As the inauguration of Donald Trump as U.S. president approached, a political uproar unfolded in Washington that was more fury than substance. A little more than a week before Trump took the oath of office, the on-line site BuzzFeed published an unverified 35-page document by a “former” member of MI6, Britain’s counterpart of the CIA, on Trump’s alleged relationship with the Russian government and its intelligence agencies. Reportedly, the document was originally created on behalf of anti-Trump—Republicans eager to find some dirt that could be used to stop the billionaire political adventurer in the Republican primaries.
The text’s most sensational part was the claim that Russian intelligence obtained documentation of Trump’s perverted sexual tastes while he was staying at the Ritz-Carleton hotel during a visit to the Russian capital in 2013. It is well documented by many other sources that Trump has abused women throughout his adult life. So even if the claims of the document are taken at face value—they would, to tell the truth, be rather tame stuff. For the record, President Trump has strongly denied the allegations, as has the Russian government.
Far more importantly, the document claims that, in exchange for the help of Russian intelligence obtaining and distributing through Wikileaks damning evidence about the Hillary Clinton presidential campaign, Trump’s business organizations passed information about the activities of “Russian oligarchs” in the West back to Russian intelligence. If true, that would mean that Trump engaged in activities that could leave him open to charges of spying for a foreign power, namely Russia, an impeachable offence. Could this form the basis of bi-partisan—”Party of Order“-sponsored—articles of impeachment against Donald Trump in the not too distant future? Stay tuned on that one. (1)
If the document is what it purports to be, it would confirm that Russian intelligence was behind the hacking of the emails that exposed the personal corruption of Clinton and the Clinton Foundation and the undemocratic methods used by the Democratic National Committee to deny the nomination to the far more popular Bernie Sanders. According to the document, Russian President Vladimir Putin both fears and hates Hillary Clinton. Even if the document is a complete fake, which it may well be, that President Putin might not be among Hillary Clinton’s greatest fans would not be surprising considering Clinton’s war-mongering against Russia in Syria, Ukraine, Crimea and elsewhere.
Just before the on-line publication of the document by BuzzFeed, James Clapper, Obama’s director of national intelligence, which is supposed to coordinate all the U.S. government’s numerous spy agencies, “confirmed” that Russia and the Russian-owned RT TV network had indeed played a key role in the success of the Trump campaign. According to Clapper, Russia and RT succeeded in electing Trump by spreading not only anti-Clinton propaganda but by hiring journalists, some quite left wing and anything but pro-Trump, who have been quite critical of many aspects of U.S. society and foreign policy. These journalists criticized the non-stop wars of aggression against countries in the Middle East and Africa that were expanded under the Obama administration. In addition, Clapper charged that RT gave attention to “third-party” candidates.
Now we are getting close to the real essence of the matter. The U.S. government and corporate media complain that RT—formerly Russia Today—and other media owned by Russia offer one of the few alternatives in the U.S. to the corporate media monopoly. Both Democrats and Republicans of the Party of Order would like to see such Russian-owned media outlets as RT and Sputnik International shut down.
You can imagine the outcry in the U.S. if the Russian government moved to shut down U.S.-sponsored media outlets in Russia. Now, that would be an intolerable dictatorship and a violation of freedom of the press. What James Clapper and Democrats and Republicans of the Party of Order have a beef with is not Russia or Vladimir Putin at all. What they are targeting is the First Amendment to the U.S. Constitution.
In another startling development, the U.S. failed to veto a routine UN Security Council resolution denouncing illegal Israeli settlements on the West Bank, as well as Palestinian “terrorism” against the Israelis. It has long been taken for granted that whenever such a resolution comes before the Security Council the U.S. vetoes it. This time the U.S. abstained, allowing the resolution to pass.
Meantime, outgoing U.S. Secretary of State John Kerry observed that the current Israeli government, headed by Benjamin Netanyahu, is the most right-wing in Israeli history. Kerry is right about that, but U.S. secretaries of state are not known for telling the truth about Israel and the nature of its government.
For his part, Donald Trump strongly defended Netanyahu, just like he has been friendly to far-right leaders rising toward power in other “Western-style democracies.” Trump appointed as U.S, ambassador to Israel David Friedman, who is considered to be to the right of Netanyahu. Now that takes some doing! While Netanyahu has been forced to pay lip-service to the creation of a Palestinian Arab state to exist alongside Israel—though with no armed forces or any other elements of statehood—Friedman doesn’t want even that. Instead, he believes “historical Palestine,” as defined by the old League of Nations mandate that handed Palestine over to Britain after World War I, should simply be “Israel.”
President Trump signaled before he assumed office that not only will he support even more Israeli settlements on the West Bank but he will move the U.S. Embassy from Tel Aviv to Jerusalem. Israel claims that the “holy city” of Jerusalem is its eternal capital—a position endorsed by Donald Trump—because various Bible verses written more than 2,500 years ago say it is. However, Jerusalem contains “holy sites” sacred not only to Judaism but also to Christianity and Islam. And for the 1,400 years preceding the Israeli conquest, Jerusalem was a center of Arab and Islamic civilization.
Jerusalem was not made part of the “Jewish State” when Palestine was partitioned by the UN—without consulting the Palestinian people—between a state of Jewish colonists and an Arab state that has so far never come into existence. Instead, the “final status” of Jerusalem was to be determined by “negotiations,” which never occurred.
Even the United States—at least before President Trump—has never formally recognized Jerusalem as Israel’s capital—eternal or otherwise. Instead it, like most other countries that recognize Israel has maintained its embassy in Tel Aviv. Other presidential candidates before Trump have tried to make political capital by promising to move the U.S. Embassy to Jerusalem but have backed down once in office. Perhaps President Trump will do so, too. But there is real fear among Palestinians, in light of his nomination of David Friedman as U.S. ambassador to Israel and the extreme Islamophobia and general racism of Trump, that he really will move the U.S. Embassy to Jerusalem. (2)
What is really going on is, number one, an attempt to mislead the massive multi-class and necessarily politically heterogeneous anti-Trump movement at home by the U.S. Party of Order. Trump is not our fault, both the Democratic and Republican wings of the Party of Order are saying. Nor is it the decline of American capitalism that is at fault. Indeed, Party of Order leaders, pointing to the purely cyclical recovery from the 2007-2009 Great Recession, insist the U.S. economy has returned to “full employment” and is thriving! Instead, they blame Trump’s election on Vladimir Putin!
In addition, the champions of the current state of affairs hope to minimize the damage that President Trump will do to their beloved “world order.” This explains the U.S. failure to veto the UN resolution against Israeli West Bank settlements. The champions of “order” are saying to their numerous allies and stooges around the world that Trump is a terrible aberration caused by Russian meddling in the U.S. electoral process. Don’t worry, the Party of Order declares, Trump will be gone soon enough and sanity will return to the White House. In the meantime, hold on for a bumpy ride.
Now, this blog is about crisis theory. While I have focused on economic crises of overproduction, there are many other types of crises that occur in capitalist society. Indeed, crises of overproduction often break out during “quiet periods” of economic prosperity and relative political stability. Then such crises breed other types of crises, which can lead to wars and revolutions.
The position of this blog is that the election of President Trump was not some freakish aberration, nor was it the result of Russian meddling. This is not to deny that there were accidental factors involved in the unexpected election of President Trump. There were, of course. But I believe the Trump election shows that a serious political crisis for the current “world order”—also called the U.S. world empire—has begun. And this crisis was on the way even before the idea of Donald Trump as U.S. president was taken seriously.
Earlier crises that shook the capitalist world order also had accidental elements. Perhaps the most famous was the assassination by young Serbian nationalists of the heir to the Austrian crown and his wife in June 1914. If things had turned out differently, the young Serbian terrorists might have been stopped, or they might simply have missed their targets. Yet within two months of this “accidental” event, World War I broke out, which completely swept away the “world order” that prevailed at the beginning of 1914. But the assassination of the Austrian monarch-in-waiting would in and of itself not have led to the collapse of the 1914 world order unless that world order had already been thoroughly undermined. If the assassinations had not occurred, some other “accident” would have triggered the end of the 1914 world order.
Nor do I deny Russian “meddling” may have played some role in Trump’s election in 2016, though up to this point this is completely unproven. To keep things in perspective, the U.S. has “meddled”—and more than meddled—in elections in
many countries, including those of Russia—for example, the Russian presidential election of 1996—to a much greater extent than Russians could possibly have
meddled in the 2016 U.S. presidential election. Russian Foreign Minister Sergey Lavrov has just pointed out that the leaders of EU, including German Chancellor Angela Merkel, expressed strong opposition to Donald Trump and support for Hillary Clinton. If Clinton had won, should we have denounced the EU and Germany for imposing Hillary Clinton on the U.S.?
The Democrats—and many Republicans—are claiming that Russian “meddling” was something unprecedented in U.S. history. This is false. In fact, foreign governments have long attempted to influence the outcomes of U.S. elections.
When Stalin ‘meddled’ in a U.S. presidential election
Any Russian government influence exercised in the 2016 U.S. election was dwarfed by the Soviet “meddling” in the 1936 re-election of Democratic President Franklin D. Roosevelt. At the time, leaders of the Soviet Communist Party dominated both the Soviet government and the Third International. The central figure within the Soviet Communist Party was J.V. Stalin.
Stalin decided in his capacity as the de facto head of the Third International to use all the influence of the International to increase the chances of Roosevelt’s re-election. He did this because he feared that the Republicans and their presidential candidate, Alf Landon, should they defeat Roosevelt in 1936 might form an alliance, or at best remain “benevolently neutral,” in the coming war between the Soviet Union and Nazi Germany.
As a result, the U.S section of the Third International—the U. S. Communist Party—did all it could to reelect Roosevelt. (3) In addition to its tens of thousands of members, the CPUSA at the time had considerable influence in the CIO and other unions, the African-American community, and the U.S. Jewish community, as well as among artists and intellectuals.
Stalin’s ability to “meddle” in the 1936 election, in whose result the Soviet Union had a vital interest, far exceeded Putin’s ability to affect the outcome of the 2016 U.S. election. Putin has no Communist International at his command. Nor does today’s Russia enjoy anything like the worldwide prestige the USSR enjoyed in 1936 as a result of the success of its five-year plans.
The Soviet “meddling” to the extent that it ensured the victory of Roosevelt—though Stalin’s support for Roosevelt’s reelection was far from decisive—helped achieve a result that virtually all of today’s progressives and many leftists consider to have been a very good thing. The subsequent U.S. alliance with the Soviet Union, which Roosevelt’s electoral victory in 1936 helped make possible, played no small role in the defeat of Nazi Germany—though it also led to the rise of the U.S. world empire.
But just as it would be a huge mistake to attribute Roosevelt’s victory in 1936 primarily to Stalin’s “meddling,” so it is a far bigger mistake to blame Trump’s victory on the vastly less influence—if it occurred at all—of Russian President Putin in the 2016 U.S. election. The real secret of Trump’s victory is found in the decline of the U.S. imperialist world empire, just as the real secret of Roosevelt’s electoral success in the 1936 election is to be found in the rise of the same world empire. Both the rise and decline of the U.S. empire—or, if you prefer, the “liberal world order”—are ruled not by the “meddling” of Stalin or Putin but by the economic laws that govern the capitalist mode of production.
