Commentary No. 441, January 15, 2017
Most politicians, journalists, and academic analysts describe the relations of China and the United States as one of hostile competition, especially in East Asia. I disagree. I believe that the top of both countries’ geopolitical agenda is reaching long-term accord with the other. The major bone of contention is which of the two prospective partners will be the top dog.
When Donald Trump says that he wants to make America great again, he is not in the least outside the general consensus of the United States. Using different words and different policy proposals, this futile ambition is shared by Hillary Clinton, Barack Obama, even Bernie Sanders, and of course the Republicans. It is shared as well by most ordinary citizens. Who is ready to say that the United States should settle for being number two?
When, in 1945, the United States had definitively defeated its great rival Germany, it was set to assume the role of hegemonic power in the world-system. The only obstacle was the military power of the Soviet Union. The way the United States dealt with this obstacle was to offer the Soviet Union the status of junior partner in the world-system. We refer to this tacit accord as the Yalta arrangements. Both sides denied that there was any deal, and both sides fully implemented it.
The United States dreams of reproducing a Yalta-like arrangement with China. China scoffs at this idea. It considers the days of U.S. hegemony as over, believing that the United States no longer has the economic strength to underpin such a status. It also believes that internal disunity renders the United States impotent in the geopolitical arena. On the contrary, China seeks to impose a Yalta-like arrangement in which the United States would be the junior partner. The closest analogy would be the post-1945 relationship of Great Britain with the United States.
China believes that slowly but surely its economic strength will be increasingly unstoppable in the coming decades. It believes that it can hurt the United States economic well-being far more than the reverse. In addition, it believes it will attract other Asians who resent having lived for at least the past two centuries in a world dominated politically and culturally by Europeans.
China’s analysis to be sure has two weak points. China may be overestimating the degree to which it can continue to dominate worldwide productive superiority. And it is haunted by the fear that the country might be pulled apart, as has happened often in Chinese history. A deal with the United States might minimize the impact of these dangers for China.
As for the United States, one day reality will sink in and a junior partner role might come to seem better than no deal at all. In this regard, Trump may speed up the process. He will bark, threaten, and insult, but he will not make America hegemonic again. In this sense, a Trump regime will disabuse more Americans than any sober version of the same ambition, such as that represented by Obama’s presidency.
In any case, the hidden dance between China and the United States – the unavowed search for partnership – will remain the principal geopolitical activity in the world-system for the coming decades. All eyes should be on it. One way or another, China and the United States will become partners.
Commentary No. 440, January 1, 2017
Short-term prediction is the most treacherous of activities. I normally try never to do it. Rather, I analyze what is going on in terms of the longue durée of its history and the probable consequences in the middle-run. I have decided nonetheless to make short-term predictions this time for one simple reason. It seems to me that everyone everywhere is focused for the moment on what will now happen in the short run. There seems to be no other subject of interest. Anxiety is at its maximum, and we need to deal with it.
Let me start by saying that I think 95% of the policies Donald Trump will pursue in his first year or so in office will be absolutely terrible, worse than we anticipated. This can be seen already in the appointments to major office that he has announced. At the same time, he will probably run into major trouble.
This contradictory result is the consequence of his political style. If we look back at how he has won the presidency of the United States, he did it against all odds with a certain deliberate rhetorical technique. On the one hand he has constantly made statements that responded to major fears of U.S. citizens by using coded language that the recipients interpreted as support for policies that they thought would alleviate their multiple pains. He did this most often either by brief twitters or in tightly-controlled public rallies.
At the same time, he was always vague about the precise policies he would pursue. His statements were almost always followed by interpretations by major followers, and quite often these were differing, even opposing, interpretations. In effect, he took the credit for the strong statements and he left the discredit for the precise policies to others. It was a magnificently effective technique. It got him where he is and it seems clear that he intends to continue this technique once in office.
