Category: MAGAZINE

US-China Economic and Military Competition and the Flight of Capital from Emerging Economies – Jörg Nowak, Ekrem Ekici

In the last issue, we have made two statements in our text on the national imperialist state: First, that a trade war between the US and China is not in sight, and second, that the national reorientation of the mightiest imperialist countries will increase the contradictions between emerging economies and the imperialist countries. As it stands now in November 2018, we were wrong about the trade war that has started to unfold, and is starting to depress growth and trade. And we were right about the effects of the policies of the Trump administration on emerging economies like Turkey, Mexico, Brazil, Argentina, India, Indonesia etc.: the rise in interest rates of the Fed and the temporary spike of the oil price during spring and summer 2018 led to popular unrest, currency crises, the outflow of investment from emerging economies and a renewed focus on debt in emerging economies.

The current situation is impregnated by two tendencies: 1. The competition between the US and China in a technological-military-economic race, accompanied by Japan and the EU as secondary competitors. 2. The subordination of emerging economies (excluding China) in the current scenario of higher interest rates in imperialist core countries.

We will start to outline the second phenomenon and then relate it back to the first one.

1. From emerging to stagnating economies

The mid term tendency in the relationship between imperialist economies and emerging economies is expressed in a change in the monetary policy: the end of quantitative easing in the US and the EU, and thus the end of the hyperliquidity flowing to emerging economies, accompanied by a tendency to higher interest rates in imperialist economies, most importantly the interest rate rises by the US Fed. This change in monetary policy is not the content of the reorientation at stake, but its instrument: the short term effect is an outflow of liquidity in dollars from the emerging economies, and ensuing currency crises, leading in the mid-term to a cementing of the subaltern position of emerging economies like Indonesia, Turkey, South Africa, the Philippines, India, Brazil and Argentina. For example, in May and June 2018 investors withdrew 14 billion dollar from EM bonds and equities (IIF 2018). Several currencies went down significantly in relation to the US dollar since November 2017, headed by the Argentine peso that fell about 50 % in one year, followed by the Turkish Lira that fell one third against the dollar, while other countries saw lighter but still quite significant depreciation of their national currencies: 10 % devaluation of the Brazilian Real in comparison with the US dollar, 10 % of the Indonesian Rupiah, 10 % of the Phillippine Peso, 12 % for the Indian Rupee and only 5 % for the Mexican Peso. The South African Rand is at the same level as one year ago compared to the dollar, but had dropped 10 % lower in August and September 2018. If one adjusts to inflation, emerging market currencies are at its lowest since the 1980s (Johnson 2018), the time of debt and currency crises, and the first major structural adjustment programs. The JPMorgan EM currency index is 11 per cent down compared to one year earlier, in early September 2018 it was even 14 per cent down since January 2018 (Allen 2018).

While the crises of currencies of emerging economies are not as serious as in the 1980s, high debt of the private corporate sector in emerging economies and current account deficits of those countries are the basis for the currency crisis. In countries like India and the Philippines with a dependence on oil imports the rising oil price increases the strain, while the governments of Brazil and Argentina faced pressure to abandon world market prices of petrol on their internal markets in the wake of popular pressure, expressed in the mighty truck drivers strike in Brazil in May 2018.

The mid-term tendency of those emerging economies will be rather that of “stagnating economies” – while they will still play a significant role for resource extraction, the absorption of consumer products, and low-wage industrial production, they will remain stuck in the middle-income trap – i.e. a large part of the population is poor, and the relatively small middle classes will not be able to catch up with their Western counterparts in terms of income, social security, public infrastructure etc. The most important issue is that those currency crises come with increased dependency on imperialist countries with higher costs for technological inputs (i.e. fertilizer, production machines), higher costs of imported consumer products, higher inflation and higher external debt. The effect highlighted by Heiner Flassbeck of a more competitive position for exports e.g. for Turkey1 due to the depreciation of the Turkish currency will not outweigh the costs for the working class and producers in those countries with inflation and higher prices for imported goods. Thus, the short to mid-term effect of what Flassbeck wrongly termed ‘currency crises’ will be a severe limitation of the level of reproduction of working classes in emerging economies.

The slowdown of exports of emerging markets is not primarily an effect of the trade war and its tariffs, as it went down already between February and May 2018 from a 6.5 per cent year-on-year rate to 1.8 per cent according to the CPB Netherlands Bureau for Policy Analysis, and similar data have been provided by consultancy Capital Economics. Causes can be found in low growth in the Eurozone, China and emerging economies. With the depreciation of the Renminbi (down 10 % since February 2018 in comparison with the US dollar), China will increasingly compete with emerging economies in Southeast Asia in the area of manufacturing (Sender 2018).

While the high debt in many emerging economies – it increased about 40 trillion US dollars since 2008 due to the Institute of International Finance – raises the risk of banking crashes or a default of a national economy, the main tendency will be a halt of the forward march of emerging economies in increasing their share of the world market in trade and exports: the looming debt crisis will serve to dump wages and contain the ‘rise of the South’ in the context of world market participation.

China, which we qualified as one of the main imperialist countries in the last issue, plays the part of a global power stuck between the status of an emerging economy and a global superpower. It has features of both, and its potential to get rid of the features of an emerging economy is one of the drivers of the restructuring of the global capitalist system undertaken at the moment. We do not consider China as an emerging market, but as an upcoming power able to compete with other imperialist powers to some extent, while it does not have the same status, both in geopolitical differences with the imperialist bloc of the US, Germany, Japan and the UK, and in per capita income of its population. Thus, it is not a country that forms part of the imperialist core, but assumes an independent leading position, and aims to build alliances with states like Russia, Pakistan and other smaller states. We will turn now to the competition between China and the US on the economic and military plane.

2. Economic and military competition between US and China

In this section we will look at the effects of the changing China-US relation. Both China and the US are grappling with slow growth – China’s growth is still around 6 per cent this year but is clearly on a slow downward trajectory since the Xi government aims to decrease financial bubbles and to diminish debt. While US growth seems steady, there is not much substance to it: non-financial profits remain below the levels of 2014 and once the effect of the tax cuts in the US has subsided, numbers will look different (Roberts 2018). And both countries grapple with a lot of corporate debt. This is the background scenario for the current economic and military competition between the still hegemonic US and the still emerging People’s Republic of China.

The national reorientation of parts of the US ruling class is based to a large extent on the interests of the military-industrial complex that aims to draw a demarcation line regarding which types of production are outsourced to China and other countries, for the fear of losing control over strategic intelligence and war technology. Due to the new type of productive forces in which production machines and war machines increasingly overlap (artificial intelligence, drones, satellites and other computer technology), the current form of outsourcing and arms-length manufacturing risks losing the upper hand in military technology and access to intelligence information. This is the essential interest behind the Trump strategy, and it is not possible to divide this into an economic and a military interest since both are essentially intertwined. In other words: If Wal-Mart produces clothes in Bangladesh or Ethiopia it is not of relevance for the military-industrial complex. If important lines of high-tech electronic communication products are partly produced in China, or Silicon valley startups are founded by Chinese capital, it is highly relevant (Foroohar 2018). Between 10 and 16 % of venture capital in Silicon Valley was financed by Chinese capital between 2015 and 2017 and 25 per cent of graduate students in relevant subjects in the US are Chinese citizens. So there is much cooperation in the AI sector between Chinese and US commerce and research which will be difficult to disentangle. One example is the artificial intelligence lab of Chinese tech giant Baidu in Silicon Valley — Baidu announced in 2018 a cooperation with state-owned China Electronics Technology Group (CETC) which develops electronic war technology for the People’s Liberation Army. At the same time, CETC cooperates with the University of Technology in Sydney on projects related to AI (Hille/Waters 2018).

The US government decided on first measures for a disentanglement: a broader mandate for the Committee on Foreign Investment that could block further Chinese investment in Silicon Valley; the Export Control Reform Act, legislated in August 2018, with stricter requirements for exports. A corresponding list that will serve as criteria for export controls is being put together and might be released in 2019. Nonetheless, a strict separation between civil and military use of electronics will be difficult to implement and would at least require close cooperation of the US with countries like Germany and Japan if crucial technologies i.e. hardware like precision tool makers for semiconductors and software for machine learning are about to be sealed off from Chinese companies. The Chinese economy is obviously lacking behind in the research and development capacity compared with the US (King 2014). But recent initiatives at least try to fill this gap: the Chinese government funded private companies who work on potential military technology with 55 billion US dollar (Feng 2018) and the Chinese private company DJI already is global market leader for commercial drones, and China is already the third largest exporter for military drones after the US and Israel (Hille 2018).

The ideological excess that comes with every political strategy led the Trump administration to go way beyond crucial technology and expand trade tariffs to a number of irrelevant goods like washing machines, solar panels etc. The main complaint by US think-thanks and government figures is that Chinese scientists may spy in other countries for the Chinese government, a practice that is only legitimate in the eyes of Western governments if they themselves use it. The trade war itself has until now mainly led to a slowdown of economic activity in general. Orders for US soybeans from China went down considerably, and the US trade deficit with China went up about 4 % in September 2018 – this can be a result of stockpiling in the face of a coming trade war, but could probably persist since consumer goods companies in the US rely heavily on Chinese imports (Tett 2018).

A second aspect of geopolitical competition between China and the US is about influence on third countries. China has set up the One Belt One Road Initiative as a massive infrastructure program, based on debt financing. It is significant that the US recently restructured its development agency, renamed as International Development Finance Corporation in order to systematically support US investments with a volume of 60 billion dollars. This move is clearly a response to the global Chinese strategy.

Another form to impose conditions on poorer countries is the Trump way of bilateral negotiations, under the threat of tariffs on exported goods, which aims to create favourable conditions for US capital, a newly packaged form of blackmail which ran as demands for ‘free trade’ since the 19th century, and now comes under the more honest label ‘America first’. One specific feature of Trump’s variant is that it is openly debated and not negotiated behind closed doors, often combined with hostilities and public attacks, and mixed up with strictly political agendas as in the case of the US pastor in Turkey, the border wall that Trump wants to build against Mexican immigration, and the personal attacks against the Canadian prime minister after the G 7 meeting.

Various countries will become a playground for this bidding for influence. While Western countries are still clearly ahead of Chinese influence in Africa, there are some countries in Latin America where Chinese investment exceeds US investment if not in some cases all Western imperialist investment altogether. This is why the political turn to the right in Brazil with its immense resource reserves in agriculture, iron, bauxit and above all petroleum was such a decisive manoeuvre. While Mexico with an incoming leftist president will probably balance between Chinese and US influence, Bolsonaro in Brazil can be expected to limit Chinese economic and political influence as much as possible. Given that a large part of Brazilian agrobusiness – Bolsonaro’s main power base – is competing mainly with US agrobusiness and is delivering the largest chunk of soy and other goods to China, it will be interesting to see how this contradiction will be managed on the ideological level.

3. The inability of capital to end the crisis

The phenomenon at the base of this form of economic restructuring is the inability of capital to end the current crisis. According to the theory of crisis of Japanese Marxist Uno Kozo, every crisis is an opportunity for capital to get rid of old capital equipment (via bankruptcies, downscaling etc.), and the crisis ends as soon as the productive capacities have been renewed with more updated technology (Walker/Kawashima 2018; Uno). Given the ongoing slump in labour productivity that we have pointed at in our contribution to the last issue, we witness the inability to update technology in those companies that are not major TNCs with an amount of 10-15 % zombie companies in the core capitalist countries. The subordination of emerging economies and the depreciation of their currencies is thus a displacement of this crisis since this will ease profit rates momentarily through access to cheaper goods in the face of lower currency rates, and increased access to raw materials and formerly state-owned enterprises or public sectors. The electoral victory of far-right Jair Bolsonaro in Brazil demonstrates this well: The privatisation of the education system, the postal service, further parts of state-owned energy companies like Eletrobras and Petrobras, and enhanced access to Brazilian oilfields and other mineral resources are the core agenda of the new incoming government. Thus, we are facing the mighty return of forms of the comprador bourgeoisie in Latin America, and possibly in other countries, trying to leverage both with the US and China (and Japan, Canada, Australia and EU countries) as investors and buyers, and without much scope for an independent national development. The illusion that emerging markets and the BRICS could delink from the imperialist core of capitalism was a short one. Thus, the alternative to a recovery of productivity growth — which capital seems unable to succeed with in the mid-term — is a more violent imperialism, and stricter subordination of emerging economies.

At the same time, the two leading economies, China and the US will continue to engage in a competitive struggle to get hold of high-tech technologies, both as productive and military capacity. The main aim of the US government is to stop the Chinese economy and government to catch up to the US in both areas, while a significant amount of Chinese economic sectors, like retail and fast food, remains under control of US companies (Starrs 2018). Both economies have their own zombie sectors that they struggle to get rid of and a high level of corporate debt. The way how China and the US will balance out between advances in the high-tech sector, the managing of debt bubbles and bankruptcies of SMEs, and the ability to increase or at least maintain wage levels of workers will be decisive in the coming year, and any major imbalance can lead to a new financial crisis as the volatile stock markets in late summer 2018 have shown.


Allen, Kate, 2018: Dollar strength hits emerging market bonds sales. Financial Times. November 7.

Feng, Emily, 2018: China pours money into private sector military technology. Financial Times. November 11.

Foroohar, Rana, 2018: Globalised business is a US security issue. Financial Times, July 15.

Hille, Katrin, 2018: China’s drone makers zero in on armed forces. Financial Times, November 9.

Hille, Kathrin and Richard Waters, 2018: Washington unnerved by China’s ‘military-civil fusion’, Financial Times, November 8.

Institute of International Finance, Global Debt Monitor – July 2018. July 9.

Johnson, Steve, 2018: Emerging market currencies at ‘multi-decade lows’. EM FX may be at its cheapest since the 1980s in inflation-adjusted terms. Financial Times, November 1.

King, Samuel, 2014: Lenin’s theory of imperialism: a defence of its relevance in the 21st century. Marxist Left Review, No. 8.

Kozo, Uno, Theory of Crisis, trans. Ken Kawashima, Leiden: Brill, forthcoming.

Roberts, Michael, 2018. America’s halfway house. 7 November.

Sender, Henny, 2018: China can no longer be counted on for EM growth. Financial Times, 7 November.

Starrs, Sean Kenji (2018):  Can China Unmake the American Making of Global Capitalism? in Leo Panitch and Greg Albo, eds. Socialist Register 2019: A World Turned Upside Down? London: Merlin Press; New York: Monthly Review Press.

Tett, Gillian, 2018: China is winning the trade war with America for now. Financial Times, 15 November.

Walker, Gavin and Ken Kawashima, 2018: Surplus alongside excess: Uno Kozo, Imperialism, and the Theory of Crisis. Viewpoint Magazine No. 6,

Weatley, Jonathan, 2018: Rising debt leaves emerging markets at epicentre of worries, Financial Times, July 14.

1 See Heiner Flassbeck and Ekrem Ekici on the crisis in Turkey here:

Marxist or Keynesian macro? – Michael Roberts

Can we talk about Marxist ‘macroeconomics’? After all, macroeconomics is an invention of Keynesian economics through the development of the concept of gross domestic product and macro identities such savings equals investment etc.i Mainstream macroeconomics separated itself from microeconomics, the analysis of markets (supply and demand) or, to be more to the point, what is the value of a unit of production for sale. For the classical economists of the early 19th century capitalism, there was no distinction between the micro and the macro. The task was to analyse the motion and trends in ‘economies’ and for that a theory of value was a necessary tool but not an end in itself.

Microeconomics became an end in itself as a way of combating the dangerous development in classical economy towards a theory of value that implied the exploitation of labour and conflicting social relations. So the labour theory of value was replaced with the marginal utility of purchase by the consumer as a result.ii

Political economy’ started as an analysis of the nature of capitalism on an ‘objective’ basis by the great classical economists Adam Smith, David Ricardo, James Mill and others.  But once capitalism became the dominant mode of production in the major economies and it became clear that capitalism was another form of the exploitation of labour (this time by capital), then economics quickly moved to deny that reality.  Instead, mainstream economics became an apologia for capitalism, with general equilibrium replacing real competition; marginal utility replacing the labour theory of value and Say’s law replacing crises.

Macroeconomics appears in the 20th century as a response to the failure of capitalist production – in particular, the great depression of the 1930s. Something had to be done. John Keynesiii took marginalist theory from his mentor, Alfred Marshalliv, and dynamically moved it beyond supply and demand among individual consumers and producers onto the aggregate. Mainstream ‘bourgeois’ economics could no longer rely on the comforting theory that marginal utility would equate with marginal productivity to deliver a general equilibrium of supply and demand and thus a harmonious and stable growth path for production, investment, incomes and employment. The equality of aggregate supply and demand, Say’s law, was denied. It had to be recognised that capitalism was subject to booms and slumps, to (permanent) disequilibria, and thus to regular crises. And these crises had to be dealt with – to be ‘managed’. That required macroeconomic analysis.

In a sense, bourgeois economics had to put back the economic clock to classical economics – the study of aggregate trends – but without returning to ‘political economy’, which recognised that economics was really about social structure and relations and not a theory of things.

At first, it appeared that modern Keynesian macroeconomics had done the trick. In the ‘golden age’ of post-1948 capitalism, economic growth was strong, employment was full and incomes rose without significant increases in inequality (inequality was there, although, according to Thomas Piketty, it had been reducedv). So (macro) economics could provide policies to ‘manage’ capitalism successfully.

This turned out to be an illusion. The first simultaneous international recession of 1974-5 was followed by the deep slump of 1980-2 and growth slowed, unemployment rose and over the next three decades inequality of income and wealth rocketed. The final nail in the coffin of bourgeois macroeconomics was the Great Recession of 2008-9 and the subsequent Long Depression of low growth in output, trade, investment and wages for the last ten years.

Mainstream ‘bourgeois’ economics failed to spot the global financial crash and a slump that matched the crash of 1929 and the Great Depression. Mainstream economists considered a return of a similar crisis like the 1930s as impossible as most were stuck in the illusions of ‘demand management’ from the 1960s. Even worse, macroeconomics had suffered a reaction back to the ideas of general equilibrium and crises caused by ‘imagined shocks’. Dynamic stochastic general equilibrium (DSGE) models were the order of the day. Along with a revival of the equilibrium microeconomics of the marginalists and the Lucas Critiquevi, there developed a theoretical justification for deregulation, privatisation and weakening of the power of labour – wrapped up in the label of ‘neoliberalism’.

Recently, mainstream economists have been debatingvii why ‘economics’ was unable to see the global financial crash coming and/or provide effective policies to end it. Mainstream economists John Quiggin and Henry Farrell summed up the debateviii: some blame non-academic economists. Others blame prominent academics. Others still say that economic advice doesn’t really matter, because politicians will pay attention only to the advice that they wanted to hear anyway.”

But Quiggin and Farrell reckon the real reason that mainstream economics failed to be of any use was the lack of agreement among economists on what to do.  Economists could not agree on whether austerity was good or bad for the economy; or on whether economists had any influence over politicians.  And the reason for this lack of agreement was not due to differences on theory but to “sociology”.  By this they meant that mainstream economists are not pure objective ‘economists’ but are “deeply bound up with the political systems that they live within.”

