During the 1990's, this position of Japan was replaced by other Asian economies, such as South Korea, Taiwan, Singapore and Malaysia, as well as, of course, China and Hong Kong. Japan had seen its own asset price bubble burst in 1992. As the global economy moved out of the stagnation phase of the long-wave cycle, and towards the prosperity phase in the late 90's, it saw, the start of the end of the long secular downward trend of interest rates. In 1994, the US suffered a bond market crash at the hands of the bond vigilantes. In 1997 and 1998 came the Rouble Crisis and Asian Currency Crisis, as those countries that had borrowed heavily to finance a more rapid industrialisation, were hit by these rising global interest rates.
In the US, Long Term Capital Management went bust, and was bailed out. As the world economy entered the expansion phase, in 1999, and the demand for a series of primary products surged, causing their prices to rise, the Federal Reserve, in anticipation of any problems arising from the Millennium (including the Millennium Bug) pumped billions more Dollars into circulation, further fuelling the asset price bubble, particularly in technology stocks. Two months later, as the real economy expanded, and interest rates rose, the bubble burst, with the NASDAQ falling 75%.
By moving large amounts of production to these newly industrialising economies, with vast latent reserves of labour-power, in the 1980's, capital muted that effect. The production shifted to these economies was of mature products, where large amounts of fixed capital was used, and replaced skilled and semi-skilled labour. What was required, was large amounts of cheap, unskilled, machine minding labour, with more that could be continually drawn in from rural areas. The potential for this demand for labour-power leading to higher relative wages was, therefore, remote. These economies could expand considerably, and the living standards of their workers increase hugely, without any such constraint.
GDP per head of population rises sharply, across the globe, starting in 1999-2000. For the world, it rises from around $5500 to $10,000 in 2012. For former Stalinist states the rise is even more stark. It rises from around $1500 to around $9,000, whilst for developing economies, it rises from around $1500 to $4200. Indeed, it was that which sucked into them large amounts of loanable money-capital to finance that expansion, which led to the Asian Currency Crisis, when global interest rates began to rise. For comparison, in the former Stalinist states, GDP per head understandably fell between 1989-2000, whilst for developing economies, GDP rises between 1989-2000. For the world, GDP rises, between 1989-2000, by about a third, from $4000 to $5500, which is much less than its near doubling, from $5500 to $10,000 between 1999-2012, as the new long wave expansion got underway.
James O'Brien is right to note that Britain, as a result of Brexit, is not the country it was, and consequently, all of the framing of the discussion over Trump and Starmer's temporary understanding – its not a trade deal – is misplaced. Britain is an isolated, weak, second and probably third rate power, when it comes to negotiating on the world stage, and so expecting it to negotiate from the kind of position of strength it had in the past is meaningless.
As O'Brien notes, of course, that growing weakness did not start with Brexit, it started as its position of global hegemon ceased, at the start of the 20th century, as other countries such as Germany, the US, and Japan began to overtake it. WWII, simply emphasised the point, as the US assumed that role as world hegemon, and Britain's weakness accelerated from there, which is why it joined the EU, to stop that rot. Its why the decision to leave the EU, and commit Brexit on itself, was an insane decision.
QEII's reign marked by Coronation Chicken. Charles III's reign by Chlorination Chicken
After WWII, Britain's imperialist power was diminishing rapidly, but doing so from a lofty position, as former world hegemon, still with a colonial empire, though in inevitable dissolution, and with centuries of foreign investments of capital, bringing in annual tribute, to compensate for its growing weakness in trade. When the new monarch crowned in 1953, the event was marked by the creation of a new piece of British culinary art – coronation chicken. As a symbol of the decline of Britain, now enhanced by Brexit, the start of the reign of its new monarch, is instead marked by the introduction of chlorination chicken.
Starmer and all those trying to defend his position, as well as those trying to defend Brexit, on the basis of saying that it has allowed Britain to negotiate a trade deal with the US – it isn't a trade deal – of course, say that Britain has not agreed to accept US chlorinated chicken, or hormone treated beef, GM crops and so on. The problem is that Trump believes that they have, and that as the further negotiations unfold that will be set out. What we have, here, is a replica of Boris Johnson's Brexit negotiations and tactics with the EU. Johnson's team would negotiate a deal with the EU, which clearly committed Britain to a certain set of requirements, but which Johnson would, then, deny were part of the deal. The Northern Ireland Protocol was a classic example.