There has been a second element in his political style. He tolerated anyone’s interpretation as long as it constituted an endorsement of his leadership. If he sensed any hesitation about endorsing him personally, he has been quick to wreak vengeance by attacking publicly the offender. He required absolute fealty, and insisted it be displayed. He accepted penitent remorse but not ambiguity about his person.
It seems that he believes the same technique will serve him well in the rest of the world: strong rhetoric, ambiguous interpretations by his varied panoply of major followers, and in the end rather unpredictable actual policies.
He seems to think that there are only two countries other than the United States that matter in the world today – Russia and China. As both Robert Gates and Henry Kissinger have pointed out, he is using the Nixon technique in reverse. Nixon made a deal with China in order to weaken Russia. Trump is making a deal with Russia in order to weaken China. This policy seemed to work for Nixon. Will it work for Trump? I don’t think so, because the world of 2017 is quite different from the world of 1973.
So let us look at what the difficulties ahead are for Trump. At home, his greatest difficulty is undoubtedly with the Republicans in Congress, particularly those in the House of Representatives. Their agenda is not the same as that of Donald Trump. For example, they wish to destroy Medicare. Indeed they wish to repeal all social legislation of the last century. Trump knows that this could bring a revolt of his actual electoral base, who want social welfare at the same time that they want a deeply protectionist government and xenophobic rhetoric.
Trump is counting on intimidating Congress and making them toe his line. Maybe he can. But then the contradictions between his pro-wealthy agenda and his partial maintenance of the welfare state will become blatant. Or Congress will prevail over Trump. And he will find that intolerable. What he would do about it is anyone’s guess. He doesn’t know himself since he doesn’t face up to this kind of difficult situation until he has to.
The same thing is true in the geopolitics of the world-system. Neither Russia nor China is ready to back down in the least from their present policies. Why should they? These policies have been working for them. Russia is once again a major power in the Middle East and in the whole of the ex-Soviet world. China is slowly but surely asserting a dominant position in Northeast and Southeast Asia, and increasing its role in the rest of the world.
No doubt both Russia and China run into difficulties from time to time and both of them are ready to make timely concessions to others but not more than that. So Trump is going to find that he is not the alpha dog internationally to whom everyone must give obeisance. And then what?
What he might do once his threats are ignored is again anyone’s guess. What everyone fears is that he will act precipitately with the military tools at his disposition. Will he? Or will he be restrained by his immediate inner group? No one can be sure. We can all just hope.
So there it is. In my view, it is not a pretty picture but not a hopeless one. If somehow we reach in the coming year an interim stability within the United States and within the world-system as a whole, then the middle-run takes over analytically. And there the story, while still grim, has at least better prospects for those of us who want a better world than that which we presently have.
Commentary No. 439, December 15, 2016
Every country has mixed feelings about its future, but some are more self-confident than others. At the present moment, there are very few countries in which self-doubt does not seem greater than self-confidence. This seems to me true of the United States, both western and eastern Europe, Australia, the Middle East, and most of Africa and Latin America. The biggest exception to this global worry and pessimism is China.
China tells itself that it is performing better in the world-economy than just about anyone else. To be sure, it seems to be performing less well today than a few years ago, but so is the rest of the world, and it is still doing better than the others.
China also tells itself that it is growing stronger all the time in its geopolitical position – first of all in East and Southeast Asia and now secondly in much of the rest of the world. It seems to be contemptuous of U.S. claims of a new position in Asia to which it says it is giving priority. To be sure, they do worry about the degree of self-control of the U.S. giant, especially now that the unpredictable Donald Trump is coming to power. But again China seems to think it can handle, even tame, what it considers to be U.S. arrogance.
The question is how realistic is this self-assessment of China? There are two premises embedded in China’s self-confidence, whose validity need to be investigated. The first is that countries, or rather the governments of states, can actually control what is happening to them in the world-economy. The second is that countries can effectively contain popular discontent, whether by suppression or by limited concessions to demands. If this was ever even partially true in the modern world-system, these assertions have become very dubious in the structural crisis of the world capitalist system in which we find ourselves today.