Quiggin and Farrell explain that, “prominent academic economists, far more than other social scientists, are likely to go back and forth between universities and roles in the Treasury Department, Federal Reserve, International Monetary Fund and World Bank. This means that economics has far more political clout than other social sciences, but it also has reshaped the profession, turning external policy influence into an important form of internal disciplinary prestige.” 

In other words, economists with jobs in government and the central bank go with the flow (from the forces of capital): “So the world of economic politics and the world of economic thought are deeply intertwined. Channels of influence rarely flow only in one direction, as some economists have discovered to their dismay.”

This conclusion seemed to surprise as well as upset Quiggin and Farrell.  Yet, if they had read Marx, they would have expected nothing else.  As Marx pointed out 150 years ago, in a footnote to the chapter on Commodities and Money in Capital, while making the distinction between classical economics and vulgar economics“Once for all I may here state, that by classical political economy, I understand that economy which, since the time of W. Petty, has investigated the real relations of production in bourgeois society, in contradistinction to vulgar economy, which deals with appearances only, ruminates without ceasing on the materials long since provided by scientific economy, and there seeks plausible explanations of the most obtrusive phenomena, for bourgeois daily use, but for the rest, confines itself to systematizing in a pedantic way, and proclaiming for everlasting truths, the trite ideas held by the self-complacent bourgeoisie with regard to their own world, to them the best of all possible worlds”ix 

Even earlier, Frederick Engels had anticipated the trend of economics in his Outlines Of A Critique Of Political Economy in 1843: “The nearer to our time the economists whom we have to judge, the more severe must our judgment become. For while Smith and Malthus found only scattered fragments, the modern economists had the whole system complete before them: the consequences had all been drawn; the contradictions came clearly enough to light, yet they did not come to examine the premises and still accepted the responsibility for the whole system. The nearer the economists come to the present time, the further they depart from honesty”.

And in Theories of Surplus Value, Marx described the vulgar economists—by no means to be confused with the economic investigators we have been criticising—translate the concepts, motives, etc., of the representatives of the capitalist mode of production who are held in thrall to this system of production and in whose consciousness only its superficial appearance is reflected.  They translate them into a doctrinaire language, but they do so from the standpoint of the ruling section, i.e., the capitalists, and their treatment is therefore not naïve and objective, but apologetic.”x

In other words, all the obstruse theory presented by modern mainstream economics is presented as purely neutral, unbiased and logical, but in reality it is not “naïve and objective” but merely an apologia for the capitalist mode of production. “It was henceforth,” Marx wrote, “no longer a question whether this theorem or that was true, but whether it was useful to capital or harmful, expedient or inexpedient, politically dangerous or not. Pure, selfless research gave way to battles between hired scribblers, and genuine scientific research was replaced by the bad conscience and the evil intent of apologetic”.xi 

Recently, two mainstream economistsxii commented: “Any scientific enterprise needs to be grounded in solid empirical knowledge about the phenomenon in question. Milton Friedman put this well in his Nobel lecture in 1976: “In order to recommend a course of action to achieve an objective, we must first know whether that course of action will in fact promote the objective. Positive scientific knowledge that enables us to predict the consequences of a possible course of action is clearly a prerequisite for the normative judgment whether that course of action is desirable.” 

Sounds good, but unfortunately, they continued: “Many of the main empirical questions in macroeconomics are the same as they were 80 years ago when macroeconomics came into being as a separate sub-discipline of economics in the wake of the Great Depression. These are questions such as: What are the sources of business cycle fluctuations? How does monetary policy affect the economy? How does fiscal policy affect the economy? Why do some countries grow faster than others? Those new to our field or viewing it from afar may be tempted to ask: How can it be that after all this time we don’t know the answers to these questions?”  Indeed!

However, the authors remain optimistic. For them, the problem is not that economists are locked into an apologia for the capitalist system, but that it is difficult to ‘identify’ the right variables in any causal analysis. In other words, economics is a positivist science like physics but it is just behind in its understanding of ‘the economy’ compared to physics because of the extra difficulty in empirical work.

Economics could progress in the same way that ‘natural science’ has. Macroeconomics and meteorology are similar in certain ways. First, both fields deal with highly complex general equilibrium systems. Second, both fields have trouble making long-term predictions. For this reason, considering the evolution of meteorology is helpful for understanding the potential upside of our research in macroeconomics. In the olden days, before the advent of modern science, people spent a lot of time praying to the rain gods and doing other crazy things meant to improve the weather. But as our scientific understanding of the weather has improved, people have spent a lot less time praying to the rain gods and a lot more time watching the weather channel.“

Unfortunately for the authors, such progress towards the truth will not take place in economics. To think so is just naïve. To quote Milton Friedman as the epitomy of unbiased, objective positivist scientific analysis demonstrates that naivety. Friedman was the peer example of an ideologist for capital, including his job as an advisor for General Pinochet after his coup against the democratically elected government of Chile in the 1970s.

Yes, economics is a science, in my view.  More accurately, as Marx says, it is political economy, the study of the social relations of the capitalist mode of production. Yes, we need to test economic theories against the facts xiii by identifying the causal variables. Indeed, we should make predictions to test our theories.xiv

But do not expect the body of mainstream economics to do so in any systematic way.  It has been hopelessly distorted by the need to preserve and defend the capitalist system.  As the authors say: “Policy discussions about macroeconomics today are, unfortunately, highly influenced by ideology. Politicians, policy makers and even some academics have held strong views about how macroeconomic policy works that are not based on evidence but rather on faith.”

Ten years since the Great Recession, it is worth reminding ourselves of some of the lessons and implications of that economic earthquake.xv First, the official institutions and mainstream economists never saw it coming.  In 2002, the head of the Federal Reserve Bank, Alan Greenspan, then dubbed as the great maestro for apparently engineering a substantial economic boom, announced that ‘financial innovations’ i.e. derivatives of mortgage funds etc, had ‘diversified risk’ so that “shocks to overall economic will be better absorbed and less likely to create cascading failures that could threaten financial stability”.  Ben Bernanke, who eventually presided at the Fed over the global financial crash, remarked in 2004 that “the past two decades had seen a marked reduction in economic volatility” that he dubbed as the Great Moderation. And as late as October 2007, the IMF concluded that “in advanced economies, economic recessions had virtually disappeared in the post-war period”.xvi

Once the depth of the crisis was revealed in 2008, Greenspan told the US Congress, “I am in a state of shocked disbelief” He was questioned “in other words, you found that your view of the world, your ideology, was not right, it was not working” (House Oversight Committee Chair, Henry Waxman). “Absolutely, precisely, you know that’s precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well”.xvii

The great mainstream economists were no better.  When asked what caused the Great Recession if it was not a credit bubble that burst, Nobel Prize winner and top Chicago neoclassical economist Eugene Fama respondedxviiiWe don’t know what causes recessions. I’m not a macroeconomist, so I don’t feel bad about that. We’ve never known. Debates go on to this day about what caused the Great Depression. Economics is not very good at explaining swings in economic activity… If I could have predicted the crisis, I would have. I don’t see it.  I’d love to know more what causes business cycles.”

Soon to be IMF chief economist, Olivier Blanchard, commented in hindsight that, “The financial crisis raises a potentially existential crisis for macroeconomics.” … some fundamental [neoclassical] assumptions are being challenged, for example the clean separation between cycles and trends” or “econometric tools, based on a vision of the world as being stationary around a trend, are being challenged.xix

As for the causes of the global financial crash and the ensuing Great Recession, they have been analysed ad nauseam since.  Mainstream economics did not see the crash coming and were totally perplexed to explain it afterwards. The crash was clearly financial in form: with collapse of banks and other financial institutions and the weapons of mass financial destruction, to use the now famous phrase of Warren Buffett, the world’s most successful stock market investor.  But many fell back on the theory of chance, an event that was one in a billion; ‘a black swan’ as Nassim Taleb claimed.xx

Alternatively, capitalism was inherently unstable and occasional slumps were unavoidable. Greenspan took this view: “I know of no form of economic organisation based on the division of labour (he refers to the Smithian view of a capitalist economy), from unfettered laisser-faire to oppressive central planning that has succeeded in achieving both maximum sustainable economic growth and permanent stability. Central planning certainly failed and I strongly doubt that stability is achievable in capitalist economies, given the always turbulent competitive markets continuously being drawn toward but never quite achieving equilibrium.  He went on, “unless there is a societal choice to abandon dynamic markets and leverage for some form of central planning, I fear that preventing bubbles will in the end turn out to be infeasible.  Assuaging the aftermath is all we can hope for.”xxi

Many saw only the surface phenomena of the financial crash and concluded that the Great Recession was the result of financial recklessness by unregulated banks or a ‘financial panic’.  This coincided with some heterodox views based on the theories of Hyman Minsky, radical Keynesian economist of the 1980s, that the finance sector was inherently unstable because “the financial system necessary for capitalist vitality and vigour, which translates entrepreneurial animal spirits into effective demand investment, contains the potential for runaway expansion, powered by an investment boom.”  Steve Keen, a follower of Minsky put it thus: “capitalism is inherently flawed, being prone to booms, crises and depressions.  This instability, in my view, is due to characteristics that the financial system must possess if it is to be consistent with full-blown capitalism.”xxii  

Of the mainstream Keynesians, Paul Krugman railed against the neoclassical school’s failings but offered no explanation himself except that it was a ‘technical malfunction’ that needed and could be corrected by restoring ‘effective demand’.xxiii 

But what about Marxist macroeconomics or to be more exact Marxian political economy? Were the practitioners of Marxism able to offer answers that the mainstream failed to do? My answer is short: in so far as Marxist economists adopted the macro analysis of Keynesian economics, they failed. In so far as they rejected Keynesianism and relied on Marx’s law of value (rejected by Keynes) and on his law of profitability (ignored by the mainstream), Marxist economists had something to say.

Most Marxists did not see the crash and the ensuing Great Recession coming either.  There were a few exceptions:  In 2003, Anwar Shaikh reckoned the downturn in the profitability of capital and the downwave in investment was leading to a new depression.xxiv And yours truly in 2005 said: “There has not been such a coincidence of cycles since 1991. And this time (unlike 1991), it will be accompanied by the downwave in profitability within the downwave in Kondratiev prices cycle. It is all at the bottom of the hill in 2009-2010! That suggests we can expect a very severe economic slump of a degree not seen since 1980-2 or more” xxv .

Very few Marxist economists looked to the original view of Marx on the causes of commercial and financial crashes and ensuing slumps in production.  Most Marxists accepted something similar to the Minskyite view, seeing the Great Recession as a result of ‘financialisation’ creating a new form of fragility in capitalism.xxvi

However, some did return to what Marx said and tried to make it relevant to now. One such was Guglielmo Carchedi, who summed that view up in his excellent, but often ignored Behind the Crisis with: “The basic point is that financial crises are caused by the shrinking productive base of the economy. A point is thus reached at which there has to be a sudden and massive deflation in the financial and speculative sectors. Even though it looks as though the crisis has been generated in these sectors, the ultimate cause resides in the productive sphere and the attendant falling rate of profit in this sphere.”xxvii Agreeing with that explanation, the best Marxist macro book on the crash remains that by Paul Mattick Jnr, Business as usual. xxviii

Marxist ‘macro’ has generally failed because it has been more Keynesian than Marxian; and it has been too easily attracted to the surface of things and not to the inner core of socio-economic relations under capitalism. The Marxian law of value has been regarded as irrelevant; the Marxian law of accumulation has been ignored; and the Marxian law of profitability denied. So Marxian macro has not developed a clear explanation of the causes of recent crises.

If we do not develop general theories then we remain in ignorance at the level of surface appearance.  In the case of crises, every slump in capitalist production may appear to have a different cause.  The 1929 crash was caused by a stock market collapse; the 1974-5 global slump by oil price hikes; the 2008-9 Great Recession by a property crash.  And yet, crises under capitalism occur regularly and repeatedly.  That suggests that there are underlying general causes of crises to be discovered.  Capitalist slumps are not just random events or shocks.

The scientific method is an attempt to draw out laws that explain why things happen and thus be able to understand how, why and when they may happen again.  Of course, it is difficult to get accurate scientific results when human behaviour is involved and laboratory experiments are ruled out.  But the power of the aggregate and the multiplicity of datapoints help.  Trends can be ascertained and even points of reversal. The Lucas critique was an attempt to deny this.

A general theory of crises also reveals that capitalism is a flawed mode of production that can never deliver a harmonious and stable development of the productive forces to meet people’s needs across the globe.  Only its replacement by planned production in common ownership offers that.

Marxist economics often seems divided between those who spend their time pouring over Marx’s works to understand their deeper meaning without relating it to contemporary events; and those who take empirical evidence without analysing through ‘the prism of value’ and so end up repeating the mistakes of bourgeois macro.

Interpreting Marx’s voluminous writings to ascertain what in his theory of crises is useful, but only to some extent.  Marx’s contribution must be the foundation of any effective and relevant theory of crises under capitalism.  But there can be many interpretations and Marx’s unfinished works lead to ambiguities that can exercise academics and scholars for a lifetime!  So there are severe limits on this type of research.  Even if we were to agree on what Marx’s theory of crises is (or even that he had one – because that is disputed), what if he were just wrong?

Moreover, it is 150 years since Marx developed his analysis of capitalism based on the main example of British capital in the mid-19th century.  The world and capitalism has moved on since then – in particular, it is the US that is now the dominant hegemonic capital, capitalism is now global and controlled even more than before by finance capital.  Thus a theory of crises must take into account these new developments.  Also, we have much more data and information to work on compared to Marx’s limited access.  The task now is not to keep analyzing and re-interpreting Marx, but to stand on his shoulders and raise our understanding. Marxian macro, like mainstream macro, faces the difficulties of empirical research, but that is no excuse for not trying.

For example, the difficulties of measuring the rate of profit from the view of Marxian categories are manifold.  First, we must use official statistics that are not accumulated in the best way to measure Marxian categories.  Indeed, some Marxist economists reckon that trying to measure the rate of profit using official statistics in money is impossible and pointless.  Others reckon that the data are so poor we cannot do it practically.  It is the job of any scientific analysis to overcome these theoretical and practical difficulties in measurement.  And many Marxist economists are doing just that.

On categories, should we measure the rate of profit of the whole economy, or just the capitalist sector, or just the corporate sector, or just the non-financial corporate sector, or just the ‘productive’ sector?  Should or can we include variable capital and circulating capital in the denominator?  Should we measure gross profit or net profit after depreciation?  Can we measure depreciation correctly?

Yes, there are big differences in the level of the rate of profit in different countries.  Theoretically, Marx’s law would suggest a higher rate of profit in so-called emerging economies where the organic composition of capital should be lower (more use of human labour).  And we would expect that, as these countries industrialise, the organic composition of capital would rise and the rate of profit would fall.  And the empirical work that has been done shows just that.xxix

Theoretically too, we would expect capital flows to be towards those economies with higher rates of profit.  There is some evidence to suggest this is the case – in the period of globalization, capital flows to the emerging economies rose sharply. But it is also the case that flows among the more advanced economies (Europe, US, Japan) are still larger.  That is perhaps due to trade and investment pacts and the huge stock of capital already in these areas.  Finance capital flows more efficiently and effectively there.  Also in the recent period of ‘financialisation’ and with falling profitability in productive capital, capital has flowed into fictitious capital markets (portfolio capital) and not into the more productive sectors. All these various measures are useful and possible.  The data are available for many major economies and many Marxist scholars have now made such measurements. 

What increases confidence in this work is that, by and large, whatever measure is used, it shows, for most countries, over time that the rate of profit has been fallingxxx, of course, not in a straight line because there are periods when the ‘counteracting factors’ dominate, if only for a while.  And each major slump produces a temporary recovery in profitability.  But these turning points are also broadly at the same time.  All this increases confidence that Marx’s law of profitability is valid and relevant to an explanation of recurrent crises under capitalism and also its eventual demise as a mode of production.

And yet Marx’s law is denied or ignored, not only by mainstream macro but also by the majority of Marxian economists. The reason that profitability is not considered in any discussion of crises is both ideological and theoretical. Mainstream economics has no real theory of crises anyway: crises are just chance, random events or shocks to harmonious growth under capitalism; or they are the result of the interference in competition and markets by governments, or central banks; or they are result of monopoly or financial recklessness or greed.  Mainstream economics also denies any role or concept of profit in its marginalist theories of production and demand. 

This is deliberate: there is no place for a theory of profit based on the exploitation of labour power (Marx’s value theory).  Diminishing returns on utility and productivity lead to no profit at the point of equilibrium. Also, heterodox/Keynesian theories deny the role of profit, as they too are based on marginalism and (im)perfect competition. Crises are therefore the result of a ‘lack of effective demand’ caused by an ‘irrational’ change in expectations (‘animal spirits’). It has nothing to do with the profitability of capital, apparently – or more precisely the exploitation of labour. And yet capitalism is a system of production for profit in competition.  So why is profit not a determinant in investment and production?  It is an ideological refusal to accept that.  Instead apparently, everybody gets their fair share according to their (marginal) contribution.  The mainstream finds no explanation of crises as a result; and the Keynesians look to ‘demand’ not profit as the driver of crises.

The mainstream view is understandable – as it represents the interests of capital, not labour and so denies the social contradictions involved. But it is less understandable why Marxian macro, on the whole, rejects profit and profitability as the underlying driving force of capital and thus regular and recurring crises of capitalism.

Take the most eminent Marxist economist today – with the widest popular appeal – David Harvey. Harvey has made it clear on numerous occasions that Marx’s law of profitability is irrelevant, wrong and even rejected by Marx himself (in his later years). So we must look away from the contradictions of the production of surplus value as the kernel of macroeconomic crises and instead consider the contradictions in other parts of the ‘circuit of capital’, namely the realisation and distribution of surplus value or profit.xxxi Harvey’s arguments are mainly theoretical and descriptive. There is little or no empirical work.

On the other hand, eminent Marxian economists, Gerard Dumenil and Dominique Levy base themselves very much on the data.xxxii D-L argue that the depression of the 1880s was a classic profitability crisis; that the crash of 1929 and the depression of the 1930s was not.  Instead it was one of rising inequality and debt, sparking a speculative slump.  The 1970s was another classic profitability crisis, but the global financial crash of 2008 and the Great Recession was similar to 1929 and the 1930s – a result of rising inequality and debt. Their main argument against the relevance of Marx’s law of profitability as an explanation of crises is the rise in profitability in the major economies from the 1980s.

But this development is explained by Marx’s law. Although profitability in the major economies stopped falling from the early 1980s up to the end of the 20th century due to counteracting factors, one of those counteracting factors was the switch from productive capital, where profitability did not recover, to financial and unproductive sectors like property.  Financial profits boomed and investment went into ‘fictitious’ sectors. 

Financialisation’ could be the word to describe this development.  But this buzz word in Marxist macro should not mean that finance capital is now the decisive factor in crises or slumps.xxxiii  Nor does it mean the Great Recession was just a financial crisis or a ‘Minsky moment’ (to refer to Hyman Minsky’s thesis that crises are a result of ‘financial instability’ alone).xxxiv Crises always appear as monetary panics or financial collapses, because capitalism is a monetary economy.  But that is only a symptom of the underlying cause of crises, namely the failure to make enough money! 