Industrial production, the foundation of military and political power
Political and military power in the modern world grows out of industrial power, defined as the ability to produce more products with less human labor. Here we come to the crucial contradiction undermining the U.S. empire that Trump and his advisors (within the limits of their bourgeois understanding) seem to grasp. Historically, the United States emerged as the strongest capitalist power and then became the core of a world empire because its industry could produce more commodities with less labor than its capitalist rivals. This is the story of the rise of the United States, first as a capitalist power between 1776 and 1898 and then as a capitalist-imperialist power from 1898 to 1945 and beyond.
During this prolonged period, the law of uneven development worked in the United States’ favor. However, once it emerged unchallenged among its imperialist rivals in 1945 to the present, the law of uneven development has necessarily worked against it.
This was the inevitable result of the growing U.S. export of capital, itself arising from the drive by individual capitalists—under the pressure of competition—to seek the highest possible rate of profit.
The beneficiaries of these capital exports were first the U.S.-defeated European (above all Germany) and Japanese rivals, and then to certain former colonial and semi-colonial countries. Above all, these beneficiaries included the People’s Republic of China. During the current phase of imperialism, money capital is concentrated in the U.S. and its imperialist satellite countries, while productive capital used by the capitalists to actually produce surplus value is increasingly located outside the United States—especially in China. This created the political conditions that made the election of Donald Trump possible.
Making America great again versus America is already great
During the 2016 presidential campaign, Trump’s main slogan was “Make America Great Again.” Hillary Clinton, speaking for both the Democratic and Republican wings of the U.S. Party of Order, answered that “America is already great.” President Obama specifically denied that the U.S. economy is facing decline despite the overwhelming evidence that so many Trump voters have experienced in their own lives to the contrary.
What is the measure of ‘national greatness’ and how is it measured?
What I call the Party of Order, which supported Clinton and includes the bulk of the Republican Party leadership, measures America’s greatness by the performance of the quotations on the stock exchange. The rise in stock market prices over time—across “bull” and “bear” markets that regularly replace one another—reflects the ever-increasing wealth of the capitalist class.
Since the New York and NASDAQ stock exchange indices have never been higher, by this definition America has never been greater. Trump and his gang—Trump voters are another matter—have no argument with stock market prices as the measure of America’s greatness. They are in full agreement! What other measure of national greatness can there be? But Trump asks, how secure is the current foundation of the U.S. stock market? Or to rephrase it, how secure are the foundations of America’s greatness?
The nation-state as a unit of competition
The United States as a bourgeois nation-state is an association of corporations that aim at the maximum enrichment of their stockholders, bondholders, directors and managers. As a capitalist nation-state, it is at war—at least economically—with other bourgeois nation-states aiming to enrich their capitalists. This is the very essence of what is called “international trade.”
At the end of World War II, the U.S. government had the unique opportunity to use state power to dismantle the major industrial corporations of its competitors. Under the so-called Morganthau Plan, Germany was to be forcibly de-industrialized and turned into a decentralized collection of agricultural states much like it had been in the middle of the 19th century when gold was discovered in a California stream. The U.S. had similar plans for Japan. Indeed, why stop with Germany and Japan? Why not forcibly dismember the capitalist industry of all of the United States’ major potential competitors, including its so-called allies Britain and France? After all, the logic of capitalist competition among nation-states pointed in this direction.
If that had been done, U.S. corporations would have had the entire world market—both as buyers and sellers—for themselves. If the U.S. government had followed an “America First” policy in the years after 1945—and gotten away with it—it would have meant that the stock market value of U.S. corporations would have soared to vastly higher levels than is actually the case today. The U.S. would have been “great” indeed! But as we know, the U.S. government didn’t dare attempt this, especially with the threat of a victorious Soviet Union and world communism staring it in the face.
Instead, Washington adopted a bi-partisan foreign policy, supported by leaders of the Democratic and Republican parties alike, buttressing a world empire in which the corporations of Britain; an economically resurgent Germany; and an economically resurgent Japan, France, Italy, Australia, New Zealand, and so on could actually compete with U.S. corporations and appropriate a portion of the surplus value for their non-American owners. As part of the deal, the leaders of rival imperialist states agreed to never again challenge the U.S., either politically or above all militarily. In this way, “peace” among the imperialist countries would be assured. Things were made easier by the fact that the world market in the wake of the Great Depression had entered an extended phase of rapid expansion.
But, Trump and his “American Firsters” say, we American capitalists can no longer afford to share the world market in this way either with “our” imperialist allies or newly industrializing nations that were not signficant producers of industrial commmodities in 1945. From now on, the U.S. government should use state power to enrich U.S. corporations at the expense of the corporations of other countries, including imperialist “allies,” engaged in capitalist production just like was done in the “good old days” before 1945.
The Party of Order—the mainstream Democrats and Republicans—answer that this is old-fashioned thinking. Under the postwar “liberal world order,” we American capitalists have increasingly appropriated the surplus value produced not only by our own workers but also the lion’s share produced by workers who produce surplus value for non-American industrial capitalists as well. This, the Party of Order holds, is the result of the world order that it so wisely and farsightedly constructed after 1945. From their point of view, this crazy Donald Trump is now threatening to ruin the world “order” that served the billionaires of the world so well for the last 70 years.
Seventy years of the current “order” has led to a situation where the bulk of the surplus value is produced outside the United States and the satellite imperialist countries but appropriated by capitalists within the United States and the other imperialist countries. A portion of this surplus value is then used as a fund to bribe the middle class—very important for political stability within the imperialist countries. Indeed, this bribery was designed to keep a person like Trump from being elected to the presidency in the first place.
Now, this wouldn’t be such a problem, Trump, Bannon and company believe, if the countries where the surplus value is produced were under their firm colonial or neo-colonial control. For example, in criticizing Obama’s Iraqi policy, Trump complained that Obama withdrew U.S. troops from Iraq—which he did briefly—prematurely. Not only should Obama have kept U.S. troops at full strength in Iraq but seized Iraq’s oil as well. Trump also complains that while President Obama successfully destroyed the government of Libya and did tremendous damage to Syria through his support of pro-imperialist rebels, Obama and Secretary of State Hillary Clinton failed to establish a strong colonial—or at least neo-colonial—government able to establish the law and order necessary to do business.
As a result, the Trumpists point out, Libya has become a refuge for “Islamic terrorists” like ISIS that previously were not able to operate in the country. And, of course, chaos does not create the best conditions for the extraction of oil and natural gas in Libya. Business needs a climate of “law and order” so that private property is respected and contracts are enforced.
Similarly, Obama-Clinton’s failed attempt to overthrow the government of Syria has led to widespread chaos in that country. Not exactly the best environment to secure the oil and natural gas pipelines from Iranian oil and gas fields that might some day run through Syria.
President Trump when he was a candidate pointed out that stable nationalist governments such as the former governments of Saddam Hussein of Iraq or Colonel Qaddafi in Libya, as well as President Assad in Syria, by maintaining a certain amount of law and order allowed business to proceed. Trump believes that U.S. imperialism should either deal with legitimate nationalist governments—though they are of course far from ideal because they aren’t under “our” direct colonial control—or establish strong colonial governments that can simply hand over their resources, which would be the ideal solution from Trump’s point of view.
Trump’s relations with China get off on the wrong foot and then get a whole lot worse
Trump, however, though he has been notoriously “friendly” to Russia, is extremely hostile to China. Columnist Trudy Rubin quotes Wu Xinbo, head of American studies at Fudan University: “We have the impression the United States has become a country out of our recognition. People are concerned because this is America, not an ordinary country.” Chinese “America experts” like Wu were sure that Trump could not possibly win. But they were wrong.
In December, the news for China’s “American experts” kept getting worse. On December 2, Trump held a phone conservation with Tsai Ing-wen, the newly elected president of Taiwan. This conversation violated a complex diplomatic protocol that has existed between the People’s Republic of China and the U.S. since 1979, called the “one-China policy.”
The ‘one-China policy’
Taiwan has long been part of China, and most of its population is ethnically Han Chinese, though there is a small aboriginal population on the island. During the Sino-Japanese war of 1895, Japan, then a rising capitalist power, seized Taiwan. This was a period of extreme Chinese weakness. The seizure of Taiwan by Tokyo was to be a prelude to far greater acts of Japanese aggression against China during the first half of the 20th century. In 1931, Japan seized Manchuria while the feeble government of Chiang Kai-Shek was powerless to do anything about it, whetting Tokyo’s appetites further. Then, in 1937, Japan opened up a general war against China aimed at transforming China into Japan’s version of British-ruled India.
In 1945, following the defeat of Japan, Taiwan was restored to the Republic of China, still under the rule of Chiang Kai-shek. In 1949, the People’s Republic of China was proclaimed and a new China was born. However, Taiwan remained under the Republic of China ruled by the Kuomintang and its dictatorial chief, Chiang Kai-shek. The U.S. then moved to put Taiwan under its “protection.”
Overwhelming U.S. air superiority ruled out any attempt by the People’s Liberation Army to liberate Taiwan from KMT-U.S. rule and return it to China. The U.S. had succeeded in seizing Taiwan from the new China at the moment of its birth, much like Japan had seized Taiwan from old China in 1895. Until the early 1970s, Taiwan was called “free China” in the U.S. media, while the People’s Republic of China was never referred by its proper name but rather as “Red China.”
In the 1970s, unable to break the resistance of the peoples of Indochina, the Nixon administration finally decided the time had come to normalize relations with the People’s Republic of China. But Nixon was not prepared to return Taiwan to China. Nor did the government of Chairman Mao and later his successor Deng Xiaoping, both of whom were eager to normalize relations with the U.S., insist on it. During the course of the 1970s, a compromise was worked out. While Taiwan remained a de facto U.S. colony, the U.S. formally recognized that there was one China—the People’s Republic of China. The U.S. ended all formal diplomatic relations with the so-called Republic of China while retaining control of Taiwan.
After the death of Chiang Kai-shek, in 1975, the U.S. encouraged the setting up of a two-party system on Taiwan, replacing the one-party system that had prevailed under Chiang. The post-Chiang two-party system consists of the KMT and the so-called Democratic-Progressive Party of the current president. The KMT, despite its corruption and history of brutal repression against workers and peasants, is the direct descendant of the Chinese nationalist party founded by Sun Yat-sen. The KMT as a “patriotic” Chinese party recognizes Taiwan as part of China.
In contrast, the Democratic-Progressive Party of the current Taiwanese president, Tsai Ing-wen, is not a Chinese nationalist party at all and would like to establish Taiwan as an independent nation. This is what the U.S. would like to see if it can get away with it. But before Trump, the U.S. always indicated to the Democratic-Progressive Party that the time was not ripe for it to declare “Taiwanese independence.” Such a declaration would simply be too great a provocation to the economic, financial and military power of a rising China. If the Chinese government in Beijing ever allowed Taiwan’s legal “independence” to be established and widely recognized, it would show that present-day China is as powerless to prevent its offshore province from being snatched away as was the feeble old China of 1895.
