In 2017, I argued that, despite what the Blair-rights, and other centre-ground liberals might have hoped, Macron's win in the Presidential Elections was a pyrrhic victory. Macron won because of a unique combination of factors. Both main parties had seen their centre-ground candidates heavily defeated in the party nomination procedures. The Republican party was rocked by scandal, whilst the Socialist Party, having suffered, as a result of Hollande's posing Left and sharply turning Right, swung behind Hamon, but too late for him to build the same kind of coalition that Corbyn had built in Britain. Besides which, unlike Britain, a credible fake left alternative to the Socialist Party existed in the shape of Melonchon, which split the Left vote, and allowed Macron to get through to the second round run off against Le Pen. But, large numbers of French workers saw no real choice between Macron and Le Pen, and simply abstained in the second round vote, a position I had also advocated.
Macron's election win was in no sense, a sign that there was a chance for the political centre to re-establish itself. It can't, the long-wave cycle has created material conditions where that, and the economic model on which that centre-ground was constructed, from the 1980's onward, no longer exists. The period ahead will be characterised pretty much by a reversal of the economic conditions, and model that were created in the 1980's, and after. In other words, the fantasy world in which wealth can be created, simply on the back of ever inflating asset prices, fuelled by larger and larger amounts of debt, itself collateralised on those ever inflating asset prices, has run its course. Economic reality is reasserting itself that capital fundamentally depends upon the creation of surplus value, and creating surplus value in ever greater quantities. To produce that increasing mass of surplus value, capital – real capital, comprising means of production and labour-power – must accumulate, and it must produce this increasing mass of surplus value, in order to accumulate, and it must accumulate, because for each individual capital, competition drives it to need to capture an ever larger share of the market, or, at least, not to see its share of the market decline.
In fact, this very reality, of the need for capital to accumulate, which causes the demand for money-capital to rise, and push up the rate of interest, itself is the cause of asset price bubbles bursting. This dynamic, of the dominance of real productive-capital, and the bursting of asset price bubbles, which have been the basis of the wealth of the ruling-class, the global top 0.01%, is what undermines the political ideology that underpinned the coalition that formed the political basis of the centre-ground over the last thirty years. That economic model, that saw the paper wealth of that top 0.01% grow at a grotesque rate over the last thirty years, whilst, in order to maintain those asset prices real economic growth, and capital accumulation was relatively held back, is what created the divisions in society that have erupted over the last ten years, and spelled the end of that centre-ground politics.
The period ahead will be marked by an increased accumulation of capital. The underlying dynamics of the long wave cycle has pushed that forward, despite the attempts of the state and central banks to hold it back. Across the globe, capital accumulation has continued to take place, and alongside it has come an increase in the global working-class, including in the old heartlands of industrial capitalism. The working-class is now the largest class on the planet. The process of capital accumulation has proceeded on the basis of the usual combined and uneven development. The old capitalist heartlands have been in relative decline, whilst the new, more dynamic centres in Asia, Latin America, Africa and the old Stalinist States of Eastern Europe, have grown more rapidly, with income per head in these areas rising much more rapidly than in the old developed economies. One reason that growth has been more rapid in these developing economies, is the fact that they have large potential supplies of exploitable labour-power, so that absolute surplus value could be increased, simply by expanding the social working-day.
As these increasing amounts of labour have been employed, even with wage rates remaining stagnant, the total amount of wages in the economy rises rapidly, but in the more rapidly developing economies, such as China, etc. wage rates themselves were also rising, causing living standards to rise significantly. As I have pointed out in the past, in relation to China, for example, this rising standard of living is easily seen in relation to food consumption. As the wage fund rises, so it is mirrored by an expansion of total output that goes to provide wage goods, and that means that capital is driven to invest in this production of wage goods. Each individual capital is driven to do that, because if it does not, its competitors will, and so it would lose market share, and thereby competitiveness.
At a macro-economic level, there are basically two regimes under which this capital accumulation can take place. Either, it takes place in an international environment in which global trade restrictions are being reduced, so that trade, and with it, economic growth increase, or else it can be undertaken in a regime in which additional trade restrictions are put in place, so that economies seek to engage in import substitution, protecting their own domestic capitals from competition, which results in higher prices, for domestic consumers, and lower living standards, as the basis of pushing up the rate of profit. These two contrasting regimes are what lies behind the contending forces currently of progressive international, social-democracy, as against reactionary economic nationalism.