If Harvey and Dumenil-Levy are right, then we Marxists do not have a viable general theory of crisis as each major crisis under capitalism appears to have a different cause. So we may then have to fall back on the theories of the post-Keynesian/neo-Ricardians who look to a distribution theory, namely that some crises are ‘wage-led’ like the current one due to falling wage share resulting in a lack of wage demand; or ‘profit-led’, like the 1970s when wages squeezed profits.

But the evidence does not show that Harvey, Dumenil-Levy or the post-Keynesians are right.  All the major crises came after a fall in profitability (particularly in productive sectors) and then a collapse in profits (industrial profits in the 1870s and 1930s and financial profits at first in the Great Recession).  Wages did not collapse in any of these slumps until they started.

And Marx’s theory of crises does stand up to time. Marx’s law of profitability is intimately connected with Marx’s value theory as it rests on two assumptions, both realistic in Marx’s view.  The first is that all value is created by labour alone (in conjunction with natural resources) and that the capitalist mode of production and competition leads to a rising organic composition as a trend.  But capitalism is a monetary economy.  Capitalists start with money as the crystallised form of previously accumulated value, and then advance money to buy means of production and employ a labour force, which in turn produces a new commodity or service (new value) which is sold on the market for money.  Money leads to more money through the exploitation of labour.

Capitalism is a monetary economy but it is not a money economy (alone).  Money cannot make more money if no new value is created and realized.  And that requires the employment and exploitation of labour power.  Marx said it was a fetish to think that money can create more money out of the air.  Yet mainstream and some heterodox (even Marxist) economists seem to think it can.  When central banks expand the money supply through printing ‘fiat’ money or creating bank reserves (deposits), more recently so-called quantitative easing, this does not expand value.  It would only do so if this money is then put to productive use in increasing the means of production or the workforce to increase output and so increase value.  But, as Marx argued way back in the 1840s against the ‘quantity theory of money’, just expanding the supply of ‘fiat’ money will not increase value and production but is more likely to inflate prices and thus devalue the national currency, or inflate financial asset prices.  It is the latter that has mostly happened in the recent period of money printing.  Quantitative easing has not ended the current global depression but merely sparked new financial speculation. 

Unlike the Keynesians, the movement of personal consumption is not the driver of slumps, it coincides with them, and so is part of the description of a slump.  Indeed, personal consumption does not fall much in recessions (even in the Great Recession).  What does fall heavily is capitalist investment and this drops before the slump or any fall in consumption or employment.xxxv  So business investment is the driver not consumption.  Investment is part of ‘aggregate demand’ to use the Keynesian category, but it is led by profits and profitability – contrary to the theoretical view of Keynes-Kalecki who see investment as creating profit.  Their view is partly because Keynes and Kalecki accepted marginalism and rejected Marx’s value theory of profit as coming from the exploitation of labour.  Indeed, for Kalecki, profit is only ‘rent’ that comes from monopoly power replacing competition.  Thus we have loads of heterodox explanations of modern capitalism as one of ‘rent extraction’, monopoly capital, finance capital – but not plain capitalism making profit from the exploitation of labour.

If Marx’s laws of value, accumulation and profitability are invalid, either logically or empirically, then we would have to recognise that alternative macro theories may be right that imply capitalism can succeed, with or without ‘management’. And macroeconomic policies designed to ‘correct’ disequilibria can work.

Indeed, this is the message of many leftist heterodox economists that rely on a radical version of Keynesian theory. Keynes saw all his policies as designed to save capitalism from itself and to avoid the dreaded alternative of socialism. xxxvi For the most part, I think that Capitalism, wisely managed, can probably be made more efficient for attaining economic ends than any alternative system yet in sight, but that in itself it is in many ways extremely objectionable. Our problem is to work out a social organisation which shall be as efficient as possible without offending our notions of a satisfactory way of life.”  So “the class war will find me on the side of the educated bourgeoisie.”  

Keynes reckoned that as capitalism expanded, it would, through more technology, create a world of abundance and leisure.  Because of that abundance, the return on lending money to invest would fall.  So bankers and financiers would no longer be necessary; they could be phased out.  Well, that does not seem to be happening.  Indeed, the very ‘heterodox economists’ who claim that Keynes is a ‘progressive’ economist with great similarities to Marx now argue that capitalism is being distorted by ‘financialisation’ and finance capital – and that is the real enemy.  But what happened to the gradual phasing out of finance in late capitalism a la Keynes?

In contrast, Marx’s theory of finance capital did not foresee a gradual removal of finance; on the contrary, he describes the increased role of credit and finance in the concentration and centralisation of capital in late capitalism.  Yes, the functions of management and investment become more separated from the shareholders in the big companies, but this does not alter the essential nature of the capitalist mode of production – and certainly does not imply that coupon clippers or speculators in financial investment will gradually disappear.

So I reckon that the differences between Keynes and Marx are fundamental and any superficial similarities pale in comparison.  That is important because it is Keynesian macro that dominates in the labour movement, not Marxist macro, 200 years after his birth.xxxvii

vi The Lucas critique, named for Robert Lucas’s work on macroeconomic policymaking, argues that it is naive to try to predict the effects of a change in economic policy entirely on the basis of relationships observed in historical data, especially highly aggregated historical data

xxx See Carchedi and Roberts, A world in crisis: a global analysis of Marx’s law of profitability, Haymarket October 2018.

xxxiii file:///C:/Users/ToshibaT/Downloads/2ndWorldMarxismCongresspaper%20(1).pdf

Forget the Anthropocene (for a minute); we are living in the Idiocene – Toby Carroll, Jörg Nowak

Last year, Nordstrom’s advertised jeans caked in fake mud for US$425 dollars, creating a storm on social media. It was but the latest micro-level sign – complementing a surfeit of macro indicators – that we live in a sort of end times in which the idiots have ascended and the masses are dosed up on bread and circuses; a period characterised by a rotten ruling class, infotainment, crumbling education systems (that do the opposite of preparing people for purposeful participation in civic life) and palliative consumption, the latter assuaging the banality of everyday life with ever-diminishing doses of dopamine.

The fake mud jeans, a grotesquely ironic garment manufactured by exploited labour yet channelling working class chic, are still in reach of some middle class consumers, albeit probably via credit and at around six times the minimum monthly wage in Bangladesh. Yet, this garment was striking for both hinting at and forgetting the working class; emblematic of the conveniently compartmentalised lives that many now live, that seamlessly leverage off incredible levels of ignorance (especially of social, political and environmental realities), cynicism, technology-fuelled escapism and debt.

At the top end of town, we are now presented with a truly surreal smorgasbord of hyper-decadent forms of luxury consumption and apocalyptic panic within the global elite – with both often combined into a hedonistic end times elixir. The most striking examples are perhaps the Silicon Valley libertarian elite variously buying large swathes of the land in supposedly safe and social democratic locations such as New Zealand and or plotting to place humanity’s survival on colonising distant and hostile planets.

In February 2017, media reports revealed that Peter Thiel, PayPal’s co-founder, Facebook’s first professional investor and a prominent Trump supporter, was granted New Zealand citizenship under ‘exceptional circumstances’ after he purchased a large property without requiring foreign investment approval. This revelation was met with nonchalance from within the tech elite, who retorted that purchasing a New Zealand property was simply code for ‘apocalypse insurance’.

While YouTube is now littered with everyman doomsday preppers, flogging both prepper-ware on eBay and knowledge of how to ride out the coming zombie-film-esque end by storing canned food, building a bunker and engaging in combat training and survival tactics, the Silicon Valley variant are evidently preparing their own airfields and keeping their aircraft fully fuelled.

All of this is happening instead of, for example, investing in proper social security systems funded out of taxing people precisely like Thiel; an approach built to avert apocalyptic uprisings by establishing the sorts of socially-grounded institutions that libertarians so despise. In essence, these supposedly smart Silicon Valley superrich – who despite being socially stupid, attract near-automatic reverence from many – spend their wealth on constructing high security prisons for themselves, while doing their bit to tear up social compacts that were won by working classes. Meanwhile, such hypocrisy has the added ‘bonus’ of challenging housing affordability in host countries, with new propertied classes and estate agents relishing in housing price increases while everybody else struggles with stifling rents and an inability to buy property in an environment of declining social mobility and stagnating wages, the latter fuelled by the sorts of policies that neoliberals and libertarians treasure so dearly.

At the same time, ultra-libertarians in the tech industry have made huge profits and increased share prices by selling high-tech surveillance systems to, and making Faustian bargains with, state agencies and supporting true idiocratic royalty, such as Donald Trump. Their proclaimed belief in radical ‘independence’ from the state is easily compartmentalised, mostly to the culling of any social services that impose costs on their ability to accumulate, and they easily turn a blind eye to the inconvenient manner in which populists like Trump advocate policies that are far from libertarian or neoliberal in nature. Indeed, their ability to accumulate such staggering wealth is often dependent upon the plundering of public budgets and delivering crucial infrastructure to strengthen repressive state apparatuses. On this front, Thiel’s company Palantir was contracted to build and maintain a new system to help the US deportation agency ICE to integrate data and establish a comprehensive surveillance of immigrants. And despite their ostensible brilliance, it is now apparent from the Cambridge Analytica and US election influence scandals that the vast social media systems that big tech have developed – systems that feed people much of their information about the world – are easily gamed and exploited.

In terms of compartmentalisation and contradiction, there are of course myriad, and seemingly more modest, versions, including the so-called ‘climate refugees’ and ‘falling stars’ – part of the new cashed up Chinese elite living in urban areas. These people respectively use their holiday time to go to countries like Iceland where the air is still clean or upload photos of themselves on social media falling out of German cars and the like with luxury items sprayed out in the most ostentatious, yet supposedly cute (read ‘infantile’), displays of wealth.

With the apparent impossibility of making companies in China adhere to environmental law in an if-it-grows-it-goes atmosphere (crucial to maintaining political legitimacy and accumulation and supplying the outputs that algorithms ensure consumers buy), the trip to Iceland or Wales during the Lunar New Year holiday has actually become a very popular option, which is seen as having the added bonus of contributing to the economy.

Indeed, business experts exalted the fact that during the 2017 Lunar New Year, climate refugees helped bolster the revenues of airlines and the tourism industry, while of course neglecting the inconvenient fact that these climate refugees were contributing to further climate change and pollution by massively boosting carbon emissions. And the lower classes haven’t been neglected in benefiting from market solutions to extant conditions. For the less well off in China, people can now purchase cans of fresh air from places such as – wait for it – New Zealand.

We could go on and expand the list of ridiculous scenarios that characterise the idiocene era: the Russian billionaire intent on reconstituting the Russian monarchy on a Pacific Island; Jeff Bezos’ plans to engage in space tourism; the Australian billionaire determined to build a replica of the Titanic; the blatant tax dodging and egregious corruption now found at the highest levels all over the place from Europe to Asia that seems to receive little more than a collective shrug or the endorsement of an often equally questionable reactionary populist politician.

The essential message here is that the global elite has become so detached from the workings of everyday life that its members appear to have no concern for notions of maintaining legitimacy. This is not just about politicians in Hong Kong, South Korea and the US who don’t know how to buy toilet paper or metro tickets (which shouldn’t be surprising given that they never use public transport or shop at convenience stores). It’s about a complete loss of ideological and political leadership amidst various grand economic, political and environmental crises combining to reinforce one another.

The complementary double to daft idiocratic luxury consumption is the idiocratic politician. Bequeathed to us by politicians such as Clinton, Blair, Obama, Hollande and Merkel of the ‘extreme centre’, as Tariq Ali has dubbed it, the original purveyors of false fixes who advanced progressively-packaged policies that actually increased inequality and precariousness for many, idiocrats like Trump, Bolsonaro, Modi, Erdogan, Duterte, and Le Pen are increasingly successful.

Political idiocrats like to trade off their status as outsiders and or being self-made, ignoring the usual etiquette of more established liberal elites. However, they have even less of a clue of how to deal with today’s problems than the pseudo-progressive politicians that they now replace. Indeed, the idiocrats are the political equivalent of the doomsday preppers: instead of facing fundamental problems, they deny them, or retreat to dog whistle ‘solutions’ such as national identity, religion or national security.

The idiocratic action plan hinges simply upon simulating the capability to act, presenting the appearance of being action men in a world that has escaped our control, as Eric Hobsbawm once put it, while they are in reality completely incapable of conceiving and addressing problems that are beyond efforts limited to the nation-state and their anachronistic ideologies.

That the global elite is moribund and bereft of solutions is on display for all to see, and this is potentially good news. It is the first serious step in creating a new world that works for the many rather than the few. However, truly progressive change demands ideological leadership and coordinated action to shake populations from bread and circus distractions and deep cynicism, the latter only finding solace in preparing for the end. It also requires solidarity against the powers that be, remembering that the only real solutions are political, demanding a rebalancing of power and a wholesale transformation in the institutions governing human activity.

It seems quite emblematic of the ideological limitations of the technology-and-science-can-fix-everything times that we live in, that the only idea that the late Stephen Hawking could come up with in early May 2017 to solve the grand crises facing humanity was to leave Earth altogether; a truly outlandish substitute now taken seriously by many for the actual necessity of getting rid of the global elite and the socially and environmentally destructive system that it defends.

Imperialism and Neo-Protectionism In The Trump Era – By Adrián Sotelo Valencia


Up until now the investigations, judgments, predictions, analyses, desires, and projections about the recent electoral process of the United States have been studied through examining the campaign speeches given by Mrs. Clinton and Mr. Trump, the latter being elected president by the Electoral College. This current anti-democratic electoral system differentiates the vote of the “popular vote” to that of the Electoral College. The “popular vote” went to the Iron Lady, Mrs. Clinton with a 3 million differential against the business magnate Trump, losing only the Electoral College and as a consequence the presidency.

In the United States, the president and vice-president are chosen in November, not by the general public but by 270 delegates who, after being voted in, join the elitist Electoral College, which has a total of 538 members. That is, there is no universal, direct, and secret election but only an indirect one. As is the case in other capitalist countries, the founders of the country decided in 1787 that the general public should not be trusted, instead giving all the power of election to the states. This system was ratified by the Twelfth Amendment of the Constitution in 1804 and survives to this day.

A heap of analyses, opinions, and reports, from mass media or from social media networks, were diffused to coincide with the speeches of the candidates as an attempt to persuade the general public to support and vote for them. Mrs. Clinton’s discourse was practically the same as the arguments of past Democratic presidents, prioritizing warmongering threats against Russia and China. Meanwhile, the xenophobic, racist and conservative Trump primarily went against the undocumented and immigrants in general. He promised to “recover” the power of the United States — framed in what is known as “American Exceptionalism,” Dixit Seymour Martin LIPSET (2000) — through protectionist policies that have already existed under the neoliberalism of the “free market” functional to advanced capitalism in the environment of the “Welfare State” that everyone criticizes and repudiates today, especially the supporters of the “free market” (IMF and WB).

Despite this, we must point out that from a historic and imperialist geopolitical view, both of these discourses combine when their interests are threatened in any circumstance. In this sense, there should be no illusion of a “benevolence” from any of these forces when it comes to the problems and contradictions of capitalism as they will always position themselves against the workers and the oppressed peoples.

The elected president also promised to give a revitalization to the country’s industrialization that, according to him, was seriously damaged by past administrations. Very briefly we must point out that while Clinton represents the interests of a faction of the imperialists of speculative financial capital (of the fictitious type), Trump represents the faction of industrial capital that has lost out to inter-capitalist competition on a global scale. In particular, to active competitors such as China who has expanded its radius of action in recent years, namely in Latin America and Africa

Since it was Mr. Trump who was elected to head the imperialist presidency by this political system for the next four years, we center our analytical commentary on the perspectives that are opened up under his influence, especially in relation to Mexico’s subordination to the United States.

Imperialism as a system of domination

The United States cannot be treated as any other country with which it could be compared to (Mexico, South Africa or Brazil); additionally and different to these, it is the main representative and chief of the capitalist-imperialist world system through its economic and financial organisms such as the IMF and the WB; diplomats, such as the UN; the ministry of the colonies, as is the OAS to the United States, and militaries, such as NATO. This is often forgotten. Therefore, we agree with those who affirm, correctly, that whatever candidate is voted in by the College as president would, essentially, not change neither the vocation nor the imperialist practices of the United States on a global scale: he may have his own peculiar way of governing and making decisions but this is all within the unalterable framework of its imperialist policy in the world.

What is sure is that the electoral ritual was performed and now the president-elect is precisely the authoritarian business magnate that has promised to deport three million undocumented people from his country, claiming they are “thieves, murderers, addicts” among other labels, accentuating his profound racism and xenophobia and infecting North American society with it.

We are dealing with an imperialist system, which Lenin and other Marxist analysts of imperialism have depicted. Trump’s emergence does not in any way signify a change to its essence but rather the reaffirmation of this global capitalist system that came up in the middle of the nineteenth century. The United States continues to be an active protagonist despite this system’s accumulating problems and relative decadence as has been demonstrated by some authors linked to world system analysis as well as the Marxist theory of dependency.

With the endorsement and power given to president Trump by the imperialist system, he has reiterated his plans to build a wall along the border of the United States and Mexico to stop the influx of undocumented people, affirming that it will be paid for by Mexicans themselves. He has also said he will confiscate the remittances, that’s to say the salaries, of millions of undocumented workers gained from the work they carry out in the United States.

The media campaign that was carried out after Trump’s victory helped to highlight the atrocities and hardships that would emerge in the world economy, the United States, as well as in Mexico and other Latin American countries, after his ascendency to the presidency in January of 2017. However, this media coverage only helps to cover up the evident widely felt frustration that Mrs. Clinton was not favored by the electoral college, as most polls had suggested she would. All the more frustrating since she had obtained more of the popular vote against her competition who, at one point, even said he would not acknowledge the results if he lost. Though they are atrocities we insist that they are must be understood as hereditary of an imperialist system, independently of who it is headed by.

What is more concerning is that sections of the Left have adopted this argument from an angle that defends the ominous and Neo-Panamericanist treaties such as the North American Free Trade Agreement; presenting personalities of the dominant elite such as Mrs. Clinton or Obama as “democrats and human right defenders”. Most unfortunately, they present them as the only alternative that could resolve the crisis in the global capitalist system, without understanding that the crisis is a genuine product of its structural, social, political and military contradictions that exceed, per se, the individual actions and good intentions of the rulers.

There’s little doubt that the swearing in and subsequent presidential term of Trump and his team of white multi-millionaires will have an impact on the world with their peculiar manner of intervening in domestic and world events. Two examples will suffice to illustrate this point. The president-elect managed to “convince” the owners of the North American company, Carrier, which specializes in air conditioning equipment, to stop moving its factory to Nuevo Leon State, Mexico, to supposedly “save” around one thousand jobs of North Americans in Indiana. Will the owners of the said company really maintain the salaries of these workers even though they are 14 times higher than the salaries they would pay Mexicans? Furthermore, the president-elect caused a diplomatic fallout due to a phone call with the president of Taiwan, causing the Chinese Foreign Ministry to complain to the United States for neglecting the diplomatic protocol which has been observed for decades.

We can add a third example: the racist and xenophobic irradiation from Trump and his entourage of white business magnates into their country’s social fabric, have intensified racism and has encouraged fascist organizations and militant ultra-right groups like the Ku Klux Klan, who have even held demonstrations in support of the president-elect. Thus uncovering the sewers of age-old historical racism, as well as uncovering the reality of class struggle in the United States.

