SNNS 28

 

Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 15

If the value of gold itself had not fallen, as a result of new discoveries, an increase in its supply could, at most, only result in a temporary fall in its market price. That fall in its market price would reduce the profits of gold miners, or even result in losses. The least profitable would go out of business, gold production would fall, supply would contract, and its market price would rise.

What Hume saw was the effect not of a rise in the supply of gold and silver, but a fall in its value, as a result of the new discoveries. Hume writes,

“‘It is easy to trace the money in its progress through the whole commonwealth; where we shall find, that it must first quicken the diligence of every individual, before it increases the price of labour." (p 304)

Engels notes,

“In other words, Hume is here describing the effect of a revolution in the value of the precious metals, namely, a depreciation, or, which is the same thing, a revolution in the measure of value of the precious metals. He correctly ascertains that, in the gradual process of readjustment in the prices of commodities, this depreciation "increases the price of labour" — in ordinary language, wages—only in the last instance; that is to say, it increases the profit made by merchants and industrialists at the cost of the worker (which he, nevertheless, thinks is quite in order), and thus “quickens diligence”.” (p 305)

The same is true in modern economies, where central banks facilitate rising prices via increased liquidity, which ultimately, then, leads to workers demanding higher wages, which is, then, presented as the cause of the inflation. Similarly, protectionism, whether via import controls, or tariffs, results in higher domestic prices, but it is only after those prices have risen that workers are left having to respond to them in demands for higher wages.

“But he does not ask himself the real scientific question, namely, whether and in what way an increase in the supply of the precious metals, their value remaining the same, affects the prices of commodities; and he lumps together every “increase of the precious metals” with their depreciation. Hume therefore does precisely what Marx says he does (A Contribution to the Critique of Political Economy, p. 173).” (p 305)

In other words, this is Marx's criticism of The Quantity Theory of Money, as presented by Hume, and later adopted by Ricardo, Lord Overstone et al, and enshrined in the 1844 Bank Act. But, an examination of Marx's argument, here, shows precisely what is wrong with the attempt by some socialists, today, to have Marx apply this argument to the increased supply of money tokens/currency.

The whole point, here, is that Marx posits the question in terms of the value of money. If there is no change in the value of gold, there is no change in the value of money, where gold is the money commodity. An increased supply may, temporarily cause its market price to fall, just as the market prices of all commodities fluctuate as a result of short-term changes in demand and supply, but that is all. If the value of gold does not change, then, as Marx describes, in "A Contribution To The Critique Of Political Economy", the only other way a change in prices can occur is if the quantity of gold contained in the standard of prices, for example the Pound, is changed, or as described earlier, if 6d of silver is attempted to be passed off as a shilling.

But, it is precisely this latter which occurs where the currency is debased, depreciating in the case of a fiat currency, by printing it in excess. In that case, it is precisely this quantity of these money tokens thrown into circulation that causes their depreciation and leads to an inflation of prices.

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Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 14

“Herr Duhring can only repeat his predecessors errors concerning Hume’s actual theory of money according to which money is a mere token of value, and therefore, other things being equal, commodity prices rise in proportion to the increase in the volume of money in circulation, and fall in proportion to its decrease.” (p 304)

Today, many socialists have heard that Marx rejected this Quantity Theory of Money. Given the association of Monetarism, as propounded by the likes of Milton Friedman, with right-wing ideas and governments, and the opposition to the ideas of Monetarists by the Keynesians, who have a corresponding relationship to more social-democratic governments, it is not too surprising that many such socialists have conflated the two things. But, again, it reflects only a confusion in relation to money as against money tokens/currency, and one that was encouraged by a Stalinism that was itself collapsing into social-democracy, and adoption of Keynesian rather than Marxist economics.

“But after propounding the above theory, Hume himself raises the objection (as Montesquieu, starting from the same premises, had done previously) that

nevertheless “’it is certain” that since the discovery of the mines in America, “industry has increased in all the nations of Europe, except in the possessors of those mines”, and that this “may justly be ascribed, amongst other reasons, to the increase of gold and silver”.

