With Trump and Putin carving up Ukraine for the purpose of their own imperialist interests there is no reason Trump is going to sanction any kind of European “coalition of the willing” to insert itself into Ukraine, UK led or otherwise, whatever Starmer and Macron might desire. What is more, although Starmer has tried, with the help of the Brexit media, to present himself as a new Churchill leading the EU – whilst being outside it! - the reality is that the EU have, again, inevitably, burst that bubble, by excluding Brexit Britain from their discussions on the EU's future defence arrangements, and procurement. They will make those decisions, themselves, and present them to Britain, as with any other such internal EU decision making, as a fait accompli. And, of course, as Brexit Britain, sees its mini-Trump, seek to obtain crumbs from the US table, in the form of some concessions on tariffs, and yet another disadvantageous trade deal, the more that will make it clear that it is an unreliable partner of the EU, which Trump has turned into his main target for ire, along with China.
Yet, the reality is, also, that, in the UK, and across the EU, decades of austerity, as governments sought to keep borrowing, and, thereby, interest rates at unsustainably low levels, so as to prevent further crashes in the inflated prices of assets, has meant that infrastructure is crumbling, and the same applies in the US and North America. But, as I have written, over the last 20 years, that has become impossible to maintain, even with the attempts to, also, hold back economic growth so as to hold back the demand for capital, to hold down interest rates.
At every point, the laws of capital poke holes in the dam. The demand for labour-power continues to rise, household incomes rise, aggregate demand rises, causing firms to have to accumulate capital. Everywhere, across the globe, real interest rates are rising, despite attempts by central banks to reduce their short term policy rates, and, in the EU, and UK, any additional spending on weapons, will cause borrowing to rise further, and already that is seen in rising government yields. It amounts, also, to throwing money into the fire, and acts to reduce capital accumulation and growth. To expect that, in conditions like those, today, of labour shortages, which are the opposite of those in the 1980's, that workers, across Europe, are going to passively sit back and accept cuts in welfare, pensions and so on, whilst governments ramp up spending on weapons is not realistic. Already, the German government has had to change the constitution to scrap its own borrowing constraints, not only to cover its spending on arms, but also to cover the inevitable spending German workers will demand on Germany's crumbling roads, railways, bridges and other infrastructure. That spending on infrastructure, as against the spending on weapons, will stimulate further growth and capital accumulation in the EU, with a consequent further rise in demand for labour, rise in wages, and increasing squeeze on profits.
These conditions are the opposite of those in the 1980's, when the microchip revolution had raised productivity, and put workers on the back foot, as well as on the dole, and which, also, raised the rate of surplus-value, and rate of profit, by reducing the value of constant and variable capital. It created a huge release of capital, not least as a result of the moral depreciation of large amounts of fixed capital. As the supply of money-capital from realised profits increased at a much faster rate than the demand for that money-capital, so interest rates fell, and that secular trend of falling rates continued for another 30 years. The falling interest rates caused asset prices to rocket, and each time they fell, the state intervened to protect the global ruling-class, a class of coupon-clippers and speculators, which owns it wealth in the form of those assets – fictitious capital.
In today's conditions, which are more like those of the early 1960's, we have high levels of profits, and a high rate of profit, which has not yet been seriously impinged by rising relative wages. But labour shortages mean that relative wages will rise, and the consequence is also that interest rates will rise, as the demand for money-capital rises relative to the supply of it from profits. Rising interest rates mean falling asset prices, and it is only the certainty of continually rising asset prices, underpinned by the state and central banks, which has meant that money continued to pour into such speculation, rather than into real capital investment. The idea put forward, for example, by Jack Conrad, in the Weekly Worker, that “the world is awash with surplus capital - capital that cannot be profitably invested in the production of surplus value” is false.
Profits and the rate of profit remains high, and so does the rate of surplus value, because workers have not yet been able to turn the growing labour shortages into rising relative wages. They remain weak, and currently pose no threat to capital, even in the way they did in the 1980's, which is why not only does capital not need to turn to fascism, but fascism, which is based upon the petty-bourgeoisie, is, currently, detrimental to its interests, meaning that so are those, like Trump et al, that, also, represent the interests of the petty-bourgeoisie. What Conrad does, as with Varoufakis, whom he quotes, is to “sanewash” the idiocy of Trumpist/Brexitist/Starmerist policies. They follow in the shadow of bourgeois commentators like Gillian Tett of the FT, who have an ideological interest in perpetuating the myth that there is some clever logic behind Trump's obviously moronic behaviour, as also Brad DeLong has described. There is, of course, a logic to both Brexit, and to Trump's actions, but that logic is one driven by the interests of the petty-bourgeoisie, not the interests of capital, nor even of the ruling-class and its fictitious-capital. But, given that the global economy functions according to the laws of capital, the reality is that policies designed for the interests of the petty-bourgeoisie are both utopian and reactionary, and bound to fail. They are, therefore, indeed, idiotic.
As I wrote, previously, in relation to the argument by Varoufakis,
“Incidentally, its important to, also, note the error of Yanis Varoufakis, in this respect, when he says that the US will suck capital in from the rest of the world, as money flows into Wall Street. That money, what used to be called “hot money”, is not real capital, but simply money flowing in, speculatively, to buy up financial assets, i.e. fictitious capital. It does nothing to raise capital accumulation in the US, or to raise US output and profits. It does push up the Dollar, making US exports more expensive, and imports from elsewhere, cheaper, which itself is contrary to Trump's aim of reducing the trade deficit. But, its not clear, also, that this process, seen in the past, will continue. The hot money flow into US assets, was a “safe haven” flow, and its not at all clear that markets will see Trump's moronic behaviour as providing any such safe haven.”
The rise in the price of gold, to record highs, shows that the global ruling class of speculators, as well as the world's central banks are already finding alternatives to the Dollar into which to deposit their money, as a safe haven.
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