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13 June 2018

Donald Trump is a symptom of the new global disorder, not the cause

Neoliberalism and the revolt against austerity have pushed powerful states to impose social and economic pain on each other, or on smaller states.

By Paul Mason

In the space of three days, Donald Trump has created a new, explosive geopolitical reality. He nixed the outcome of a G7 summit he had disparaged, disrupted and departed from early. Then, with all the subtlety of an estate agent, he welcomed Kim Jong-un into the growing club of authoritarian strongmen who are intent on destroying the post-1989 world order.

With the G7, we knew it was coming. Trump ran on the slogan “America First” and has delivered on it: he has promoted economic growth at the expense of the US’s lenders, and by saddling future generations with unpayable debts; created jobs at the expense of America’s competitors and launched a trade war.

But the shape, smell and feel of the “it” would only be clear once Trump sat down, surrounded by the failed technocrats and globalists, in that now-iconic photo.

Released by Angela Merkel’s team, it is supposed to show her as the strongwoman forcing Trump to accept the need for a rules-based global order. Instead it shows the combined geopolitical power of Germany, Italy, the UK, Japan, France and Canada amounting to zilch in the face of America’s new policy of “beggar my neighbour”.

For certain, Trump looked stupid and, with hindsight, weak throughout the entire two days. He got pushed by his diplomats and the other leaders into signing a document he didn’t believe in. But that doesn’t matter: because, in the geopolitical turmoil that is about to deepen, the USA has three important things: the dollar, the world’s biggest military and a $6trn debt to the rest of the world.

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Three years ago, in Postcapitalism, I outlined two scenarios if the world’s elites refused to contemplate a break from the free market economic model. The first was long-term stagnation and austerity. In the second:

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“The consensus breaks. Parties of the hard right and left come to power as ordinary people refuse to pay the price of austerity. Instead, states then try to impose the costs of the crisis on each other. Globalisation falls apart, the global institutions become powerless and in the process the conflicts that have burned these past twenty years – drug wars, post-Soviet nationalism, jihadism, uncontrolled migration and resistance to it – light a fire at the centre of the system”.

That is what has happened. Vladimir Putin’s annexation of Crimea and eastern Ukraine, Syriza’s clash with the eurozone, Merkel’s unilateral negation of the Dublin Treaty on migration, Brexit, the coup and counter-coup in Turkey, Trump’s victory, the victory of Poland’s Law & Justice party, the switch by Austrian conservatism to an alliance with neofascism and the installation of a far-right/populist coalition government in Italy.

They are all part of a chain reaction by which powerful states try to impose social and economic pain on each other, or on smaller states.

Russia and China have played their part too: Putin with the creation of a 19th century-style “sphere of influence” involving Iran, Syria, central Asia and many western dupes (one of whom may be Trump himself). China, meanwhile, is creating a 21st century economic empire, launching its state and private sector jointly into the race to become hegemonic in artificial intelligence, while consolidating power around Xi Jinping’s project of Chinese nationalism with a Marxist face.

To see the G7’s collapse as one isolationist against a room full of liberal globalists, as many mainstream commentators have done, is wrong. Germany smashed Greek democracy and has manipulated the eurozone to impoverish southern Europe and suppress European demand. Theresa May leads a party transformed overnight into a vessel for xenophobic nationalism (albeit floundering around, incapable of translating its new convictions into actions).

Shinzo Abe would never need to use the words “Japan first” because that has been the implicit policy of all Japanese governments since the Asian crisis of 1997. Italy, meanwhile, just completed an abject week for globalism by dumping 600 stranded migrants onto Spain

The old imperial powers of Europe and Asia were already, in other words, engaged in the game.

There were only two committed defenders of globalisation in its old form – Macron and Justin Trudeau – and, as they will now find out, the changed situation will soon force them, too, into measures needed to survive the breakdown of a rules-based order.

The question: “what do we do?” should be on the minds of all political people who understand, from the example of the 1930s, what happens when a rules-based order is fragmented. But it’s not.

The reason for is that, for 30 years, neoliberal ideology has been founded on the perfection and unchangeability of the current system: not just of the free market economic model and free trade, but of a global order underpinned by unipolar American power, Chinese isolationism and a Russia contained and constrained by its economic weakness.

In a relatively short space of time – dating roughly from the Crimea annexation in February 2014 –  all these assumptions have evaporated. Economists operating with static models, political journalists assuming that the “machine” would capture Trump, geopolitical pundits – that most speculative of professional groups – understood the world order was fragmenting but not the causes.

One of the greatest adverts for Marxism, in the year of Marx’s 200th anniversary, is that all the events described fit neatly into the theory. There was never a global elite, only a series of national bourgeoisies locked together in a system of global wealth extraction. Globalisation was their collaborative project: a policy, not an irreversible natural event.