When we look at the first premise, the ability of countries to control what happens to them in the ongoing life of the modern world-system, the greatest evidence that this proposition is dubious is what has been happening in the last few years in China itself. Surely no state has worked as hard as China to guarantee its continued high performance. China has not left its activities to the workings of the “market.” China’s government has constantly intervened in economic activity within China. Indeed, it has virtually dictated what is to be done and how it is to be done. Yet, despite all that the government has done, China has been encountering of late worrisome setbacks. The government has been preoccupied with these setbacks, but the best it has been able to do has been to moderate them, not prevent them. I do not denigrate the actions of the Chinese government. I merely insist on noticing the limits of their efficacy.
If we look at the geopolitical arena, China has counted on being able to insist that other states recognize and implement its “one China” policy. Considering what the global situation was fifty years ago, China has done exceptionally well in this regard. Nonetheless, recently Taiwan seems to be regaining some ground in its struggle for autonomy. Perhaps this is a momentary illusion, but perhaps not.
The second premise is seeming even more dubious these days. Popular uprisings against regimes because of their harshness or the corruption they have fomented is not new. But they seem more frequent, more sudden, and even more successful than in the past. A good example is right next door to China – in South Korea. There President Park Geun-hye has catapulted downward in public favor seemingly from one day to the next. She has been impeached despite her impressive electoral victory and her control of the state’s administrative machinery.
A look at these popular uprisings shows that, while they often succeed in overthrowing the regime in power, they do not appear to create a lasting new regime. But this observation would be of very limited comfort to any regime, and certainly not to the present regime in China.
It is not that the Chinese government, and its interlocked partner, the Chinese Communist Party, are unaware of these arguments. Far from it! But they believe that they can and will overcome the obstacles and emerge over the next ten to twenty years as the dominant economic structure in the world. And, given this, they expect that they will prevail geopolitically over others, and in particular over the United States.
No one can be sure how this geopolitical rivalry will play out. I do counsel skepticism about the two premises of China’s self-confidence. I return, as I always do, to viewing the current world situation as part of a rivalry between two groups that are contending not about how to manage the current world-system or prevail in it, but rather about what should replace a capitalist system that is no longer viable, either for its super-elites or for its large oppressed classes and peoples.
Commentary No. 437, Nov. 15, 2016
Almost everyone is astonished at Trump’s victory. It is said that even Trump was astonished. And of course now everyone is explaining how it happened, although the explanations are different. And everyone is talking about the deep cleavages that the election created (or it reflected?) in the U.S. body politic.
I am not going to add one more such analysis to the long list I’m already tired of reading them. I just want to concentrate on two issues: What are the consequences of this victory of Trump (1) for the United States, and (2) for U.S. power in the rest of the world.
Internally, the results, no matter how you measure them, move the United States significantly to the right. It doesn’t matter that Trump actually lost the national popular vote. And it doesn’t matter that if a mere 70,000 votes in three states (something under 0.09% of the total vote cast) had been lacking to Trump, Hillary Clinton would have won.
What does matter is that the Republicans have gained what is called the trifecta – control of the Presidency, both Houses of Congress, and the Supreme Court. And while the Democrats might win back the Senate and even the Presidency in four or eight years, the Republicans will hold on to a Supreme Court majority for a very much longer time.
To be sure, the Republicans are divided on some important issues. This is apparent just one week after the elections. Trump has already begun to display his pragmatic side and therefore his priorities: more jobs, tax reduction (but certain kinds), and saving parts of the Affordable Care Act (Obamacare) that are widely popular. The Republican Establishment (a quite far right Establishment) has other priorities: destroying Medicaid and even Medicare, different kinds of tax reform, and rolling back social liberalism (such as abortion rights and gay marriage).