In the end, it is always the most powerful side, which can insist on its interpretation. In the case of Brexit that was the EU, in relation to Starmer and Trump, it is Trump. So, at the point that Trump insists Britain take its chlorinated chicken, hormone treated beef, and so on, Starmer will either have to capitulate, and accept it, which means doing any kind of deal with the EU is out of the question, or else, bearing in mind that the exiting trade with the EU is far more important than trade with the US, he will have to tear up the supposed agreement he has made with Trump.
And, its important to bear in mind that even where Trump has previously signed actual trade deals and treaties, such as the US-MCA, he has also arbitrarily torn them up. But, as Lawrence O' Donnell notes, this is not even a trade deal. It is just something that Trump has signed using his executive powers, as President. It is nothing more than a temporary agreement, an understanding between him and Starmer, that Trump can, and probably will rip up tomorrow. A trade deal can only be put into law by the legislative assemblies of the US and UK, i.e. the US Congress, and British parliament. No such law has been agreed.
But, in his video, James O'Brien, asks what else Starmer could have done, and concludes, as he has in the past, that given Brexit, and the weakened position it put Britain in, that Starmer played a Brahma. If, however, as a result of chlorination chicken, as Britain's new dish, and so on, not only is any closer actual deal with the EU made impossible, because the EU will not be able to accept the reduction in standards which that would imply, and especially the problems that would cause in relation to the Northern Ireland Protocal/Windsor Agreement and so on, in relation to phyto-sanitary and veterinary standards, etc., but would, also, thereby threaten even existing trade with the EU, far from playing a Brahma, what Starmer would have done is to simply complete the work of Johnson, in further isolating Britain from the EU, as its biggest trading partner, and subordinating it to the US!
So, in that context, obviously, at the very least, Starmer should have adopted the position of Carney, in Canada, and refused to be picked off as the weakest animal in the herd. The answer lies not in seeking to minimise the damage, resulting from Brexit, caused by Trump's tariffs, by simply capitulating to them, as a kind of protection racket, but in rejoining the EU, and, thereby, gaining collective strength. Its why the EEC/EU was formed to counter US imperialist power in the first place. Its why Britain joined it, as its own power as a nation state had disappeared, in the 1970's. Collectivists understand this, in a way that liberal individualists never can. Its why we understand the need for workers to join trades unions, for example, even if not as a complete solution, but as a necessary step towards it. So, its wrong of O'Brien to claim that Starmer had a bad hand to play, and so had no other choice. He could, rather have gone big on making the point that Britain had, indeed, been put in this weak and invidious position, precisely because of Brexit, and so have made the point, strongly, that it is necessary to re-join the EU at the earliest opportunity. Starmer cannot do that, because, for the last 5 years, he has taken over the role of Boris Johnson, in promoting Brexit!
O'Brien argues that Starmer had to play the cards he had, and the hand was weak. But, in poker, or gin rummy, you get to change your hand, by picking up other cards. Over the last five years, Starmer had the perfect opportunity not only to change the hand he was playing with, but, even to choose the new cards in his hand. If, over the last five years, he had made the point, each day, that Brexit had weakened Britain, that a Labour government would reverse that damage, as quickly as possible, he would not have had the weak hand he has today. But, Starmer did not do that. Instead he became Brexiter Number 1, and not only that, he attempted to wrap himself in the butcher's apron, to a most disgusting extent, as well as engaging in the most reactionary forms of jingoism, and indeed, racism, as seen with the willing and rapacious scapegoating of immigrants etc.
If we look at Reform, a lot is being made of the potential for it to fail as it takes over control of various councils. Maybe, it will, but what if it doesn't? Trump has failed already in the US, but the hard core of petty-bourgeois Trumpists are still behind him, and denying reality, just as the hard core of petty-bourgeois Brexiters continue to support it, despite all of the chaos and damage it has done, and continues to do. One thing everyone remembers about Mussolini is that he made the trains run on time, even though its a myth. But, who is not to say that Reform run councils may not divert resources from other areas, for populist purposes, such as dealing with potholes in their area? What we do know, from the experience of devolution, as well as from the propaganda that led to Brexit, is that, Reform run councils will blame any failures in their area on the lack of funding, and other requirements placed on them by the new bogey, this time, not Brussels, but Westminster.