These facts demonstrate the peculiar behavior of a ruler who must nevertheless be viewed from the unalterable framework of imperialist politics to which all representatives of the United States are obedient, within their own country as well as in relation to the rest of the world. Mexican authorities, from the presidential level, have docilely folded their arms when it comes to the threats that Mexican people will have to pay for Trump’s wall. Using the FTA as leverage, the United States have threatened to pull out from the agreement which will evidently cause job losses — the majority of which are precarious and badly paid — likely increasing the already intense crisis unfolding for the Mexican neoliberal capitalist owners whose sustenance is dependent on the manufacturers for exportation that has up until now only really benefited the big North American transnational companies. There has been no significant reaction from the representatives of the Mexican political regime who are, undoubtedly, waiting to receive orders from Washington to act. That is, to conform to their designs.

The parameters and coordinates of imperialism

Historically, capitalist-imperialism has constructed geopolitics and strategic coordinates and parameters of its action in the world’s space. The coordinates define the location and position in distinct places and spaces of the earth where, generally, military bases are established in order to guard and reproduce its interests. The parameters are what guides imperialist action in terms of achieving its objectives as set out in the coordinates. The above is described in order to argue that the imperialist system is not limited to the action of one country, be it the United States, Germany, France or England, a block (NATO) or a region (EU); rather, it corresponds to a global system within the very structure of operation of the historical capitalist mode of production in its current phase that we can characterize as neo-imperialist.

In this context, we insist that independent from the personality that may occupy the imperial presidency, namely the United States, the person in power must move within the strict framework that determines the parameters and coordinates of an imperialist system. In order for it to reproduce itself it has to comply with the established actions of deploying investments, land appropriation, invasions of nations and the imposition of any necessary policies (protectionist or free traders), reserving at any moment to resort to the use of force, and, as a last resort, to imperialist war.

A paradigmatic example today is Syria where the imperialist project commanded by the United States and the terrorist forces against the legitimate government of President Bashar Háfez al-Ásad who, whit the military, logistical and strategic support that Russia lends him as an allied power, exterminating extremist groups and liberating the territory in favor of the Arab nation. In this case, it is irrelevant if the Imperial Presidency is occupied by Obama, Clinton, or Trump. Ultimately, the only thing that changes is the “style of governing” but only within the structural context of the geopolitical and military interests that predominate it. That is why it is an illusion to think that the course of history would change if Clinton or another person had been elected over Trump. For example, in both cases there would have been no change in the behaviour of the United States towards Latin America in terms of trying to defeat progressive governments (Venezuela, Bolivia and Ecuador) as they already have done in Argentina and, through a parliamentary coup, in Brazil in the interest of North American organizations such as the IMF and WB.

Another example is the racist and xenophobic tirade by President Trump against immigrant workers and, especially, against undocumented Mexican migrants whom he has insulted through stating that he belongs to the white bourgeoisie and that they are simply Indians, drug addicts, criminals, and rapists, threatening to deport them from his territory. Similarly, he has threatened to reject the “North American Free Trade Agreement” that has been commanded, since its inception, by the big transnational companies who are predominantly North American, including Canadian and some Mexican businessmen, who are completely subordinated to their interests and mandate. In this respect, there has been a series of worries, alarms and tearful auguries that affirm that if this Pan-Americanist trade agreement were to disappear, the whole world would enter into a situation of chaos and anarchy, and the whole (capitalist) system would come to an end. These predictions reveal the extent to which great international capitalists invest and act in that ominous agreement. Of course, this calamitous scenario is promoted by the hegemonic media with a seat in the developed countries of advanced capitalism and their correspondents in the underdeveloped countries, generally dependent of and promoters of the dominant ideologies and therefore playing a central role.

Imperialist protectionism

As the representative of the interests of the factions of industrial capital in the United States, President Trump has proposed to boost a kind of protectionism, even threatening to sanction and tax businesses that look to invest and take their factories abroad, particularly to Mexico where real wages per hour are at around ten or fourteen times lower than in the United States. The deception in this policy is not so much that it cannot be practiced in real life, as has been shown in the different phases of the history of capitalism. It is more so due to the fact that his proposal, that has a certain dose of demagogy coming from a businessman-president prone to liberalism, is made in a moment when global capitalism finds itself submerged in a profound structural crisis. A crisis that is not just commercial, financial, trade and monetary, but also a natural crisis that is much more complex and profound. A crisis that is expressed in the ever more difficult ways that this system can produce the value and surplus sufficient to reverse today’s economic recession and, at the same time, predicting a new phase of growth of the global economy (Sotelo, 2010 & 2015). Although significantly lower than what was recorded in the period after World War II (called the “glorious 30 years”) a gloomy picture of quasi-stagnation is presented, only solved by the dynamic economies such as China and India who are nevertheless also presenting difficulties in recent months that concern the monetary and financial circles and businessmen of the West.

This is, then, the scenario of capitalist crisis in which the US government will have to operate for the next few years under the presidency of the Presbyterian D. Trump and, it seems, this will not just be a job for one government, but also for the other conservative governments of Europe, of Japan and Latin America, particularly, where rights and social gains have been drastically reversed against workers and the people as in Argentina and Brazil.

The crisis in Mexico is not just because of the uncertainties and convulsions of the national monetary and financial system caused by the presidential elections in the United States — and that actually benefits speculators and rentiers — but, fundamentally, because of the structural historical condition of the country’s dependence on the dynamics of the US economic cycle which subsumes virtually all of the Mexican macroeconomic variables to its designs. To such a degree that at present the pattern of accumulation of manufacturing-export capital depends on more than 80% of North American imports, enough for the government in power to the North to make it difficult for commercial transactions between both countries. Similar to the Cuban boycott, it submerges the national economy in a deep pit hardly surmountable under the vicissitudes of the validity of neoliberal policies widely promoted by the government regime led by the PRI and the Mexican partycracy.

This regime is precisely the fundamental variable necessary in order to keep things as they are, independent of the changes that have occurred in the North American political system. The Mexican authorities have their arms folded in response to the declarations of the new government of that country and have rushed to take a series of measures framed as so-called structural reforms (energy, labor, financial, educational). They have privatized public enterprises, particularly the energy sector, and sacrificed the rights and living and working conditions of the population by cutting social budgets in the areas of education, housing, health, pensions. They do this as a way to try and ease the difficulties rooted in the profound economic crisis of the country as well as to preserve their interests as the dominant class in a country that is dependent and underdeveloped before the power of the new imperialist bloc led by President Trump.

Everything points to the government and the lumpen-bourgeoisie businesses of Mexico maintaining their status as dependents and subordinates to the strategic interests of imperialism. In this scenario, it is probable that the political and social situation of the country, while it will become ever more complex, of course, will continue to be a huge problem for the majority of the people.

The gradual and surreptitious delivery of Mexican territory to transnational companies in energy, mining, water, natural resources, infrastructure, etc., adds to the historical-structural dependence of the country a new neocolonial status. A status that is entirely favorable to the geopolitical and strategic-military interests of the United States which, as we have already stated, under the permanence of this condition of dependent subordination of the country, will only expand and deepen under the auspices of the government of President Trump in the next four years and, probably, for another four years, until 2025, if he is re-elected by the College of Electors once his first term ends.

Crisis of imperialism, crisis of capitalism

The backdrop of the Obama administration fell like a heavy slab on a government that reaped the most negative results of recent decades. Not just because the Democratic candidate lost the elections, after having shown that she had the support of Wall Street and financial capital, but also because she had practically lost the war in Syria. The legitimate government of that country, with overwhelming military support from the Russian government, was able to finally liberate the strategic city of Aleppo, pushing out the terrorist forces that sought to divide the country favoring the geopolitical interests and strategies of the West and the United States. Lacking arguments to justify said defeat, the outgoing President Barack Obama accused Vladimir Putin of being Trump’s “promoter”; the architect of his triumph through “cyber-spying” practices used against the Democrats and their presidential candidate. The same candidate that was investigated and discredited by the FBI in a sort of “soft coup” using controversial emails that incriminated her in endangering the security of the State.

During his annual speech, the Russian president pronounced himself on this case: “the administration of the outgoing United States President, Barack Obama, divided the nation due to calling for a rejection of the new president-elect (Donald Trump); this is a step toward dividing the nation”. He also reminded his audience that the Democratic Party did not only lose the presidential elections but also the Senate and Congress where the Republicans now have the majority of seats. He then, ironically asked: “was this also my doing?”, alluding to the accusations that make him directly responsible. “All of this demonstrates that the current administration suffers from structural problems and the elites of the Democratic Party do not understand reality”. He took advantage to affirm “… I see the data that says that 37% of the Republican Party voters sympathize with the President of Russia… this means that a great part of the United States public has the same idea about how the world should be, our common problems and dangers” (EFE and AP, Moscow, Russia, December 23, 2016).

These facts show, in the context of the crisis of the international capitalist system a point of inflection in word history characterized by the relative decline of the United States hegemony. They also show the emergence of new powers such as Russia, China, India, Iran, North Korea, among the most important and with undoubted nuclear capacity to destroy the planet several times over.

It is not by chance, therefore, that the rhetoric of the United States president resuscitates the old protectionist and nationalist policies and ideologies entangled with a furious racism, an exacerbated xenophobia and the practically unrealisable promise to recover the so-called “American exceptionalism” for “the good of the American people”, returning the historic imperial power which it had against most nations, particularly after the World War II. This “ideal” of the elected business magnate only helps to remind us of that phrase which was impregnated with racist stench, written by California’s State Attorney in 1930: “… It was us, the whites, that founded America first and we want to protect ourselves in our enjoyment of it” (Chomsky, 2011: 4).

In the mind of President Trump there is a dangerous imperial hologram that radiates rays of light in opaque circles that gradually dissipate until they practically vanish. Flanked by borders and walls that divide them, not only geographically, physically, territorially, and culturally, the United States intends to “shield itself” from “external enemies” such as the bulky and “dangerous” human crowds, like the millions of undocumented Mexican workers, that the new government equates to terrorists. It intends to do this by using its powerful military and anti-immigrant paramilitary groups (such as the official border patrol) and racists (such as the Ku Klux Klan), which most of the time is supported and promoted by the government of (okay? Yes) the United States. This is just a continuation and deepening of Obama’s “border security”, in other words its militarization, only now it is presented by Trump.

Up until now the Mexican authorities have done nothing but wait docilely, hoping for the new government of the United States to “sit down and negotiate”. It has to be made clear that you can only negotiate between equals and not while you are a subordinate as is the historical status for governments of nations that are dependent and oppressed as is the Mexican nation, who share similar migration policies towards its southern neighbour states with its northern neighbor, and to which they have always remained silent and submissive when it comes to deportations, murders, massacres and the ruthless super-exploitation of undocumented workers who receive some of the lowest wages in the world.

The delusions that things will improve when both countries feel they are negotiating, is not only a chimera, but a way of covering up their behavior, the harsh reality for millions of workers who cross the border every day in search of the much-sought and now deteriorating “American way of life”: in reality super-exploitation, precariousness of work and the ripping apart of social life.

One of the comparative advantages between Mexico and the United States, in terms of immigration and the cycle of capital, has been precisely the economic annexation of the former by the latter, which has led, historically, to agricultural and manufacturing production based largely on export maquiladoras. The Mexican economic system has specialized in the massive export of supernumerary, cheap, docile and flexible workforce that has practically no human and labor rights and that has nurtured the ranks of the army of workers in the United States allowing the bosses of this country to obtain large and juicy profits in their industries.

Therefore, undocumented activity is not, as the American president thinks, something harmful for the economic cycle and the reproduction of capital. On the contrary, it turns out to be the greatest advantage that North American capitalism has to obtain high rates of exploitation and masses of surplus value derived fundamentally from the combined mechanisms of intensive and extensive labor and the very low salaries that, even today, are below the wages of Chinese workers and other countries of the so-called third world.

This is one of the advantages that explains the historical dynamism of the US economy at least since the 1960s. That is why we say that the protectionist policies that President Donald Trump threatens to impose as part of his safety and labor policies in practice are not only doomed to failure. They will also have to be reworked according to reality, to a global competitive capitalism which is in crisis and whose internal dynamics of operation has installed super-exploitation of labor as the best system of production of surplus value and capital accumulation based on labor flexibility, labor deregulation, low wages, and on the monumental precarization of the components of the world of work and in the savage rejection of workers’ social and contractual rights practically all over the planet (SOTELO, 2018).

Following are just some of the myths that mobilized sectors of the electorate, including Hispanics, to vote for the Republican candidate: a) Immigrants take American jobs. b) there being a very limited number of jobs, a greater number of immigrants will bring more competition that will put a downward pressure on salaries. c) Undocumented workers, foreigners, particularly Mexicans that constitute the majority, are vicious, rapists and criminals, the reason why social life in North America is degraded. d) North American unions are against immigration because it harms the white American working class. e) Immigrants do not pay taxes. f) They are a burden on the economy. g) They send remittances to their countries of origin “damaging” the United States. h) They are a “danger” because they are invading the United States (CHOMSKY, 2011).

All these arguments-fallacies-myths promoted widely by the dominant media caught the minds and consciousness of North American society which is currently enveloped in a deep crisis —which, among other explanations, is the crisis of the “American way of life” and the so-called Welfare State. A society that is extremely malleable to the manipulation of the mass media and social media networks. These media outlets being the ones who introject, like a gospel yet lacking the message of the bona spe. Ideas that configure an ideological result, leading to the election of President Trump, which was unexpected indeed by most polls and experts.

Obviously, this ideological spectrum promulgated by the US ruling classes and the national and international media, harms the Mexico-US relationship and, in particular, casts shadows of uncertainty on the population of both countries. Above all, in Mexico, if we consider that currently, in the face of the structural, financial and monetary crisis, remittances are the central element in obtaining foreign currency in the face of the precipitous fall of oil and tourism derivatives. The latter case being due to the widespread violation of human rights as well as the official violence of the repressive and counterinsurgent practices of the Mexican State and, finally, to the generalized climate of insecurity in the country that “scares” tourists.

Under the current block of bourgeois power made up by the dependent dominant classes, especially by its monopolistic and financial factions completely committed to the dynamics of capital accumulation of the United States; by the partycracy, the leadership of corporate unionism and under the influence of irregular criminal groups that operate at ease throughout the country, it is practically impossible to think that the situation will change favorably in Mexico for the national and undocumented population under the Trump administration.

On the contrary, under the auspices of the crisis of the current pattern of accumulation and reproduction of the dependent capital specialized in manufacturing and maquiladora production for the world market, in particular, for the United States, the processes and trends that underpin the medium and long terms are those of deepening the structural and financial crisis of world capitalism that will become more extensive and profound. The United States itself, with the implementation of its protectionist and restrictive policies, now has to deal with problems arising from the necessary increase to military spending in order to counteract the growing nuclear power headed by Russia and China.

We insist that all these social, political, cultural, geo-strategic and military problems that surround the practices of imperialism on a global scale, in no way depends on the personality of those who temporarily assume the political power of the hitherto still greatest power of the planet (United States). Rather, it is the historical-structural conditions of multiple relationships and determinations of class struggles, economic and political crises, natural calamities and environmental disasters. It is the implementation of neoliberal economic policies under the auspices of the International Monetary Fund and the World Bank. It is the annexation of countries and territories, coups d’états, crises of bourgeois democracy and an endless number of problems whose solution is far from being found. These are what in the long term determine the action of the rulers and the peculiar way in which they affect the course of its development.

The new power of the protectionist United States is to deploy an imperialist praxis both within the United States, towards its own working class, its citizens, the undocumented, immigrants, health policies, salaries, education and social welfare among others, as well as its foreign policy vis-a-vis the great powers of the world and of regions such as Latin America.


In short, more than a crisis of globalization or of the “free market” economy linked to the neoliberal capitalist practices, the current systemic and civilizational crisis is part of a secular cycle of decline not only of Capitalism as a form of accumulation and exploitation of labor power, but as a mode of production and life, in which humanity no longer has any future or, if it does, it is from the perspective of barbarism, its own extinction.


¬ LIPSET, Seymour Martin, El excepcionalismo norteamericano. Una espada de dos filos, FCE México, 2000.

¬ SAPIR, Jacques, El nuevo siglo XXI. Del siglo americano al retorno de las naciones, El Viejo Topo, Madrid, 2008.

¬ SOTELO, Valencia, Adrián, Crisis capitalista y desmedida del valor: un enfoque desde los Grundrisse, coedición Editorial ITACA-UNAM-FCPyS, México, 2010.

¬ SOTELO, Valencia, Adrián, The Future of Work: Superexploitation&Social Precariousness in the 21st Century, Brill, Boston, USA, Brill, Boston, USA, 2015.

¬ SOTELO, Valencia, Adrián, United States. Geopolitics of the super-exploitation and the precariousness of work in a world in crisis (to be published).

¬ CHOMSKY, Aviva, Nos quitan nuestros trabajos y 20 mitos más sobre la inmigración, Editorial Haymarket Brooks, Chicago, Illinois, 2011.

Imperialism, globalization and the profitability of capital – Michael Roberts

Profitability and imperialism

The characteristics of modern imperialism are to be found in modern capitalism.  That is not a tautology.  The key connection between imperialism and capitalism is the general tendency of the profitability of capital to fall over time, leading to shifting of capital ‘abroad’ by national capitals seeking to reverse any fall.

When 150 years ago Marx outlined the law of tendency of the rate of profit to fall in capitalist accumulation – a law that he considered the ‘most important in political economy’ – he made it clear that there were ‘counteracting’ factors to the operation of that law[i].  Indeed, this is why the law was a ‘tendency’ that was not always realized.  One important counteracting factor was foreign trade and investment overseas.  This could cheapen the cost of raw materials extracted from the colonies and could raise the rate of exploitation of the labour force by using the plentiful supplies of cheap labour (an untapped ‘reserve army’) in the colonial territories. The profit created by that labour could be transferred to the imperialist economies and thus raise the rate of profit at the centre.

Lenin, in Imperialism[ii] explained this counteracting factor as follows.  “The need to export capital arises from the fact that in a few countries capitalism has become ‘overripe’ and (owing to the backward state of agriculture and the poverty of the masses)” …. capital cannot find a field for ‘profitable’ investment.”  This is a limited explanation.  Henryk Grossman took it further[iii].  “Why,” then, “are profitable investments not to be found at home? The fact of capital export is as old as modern capitalism itself. The scientific task consists in explaining this fact, hence in demonstrating the role it plays in the mechanism of capitalist production.”

Marx’s theory argues that there will be a tendency to equalise the rate of profit between capitals (even under monopoly capital) – indeed, this is how the higher rates of exploitation in the poor or colonial South end up in the profit rates of the rich and imperialist North.  There is a transfer of value from less productive capitals of the South to more productive ones of the North.

See this example below.  In both the North and the South, the rate of exploitation (s/v) in value terms is the same = 100%.  The capitalists of the North use the latest technology so that the time taken to produce the value of labour power is much less (20v) than in the South where the capitalists use less technology and more cheap labour.  But the rate of exploitation is the same in this example (North 20/20 and South 60/60).

North: 80c + 20v + 20s=120V.  Rate of profit = 20/(80c+20v) = 20%
Rate of exploitation = 20s/20v = 100%

South: 40c + 60v + 60s= 160V.  Rate of profit = 60/(40c+60v) = 60%
Rate of exploitation = 60s/60v = 100%

Total: 120c + 80v + 80s= 280V.
Average rate of profit = 80s/(120c+80v) = 40%.