When news broke on December 2, 2016, that then president-elect Trump had accepted the call from Tsai Ing-wen, the media speculated that perhaps it was a beginner’s mistake. After all, how many Americans who are not professional diplomats understand the delicate diplomatic protocol called the “one-China policy”? But it soon became clear that it was nothing of the kind. It was a provocation on the part of Trump planned long in advance. In reality, this provocation, important as the Taiwan question is for the Chinese people, is only the tip of the anti-China iceberg.
Just like Japan’s seizure of Taiwan in 1895 from old China was merely a prelude to the Japanese attempt to transform old China into a colony, so Trump’s Taiwan provocation is an attempt by Trump and his gang to halt and reverse the growing economic power of new China.
If that wasn’t enough, December brought even more bad news for China’s “American experts.” They learned that the president-elect had named none other than the Democratic—not Republican—economist Peter Navarro to head the U.S. National Trade Council. Navarro is no ordinary economist but the producer of the viciously anti-China propaganda movie “Death by China.”
“Death by China” blames not the capitalist system but “Communist China” for the destruction of U.S. industry and the very real problems caused by the de-industrialization for the U.S. working class. The very name of the movie suggests that the American people face “death”—not merely economic ruin—if China isn’t stopped.
Parts of this movie may seem anti-capitalist because it attacks large corporations for shifting production from the U.S. to China simply because it is more profitable to produce in China, in violation of the “national interests” of the U.S. Navarro’s movie counterposes the patriotic bosses of small manufacturing companies that can’t afford to shift production to China to giant corporations like General Electric, Boeing, and Apple among others, that put profit before country. In this way, “Death by China” appeals to the “small bosses” against big business.
Rich Trumka, movie star
Perhaps to his embarrassment—or maybe not—one of the “stars” of the movie is AFL-CIO’s President Rich Trumka. Trumka, in the classical spirit of Samuel Gompers, complains that profit-oriented big businesses are undermining the U.S. as a nation by shifting production to China. What Trumka says in the movie contrasts sharply with the need for solidarity of U.S. and Chinese workers against the common class enemy—the capitalist class. The problem with U.S. bosses from Trumka’s point of view is that they are insufficiently patriotic. They fail to put “love of country” before profit. In contrast, since the days of Gompers the AFL-CIO—and the AF of L before that—have always put “love of country” before the class interests of the global working class of which the U.S. working class is a part. While the great German revolutionist Karl Liebneckt in the dark days of August 1914 declared, “the main enemy is at home,” Trumka declares the main enemy is … in China!
Meantime, under Trumka’s watch, the trade unions that make up the AFL-CIO have continued to retreat as more and more U.S. states pass “right-to-work laws,” including the old CIO stronghold of Michigan. “Card check” (4), which Obama said he supported but failed to deliver, has gone the way of single-payer health care, or at least the “public option,” the closing of Guantanamo, and the end of the U.S. involvement in the war in Afghanistan by 2014, among other broken Obama promises. And as we know, Trumka’s attempt to help elect Hillary Clinton to the presidency failed. No wonder. What did Clinton have to offer the workers of the U.S. rust belt besides empty boasting how well the U.S. economy was doing under President Obama?
Samuel Gompers may have demanded “more” but the U.S. bosses are offering less, and Trumka and his AFL-CIO union federation built on Gomperite principles have been powerless to do anything about it. If you learn to live as cheaply as Chinese workers, the U.S. bosses say—and we are glad to work with President Trump to achieve that—then we might consider locating more manufacturing here in our beloved country. But the profits for our shareholders—and ourselves—must come first. No matter how much the AFL-CIO deplores it, is it any wonder that so many white workers voted for Trump?
It is interesting to compare Navarro’s “Death by China” with the 1943 movie “Our Enemy the Japanese.” Both movies show a resemblance to another movie of the era, “The Eternal Jew,” another World War II propaganda movie brought to you by the German Ministry of Propaganda and Enlightenment, headed by one Dr Joseph Goebbels, one of Hitler’s strongest supporters.
While “Death by China” blames virtually all the problems faced by the American people on a demonic China, “Our Enemy the Japanese” paints a “totalitarian” though economically powerful Japan as representing the negation of everything that democratic America stands for. The “Eternal Jew” paints the demonic Jews as the enemy of what every decent hardworking creative Aryan German holds dear. According to Nazi propaganda, “the Jews” controlled both the “capitalist plutocracies” of the United States and Britain and the “Bolshevik” Soviet Union. The Jews were the real enemy the German people were told that Germany was fighting to free the world from.
All three movies are classic examples of imperialist propaganda that seek to misdirect the natural hatred of wage workers and other working people from the rich of their own nation to some demonic nation or entity. The demonic entity is China in the case of Navarro, Japan in the World War II-era U.S.—and an easier target than Germany because it wasn’t “white”—and “the Jews” in the case of Nazi Germany.
Trump, China and Russia
In contrast to Trump and Navarro, the organs of the Democratic-Republican Party of Order have gone on a huge anti-Russian campaign combined with the increasing personal demonization of Russia’s President Putin. While Russia’s current leaders don’t even pretend to be Communists, and haven’t for a quarter of a century, China is still ruled by the Communist Party of China. The Communist Party of China was once a section of the Communist International—dissolved in 1943—though unlike most of the Communist Parties that were not only in theory but in practice built and based on the class of wage workers, the Communist Party of China from 1927 on was built and based on the Chinese peasantry, which constituted the overwhelming majority of the Chinese people.
The ruling Communist Party of China still proclaims to this day its ultimate aim is to build a communist society in China, if only in a distant future. But the party explains that to do this, China must go through a “preliminary stage of socialism,” called “socialism with Chinese characteristics,” because of the very low level of China’s productive forces at the time of the revolution.
This “preliminary stage” includes private ownership of large-scale industry, and state enterprises with private shareholders that maximize profit. With their private shareholders and profit-maximizing principles, these entities resemble U.S. public corporations more than they resemble the state enterprises of the Soviet Union. Banking and other financial institutions are also operated on a profit-making basis. The Chinese Communist Party itself describes the current Chinese economy as a market economy and not a planned economy like was the case with the Soviet economy.
Emerging in no small measure from the ranks of the victorious revolutionary peasantry that the Chinese Communist Party was built on in its revolutionary days, China now has a very wealthy capitalist class topped by billionaires. However, land outside of urban real estate remains state owned.
The Chinese system of combining Communist Party rule with a capitalist economy has real advantages for Trump’s propagandists like Navarro. China can be pictured as ruthlessly capitalistic and “communist” at the same time. Beginning long before Trump entered the White House, if the U.S. media wanted to encourage a feeling of hostility towards China, they reminded their readers that “the Communists” rule China, or referred to China as “communist China.” But when the media wanted to encourage a friendly feeling towards China, the fact that China is still ruled by a self-described Communist Party was “forgotten.”
Why then do the United States under Obama—and other Party of Order Democrats and Republicans—seem to prefer “Communist China” to “non-Communist” Russia? Thomas Wright, in an article originally published in Foreign Affairs and republished by the Brookings Institution, explains: “The mystery is why Trump is so keen to work with Russia. The United States has little economic interest in the Russian economy. Trade and investment are minuscule compared with China. And Russia has very little that the United States wants.” Exactly.
Under Gorbachev, who presided over the overthrow the Soviet Communist Party and Boris Yeltsin, the first capitalist president of Russia, the industrial economy developed under Soviet rule was largely destroyed. Today, capitalist Russia is largely a supplier of agricultural, energy and mineral raw materials rather than a major industrial player on the world market. From Trump’s point of view, Russia’s raw materials-oriented economy complements more than competes with the U.S. industrial economy. (5)
Capitalist Russia’s industrial weakness doesn’t mean that Russia is a military pushover as its limited but effective military intervention—largely confined to air power—against U.S.-supported Syrian rebels as well as ISIS fighters who the U.S. is also attacking show. (6) Russia still has a nuclear stockpile and intercontinental missiles to deliver them that were developed under Soviet power.
Since czarist times, Russia has been a land power, and the history of both the Korean and Vietnam wars has shown that the U.S., though militarily powerful on the seas and in the air, is much less impressive on large continental land masses. The U.S. did fairly well when it invaded Europe in 1944-1945 only because the Soviet Union was doing most of the fighting and Hitler’s bestial regime had turned almost all the non-German nations of Europe against Germany. As a result, the U.S. was considered a liberator by the peoples of Western Europe.
Even if Russia were stripped of its nuclear weapons as a result of some nuclear disarmament deal, its vast continental size would make it virtually impossible for the U.S. or any other invading power to fully occupy it, as Napoleon and Hitler found out the hard way. From the viewpoint of President Trump, since Russia is only a secondary industrial power it is not really dangerous unless the U.S. stumbles into a full-scale war against it.
During the campaign debates, Trump despite his lack of governmental experience appeared the reasonable statesman in regard to Russia, while Hillary Clinton appeared to be itching for a limited air-naval war with Russia in the Syrian-Crimean region. This is the same region where the Crimean War of 1853-1856 between czarist Russia on one side and Britain and France on the other was fought. A second “Crimean War” that Hillary Clinton seemed to be itching for could easily have gotten out of hand. This was one of the factors that cost Clinton the election, allowing Trump to run as “the peace candidate.”
The real danger from the viewpoint of the Trump team is not Russia but rather China, which has now surpassed in absolute terms the U.S. as the country with the highest level of industrial production in the world. However, when China’s much larger population of over a billion people is taken into account, in per-capita terms China is still very much a developing country, but not yet a rich developed country. But, the Trumpists ask, with the industrial districts of the U.S. already reduced to the “rust belt,” which they blame on “unfair” Chinese competition, what would happen if China were over the coming decades to reach or even approach the level of U.S. industrial production on a per-capita basis? Would U.S. capitalism even survive? This, the Trumpists answer, cannot be allowed to happen.
Obama and the Party of Order of mainstream Democrats and Republicans actually share the view that China and not Russia is the U.S.’s most dangerous foreign enemy—their most dangerous enemy is the U.S. working class. But unlike Trump, the Party of Order Democrats and Republicans believe that the rising economic and financial power of China makes it dangerous to bait China in the way that they bait Russia. The Transpacific Partnership (TPP)—backed by both the Democratic and Republicans wings of the Party of Order—was designed to further slow China’s development without provoking China “too much.”
For some time now, the U.S. business press has written hopeful articles about how China is shifting to a “service-oriented,” consumer-driven economy based on the home market. The idea is that the further growth of the share that Chinese industry has of the total world market—of which the internal U.S. market is the most important part—has already gone much too far and must be gradually reversed. From now on, China must be content with a smaller share of the world market. But the Party of Order believes this should be done gradually without turning the entire global economic and political order upside down.
The idea behind the TPP, which did not include China, was to encourage the movement of industry to countries that have far less potential to challenge U.S. military and the political power than China. China has huge potential military, political and financial power. Today, however, an only partially industrialized China is primarily a land power, not a naval or air power, and maintains a purely defensive posture.