His explanation of this phenomenon is that

“though the high price of commodities be a necessary consequence of the increase of gold and silver, yet it follows not immediately upon that increase; but some time is required before the money circulates through the whole state, and makes its effect be felt on all ranks of people”. In this interval it has a beneficial effect on industry and trade.” (p 304)

Marx describes this, also, in Capital II. What, in fact, was happening? It is not that an increase in the supply of gold and silver – money – of itself resulted in a rise in prices. Take money out of the equation and assume only an exchange of commodities. The basis of this exchange is an exchange of equal values, say 1 metre of cloth for 1 kilo of wine. If the supply of cloth and wine are in balance to meet the demand for each, a rise in the supply of one of them may result in a temporary fall in its rate of exchange. For example, if more cloth is supplied, either some of it is unsold, or 1 metre of cloth is exchanged for less than a litre of wine to clear the market. But, it does not change the value of cloth, and the result is that less cloth is, then, produced and brought to market.

The only way that this increase in supply of cloth can be sustained is if the value of cloth itself falls, i.e. if less labour is required for its production. If, then 2 metres of cloth has the same value as 1 litre of wine, the supply of cloth can be sustainably increased, and a new exchange rate of 2:1 is established. Price is only a specific form of exchange-value, the exchange value of commodities against money. So, if gold is the money commodity, it is not a question of more gold being supplied, but this increase in supply being a consequence of new gold discoveries which reduced the value of gold, i.e. less labour is required for its production.

This gold, whose value is lower, is supplied into European markets, as described above. At first, the lower value of this gold is not manifest in those exchanges. It exchanges at its old value, and so the gold miners are able to buy, say, British cotton cloth, and this demand for cloth stimulates textile production. But, over time, this influx of gold circulates within the British economy. The textile producers buy more cotton, more machines and so on, and pay for it with this gold. Their suppliers now buy more inputs with the gold paid to them. Eventually, this increased supply of gold has had an effect throughout the economy. The effect is two-fold; first it leads to an increased demand, and consequently an increase in production; secondly, it results in the new value of gold becoming manifest as an increase in prices. But, that is only so because the increased supply of gold was also an increased supply of gold at a lower value.

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Forward To Part 15

Like Trump, Blue Labour View Democracy As An Inconvenience - Part 2 of 2

We could point to the numerous examples of where Greens have also allied with Tories in local councils, or on their own, when in control, have acted as dutiful managers of the local capitalist state, and attacked workers interests, but a more stark example is of where the petty-bourgeois, ideology of Green politics leads, as seen in other countries. Those of us whose earliest political activity goes back to the days of May '68, remember the name of the leader of the French students - “Danny The Red”, aka Daniel Cohn-Bendit.

Despite the “red” label, and media popularisation of him, at the time, as a socialist revolutionary, Cohn-Bendit was not a “red”, but a petty-bourgeois anarchist. There were two main factors for the failure of 1968. One was the counter-revolutionary role of Stalinism, which was powerful in the workers movement, and acted to restrict the actions of workers, engaged in rolling general strikes, in favour of parliamentarism, and the second was the role of anarchists and syndicalists, who opposed the Stalinists' betrayal, but who promoted the ideas of spontaneism, and failed to build the required organisational structures to confront the bourgeois state, and create an alternative to it. Groups like the SWP have continued to make that same mistake ever since.

For an Anarchist like Cohn-Bendit, his individualist, petty-bourgeois mindset, also consistent with the collapse of large sections of the left into a reactionary, petty-bourgeois, moralism and “anti-capitalism”, led him inexorably into the Greens, the epitome of that kind of reactionary “anti-capitalism”, as a synonym for opposition to large-scale industrial capitalism, in favour of utopian notions of the small business myth, alternative paths of development and so on. In Germany, the Greens, now ally with the conservative bourgeois parties, and support NATO, etc.