It remains to be seen if Trump can win against Paul Ryan (who is the key figure in the Congress-based rightwing), or Paul Ryan can push back Trump. The key figure in this struggle seems to be Vice-President Mike Pence, who has positioned himself remarkably as the real number two in the Presidential office (as had Dick Cheney).
Pence knows Congress well, is ideologically close to Paul Ryan, but politically loyal to Trump. It was he that chose Reince Priebus as Chief of Staff for Trump, preferring him to Steve Bannon. Priebus stands for uniting the Republicans, while Bannon stands for attacking Republicans who are less than 100% loyalists to an ultra-rightwing message. While Bannon got a consolation prize as an inside counselor, it is doubtful that he will have any real power.
However this intra-Republican struggle turns out, it is still the case that U.S. politics are now significantly further to the right. Perhaps the Democratic Party will reorganize as a more leftwing, more populist movement, and be able to contest the Republicans in future elections. That too remains to be seen. But Trump’s electoral victory is a reality and an achievement.
Let us now turn from the internal arena in which Trump has won and has real power to the external arena (the rest of the world) in which he has virtually none. He used the campaign slogan “make America great again.” What he said time and time again was that, if he were president, he would ensure that other countries respected (that is, obeyed) the United States. In effect, he alluded to a past in which the United States was “great” and said that he would recover that past.
The problem is very simple. Neither he nor any other president – be it Hillary Clinton or Barack Obama or for that matter Ronald Reagan – can do very much about the advanced decline of the erstwhile hegemonic power. Yes, the United States once ruled the roost, more or less between 1945 and circa 1970. But ever since then, it has been steadily declining in its ability to get other countries to follow its lead and to do what the United States wanted.
The decline is structural and not something within the power of an American president to stem. Of course, the United States remains an incredibly powerful military force. If it misuses this military power, it can do much damage to the world. Obama was very sensitive to this potential harm, which accounts for all his hesitancies. And Trump was accused throughout the electoral campaign of not understanding this and therefore being a dangerous wielder of U.S. military power.
But while doing harm is quite possible, doing what the U.S. government might define as good seems virtually beyond the power of the United States. No one, and I mean no one, will follow today the lead of the United States if it thinks its own interests are being ignored. This is true not only of China, Russia, Iran, and of course North Korea. It is true as well of Japan and South Korea, India and Pakistan, Saudi Arabia and Turkey, France and Germany, Poland and the Baltic states, and our erstwhile special allies like Israel, Great Britain, and Canada.
I am fairly sure that Trump does not yet realize this. He will boast about the easy victories, like ending trade pacts. He will use this to prove the wisdom of his aggressive stance. But let him try to do something about Syria – anything – and he will soon be disabused of his power. He is most unlikely to retreat on the new relationship with Cuba. And he may come to realize that he should not undo the Iran agreement. As for China, the Chinese seem to think that they can make better arrangements with Trump than they would have been able to do with Clinton.
So, a more rightwing United States in a more chaotic world-system, with protectionism the major theme of most countries and an economic squeeze on the majority of the world’s population. And is it over? By no means, neither in the United States, nor in the world-system. It’s a continuing struggle about the direction in which the future world-system (or systems) should and will be heading.
Commentary No. 436, November 1, 2016
The World Social Forum (WSF) has met regularly since its first meeting in Porto Alegre in 2001. And just as regularly, there have been analysts who have announced its demise as a relevant expression of the Global Left. And nonetheless, somehow, it continues to matter in the struggle for global justice.
The most recent meeting was in Montreal, Quebec on August 9-14, 2016. This meeting was in some ways different from previous ones. It was the first one held in the Global North. The decision to hold it there was a deliberate attempt to demonstrate the globality of the WSF.
This decision came at a price. The Canadian government refused visas for a significant number of prospective attendees coming from the Global South. The cost of travel and lodging for attendees was relatively high. The result was a meeting with a reduced number of participants, and one that was tilted more than previously to persons coming from the Global North. This was no surprise to the organizers. The belief was that the price was worth the positive side of the decision.