In a period like the 1930's, the latter strategy leads to a deepening of an existing economic stagnation. But, today is not the 1930's. In periods of long wave upswing, such as now, the reactionary policy of economic nationalism, and protection of the domestic market, can go along with continued economic expansion, and, for some economies, may initially even accelerate it. Britain undertook the Industrial Revolution behind a barrage of monopolies and protective barriers, including its restrictions on access to its colonies, and the US similarly industrialised behind high tariff barriers in the 19th century. As Engels put it, citing a conversation he had with a Scottish industrialist on a train journey to London, about US industrialisation,
“"Well," I replied, "I think there is another side to the question. You know that in coal, waterpower, iron, and other ores, cheap food, homegrown cotton, and other raw materials, America has resources and advantages unequalled by any European country; and that these resources cannot be fully developed except by America becoming a manufacturing country. You will admit, too, that nowadays a, great nation like the Americans' cannot exist on agriculture alone; that would be tantamount to a condemnation to permanent barbarism and inferiority; no great nation can live, in our age, without manufactures of her own. Well, then, if America must become a manufacturing country, and if she has every chance of not only succeeding but even outstripping her rivals, there are two ways open to her: either to carry on for, let us say, 50 years under Free Trade an extremely expensive competitive war against English manufactures that have got nearly a hundred years start; or else to shut out, by protective duties, English manufactures for, say, 25 years, with the almost absolute certainty that at the end of the 25 years she will be able to hold her own in the open market of the world. Which of the two will be the cheapest and the shortest? That is the question. If you want to go from Glasgow to London, you take the parliamentary train at a penny a mile and travel at the rate of 12 miles an hour. But you do not; your time is too valuable, you take the express, pay twopence a mile and do 40 miles an hour. Very well, the Americans prefer to pay express fare and to go express speed."”
But, Engels also continues,
“Protection is at best an endless screw, and you never know when you have done with it. By protecting one industry, you directly or indirectly hurt all others, and have therefore to protect them too. By so doing you again damage the industry that you first protected, and have to compensate it; but this compensation reacts, as before, on all other trades, and entitles them to redress, and so on ad infinitum. America, in this respect, offers us a striking example of the best way to kill an important industry by protectionism...
Protection to shipbuilding has killed both shipping and shipbuilding...
But the worst of protection is that when you once have got it, you cannot easily get rid of it. Difficult as is the process of adjustment of an equitable tariff, the return to Free Trade is immensely more difficult. The circumstances that permitted England to accomplish the change in a few years will not occur again.”
For developed economies, protection always means higher costs of production, and so lower rates of growth and capital accumulation. The effect of that depends upon the long wave conjuncture, and the relative strength of the particular economy within the global economy. Donald Trump is implementing a policy of global trade war. That policy, for example, the tariffs on steel and aluminium, raises the costs for US users of steel and aluminium. It thereby reduces their rate of profit, and reduces potential capital accumulation. It raises the costs of wage goods for US workers, reducing their standard of living, and in the longer term pushing up the value of labour-power, reducing the rate of surplus value, and capital accumulation. But, in a period of long wave expansion, it also means that an incentive is given to producers to establish businesses in the US, to avoid the tariffs, so, in that way, it increases capital accumulation.
The same applies to the effects of those tariffs on China, and other exporters. They respond by introducing retaliatory tariffs. That means they increase the cost of their own imports, with a similar set of effects, as described above. The overall effect is to raise costs, and reduce productivity, which means that less additional wealth is produced, a lower rate of profit is produced, which reduces capital accumulation, and also reduces the pace at which living standards can rise. But, in a period of long wave expansion, this is manifest relatively, not absolutely. In other words, such a trade war has an initial impact, before adjustments in terms of trade take effect, and changes in global trade patterns result. Capital accumulation proceeds, but at a reduced pace, but dependent upon the underlying dynamic of the long wave expansion, that reduced pace, can still be substantial.
What is certain, is that such trade wars, and the imposition of protective measures can only ever be beneficial to large economies, and then only relative to their impact on smaller economies. The US is damaging its economy via Trump's global trade war, but it can get away with it, because of the size of its economy, compared to the size of the economies of some of those on which it is imposing tariffs. China does damage to its economy, and so does the EU by introducing retaliatory tariffs against the US, but not as much as if these huge economies were only a fraction of the size. As Engels also put it in the above article,
“Such was protection at its origin in the 17th century, such it remained well into the 19th century. It was then held to be the normal policy of every civilized state in western Europe. The only exceptions were the smaller states of Germany and Switzerland -- not from dislike of the system, but from the impossibility of applying it to such small territories.”