Through the TPP, Obama and the Democrats and Republicans of the Party of Order were saying to the corporations that in the future they should try to find alternatives to China when making industrial investments or loans to industrial capitalists abroad. Instead, they should try to invest in the region covered by the TPP, which unlike China is—with the exception of Vietnam—under the U.S. military’s thumb.
A key part of Obama’s anti-China policy was the military pivot to China. Under Obama—not Trump—it was announced that the U.S. intended to concentrate 60 percent of its vast military power in the Pacific. One of the reasons Obama did this was to force China to spend more of the huge amounts of surplus value produced by Chinese workers on the military as opposed to transforming it into still more productive capital and thus further slow China’s economic growth.
What do U.S. capitalists want from China?
What the United States—or rather the United States capitalists—want most of all from China is the lion’s share of the surplus value produced by the Chinese working class. Russian workers produce very little surplus value compared to what the U.S. capitalists are appropriating from Chinese workers in the form of profit, interest and dividends. No matter how much capitalists speak about “love of country” as the highest virtue, the capitalists themselves—whether they are American, German, Japanese, Russian or Chinese—put profit first, last and everything in between.
The problem from the viewpoint of the U.S. capitalist class and its political representatives—the Party of Order of both Democrats and Republicans and the Trump gang—is that the U.S. capitalists in squeezing huge amounts of surplus value out of the Chinese have been forced to develop China’s productive forces at the same time. The Trumpists fear that some time in the future, when the U.S. world empire like all empires that preceded it has crumbled, the U.S. capitalists will have to be content with a far smaller share of the global surplus value produced. Among the consequences when this comes to pass will be that U.S. capitalists will have much less surplus value to maintain—actually bribe—a relatively large but already shrinking middle class, which includes the “aristocracy of labor” inside the U.S. Therefore, Trump and his gang believe, the U.S. shouldn’t let itself be distracted by an avoidable war—or even war of words—with Russia. Trump believes that it is not Russia but China that must be confronted and must be confronted now.
How U.S. imperialism exploits China
Today, U.S. capitalists and capitalists of the satellite imperialist countries, which together constitute the core of the U.S. world empire, are exploiting the Chinese people far more intensely than they exploited “old” China before 1949. The difference, however, is that thanks to “pro-development” policies pursued by the Chinese government they have been forced to develop China’s productive forces as a byproduct. These productive forces are the potential instruments of liberation from the severe exploitation China’s current leaders feel they have to put up with for now.
From Trump’s and also from Obama-Clinton’s viewpoints, this is where the danger lies. The U.S. method of exploiting other countries increasingly involves the U.S. and other capitalists exploiting the workers of the developing countries indirectly with native industrial capitalists as intermediaries. Under this arrangement, local industrial capitalists are forced to share an increasing quantity of the surplus value they directly wring out of their workers with the capitalists located in the imperialist countries, because this is the only way they can get access to the home markets of the imperialist countries. The capitalists of the developing countries, including China, must penetrate the home markets of the imperialist countries if they are to survive. Let’s look at some of the methods the capitalists of the imperialist powers use to exploit China and other developing nations engaged in capitalist production.
A traditional method through which imperialism exploits oppressed nations involves interest paid on loans made to those countries—to the government, industrial and commercial capitalists, and consumers. This is perhaps the oldest method used by the imperialist countries of Europe and the U.S. to exploit the peoples of what is now called the “Global South.”
Another method is through the ownership of plants in these countries by U.S. capitalists—or the capitalists of satellite imperialist countries—who then hire workers to directly produce surplus value for them. Traditionally, this has involved the extraction of raw materials—for example, Standard Oil (now called ExxonMobil) for oil and the United Fruit Company (now called Chiquita Brands) for agricultural commodities in tropical Latin America.
These are the traditional methods employed by imperialism of extracting surplus value from the colonies and semi-colonies. And with the appointment of the head of ExxonMobil as U.S. secretary of state by Trump, these traditional forms of exploitation are anything but things of the past. Indeed, under Trump, we are likely to see this kind of exploitation increase.
This type of direct imperialist investment involves the production of raw materials or agricultural consumer commodities—like bananas, sugar or coffee. It did not and does not involve the creation of industries in the colonial or semi-colonial countries that could compete directly with the industries located in the imperialist countries. You can’t grow tropical commodities like bananas or coffee on a commercial basis in the U.S. Oil deposits and other raw materials—and money material like the gold from South Africa’s now largely depleted gold mines—are not necessarily located in the imperialist countries.
But the continued growth of monopoly capitalism over the last 50 years means that imperialism can no longer confine itself to exploiting the workers of the Global South in the traditional way. New methods have been developed to exploit the masses of working people, not least the industrial working classes, of the exploited countries. Many of these new methods involve “intellectual property.”
Intellectual property refers to a variety of methods by capitalists, often non-industrial capitalists, to appropriate the surplus value produced by workers who are directly exploited by industrial capitalists. Among these are patents and brand names. Patents and brand names are not new, but they are playing a greatly expanded role in today’s imperialism. Another new form of exploitation involves the private ownership of computer programs.
When you buy a product, whether in the traditional brick-and-mortar store or these days increasingly on-line, you have no idea where the industrial capitalist who produced it is located. Indeed, different parts of the product are likely produced in different countries and indeed different continents. For example, the central processing units in an iPhone are likely produced in high-tech “fabs” located in South Korea, Taiwan or even the United States. But the final assembly of the product—which is looked down on by economists because it is “labor intensive”—is carried out in China.
If you have mastered Marxist economic theory, you know that it is exactly in the “lowly,” labor-intensive part of the production of a commodity—and not the high value added part—that the bulk of the value, and above all the surplus value, is produced.
When you buy a smartphone—unless you have unusual technical knowledge and maybe not even then—you have no way of knowing anything about the quality of the phone. Will all its functionality—or at least the functionality you plan to use—really work as promised? And if it does work, how long will it work? Will it still be usable in two or even four years or will it fail within a few months?
If you buy a product from Apple Corporation, for example, an iPhone, you know it will be “pricey” relative to your budget—unless you happen to be quite wealthy—as well as to its price of production. But it will have a relatively high quality. The Apple Corporation, in order to maintain its market share while selling its “iThings” at prices that are generally in excess of the prices of production, must maintain quality for the commodities it sells.
Apple’s bosses know that if they don’t maintain a certain quality of the products they sell under the iThing brand name, at some point they will either lose market share or be forced to sell their products at the price of production or even below the price of production. Their super-profits would vanish.
Apple, therefore, makes sure that the industrial capitalists that actually produce iPhones maintain this high quality. If they allow the quality of the product to slip—which they are constantly tempted to do in order to squeeze out a few extra pennies of profit per phone—the “value” of the “iPhone” and “iThing” brand name, in general, will slip as well.
Successful brand names often outlive the industrial capitalists they were once associated with. For example, most U.S. car brand names like Chevy, Oldsmobile, Buick, and so on once represented actual industrial capitalists, whose capital was later merged into “The Big Three.” Indeed, brand names are bought and sold among their capitalist owners as though they were actual commodities.
Establishing a new brand name, whether in smartphones, soups, cereals or sodas—Coca Cola, for example—can take many years. It requires not only a certain period of time but extensive and expensive advertising campaigns. But once a brand name is developed, it is very valuable for its capitalist owners. For example, a consumer might be quite willing to shell out $600 for an iPhone 8.
The same consumer would balk at paying anything approaching that for “Mr Li’s smartphone.” This is because they will have no idea what they would be “getting”—in use value and quality terms—from a smartphone produced by Mr Li. Therefore, Mr Li as an industrial capitalist whose factory assembles smartphones in order to penetrate the U.S. market might agree to sell his phones through the Apple Corporation. The Apple Corporation then presents to Mr Li a “blueprint” of an iPhone 8 and sells him the parts at monopoly prices that Apple has purchased on the world market. Once the phones are assembled in Mr Li’s factory, Apple inspects them and certifies that they are up to Apple’s quality standards. The phones assembled in Mr. Li’s factory are now officially Apple iPhone 8’s. Naturally, Apple doesn’t do this for free but demands in return a considerable portion Mr Li’s profits. (8)
Perhaps, however, Mr Li being an enterprising fellow cheats. He produces a smartphone that is identical to the iPhone 8 but instead of calling it Mr Li’s smartphone, he calls it an iPhone 8 without Apple’s approval. This way he gets to keep the portion of the surplus value that he would otherwise have to hand over to Apple. This practice is called “product counterfeiting.”
However, the Chinese government is a member of the World Trade Organization, whose rules strictly prohibit “product counterfeiting.” If the Chinese government gets wind of Mr Li’s “counterfeiting” of Apple iPhones, it will send a squad of cops to pay a visit to Mr Li and close down his operation. If the Chinese government were to turn a “blind eye”—and the U.S. media is always complaining that the Chinese government is doing just that—China’s leaders know that the U.S. government will complain to the WTO—World Trade Organization—about China “counterfeiting.” If China were to tolerate widespread “product counterfeiting” by its industrial capitalists, China would lose its access to not only the giant U.S. market but also markets throughout the world controlled by the U.S. world empire.
Since well-established brand names enable their owners to make an extra profit, they are in effect a title to a definite amount of surplus value. Brand names are therefore a form of fictitious capital. Just like government bonds and land—the classic forms of fictitious capital discussed by Marx in Volume III of “Capital”—brand names can circulate in the market as though they were commodities.
Scientists, inventors and engineers, as workers of the “brain,” expend their labor power to develop new and cheaper ways of producing existing commodities with an existing quality, or to develop a new type of commodity or an improved commodity. In the terminology of the business world, this is called R&D—research and development. However, to “compensate” themselves for the expense of developing these new products and productive techniques, the industrial capitalists will go to their government and take out a patent. A patent is a legal document that gives its owner a state-enforced monopoly for a given number of years. Other competing capitalists are then not allowed to produce the commodities or use the productive techniques during the lifetime of the patent, or else they have to pay a “royalty” to the owner of the patent.
The industrial capitalist who owns the patent can sell the commodity at a higher price—above the price of production the commodity will sell at (assuming average market conditions) once the patent has expired. Like brand names, patents entitle their owners to a fraction of the total surplus value and can circulate as though they are commodities. Patents—the work product of lawyers—are therefore also a form of fictitious capital. There are companies that do nothing but buy and hold patents. To sum up, patents are state-granted monopolies that are privately owned and can circulate.
Sometimes companies even buy up patents in order to prevent the production of a given commodity. Lenin gives an example of this in his book “Imperialism,” so patents are hardly new. Indeed, when developing industrial capitalism in the late 18th and 19th centuries, the U.S. was notorious for its refusal to respect British patents. However, today any government that allows its industrial capitalists to ignore patents will be accused of violating the rules of the WTO and will lose access to the markets of the U.S. world empire. Fortunately, for the United States, there was no WTO in the 18th and 19th centuries to hinder U.S. industrial progress.
Perhaps the most criminal type of patents are those granted by the U.S. government to pharmaceutical companies. As a result of these patents, life-saving drugs are sold at many times their price of production. Companies largely located outside the U.S.—many based in India—often sell drugs known as generics because they are not encumbered by patents and can, therefore, be sold at a fraction of the price of patented drugs.