Those who limit their horizons purely to an opportunist, “lesser-evilism”, focused on parliamentarism, can always find excuses for voting for anti-working class parties, on the basis that they are the least dirty shirt in the laundry basket. Doing so does nothing to change the conditions that lie behind such a restricted choice, other than to make it worse, by tarring those that do so with the brush of those parties, and further alienating the workers. It is that approach that has opened the door to Le Pen, to Farage, to Trump, to the AfD, and so on.

The same can be seen in the US, now. The liberal bourgeois politicians and media, in recent days, have seized on the fact that voters have turned increasingly away from Trump, and the Republicans, with some Republican politicians, also, peeling away, at the margins. The liberal bourgeois see this as decisive, but they fail to understand the nature of fascism as a movement of the petty-bourgeoisie. They assume that seeing this electoral support slipping away from him, Trump's days are numbered. But, for Trump, who has laid his cards openly on the table, in setting out his desire to utilise his “magic powers”, as he calls them, granted by The Insurrection Act, they fail to understand that, such fascist regimes, always, reach a point where they can no longer rest upon constitutionalism, and the vote, and so, simply resort to the use of force.

"It is stupid to believe that the Nazis would grow uninterruptedly, as they do now, for an unlimited period of time. Sooner or later they will drain their social reservoir. Fascism has introduced into its own ranks such dreadful contradictions, that the moment must come in which the flow will cease to replace the ebb. The moment can arrive long before the Fascists will have united about them even half of the votes. They will not be able to halt, for they will have nothing more to expect here. They will be forced to resort to an overthrow."

(For a Workers’ United Front Against Fascism)

Trump is already doing that in Minnesota, and with clear plans to do the same elsewhere. It is sensible for the workers in Minnesota and, elsewhere, to be restrained, and minimise the ability of Trump to do that, just as, Lenin and the Bolsheviks argued against workers, in Russia, engaging in premature actions, in July 1917, which ended up with Kerensky utilising those actions to lock up the Bolshevik leaders. But, Lenin and the Bolsheviks did not make that argument because they wanted the workers to content themselves with constitutionalism. They did so because, as with Marx's advice to Parisian workers in 1870, they believed it was premature, that the workers needed to build their own organs of power, their own tested leaders and so on.

The ordinary citizens of Minnesota have shown tremendous courage and principle. But, it is largely unorganised and leaderless. They have engaged in a “General Strike”, but it was largely a passive, petty-bourgeois affair, with small businesses, shops, and schools closing their doors - they would have had few customers anyway. It is not like the political General Strike of masses of industrial workers, in the large enterprises seen in 1917, or in France in 1968. As Trotsky went on to note,

“the main strength of the fascists is their strength in numbers. Yes, they have received many votes. But in the social struggle, votes are not decisive. The main army of fascism still consists of the petty bourgeoisie and the new middle class: the small artisans and shopkeepers of the cities, the petty officials, the employees, the technical personnel, the intelligentsia, the impoverished peasantry. On the scales of election statistics, a thousand fascist votes weigh as much as a thousand Communist votes. But on the scales of the revolutionary struggle, a thousand workers in one big factory represent a force a hundred times greater than a thousand petty officials, clerks, their wives, and their mothers-in-law. The great bulk of the fascists consists of human dust.”

(Trotsky – Germany Is The Key To The International Situation)

Large corporations in Minnesota are, now, coming out to oppose Trump's actions, and to demand that the confrontations be tempered. Trump does not represent the interests of large-scale industrial capital.  At some point the permanent state is likely to move more decisively against Trump for that reason, but, in the meantime, it and the ruling-class will rely on their usual levers of power in the financial markets, use of the courts etc., as well as relying on the masses of workers doing the fighting for them, so long as they do not begin to assert their own class interests.