In some ways, the meeting was like all previous meetings of the WSF. On the one hand, there was an immense range of themes under discussion. And participants tended to attend those thematic panels that were of greatest interest to them. The result was a network of thematic ghettos, and an insufficient amount of trans-communication between the range of different worldwide political struggles.
On the other hand, there was a major debate about the validity of the “horizontal” manner in which the WSF was organized. Its critics argued that the WSF was not (or no longer) relevant, as a result, to the real political struggles going on everywhere. This debate has been held repeatedly, but this time it was perhaps more intense, and even angry. Nonetheless, its essence remained the same.
The major new argument among those who were unhappy with the “horizontalist” mode of organization was that we should not be looking at who is now attending the WSF but at those who are no longer attending it because they have come to see it as an expensive waste of time, since it did not further the actual political struggle.
The counter-argument is that the WSF has shown itself to be a powerful brand name. There are now an ever-growing number of countless regional, national, and local social forums. There are endless thematic forums at all geographical levels. These forums, as the global WSF itself, are self-organizing. The WSF has proved to be a bottom-up concept, not a top-down one. And this remains its essential strength.
Of course, none of us has quantitative data to back up these assertions, one way or the other. It is a battle of one set of intuitive and genuinely subjective judgments against another. If it has become more intense, it is largely because the global political struggle that seemed so relatively favorable to the Global Left a decade ago now seems to have been reversed. The resulting pessimism within the global justice movement has led to the harsher internal debate of the WSF. It is not the WSF that has caused this worldwide greater difficulty for the Global Left. Rather, it is this reversal that has led to more internal debate within the WSF.
My own sense is that we have to keep our eye on the global struggle, and the role that the WSF can play in it. If we were to hold no more WSF meetings, it might liberate some money, energy, and time for other activities. But these “other activities” might never occur, as pessimism leads to withdrawal from activism. The meetings of the WSF, however imperfect, are acts both of renewal and optimism. The leaders of two major organizations in the Tunisian struggles – the FTDES (Tunisian Forum for Economic and Social Rights) and the UGTT (Tunisian General Labor Union) – have written a very critical paper analyzing the failings of the Montreal meeting. Nonetheless, they end their paper by saying that, despite the flaws, the meeting was a success because it preserved le sillon de l’espoir (“the trace of hope”).
One very positive aspect of the Montreal meeting was that the sessions devoted to the future of the WSF were massively attended. The debates were fierce, but what it showed to me was that the attendees wanted to debate. They were seeking ways to strengthen their struggles. They thought that how the WSF was organized might be part of the answer.
The secret of the WSF from the outset has been that it sought to be widely inclusive of all the tendencies within the Global Left. It sought to be mindful of the historic failures of the Global Left over the past two centuries. It has been a plus, not a minus, in the worldwide struggle to transform the world-system and to replace it with a relatively democratic, relatively egalitarian one. Let us not waste our time throwing stones at each other. Let us continue to talk to each other and learn from each other.
Commentary No. 435, October 15, 2016
The global scene has been miserable for the last decade at least, if not longer. The world is inundated by wars, big and small, that seem both unending and unendable; by horrendous cruelties about which their perpetrators boast; and by deliberate attacks on so-called safe zones. In this hell on earth, there has been only one bright light. What was called since 1948 la violencia in Colombia seemed to be coming to an end.
The struggle has taken the form since 1964 of an attempt by a peasant guerilla group called the Fuerzas Armadas Revolucionarias de Colombia (Revolutionary Armed Forces of Colombia, or FARC), to overthrow the government. The guerilla movement faced the fierce opposition of the government, with the active support of the United States. In addition, there were unofficial murderous right-wing paramilitary forces, which had the unavowed backing of the government.