The capitalists in the South get 160V in value out of their workers, while the capitalists in the North get less, 120V.  The rate of profit in value terms in the North would only be 20% while it would be 60% in the South.  But competition in the global market equalizes the average rate of profit at 40%.  So the market price of production for the North and South is 140 and the North gets a transfer of value of 20 from the South.  The capitalists of the North get some of the value created by the workers in the South through price competition equalizing the rate of profit on the global market.

North = 80c + 20v + 40s = 140P (compared to 120V), so transfer gain of 20.

South = 40c + 60v + 40s = 140P (compared to 160V), so transfer loss of 20.

Now suppose that the workers in the South are ‘super-exploited’ and forced to accept a lower wage (halved from 60v to 30v in the above example).  Now the surplus value in the South is way higher (and the rate of surplus value is now 300% compared to 100% in the North).  The process of the global market produces an average rate of profit that is higher than before, at 65%.

North = 80c + 20v + 20s = 120V.  Rate of profit 20s/(80c+20v) = 20%.

Rate of exploitation 20s/20v = 100%

South = 40c + 30v + 90s = 160V.  Rate of profit 90s/(40c+30v) = 130%.
Rate of exploitation 90s/30v = 300%

Total = 120c + 50v + 110s = 280V.
Average rate of profit 110s/(120c+50v) = 65%

Through the transfer of values in the global market, the capitalists of the North now get an extra 45V out of the super-exploited workers of the South.  Super-exploitation in the South increases profits for the North.  Total surplus value in the North and South has risen from 80 in the first case to 110 in the super-exploitation case.

North = 80c + 20v + 65s = 165P (compared to 120V), so transfer gain of 45.

South = 40c + 30v + 45s = 115P (compared to 160V), so transfer loss of 45.

The wages of the workers of the North are unchanged.  In this sense, the workers of the North are not ‘living off’ those of the South.  Both the capitalists of the South and the North are exploiting the workers of the South by squeezing more value out of them.

It is the race for higher rates of profit that is the motive power of world capitalism and the driver of imperialism and rivalry among imperialist nation-states.  Foreign trade can yield a surplus profit for the advanced country.   For example, from about the mid-1960s onwards, the rate of profit fell in the major economies and reached a post-war low by the early 1980s.  So the leading capitalist states looked to counteract Marx’s law through renewed capital flows into countries that had massive potential reserves of labour that would be submissive and accept ‘super-exploiting’ wages. World trade barriers were lowered, restrictions on cross-border capital flows were reduced and multi-national corporations moved capital at will within their corporate accounts.  This explains the policies of the major imperialist states at home (an intensified attack on the working class) and abroad (a drive to transform foreign nations into tributaries).  Globalisation is thus a product of the drive to raise profitability after a significant decline in the major capitalist economies.

MR graph 1

This connection between the changes in the rate of profit in the major capitalist economies and globalization from the 1980s can be shown to have a common thread ever since capitalism became the dominant mode of production in the world, starting with Europe, the US and Japan in the mid-19th century.  Moreover, it appears that after a particularly long period of low profitability and stagnation in production, imperialist rivalry in the struggle of the share of global surplus value becomes intense.  Competition among imperialist powers for the spoils of exploitation turns into capturing the spoils of war.

There have been three depressions in the history of capitalism: one in the late 19th century; the Great Depression of the 1930s; and the current Long Depression[i].

They coincided with different stages of capitalism. The depression of the late 19th century was the impulse for the development of modern imperialism, namely the expansion of finance capital into the “colonies”.  This eventually led to a new imperialist battle, one that was not resolved by World War I.

The hegemonic imperialist power, Great Britain, had been irretrievably weakened by the 1914–18 war, but the rising hegemonic power, the United States, was not ready or willing to assume the mantle of imperialist dominance. The rising imperialist powers, Germany and Japan, tried to gain a bigger cut of the spoils. That led to World War II and the eventual assumption of Pax Americana after 1945.

The current Long Depression could also give way to a new period of imperialist rivalry (but more on that later).

We can show empirically that globalisation of trade and capital took off whenever the profitability of capital fell in the imperialist centres.

MR graph 2

Between 1832-48 profitability of capital in the major economies fell; after which there was an expansion of globalization to drive up profitability (1850-70).  However, a new fall in profitability led to the first depression of the late 19th century (1870-90), during which protectionism rose and capital flows shrunk.  With economic recovery after 1890, imperialist rivalry intensified, leading up to the Great War of 1914-18.

In the post-1918 period, after the defeats of various European revolutions and the isolation of the Soviet state, there was a brief period of rising profitability, before a new drop led into the Great Depression of the 1930s.  Imperialist rivalry bubbled up again, leading to WW2.

Again, after the defeats of various labour struggles post 1945 in Europe, Japan and in the colonial territories, capitalism entered a new ‘golden age’ of relatively fast growth and rising profitability.  Globalisation of trade (reduction in tariffs and protectionism) and capital (dollar-led economies and international institutions) revived, until profitability again began to fall in the 1970s.  The 1970s saw a weakening of trade liberalization and capital flows.  From the 1980s, however, capitalism saw a new expansion of globalization in trade and capital to restore profitability.

It is no coincidence that the movement in the profitability of capital in the imperialist countries aligned with the degree of openness in world trade.  Rising profitability from 1850-70 saw a significant fall in international trade barriers, relative to intranational trade barriers. However, as profitability fell from the mid-1860s during the late 19th century depression, open trade stopped and protectionism returned.  With rising profitability in the 1920s, trade barriers fell further until the Great Depression arrived.  A new wave of trade liberalisation only began again after the 1970s.

Export openness for three country samples: 1827-2014

MR graph 3

So we can divide globalization into three great waves[i].  The first wave was from 1860-1914 when Europe and North America were strongly affected by internationalisation. The flow of goods accelerated. Capital moved relatively freely between countries. In some respects, financial integration was more pronounced than it is today. Even international migration was greater than it is today. Roughly 60 million people left Europe to seek their fortunes in the New World.  Great Britain was the world’s leading economy.

The basis for the European free trade system was the 1860 free trade pact between Great Britain and France. Many other European countries subsequently aligned themselves with this free trade system.  However, from the 1870s, in the depression period, a Russian and American ‘grain invasion’ prompted higher tariffs in most of continental Europe. So overall trade costs did not decline dramatically after 1870 since tariffs and non-tariff barriers rose.

In the second wave after WW2, international regulations and organisations to support economic integration at the global level were created. Cooperation was based on the Bretton Woods Agreement of 1944.  The US was now the leading economy in the world and the dollar became the monetary basis of the financial system. The ‘Bretton Woods system’ meant that nations had fixed currency exchanges in relation to the US dollar, which in turn was fixed to the gold standard.

Two organisations were established during this period, the World Bank (IBRD) and the International Monetary Fund (IMF). In addition, a special agreement, the General Agreement on Tariffs and Trade (GATT) became operative in 1948. In practice, GATT became the international organisation which set the framework for several important steps towards increased global free trade, particularly via successive reductions in industrial tariffs. But by 1970 the Bretton Woods system was coming under increasing pressure.

MR graph 4

In the third wave from the mid-1980s, the more populous countries in the developing world, particularly China and India, opened their doors to the world. European cooperation widened and deepened. In the decades up to the end of 20th century, international trade grew significantly faster than total production. The export of goods amounted to 31% of global GDP in 2006 as compared to 12% in 1970. Foreign direct investment (establishing or buying up companies abroad) increased twice as fast as trade. An even more rapid increase has been seen in foreign securities (investments that do not lead to controlled ownership in foreign companies).

This third wave is visible in the expansion of gross foreign assets (capital invested abroad) since the 1980s.

MR graph 5

The ratio of global foreign assets to global GDP more than doubled – from 7% in 1870 to 19% in 1900. This upswing was reversed during the first half of the 20th century. The mayhem created by two world wars and the Great Depression on the one hand and the emergence of domestic ‘institutionalized waste’ on the other undermined the flow of capital and caused the share of foreign ownership to recede. After the second world war, the new world order under the US allowed the expansion of international capital flows again and by 2003, after a quarter century of exponential growth, it reached an all-time high of 122%.

According to the McKinsey Global Institute[i], between 1990 and 2006 the global proportion of foreign-owned assets has nearly tripled, from 9% to 26% of all world assets (both foreign and domestically-owned). The increase was broadly based: foreign ownership of corporate bonds rose from 7% to 21% of the world total, foreign ownership of government bonds rose from 11% to 31% and foreign ownership of corporate stocks rose from 9% to 27%.

Capitalism became truly global in the late 20th century. That’s because increased investment into emerging capitalist economies brought into the capitalist mode of production a huge supply of peasant and non-capitalist labor and much of it at a cost below poverty.

At the same time, imperialist economies are acting even more as bases for finance capital globally.  Tony Norfield points out that US corporation revenues from abroad are worth $3bn a day and total more than the annual GDP of Switzerland. A financial company operating in a major international financial centre can draw upon the surplus value produced anywhere in the world, for the ultimate benefit of the imperialist power in which it is based.  Just 147 companies globally control the world[ii].   The IMF reckons that just 30 banks have more than $47trn in assets, or more than one-third of bank assets and these banks control 70% of credit markets.[iii]

However, the world of international business is still a regional one, not a global one. Capitalism today remains divided, whatever the degree of its global integration, into distinct capitalist nation-states, ruled by their own capitalist classes, which project their interests and protect those interests against rivals. In 1980, when US ‘financialization’ started in earnest, US owners accounted for only 28% of global foreign assets. But by 2003, the asset share of US owners was reduced to a mere 18%.

MR graph 6The rapid expansion of international financial dealing since the 1980s has been a potential source of profit for, and an incentive behind the growth of, the financial sector of the economy in many countries. However, at the forefront of this trend has been the boom in the activities of the City of London, the centre of dealing for the imperialist power most closely associated with finance.

British capitalism lost its hegemonic status a hundred years ago but in the post-war period its financial sector has maintained its global status while its manufacturing base diminished.  The Eurodollar market in the 1960s and the ‘Big Bang’ of the 1980s, when US banks and foreign banks operated without restriction, preserved the City’s pre-eminence.

Britain is second only to the US in the importance of its financial sector globally and in some areas like foreign currency trading it leads[i] .  Britain has the second largest stock of foreign direct investment (FDI) of nearly $2trn, equivalent to 30% of UK GDP.  Of the top 500 global companies, the UK was second only to the US with 34 companies.  The UK had six financial institutions in the top 50, compared to the US with ten.  And UK bank assets are four times UK GDP, the highest ratio in the world after Switzerland and tax-haven Luxembourg.

The global pecking order (Norfield index).

MR graph 7

In the previous wave of globalisation after 1980, power had shifted from owners in one core country (Britain) to those in another (the United States). By contrast, in the next wave, the contenders could be from China, OPEC, Russia, Brazil, Korea and India, countries that have become major foreign investors with significant international positions, including large stakes in America’s ‘imperial’ debt.

The beginning of the 21st century brought to an end the third wave of globalisation.  Profitability in the major imperialist economies peaked by the early 2000s and after the short credit-fuelled burst of up to 2007, they entered the Great Recession, which was followed a by a new Long Depression[i].  So the counteracting factor to low profitability of exports of commodities and credit has died away. This threatens the hegemony of US imperialism, already in relative decline to new ambitious powers like China, Brazil, India and Russia. Renewed rivalry threatens to unleash major conflicts in the next decade or so.

MR graph 8

World trade growth in 2016 was well below the post-Great Recession average of 2.7% a year, which in turn is less than half the rate of world trade growth before the global financial crash (at 5.7%).[i] As the IMF put it: “Since 2012, growth in the volume of world trade in goods and services has been less than half the rate during the preceding three decades. It has barely kept pace with world GDP and the slowdown has been widespread.”  [ii]

McKinsey outlined why global trade and industrial growth has slowed to a crawl since the end of the Great Recession in 2009[iii].  “The shock of the 2008 global financial crisis triggered the first recorded drop in global GDP and the hangover has since persisted, with many countries struggling with unexpectedly weak recoveries.”  And it is not going to get any better. “More worryingly, long-term growth prospects are serious cause for concern. Annual GDP growth from 2014 to 2064 is projected to effectively halve, falling to 2.1% globally and 1.9% for developed countries”.

The ratio of import growth to real GDP growth in the major economies has fallen back sharply.

Trade elasticity (ratio of trade growth to GDP growth)

MR graph 9

Deutsche Bank economists concluded that “It feels like we’re coming towards the end of an economic era. Such eras often come and go in long waves.  In the past 30 years a perfect storm of factors — China re-entering the global economy in the 70s, the fall of the Soviet Union, and to some extent, the economic liberalisation of India — added more than a billion workers into the global labour market.”  [i]

Globalization and the high-tech revolution reversed the productivity growth decline in the 1990s.  But in this century productivity growth in the advanced economies has headed toward stagnation. Only productivity growth in the emerging economies has enabled world productivity growth to stay near 2% a year. Since the Great Recession, productivity growth has dropped to under 1% a year.

Advanced economy average productivity growth (%)

MR graph 10Source: OECD

What the productivity growth figures show is that the ability of capitalism (or at least the advanced capitalist economies) to generate better productivity is receding. Capitalists have squeezed the share of new value going to labor and raised the profit share to compensate. Above all, they have cut back on the rate of capital accumulation in the ‘real economy’, increasingly trying to find extra profit in financial and property speculation.

This story on productivity is repeated for employment growth in the advanced economies. Employment growth is now less than 1% a year.  If you add (to productivity growth) an employment growth rate globally of 1% a year, then global growth is going to be little more than 3% a year for the next decade (and a maximum of just 2% a year for the advanced economies).  The dynamism of world capitalism is waning.

Some argue that, after its 60-year decline, manufacturing may start to return to the advanced capitalist economies. Then profitability will rise again in the major capitalist economies through a new manufacturing revolution.  This is the theme of President Trump, who reckons he can cajole American manufacturers to produce at home and restrict cheap imports from China etc.

But this is really just so much wishful thinking. American manufacturing has been growing in the past few years, but the sector still has 2 million fewer jobs than when the Great Recession began. Worldwide manufacturing is growing much faster, even for many of the American-owned companies that are expanding at home. Wage levels may have risen in emerging economies and stagnated in the advanced economies, but the gap is still huge. Hourly compensation costs for manufacturing in the US were about four times those in Taiwan and 20 times those in the Philippines.

As John Smith has shown[i] “about 80% of global trade (in terms of gross exports) is linked to the international production networks of transnational corporations”. UNCTAD estimates that “about 60% of global trade … consists of trade in intermediate goods and services that are incorporated at various stages in the production process of goods and services for final consumption”. –A striking feature of contemporary globalisation is that a very large and growing proportion of the workforce in many global value chains is now located in developing economies. In a phrase, the centre of gravity of much of the world’s industrial production has “shifted from the north to the south of the global economy”.

On a standard measure of participation in global value chains produced by the IMF, the rise in profitability for the major multinationals is now stalling. Sure, information flows (internet traffic and telephone calls, mainly) have exploded, but trade and capital flows are still below their pre-recession peaks. Global foreign direct investment as a share of GDP is also falling and capital flows to the so-called ‘emerging economies’ have plummeted (See

MR graph 11

Yet imperialism continues to suck profit out of the peripheral economies in the way Marx outlined in his theory of profit equalisation and unequal exchange.  The US-based Global Financial Integrity (GFI) and the Centre for Applied Research at the Norwegian School of Economics tallied up all of the financial resources that get transferred between rich countries and poor countries each year: not just aid, foreign investment and trade flows but also non-financial transfers such as debt cancellation, unrequited transfers like workers’ remittances, and unrecorded capital flight (more of this later).  What they discovered is that the flow of money from rich countries to poor countries pales in comparison to the flow that runs in the other direction.

In 2012, the last year of recorded data, developing countries received a total of $1.3tn, including all aid, investment, and income from abroad. But that same year some $3.3tn flowed out of them. In other words, developing countries sent $2tn more to the rest of the world than they received. If we look at all years since 1980, these net outflows add up to $16.3tn – that’s how much money has been drained out of the global south over the past few decades.

Developing countries have forked out over $4.2tn in interest payments alone since 1980 – a direct cash transfer to big banks in New York and London, on a scale that dwarfs the aid that they received during the same period. Another big contributor is the income that foreigners make on their investments in developing countries and then repatriate back home.  But by far the biggest chunk of outflows has to do with unrecorded – and usually illicit – capital flight. GFI calculates that developing countries have lost a total of $13.4tn through unrecorded capital flight since 1980.

Most of these unrecorded outflows take place through the international trade system. Basically, corporations – foreign and domestic alike – report false prices on their trade invoices in order to spirit money out of developing countries directly into tax havens and secrecy jurisdictions, a practice known as “trade misinvoicing”. Usually the goal is to evade taxes, but sometimes this practice is used to launder money or circumvent capital controls. In 2012, developing countries lost $700bn through trade misinvoicing, which outstripped aid receipts that year by a factor of five.

A new phase of imperialism ahead?

The strategists of capital are worried that Trumponomics will only make things worse for profitability globally. Lorenzo Bini Smaghi, ex-member of the European Central Bank’s executive board and leading strategist of finance capital, commented: “Trying to reverse globalisation can be damaging, particularly for the country that takes the first step. It is the advanced economies that are facing the greatest challenges in its most recent wave, which is why anti-globalisation movements are gaining support and governments are tempted to become inward-looking. However, because their economies are so large, and so bound by the web of globalisation, they cannot reverse its course, unless emerging markets also retreat.”[i]

The world economy is in a Long Depression. However, world capitalism will not stay in this depressed state. Eventually, probably after another slump that will destroy sufficient value (the value of means of production, fictitious capital and employment), profitability for those capitals that survive will rise again to start a new upwave in investment and growth. This assumes, of course, that the class struggle does not lead to the forces of labor triumphing over capital in any major imperialist economy.

A new wave of globalization is thus possible. There are yet more human beings in the world to be exploited and there are always new technological innovations that can provide a new cycle for expansion of value and surplus value.

There are still huge reserves of labor as yet untapped, particularly in Africa. The latest UN projections for the world’s economies show that Africa is expected to dominate population growth over the next ninety years as populations in many of the world’s developed economies and China shrink.[ii] Africa’s population is expected to more than quadruple over just 90 years, while Asia will continue to grow but peak about 50 years from now and then start declining.

Can capitalism get a further kick forward from exploiting these hundreds of millions coming into the labor forces of Asia, South America, and the Middle East? While the industrial workforce in the mature capitalist economies has shrunk to under 150 million; in the so-called emerging economies the industrial workforce now stands at 500 million, having surpassed the industrial workforce in the imperialist countries by the early 1980s. In addition, there is a large reserve army of labor composed of unemployed, underemployed, or inactive adults of another 2.3 billion people that could also be exploited for new value.

The global industrial workforce (in millions) 1950-2010

MR graph 12

Source: International Labor Organisation (2016)—dgreports/—dcomm/—publ/documents/publication/wcms_443480.pdf

America’s intelligence services also looked recently at developments in the world economy.  The Office of the Director of National Intelligence (DNI)  published its latest assessment[i], called Global Trends: The Paradox of Progress, which “explores trends and scenarios over the next 20 years”.  And the DNI reckons that things are not going to get better.  The next five years will see rising tensions within and between countries. Global growth will slow, just as increasingly complex global challenges impend.”