Subordinate classes – even classes who’ve had their organisations and cultures suppressed by force, like the working class communities who backed Trump, Brexit and Lega  – can exert pressure on elites. Apparently permanent forces are unstable beneath the surface. The laws of change work through abrupt transitions such as the one Trump triggered when he tweeted the cancellation of the G7 communique in mid-air.

I don’t care whether you call it Marxism or merely “sinuous, complex dialectical thinking about reality based on impermanence and economic determinism and class power analysis”. Without it you cannot formulate the question “what do we do?” adequately.

For that question should really be: what do we do about long-term economic stagnation, which has led to a rush for the exits from the multilateral global system, posing the possibility of trade wars, the fragmentation of the global finance system, military conflict and a threat to the global architecture that protects universal human rights?

I fear the moment is past where that question can be answered inside a global institution. Indeed, the true global institutions, like the IMF and the Bank for International Settlements must be asking themselves searching questions about who they will serve in future. Is it conceivable that, within 20 years, the IMF will become a tool for China to impose its values and economic doctrines on the world, as it was for the US in the 1980s and 1990s? Is it conceivable that a globally co-ordinated central banking system can survive when treasures and central banks take up the game of beggar thy neighbour in earnest?

I have become notorious on the left for insisting that the “we” of progressive politics no longer means primarily the organised working class. The agent of history that will need to summon enough social power to rebuild something like a global order is the networked consumer and citizen. As the elites flee from globalism, its progressive values remain implicit in the lifestyles of the networked and cosmopolitan-minded educated populace.

So what can we – should we – do?

The answer is: design and execute a new kind of capitalism that meets the needs of people in the developed world. The design is not impossible: the elements of it lie in the provision of universal basic incomes or services, a Green New Deal, rapid automation and the creation of increased leisure time, massive investments in education, and an end to outsourcing, offshoring and privatisation.

We can either do this collectively, as Europe, or the G7, or as NAFTA. Or, more likely, as a series of national projects where borrowing to invest, printing money where necessary and stimulating moderate inflation creates the same – albeit unstable – synergies as in the “thirty glorious years” after 1945.

For the left it means thinking beyond party designations. In Britain, the Greens, Momentum, maybe 50-plus truly Corbynite Labour MPs, half the SNP and the diffuse membership of two or three big NGOs are those who really get it. In Europe, however, many green parties have become bastions of neoliberal complacency: they will be musing on the possibility of degrowth and digging their organic allotments the moment the AfD and the Front National take power.

As for social democracy, it falls into three camps: outright conservative economic nationalists, as in Slovakia; enthusiastic participants in the failed neoliberal model, as in Germany; and people like Austria’s Christian Kern – a technocrat flung into a crisis who had to throw away the playbook – or Spain’s Pedro Sanchez, who understand the need to reconnect and rethink. And of course Jeremy Corbyn and Bernie Sanders.

We now need an alliance of parties, movements and individuals who are not going to fight for the system that has failed but to imagine a new one: a capitalism that delivers prosperity to Wigan, Newport and Kirkcaldy, if necessary by not delivering it to Bombay, Dubai and Shenzhen.

Is that an argument for economic nationalism? No, rather an internationalism that says to the rest of the world: if the developed, democratic countries of Europe, America and Asia collapse into authoritarian rule, the 400-year upswing of industrial societies alongside democracy will have, once again, stalled  – and, with China’s inevitable hegemony, it might go into reverse.

To save what we can of the multilateral order, we need to reverse out of its extreme forms. It’s a tragedy that it took the Five Star Movement in Italy to argue for a pre-Maastricht form of the EU. That position is implicit in the left’s critique of the eurozone and of German mercantilism. As progressives, not nostalgics, however, we should argue for a post-Lisbon Europe.

But even saving the multilateral order might now prove impossible. If the situation collapses into all-out trade war, the repudiation of the Geneva Conventions and the Universal Declaration of Human rights, the factionalisation of the IMF and – the ultimate horror – mutual debt defaults, then the point is to go on imagining how we can set things right.

J.M.Keynes, who had predicted the doom that overtook Europe in the early 1930s, and continuously struggled to keep the global system together, reacted to its collapse in 1939 by working on a new design.

In September 1941, with Leningrad surrounded and the US not yet even in the war, Keynes sat down to write Proposals for an International Currency Union. He designed a self-correcting global system with a global bank, a global currency a development bank and a reserve fund. Keynes never convinced the Americans (or the Russians) of his scheme, but an adequate version of it was adopted at Bretton Woods, unleashed an unparalleled period of prosperity, and still underpins the global financial architecture, despite the formal collapse of Bretton Woods in 1973.

The question that concerned Keynes and his US counterpart Harry Dexter White in 1941 was simply: what will the world economy look like after we have defeated fascism, ended the conflict between imperial powers and restored the international rule of law?

That’s the kind of question the iconic Trump-Merkel photograph should now prompt among the beleaguered political progressives of the West.