The limit on Reform's electoral support, as Trotsky, also, pointed out in relation to the Nazis in Germany, is the fact of which class interests they appeal to, and upon which they are based. That is the petty-bourgeoisie, and its attendant lumpen layers. In Britain, that amounts to around 30%, but, if they are able to mobilise all of that 30% minority, it can be enough, unless a unified, progressive alternative is provided to them, based upon the interests of the working-class. Blue Labour cannot provide that, and the Labour Party itself can only begin to build it if it gets rid of Starmer and the reactionary Blue Labour party within a party that he represents.
So, it is a golden, missed opportunity for Starmer to point out that the weakness it now faces in dealing with a big powerful US, is one that it has inflicted on itself, as a result of Brexit, and that the sooner that is reversed, and Britain re-joins the EU the better. It is why Marxists, not only favour such voluntary integration of nations into larger multinational states, but, also, why we favour a unified and indivisible state, as against federalism, or devolution, which is just a stepping stone on the path to separation. Of course, it could be argued that, in that case, we could as easily argue for Britain becoming a part of the US. I have dealt with that argument in previous posts. It would be progressive for Canada, Greenland, Mexico to be part of the US, but it makes no sense for Britain to become so, as against part of the EU, precisely because of the geography, and established trade patterns. Part of the reason for Britain's weakness, and for the arguments that led up to Brexit, is precisely that it continually whined on about its “special relationship” with the US, and continually looked longingly across the Atlantic to the US, rather than fixing its gaze, determinedly on its future across the Channel.
And so, for all O'Brien's attempts to defend Starmer, the reality is that this is a condition of weakness that Starmer has himself put himself in, as a result of his continued support for Brexit, and all the other reactionary, petty-bourgeois nationalism, just as the position of weakness that Britain finds itself in, is a result of that same Brexit! Whatever Starmer may say, in his latest statement about the next election being between him and Farage, that is increasingly unlikely. It will, indeed, be Farage on on side, as Reform swallows the Tory wing of the Conservative Party, in one form or another, whilst the middle-class, conservative social-democratic wing of the Conservatives flocks to the Liberals, again in one form or another, either as a movement of individuals, or as some kind of Con-Lib Alliance, or simply as a merger between the two. But, the main challenger to Farage, at the next General Election is unlikely to be Starmer.
Either, the Blair-Right, conservative social democrats will oust him, and end the disastrous experiment with Blue Labour that has led to this situation, in which case, it will be a different Labour leader lining up against Farage, or else, as Labour voters, and, increasingly members, haemorrhage to the Liberals, Greens, SNP, Plaid, and potentially other formations, or individuals, as happened in 2024 with the wins for Corbyn, and close-run contests against Streeting etc., the Blair-Right wing of the party will be forced to seek an alliance/merger with the Liberals, as happened in the 1980's with the SDP, and as happened even more fleetingly with Change UK. If they do not do that, then, even with the limp anti-Brexitism of the Liberals and Greens, over the next four years, Labour will lose ground in local elections, by-elections and so on, meaning that it will be the Liberals, that become the main opposition to Farage come the General Election, at least in England and Wales, with the SNP, also, being provided with a quick route back, as a result of Blue Labour's continued lurch to the Right.
Having claimed that China, and every other country, was going to crawl to the US, to "kiss his ass", begging for a trade deal, it is Trump's regime that has, instead had to capitulate, once more, this time to China, and agree to a ceasefire, for 90 days, in the tariff war. China, along with the EU, Canada, Mexico and others refused to be brow-beaten by Trump, and he was forced to capitulate, probably under pressure, also, from intelligent people within US state. They are continually, also, having to apply pressure against the inane, moronic policies that Trump, along with others, such as Peter Navarro, Musk, Kennedy et al, dream up, and which rapidly lead to chaos, much as also happened with Brexit, in Britain. Indeed, the only country that has abased itself in front of Trump, is Brexit Britain, in the form of its own mini-Trump, the gelatinous Starmer, who, not content with just kissing it, disappeared up Trump's arse.
The reason Trump capitulated to China, was quite clear. His tariffs imposed on China had meant that he had, basically, put an embargo on all Chinese imports, just as effectively as the US, under Biden, had put a physical embargo on Russian energy and other supplies, and had pressed other countries, via NATO, the G& and so on, to do likewise. The boycott of Russian energy, mostly damaged European economies, which saw the cost of its gas rise by more than 1,000%, sending Germany into recession. The US, with its own large supplies of oil and gas, by contrast, benefited, as global oil and gas prices rose, and US energy producers sold in to the world market at these higher prices.