What is the answer?  Well, this comment from the DNI report is unvarnished: It will be tempting to impose order on this apparent chaos, but that ultimately would be too costly in the short run and would fail in the long. Dominating empowered, proliferating actors in multiple domains would require unacceptable resources in an era of slow growth, fiscal limits, and debt burdens. Doing so domestically would be the end of democracy, resulting in authoritarianism or instability or both. Although material strength will remain essential to geopolitical and state power, the most powerful actors of the future will draw on networks, relationships, and information to compete and cooperate. This is the lesson of great power politics in the 1900s, even if those powers had to learn and relearn it.”

In other words, while it would be better to just crush opposition and “impose order” in America’s interests, this is probably not possible with a weak world economy and lack of funds.  Better to try “draw on networks, relationships and information” (ie spy and manipulate) to get “cooperation”.

But it is not going to be easy to sustain America’s dominance and the rule of capital, the DNI report concludes, as globalisation “hollowed out Western middle classes (read working classes) and stoked a pushback against globalization.”  Moreover, “migrant flows are greater now than in the past 70 years, raising the specter of drained welfare coffers and increased competition for jobs, and reinforcing nativist, anti-elite impulses.” And “slow growth plus technology-induced disruptions in job markets will threaten poverty reduction and drive tensions within countries in the years to come, fueling the very nationalism that contributes to tensions between countries.”

America’s intelligence services expose imperialism’s two Achilles heels.  The first is the tendency of the rate of profit to fall as capitalism accumulates, posing increased rivalry and even damaging and destructive wars. The second is the global proletariat – the gravediggers of capitalism – who are still growing in size across the world. The global proletariat has never been larger in the history of capitalism.  In that sense, Marx’s prophecy in the Communist Manifesto 160 years ago is confirmed.  Sure, the majority of the proletariat is now in the South and not the North.  But that does not mean the workers of the North will play no role in ending capitalism.  On the contrary, they are the key to ending imperialism in its centre.

  1. Capital Volume 3, Chapter 15.
  4. M Roberts, The Long Depression, 2016, Haymarket Books.
  6. McKinsey, Financial globalization: retreat or reset?, 2013
  8. IMF Global Financial Stability Report, October 2017, p5.
  9. Tony Norfield, The City, Verso Books, 2016
  10. M Roberts, The Long Depression (2016), Haymarket books.
  11. CPB World Trade Monitor, November 2016,
  12. IMF World Economic Outlook, October 2016,
  13. Turbulence ahead: Renewing consensus amidst greater volatility, McKinsey Global Institute, September 2016
  14. Deutsche Bank, Long-Term Asset Return Study, strategists Jim Reid, Nick Burns, and Sukanto Chanda,
  15. John Smith, Imperialism in the Twenty-First Century: Globalization, Super-Exploitation, and Capitalism’s Final Crisis, Monthly Review Press, 2016
  16. [1]
  17. UN World Population Prospects, 2015 Revision,



[ii] UN World Population Prospects, 2015 Revision,

[i] John Smith, Imperialism in the Twenty-First Century: Globalization, Super-Exploitation, and Capitalism’s Final Crisis, Monthly Review Press, 2016

[i]  Deutsche Bank, Long-Term Asset Return Study, strategists Jim Reid, Nick Burns, and Sukanto Chanda,

[i] CPB World Trade Monitor, November 2016,

[ii] IMF World Economic Outlook, October 2016,

[iii] Turbulence ahead: Renewing consensus amidst greater volatility, McKinsey Global Institute, September 2016

[i] M Roberts, The Long Depression (2016), Haymarket books.

[i] Tony Norfield, The City, Verso Books, 2016

[i] McKinsey, Financial globalization: retreat or reset?, 2013


[iii] IMF Global Financial Stability Report, October 2017, p5.


[i] M Roberts, The Long Depression, 2016, Haymarket Books.

[i] Capital Volume 3, Chapter 15.



Rethinking anti-imperialism today – Panagiotis Sotiris

Recent developments from the election to Donald Trump to Brexit and the increased tension between the US on the one hand, Russia and China on the other, have been presented as evidence for a broader crisis of ‘globalization’ and a turning point in modern imperialism. Many have even talked about an ‘end of globalization’. Moreover, these changes have been presented as a turn towards a nationalism or oven isolation. In what follows I will try to offer my thoughts on these questions in an attempt to problematize them but also to suggest what these changes imply regarding radical left strategy. In particular I will insist on the need for a new anti-imperialism based upon a rethinking of the notions of the people and popular sovereignty.

The question regarding some form of ‘crisis of globalization’ or even an ‘end of globalization’ is based on the assumption that there was indeed some form of globalized capitalism in the previous period. However, I think that globalization has been a misleading term since it suggested that we were moving towards some form of a unified system of social relations, a transnational social formation, with a transnational bourgeoisie.[1] In contrast, I insist that what we have witnessed has been a process of increased internationalization of capitalist production. This process has been instrumental regarding the reproduction and enhancement of aggressive forms of capitalist accumulation. Moreover, increased internationalization of production, in the form of increased capital flows, direct investment and trade, has been a mechanism of constant pressure for capitalist restructuring and for the expansion of neoliberalism as the dominant regime of accumulation. However, national capitalist formations and nation-states have remained the main loci of capitalist accumulation. By this I do not mean that there have not been important changes. In contrast, I would say that Poulantzas’s original insight in the 1970s that the relations of forces in the imperialist chain are being interiorized in the power block of each national capitalist formation has been exacerbated in the past decades.[2] By this I do not simply refer to the role of ‘foreign capital’, a constant reference point of older dependency theories, but to the way imperatives for certain strategies of accumulation become dominant in each capitalist formation. The centrality of competitiveness as the main measure of success and the main justification and legitimacy for aggressive capitalist restructuring and neoliberal reform after the 1980s attests to this. Processes of regional integration such as European Integration, with their extensive forms not only of lowering barriers to trade and the free movement of capitals, but also of ceding of forms of sovereignty, have been the most aggressive cases of using the exposure to increased foreign competition as a pressure for capitalist restructuring.[3]

Such an approach suggests that we put aside the rhetoric of globalization and instead attempt to theorize an inherently contradictory process of capitalist internationalization. Such an approach can explain both the tendency towards increased liberalization of trade and capital flows but also the presence of increased antagonism. In this sense, what we are witnessing today is a tendency towards increased conflict and competition within this process of capitalist internationalization. However, before proceeding along this line, we must also see some other important aspects of modern imperialism.

If we are to keep something from what in a very schematic way has been presented as a Marxist or even Leninist theory of imperialism are two important insights. The first has to do with the way that the Marxist tradition, including Lenin revolutionized the theorization of international relations by giving priority not to interstate relations, but to class relations and strategies and their projection to the international plane. States’ behavior is based in their internal class composition, accumulation strategies and the relation of forces in the class struggle. The second is that the hierarchy in the international plane, namely the complex interplay of interdependency and antagonism that the notion of the imperialist chain suggests, is not determined simply on the economic level, but also on the basis of political and even ideological relations of forces. The dominant social formation in the imperialist chain is not simply the most powerful in economic terms but also the one that can in a certain way guarantee the collective capitalist-imperialist interest of the entire imperialist chain, by having the political and military capacity to do so. Moreover, this also implies that modern capitalist imperialism has been fundamentally non-territorial having to do with the expansion of social relations of production, of social forms and of accumulation strategies and less with direct territorial domination, despite the importance of territorially based resources such as energy flows, minerals etc.[4]

To this classical ‘Leninist’ approach I would also like to add another important aspect. The antagonistic and hierarchical relations inside the imperialist chain also have to be treated as hegemonic relations. By this I am not referring to the traditional conception of hegemony one can find in the discourse of mainstream International Relations Theory, or even at classical Marxist texts on imperialism. I am using hegemony in its Gramscian conceptualization as a way to theorize the complex modalities of power in capitalist social formations and as a concept that refers not simply to ‘consent’ or ‘intellectual leadership’ but as the complex articulation of force, leadership and ideological appeal that indeed leads to a social class becoming not just ruling but the leading force of society. In such an approach the hegemonic force in the imperialist chain, or in a block of imperialist states is not just the most advanced in economic terms or the most powerful in terms of military force, however important these aspects are, but the one that can project a hegemonic project that ‘links in the chain’ would want to attach to. To give an obvious example, the United States became the hegemonic force of global capitalism after 1945 because they were the most advanced and productive capitalist economy, the only country that could match Soviet military capabilities but also a country that offered a hegemonic project. This hegemonic project combined the Fordist regime of intensified capitalist accumulation, ‘Western’ liberal-democratic institutions, and a mass culture that comprised consumerist hedonism and individualism. The fact that for example the United States initially helped other social formations becoming more competitive in relation to the US as part of a strategy to strengthen the reproduction of capitalist social relations, is something that can be seen in the support given by the US to both European Integration and the capitalist development of Japan.[5]

Apart from these broader theoretical lines of demarcation, I would like to point to another important point. We are still in the aftermath of the capitalist crisis of 2007-2008. There is an impressive literature and an open debate regarding the actual causal mechanisms of this crisis, and in a certain way the discussion has not yet been concluded. However, we can say that what happened was neither a typical cyclical recession nor just a crisis of financialization. Also, it was not another manifestation of a prolonged crisis that started in the 1970s. What we witnessed was the combined crisis of an entire social paradigm that comprised the productive model based upon post-fordist capitalist restructuring, the over expansion of the financial sector, neoliberalism as a regime of accumulation and a certain form of international monetary, financial, productive architecture. The reduced dynamism of the post-2010 recovery, the absence of large gains in both productivity and profitability, the stagnation of the EU, the continuous problem of increased debt, both public and private, the crisis in public finances despite successive waves of austerity, and the inability to go ahead with the big interregional free trade agreements (long before Donald Trump’s rise to power), all these attest to the structural and still unresolved character of this crisis. The reason is that what is needed is a new social and technological paradigm that has yet to emerge. Moreover, another important aspect is the uneven character of both the extent of the crisis and the responses to it. It is obvious that the crisis was deeper in the ‘western’ formations in the imperialist chain in contrast to the new competitors in the East and in particular China.

The economic crisis also created — especially in the US — certain cleavages inside the dominant power block. Although neoliberalism, deregulation and reduced taxation (along with the intervention of the FED towards keeping the banking system afloat) have been common elements, it is interesting to see the divergence between those sectors that were based upon globalized production and supply networks and those more based in the US, a fact that can account for different approaches towards international trade agreements and also different approaches towards the politics of Trump administration. However, it is interesting to underline the fact that so far the Trump administration has refrained from ‘protectionist’ measures and has mainly opted for aggressive attacks on social rights, such as the attack on Obamacare.

At the same time this economic crisis was combined with a deep political and in some sense hegemonic crisis in many formations. 2011 represents an important landmark in the sense of the opening of a broader global cycle of protest and contestation. There is growing widespread disillusionment with mainstream politics as a result of austerity policies, an authoritarian post-democratic turn (enhanced by the absence of any real difference between centre-right and centre-left political parties) along with a broader tendency towards an insulation of the political scene against the demands and aspirations of the subaltern classes.

All these tendencies and developments in their articulation not only represent the effectivity of social antagonism, but also form the basis of the new wave of increased antagonisms in the imperialist chain. Ever since the fall of the Soviet Union it was obvious that the United States has opted for a strategy that aimed at maintaining that kind of military superiority that would guarantee their leading role in the imperialist chain, even in the sense of a “management of instability” that would always make a US intervention indispensable. Despite the setbacks that this strategy suffered, especially in the form of the Iraq debacle and the failure of the attempt to  ‘export western-style democracy and market economy’ by military means, it remained dominant, exactly because it offered a means to maintain a leading role.[6]

However, at the same time the expansion of capitalist productive forms and shift regarding the poles of accumulation created new forms of antagonism. Especially China managed not only to expand its domestic economy but also to play an increasingly important role in the global economy, not only as the leading force in manufacturing or as attracting foreign investments but also as a major investor abroad. The rhetoric notwithstanding, the ‘one belt one road’ strategy indeed points towards China claiming an increased role in the internationalization of capital, also expressed in the fact that the Chinese leadership attempts to present itself as the leading force in favour of a globalization based on investment and not just financial transactions. At the same time the emerging alliance with Russia, which not only has advanced military capabilities but also an important productive and high technology base, suggests an attempt indeed to create an alternative pole in the global system. What is important is that this new model attempts to also have some form of ‘hegemonic projection’. The combination of neoliberalism with increased state intervention, the attempt towards a more ‘paternalistic’ approach to social inequality along with a more authoritarian version of a strong state, plus a more classical approach to international relations as balance of force and cooperation can indeed be considered a different hegemonic project, one that can have a certain appeal.

The response to this by the United States has been a preemptive attempt towards military confrontation, by means of attempting to turn regional crisis into forms of pressure towards Russia and China. From Ukraine and Syria to North Korea and the renewed attempt at aggression towards Iran, this has taken many forms in the past years with differing degrees of success (for example the Syria crisis ended up in a situation of increased Russian presence as an integral aspect of the attempt to solve the crisis). It is interesting that this strategy, which in certain aspects has the support of some of the leading ‘western’ formations — although not all of them (see for example European governments feeling uncomfortable with increased sanctions against Russia given the energy dependency of Western Europe) — in a certain way represents an element of continuity regarding US administrations (see for example the fact how Trump was forced to distance himself from advisors and senior staff that had opted for a different strategy).

At the same time we are witnessing the deep crisis of European Integration, which also leads to the inability of the EU to play a leading role.[7] The crisis of European Integration is multifold. On the one hand we face the same problem as in the US of an inability to attain increases in productivity that would enable increased and sustainable profitability. The economic, institutional and financial architecture of the Euro as a single currency has exacerbated both regional differences but also indebtedness. Although designed as the most aggressive use of the ceding of sovereignty as a means to enhance capitalist restructuring it also led to increased divergences in competitiveness which in their turn also created conditions for increased private and public debt. Moreover, as a result of the German dominance in the EU combined with reluctance of German capital and the German political system to even think about redistributive policies or even some form of mutualisation of the debt (e.g. Euro-bonds), the tendency has been mainly towards automatic ‘penal’ mechanisms and even more austerity instead of a coordination of policies.One might say that Germany has been dominant but not hegemonic. At the same time the political crisis in Europe also comes as a result of an increased authoritarian, disciplinary turn, exemplified in the unprecedented social and political violence unleashed upon Greek society.[8] All this creates conditions towards an intensified crisis of representation, especially since what is at stake in Europe is not just “austerity” but a much more profound erosion of whatever aspects of the ‘European Social Model’ were still in place. The emergence of coalition governments or of new political hybrids such as the “movement of Emmanuel Macron” are evidence of this deeper crisis. At the same time the increased turn of countries that became part of the EU as part of the enlargement process, especially in Eastern Europe, towards a much more authoritarian and racist politics is also an element stressing the extent of the political crisis at traversing European integration.

All this points towards a period of transition and a period of increased conflict and antagonism within the imperialist chain. It is not the end of globalization, but rather a period of a more conflictual form of capitalist internationalization, a period in which it is open what hegemonic relations will emerge.

It is in light of the above tendencies that we can see the re-emergence of nationalist rhetoric and also of certain forms of the Far-Right. Especially the Far-Right usually manages to gain the political space left open by the combination of the crisis of systemic political forces and the inability or inexistence of radical left forces that could represent and at the same time transform growing sentiments of resentment from the part of the subaltern classes. At the same time, it is obvious that most far-right formations do not actually challenge the basic premises of both the dominant regime of accumulation and the core of the process of the internationalization of capital. In this sense, I would not present contemporary politics as a return of isolationism. We are still living in a world of increased interdependency, yet this is becoming a contested terrain.  Moreover, as far as institutional racism and the politics of increased barriers to migrants and refugees are concerned, it was the political mainstream that initiated a reactionary policy of border fences, ‘discouraging’ of migrants and refugees to arrive, and anti-migrant and anti-refugee policies all over Europe. This has been the hard reality of Fortress Europe.

The forms that the conflict in the imperialist chain will take along with the form of a new balance of forces or a new hierarchy, are not easy to discern. At the same time, one cannot rule out the possibility that in the end this struggle for hegemony in the imperialist chain will take a more open or even violent form, as it has been the case in the 20th century with two world wars! For the time being it seems that this conflict mainly fuels the tension and the violence in peripheral conflicts and the various forms of ‘war by proxy’ between opposing blocks.

I believe that in such a conjuncture anti-imperialism acquires a new meaning. First of all the very fact of a world with more conflicts is also a world with more ruptures and more openings which means that it is possible to suggest a strategy of de-linking from imperialist networks, on the economic, political and ideological level. However, this approach does not suggest simply taking advantage of cleavages in the sense of an attachment to one or the other pole in the international system. Opposing increased US aggression against Russia and to a certain degree China should not lead to thinking of Russia or China as potentially ‘progressive’ allies.  Nor does it simply points towards the emergence of a different ‘foreign policy’. Rather it points to the direction of the possibility of a broad alliance of the subaltern classes becoming hegemonic in a ‘weak link of the chain’ and initiating a process of profound social change and transformation which would also include a different approach to foreign relations and a new internationalism. The centrality of the de-linking is not linked to some form of isolationist utopia but to the fact that any process of social change must reduce its exposure to the pervasive influence of internationalized capitalism and the ways that competitive pressure induces the reproduction of capitalist social relations.

In this sense, any process of radical change today is in a certain sense a form of reclaiming of sovereignty. However, as always with questions of sovereignty the crucial question has to do with the subject of sovereignty, the subject that exercises sovereignty or the collective subjective of which sovereignty is exercised. To play a little with words I would like to suggest that we do not need some form of national sovereignty; rather we need to re-invent popular sovereignty.

There are two important points to be made here. The first one is whether such an approach towards an anti-imperialist de-linking runs the danger of nationalism. To take an example in the debates in the European Left regarding the question of the Euro and the European Union in general, advocates of a strategy of rupture and exit have often been accused of having the same position as the populist far-right. I believe that such criticisms make two mistakes. On the one hand they do not see that capitalist internationalisation is in fact the ‘nationalism’ of capital, in the sense that the European Integration is a class project of the European bourgeoisies aiming at strengthening capitalist power and hegemony. Any anticapitalist strategy must necessarily include some form of rupture with these processes. There can be no socialism under the supervision of the European Central Bank and the European Commission. On the other hand, they underestimate the possibility that the demand for sovereignty can be articulated in a progressive, democratic, radically emancipatory fashion representing a broad alliance of the subaltern classes against not just the European Union but also capitalists. Such an alliance also makes possible to rethink internationalism. I do not think that it is possible to conceive of internationalism in the form – to take again the example of the European Union – of a pan-European movement that could coordinate movements of the subaltern classes in 27 different countries, with different languages, traditions, histories of struggle and relations of force. In contrast, I think that it is more probable to see the possibility of a sequence of ruptures, based upon the uneven development of class struggles. In such a sequence each rupture will induce destabilizing tendencies in other social formations along with offering examples of successful struggles. This can be the basis of a new internationalism. A movement reclaiming democracy and popular sovereignty is a movement that can more easily opt on ‘foreign relations’ based upon solidarity and cooperation instead of antagonism. States that have reclaimed sovereignty by means of movements that challenge imperialism but also capitalist social relations are more likely to find new forms of cooperation.