What became apparent in the last decade was that neither side was able to win an outright military victory. The stalemate and the ensuing battle fatigue led each side to reconsider its all-or-nothing position and to enter into political negotiations. How did this happen?
On the government side, a new president was elected in 2010. He is Juan Manuel Santos, scion of a great aristocratic landowning family and an ultra-conservative in his politics. Under the previous presidency of Alvaro Uribe, he had been the Minister of Defense. As such, he had led a great offensive to wipe out FARC. However, he was a realist and, once elected president, he secretly sought negotiations with FARC.
On the side of FARC, a parallel succession occurred. The number of zones in which FARC had de facto military control had been reduced. Two successive leaders had been killed. The latest leader, Rodrigo Londoño, known by his guerilla name as Timochenko, was also a realist and also sought negotiations.
The secret negotiations led to an announcement in October 2012 that they reached the point of agreeing on a framework for discussion. They agreed to meet in Havana under the joint sponsorship of the governments of Cuba and Norway, and with the support also of Chile and Venezuela. These negotiations were long and difficult but, one by one, compromises were reached on six major issues. Hence, the Colombian government and FARC publicly signed an agreement on September 26, 2016.
However, before implementing the agreement, the Colombian government submitted the agreement to a plebiscite. The plebiscite was the idea of Santos, who felt that true peace required the legitimation of a popular vote. FARC thought it was a bad idea, but did not obstruct the vote.
The previous president, Alvaro Uribe, who had loudly opposed any negotiations from the beginning, led the call for a no-vote. The polls indicated an easy win for the yes-vote. However, in the plebiscite on October 2, the no-vote obtained a very narrow victory of 50.2 percent. Colombia and the world has been in shock ever since.
Why were the advance polls so mistaken? There may have been many factors. Some persons may have lied to the pollsters, not wishing to admit to being opposed to a “peace” accord. Some yes-voter persons may have been “lazy” and not bothered to vote because the polls indicated such an easy victory for the yes-vote. Unexpected bad weather made it difficult to vote in some pro-FARC rural areas. And perhaps some wavering yes-voters may have had last-minute fears about allowing FARC to enter the political process. Only 37% of the eligible voters cast a vote.
Whatever the explanation, the entire peace process has been upended. For Colombia, the question is what next? Alvaro Uribe says that he will not discuss anything with FARC. He insists that the Santos government retract two key concessions to FARC. One has to do with leniency for FARC leaders for past violence. The second has to do with a guarantee to FARC of some non-voting seats in the next two legislatures, a proposal that would allow a reorganized FARC to enter the political process legitimately.
FARC is less intransigent. It says it is willing to resume negotiations with the Santos government. And the Santos government is clearly uncertain about how (and about what) it can talk with Uribe on the one hand and FARC on the other.
Into this confused situation the Norwegian Nobel Committee has entered the picture with its award on October 7 of the peace prize to Santos. Let us notice several things about this award. First, the decision was made before the plebiscite. The award was therefore for an achievement that has not in fact been realized. The award reflected widespread sentiment around the world.
Secondly, this was an award made to him alone and not to his negotiation partner, Londoño. This is very unusual. In the six other times since 1945 in which the prize was awarded for a peace agreement, it was always awarded jointly to the leading figure on each side. Was the Norwegian Nobel Committee hesitant to include Londoño because they sensed it was too delicate an issue? It could not have been more upsetting to some people than giving the prize to Arafat in 1994 or to Henry Kissinger in 1973.
Does the prize for Santos strengthen his hand? Slightly, but I cannot imagine that Uribe is ready to make any serious concessions now that he has won the plebiscite. FARC seems more willing to discuss the matter. And complicating the matter is the fact that another smaller guerilla movement – the Ejército de Liberación Nacional (National Liberation Army, or ELN) has not even started negotiations with the government. The plebiscite’s result reinforces those within the ELN who are against any negotiations at all.
