Trump plays silly buggers with trade.

It’s hard not to think of Trump as either silly or cynical.  His economic nationalism is skating on very thin ice and is impossible given the current state of capitalist industry and finance in the world today. Trump should know that capital has long considered national borders as an inconvenience, an opportunity to make more capital, but certainly not as impenetrable walls. His own campaign material was printed in China. His ‘Make America Great Again’ hats were made in China. What the hell is he thinking? It may be that he doesn’t care a wit about any of this because nationalism and flag waving are big sellers in the US. If enough Americans buy into his strategy, if in fact he has one, he can safely ignore his anti-globalist stance in practice and get on with making more money for himself and his cronies. He promised Appalachia that coal would return. It won’t. Empty promises don’t matter, it seems. China and Canada are mean and unfair to poor little USA. ‘Yes! That’s right!’ shout his acolytes. Blame others, that’s it. The people will lap it up. As long as people believe him, Trump feels safe. That would make him the consummate cynic. Do you buy into the idea that Trump knows exactly what he’s doing? His popularity is slowly waning however so he had better watch his ass. Now that I’ve got that off my chest, I want to repeat here what I’ve written before, at least in its essence, elsewhere in this blog (among other places). Yes, I will be repetitious in this post, but only because sometimes repeating a message over and over again is the only way to get through to some people. Of course the people I would like to convince to look more deeply into Trump’s politics are not likely to read this blog. Research, science and thoughtful criticism are not where they turn to for ideas on current political affairs. Belief is enough for them, heart and feeling trump brain. Because Trump is so high on America First, I want to outline some ideas that have been kicking around for centuries about the relationship between countries and capital. Where do American corporations fit into Trump’s world of international trade? Where do international industrial practices, just in time production, export processing zones and globalist production, distribution and consumption fit in Trump’s world? Who knows? However, I don’t think it matters much because capital is bigger than Trump and bigger than the American political system. Capital will eventually eclipse all politics and we’ll be left with who knows what. That may be the end of our tenure on this planet. I have no idea. The problem is that we are such a species full of contradictions. We can do amazingly wonderful things then in the blink of an eye turn into murderous butchers. But back to my point. There is a ton of books that have been published in the 19th, 20th and now in the 21st century about the relationship between countries and capital, but they haven’t seemed to have convinced most people that countries are no longer the repositories of capital and haven’t been for a couple of centuries. Most of the books and scholarly articles I’ve read, and I’ve read dozens on this subject, are clear that capital has long since eclipsed countries as the seat of political economic power. Barnet and Muller in their book Global Reach: The Power of Multinational Corporations from 1976, the year I entered graduate school, argue that of the 100 most powerful economic entities on the planet, 49 of them were multinational corporations (MNCs). I’m sure that ratio is now even more skewed towards MNCs than it was then. I suggested earlier in this post that I was about to write about capital, so what am I doing writing about multinational corporations? Well, MNCs are the seat of capital, the embodiment of what capital means and stands for. They are the crystallization of capital, the vehicles for the generation, circulation and consumption of capital and ultimately its concentration. It might be informative at this stage to define what I mean by capital. I’m not going to do that except to say that capital is the means of creating and re-creating wealth although people commonly equate capital with money. Actually, Marx defined capital in the 1860s with his book, Capital. If you want to understand capital, read Marx, then read some more. A recent book by Thomas Piketty (2017) called Capital in the Twenty-First Century, takes up Marx’s challenge and does a fair job of it. His argument carries on where Marx left off. He clearly documents how capital has become increasingly concentrated in the hands of just a few corporations and individuals (the 1%) over the past three centuries. It’s been a slow but inexorable process. I’ve already argued in this blog on several posts that countries were a creation of capital to start with. ‘Modern’ capital was initially dominated by merchant capital, think Christopher Columbus, (starting in the 11th Century and even before), was replaced eventually in the mid 18th Century by industrial capital, think Wedgwood, then in the late 19th Century by finance capital, now, of course, think Rothschild and Goldman Sachs. That doesn’t mean that all forms of capital haven’t