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Is Trump wrong about trade?

7/26/2018

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​     In an interesting article published in the New York Times on July 23, Adam Tooze, an economic historian and Professor of History at Columbia University, maintains that “Trump is wrong about trade” when he calls the European Union a “foe,” because of “what they do to us in trade.”  Tooze writes:  “To think, as Mr. Trump appears to do, of nations locked in mortal economic rivalry shows a grave misunderstanding of how competition actually works in the global economy. Competition is, of course, an ordering principle. . . .  But the protagonists aren’t supposed to be states . . . , but businesses, investors and workers.”  The role of states, he maintains, is to sign treaties that regulate what preferences can be shown to national firms.  Neoliberalism, as he sees it, “creates the largest possible economic space for competition;” and in the European Union, “national preference is outlawed as far as possible.”  Such neoliberal principles have become entrenched in the world-economy in recent decades, such that there have emerged “transnational production systems that make nonsense of economic nationalism.”
 
      Tooze also believes that everyone, not only Trump. is confused about trade.  In spite of the integration of production and finance in the world-economy, there exists a cognitive dissonance.  “In the popular imagination and in the words of politicians, the world economy continues to be thought of like the World Cup: cosmopolitan and transnational, yet made up of discrete national teams competing for a single prize.”  Like Trump, European Council President Donald Tusk and German Chancellor Angela Merkel, Tooze notes, speak of the world-economy as a competition among nations; as did Trump’s Democratic predecessors, Bill Clinton and Barack Obama.  Trump’s comments are upsetting, Tooze maintains, because he broke taboo by naming particular nations that are economic competitors to the USA, and by threatening to rupture the liberal order with a U.S. policy of economic nationalism.  He writes:
​Conventional competitiveness rhetoric treads a fine line. The point is to stir the pot without causing things to bubble over. With Davos types like Ms. Merkel, you know that whatever rhetoric they employ in public, there are people working behind the scenes who respect international law and global treaties, who understand that blatant national favoritism will blow the system up. The same cannot be said for the Trump administration, which has actually imposed tariffs.
      Tooze does not mention the fact that the rules of the liberal order favor those corporations and nations with economic advantages, reinforcing a tendency of the world-system to increasing inequality.  The system could tolerate this defect as long as it could continually expand, which it did on the basis of the conquest of new lands and peoples, incorporating more cheap labor, raw materials, and markets into the system, combined with a tendency for higher wages of workers in the core regions.  But when the world-system reached the geographical limits of the earth, and overextended its ecological limits, it could no longer expand in the same way and at the same rate.  Symptoms of its unsustainability emerged: deterioration of small-scale rural production, urban overpopulation, widespread extreme poverty, uncontrolled internal and international migrations, and forms of political and criminal violence without precedent.  The post-1980 neoliberal turn did not alleviate these symptoms, but exacerbated them. 
 
       Meanwhile, the United States has experienced an economic decline relative to Europe since the 1960s, giving rise to the need for protectionist policies.  The U.S. power elite, however, has not addressed the problem.  Economic, fiscal, and taxing policies have favored factory relocation, foreign investment, and financial speculation, rather than investment in production and in communities that were dependent on old industries.  The power elite looked at the problem only from the point of view of its particular interests, rather than taking into account the long-term economic health of the nation.  As a result, the people feel betrayed, a situation that Trump has been able to exploit.
 
      The need for economic protectionism is hardly unknown to the great majority of the peoples of the world, whose nations of the world are among the disadvantaged.  They were put in this position by nearly five centuries of actions and policies that violated liberal principles, often proclaimed by those who carried them out: military conquest and occupation, control of economies through colonial domination, and penetration of economies through imperialism and the shoring-up of subordinate national elites.  When the colonized peoples attained voice in global affairs, they declared the need for a world-system based on principles different from domination and superexploitation.  Accordingly, the 1974 UN General Assembly declaration of a New International Economic Order envisioned a world in which sovereign states would protect their national industries and their national currencies and would seek mutually beneficial trade with other states.  The 1980 neoliberal turn dashed these hopes, as the global powers severely reduced the already limited sovereignty of the disadvantaged nations.  However, in the first decades of the twenty-first century, the Non-Aligned Movement has reemerged to reaffirm the alternative principles that are the foundation of the proposal for a New International Economic Order.  The governments of the Non-Aligned Movement, representing three quarters of humanity, consistently have rejected the liberal order that Tooze and Merkel defend.  They believe that economic nationalism, combined with mutual respect and a spirit of internationalism, is necessary for the future of humanity.
 
       The vision of the New International Economic Order differs from tendencies in Western Marxism, anarchism, and utopianism, in which national identities are viewed as a manifestation of backward and/or ethnocentric consciousness.  The Third World project envisioned not a utopian order without nations, but a world-system in which the sovereign rights and self-determination of all nations is respected.  Although appropriating important concepts from Marxism, the Third World project did not fall into the error of underappreciating the importance of national identity among their peoples.  In the Third World revolutions and social movements, Marxism was synthesized with nationalist visions, on the basis of which the sovereignty and the dignity of the nation was constituted as the underlying, unifying principle.  This stands in contrast to the ideological situation in the global North, where Leftist ideas could attain limited influence among the peoples, in part because they lacked full appreciation of the importance of national identities.  Consequently, Leftist intellectuals and organizations have not been prepared politically or ideologically to respond effectively to neoliberal globalism. 
 