The idea put forward by the economic nationalists, be they those such as Le Pen, or the BNP, or equally Melonchon, or those Stalinist ideologues advising Corbyn, that any kind of salvation can be found in today's world dominated by huge economies, and economic blocs, by retreating behind protective walls of a nation state, are, therefore, not only thoroughly reactionary, but also doomed to failure.
That sections of the population, in those capitalist heartlands that have been in relative decline for the last thirty years, and who have seen their living standard stagnate during that time, whilst they see, a tiny section of the population has had its paper wealth expand astronomically, should turn to radical solutions of right and left, is then not surprising. But, the easy solutions presented by the economic nationalists of right and fake left, is an illusion, for the reason described above.
Last weekend, Fareed Zakharia again interviewed David Miliband on CNN, and discussed the events in France, and Brexit in Britain. Once again, he implored Miliband, the next time he appeared on his programme, to be announcing that he was establishing a new centre party in Britain. That shows just how little these middle-class liberals understand of the world they live in, and the conditions that have created Brexit in Britain, the rise of right-wing populism in Europe, and of the protests of the gilets jaunes in France. To believe that all of these phenomenon could be addressed be creating some new centre party, is like believing that you could put out a fire by throwing petrol on to it! Zakharia could not seem to connect the fact that the current French protests are against Macron, against the failed politics of that centre-ground, of whom he is the poster child in which the liberal middle class placed their faith!
At the time of the French Presidential election I argued that workers should abstain, because the Blair-right, conservative social-democratic politics of Macron not only offered no way forward, but would open the door to Le Pen. That is what we are seeing now, in France. The solution to the problems of French workers cannot come from the economic nationalism of Le Pen, or of Melonchon. It requires French workers to develop their own progressive, internationalist, social-democratic and socialist alternatives. In the US, the Democrats undermined Sanders in the hope of getting Clinton. They got Trump instead. But, Trump's election, simply fuelled that grass roots movement behind Sanders, and all of those young people that have mobilised around the DSA. In Britain, Brexit has fuelled an ironic development, whereby tens of thousands of new young activists have been drawn into political activity, as part of the Corbynite movement, overwhelmingly committed to internationalism, and opposition to Brexit, as well as to a radical social-democratic economic agenda, even though the Corbynite leadership of the party has itself been captured by that reactionary economic nationalist agenda of the Stalinism, that characterises Melonchon.
In France, the different electoral system, and the consequent existence of a number of parties has meant that we have not yet seen the kinds of rank and file upsurge inside the Socialist Party that we have seen in the Labour Party, or the US Democrats. But, for the current protests to be lead in a progressive direction, such a development needs to occur. The Greek workers were wise enough to realise that leaving the Eurozone, let alone leaving the EU, would be catastrophic for their interests. The economic nationalism of Melonchon and of those advising Corbyn, is a reactionary dead-end.
If Brexit occurs, it will result in a more rapid decline of Britain's economic fortunes, with a consequent diminution in workers living standards, and that will occur whether Britain, as a relatively small economy, in terms of global economic formations, attempts to go forward on the basis of some right-wing fantasy of a thoroughly free market free for all, or on the basis of a policy of economic nationalism, and protection. It is unlikely that France will go in that direction. Even in Italy, the right-wing populists of Five Star, and The League, have pulled back from their earlier suggestions of leaving the Eurozone.
The reality, however, for the EU, as a whole, as it comes to respond to Brexit, and to right-wing populism and nationalism in general, at the same time as it is driven by the material conditions of the long wave uptrend, and the need for capital accumulation, is that it will be led inexorably to the introduction of further progressive social-democratic measures. It will be forced to accelerate the integration of the EU into an EU state, the moves towards the creation of an EU army being just one manifestation of that; it will be forced to speed up the integration of its banking systems, and fiscal regime; and it will be forced to increase the degree of regulation and planning across the block, so as to accelerate capital accumulation, and drive up productivity. The continued accumulation of capital, and the growing power of labour as the demand for labour-power increases, will intensify the need to increase measures of industrial democracy, as part of that process.
But, as the French protests currently show that forward movement will proceed through a variety of channels, with a number of eddies that move in contradictory directions, as part of the overall forward movement of the current.
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