survived, it just means that the dominant form of capital has changed over the decades. In the face of the persistent and overwhelming power of capital, countries went from being somewhat independent political entities with more or less functioning economies to essentially servants of capital and managers of the working class. It didn’t happen overnight. It’s a process not an event. As Harold Innis (1894-1952), a political economist and professor at the University of Toronto, wrote in the 1940s, politicians rely on national statistics to support their power. The Canadian government collects national statistics and ostensibly relies on them to make political decisions. Stephen Harper did not like Statistics Canada because it often reported in ways he did not approve of. Innis knew that national statistics were often a sham and he said so. Think of this possible scenario: General Motors sends a car it assembled in Oshawa to Michigan. Stats Can considers this a transaction that needs to be reported under the heading: international trade. Or this: Canada’s petrochemical industry is overwhelmingly owned by American companies. They ship their product along their pipelines from Canada (Alberta) to the US for refining. That is international trade. It strikes me that if we want to get a grip on how ‘our’ economy works we need to abandon our traditional way of collecting statistics or we must at least map out how large multinational corporations do business across borders. William Carroll at the University of Victoria studies international supply chains. His work is illuminating, but the situation is changing so rapidly it’s hard to keep up. According to the Office of the United States Trade Representative:
  • U.S. goods imports from China totaled $505.5 billion in 2017, up 9.3% ($42.9 billion) from 2016, and up 57.3% from 2007. U.S. imports from are up 394% from 2001 (pre-WTO accession). U.S. imports from China account for 21.6% of overall U.S. imports in 2017.
These are impressive statistics, but what real story do they tell? Well, for one, when the Trade Representative notes that ‘imports from China account for 21.6% of overall U.S. imports in 2017, does he include iPhones in that calculation? Apple assembles iPhones in China via a contractor called Foxconn. Foxconn has plants all over the place, not just China and parts for iPhones may very well come from Thailand or the Check Republic. Is an iPhone a Chinese product considered an import from China? China has established social processing zones also known as export processing zones (EPZs) where foreign corporations like Apple can come and set up shop without paying all those annoying local taxes while, in many instances, ignoring health and safety regulations and paying very low wages. Some of these EPZs are huge encompassing whole cities and surrounding areas. EPZs exist in many parts of the world we used to call the ‘Third World.” They are where our toys, clothes, and a myriad of other products are made and/or assembled. All of these products are ‘made’ by American or Canadian manufacturers, who now maybe should be called importers, but they still call the shots in every way. The automobile industry assembles cars here and there but the parts come from all over the globe. Engines can arrive at an assembly plant in Québec or Michigan ready to be dropped into a car, so are all drive train parts. Body parts can be pressed in Mexico and batteries can also come from there. There is no such thing as a “Canadian” car. Trump either knows this and doesn’t care or has it in for the  auto sector for some reason. I wonder if Trump has done the political economic calculus on his tariff plans for the ‘Canadian’ auto industry or if he just wanders off flying by the seat of his pants making decisions that are clearly arbitrary. It’s been well established that putting tariffs on ‘Canadian’ cars will put a significant dent in the profits of American car companies. Trump doesn’t seem to mind. Maybe he thinks it’s fake news. Some people have argued that Trump is just trying to force American corporations to manufacture their products on American soil. The fact is, that horse has already left the barn and there’s no way of getting it back, even if plants could retool. It used to be that the Ford plant in Dearborn, Michigan imported from around the US and abroad all the raw materials required to build a car, manufacture the parts and assemble the cars on site. That is no longer the case and hasn’t been since the creation of shipping containers and the need to acquire parts more cheaply than possible from American sources only. ‘American’ cars are manufactured all over the world. Capital, like the weather, ignores borders. We live in a global world with a global economy. The existence of nation-states or countries is still a fact because taxes need to be collected and passed on to the corporations and workers need to be managed. So far, it seems better to do that locally than globally. That may very well change and there are signs that it is. Trump’s Americans are not happy about the decline of their precious country, but their world is not contained within their borders and the sooner they realize that the better.