Having won the Presidency, and control of Congress with the votes of the petty-bourgeoisie, including some of them now opposing Trump and his fascist goons in Minnesota, Trump will increasingly have to rest, not upon their votes, but on his ability to mobilise violence via a hardcore of fascist thugs. Even the bourgeois liberals continue to present the recruitment into ICE of such thugs as being purely a matter of managerial incompetence, and failure to check their credentials, to train them and so on. No, Trump and the hard core fascist ideologues, like Miller, pulling his strings, have deliberately recruited those thugs, as their personal paramilitary force, separated from the hierarchy of the permanent state' bodies of armed men, and the discipline from above of the generals, who serve the interests of the ruling class. Many of those recruited are the very thugs convicted of actual insurrection on January 6th that Trump has, since, pardoned.

Workers in the US certainly should not gift Trump the justification for introducing the Insurrection Act, by engaging in violent acts, but they should not think that refraining from confronting the fascist thugs of ICE will prevent that from happening anyway. The workers in the US need to confront the ICE Gestapo in an organised and disciplined manner, the right granted to them under the Constitution, as the right to bear arms as part of a well regulated militia. The mistake of Alex Pretti, murdered by Trump's Gestapo, was not to be armed, but was to be armed, and to act as an individual in confronting them. The working-class of Minnesota is far larger than the forces that ICE can mobilise. A Workers Militia, armed, disciplined and organised that defends its own communities, and confronts the ICE thugs, in large numbers, would not suffer that same fate. But, it takes time to organise such militia, and to organise the democratic structures required to control it, to arm it, and so on. It is only that fact that causes us to advise caution at the present time.

But, the advice of the bourgeois liberals to rely on passive resistance and on the constitution will lead to disaster. There is no reason that Trump cannot cancel elections, or that, like De Gaulle in 1968, or Khameini, today, in Iran, where the protests have disappeared from the headlines, as a result of the mobilisation of mass violence against them, the elections may be held in such conditions as to ensure his success. Starmer and Blue Labour can only look on in admiration.

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Like Trump, Blue Labour View Democracy As An Inconvenience - Part 1 of 2

 Like Trump, Blue Labour View Democracy As An Inconvenience

At the weekend, as the Bonapartists of Blue Labour met to block Andy Burnham from standing in the Denton & Gorton By-Election, one of their spokespeople, and original conspirators to put Starmer in the driving seat, using the backing of various shady millionaires, and their money in off-shore tax havens, set out how they see democracy. Steve Reed appeared on TV to tell us that they thought Burnham could not be allowed to stand, because it would mean an election, also, for Manchester Mayor, and they did not want to cause the voters of Manchester to be “inconvenienced” by having to vote!

That about sums up Blue Labour's Bonapartist mentality. Democracy, even the feeble version of democracy that is bourgeois-democracy, and involves the mass of the population only in passively and ineffectually placing a cross on a ballot every few years, is an “inconvenience”. For the likes of Blue Labour, the ideal voter is like the woman interviewed several years ago, who, when told the Tories were to hold another election, proclaimed “Not another one”. Not a right, not something to be cherished or valued, or fought for, but an “inconvenience”, a nuisance that interrupts the intended torpor of the voters, very periodically, and so unnecessarily involves them in the political life of the country, that the bourgeois politicians would prefer they keep out of, so as to let the politicians just continue on their own merry way, unencumbered by such things as accountability.

It is a far cry from the fight to be able to vote that many across the world still face, not to mention from the ideas and struggles of those that created the modern form of bourgeois-democracy – social-democracy - in Britain, in the 19^th century, starting with the combined struggle of industrial workers and bourgeois for the right to vote, and to do away with the “rotten boroughs”. It is a far cry from those that created the labour movement out of which the Labour Party itself developed – the Chartists – who demanded annual parliamentary elections.