Frankly, I do not see any way the peace accord can be saved. The exceptional bright light of Colombia has been extinguished. Colombia is now like all the other areas of unending conflict. So I say to Santos and Londoño: Nice try, but you didn’t make it. The chaotic world situation continues unabated in what I remind you is the struggle to decide on the successor system to the capitalist system that is now in systemic crisis.
Commentary No. 434, October 1, 2016
This is the question people left of center have been asking for some time now. In different ways, it is being posed in Latin America, in much of Europe, in Arab and Islamic countries, in southern Africa, and in northeast Asia. The question is all the more dramatic because, in so many of these countries, this follows a period when there were significant shifts leftward.
The problem for the left is priorities. We live in a world in which the geopolitical power of the United States is in constant decline. And we live in a world in which the world-economy is seriously reducing state and personal incomes, so that the living standard of most of the world’s population is falling. These are the constraints of any political activity by the left, constraints the left can do little to affect.
Increasingly, there are movements emerging that make their appeal on a denunciation of mainstream centrist political parties. These movements call for radically new transformative policies. But there are two kinds of such movements, what one might call a right version and a left version. The right version can be found in Trump’s U.S. presidential campaign, Rodrigo Duterte’s anti-drug campaign in the Philippines, the Law and Justice Party in Poland, and many others. For the left, priority number one is to keep such movements from seizing state power. These movements are basically xenophobic and exclusionist and will use their control of the state to crush movements of the left.
On the other hand, there exist movements of the left that have also been organizing on the basis of radically new transformative policies. They include Bernie Sanders’ attempt to obtain the Democratic nomination for U.S. president, Jeremy Corbyn’s attempt to return the British Labor Party to its historic support of socialism, Syriza in Greece and Podemosin Spain, and many others. Of course, when such movements come near to obtaining state power, the world right (mainstream or radically anti-Establishment) unites to eliminate them or to force them to modify their positions in major ways. This is what happened to Syriza.
So this second priority has its in-built limitations. They are forced to become another version of a center-left social-democratic party. This does serve one function: It limits the short-run damage to the poorer strata, thereby minimizing the damage. But it does not aid in transformation.
The middle-run objective of establishing a new world-system that is relatively democratic and relatively egalitarian requires political action of a different kind. It requires organizing everywhere at the bottom level of politics and building alliances up from there, rather than down from state power. This has been the secret of the recent strength of rightwing anti-Establishment movements.
What will make it possible for the left to gain the upper hand in the struggle over the next 20-40 years to establish a successor system to our existing capitalist system, now in definitive decline, is an ability to combine the short-run politics of alliances to minimize the harm that tight budgets do to the poorer strata, fierce opposition to the control of state power by rightwing anti-Establishment movements, and continuous organization by the world left at the bottom level of politics. This is very difficult and requires constant clarity of analysis, firm moral options for the kind of possible other world we want, and wise tactical political decisions.
Commentary No. 433, September 15, 2016
The world’s economists have been wrestling with something they have found difficult to explain. Why is it that stock market prices have continued to go up despite the fact that something called growth seems to be stagnant? In mainstream economic theory, it’s not supposed to work that way. If there’s no growth, market prices should decline, thereby stimulating growth. And when growth recovers, then market prices go up again.
Those who are faithful to this theorizing say that the anomaly is a momentary aberration. Some even deny it is true. But there are others who consider the anomaly to be an important challenge to the mainstream theorizing. They seek to revise the theorizing to take into account what many are now calling “secular stagnation.” The critics include various prominent persons, some of them Nobel Prize laureates. They include such different thinkers as Amartya Sen, Joseph Stiglitz, Paul Krugman, and Stephen Roach.
While each of these persons has a different line of argument, they share some beliefs. They all believe that what the states do has a large impact on what happens. They all believe that the present situation is unhealthy for the economy as a whole and has contributed to a significant increase in the polarization of real income. They all believe that they should try to mobilize public opinion to put pressure on governmental authorities to act in specific ways. And they all believe that, even if the present unhealthy and anomalous situation may last for some time yet, there do exist appropriate state policies that will make possible a less polarized and unhealthy economy.