Gwynne Dyer – A review of a recent talk: a lot right, some not so much.

Gwynne Dyer – A review of a recent talk: a lot right, some not so much.

 

Gwynne Dyer (http://gwynnedyer.com/) spoke recently at North Island College as part of the Institute of War & Peace being taught over the spring term by three faculty members from the English and Humanities and Social Sciences Department.  This is the third time I’ve heard Dyer speak and on every occasion he has demonstrated an uncanny ability to go on for an hour and a half without notes or even the benefit of a power point presentation.  Astounding!  But he is a compelling speaker.  When I was still teaching sociology at the college I often used Dyer’s films in my classes, one on the experience of Marine basic training on Parris Island, South Carolina and another great one on the ‘tribe’ as an organizing social and political force.  Dyer is an intelligent reporter and critic on world affairs, especially those with military dimensions.

 

In his recent talk at the college he covered three areas of ‘current unrest’ in the world, the Middle East, the Ukraine and the South China Sea.  His analyses often seem counterintuitive as one listens to them yet strangely plausible at the same time.

 

With reference to the Middle East, Dyer argues that there has been no major war to disrupt the area for quite some time.  He goes over the power and potential of the major states in the area, Syria, Lebanon, Jordan, Iran and Iraq, but also of Egypt, to win a war with Israel.  He concludes that all out war between Israel and any one of those Arab states is highly unlikely.  Of course, the tension always seems to be there and there have been the odd military excursions here and there and punishing attacks by the Israelis in Gaza in ‘retaliation’ for Palestinian attacks like the wave of bus bombings in Jerusalem a few years ago.  The West Bank is slowly being overrun with Jewish settlements.  So what would be a viable solution to the ‘crisis’ if one were a Palestinian?  Well, the two state solution seems plausible with Israel taking the bulk of the territory but with the Palestinians at least holding on to some territory over which they would have sovereignty.  A better solution, still, Dyer proposes, might be a one state solution where Israel would cover the whole area from the Egypt to Lebanon and everyone would become a citizen of one country, Israel, whether Jewish or Palestinian.  Because of the demographics of the situation, and if the Palestinians had the vote which would be their right as citizens of Israel, power could realistically devolve to the Palestinians in a reasonable period of time.  Apparently, this scenario is gaining ground as a possibility among Palestinians but the impediments to such a solution are not easily discounted.  Plausible…as they would say on Mythbusters, but probably a long shot.

 

Dyer’s comments about the Ukraine are less optimistic than are his thoughts on the Middle East.  He sees a lot of outright stupidity and bravado there but he is cautiously optimistic that war will be averted as long as Western countries keep their noses out of it but that the tension could very well devolve into something more serious than a skirmish.  Dyer is much more knowledgeable about the situation than I am.  I freely admit that I know very little about the politics of that area of the world, but I still feel there is something lacking in Dyer’s analysis, a feeling I get from my general knowledge of the global political economy over the past few centuries, particularly since the first serious wave of the spread of European capital to other parts of the world in the 15th Century. (let’s not quibble about the Roman empire).  Back to that later.

 

Dyer ended his talk with a note on the South China Sea where China and Viet Nam are now in a dispute about the ownership of some islands that coincidentally are on top of substantial oil reserves.  We know from the news that Chinese nationals are being attacked by Vietnamese in Hanoi and other cities causing thousands of Chinese to return in haste to China. Dyer also talked about longstanding disputes between Japan and Korea over islands (of course).  His main point in his talk about the South China disputes is that China is headed into a deep recession.  Its in need of a diversion so that its citizens are focused on an external ‘threat’ thus inflaming an always present but sometimes dormant nationalism.  For the Chinese leaders this is a much better outcome than having China’s workers brooding on the fact that their jobs have disappeared and having them get revolting over that. There’s already enough unrest in Chinese factories with workers demanding pay increases and better working conditions.  Don’t need any more of that!   I don’t believe I’ve misinterpreted Dyer in any of this but I’m open to be corrected if need be.  That said, I left Dyer’s talk last week a little dissatisfied.

 

Dyer, being a specialist in military and political history, can be forgiven for not integrating political economy into his analysis more completely.  In reference to some situation in the Ukraine that I can’t recall at the moment, although it may have had something to do with the sad state of productive capacity and outmoded means of production and competition from other jurisdictions, he made an offhanded remark that ‘well, that’s just business.’  Well, business, especially at the scale we’re concerned with here, is never just business.  When Dyer mentions that a coming recession in China is driving foreign policy he’s getting it, sort of, but not essentially.