Blue Labour have, of course, used the same corruption of ideas and even of bourgeois-democracy to justify their refusal to countenance any new vote on Brexit, despite the fact that every poll, every actual election shows that the large majority of the electorate recognises that Brexit was a a huge mistake, and that, if they had a vote, today, they would vote to reverse it, and to re-join the EU. Blue Labour say, instead, the voters voted once, and that is it for ever more, or at least until we deem it advantageous to us, to allow them to vote again! That is not even bourgeois-democracy, let alone social-democracy, but simply the Hobbesian justification for absolutism.

Blue Labour supplement their appalling, anti-democratic justification for blocking Burnham by other similar arguments, such as the cost of holding the election, which is the argument used by every authoritarian in history. On that basis, you would postpone all elections for much longer, so as to further reduce the “inconvenience” and cost to voters of living in a supposed democracy! Why not go the whole hog, and, like Trump, proclaim that because you are doing such a grand job, there is no need for elections at all.

Blue Labour, also, argue that if Burnham stood in Denton and Garton, he might lose, but also, they might lose the Manchester Mayoral election. Again, if fear of losing elections is justification for not holding them, it tells us a lot about the authoritarian, undemocratic ideology of Blue Labour. More significantly, its necessary to ask, why, they might lose those elections. Its only 2 years since they were telling us what strategic geniuses they were, and were crowing about the huge parliamentary majority they had, despite winning much fewer votes than Corbyn's Labour in 2019. The reason they expect to lose is that, in that two years, not only has the fraudulent nature of that election win been exposed, but the policies of Blue Labour, ever since, in attacking workers, pensioners, the sick and disabled and poor families has seen their support crater even further.

Compared to Starmer and Blue Labour, compared to the likes of Streeting, or Mahmoud, or Rayner, Burnham is popular. If anyone could win the by-election, it is him. If even he could not win it, the blame for that would clearly lie, not with Burnham and his brand of mildly progressive, social-democratic politics, but with the fact that Blue Labour is such a toxic brand, across the country, that any individual Labour candidate, no matter how popular, or distanced from it, will be tarred with the same brush and suffer the consequences. No Labour MP is now safe, as a result of the toxic nature of Starmer's Blue Labour. They will all see their voters either sit on their hands, or as with Caerphilly, will move en masse to more progressive sounding parties, be it Plaid, SNP, Greens, or even Liberals.

As I pointed out months ago, if Labour did not replace Starmer and kick out his Blue Labour cabal, before the Spring elections, it would likely be too late to save Labour. They will be eviscerated in the local and regional elections, and, as Burnham himself says, will probably, now, lose the by-election. If voters in Denton and Garton want to keep out Reform, they will have to vote for the Greens, and that reality will impose itself across the country in coming months. It is not, of course, that either Burnham, or the Greens, or Plaid or SNP, really represent a progressive alternative. They do not. But, it is an indication of the reactionary nature of the petty-bourgeois, nationalist politics of Blue Labour that they appear so.

In the past, the argument of Marxists was that, even though Labour's politics moved periodically from Left to Right, and then, back again, the justification for working within it was that it was based upon the working-class, and its organisations such as the trades unions etc. But, Blue Labour has based itself not on the working-class, but the reactionary, nationalist petty-bourgeoisie. Starmer has neutered democracy within the party, by expelling huge numbers, and alienating thousands more. In electoral terms, the large majority of workers no longer look, now, to Labour, as their natural party, but look instead to these other parties such as Plaid, SNP, Greens, who present themselves in the same colours that Labour, as a social-democratic party used to promote. The trades unions have failed to check that abandonment of the working-class, and of social-democracy by Blue Labour.

When Labour get smashed in the forthcoming elections, and as the Greens and other parties appear as realistic, progressive alternatives, there will be a great temptation – as happened under Blair and Brown – to focus on these other parties. It can be seen already, in the support being given to the populist Polanski of the Greens, by sections of the Left. It is to again invite disappointment and disaster. The Greens, Plaid, SNP, and certainly the Liberals, are not the solution. They are not based on the working-class. Their ideas are not those of the working-class, and its class interests.