       But neither do the neoliberal defenders of a corporate dominated international order with limited states appreciate the significance of national identities.  The defenders of the post-1980 globalized neoliberal order offend the peoples of the world by implicitly dismissing their nationalist and patriotic sentiments as parochial survivals of an earlier era; and by limiting the role of the states, which constitute the most effective political voice of the peoples. 
 
     The global neoliberal project has given rise to different ideological dynamics in different zones of the world-economy.  In the North, myopic forms of nationalism have emerged, provoking an intense political conflict between right-wing nationalism and neoliberal globalism, with the Left at the margins.  In the South, anti-imperialist Third World nationalism has emerged to challenge the globalized neoliberal order on the basis of the rights of the nations to sovereignty and the rights of peoples to economic and social development, with the imperialist governments of the North waging unconventional war in defense of its specific interests.  In the political conflicts of the South, the anti-imperialist Left occasionally notes and cheers on the Leftist popular protests of the North, without necessarily appreciating the limited political effectiveness of these protest actions.  In these global ideological dynamics, both the myopic nationalism of the North and the anti-imperialist nationalism of the South reject the assumptions of the globalized neoliberal order. 
 
      Trump, therefore, should not be dismissed as one who does not understand how competition in the world-economy works.  It is not wrong for the President of the United States, or for the chief of state of any nation, to seek beneficial terms of trade for companies based in the nation, or to protect national industries through tariffs.  Trump does not appear to understand, however, that states should protect their national economies in the context of appreciation of the importance and sustainability of the world-system as a whole.  States should defend their national economies not by aggressively pursuing economic interests, as do imperialist policies, but by seeking mutually beneficial trade with other nations, and by cooperating with other states in the development of a world-system that is just, democratic, and sustainable. 
 
      Such a vision of a cooperative world-system has been proclaimed by the Third World nations for more than fifty years, and it is the vision proclaimed by the foreign policy of China, as it seeks mutually beneficial trade with all regions of the world.  For this reason, Tooze is very concerned about China.  He does not express awareness that China is seeking ascent in the world-economy in accordance with rules different from previous cases of ascent in the modern world-economy; and that as it ascends, China is seeking to transform the rules of the world-system itself, basing them on cooperation, rather than domination and superexploitation.  But Tooze does recognize that the integration of China into the world-economy has not had the consequences that were anticipated in the 1990s.  He writes:
The hope [in the 1990s] was that [China’s] integration would transform it into a Western-style globalized economy. The results have certainly been spectacular: China now accounts for a larger share of global growth than the United States and the European Union put together. But the idea that China’s businesses and investors would become detached from the Communist Party, or that they might even begin to call the shots, has proved illusory. With the rise of President Xi Jinping, there is reason to believe that China is becoming precisely the kind of actor of which national competitiveness language talks: an integrated national economic team, in which public and private interest is blurred. It is a fearsome prospect.
​      Perhaps in the 1990s Western politicians and economists did not understand the logic and aspirations of the Chinese socialist project, which has sought to construct socialism with Chinese characteristics, including space for foreign and domestic capital in a national economy regulated by the state.  Now, concerned with this “fearsome prospect,” Tooze hopes that Europe will take steps to address its trade surplus with the United States, so that the two can function as allies to block the ascent of China.  In effect, he is calling on the nations of the North to defend the liberal order against the efforts to construct an alternative world-system from below, in which the role of states as formulators of national social and economic development projects and as regulators of their national economies would be the international norm.
 
      If the peoples of the nations of the North were to understand the issue in these terms, perhaps they would be less inclined to wage unconventional war against those who have less and are seeking a better deal, and more inclined to favor the cooperative approach of China and the Third World.  The vision of China and the Third World recognizes that the world-system, constructed on a foundation of conquest and domination, has reached its economic limits, because it has reached and overextended the geographical and ecological limits of the earth.  The unsustainability of a world-system driven since 1980 by the aggressive imposition of liberal principles is symbolized most clearly by such phenomena as uncontrollable international migration, terrorism, and criminal violence.  In contrast, the possibilities for the future are indicated by the pragmatic socialist policies of nations like China, Vietnam, Cuba, Venezuela, Bolivia, and Nicaragua, which have registered important gains in the construction of viable national projects.  Their delegates display dignified comportment in international fora, calling the nations and peoples of the world to the construction of a more just, democratic, and sustainable world-system.  Let us learn to listen to that voice, which expresses the essential dignity of the human species in its hour of crisis.
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    Author: Charles McKelvey

    Retired professor, writer,  and Marxist-Leninist-Fidelist-Chavist revolutionary

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