But, Trump's embargo of Chinese manufactured goods has only, really hurt the US. Other countries have not imposed any such tariffs on Chinese goods, and so they have not faced the kind of emptying of shelves and hikes in prices that the US faces. Indeed, in the intervening period, China has strengthened its trade ties with many other countries, particularly those in Asia who now see the US as unreliable and unpredictable. The US accounts for only 15% of Chinese exports, many of which could, over time, be diverted to other markets, s China grows its trade with other countries, in Asia, Europe, Russia, Canada, Latin America, and Africa. Indeed, exports to the Us account for only 2.5% of Chinese GDP, so that a large part of those exports could simply be absorbed into its own expanding economy.
By contrast, Chinese imports constitute around 60% of the goods on the shelves of major US retailers such as Wal-Mart. The US faced those shelves being emptied in the next few weeks. Already, the ports in California, which receive the imports from China, report that they have no ships to unload. Trump, presented with those facts, claimed, in a show of bravado, not to care that this would lead to thousands of dockers, truckers and so on being laid off. Maybe he didn't. After all he represents the interests of a reactionary nationalist petty-bourgeois, which, as with Brexit, leads towards autarky. Yet, the reality is that whether Trump didn't care or not. The US was forced to do a deal with China.
Of course, we have seen this, before, when Trump capitulated to Mexico and Canada, when he first imposed his arbitrary tariffs. Within days, in those cases, he capitulated and withdrew them, but as that fact quickly spread across social media, and totally destroyed all of the narrative he and MAGA had been retailing that tariffs would somehow be paid by other countries, as against the reality that they are a tax on US consumers, he reimposed them. It can't be ruled out that he will do the same at the end of this 90 day ceasefire with China.
There is a lesson for everyone thinking of making any kind of deal with the US, which can be torn up by executive decree the next day.
So, contrary to Duhring, but also to those who interpret the “expropriation of the expropriators” as meaning some single event, i.e. the socialist political revolution, as characterised by the October Revolution, Engels makes clear that Marx does not mean by it some such future event, made necessary as a consequence of an Hegeliandialectical law, but is describing a process that had already occurred and was continuing. The failure to understand this, and, instead, the success of the statists, in presenting it as meaning some single, revolutionary event, has held back the development of the working-class for a century. It facilitates and fuels the reactionary petty-bourgeois ideology of “anti-capitalism”, and “anti-imperialism” that equates the large corporations with “the monopoly of private capital”, whereas that was not at all what Marx and Engels were referring to. On the contrary, these large monopolistic corporations are the socialised capitals that Marx and Engels identify as the “expropriators of the expropriators”, the means by which the monopoly ownership of capital by private individuals was ended.
As Marx and Engels describe, in these huge monopolistic, socialised capitals, it is not the ownership of capital that is monopolised, which was the case with the previous condition of the monopoly ownership of private capital, but the monopolising of production, of the market. In fact, this is the opposite of the condition in the period of the monopoly of private capital. In that period, the capital itself was monopolised by a relatively few individuals, but production was still characterised by a plethora of such private capitals, each competing against each other in the market, which, as Marx describes in Capital III, Chapter 15, is one of the reasons that crises of overproduction erupt.
“The so-called plethora of capital always applies essentially to a plethora of the capital for which the fall in the rate of profit is not compensated through the mass of profit — this is always true of newly developing fresh offshoots of capital — or to a plethora which places capitals incapable of action on their own at the disposal of the managers of large enterprises in the form of credit. This plethora of capital arises from the same causes as those which call forth relative over-population, and is, therefore, a phenomenon supplementing the latter, although they stand at opposite poles — unemployed capital at one pole, and unemployed worker population at the other.”
Relative surplus population is created by capital in response to a shortage of labour in the crisis phase of the long wave cycle. The rise in relative wages squeezes profits, as, for example, described by Glyn & Sutcliffe (Workers and The Profits Squeeze), in relation to the 1960's, and early 70's. For the less efficient (generally smaller) capitals, operating on already small profit margins, this means that they become prone to those margins disappearing altogether. Capital is only capital if it produces profit, and so, this is the basis of an overproduction of capital, i.e. it is overproduced relative to the labour supply/social working day. Capital responds by technological innovation. It replaces labour with fixed capital, thereby, raising social productivity. The same level of output can now be produced with less labour, creating a relative surplus population.
