Has US opted for a Mussolini populist?
Is Trump’s victory a harbinger of capitalism’s end-game?
The President Elect – What a pity!by Kumar David-November 12, 2016
Donald Trump has defied forecasters and stormed to victory. It is a repudiation of the Obama legacy, a rejection of the Washington establishment and a mandate for racial prejudice. It is also the beginning of a new period in US foreign policy if he keeps the threats he flung on the campaign trail. The white working and lower middle class vote was a wall Hilary Clinton could not scale. They were angry with Obama, with Washington and with non-whites. Add America’s conservative, reactionary, gun toting and male chauvinist population segments and you have Trump’s winning formula.
Colic in America will disturb the rest of the world as profoundly as did the decline and fall of Rome bring chaos to medieval Europe. A plunge in America will not usher in a Dark Age, a jihadist catastrophe or global financial chaos, but capitalism as a world system stands confounded. A political and economic mess in America will affect others. Inter-layering and spread of production, trade and political power across the world is more intense now than in Roman times hence the world today has resilience. Well, this is not quite true if you recall that the other great civilisations of the time, Imperial China and Gupta India, hardly noticed events in far way Rome and Constantinople; but that was a differently compartmentalised world. Global dependence is deeper today than millennia ago.
The insurmountable obstacle
The question is what will a Trump presidency look like given his idiosyncratic personality? This is the point of departure of this essay and my conclusions are negative. I wish it were otherwise; I am not a juvenile who delights in human wretchedness because it brings revolution closer. Capitalism when it goes will do so on its own, it does not need a push from me; in any case social revolution is not within the perspective of a short essay such as this.
Some things are so difficult to change that one could disagree with Napoleon that "the word impossible is found only in the dictionary of fools" – you can’t bring Queen Victoria back to life! Trumpism (the Trump phenomenon) is an outburst of anguish from a white working class which has lost or is losing its livelihood and is in distress. The underlying and impossible to reverse root cause is that US capitalism is no longer competitive, or to be more precise, US manufacturing and much of the US service sector is no longer competitive in world markets.
Let me invent a simplified explanation. Let’s use MO for value of manufacturing output and BP for the benefit package (wages, social security, welfare, medical benefits and so on). Now let me propose the symbol PP, with apologies to snooty economists, for what I will call productive power, where PP = (MO/BP). Simply put, if PP is high, a country produces lots of output (MO) for relatively small human resource costs (BP); if PP is low, output is not enough relative to wage and benefit costs. True the USA is a high tech country, so its MO per worker is high, but the point is that, relatively, its BP is even higher. To put it another way; American standards of living, life styles and quality of life are too expensive, relative to productivity. If PP(A) of country A is higher than PP(B) of country B, then A’s products are less costly and more competitive than the products of country B, keeping other factors constant.
It’s as simple as this though economists obscure simple things. My case is that the USA is an example of B and examples of A are China and Mexico. US manufacturing and much of the service sector are no longer competitive; the consequence is that both the general rate of profit on capital and the rate of new investments decline, jobs disappear and no amount of quantitative easing or near zero interest rates – no amount of pseudo-Keynesianism or desperate monetarism - will make a difference. Which capitalist is so stupid as to invest his money for the purpose of losing it! This is the sustained experience of the last eight years (2008 to 2016).
What will come of Trump’s threat to tear up trade pacts and put China and Mexico on ice as trading partners and bring manufacturing back to make America Great Again? Scaremongering that the world is ripping off the US, cheating in trade and stealing its jobs is false and plays to the delusion "nothing is wrong with us, we are victims of cheating by foreigners". The reality is that PP(USA) is markedly lower than PP(Mexico), PP(China) and others who are routing the US in trade. Technology can be enriched, but China, Taiwan and Korea are not technology laggards and 95% of global trade is not in aerospace or advanced products that need the highest tech. A trade war will impose costs on the American consumer; stores are packed with imported goods for the reason that they are cheap. Is Trump going to replace them with more costly US made goods?
