Here We Are
Random thoughts on day one of America’s war on the world. This is my way of summarizing, it is not definitive by any means! I wrote in haste.
Here’s a quote to get us started:
“What made fascism attractive in Europe and elsewhere was its combination of national autarkic aims, militarism, statism, and a glorification of technology, which suited the inclinations and interests of military rules and modernizing autocrats.” [Osterhammel and Peterson; “Globalization, A Short History”; p101]
Only a few minor changes and that describes America pretty well. Perhaps not all-out fascist. Certainly increasingly autarkic — in thought if not action. Obviously militaristic. Not statist so much as nationalistic. And a world leader in the glorification of technology — Musk and his gang currently rampaging through American government files. Unchecked. Insecure.
Autarkic? Mercantalist? Words we never thought we would never toss around with respect to America. Then came Trump.
As America declares war on its friends and allies I find myself deep into a project thrust upon me by a friend who had read a book review in the New York Times back in early December. The book in question was by Wolfgang Streeck: “Taking Back Control? States and State Systems after Globalism”. It is typical Streeck and centers on the immense tension between the tendency of capitalism to spread globally in search of extra profit, and national government whose responsibilities bias it inward to protect the interests of its citizenry. It is the age-old conflict between capital and democracy writ large.
So how apt is it that I am steeped in globalism right at the moment that America is trying to undo it?
What to say?
1 — America is in retreat. We cannot avoid this. The world system America is now attempting to undo is one that it built. All the institutions that America is now leaving, defunding, and otherwise denigrating were put in place with American backing and leadership. The great era of American international leadership is over. A void is appearing. In such moments the risk of conflict, misunderstanding, and general mayhem rises.
2 — Why is America in retreat? Because its domestic policies fell out of synch with its foreign policies. It encouraged globalism, but did not protect its citizens from the depredations thereof. When America’s businesses sent capital around the world to eke out extra profit it withdrew simultaneously from the domestic economy. The consequence was localized havoc. There was no compensating effort to soften the blow. An anti-globalist sentiment began to flourish.
3 — Why did American capital quit America? Because capital is always unbounded by national considerations. It has no allegiance other than to profit. The mantra that “capital must be free” is as old as capitalism itself. It is not a modern invention. There have been moments of constraint — capital flows have been limited many times — and each such moment has been met with vociferous chatter amongst capitalists of “liberty” and related topics. The freedom of movement of people and labor seems never to have attracted the same level of energy. Odd that.
4 — Yes, but, why did American capital really quit America? The neoliberal takeover of America and the West changed the postwar rules. Deliberately so. The postwar consensus was more a balance between capital and democracy. In Europe it produced social democracy. In America it produced a watered down version that was based upon the New Deal. There was a class compromise. The turmoil of the first half of the twentieth century had upended the control by capitalists and the wealthy elite. Workers wanted a greater share. And everyone was terrified of the example set by the Soviet Union. So peace was bought by sharing the goodies produced by postwar economic growth. It was the heyday of the middle class. Much to the chagrin of both Marxists, who saw it as a sell out; and of capitalists, who saw it as a burden and diminution of profit. Something had to give.
5 — And gave it did. The neoliberal movement funded by wealthy capitalists and centered in American universities like Chicago [where the economics department was purchased and repurposed], spread a reactionary ideology that was based on nineteenth century liberalism. It emphasized individual rather than class freedom; it reduced business to an essence of shareholder primacy; it was critical of all government involvement in economic matters; and, crucially, it was global. “Capital must be free” was its central point. The freedom of capital to shed the burden of impositions such as the New Deal and the tax burden it implied, became the rallying cry. That the Cold War gave the entire enterprise a nationalistic impulse too was an added bonus.
6 — All this came to a head in the 1970s. A history we do not need to reprise. It opened the door for an actor to assume the stage in the White House. It opened the door to a fully fledged assault on democracy. And that steady assault has now reached fever pitch.