In short, and this is my main point here, none of the critics are ready to go further and accept the argument that the capitalist system as such has entered a phase of inevitable decline. This means that there does not exist any governmental policy that will restore capitalism’s functioning as a viable system.
Not so long ago, secular stagnation was a term used by many analysts primarily to describe the state of the Japanese economy beginning in the 1990s. But since 2008 the use of the concept has been applied to diverse areas – Eurozone members as Greece, Italy, and Ireland; oil-rich states as Russia, Venezuela, and Brazil; recently the United States as well; and potentially such previously strong economic actors as China and Germany.
One of the problems for those who seek to understand what has been happening is that different analysts use different geographies and different calendars. Some are talking of the situation state by state and some are trying to assess the situation in the world-economy as whole. Some see secular stagnation starting in 2008, others in the 1990s, still others as of the late 1960s, and a few as of even earlier.
Let me propose once again another way of viewing secular stagnation. The capitalist world-economy has existed in parts of the globe since the sixteenth century. I call this the modern world-system. It has steadily expanded geographically, finally encompassing the entire globe since the mid-nineteenth century. It has been a very successful system in terms of its guiding principle, the endless accumulation of capital. That is, seeking to accumulate capital in order to accumulate still more capital.
The modern world-system, like all systems, fluctuates. It also has mechanisms that limit the fluctuations and push the system back to equilibrium. This looks like a cycle of ups and downs. The only problem is that the downs never return to the previous low point, but rather to one somewhat higher. This is because, in the complex institutional pattern, there is resistance to going all the way down. The real shape of the cyclical rhythms is two steps up and one step down. The point of equilibrium is therefore moving. In addition to the cyclical rhythms, there are secular trends.
If one measures the abscissa of the trends, they move toward an asymptote of 100%, which of course they cannot cross. Somewhat before that point (say, about 80%), the curves begin to fluctuate wildly. This is the sign that we have moved into the structural crisis of the system. It bifurcates, meaning that there are two different, almost opposite, ways to choose the successor system(s). The only thing that is not possible is to make the present system operate in its previously normal fashion.
Whereas before that point, great efforts to transform the system resulted in little change, now the opposite is true. Every small effort to change the system has great impact. It is my argument that the modern world-system entered into this structural crisis circa 1970 and will remain in it for another 20-40 years. If we wish to assess useful action, we need to bear in mind two different temporalities, the short term (at most three years) and the middle term.
In the short term, what we can do is minimize the pain of those most negatively affected by the increasing income polarization that is occurring. Real people live in the short term and need some immediate relief. Such relief, however, will not change the system. Change can come in the middle run as those favoring one or another kind of successor system obtain sufficient strength to tilt the bifurcation in their direction.
Here is the danger of not going far enough in critical analyses of the system. Only if one sees clearly that there is no way out of persistent stagnation can one in fact become strong enough to win the moral and political struggle. One prong of the fork stands for the replacement of capitalism by another system that will be as bad or even worse, retaining the crucial features of hierarchy, exploitation, and polarization. The other prong stands for a new system that is relatively egalitarian and relatively democratic.
In the years to come, there may be upturns that seem to indicate that the system is functioning again. Even the level of employment in the system as a whole, the key measure of the state of the system, may rise. But such a rise cannot last long because the global situation is too chaotic. And the chaos paralyzes the readiness of both powerful entrepreneurs and simple persons to expend their remaining capital in ways that will risk loss and therefore their survival.
We are in for a wild ride and a very unpleasant one. If we are to behave sensibly, clarity of analysis is the first requirement, followed by moral choice, and political judgment. The bottom line is that we are way past the point in which there is any way that capitalism as a historical system can survive.
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