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Capitalism means Crisis and Trade War
by Elmar Altvater and Christian Schroeppel
Email: marc1seed (nospam) yahoo.com
02 Jan 2019
Capitalism contains crisis as rainclouds contain rain, said Jean Jaures, 19th-century French socialist. Big Pharma, Big Wall Street, and Big Military Complex have armies of lobbyists. We the People should govern and politics should control economics. The state should represent the public interest and fight poverty.
CAPITALISM MEANS CRISIS
By Elmar Altvater
[This article published in “ABCs of Economics 2.0 is translated from the German on the Internet, www.rosalux.de. Elmar Altvater who died on May 1, 2018 was a beloved professor of political economics at the Free University of Berlin and a prolific writer.]
Capitalist globalization knows winners and losers, it is said. Is this the time for capitalism criticism? Nonsense! Humanity has done well with the system and the “Wealth of the Nations” has never been greater. For more than two hundred years, there has been an average annual growth rate of 2% and more. That never happened before in the history of humanity. The growing inequality of incomes, wealth and life chances between the winners and losers is smeared.
So life continued for a long while. Only a more or less just distribution of the produced wealth was urged. But, there is a limit to everything, I suppose. Limits are set to commodification, the transformation of natural resources into commodities. Only a few resources needed for the accumulation process are renewable. This is true for immaterial resources like the training of workers or some technological developments but not for mineral and agricultural raw materials or for fossil energy – above all crude oil and natural gas. Capital accumulation would collapse without them. Cultures did not need to worry at the beginning of the fossil age 150 years ago when resource limits were far away. But when “peak oil” was imminent or on the horizon, capitalism analysis had to take account of social relations to nature. Then, the double character of economics described by Karl Marx as a “spring board” became important. The material-natural dimension of commodified resources also remains significant in the process of capital accumulation.
Endogenous contradictions of accumulation can be described as development limits. The losses of the losers and the profits of the winners of capitalist globalization are complex. The winners are owners of financial assets, rich capitalists and consumers with purchasing power. Losers are those dependent on their labor for gaining a tolerable income. This is more than a problem of distribution and justice. Periodically, their consumer power is not enough for buying the products of the constantly greater productivity.
The periodic errors of the capitalist production method are blatant. Capital accumulation comes to a standstill because purchasing power demand and growth are lacking. Capital is destroyed; many jobs and the life chances of many persons are lost. Incomes and state revenues fall. The crisis also seizes the financial markets and cannot be limited anymore. When this is attempted, the continuing liberalization of the financial markets allows ever more adventurous financial innovations. With these innovations, “financial investors” could ensure high profits in the crisis at the expense of whole sectors of the population and countries forced into poverty. Then, accumulation of capital occurs through expropriation and no longer through production of a (relative) surplus value.
If the system functioned free of crisis, there would be no occasion for criticism and therefore no reason to reflect about alternatives to capitalism. The crises provoke intellectual and practical criticism. What must be the goal? Capitalism rates itself and does not accept other criteria than profits, profitability and accumulation- or growth rates. Firstly, the accumulation process produces periodic crises out of its own contradictory dynamic. Neither Keynesian nor anti-cyclical intervention policy could prevent or contain these crises or ensure the neoliberal trust or “stability of the private sector.” Secondly, capitalism tends to overuse the resources of accumulation, first of all human labor. The modern welfare state had fought for their protection but is now abolished more and more in the “neoliberal counterrevolution” to increase the exploitation unhindered. But, the reproduction conditions of external nature are also systematically ignored. The resources are exploited to the last dregs and the sink of global nature is overused to the collapse of ecosystems like the global climate system.
TRUMP’S PUNITIVE TARIFFS: FROM FREE TRADE TO TRADE WAR
by Christian Schroeppel and www.marx21.de
US president Donald Trump cancels regional free trade agreements and imposes punitive tariffs. Is his policy a counterbalance to worldwide free trade and to Germany’s export orientation?
[This article published on December 10, 2018 is translated from the German on the Internet, www.marx21.de.]
For decades, free trade was the declared goal of the most powerful industrial states. In 1995, the World Trade Organization (WTO) arose out of the General Agreement on Tariffs and Trade (GATT) started up after the Second World War. The states of the G7 group – the US, Japan, Germany, Great Britain, France, Italy and Canada – define the political agenda. In their meetings, they presented themselves as an informal world government.
Worldwide protest quickly formed against this world government. After the great demonstration against the WTO ministerial conference in Seattle in 1999, a movement emerged that pursued the powerful at their summits even in remote places of the world. Free trade was at the center in the protests – alongside order and protection of the atmosphere.
Free trade and the World Trade Organization
The goal of the many negotiation rounds in the scope of GATT was to increase more and more goods and more and more states in worldwide agreements on reducing tariffs and other so-called trade barriers. At first, the WTO continued this. All member states of the World Trade Organization had to ensure that their laws were in harmony with the rules of the WTO. For weaker states, the WTO agreement is like a gag-agreement that actually suspends their state sovereignty. The so-called Doha round of the WTO that began in 2001 showed the conflicts of interests of the participating states. For a long time, there was no agreement on a further liberalization of global trade.
