Trump, Brexit, Nationalism and ‘Neoliberalism’

In the wake of Brexit, European political developments and Trump now being POTUS #45, surely it is time for the left that goes on about ‘neoliberalism’ to wake up instead to the emerging nationalist economic policies in the rich imperialist countries. Unwelcome as it may be, these policies are backed by the mass of the people in such countries, not simply by a small bunch of reactionaries. Furthermore, the nationalism of one imperialist power is, as one would expect, opposed by another, so it is also a time for the left to consider whether it will play a part in siding with one of these or rejecting all of them. That often turns out to be difficult. As with some parts of the left-wing vote for Brexit in the UK, there is often an attempt to adapt to reactionary nationalism by claiming that it represents an opposition to the established political order that can be turned to radical ends. (Which, however, is not to say that voting for EU membership was a progressive option – so I abstained)

The term ‘neoliberalism’ describes the changes in economic policy after the 1970s. I do not use it for several reasons. Firstly, there was not much of a change and what change did occur did not start from the Thatcher and Reagan governments after 1979-81. Secondly, the most important reason for the new stance in capitalist economic policy was derived from the new imperatives of the global capitalist economy, riven by crises from the late 1960s, not from a policy ‘coup’ by arch conservatives or due to the domination of government economic policy making by reactionaries. Thirdly, the perspective of people arguing for the notion of ‘neoliberalism’ is to argue for alternative and more progressive policies, but under a capitalist government and/or in a capitalist economy. Nostalgia for an illusory past – a more caring capitalism – was their common trait, and they also ignored how pressures from the global economy on policymakers led to the ‘neoliberal’ policies.

A number of articles on this blog have covered the question of the ‘China price’ and the benefits that inhabitants in the rich powers have gained from the import of cheap goods produced by super-exploited labour elsewhere. Although it is an uncomfortable fact for radicals in rich countries, this has also underpinned the complaint by workers that their jobs and living standards are being undermined by low-cost imports. In a related fashion, a more strident complaint from these workers is that the problem is migrants who will work for less than them. I would be generous here and describe these complaints as economic nationalist, and not necessarily racist, although sometimes they are.

In recent years, the ruling elites in several rich countries have adapted to these popular complaints, even if they had previously been at the forefront of promoting free trade and global economic connections. In democracies, popular opinion ends up influencing the political stance of the government. This has been behind Trump’s support in the US, Brexit in the UK, Marine Le Pen in France, Geert Wilders in the Netherlands, etc. Much of the anti-Moslem sentiment in Europe and the US is also due to a resurgence of such economic nationalism. Not that Moslems can rationally be seen as an economic threat, but they provide a convenient focus when the issue is to ‘protect our way of life’ from foreign influences.

The real challenge to the left in many rich countries comes not from the ruling class, or its policies, but from their inability to take on reactionary popular sentiment in the mass of the population. Instead, mostly they focus on their own version of progressive policies that their national capitalist state should implement, whether taking over banks or diverting public spending to better causes. That is why most radical invective around these issues will use the more acceptable pejorative term ‘racist’, rather than the often more accurate term ‘nationalist’. With this approach, they will be wrong-footed by the new, more strident nationalist stance of Trump for the US and likely similar positions taken in other major powers.

Tony Norfield, 21 January 2017

Ukraine & the EU

Deputy Wendell, reviewing the crime scene: 'It's a mess, ain't it, Sheriff?'

Sheriff Ed Tom Bell: 'If it ain't, it'll do till the mess gets here.'

'No country for old men', Coen Brothers, 2007

(This is a guest article)

Ukraine, a country of 45m people, is not divided into a western ‘pro-European’ camp and an eastern ‘pro-Russian’ camp. Ukrainians are generally anti-Russian, but will be ‘pro-Russian’ when it suits their business interests. Some westerners are ‘pro-European’ as a form of optimism, but recognise their dependence on the industries of the east.

The eastern and southern part has an important heavy industry and manufacturing sector. It is barely competitive by international standards, but benefits from a relationship with the Russian economy. It needs cheap Russian energy sources to be viable. So this part of the economy tends to value its Russian connections, although that does not make it ‘pro-Russian’. The western half of Ukraine has no such facilities and so tends to be pro-European, but this is not a realistic economic interest. It is just a desperate hope.

Ukrainian agriculture is a potentially very rich resource. It can produce a wide range of products to rival EU agriculture. But this needs capital investment. The problem is that the land is in public ownership and has had little investment. Privatisation would require a small but painful revolution, which no one is willing to undertake.

Politics and the state

Russia today is virtually a dictatorship, although it is primarily oriented towards national defence and development rather than exploiting the masses. Russia's economy is based on:

- State control of the energy sector, which provides the funds to finance social provision and keep the oligarchs in check.

- A relationship with the oligarchs who cooperate with the state. The state cannot by itself ensure national economic development.