The fact that all these parties, basically, themselves middle-class parties, based on the progressive, professional middle-class – as social-democracy has always done – appear progressive, simply shows the degeneration of the Labour Party as a consequence of Blue Labour. The SNP used to be called “Tartan Tories”, and it was the SNP that opened the door to Thatcher in 1979, by bringing down Callaghan's government. The Liberals, of course, joined Cameron's Coalition in 2010, rather than support Brown. Within days, they swivelled from their opposition to austerity to fully backing it, in government. They opened the door to the Brexit vote.

Forward To Part 2

Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 13

In fact, North's exposition is a classical Liberal advocacy of free trade, both in relation to foreign trade, and the domestic economy.

“certainly “something extraordinary” in the year 1691!” (p 302)

Duhring belittles North, complaining that he was a merchant, and that his work received no approval. Engels replies.

“Indeed! How could a book of this sort have met with “approval” among the mob setting the tone at the time of the final triumph of protectionism in England? But this did not hinder its immediate effect on theory, as can be seen from a whole series of economic works published in England shortly after, some of them even in the seventeenth century.” (p 302)

Its an indication of the extent to which things have deteriorated that, today, the same false ideas are propounded as 350 years ago, whether it is in relation to protectionism/Brexit/tariffs, or in relation to the confusion over money prices and interest rates.

As Lenin noted, in relation to the progressive nature of even Russian liberals, compared to the reactionary, petty-bourgeois ideas of the Narodniks, the liberal ideas of the likes of Petty, Locke and North, appear relatively progressive compared to the reactionary, petty-bourgeois nationalist ideas not only of the likes of Trump, Farage, Starmer et al, but, also, of the so called “Left” Brexiters.

“The “treatment of history in the grand manner”, which chalks up against Marx the unpardonable sin of making so much fuss over Petty and the writers of that period in Capital, simply strikes them right out of history. From Locke, North, Boisguillebert and Law it jumps straight to the Physiocrats, and then, at the entrance to the real temple of political economy, there appears — David Hume. With Herr Dühring's permission, we restore the chronological order, with Hume before the physiocrats.” (p 302-3)

Engels details the extent to which Hume copied the views of Vanderlint.

1. He treats money as a mere token of value
   
   
2. He argues there can be no permanent favourable or unfavourable balance of trade
   
   
3. He teaches an equilibrium of balances brought about naturally
   
   
4. He propounds free trade
   
   
5. He sees wants/consumption as the driver of production
   
   
6. He wrongly attribute bank money and government securities the influence on commodity prices
   
   
7. He rejects credit money
   
   
8. He makes commodity prices dependent on wages
   
   
9. He copies Vanderlint's “whimsical idea that the accumulation of treasure keeps commodity prices down.” (p 303)

Duhring had, previously, intimated that Marx had misunderstood Hume's theory of money. In fact, there was no such misunderstanding, and the misunderstanding resides with those that do not understand the difference between money and money tokens/currency. Hume was also guilty of this error, as, later, was Ricardo. By equating money with currency, i.e. a money token, Hume, and later Ricardo, confused a depreciation of the currency/money token, as a token of value, consequent upon an increase in the quantity of such tokens in circulation, with a reduction in the value of money itself, as a consequence of an increase in its supply. For Ricardo to make this error, as Marx notes, is particularly surprising, because it requires him to abandon his own labour theory of value, in relation to the determination of the value of the money commodity, e.g. gold. He is left determining the value of gold not by the labour required for its production, but solely on the basis of its quantity relative to other commodities, as Hume did.