This reclaiming of sovereignty cannot be conceived in terms of a ‘national economic –capitalist– development’. Rather it would be a process of intensified class struggle around the possibility of a transition program that would represent a radical alternative in an anticapitalist direction. Processes of integration, such the European Union, have pervasive effects upon national economies and the forms of accumulation. ‘National’ bourgeoisies become attached to the processes of integration and the linkages with global capital. Consequently, it is no longer possible to think in terms of segments of capital supporting some form of reclaiming sovereignty. Even in those cases in which we saw fractions of capital supporting some form of rupture (such as Britain or Italy) these are internationalised fractions that feel that they could compete in the international plane better outside the contours of European Integration. In a country like Greece, where the measures imposed by the EU, the IMF and the ECB led to an economic depression without precedent,[9] the forces of capital remained loyal to the euro and insisted on Greece remaining inside the Eurozone.

The other important point concerns the very subject of sovereignty. This cannot be conceived in terms of the nation. It is here that the notion of the people acquires a new importance. In such an approach the people is not a discursive construction or a signifier waiting to be articulated as part of the antagonism of discourses as Laclau and the neo-populist current have suggested.[10] Instead, we should point towards a class-based analysis, which makes the people “a concept for strategy” as Poulantzas has suggested.[11] In this reading, ‘the people’ refers to a potential alliance of the subaltern classes under the hegemony of the working class, the ensemble of all those that are obliged, one way or the other, to sell their labour power in order to make ends meet. It is here that the question of a post-national and post-colonial conception of the people acquires its significance. From refugee flows to mass migration, it is impossible to find societies where the subalterns have the same ‘national origin’. Moreover, racism and what can only be termed as neo-colonialism create new divisions and new forms of increased exploitation and oppression among the subalterns. A post-national and post-colonial conception of the people as the ensemble of all those who live at the same state territory and share the same conditions of exploitation and oppression and also the same needs, aspirations and struggle, can help overcoming these divisions. This points to something more complex than the formation of the people by means of a process of signification that creates both a common identity and an opposition to a common ‘enemy’, however important such aspects for this re-emergence of the people as the collective agent of transformation and emancipation. When dealing with the particular problems posed by the need to create new forms of popular unity between the different segments of the subaltern classes and groups, divided as they are by ethnic or religious lines, but also by the institutional division between citizens and migrants and also undocumented migrants, more important than the common ‘cultural referents’ are the collective practices, demands, strategies, re-writings of histories, knowledges of each other, and –above all– common aspirations, that can indeed induce the common identification as people. This process also requires concrete struggles for the institutional forms that enable this convergence, especially full social and political rights, but also the forms of political organizing and mass political intellectuality that link this common condition to common hegemonic projects of transformation and emancipation and help the articulation of common struggles and alliances, in sum what Gramsci tried to define as the ‘Modern Prince’, the political form of a modern United Front. In this sense, following Deleuze we are talking about a people that is missing, a people that has to be produced, a people-to-come, ‘[n]ot the myth of a past people, but the story-telling of the people to come. The speech-act must create itself as a foreign language in a dominant language, precisely in order to express an impossibility of living under domination.’[12]

It is in light of the above that Antonio Gramsci’s notion of the historical bloc can be useful in any attempt to rethink such questions. For Gramsci the historical bloc,[13] a complex conceptual elaboration that refers to the relation between structure and superstructures, is not simply a reference to the combination between an alliance of the subaltern classes, a transition program of social transformation and new forms of organization and political practice.[14] In such a perspective, the question of sovereignty as a part of a radical and emancipatory perspective requires exactly the formation of a new historical bloc, in the sense of a process of transformation and an alternative narrative for societies. In this sense, there is a dialectical correlation between anti-imperialism and anti-capitalism. The question of sovereignty becomes a stake in the class struggle, and only a socialist perspective can indeed point towards reclaiming popular sovereignty and reclaiming democracy. It is exactly the emergence of a new historical bloc that can actually give a different meaning to sovereignty, linking it to social transformation and emancipation, basing it upon a strategy to actually fight racism and neocolonialism and transforming into a form of a potentially revolutionary ‘general will’, representing the democratic instance that is at the heart of communism as a material tendency.

To conclude: a new anti-imperialism is today indispensable. Yet at the same time this implies the articulation of reclaiming sovereignty with crucial aspects of a contemporary socialist strategy and a project of profound social transformation. All these require a rethinking of the very notion of the people as the collective subject of this reclaimed form of popular sovereignty but also of a process of emancipation.


Deleuze G. (1989), Cinema 2. The Time-Image, trans. H. Tomlinson and R. Galeta, Minneapolis: University of Minnesota Press.

Durand, C. (ed.) (2013), En finir avec l’Europe, Paris : La Fabrique.

Gramsci, A. (1971), Selections from Prison Notebooks, ed. and tr. by Q. Hoare and G. Nowell Smith, London: Lawrence and Wishart

Gramsci A. (1975), Quaderni del carcere, ed. by V. Gerratana, Torino: Einaudi.

Laclau, E. (2005), On Populist Reason, London : Verso.

Lapavitsas, C. et al. (2012), Crisis in the Eurozone, London: Verso.

Poulantzas, N. (1975), Classes in Contemporary Capitalism, London: Verso

Sakellaropoulos, S. (2009), ‘The Issue of Globalization through the Theory of Imperialism and the Periodization of Modes of Production’, Critical Sociology 35 (1).

Sakellaropoulos, S. and P. Sotiris (2008), ‘American Foreign Policy as Modern Imperialism: From Armed Humanitarianism to Preemptive War’, Science and Society, 72(1),

Sakellaropoulos, S. and P. Sotiris (2015), ‘From Territorial to Nonterritorial Capitalist Imperialism: Lenin and the Possibility of a Marxist Theory of Imperialism’, Rethinking Marxism 27 (1).

Sotiris, P. (2013), ‘Gramsci and contemporary Left strategy: The ‘historical bloc’ as a strategic Concept’,

Sotiris, P. (2017), From the Nation to the People of a Potential New Historical Bloc: Rethinking Popular Sovereignty through Gramsci’, International Gramsci Journal, 2(2).

Sotiropoulos, D., J. Milios and D. Lapatsioras (2013), A political economy of contemporary capitalism and its crisis: demystifying finance, London Routledge.

Toscano, A. (2015), ‘‘Portrait of a Leader as a Young Theorist’, Jacobin,

[1] For a critique of the notion of globalization see Sakellaropoulos 2009.

[2] On this approach see Poulantzas 1975.

[3] As Sotiropoulos, Milios and Lapatsioras point out, “if a capitalist country has entered into the phase of developed or developing capitalism, the route of exposure to international competition is the most appropriate strategy for organizing bourgeois power: as a model for the continuing reorganization of labor and the elimination of non-competitive individual capitals to the benefit of overall social capital.” (Sotiropoulos et al. 2013, p. 190)

[4] For an extended version of this argument see Sakellaropoulos and Sotiris 2015.

[5] On this see Sakellaropoulos and Sotiris 2008.

[6] On this see Sakellaropoulos and Sotiris 2008.

[7] On the crisis of the Eurozone see Lapavitsas et al. 2012 and Durand (ed.) 2013.

[8] On this see Sotiris 2017.

[9] On this see Sakellaropoulos and Sotiris 2014.

[10] See Laclau 2005 and Toscano 2015.

[11] ‘The articulation of the structural determination of classes and of class positions within a social formation, the locus of existence of conjunctures, requires particular concepts. I shall call these concepts of strategy, embracing in particular such phenomena as class polarization and class alliance. Among these, on the side of the dominant classes, is the concept of the ‘power bloc’, designating a specific alliance of dominant classes and fractions; also, on the side of the dominated classes, the concept of the ‘people’, designating a specific alliance of these classes and fractions.’ Poulantzas 1975, p. 24.

[12]Deleuze 1989, p. 223.

[13] ‘If the relationship between intellectuals and people-nation, between the leaders and the led, the rulers and the ruled, is provided by an organic cohesion in which feeling-passion becomes understanding and thence knowledge (not mechanically but in a way that is alive), then and only then is the relationship one of representation. Only then can there take place an exchange of individual elements between the rulers and ruled, leaders [dirigenti] and led, and can the shared life be realised which alone is a social force with the creation of the “historical bloc”’ (Gramsci 1975, pp. 1505-1506; Gramsci 1971, p. 418 [Q11, §67])

[14] On this see Sotiris 2013 and Sotiris 2017.

The return of the national imperialist state – Jörg Nowak, Ekrem Ekici

The return of the national imperialist state[i]

The ultimate political consequence of the great financial crisis is the retreat into and renewal of the national imperialist state, centred around an authoritarian-nationalist project. Nevertheless, this ‘return of the national imperialist state’ that was never absent is deeply embedded into the neoliberal form of today´s global capitalism. It pretends to cater to working class interests of its citizens to some greater extent; but this remains largely a symbolic gesture. That fake interpellation of the national proletariat – not much unlike classical fascism – is accompanied by a profound political weakness and instability of these regimes. While this tendency itself seems to be a global phenomenon, it is at the same time fraught with the challenge to establish an economic nationalism in the framework of a globally interconnected capitalism, thus placing an enormous contradiction in the heart of this very tendency.

Not only are the national imperialist states haunted by their promises of welfare and employment, they also are confronted with deeply divided and fragmented state apparatuses in which different state agencies pursue radically different strategies. This goes far beyond the institutional chaos that reigned over German fascism in the 1930s and 1940s with its sprawling multiplicity of state and para-state agencies, and is also completely different from the usual competition between different corporate factions that expresses itself in a certain but limited extent of elite fragmentation in liberal democracies. The splits within state elites and state apparatuses in the national imperialist state are profound and radical.

Contours of the renewed imperialist national state

We identify five countries as the main imperialist states: The US, China, Germany, the United Kingdom and Japan. These countries are connected to a broader range of subimperialist states like Canada, Mexico, Brazil, France, Spain, Russia, India, Turkey, Egypt, South Korea, Taiwan etc. These subimperialist states often dominate other countries, but are highly dependent on the main imperialist states in economic terms. For example, although Canada is much more stable as a social formation as Mexico, and has a much higher medium income, its economic dependency on the US is quite similar to that of Mexico, if not higher.

Before we start to look at some details, we will define some general features of this new emerging form of state:

  1. Economic and political strategies are focused on a strengthening of national industries and companies and employment creation in the national territory. This includes a shift away from former transnational strategies. It does not involve any strengthening of unions or working class power, or participation of workers in decision-making, and also not a strengthening of welfare aspects or social security aspects. This economic strategy involves strong competition to attract investments on the own national territory and signals a move away from directing investment to low wage areas in other countries, at least to some extent. But this does not go along with any positive changes in terms of wages or working conditions in the main imperialist countries.
  2. Strong collusion of government and corporate interests, including the presence of corporate leaders and/or strong corporate interests in the government itself. This allows almost no meaningful distinction between corporate and government interests – as can be observed on the inclusion of the representatives of global corporations, such as Goldman Sachs, Exxon Mobil, in the Trump cabinet; most notably, Rex Tillerson being the Foreign Secretary; the close collusion of corporate interests and political rule in the People’s Republic of China; the millionaire cabinet in the UK; the government protection of car companies that manipulate emission devices in Germany; and the government of Japan that restarted various nuclear power plants after the Fukushima disaster in 2011 in spite of adverse seismic conditions (currently two nuclear power plants are operational in Japan).
  3. The tendency to lure investments away from smaller to the main national imperialist states is reinforcing the contradictions between imperialist and subimperialist states of which some are a lot more volatile in their economic situation than the more stable imperialist states. Since employment creation on the own territory (as precarious as those jobs might be) is one of the means of legitimation for the imperialist states, this type of competition will enhance the pressure for subimperialist countries to lower the standards of salaries and social security and to offer even more tax breaks, subsidies and the like to investors. It will also involve a high volatility for the currencies of some of the subimperialist countries. Thus, imperialist domination is severely enhanced.
  4. Imperialism in its classical form involves competition between imperialist powers, both on the economic and on the political and military level. It is obvious that competition and cooperation go hand in hand on the economic level, and until now there is no protectionist trade war in sight, but rather empty threats – and a full-on trade war is also highly improbable given the level of mutual interconnectedness of all major imperialist economies. This does of course not preclude a constant and fiercer renegotiation of terms of trade and national economic policies. The governments of all major economic powers are more keen to protect their own national champions from hostile takeovers by other national champions. And for sure this competition is present concerning investments in third countries, often resulting in zones of influence not much unlike earlier 19th century colonial policies.
  5. As has been noted in the introduction, the regimes of the new national imperialist states are not strong regimes backed by a huge consensus and a stable legitimacy. This is, on the one hand, the result of serious conflicts within state elites and state apparatuses. That aspect is less pronounced for the cases of Japan and Germany. The political agendas of the increasingly authoritarian leaderships are controversial for a large part of the state apparatuses and the political elite, and are causing serious rifts in the state apparatuses: The Trump administration is facing a high amount of resistance by various state agencies; the Brexit scenario created a huge rift between different factions both within the main political parties, but also between state agencies; the Xi Jinping government faces enormous difficulties to align provincial governments to a more coherent national policy; and the tensions in Japan due to Abe’s nationalist and militarists line are considerable. For a while it seemed that the conservative pole of German politics could be torn apart due to its stance on migration, but these tensions seem to ebb away more recently. On the other hand, the political leaderships do not dispose of a stable consensus in the population that would back their rule. Electorates are as quickly pulling away their support as they were flocking to vote for authoritarian candidates. The volatility of voters and/or citizens in supporting leaderships has increased immensely. If candidates do not deliver on election or agenda promises quickly and appear to move on with collusion between corporate and public interests, they are losing a seemingly overwhelming support in record speed. This increases the pressure on political leaderships to come up with ideological spectacles or campaigns that target so-called enemies and increases the likelihood that those leaderships engage in erratic or not carefully designed moves that might increase the lack of legitimacy.
  6. The biggest pitfall for the leaderships of the national imperialist states are for sure the economic contradictions within those social formations. Suffice to say that these economic contradictions are neatly linked up with the issue of popular support for these regimes. For most of these countries, the economic contradictions that the governments are facing are enormous. Again, Germany and Japan are exceptions and see less pronounced economic contradictions at first sight. A lot of the trajectory of these states will depend on the fact if they will be able to maintain a general economic stability and an improvement of the living conditions of at least some significant part of the population. Dissatisfaction is widespread in all the populations of the major imperialist states and might erupt at any time in unexpected convulsions.

The renewed emergence of the national imperialist state responds to a certain conjuncture and to long-term economic and political developments of global capitalism. There is, first, the growing lack of legitimacy of the global economic and political order – the idea of the “strong state” responds with nationalism, traditional ideas of community, violence and what is currently traded as “economic nationalism”. There is, second, the growing lack of stable rates of profit, or better, the lack of profitable investments that can only be reinstalled temporarily with the help of the state, public funds, national or transnational development banks or state-supported acts of violent appropriation. Thus, the mixture of authoritarian politics and plundering of public budgets for corporate undertakings aims to restore both legitimacy and profitability – the strong state becomes the political and economic lender of last resort for a failing economic system. It is the inner contradictions of the national imperialist state and the shaky ground that it is supposed to remedy that make up for the fragility and instability of this form of state.

In terms of recent theories of imperialism there might be two contending lines of theory. The theory of a global Empire (Hardt/Negri 2000) that is only symbolically centred in the USA is adequate in highlighting the aspect that the global system of rule has become a unitary global system with a uniform shape and logic. But it underestimates the very real aspect of competition between national imperialist states that do not neatly work together but exhibit their own irrational excess of nationalism. The other extreme is the theory that ultimately all other states are still subjected to the rule of US imperialism (Panitch/Gindin 2010; Bellamy Foster 2015). This theory is adequate in the aspect that the USA is still the largest economic and military power of all imperialist states. But it fails to acknowledge the moment of competition and power rivalry, too. It is an important moment even if the US is still dominant in some respect.

The diagnosis of the revival of the national imperialist state raises inevitably the question about the transnational nature of the ruling classes. The question whether a transnational capitalist class exists cannot be answered with a clear yes or no. It is obvious that a more or less unified transnational capitalist class is coexisting with a vast number of national oriented capitalist classes that favour different policy sets than the transnational faction of capitalists (Hirsch/Wissel 2011). This response seems to evade a clear cut answer and raises questions as to how many percent of capitalist classes belong to the transnational or national ones. The turn to the national imperialist state signals that the earlier hegemony of the transnational faction of the capitalist class is in a serious crisis. At least some part of the transnational faction is reorienting towards a stronger national orientation, both in the US and in the PRC. This national reorientation of a part of the earlier transnationalists is much weaker in Germany, Japan and the UK – despite the Brexit strategy of a part of the Tories. The resurgence of the national imperialist state means that earlier rifts between the transnational and national factions of the global capitalist class are becoming serious rifts. But it is significant that the national factions seem unable to formulate a coherent strategy which reflects the national interdependence of economic networks today. The state of things is that both factions of the capitalist classes unite in the sense of urging national states to secure their conditions of investment: access to resources in other countries, military protection, access to markets. It’s the beggar-thy-neighbour policy that becomes the common ground for all factions of capitals in a time of sinking profit rates.

Thus, the issue of inter-imperialist competition should not be neglected. It is crucial since it is the form in which the contradictions of contemporary global capitalism are moving and in which these contradictions find their political expression. There is a clear move to focus on the domestic development of these national imperialist states in order to alleviate and minimise the social contradictions within these countries, but as stated this does not include a significant power shift towards the working classes in these countries. The hope of the authoritarian regimes is that a mixture of nationalist ideology, repression, manhunt against so-called internal and external enemies and creation of employment opportunities will be enough to deal with the internal contradictions of these regimes. At the same time, the surge in authoritarian rule is a desperate attempt to get the competing rackets within the state apparatus and the corporate elites united that are disintegrating due to strong contradictions between their interests, fueled by the lack of profitable investments and a long-term economic depression (Roberts 2016).

The 2008 crisis and the aftermath

But before we elaborate more on these issues, we have to look at the economic background for all this to happen. As said, the reappearance of the nationalist imperialist state is the outcome of the 2008 crisis and its long aftermath. But what does that mean in economic terms? First, growth rates did come back after the crisis, but did not reach the pre-crisis levels in any significant country, especially not in the BRICS states on which much of hope and economic growth rested before 2008. Second, Michael Roberts (2017) has highlighted the fact that the profit rates are going down both in the established and in the emerging economies and that the pre-crisis growth rate in labour productivity could not be restored. The European Central Bank and the OECD have recently published reports on these questions (McGowan et al. 2017: Acharya et al. 2017). These reports have found out that the most advanced large corporations are increasing their productivity at the same speed as pre-2008. In other words, there is a big group of medium and small companies that does not have enough capital stock in order to catch up with new technological developments.