 

I want to step back here for a moment and consider why there has been no major military battles in the last 70 years on this favourite planet of ours.  It could be argued, I suppose, that assured mutual destruction may have something to do with it.  Launching nuclear weapons is a no-win game and everybody knows it.  That doesn’t mean that some nut job in the Pentagon or the Kremlin hasn’t thought about it.  So far more rational heads have prevailed.  Let’s hope it stays that way.

 

I believe, however, that the main reason for the fact that bombs aren’t flying between major powers in the world today is much more about the fact that countries are not really the drivers of economic activity, multinational corporations are.  I know not everyone agrees with me on this, but from my reading of European history, the driver of the formation, configuration and constitution of countries (states) from as far back as the 14th Century is capital expansion.  In the Middle Ages the acquisition of land, often violently but mainly by treaty and intermarriage, was the way wealth and power were accumulated.  After all, it was the prospect of new territory that prompted Queen Isabella of Spain to bankroll Christopher Columbus on his little jaunt into the Atlantic Ocean.  Columbus himself didn’t care a hoot about territory. He was interested in ‘stuff’ he could bring back from India or wherever he landed to sell on the European market to make himself rich.  For his class of people, the bourgeoisie, commodities, not the conquest of land were the source of wealth.  That’s still the way it is today although today we’ve come to a time when the world is becoming highly integrated in economic terms.  Companies with head offices the whereabouts of which matter very little anymore, produce (or contract other local businesses to produce) goods in export processing zones all over the world.  They then move them to ‘consumer’ markets mostly in Europe and North America, but increasingly to every corner of the planet by just-in-time processes of distribution.  In whatever country a corporation has a head office (usually just because it first saw the light of day there) it’s likely to lobby hard and get the support of the national government to champion its interests even though those interests may clash with those of the citizens of said country.  The larger the corporation the less likely the national government is to ignore it.  And if, as with the petrochemical or auto industries, a number of corporations lobby hard through their non-profit lobbying societies like the Canadian Petroleum Producers Association, then the government takes the call no matter what time of the day or night.

 

In fact, with a few exceptions, the governments of our world are all too eager to serve corporate interests to the detriment of those of its own citizens.  A recent article in The New Republic suggests that a number of ‘American’[1] corporations are already whining about how economic sanctions against Russia would be sanctions against them because they do billions of dollars of business a year in Russia and have high hopes for Russia as an emerging market for US goods (some produced, no doubt, in China). There are Pepsi and Coca-Cola signs all over Moscow. (Vinnik 2014)  Now this has a critical impact on the likelihood of open interstate warfare, especially where nuclear weapons are concerned.  It’s really not about territorial expansion anymore, anyway.  It’s about control of commodity markets, including those for cheap labour power.  Particularly strange would be for the US to decide to attack China with bombs.  It’s true that if Walmart were a country it would be China’s 8th most important trading partner.  I can’t imagine Washington attacking Walmart’s factories in China!

 

In fact, in a perverse kind of weird way, I think that the fact that corporations, in looking for the cheapest sources of labour and raw materials, spread themselves all over the globe is a deterrent to all-out war between states.  Of course the fear of war is important because that justifies feeding billions of dollars into arms producing businesses.  But skirmishes here and there use up some of that arms production as do military exercises like patrolling the South China Sea, something the American Navy has done since 1945.  Still, an American government aiming to protect ‘its’ corporations is not likely to send in the troops when that would lead to dropping corporate profits.  Nowadays, war is not always good for business and its clearer now than ever that corporate interests come first in our world.  I hate to admit it, but corporate global expansion may be a strong deterrent to interstate warfare. (Vinnik 2014)

Works Cited

Vinnik, Danny. These U.S. Corporations Are Probably Scared of Sanctions on Russia. March 4, 2014. http://www.newrepublic.com/article/116853/economic-sanctions-would-hurt-american-companies-russia.

 

 

 

 

[1] Corporations are considered legal individuals in the US and in Canada but it’s a stretch to think of them as ‘national’ when capital supercedes state in the way the world is organized these days according to Thorstein Veblen and other commentators for whom I have a great deal of respect.  Although the relationships are complicated, it’s more accurate to say that capital created the modern nation-state than the other way around.