Leftist criticism of free trade
Leftists criticized capitalist world trade before the founding of the WTO. They supported efforts to control powerful industrial states and their corporations. Their criticism is valid for politically-controlled trade in screened-off colonial realms and for the penetration of countries of the South by profit-oriented big businesses. In both cases, trade- and economic relations are part of political rule over the population of these countries. Many political and military incursions of the US and other countries prove the close connection between economic and political rule. The Stalinist Soviet Union also supported repressive regimes to expand its worldwide influence.
The inhuman working conditions under which employees of international corporations must work are the immediate reason for resistance and criticism: toxic pesticides on plantations, conditions in mines dangerous to life and excessive working hours in garment factories.
Will free trade bring everyone prosperity?
Advocates of the so-called dependence theory (theory of dependence) rightly oppose the argument: free competition on the world market leads to a new division of political economies into a few economic powers where technologically advanced products are produced on one side and many countries specialize in producing simple goods with the lowest possible labor costs on the other side.
Dependence theory opposes the thesis of classical and neoclassical economic theory that “comparative cost advantages” ultimately improve everyone’s well-being. This means political economies would specialize in those products they can produce very efficiently – because of outward circumstances – like climate and soil. Specialization in coffee, cocoa and tropical fruits only brought prosperity to the plantation owners. For most, industrial control and the regulation of foreign trade were important elements of an economic policy that built an independent production base. A land reform was often the starting point for the further development of agriculture as a basis for general economic development – in contrast to the spread of mammoth plantation owned by transnational corporations. The specific interests of the ruling class in these states are reflected in this politics, not the interests of workers to develop their economy in an independent way. Therefore, an internationally-oriented left will emphasize cooperation, new technological discoveries and developments worldwide as fast as possible, not on screening states and building self-sufficient economies. The left is in solidarity with liberation movements that stress an independent economic development.
Critical points against free trade
At the end of the 1990s, the anti-globalization movement offered critical points against free trade. Free trade undermines the gained rights of employees through unbridled competition, leads to a race to the bottom for the lowest business taxes, endangers public enterprises and services, promotes dumping competition through poor protection of the atmosphere and prevents effective protection of consumers from noxious products.
Worldwide agreements and regional arrangements like the Transatlantic Free Trade Agreement (Transatlantic Trade and Investment Partnership, TTIP) act as backdoors to suspend the rights of employees and consumers. Trade- and investment agreements are periodically crafted in secret by economic decision-makers and unknown trade commissioners.
The whole undemocratic construction of this agreement is used to enforce the interests of corporations and powerful states against their own populations. Criticism of the secret negotiations contributed to the breakdown of capitalism driven by ever-sharper competition (“Multilateral Agreement on Investments” (MAI)
Could regional and bilateral agreements be alternatives to free trade?
For a long time, regional agreements and bilateral agreements were regarded as the alternative to the blocked global negotiations. These agreements were understood as preliminary stages for agreements on the global plane. Many states saw themselves under pressure to accede to these agreements to prevent other countries joining forces and determining global rules and standards without them.
On one side, the rhetoric in the negotiations on region al agreements is preparatory work for global agreements – according to the ideology – for the well-being of everyone on an equal basis. On the other hand, negotiation s on all planes were always characterized by conflicts over technical norms and product features with which states and transnational corporations gained advantages over the competition.
Hypocrisy of little lies
Political power is primary, not the best solution for everyone. So former US president Barack Obama warned Great Britain would “fall behind” in worldwide trade after withdrawing from the European Union. In the last decades, there were trade wars fought with tariffs and import restrictions between states, even between member states of the WTO. As everybody knows, US president Donald Trump is at loggerheads with reality. For his followers, the reinterpretation of reality is very powerful and strong-willed. They feel Trump annuls their own powerlessness as cogs in a system driven by profit. The hypocrisy of little lies is manifest when a policy driven by profit interests is reinterpreted as a battle for the bet ideas in the general interest. So Trump personifies the brutalization of a capitalism driven by ever-sharper competition.
Trump sets the battle of everyone against everyone else, success and power as ends-in-themselves in place of a universally valid ethic – that could be turned against a radicalized capitalism. Winning in the rivalry legitimates political rule in this world of ideas, not achievement for the community. Trump’s project is making people morally fit for a radicalized raw capitalism. For this reason, Trump enjoys the great support of the exchanges and important parts of the economy in his outsider role within the political sphere.
Right after his assumption of office, Trump cancelled the so-called Transpacific Partnership. Trump threatens to abandon the North American Free Trade Agreement. Trump introduced punitive tariffs on imported steel and aluminum – even from NATO states – and justifies this with the demands of national security. He prefers bilateral agreements since the US can prevail and cancel these agreements at any time.
Jason Stanley, “How Fascism Works,” The Guardian, October 2018, https://www.theguardian.com/us-news/2018/oct/15/how-fascism-works-jason-
Video: “Who Rules America?”, Free Speech TV, 26 min
Video: “Authors Discuss the Trump Administration,” booktv.org, October 2018, 1 hr