In the era of imperialism/large-scale monopoly capital, it is not the individual capitalists, therefore, that have to be, now, expropriated, because that has already been accomplished. The socialised capitals are, already, the collective property of the associated producers within them. It is one reason that the attacks on these companies, by the “anti-capitalists” and “anti-imperialists” are reactionary, because what they are attacking is the collective capital of the working-class and material basis of the new society. That is the basis of Lenin's argument in Left-Wing Childishness. What they should be attacking is the continued role of the ruling class of speculators and coupon-clippers, in controlling those companies, and the denial of the legitimate right of the workers to do so.
“It is therefore once again a pure distortion of Herr Dühring's when he declares that the negation of the negation has to serve here as the midwife to deliver the future from the womb of the past, or that Marx wants anyone to be convinced of the necessity of the common ownership of land and capital (which is itself a Dühringian contradiction in corporeal form) on the basis of credence in the negation of the negation.” (p 171)
Engels contrasts dialectics with formal logic. Duhring's argument had Marx “predicting” the “expropriation of the expropriators”, and socialism, solely on the basis of the playing out of a dialectical law – the negation of the negation. As set out, that is not what Marx's theory does, nor what he did in practical application of that that theory in analysing the development of capital. Marx's materialist method is not speculative nor deductive. It is based on analysis of what exists, and analysis, thereby, of the laws of motion that created what exists. As Engels sets out, this is different to formal logic, upon which Duhring based his argument.
The devalued Dollar, as global reserve currency, had the same effect on global inflation as the reduction in the value of gold, as the money commodity, and measure of value, in previous centuries, resulting from new gold discoveries. The US was able to pay its way, not, now, because of its administratively fixed rate against gold, but because of its role as global reserve currency, and because of those other inflows. In the 1970's, the rise in the price of gold, partly, reflected this devaluation of currencies, but, also, partly, reflected its role as store of value, and speculative asset. But, after 1980, when the peak for gold was reached, it could no longer perform that latter function. Over the next 20 years, its market price fell back to around $250 an ounce.
There is only a point in buying speculative assets, like gold, if they produce capital gains, or at least, preserve their own value. Its why such assets as Bitcoin, which, unlike gold, have no use-value, and so, also, are not commodities possessing value, are subject to such wild swings in their market price. After 1980, a falling gold price signified capital losses. As I set out, elsewhere, the market price of gold is largely determined by the role of the existing supplies of it in existence. As the owners of those existing supplies sought to sell it, its market price fell even below its long-run cost of production, witnessed by the fact that, as the new long-wave uptrend began, in 1999, its price rose quickly from $250 an ounce, despite central banks continuing to sell from their own gold reserves. By 2011, it had risen to over $1900 an ounce. In the following years, it fell back to around $1200 an ounce, but with currencies again being devalued, as a result of large scale printing of money tokens, during lockdowns, and now, with Trump turning the US into a rogue state, and trashing the safe haven status of US financial and property assets, gold has risen again to, now, stand at over $3,000 an ounce.
In the meantime, the use of Dollars to buy US financial and property assets offered not only capital gains, but also a yield on those assets, in the form of interest/dividends or rent. The most obvious result of that was in the form of Petrodollars. The Gulf states, following the oil crises of the 1970's, and formation of OPEC, became the recipients of huge flows of Dollars in payment for oil. Unable to use all those Dollars in their own economies, the Gulf states ploughed them straight back into the purchase of US bonds, shares, and property.
The demand for Dollars, across the globe, to pay for oil, raised the value of the Dollar, and the return flow of those Dollars, to the US, kept its value high against other countries. The mechanism by which, under a floating currency system, trade imbalances should result in a fall in the exchange-rate, making its exports cheaper, and imports more expensive, could not operate for the Dollar, in these conditions.
But, contrary to the argument presented by Trump, this was not some conspiracy by other countries to systematically rip off the US. It was, in fact, a continuation, by other means, of the way, under the Gold Standard, the US could pay for its imports with increasingly worthless Dollars, whose value was artificially fixed. What is happening, now, is a repetition of what happened in the 1980's, when that process led to the rapid development of Japanese imperialism, and its industrial dominance, manifest in its trade surplus with the US, whilst the value of the Yen did not rise, correspondingly to the Dollar. It resulted in The Plaza Accord, in 1985, and the Louvre Accord in 1987.