Recently, the U.S. Senate voted down a bill that would have allowed the import of generic drugs from Canada. The vote was not along Democratic versus Republican or liberal versus conservative lines. Republican Senator Ted Cruz from Texas, considered to be on the extreme right wing of the Republican Party, voted to allow such imports. But Senator Corey Booker, Democrat of New Jersey being groomed as “the new Obama”—Booker is the former African-American mayor of Newark, New Jersey—voted against, much to the outrage of U.S. progressives. The system of drug patents leads to countless preventable deaths every year.
Because of the lack of universal health care as a basic human right in the U.S., unique among the imperialist countries, the U.S. people themselves are special victims of the criminal system of drug patents. Drug patents also represent a particularly shameful method by which “big pharma,” located in the U.S. or satellite imperialist countries, exploits people of oppressed countries while causing many preventable deaths in the process.
Private ownership of computer programs, software copyrights, and software patents
Originally, copyrights were legal documents that established conditions that granted the owner of a literary or artistic work a monopoly on publication. Copyrights are still used for this purposes. For example, I cannot take a novel by Steven King or John Grisham (7), make some improvements of my own, and sell the work without the approval of King or Grisham, which they would be very unlikely to grant. If I were to attempt to do this without their permission, I would be forcibly prevented by agents of the state.
But what about lists of instructions to computers—called software—that plays an ever-increasing role in our modern computerized society. Computer programmers type in a program in a “high level” computer language. Special computer programs called compilers or interpreters are used to translate the instructions into the 1’s and 0’s that the computer “understands.” Decades ago in the early days of computers, the question came up whether these lists of instructions were akin to the creation of literary work, or were they more like mathematical algorithms that even the U.S. government recognizes cannot be copyrighted.
Anybody who knows even a little about computer programming and mathematics knows that computer programs are indeed mathematical algorithms written by programmers in a “computer language.” Unfortunately, the U.S. capitalist courts, ignoring the actual nature of computer programs, claimed they were subject to copyright. Today, when you buy a copy of Windows 10, for example, you are not actually buying a copy of Windows like most people think. Instead, you are buying a software license—the work product of lawyers, not programmers—that enables you to install it on a certain number of computers.
Naturally, you have to pay Microsoft for the privilege of using the Windows operating system, which is the private property of the Microsoft Corporation. If you do want to become a part owner of Windows, the place to go is to your stockbroker, not the computer store. And if you want to become an owner of a considerable portion of the Windows operating system, you better have a lot of money. Otherwise, forget it.
Since the great bulk of software programs are owned by capitalists of the imperialist world—Microsoft and the Apple Corporation are the most well-known examples—the imperialist countries have used the selling of software licenses to appropriate surplus value produced by workers in the Global South.
This practice greatly limits the ability of poor countries to make full use of computer technology and in the long run denies them the knowledge of how computer programs actually work. This is the consequence of treating human knowledge as a commodity. In addition to software copyrights, there are software patents. Not all imperialist governments recognize the validity of software patents, but the U.S. government insists on recognizing their validity. (See here for an explanation of why software patents are an obstacle to software development.)
While a software copyright enables the owner of the program to set the conditions under which you make use of it, a software patent prevents you from writing a new program using your own algorithm that performs the same function as the patented software. Since software patents are disproportionately concentrated in the hands of the imperialist countries, they are yet another tool the capitalists of the imperialist countries use to exploit countries of the Global South.
Why do China and other newly industrializing countries put up with this?
Why do the government China and other developing countries put up with these arrangements? Is it because China’s leaders are sellouts? Not at all. Since its beginning in the 16th century, when in Marx’s words capital came into the world “dripping with blood and filth from every pore,” no country with the exception of the USSR and its closest allies—which did not include the People’s Republic of China after 1959—has been able to industrialize without major importations of foreign capital.
This is the reason why in the late 18th century the U.S. statesman Alexander Hamilton wanted to maintain good relations with capital-rich Britain, while Thomas Jefferson, who did not desire an industrial U.S., wanted to instead ally with capital-poor France. The importation of foreign capital involves two elements. One involves the importation of foreign science and technology—a process called “technology transfer.” The other involves the importation of foreign capital, which is absolutely essential for the development of the home market. Though interconnected in practice, these are two quite different things, which should not be confused.
The big exception: industrialization of the USSR
Even the USSR depended on the importation of foreign technology, especially during the early five-year plans. This was especially true during the first five-year plan in 1928-1932, which largely coincided with the super-crisis in the capitalist world. As the Great Depression settled over the capitalist world, the USSR imported both machinery and skilled labor power from the Depression-bound capitalist-imperialist nations—not least the U.S. The USSR invited many engineers and skilled workers who faced mass unemployment to work for a number of years in the USSR. And the USSR was eager to purchase large amounts of machinery in no small measure to obtain the science and technological knowledge necessary to carry out 20th-century industrial production.
During the super-crisis, industrial capitalists—if not always their governments—much appreciated the orders from the USSR. In those days, there weren’t many orders coming from their fellow capitalists. This was true even though the machines once purchased by the USSR were being used to build up a rival social system that carried out industrial production without capitalists. This is something that industrial capitalists and capitalists, in general, most certainly did not appreciate. (9)
What the USSR did not do in the 1930s was to import foreign capital. Instead, the USSR paid for the machines it imported in hard cash—dollars and gold mostly raised by selling grain and other primary commodities on the depressed world market. No import of capital was involved. Instead, the USSR simply exchanged value in the form of money—dollars or gold—and got value in the form of factories and machines, skilled labor power, as well as technology and scientific knowledge that the USSR used develop its industrial production and its own technology. The USSR was able to do this in the very teeth of the super crisis—the worst period of the Great Depression—because it had a planned economy that was not limited by the laws that govern and restrict a capitalist economy, though it did pay a steep price for this.
While the purchase by the Soviet Union of machines produced by industrial capitalists involved commodity exchange, the production and the distribution of products within the Soviet planned economy did not involve the exchange of commodities. Consequently, the Soviet Union did not have the problem of realizing the value of commodities within the planned economies.
Within the planned sector, the social nature of labor was not expressed indirectly through the realization of the value of commodities through exchange but rather was directly social. Instead of the problem of insufficient monetary demand for commodities that plagues every capitalist economy, the problem the Soviet economy faced was a tendency toward a “goods famine.” Behind the “goods famine” was the fact that Soviet industry was very far from being able to meet demand based not on the ability “to pay” as under capitalism but rather on the actual material needs and desires of the population.
China follows a different path
Though most people, whether they were supporters or enemies of the Chinese Revolution, expected that China would follow the path of the Soviet Union and industrialize itself on the basis of a planned economy (10), things have turned out otherwise. Instead, especially after the victory of Deng Xiaoping’s grouping within the Central Committee of the ruling Communist Party of China in 1978, two years after the death of Chairman Mao, China has industrialized through the massive import of foreign capital, the development of capitalist industry, and a massive expansion of exports. The economic laws governing China’s rapid industrialization since 1978 have been the laws that govern the development of capitalism examined in this blog and not the laws that governed Soviet industrialization. (11)
Foreign trade and the home market
Monthly Review writers critical of bourgeois “developmental economics” often criticize the governments of nations of the Global South—which include China—because these developing nations follow an export-dependent strategy. Why can’t China develop the home market instead, the Monthly Review writers ask. This raises an interesting question. How does the home market actually develop during a process of capitalist industrialization? The reason they can’t is that both the import of foreign capital and foreign trade play absolutely necessary roles in the process of capitalist industrialization.
Ultimately, the growth of the world market is governed by the production of money material. Capitalism requires, along with the accumulation of wealth in the form of the growth of the number of productive workers, machines, factories, farms, and mines, that a certain portion of wealth is accumulated in the form of gold bullion—money material. Gold, owing to its chemical properties, does not tarnish because it does not react chemically with other elements. On the scale of the lifetime of the capitalist system, gold bullion is immortal. Unlike other commodities, which are consumed as well as produced, gold bullion—as opposed to circulating gold coins, which do wear out in circulation—is accumulated without being consumed.
The quantity of money material—measured in terms of some unit of weight—therefore rises through the lifetime of the capitalist system. It is true that the development of clearing houses, especially through the banking system, beginning in London in 1775, allows payments to offset one another and therefore greatly reduced the quantity of money material needed to support a given level of economic activity. But once the banking system has reached a high degree of development, the further growth of the market depends on the physical increase of the quantity of gold bullion in the world.
Marx traced the birth of the world market to the gold and silver discoveries in the “New World.” This vastly increased the demand for commodities as the period called the Middle Ages by European historians gave way to the modern era. The modes of production handed down from the Middle Ages, such as handcraft, small-scale peasant agriculture, and guild production located in the towns, were no longer adequate to meet the increased demand for commodities. As a result, capitalist production employing wage labor—and for a while large-scale plantation agriculture employing the slave labor of kidnapped Africans—on an ever larger scale was needed to meet the growing demand for commodities.
The world market and the formation of the home market
The bourgeois nation-state develops on the basis of the world market. The bourgeois nation-state can be seen as an association of capitalists that employs the power of the state to capture as large a portion of the world market as possible at the expense of other nation-states. In the early days, these methods included measures to limit the ability to take gold and silver coins and later other forms of currency out of the country. Nowadays, such measures are called “capital controls.” Protective tariffs and other trade restrictions were employed by the state to ensure that local capitalists had a monopoly on the portion of the world market ruled over politically by “their” nation-state. The portion of the world market that is ruled by a specific nation-state is called “the home market.”
The home market is developed in no small measure by the capture of foreign markets. The mercantilist economists, who dominated economic thought in the early days of capitalism, emphasized the importance of a positive balance of trade and payments. In other words, the money brought into the country through positive balances of trade and payments was vital to expand the home market. On this point, the mercantilists were and are correct as against the economic liberal concept of “comparative advantage” that dominates today’s university economics. And since the state is an organization of violence—whose basic role is to support, by violence if necessary, the rule of the capitalist class over the working class—economic competition between states engaged in capitalist production tends to—and periodically does—lead to shooting wars.
In his “General Theory,” John Maynard Keynes who was a keen student of mercantilist thought—unlike most of today’s university-educated economists, who are taught only economic liberalism—realized that the mercantilists had a far more realistic view of foreign trade than the liberal economic theory of “comparative advantage.” Mercantilist thought expresses the necessarily antagonistic nature of international trade under the global capitalist system.
To the extent the home market of a given country grows through a positive balance of trade and payments, the implication is that the home markets of its competitors will shrink through the same process. Though this is not a “zero sum game” since the world market does grow over time—though at a slower rate than the ability of industrial capitalists to produce—the competition for markets, therefore, assumes the character of a life-and-death struggle that periodically leads to shooting wars.
However, Keynes put forward a fantasy of his own. He famously believed that the capitalist state could through a combination of fiscal and monetary policy manage demand in such a way that the full employment of workers and machines could be achieved within the borders of each nation-state. In this way, Ricardo’s old claim that the entire capital of a nation could always be profitability employed at home could be realized even if through non-Ricardian policies. In this way, Keynes relieved foreign trade of its antagonistic character.