The way to make America competitive is to make big cuts in BP – wages and welfare. How else will he balance the budget and pay for his hare-brained economic programmes? Austerity! But austerity is the opposite of what propelled him to power. It will provoke unrest. In a gun crazed society with 300 million guns for less than 200 million adults and with 300 (FBI estimate) gun toting restless "sporting" clubs and clans, there is reason for alarm. In the absence of a revolutionary overturn of the economic order, and if reaction to austerity is hostile, what are Trump’s options? Sans hope of competitive and profitable golden-age capitalism, there is little to do but resort to state power to curb dissension. The consequence of repression will be revolt, or more likely, snowballing conflict which will bleed the nation and dismayed capitalism which will trigger return of recession. So is Trump is the Cassandra who will usher in what billionaires have been desperate to avert?
Here is my conclusion. There is nothing Trump can do about a dilemma whose roots lie deep in the laws of the dynamics of capitalism. Social transformation is not on the agenda and biting austerity is not politically feasible since America is not psychologically ready to climb down from its addiction to unaffordable life styles. That means crisis! The tragedy is that though there is a large deprived class, ‘average’ America lives beyond its means at the cost of cheap global labour, and topmost America is obscenely rich. My instinct says Trump will turn his back on those forces that propelled him to power. Tax cuts and leaning on the rich will worsen the plight of those lower down.
A negative prognosis
Indisputably, a primary objective has to be to reach the alienated white working class. Though golden-age capitalism cannot be reincarnated there are things that can be done – America’s reserves are immense. Redistribution of lopsided wealth and income will go some way. There is no denying despondency in the American white working class but it would be burying one’s head in the sand to deny that the class is also racist. The working class cannot be written off but the task of salvaging it is doubly urgent; livelihood issues and combating racism.
This requires a programme of new industries (small high-tech steel mills are already opening up) and investment in the rust-belt states; the US needs an active interventionist state. Does this sound like the anathema of social-democracy rather than progressive market capitalism? Desperate times call for corresponding responses. If the Great Depression drove FDR to the New Deal, the low-key prolonged depression following the Great Recession of 2008-09 should drive a progressive capitalist government to shift into social-democratic gear. But is Trump the animal to do it?
Then there is the formidable task of healing racial dissent. The US is a plural society and a melting plot of emigrants, but here has always been a heavy current of racist and religious intolerance and Trump has exacerbated it with a cacophony of bigoted rhetoric. Subduing cultural hatred is a great deal more difficult than overcoming economic problems – we in Sri Lanka know all about that. It cannot be done by governments alone and cries for the intervention of civil society at large – media, academia, churches and voluntary organisations. Trump is psychologically unsuited to lead any of this. On this matter I would have had some confidence in Clintonesque liberalism. But working towards a "more perfect union", a priority task now when the whites are on the brink of ceasing to be an absolute majority, is now buried. This election buries the legacy of America’s first black president.
Another matter of priority is violence; drug related violence, the largest prison population in the world, ‘black lives don’t matter’ police gunfire and the insane Second Amendment. When bigotry is ingrained as with the US Constitution’s Second Amendment, which guarantees Tom Mix style cowboy rights, it is impossible to rescind. Trump beloved of the National Rifle Association is unlikely to do much to ameliorate gun violence and abuse of power by the police.
Finally foreign policy; objectively, Trump has no room for manoeuvre, but plenty of options for fouling up the international scene if he is allowed to. The USA is no longer the world’s unhindered super power and Trump will have his hands tied from day one. The imbroglio in the Middle East, dealing with China in the South China Sea and with Russian interests in Ukraine are matters about which he can blow hot but there will be chaos if he disengages from rationality. There is hardly any flexibility in Syria and Iraq, the relationship with China is important for keeping the lid on North Korea and Russia is needed for pressuring Iran. He will be forced to come in line with the Washington Establishment. If the way he behaved during the campaign is anything to go by, he is a loose cannon and heaven knows what’s in store if he is allowed to run feral free. But Washington won’t let him; otherwise the Chinese will be the big long-run winners on the international scene.