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Forward To Part 14

Predictions For 2026 - Prediction 3 - Inflation Returns - Part 7 of 7

We are not yet at the stage of the cycle equivalent to the 1970's, i.e. a crisis of overproduction of capital. Over the last 40 years, central banks have inflated the currency supply, not to provide support for profits against rising relative wages, via rising prices, but to provide a safety net for asset prices, first following the asset price crash of 1987. As Money-capital was terribly devalued, in the way Marx described, because of the delusion that money-capital could simply produce interest/dividends out of thin air, so too the manifestation of that, in the form of crashes in asset prices had to be countered by a devaluation of the standard of prices.  In addition, in a world of sharply rising productivity, which caused the value of commodities to fall significantly, from the 1980's on, it acted to prevent actual falls in the prices of commodities, which risk creating damaging price wars amongst large-scale producers.

But, we are at a stage, equivalent to the early 1960's, in which a period of intensive capital accumulation, after WWII, with rising productivity, came to an end, and a period of extensive accumulation, with slower productivity growth began. Today, in western economies, the large rise in the size of the petty-bourgeoisie, which is different to the conditions in the early 1960's, means that productivity growth was already sluggish, because this petty-bourgeoisie, with its pygmy capital is, by definition, inefficient. It is, however, one source for large-scale capital, in the period ahead, to ease some of its labour supply issues, as the historical trend of the petty-bourgeoisie being driven out of business and into the ranks of wage-workers resumes. Its why the petty-bourgeois, small business agendas of the likes of the Tories, Reform and Blue Labour are doomed to fail.

Lockdowns and the subsequent inflation of the currency supply used to cover the reckless hand out of replacement incomes to households, as I said at the time, marked a turning point. The inflation of the currency supply to boost asset prices, then became an inflation of commodity prices, and so, necessarily of wages. The effects of the ending of the process of globalisation as the protectionists of Trump, Reform, Blue Labour took office, inevitably caused productivity growth to slow even more, or even go into reverse. The rate of turnover of capital was reduced, so reducing the annual rate of profit, globally. Costs of circulation rose, cutting the growth of profits. The most obvious example is Trump's use of tariffs, which has imposed huge costs on the US economy, and on the profits of US companies.

At the same time, decades of austerity have left the infrastructure of many economies in the developed world in tatters, which itself imposes a drag on productivity compared to the newly industrialising economies in China, India and other parts of Asia, for example, where, brand new infrastructure is arising alongside other capital investment. As I have noted for some time, the main imperialist competitor to the US is the EU, and that is now manifest. The EU has more objective reasons to orient towards the other major imperialist bloc, which is Eurasia.

The world is divided into these three competing imperialist blocs of North America, the EU and Eurasia. Rachel Reeves can bleat all she likes, at Davos, that the UK is not there to be buffeted around, but the reality is that the UK is an irrelevance in the current world. Its survival depends upon being inside the EU imperialist bloc, and its vain attempts to continue its alliance with US imperialism, 3000 miles away across the Atlantic is not only doomed but is counterproductive, because it only isolates it from its allies in the EU.

The EU has already recognised that it must respond, and part of that response involves not just military spending, but also large-scale infrastructure modernisation, and real capital accumulation of the kind that only newly industrialising economies have pursued over the last 40 years. The EU spends more than 60% of its arms budgets on US produced weapons.  It relies on US technology in almost every sphere, and that has hindered its own technological development, in every sphere.  An independent EU arms industry, energy industry, space industry, computer industry and so on, will require large amounts of spending on R&D, and on an extensive accumulation of real industrial capital.  That means that interest rates will rise. A reflection of that is already seen with the rise in Japanese interest rates, and bond yields. The corollary is falling asset prices, which means that central banks will again inflate currency supply to try to bolster those asset prices. If Trump succeeds in gaining control of the Fed, that process will be brought forward and intensified.

But, the other changes noted above, compared to the last 40 years, means that any such increase in liquidity will also simply feed through into higher commodity prices, including higher wages. Central banks will again try to protect profits by increasing liquidity to raise prices, but these are not the conditions of the last 30-40 years.

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