Therefore, Keynes believed that correct fiscal and monetary policies could not only banish the problem of unemployed workers and machines but also prevent shooting wars among capitalist countries. As we have seen throughout this blog, and has been shown empirically by almost a century of “stabilization policies” inspired by Keynes’s work, this is not and cannot be the case. The conclusion is that as long capitalism and the nation-state survives, foreign trade cannot be stripped of its antagonistic character. President Donald J. Trump did not drop from the sky.
A monetary cake made of three layers
Before 1914, the major capitalist powers maintained their own gold hoards under their physical control. The current international monetary system, in contrast, resembles a three-layer cake. The bottom layer consists of gold bars that are physically under the control of the government of the United States, now headed by President Trump. This bottom layer consists of two sub-parts. One part is the gold actually owned by the U.S. Treasury. The other part is the gold owned by other governments or central banks but held physically, guarded and controlled by the U.S. government in the vault of the Federal Reserve Bank of New York in lower Manhattan, and perhaps at other “secret” locations as well.
The currencies of other countries—and the Eurozone—are not directly “backed” by gold they physically control but by U.S. dollars. The dollars are as a rule not held in the form of Federal Reserve Notes but rather short-term Treasury notes that yield their owners a low rate of interest and can be quickly converted into dollars if need be on the open market.
Suppose the local currency—for example, the Chinese yuan—were to face “a run,” which the yuan indeed is now threatened with. This would occur if the holders of yuan, fearing that the currency was about to be sharply devalued against the U.S. dollar, began to use yuan to buy dollars in order to protect the value of their money capital, which is measured in terms of U.S. dollars on the international market. Like all central banks, the Bank of China could always stop such a run if it were willing to reduce the quantity of yuan in circulation sufficiently within China. However, this would mean a sharp rise in interest rates, an acute shortage of ready cash, and a contraction of the Chinese home market—in other words, a violent recession. However, as long as the Chinese central bank maintains a significant dollar reserve, it can sell its Treasury notes for dollars and then use the dollars to buy back yuan—while creating additional yuan backed by its hoard of U.S. Treasury notes. In this way, it can stave off a major contraction of the home market as long as it does not run out of its dollar reserves.
Because of the rapid growth of Chinese exports in the years preceding the Great Recession of 2007-2009, China built up a huge hoard of dollar-denominated U.S. Treasury notes. As the hoard of dollars grew, the Bank of China was able to issue increasing quantities of yuan, which fueled the growth of the Chinese home market. Even Chinese businesses that were not directly involved in foreign trade benefited from the growth of the home market that China’s trade and balance of payments surpluses made possible. Then when the crisis of 2007-2009 hit the world market, China was able to launch a massive “Keynesian” program of public works that greatly mitigated the effects of the global recession within China.
But as China’s ability to continue to increase its exports has run into increasing resistance caused by the increasingly limited size of the world market relative to the ability of Chinese industry to produce, China is finding that its hoard of U.S. Treasury bills is beginning to melt away as the Bank of China is forced to sell off some of its hoard of U.S. Treasury bills to prevent a massive devaluation of the
yuan. This means that when the next inevitable global recession hits, China will have a greatly reduced ability to mitigate the effects of the recession on its home market through “Keynesian” measures. And things would be far worse for China if President Trump actually carries out his threat to impose a 45 percent tariff on Chinese commodities.
It can be considered a law of foreign trade that the smaller a country’s economy is relative to the world market the faster its exports can grow and therefore its home market can grow. As long as the country’s economy is small enough, the increased percentage of the world market that it must command if it is to continue to develop can be made up by the overall growth of the world market. But as the rapid growth continues, “the law of exponential functions” kicks in and the growth can only be maintained at the expense of other countries. Not only does its growth slow down, but even the ability to maintain a reduced rate begins to shrink, involving it in ever greater antagonisms with its trading partners. The trade relationship between China and the U.S. has now reached this point.
How the dollar system enables the U.S. to maintain its internal market
The U.S. is able to run trade deficits year after year without a collapse of its home market because of its unique ability to borrow made possible by the dollar system. When the central banks of other countries buy dollars, they do not build up a pile of green paper dollars in their vaults. If they did, the U.S. home market would rapidly shrink in the face of continuing U.S. trade and payments deficits. Instead, they loan the money back by purchasing short-term Treasury bills. In this way, money—and monetarily effective demand—that flows out of the U.S. as the U.S. purchases foreign-produced commodities flows right back into the U.S. as the central banks purchase U.S. Treasury bills.
As a result, effective monetary demand is maintained within the U.S. market despite the huge U.S. trade deficits. This maintains a living standard for much of the U.S. middle class that is increasingly out of proportion to what the U.S. is actually producing—though since the Great Recession to a lesser extent than before. The U.S. is able to do this because international commodity prices are quoted in U.S. dollars and international debts are denominated in U.S. dollars, which in turn forces both countries and large corporations to maintain huge reserves of liquidity denominated in dollars.
If this mechanism did not exist—for example, if commodity prices and debts were denominated directly in gold or some other currency other than U.S. dollars—the U.S. trade deficit would rapidly drain monetarily effective demand right out of the U.S. “Consumers” in the U.S. would no longer have the ability to purchase so many foreign-produced commodities. Most of those Chinese-produced commodities would be collecting dust on Walmart shelves.
U.S.-based industrial capitalists would also face a massive contraction of demand on the U.S. home market. They would be forced to find markets abroad or go bankrupt. The U.S. trade deficit would then vanish. But with the U.S. importing a lot less and selling a lot more of internal production abroad, the standard of living of the already shrinking U.S. middle class would plunge.
We got a foretaste of this during the 2007-2009 crisis. One of the greatest fears about President Trump by the leaders of the Democratic-Republican Party of Order is that Trump’s policies will lead to the downfall of the dollar system as countries react to Trump’s economic nationalism with their own nationalist policies.
Trump and the threat of a new era of wars among the trading nations
Since 1945, a new contradiction unknown in earlier periods in history has developed. With the development of the productive forces comes a parallel development of the forces of destruction. It has been obvious for half a century that a general “nuclear exchange” between the leading nuclear powers would destroy human civilization. Other weapons such as biological weapons might destroy human civilization as well. Even a so-called “cyber war” in our increasingly computerized world could lead to death tolls that could well exceed those of World War I and World War II.
A possible civilization-ending world war among the leading trading nations has been avoided up to now in large part because the U.S. world empire has managed to check through interventions real or threatened the division of the world market into antagonistic nation-states without abolishing it. However, like all such half-way solutions in history, this solution is inherently unstable and increasingly ineffective as U.S. economic and military power wanes.
In addition, the “solution” the Cubans call “the Empire” and its defenders call the “world liberal order” is profoundly unjust. As the late leader of the Cuban Revolution Fidel Castro emphasized for decades, the current “order” is unsustainable. It will shatter sooner or later. Will the Trump administration be the instrument that accomplishes this?
The Brexit vote in Britain and the rise to power of Donald Trump in the U.S. signals a resurgence of economic nationalism among the imperialist countries themselves that has been suppressed for 70 years by the U.S. world empire. Indeed, since the Great Recession world trade has been growing more slowly than overall economic growth. This reverses the trend of world trade growing faster than economic growth that had prevailed since 1945. The slowdown in world trade relative to economic growth is behind the current toxic wave of nationalism, and its inevitable companion racism, that is sweeping the imperialist countries. It indicates that the “liberal order” was beginning to unravel even before the Brexit vote and then the election of Donald Trump.
The price the U.S. had to pay for its world empire
In order to make the empire last for even 70 years—a very short period historically—the U.S. had to give up much of its domestic industrial production. This has been no great sacrifice for the U.S. capitalists because in exchange they have vastly increased their ability to exploit the industry and workers of other nations, as we have seen. Herein lies the answer to the riddle of why the U.S. stock market has been able to perform so much better after the “Great Recession” than was possible after the Great Depression, despite the vastly stronger recovery of U.S. industrial production during and after the Great Depression compared to the feeble recovery of U.S. industrial production since the Great Recession.
All this would be fine—from the point of view of the U.S. ruling class, that is—if the U.S. world empire ruled the world politically as thoroughly as the U.S. dollar dominates the international monetary system. The problem is this is not the case. The U.S. is having tremendous problems ruling Libya and Iraq, nations of only a few million people, after it destroyed their governments by the application of overwhelming military force. There seems to be no way that the U.S. could ever establish its colonial rule over China despite the huge dependence on the Chinese workers by the U.S. ruling class for the production of surplus value that capital needs to survive as capital. Something will have to give.
Imperialist economic nationalism, enemy of the workers
Economic nationalism, when it involves the imperialist countries, inevitably leads to national hatred and to racism, at best, and at worst leads to fascism. Peter Navarro’s anti-China movie is a textbook example. However, as is the case with the national question in general, it is important to distinguish between nation-states that are trying to shake off centuries of imperialist oppression, on one hand, and the imperialist nations, on the other. The U.S. under both Obama—and now more radically under Trump—is attempting to limit and even roll back China’s attempt to reach a level of industrialization that when taking into account relative populations would merely put it on a par with the U.S. and the nations of Western Europe. This type of nationalism is entirely reactionary.
On the other hand, China’s own industrialization made possible by the results of its great revolution, even though carried out on a capitalist basis, is historically progressive. Industrialization is forging the weapons for the Chinese nation to liberate itself from the exploitation of the U.S., but it is forging the weapons for the Chinese workers to free themselves from exploitation from “their own” native capitalists as well. Therefore, when oppressed nations follow nationalist policies aimed at their industrialization such has protective tariffs, measures restricting the removal of currency from the nation, and so on, the results are progressive.
However, when imperialist countries who already command vast parts of the world market—both their home market and the foreign markets they command through exports—use similar policies against the oppressed nations—or against each other—the results are reactionary. Compare, for example, the tremendous progress the People’s Republic of China has made since 1949, which is a real contribution to humankind as a whole, and the “achievements” of the Hitler regime during the brief 12 years of its existence. At the end of only 12 years of intensely nationalist policies, economic and otherwise, Germany had not only managed to kill untold tens of millions of people but itself was reduced to smoldering ruins both physically and morally.
Progressivism and economic nationalism
A great weakness of the Bernie Sanders campaign and the progressive movement that he represents is its failure to take on economic nationalism. Indeed, it is worse than that. Unwilling to challenge the private ownership of the means of production like the Second Intentional did in its better days and the Third Communist International did in its time, today’s progressives represented by Sanders support economic nationalism. They agree with President Trump and Peter Navarro that it is “bad trade agreements”—and not capitalist private ownership—that are the cause of the lack of decent jobs and all the problems that flow from it that confront U.S. workers and people in general.
Indeed, Peter Navarro himself found his natural “home” in the “progressive” Democratic Party before he teamed up with the racist Trump. The workers in the U.S. rust belt need jobs. There is no doubt about that. But don’t Chinese and Mexican workers need jobs just as much? They do! A policy aimed at protecting “American jobs” at the expense of Mexican jobs or Chinese jobs leads inevitably to war. With the victory of Trump, the ghost of the ruined Berlin of 1945 is casting its dark shadow over the world. This and the images of Nazi death camps is where imperialist economic nationalism inevitably leads.