There is no real market economy, no bourgeois class and no real state authority in the sense of a capitalist constitutional authority.

Ukrainian politics is even worse since it does not even have an absolutist central authority! Politics is entirely dominated by the shifting interests of the oligarchs and business cliques, including the improbable heroine Yulia Tymoshenko. This means there are no real political parties, which is why the Kiev protests have been 'led' by disparate groups, including some militant 'nationalists' with no political programme, only reactionary prejudice.

There is no real state authority in Ukraine. Corruption has to be total since the only sensible policy is the pursuit of self-interest. That is why state control in the western areas (Kiev and Lviv) collapsed so quickly and even the police and army are looking for a way out.

Ukraine is broke

The top rate of tax is 19%, which means that the Ukraine is a state without the funds to be anything more than a caretaker covering only basic functions. It has no popular legitimacy, nor a base of popular support.

Another indication that things are not well is given by the data for the biggest foreign investor in the Ukraine. It is Cyprus … home to Russian and Ukrainian oligarchs, living in the sunny tax haven. They had $12.1bn invested in Ukraine at end-2011, compared to just $7.3bn for Germany, in second place, and $4.9bn for the Netherlands, in third. The western investments do not look sufficient to sway their governments' policies in favour of generosity towards Ukraine. The more recent 2013 Shell deal to invest in shale gas is in its early stages, so again it is not a vital interest.

EU membership?

There is no prospect of EU membership for Ukraine in the foreseeable future, nor probably in the more distant future. It is not only that the EU has no development funds available to help bring Ukraine up to the level necessary for EU membership. Perhaps more importantly, its membership would threaten to destroy the agricultural sector in France and several other EU countries!

The so-called EU trade agreement, which Yanukovych refused to sign in late 2013, had no real economic significance. It was just a political gesture. 

EU diplomacy

The EU will nevertheless need to keep the Ukraine from falling apart, even if this means negotiating with Russia. The disintegration of a large country on the EU's eastern border means that what looked like a cheap tactic for undermining Russian power could turn out to be very expensive indeed. Putin has now pulled the plug on $15bn for bailing out Ukraine, and will need persuading otherwise. The UK has cynically declared that the IMF is 'best placed to provide the financial support and technical advice to Ukraine' (ie not the UK directly) and EU policymakers will be cursing the costs of an ill thought out political strategy.

Pete Tchaikovsky

25 February 2014

Imperialism by Numbers - Amendment

This is an update to the chart on the ‘Index of Imperialism’ published on this blog six months ago, on 1 May. The change made here is that I use another set of data to account for the international banks in major countries; otherwise the five factors in the ‘Imperialism index’ remain the same. To recap, these were made up from: nominal GDP, military spending, the stock of foreign direct investment, the size of international banks based in a particular country and the global use of that country’s currency in international foreign exchange reserves.

As noted previously, any set of data has its limitations. However, the earlier data I used for banks were based on a country’s ownership of the top 50 international banks and this only covered 14 countries. The new numbers are based on BIS data for the relative size of international assets and liabilities of banks operating in particular countries. They are not limited by the number of banks and cover 19 of the 20 countries in the chart. The BIS also gives figures for bank assets and liabilities by the nationality of the bank. However, these data are for only nine countries, so I did not use them (in any case, they show a similarly ranked pattern to the bank-location data that is used here).

With these new data for international banking, the rank and index value of some countries changes significantly, but in a way that I think better reflects power relations in the world economy. The US is no longer top in all categories; it falls into second place as a centre for international banking, behind the UK . But this still leaves the US as top power, with the UK a distant second. Germany moves up to position 3, China jumps to position 4, now ahead of Japan, and France falls to position 6 from position 3 that it had before. Italy, Switzerland and Canada fall back in their ranking; Netherlands moves up to position 7.

(The chart has now been changed from when first published, with corrected ISO codes for Canada, CA, and Belgium, BE)

Chart: The Imperial Pecking Order

Notes: The height of each bar is given by the country’s total index value, which is then broken down into the respective components. Countries are identified by their two-letter ISO code. Take care, because CH is Switzerland, not China (which is CN), and SA is Saudi Arabia, not South Africa (not shown, as it was ranked number 26).

I would reiterate that the position of an individual country can only properly be understood by looking at its relationship to the imperialist system as a whole, not simply by examining whether its index value is higher or lower than another’s. It would be foolish to say that a particular index number means a country is imperialist, while one that is a certain amount smaller shows that it is not. The index components summarise only particular dimensions of the system. Different measures would produce different results, and any index measure would have a problem grasping the dynamics of the system. However, the chart I use clearly indicates that a very small number of countries are head and shoulders, and elbows too, ahead of all the others in the world. Most other measures of international power would show similar results.

Tony Norfield, 1 November 2012