results in the sort of implosions that have been providing some background noise here. In extreme cases the vacuum can be so complete that it comes back for an encore after having announced a dramatic exit.

        ” in politics abusive language often serves as a screen for utter lack of principles and sterility, impotence, angry impotence, on the part of those who use such language.”

        https://www.marxists.org/archive/lenin/works/1914/jun/24.htm

        This stuff used to be politely ignored by people on the left, on the basis that it doesn’t really matter that some comrades are talking nonsense as long as they are opposed to the same enemies as the rest of us. The rest of us can more productively spend time interacting with people who reject left views to convince them than trying to figure out what to do about nonsense.

        But the result has been widespread acceptance of right wing propaganda that people spouting complete nonsense and ranting about “intelligence operatives” ARE “the left”.

        So I am not willing to politely ignore it.

      • michael roberts Says:

        This is the last on this subject – no more

    • jlowrie Says:

      ”“don’t try to discuss anything with me I’m just posturing”. Arturo’s best own goal to date!

  7. michael roberts Says:

    Guys,this continual feud between some commentators has become very tiring and annoying and is taking up space that other comments might fill. I have only ever banned one person on this blog for racist comments and he withdrew anyway. But from now on I am moderating EVERY comment and will block any if I consider them unnecessarily nasty. Also any comment with swear words will be blocked automatically. Sorry, but I like good language. Maybe after a little cooling off, we can resume automatic comments MICHAEL ROBERTS

    • mandm Says:

      Michael, I think you will agree that England, unlike the US, has real political choices that can be embraced by marxists and other socialists: (1) Corbyn should be given mass support by all socialists in his stance against NATO interventionist wars and threats of same against Russia and China. He should also be encouraged to oppose US aggression against Venezuela. (2) He should be supported and pushed as far as possible in his intended nationalization program, including banks. (3) He should free and protect Julian Assange.

      Such foreign, political, and legal policies, would in fact be revolutionary under current conditions.

      I agree regarding your annoyance with the use of language in the dismal feud between commentators in this latest post, and that crass obscenities are counterproductive in rational discourse.

      But more obscene has been the civilized, humane strategy among many European “socialists” of preemptively “opting out” of political discourse any views (such as enumerated above) that challenge bourgeois political/cultural hegemony while co-opting and perverting the language of “left” political discourse in the service of austerity and truly obscene imperialist violence.

      Commentators employing such co-opting strategies usually take up the hog’s share of space when choosing to enter your posts. My sympathies. Your blog is excellent and well managed. But you shouldn’t have let one of them have the last word as well.

      • michael roberts Says:

        As I say, I shall be moderating the comments for now and that will include avoiding huge long pieces that match the length of my own posts on my blog.

  8. epistemologija Says:

    Mr. Roberts,

    each of your articles is very interesting and I am following you in the last two years. I learned a lot from you in that time.Your work is a very worthful for our understanding of the dynamism of the capitalistic economic reproduction. I read your awesome book The Long Depression and when I write an article about economic crises I use many your arguments about tendentially fall of the profit rate.

    Specially, I am interested what do you think about the famous theory of unequal exchange by Emmanuel Arghiri? May we support thesis about transfer of surplus value from countries with a extremly low wages toward the developed capitalist economies? Arghiri’s theory is grounded on the assumption of profit rates equalisation at the international level. However, modern works from the econophysics show a gamma distribution of profit rates at the national level. I think that unequal exchange exists between countries, but it is much more difficult to express it mathematically within gamma distribution terms. I will be very thankful if you can give any comment on this topic.

    Best regards from Serbia for you,
    Vladimir Vasić.

  9. ucanbpolitical Says:

    We are about to enter the white water of history again after all these years becalmed. The combination of Humpty Trumpty giving China a $50 billion fine for illegal parking of exports, tumbling stock/commodity markets and the $1.3 trillion budget which boosts arm spending are pointers of what is to come. We should be using this valuable site for dealing with burning contemporary issues of the highest magnitude.

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