Why did Sanders lose the Democratic nomination?
Why did Bernie Sanders lose the Democratic nomination to the unpopular Hillary Clinton? There are many reasons, of course. The “big money” was against him—though it was also against Trump. And Sanders faced the problems of overcoming the system of unelected “super-delegates,” a problem that Trump avoided by running in the Republican Party. But there was another weakness that haunted the Sanders campaign. That was Sanders’ persistent weakness among nonwhite voters. Despite some impressive early victories against the Clinton machine, Sanders performed poorly in the southern primaries where the Democratic electorate was overwhelmingly African American.
Clinton with her racist “super-predator” remarks, and her husband’s sponsorship of the “Anti-Terrorist and Effective Death Plenty Act,” which led to the imprisonment of so many African Americans, along with her opposition to single-payer health insurance, made her beatable among the southern African American electorate. Clinton found out on the morning of November 9 that she and her husband were not as popular among African Americans as the media claimed they were. Today, Hillary Clinton and not Donald Trump would be sitting in the White House if she had been as popular among the African American people as she no doubt imagined she was.
If Sanders had been able to galvanize the African-American vote during the southern primaries, his momentum would have been unstoppable. Later, Sanders had difficulties with the Latinx vote in the West, including even in strongly anti-Trump—and majority non-white—California. All too many of Sanders’ rallies seemed to be as “white” as Trump’s.
This is not to say that Sanders used racism as Trump did. That would be pure slander. And Sanders did win increasing numbers of young people of color as the campaign advanced, but not on the decisive scale that he needed to actually defeat Clinton and bar the road to the White House for Trump. But perhaps this is hard to do when you run on a platform that blames the curse of unemployment and de-industrialization on “bad trade deals.” That and his “kinder and gentler” economic nationalism rather than focus on the real culprit, the capitalist system, which not only pits worker against worker but nation against nation.
Germany, Trump’s enemy number two
After China, the country that is perhaps most unhappy with the rise of Trump is Germany. Indeed, Trump probably sees Germany as the most dangerous enemy of the U.S. after China. Days before he assumed the presidency, Trump told the European press that he expects other countries—besides Britain—to leave the European Union. Ironically, Berlin and Beijing are emerging as the last champions of the expiring “liberal economic order.” They are hoping against hope that the Trump election is some kind of nightmare that will be gone when they wake up in the morning. But the Trump election is not a nightmare, it is reality.
Russia and Germany
If you are a Russian diplomat, these are exciting days. For example, if you are assigned to Mexico, you might explore the great opportunities for renewing the great historic friendship between Mexico and Russia. And if you are posted to the Islamic world that Trump has gone out of his way to insult, you would explain about the great opportunities from better relations between Moscow and the countries of Islam. But Moscow’s greatest interest lies in Germany.
Since 1945, Russia and the Soviet Union before it has been trying to win Germany away from its alliance with the U.S. Early in the post-World War II period, the Soviet Union tried to prevent the division of Germany. Moscow hoped that a united neutral Germany under the leadership of the German Social Democratic Party (11) would act as a buffer between the Soviet Union and the emerging U.S. empire.
In 1952, just before the death of Stalin, the Soviet government once again raised the possibility of a united neutral Germany. The West German government—which was completely under the control of the U.S. government at the time—turned down the offer. Later, in the mid-1960s, West German Social Democratic Chancellor Willy Brandt, who represented just the kind of left-wing government Moscow wanted to see in the Western countries, attempted to improve relations with Moscow independent of the U.S. There were hints that under Leonid Brezhnev Stalin’s old offer of German reunification on condition of Germany neutrality—no NATO membership—was back on the table.
But then an East German spy was conveniently discovered within the West German government and Chancellor Brandt was forced to resign. All possibility of German reunification—under capitalist rule—disappeared until the rise of Mikhail Gorbachev. Unlike Stalin or Brezhnev, Gorbachev was willing to accept a unified capitalist Germany while it remained in NATO. Gorbachev did receive some verbal assurances from President George H.W. Bush that NATO would not expand eastward—which of course proved to be worthless.
If Germany is forced by the wave of imperialist economic and political nationalism sweeping the United States, Britain, and other imperialist nations to return to a nationalist policy of its own, putting Germany first, it may well come to an agreement with Russia. Russia has many of the raw materials that German industry needs. Russia could sell Germany foodstuffs, oil and gas, and industrial raw materials. In exchange, Germany could sell Russia high-quality consumer goods and, to the extent that Russian industry revives, industrial machinery. If Germany faces the loss of markets in the U.S. and western and southern Europe, it could partially make up for it by finding new markets in Russia. Could Vladimir Putin succeed where his far more powerful Soviet predecessors failed?
The ‘spirit of ’17,’ the answer to imperialist economic, political and racist nationalism
Trump’s inauguration, which occurred just as I am finishing up this post, has been accompanied by an unprecedented wave of protests, while the size of crowds gathered in support of Trump’s administration was unusually small. The counter-inaugural held on January 20 was attended by tens of thousands of protesters, and leaders of the arts and culture that traditionally perform for the new president boycotted the event en masse.
But the women’s march held on January 21 was the real shocker. The size exceeded all expectations. While such a huge demonstration, which included many men as well as women, was of necessity politically varied, the overall theme was rejection of everything that Trump, Steve Bannon, Peter Navarro and their ilk represent. If the women’s marches held in other U.S. cities are taken into account, it seems that one out of every 100 U.S. citizens took part. Trump, Bannon, Navarro and Company are now on notice that the world is not going to be dragged back to the racist, patriarchal, homophobic, fascist-ridden, economic nationalist world of the 1930s without a fight.
But the most impressive development was that the women’s marches were international, occurring throughout western and eastern Europe, Latin America, Palestine and beyond. And here lies the real solution to imperialist economic nationalism, whether in the racist form pushed by Trump, Bannon and Navarro or the gentler and kinder version pushed by the Gomperite leadership of the AFL-CIO and much of the “progressive movement” that blames the problems of the rust belt not on capitalism but “bad trade deals.”
This is the “spirit of ’17,” of 2017 but also of 1917 before the Great Russian Revolution began its fatal descent owing to the lag into its own form of economic and political nationalism due to the failure of the workers of the West to defeat their own economic nationalisms. This time, the spirit of ’17 is at war with the spirit of August ’14 and January ’33, when the forces of imperialist economic nationalism were victorious. The results of the titanic battle now unfolding will determine the future of the human race.
Long live the spirit of ’17!
Late last year, I had intended to write a series of reviews of important economic works that appeared in 2016, including Anwar Shaikh’s obscurely written but crucial book “Capitalism” and John Smith’s “Imperialism.” I was already sick of the U.S. election campaign and was eager to return to the “high ground” of political economy. I intended to devote one month—December—to the results of the election and return to the main thread, so to speak.
However, Trump’s unexpected victory indicated that the U.S. world empire was disintegrating at a faster rate than was apparent through most of last year—though Brexit had already sounded a warning of what was to come in November. So I have been forced to dedicate the months of December and January to Trump’s victory.
The main conclusion is that the forces of economic nationalism represented by Trump are doing battle with the Democratic and Republican Party of Order entrenched in the media and the CIA that is doing its best to salvage what is left of its wretched “liberal international order.” But the millions that have come out on the street worldwide indicate that there is another player—revived internationalism that I have dubbed the “spirit of ’17.” This post is far too long, but if I had broken it up, it would have meant devoting another month or maybe two, if not more, to Trump’s victory.
Is my earlier plan still valid in the light of Trump’s unexpected victory? I believe that it is actually more valid than it would have been if Hillary Clinton had been elected. Much of the current commentary on Trump’s victory is superficial. This blog is designed to go beneath the surface to penetrate to the very roots of “economic creation,” to quote Rosa Luxemburg. What will be different, however, is that I now plan to give more attention to the role of the nation-state and foreign trade than I would have if Clinton had been elected. I am declaring war—in the theoretical sense—against imperialist economic nationalism and the whole view that the problems faced by workers in the imperialist countries—and ultimately in all countries—are the result merely of “bad trade agreements.” and the laws of the capitalist mode of production.
1 If Trump were to be impeached and removed by the Senate—or be forced to resign like Nixon was in August 1974—Vice President Mike Pence would become president. Though on the extreme right of the Republican Party, unlike Trump Pence is considered a conventional “Christian conservative” Republican. In other words, Pence is a Party of Order man. For example, during his vice presidential debate against Hillary Clinton’s vice presidential running mate Tim Kaine, Pence agreed with Clinton and Kaine on implementing a “no-fly” zone in Syria.
Trump then announced that he was against a Libyan-style no-fly zone, much to the outrage of the Democratic and Republican leaderships alike. The truth is that the leaderships of the Democratic and Republican parties would far prefer Pence to be president than Donald Trump. (back)
2 Is there a contradiction between the hints of anti-Semitism—not on the scale of the open and undisguised Islamophobia pushed by Trump but present nonetheless—especially on the alt-right wing of Trump, which shades off into the neo-Nazi fringe. The answer is no.
In fact, European anti-Semitism has always supported Zionism, because both movements shared the same aim, the removal of the Jews from Europe. During the 1930s, the second most anti-Semitic European government—that of Poland—strongly supported Zionism as a way to get rid of its then large Jewish population. And the Nazis themselves encouraged the Zionist movement in Germany in the 1930s in order to get rid of German Jews.
Last year, Israeli Prime Minister Netanyahu created a scandal when he claimed that Hitler had only wanted to remove the Jews from Europe—an aim shared of course by the Zionist movement—until the Grand Mufti of Jerusalem convinced him to kill the European Jews instead.
According to the ultra-right-wing racist prime minister of Israel, it was not Hitler or the Nazis that were responsible for the Holocaust but the Palestinian people and their leader the Grand Mufti. While the Grand Mufti did view Hitler as an ally, no serious historian thinks he had any serious influence on Hitler’s policies toward the European Jews. In reality, the Nazis ended their support of Zionism only when it became clear that Palestine would remain under British control during World War II. The capture of Palestine simply did not fit into Germany’s military plans, which were oriented towards a war against the Soviet Union instead.
Second, it was in Germany’s interest to pose as a friend of the Arabs and the Muslim peoples because, with the exception of Italy’s colony of Libya, the vast majority of Arab and Muslim peoples were oppressed by the “allied” powers, mostly Britain. Germany, therefore, gained some cheap propaganda advantages by championing the Palestinian cause against the Zionists during World War II.
The U.S. itself was at the same time championing the cause of the Chinese and the Vietnamese—against Japan! In reality, Germany gave virtually no military support to Muslims or Arabs in general against British imperialism or the Palestinians in particular in their struggle against the Zionist colonists. Germany’s propaganda support of the Arab Muslim and Palestinian cause proved less than worthless after World War II because it helped mislead public opinion in Europe, including in the Soviet Union, into supporting the Zionists in their struggle against the “reactionary pro-Nazi Palestinians.”
It took decades of Zionist-Israeli crimes against the Palestinian people and the rise of a new generation before this confusion began to be overcome. Only then did the European and U.S. left return to their historic anti-Zionist positions.