7 — Yes, but how does this all fit together? The neoliberal project to diminish national control over economic matters in order to set capital free to roam was an attack on democracy. After all, national governments in a democratic system have their citizens first and foremost in their policy setting mindset. Occasionally that implies that a national government might do something damaging to the globalization of capital. It might upset the currency valuation apple cart. It might tighten restrictions on capital flows. And so on. All in the name of avoiding unemployment or protecting wage growth. And so on. This won’t do! It simply won’t do! “Capital must be free”. So national governments need to have their hands tied.
8 — And tied they were. By a set of global institutions created by America. The postwar consensus — the so-called Bretton Woods system — was relatively flexible. National governments were tied to the gold standard, which was the ultimate weapon of capital, but they had sufficient wiggle room to soften the blows of globalization. Even that proved too much for capitalists. The blockage to profit represented by the needs and whims of the middle class — itself a creation of the New Deal — had to go. Gently, of course, and of its own accord. The middle class had to be induced to kill itself. Which it did once it forgot that democracy is, at its core, a class war and not a set of values that can be interpreted widely and loosely. Once lulled into the complacent coma of a belief in “individuality” the middle class stopped acting solidly in protection of its interests. Capital won.
9 — And capital won big. Wealth and income inequality surged. Profits boomed. Wages flatlined for a while. The standard of living slowly came under threat from rising costs in the production of services such as health care and education. Productivity gains were not shared and accrued mainly to capital. And national governments stood aside to let it happen. Worse: they abetted it by enacting series of pro-capital legislation, like free trade agreements. Governments stopped governing on behalf of the people and started governing on behalf of something they called “free markets”.
10 — This surrender to capital is best illustrated by Margaret Thatcher’s infamous comments about “society”. Anything “social” is anathema to capital — it suggest class struggle. So the word society has to be expunged. Voters had to be lured into the world of capital. To do this society was eliminated as a legitimate object of policy, which henceforth was re-oriented towards the “individual” as if all individuals have equal power and status. Which, of course, they don’t. Which is the point. Capital, after all, must be free. Even if it has to trample on “individuals” occasionally. With society cast aside, so too is citizenry. With citizenry cast aside so too is the entitlement that comes from being a citizen of somewhere. And with that “somewhere” cast side only the global playground is left. Which was the point all along.
11 — And the rest, as they say, is history. Grim history. With capital running amok and national class solidarity expunged from public discourse, the political balance of power shifted dramatically in favor of global players. So much so that even the creator and protector of the global system began to rot within. Eventually the loss of democracy that began in the 1980s accumulated in effect until unrest with globalization unleashed a countervailing populism around the western world.
12 — Why? Because those who industrialize first tend to de-industrialize first. Capital moves to areas where the first flushes of industrialization are driving fastest growth and are based upon lower local costs. Profit is all that matters. Squeezing continuous growth in older economies becomes increasingly difficult — the accumulated capital invested there is expensive to replace or update, whereas fresh investment in newly growing places is easier to justify and is more profitable. Diminishing returns reduces the rate of innovation. Populations age and need expensive social services. Capital wants to avoid that trap. So it migrates. Stock markets flourish because profits are global not national. Finance surges as it moves paperwork around the globe. Industry stagnates and goes into decline. We have seen all this. And at each step national governments have turned a blind eye to it in favor of protecting capital. But voters notice. Even in atrophied democracies.
13 — And so we have populist revolt. And so we have America leading the undoing of its own world order. We have Trump undoing Reagan. Capital over-reached, but has the advantage of power and status. So it can attach itself to populism and turn it into authoritarian plutocracy. The oligarchs think they can survive. They own the place. For now.
14 — All of which is precisely what Streeck is saying in his book — in a much more rigorous and erudite fashion. The full-on fight between global capital and local democracy is underway. It was bound to be thus once national governments lost their way and gave their support to the neoliberal vision of global capital and once they undid the concept of citizenry. In the name of a false image of “liberty” we lost the precarious balance won only after a sharp class conflict that most of us now prefer to ignore or forget. After all class conflict sounds so dated in our modern world. Yet without it it democracy cannot exist. Anywhere.
And so, here we are.
Nest step: Project 2029? Let’s start something.