Today, many European and some U.S. fascists admire apartheid Israel as the only openly racist—or as they put it “racial”—state left in the world since the end of South African apartheid. If under Trump there is a significant growth of anti-Semitism in the U.S., it won’t—at least at first—take the form of driving U.S. Jews into some 21st-century version of death camps. In today’s world, the extermination of Muslims—being openly called for by some Trump supporters—is a far more imminent danger.
Instead, rising anti-Semitism will at first take the form of increased pressure for U.S. Jews to move to Israel to fill up the new settlements now being established by Israel’s far-right Zionist government. Isn’t the anti-Semites’ Israel and not the U.S. the Jews’ real homeland? This is exactly how anti-Semitism developed in Europe in the decades that preceded the holocaust. (back)
3 In 1936, the Third International was still organized not as a federation of world Communist Parties but as a single worldwide centralized Communist Party whose national sections were subordinated to a single international leadership. After Lenin suffered a severe stroke that ended his political life in the spring of 1923, a struggle broke out for the leadership of the Soviet Communist Party and government, but given its highly centralized nature it became a struggle for the leadership of the entire Communist International.
By 1936, the supporters of J.V. Stalin, called “Stalinists” by their enemies, were in command of the Soviet Communist Party, the Soviet government, and the national sections of the Communist International, including the CPUSA. In 1936, the CPUSA headed by Earl Browder (1891-1973), then a strong Stalin supporter, was growing rapidly. According to Browder’s memoirs, the famous Bulgarian Communist Georgi Dimitrov, the formal head of the Communist International—though Stalin was the unofficial political leader—told Browder that the International believed the CPUSA had to support Roosevelt in the coming U.S. presidential election as part of the Comintern’s popular-front policy against fascism.
Browder, who knew U.S. political reality better than Dimitrov, thought it would be unwise to do this openly because it would enable the Republicans to claim that Roosevelt was the “Communist” or “Moscow’s” candidate. In the strongly anti-Communist political atmosphere that prevailed in the U.S. even during the 1930s, the Communist Party’s open endorsement of Roosevelt would have been a political liability for the U.S. presidential candidate rather than an asset.
Instead, Browder suggested to Dimitrov that the CPUSA should run himself as the Communist candidate for president. During the campaign, however, Browder would direct all his fire against the Republicans and their presidential candidate, Alf Landon. The CPUSA slogan proposed by Browder was “Defeat Landon at all costs.” The CPUSA used its then considerable influence in the CIO unions, the African-American and Jewish communities, and among many artists and intellectuals to encourage people to vote for Roosevelt. But if Communist Party members were asked point blank if they supported Roosevelt, they would deny it and explain they supported Browder for president. By doing this, they were, as it is said nowadays, preserving plausible deniability.
In reality, Stalin’s ability to influence the U.S. election of 1936 far exceeded Putin’s ability to influence the 2016 presidential election. Putin is a Russian nationalist who doesn’t have a political party of his own, even in Russia let alone internationally. There is no party of “Putinites” in the U.S. nor can there be. In addition, the Soviet Union was pioneering the five-year plans carried out under Stalin’s leadership that had amazed the world by their ability to achieve unprecedented rates of industrial growth while vast numbers of new jobs in industry and elsewhere were being created in the very teeth of the Great Depression.
And since the October Revolution the Soviet state and its international ruling party—the Communist International—had championed the rights of oppressed nationalities throughout the world, including the rights of African Americans.
In contrast, in 2016 Russia under Putin is struggling to get out of its latest recession caused by falling oil prices and U.S. sanctions. While Russia’s support of besieged Syria under Putin has gained Russia respect, this doesn’t come anywhere close to the prestige that the Soviet Union and the Communist International enjoyed among oppressed nations and nationalities in 1936. And in complete contrast to the situation that prevailed in 1936, Putin’s government has no support in the U.S. trade union or African-American movement, or any other sector of U.S. society. (back)
4 Under the National Labor Relations Board system established by the New Deal, if a group of workers in an enterprise want a union, they are supposed to hold a government-supervised election to establish whether the majority of the workers wish to be represented by a specific union. The New Deal introduced this measure in order to get workers off the picket line and into a voting booth. The NLRB gives the bosses the opportunity drag things out into what becomes a prolonged judicial procedure.
For example, the boss will fire the workers who are leading the unionization effort. This policy is indeed illegal under the NLRB. The NLRB will then find the boss in violation of law though the boss faces no serious penalties. By then all too often the momentum will likely be lost, the pro-union workers have gotten jobs elsewhere, and the union is ultimately defeated. This is how most organization drives carried out by AFL-CIO unions end these days.
In order to prevent this, the “card check” is a proposal that if a majority of the workers check a card that indicates that they wish to be represented by a union, that’s it and the union is recognized then and there. This reform would no doubt make it far easier to organize unions under the NLRB system. Obama and the Democrats promised in 2008 that they would introduce legislation to establish card check but failed to keep their promise. (back)
5 We shouldn’t forget, however, that the U.S. is, like Russia, also a considerable producer of energy, agricultural and mineral raw materials, as well as money material (gold). But, insomuch as Trump foresees an industrial future for the U.S., its economy would tend to complement rather than compete with Russia’s raw material-oriented economy. The opposite would be the case with industrial China. (back)
6 Under Obama, the U.S. bombed ISIS in Syria without the support of the Syrian government of President Assad and on one occasion “accidentally” bombed Syrian government forces. Russia, in contrast, has bombed ISIS forces with President Assad’s agreement and played an important role in the recent defeat of pro-imperialist rebels that had for several years occupied part of the Syrian city of Aleppo. Trump, before he became president, indicated that he would be more willing to work with Russia to defeat ISIS as opposed to trying to overthrow the Syrian government. What Trump’s actual policy will be now that he is president will soon be apparent. (back)
7 The fact that you cannot do this has actually greatly limited the development of literature during the capitalist epoch. In past epochs, great literature was often developed by many authors who improved an existing work rather than start from scratch. One famous example is the Homeric poems, which were created not by a single poet called “Homer,” who may never have existed, but by generations of poets who sang the poems making slight changes that over time accumulated. The results were those awesome works that were finally written down in the classical epoch and then handed down to our modern world.
Another example is the literature of the Bible. The Bible stories, poems and psalms have many authors. This is also true of Shakespeare’s plays. William Shakespeare, who lived and wrote at the beginning of the capitalist era, did not write his plays from scratch. Instead, he took pre-existing works and greatly improved them. Today, this would be considered plagiarism. In the future, when capitalist relations are fully left behind, the method of improving existing works of literature rather than starting everything from scratch will in all probability undergo a major revival. (back)
8 I am using Mr Li as the name of a generic Chinese industrial capitalist. Most Apple products are assembled by the huge industrial Foxconn corporation, which is headquartered in Taiwan but owns gigantic factories in mainland China. However, many manufactured commodities that are sold in the U.S. are assembled by relatively small Chinese industrial capitalists. Chinese industrial capitalism is more vibrant than its aged U.S. counterpart, since in China capitalism is still emerging from the peasant economy and remains in its competitive phase. (back)
9 The founders of the Soviet state had not foreseen anything like this. Originally, they had assumed that Soviet Russia would receive extensive aid from a socialist Germany and other Western European socialist states—a socialist equivalent of the massive import of capital—or they would be quickly overthrown by the counterrevolution. When it became clear that a socialist revolution would not occur immediately in Germany or any other European nation, Lenin raised the perspective of “state capitalism” as a road to economic development for a Soviet state that would exist for some time in a capitalist world.
Under Lenin’s proposed program, the Soviet economy would be largely capitalist and the capitalist enterprises would be largely owned by foreign capitalists but controlled by the workers’ state—hence the name “state capitalist.” The problem was that few foreign capitalists were prepared to invest capital in the Soviet Union when they had many alternatives, though there were a few foreign concessions.
It was only during the first five-year plan that the Soviet Union under the leadership of J.V. Stalin embarked on a program of industrialization that, though it depended on foreign technology transfer, carried out industrialization without the import of foreign capital. This was—and still is—without precedent in the modern world.
The results were astonishingly successful, but the price was heavy. This “process of primitive socialist accumulation,” unforeseen by Marx or Lenin, induced massive conflicts between the working class and large sections of the peasantry that resisted the draconian grain collections and collectivization measures that were necessary to finance industrialization. Stalin’s policy was to meet this resistance wherever it occurred with a massive application of force.
During this period, Stalin fully lived up to his party name—which in Russian means “man of steel.” These policies and the massive resistance they provoked led to many splits within the ruling CPSU, including among those who had supported Stalin against both Trotsky and Bukharin. The internal party conflicts, both open and concealed, led to the widespread terrorist purges and eventually the massive executions of many CPSU leaders and rank-and-file members between 1936 and 1939. Among the victims were not only former supporters of Trotsky and Bukharin—including Bukharin himself—and Trotsky, who was assassinated by a man working for the Soviet intelligence service in 1940—but many Stalin supporters as well.
The wounds created by the terror never healed. The extreme terror and repression necessary to maintain industrialization without any import of foreign capital—or the socialist equivalent of the import of foreign capital—progressively consumed the revolutionary spirit of the Soviet people and demoralized the Soviet working class. The subsequent reaction to the terror that burst out into the open almost immediately after Stalin’s death (in somewhat dubious circumstances) deepened over time and developed into a full-scale political and social counterrevolution under Gorbachev and Yeltsin that destroyed the achievements of the Soviet industrialization that had been won at such a cost. (back)
10 If the Soviet Union and China had remained allies, China could have with Soviet help carried out a socialist industrialization where Soviet aid would have been the socialist equivalent of importing foreign capital. In this way, China would have avoided the heavy costs that the Soviet Union incurred during its industrialization. Before the fall of the Soviet Union, both the Democratic People’s Republic of Korea and Cuba benefited from such a relationship. However, the decision of the Chinese Communist Party, led by Chairman Mao, to move away from the Soviet Union starting in 1959 precluded this possibility. (back)
11 In the days when the CPSU—which was part of the international workers’ movement—ran Russia, which was actually only a part of the multinational Soviet Union, the Kremlin always preferred to see “left-of-center” governments in the West, though it was willing to work with right-wing governments when necessary. However, Putin, who like Trump is something of a Bonapartist figure within Russian domestic politics, is just as willing to support—though his influence is quite limited—right-wing as well as left-wing parties when he sees this is in Russia’s national interest. Putin, therefore, plays no favorites between right and left.
Many progressives are angry by what they see as Putin’s support of Trump. Isn’t Russia supposed to support progressives and not reactionaries like Trump? This was indeed true in the days when “Russia” was ruled by the working class through the CPSU.
In those days, many of these “progressives”—at least the older ones who were alive when the Soviet Union still existed—supported all kinds of bourgeois opponents of the CPSU in the name of supporting “democracy” against the CPSU one-party dictatorial rule. Now that these bourgeois forces are victorious and rule Russia, the Russian government no longer cares whether “progressives” or racist reactionaries like Trump rule the Western countries. The lesson here is you should aways be careful what you wish for since you may just get it. (back)