The OECD finds that the amount of resources sank in those companies rose since the mid-2000s, and it estimates that across nine European countries that were in the focus of this study the capital in those zombie companies – those companies that are not making any profit after serving the interest payments for credits – makes up between 5 and 20 percent of the total private capital. This signals a concentration of profits in the large companies after the great crisis and explains some of the serious contradictions between large and smaller companies, thus also the renewed focus on renationalization among much of the middle classes.[ii] Due to the ECB report: “While banks that benefitted from the announcement increased their overall loan supply, this supply was mostly targeted towards low-quality firms (…) As a result, there was no positive impact on real economic activity like employment or investment. Instead, these firms mainly used the newly acquired funds to build up cash reserves.” (Acharya et al. 2017) Thus, from the perspective of a Gesamtkapitalist, those companies should disappear from the market (or should have already disappeared during the cleanup during the last crisis). They cannot deal with today´s requirements of competition, i.e. immense investment into research and development. Roberts interprets this correctly as one expression of the tendency of the rate of profit to fall, i.e. a higher technological composition of capital. This phenomenon is not confined to Europe, as the Bank of International Settlements (BIS) identifies it in all Western and large emerging economies (BIS 2017, 13), Japan proves to be the only exception in that respect. While in the Eurozone and the UK about 9 %, and in the US about 17 % of the largest companies are identified as zombie companies by the BIS, it is important to note that the numbers of BIS only relate to listed companies. It is significant that the amount of listed zombie companies is more or less stable in the US since 2003, but has risen steeply both in the UK (since 2014) and the Eurozone (since 2012). Daniel Lacalle reports that in the Eurozone 30 % of all SMEs are zombified, and the numbers for SMEs are at 20 % for the US and 25 % for the UK (Lacalle 2017). In China, the amount of zombie companies went down from a peak of 15 % in 1999 to only 5 % in 2016, but their share of total corporate debt has been rising disproportionately since 2011. State-owned enterprises play a crucial role here, contributing 60 % of the rise in total corporate debt between 2008 and 2016 (Lam et al. 2017). The BIS defines zombie companies as businesses unable to cover interest expense with earnings before interest and taxes. All of this is happening in the context of exceptionally low interest rates, and this is one of the reasons why upticks in interest rates are such a sensitive issue.

The other side of this tendency are the enormous job losses through automatization and robotization since the late 1970s – and more job losses are yet to come. The nationalist blame game is thus very obviously serving to move attention away from the paradoxes of technological improvement in capitalist societies: The overabundance of wealth made possible with technological improvements leads to immiseration and longer working hours. Within the capitalist class, it leads to increased contradictions and tensions between large companies and the SMEs, and to a growing number of indebted zombie companies that block profit-making. But robotization was used mainly in specific industries, namely in manufacturing, so that rather than having too much automatization, researchers of the IMF and of McKinsey underlined a lack of capital investment in most advanced economies over the last ten years (Adler et al. 2017; McKinsey 2017). The IMF paper highlights that apart from stagnant labour productivity the total factor productivity is also not increasing. This basically means that large sections of the economy in richer countries lack investment, but that these sections could see even larger job losses in the future (namely in the job-rich service industry) if capital investment catches up. For now, there is rather a problem of a lack of profitability. Thus, we have a small section of highly capitalised global companies, and a large section of companies with lack of increases in output per capital investment, lack of increases in labour productivity and lack of technological advances.

This leads us to a second aspect of the economic background: The financial sector. It tried to move out of the stock markets and evade some of the real estate markets that failed in the late 2000s – partly in order to move into new real estate markets, e.g. in Germany. On the other hand, the banks continued to feed the zombie companies with credit, and a huge amount of the non-performing loans goes back to these companies. While the small and medium companies feel increasingly strangled by the banks, some banks might be prone to fail if the number of those companies not able to pay the loans continues to rise. The enormous problems of Italian banks go back to this issue. Thus, the middle classes are trapped in between. While they continue to profit from rising real estate prices, and are able to get higher rents from small real estate property or higher private credit due to the rising value of property the middle classes live in, they face more difficulties to service loans for their companies and encounter more difficulties to expand their salaries by playing on the stock market which was one of the main pillars of integration of the middle classes into financialization (Mau 2015). On the larger plane, it has been convincingly argued that financialization served to reinforce the dominance of the main imperialist countries since they do not only have the largest and more powerful banking sectors, but the large corporate and private capital holders also use the financial sector as a relay to force whole countries to adapt to shareholder value expectations (Norfield 2016). The financial sector as such is looking for new fields of investment and due to an overabundance of capital that is crowding the few profitable investment opportunities it discovered recently “infrastructure as the new asset class” (Black Rock 2015; Hildyard 2016).

Infrastructure investment is the third element for our economic background and it is not by chance that it forms the central axis for both the economic rationale of the Trump administration and Xi Jinping´s showcase project of One Belt, One Road. While profit rates in the real economy are decreasing, and real estate markets still do not provide enough investment opportunities, there is an enormous liquidity of capital that is not being invested, above all in China, but also in the other main imperialist states. This hyperliquidity stems on the one hand from the dysfunctional domestic markets, witnessing the decreasing spending power of the general population. In addition, in China saving rates are high due to a largely incomplete social security system. Another reason for the hyperliquidity are dollars held by emerging economies in sovereign wealth funds, and the enormous redistribution of wealth to the top in the years after 2008. In any case, the new strategy to absorb this hyperliquidity is focused on state-led infrastructure projects that do not only procure private companies for construction, maintenance and operation, but also include multiple forms of financial investment and/or public-private partnerships that regularly benefit financial investors to the detriment of public budgets and citizens that face higher fees for toll roads, health service and education, or simply higher prices for railway and air transport. Black Rock (2015) reported a record high of 48.3 billion Us-dollar infrastructure investment globally for 2014, and cites a McKinsey estimate of 57 trillion US dollar of necessary infrastructure investment until 2030.

Although the last number should be dealt with cautiously, it illustrates where the hopes of investors lie. Nick Hildyard has demonstrated in detail how the different ways of extraction of public wealth for private interests work via infrastructure investments (2016) – basically, private capital demands a certain return on investment over a period of 5 or 10 or 20 years. If the infrastructure in question does not deliver the return defined in the contract, then state budgets will serve this gap. In this way, a growing (and uncertain) amount of the public budgets is already claimed by private capital, and this for decades in many cases.

So, it is on these types of investment that the hopes of many corporate actors today rest. The German government tries to privatize its famous highway system, under high pressure by insurance companies that enter shaky ground due to the low interest rates, and the long-running life insurances they sold with a much higher interest rate (Bock et al. 2015). The Juncker Plan in Europe and the EU capital market union are designed to encourage large infrastructure projects across Europe (Müller 2015). Donald Trump promised a large scale infrastructure investment that would create jobs for US citizens. The People´s Republic of China intends to invest in more than 60 countries in order to enhance infrastructure, get access to natural resources and to boost trade. The investment in the context of One Belt, One Road is estimated to be around 100 billion US dollars. Fitch Ratings issued a report in early 2017 that the Chinese financial system could be in danger due to potential risk defaults, since construction and manufacturing companies in China are currently the main sources for non-performing loans domestically, and Fitch sees an export of the same model with the One Belt, One Road infrastructure program (Wells/Weinland 2017). These infrastructure investments will in some cases also reinforce the domination of other countries by main imperialist powers, such as the inroads of Chinese companies into Brazil´s energy sector. In the context of the One Belt, One Road initiative, “Laos, for example, has provided assets in the form of potash mines as collateral for a loan that will push up its public debt to gross domestic product ratio by almost 60 percentage points.” (John 2017).

Achilles heel of the renewed national imperialist state: redistribution of wealth

Thus, we see three large tendencies: a slump in overall labour productivity focused on a growing portion of the all companies, financialization as the relay for enforcing high rates on return that are increasingly hard to get, and public infrastructure spending as both the promise to generate employment, an instrument of domination and influence, and an investment opportunity for the hyperliquidity of capital. The decisive question if of course, how all these tendencies will play out in the future – will it be feasible to integrate a considerable part of the zombie companies into infrastructure investment? Will it be possible to generate enough employment in order to compensate past and future job losses due to automation without a radical transformation of economic, social and political relations? It seems pretty unlikely that the infrastructure drive will serve to solve any problems of profitability or legitimacy of capitalism, but the challenge for the national imperialist governments will consist in raising the hopes as long as possible, while they will seek to generate new dynamics (wars, political campaigns) in order to distract from the paradoxes of high-tech capitalism.[iii]

While the question of economic performance and distribution of wealth will be the Achilles heel of these countries, it is not the only obstacle. While almost all governments worldwide follow the same economic model, the tensions between the imperialist countries and between the imperialist and the subimperialist countries will be a substantial characteristic of the coming period. Politically, this is much more resembling a pre-World War 1 situation than a pre-World War 2 situation. We are not facing consolidated fascist regimes with a more or less stable mass support, but rather shaky oligarchies that try to gather a mass support that remains very volatile. But for sure we are facing a kind of neo-Leviathan strategy that tries to rule with fear. Given the situation of the ruling classes, a socialist revolution might have some good chance of success, but we (still) do not have a revolutionary situation due to the lack of such sentiment in the broad masses and the lack of properly organised revolutionary political forces. Suffice to say that these were also seeming to lack in the end of World War 1.

We identified the competition between the main imperialist states as the form in which they unfold their logic of development. This competition is characterised by an overlapping of geopolitics and economic relations, as in every imperialist epoch. The most pronounced and influential variant is for sure the Trump administration in the US. Two driving forces have been commonly identified behind it: a crisis of representation of established presidential candidates, and a ‘realist’ reorientation of a part of the US elite towards confrontation with China. Mike Macnair has convincingly argued that this reorientation might be based on the fact that Russia is rather a second-class power today, and that the EU has run out of steam to be a potential competitor with the US, and thus does not have to be controlled via the UK anymore after Germany wrecked any political perspectives within the EU with its own imperialist oppression of other EU countries via the common currency and the 4-plus-2 compact established in a parallel law system in January 2012 (Macnair 2017). Brexit gave the death knell to the stumbling EU project.

The UK will try to strike a balance between trade with the EU and China, and a close relationship with the US, but there will be a strong push to strengthen strategic ties with the US, and the special relationship that Britain maintained with the US for a long time. This is enhanced by the fact that the US has the largest share of foreign-owned non-financial businesses in the UK with three times more gross value added than German-owned-companies (Office for National Statistics 2017). China seems to go onto the offensive with its parallel outreach of infrastructure investment outside and the project to prop up its poorer provinces. But apart from the huge liquidity that Chinese companies hold, and the ability to oppress any dissidents with ruthless oppression, the Chinese leadership is facing tough challenges. This mood could be read psychologically with the desperate embrace by Xi Jinping of free trade at the Davos meeting in 2017. Harder and colder facts are the sheer impossibility of coherent reform of the governance apparatus in China, with which Xi Jinping aims to combat corruption and regional and intra-party factionalism, and to improve product quality and the massive environmental problems. In regular patterns, all those problems are interwoven, as exemplified in the regular food scandals. As long as these problems persist, China will also be faced with them in any outside venture and remain unattractive as a role model to follow. In these aspects, the areas of superiority of the US as a superpower become quite clear, which might expand to the military aspects.

Japan, like Germany, is caught between China and the US. Both countries want to improve economic relations with China, but at the same time protect their own national champions against any Chinese takeovers. While this balancing act might be manageable, Japan´s geopolitical ambitions go along with an increasing tension with China, partly caused by Japan´s installment of a new missile defence system. Not unlike Germany, Japan’s government is quite good at ruining relations with allied countries, as can be witnessed with the ongoing and escalating fight about the comfort women with South Korea´s government. At the same time, both countries face allegations by the Trump administration to manipulate currencies. Other than China, Britain and the US, the national leaderships in Germany and Japan are not challenged by protest and widespread dissatisfaction, so they might rather be able to muddle through. The intention to both trade and compete with China finds its expression in recent reports and research papers from Europe that project the Chinese state and economy as a threat to free trade and to European companies (European Chamber 2017) or see China’s impact on the global economy as the central cause for ‘economic nationalism’ in Europe (Colantone/Stanig 2017). Colantone and Stanig contend that regions affected by Chinese imports would have voted stronger for the radical right – in implicit denial of the fact that German imperialism is likely to have a much bigger impact on European countries than Chinese imports. Why speak about the elephant in the room if you can blame the mosquito? These ideological repercussions of imperialist competition in academic research will not remain isolated incidents.

Shift in variables: towards a new encounter of “the Left” with the conjuncture

We have seen how the competition between the main imperialist states plays out. The decisive test for these projects will be whether one of those governments will be able to kickstart a new cycle of growth within a few years. All the predictions by the IMF and the World Bank do not indicate such a growth in foreseeable time. The political variables are an escalation of xenophobic and authoritarian movements beyond the control of governments and a growth of progressive movements or electoral victories of left-leaning governments. At least the UK could see the latter, and possibly also the US. On the other hand, the relative triumph of far right populism in the German elections in September 2017 and the following “low-intensity” political turmoil has confirmed the former part of that equation, the consolidation and relative electoral success of a Corbyn-led Labour Party in the UK the latter part. China seems to be static in political terms, but could face significant tensions in the future when more rural migrant workers retire without sufficient pension insurance and more workers are laid off due to high-speed robotization.[iv] More likely are in the present conjuncture in all five main imperialist countries more conservative, nationalist and protectionist movements in the population. At this point, ideological struggles will become one of the decisive crossroads in order to make inroads into this scenario.

A serious weakness of many left analyses consists in giving in to the liberal rhetoric of “populism” that is subsuming the state projects of the national imperialist states and recent renewals of social democratic or socialist political projects under the same heading. This lumping together under the name of populism (Mouffe 2016) suggests that these would be essentially similar approaches. In the light of the analysis above the whole notion of calling “populism” every political current that pretends to divert from the different brands of neoliberalism becomes visible as being an ideological manoeuver in itself, and a largely successful one. This manoeuver gives credibility to the national imperialist state projects by granting them some “popular” legitimation, and it collapses any progressive move towards a more equal society (even if it comes from largely failed social democratic revamps like Syriza or Podemos) with deeply authoritarian and corporate politics.

Such form of an inverted theory of totalitarianism (= right wing and left wing populism wanting essentially the same, i.e. put an end to free trade neoliberalism) signals the lack of a serious internationalist vision on the side of the remaining and hitherto weak left-wing political forces, accompanied by the “inability to intervene at the global scale in which markets operate” (Gonzalez Vicente/Carroll 2017). Both the expected and ongoing surge of imperialist and subimperialist nationalisms (and the ensuing types of competition and economic nationalism) as well as the increasing relevance of migrant labour and migration hint at the necessity of a radical internationalist orientation for any progressive politics in the future with a redefined terminology and vision to entrench itself against the reconstruction of the dynamics of national imperialisms.

This requires a clear view of the economic problems and constellations beyond the surge of the nationalist wave. It is an ideological move to the extent that the colluding political and economic elites in all major imperialist projects have strong transnational links through investments, company mergers, financial connections etc. But this ideological move represents the sentiment and hopes for more national focused economic projects by the big mass of small and medium enterprises, since the contradictions between large global companies and the majority of all other companies that do not see capital investment and increases in labour productivity is one of the driving forces of the current dynamic. This split within the capitalist class accounts also for the frictions within state apparatuses and state projects. At the same time, much of the political horizon of the middle classes is too narrow in order to conceive a political project of a Fordist-type class compromise on a level beyond the national state. It is in this arena that the weight of ideology is making itself felt. Thus, the national imperialist projects are fraught with the paradox that renationalization is no viable option on the economic plane, but part of the elites feel they need national rhetoric in order to tie the middle classes to the existing economic order. The move to engage in large infrastructure projects seems to represent a rather desperate attempt to relieve some of the political and economic deadlocks than a viable long-term project of accumulation and political rule.

It is clear that a social-democratic solution will not offer another way out of those impasses. On the other hand, it is obvious that political tensions and economic bottlenecks are rather increasing.

Towards the conclusion, we would like to draw attention to a relative new phenomenon which may very well evolve into a sub-conjuncture within the greater context of the rebirth of the national imperialist state: the re-emergence of separatist movements within the advanced economies.

Albeit it has a renowned and complex historical background, the Spain – Catalonia crisis points towards a new and escalated phase of internal contradictions in the developed economies. Carving “new micro-states” out of existing and centralized ones has been largely occurring in more peripheral states, but this phenomenon currently signals a serious tendency of crisis of the nation-state in Europe. However, the idea behind that relatively new form of “separatism” is not an anti-capitalist one. It is rather related to the fact of “distribution and redistribution of wealth” given the specific situation of the region of Catalonia within the Spanish state. In any case, with all its economic, socio-cultural, and more importantly, legal dynamics, the Catalonia crisis could be the harbinger of a significant overturn of the state formation in Western world. The fierce reaction of the central Spanish state to the independence referendum in early October 2017 also provides hints for the near future regarding the shape of things to come in the political scene of Europe.

What makes the “Catalonian dilemma” important is that this particular crisis demonstrates the fact that intra-capitalist contradictions have arrived at an irreconcilable stage even in the global North or in the Western world if you will. These developments should be read in the context of a concrete analysis of the concrete situation. Today, many purportedly progressive analyses and responses to such developments are rather based on a vague recourse to democracy. For instance, the Catalonian dilemma may be perceived in the framework of the “right to self-determination of oppressed nations”, instead of handling the issue in the context of the political-economic reality. The same argumentative logic of national self-determination and popular democracy is employed by nationalist right-wing parties like Front National in France and AFD in Germany. This does not legitimise equating the Catalan independence movement with the extreme right, but reveals the emptiness of a politicist recourse to democracy without any explicit basis in contemporary political economy and the economic interests at stake – taking into account that these are never ‚purely’ economic: they always take a political form. Similar examples of the ineptness of approaches of the ‚populist’ left can also be seen in the instances of the Syrian crisis or the Arab Spring. That ineptness has led and continues to lead to devastating ideological and practical-political errors.

In the light of all this, the most pressing issue remains to be the reconstruction of a renewed revolutionary response – not “alternative” – to rising neo-authoritarianisms on the one hand, and to a weakened and deformed mainstream cultural “left”. This situation is connected to a rather subterranean malaise: the avoidance of the idea of socialism centred around the issue of the ownership of the means of production – that is, the abolishment of private ownership of the means of production. To be more specific, the new phase of global capitalism and the re-emergence of the national imperialist state necessitate a corresponding, multi-dimensional and multi-layered communist thinking and program.


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[i] Many thanks to Toby Carroll for useful hints and debates on robotization, and to Brad Williams for background information on Japan.

[ii] A recent study found that the European resistance against the TTIP trade deal was also supported by small and medium enterprises, see Theurl 2017 for the case of Austria. European SMEs set up a website in which they declare opposition to TTIP:

[iii] As we finalise this text, the Trump administration launches a military attack against military bases of the Syrian government on 6 April 2017 – during the first day of Xi Jinping’s first meeting with the US president. It is yet unclear if this was rather a ‘drive-by-bombing’ as suggested by the Financial Times as one possible option, or if this announces a lasting direct engagement of the US military in Syria. For sure, Trump succeeded with this attack to line up formal allies like the German government and important politicians in his own party behind him. It is important to note that Xi Jinping did not leave the meeting with Trump after being informed about the attack. This points to a situation in which the Chinese leadership is so much afraid of a trade war with the US that it tolerated this maneouver.

[iv] Huang Yu conducted a very recent study in Dongguan province based on data from the year 2016 and found out that robotization led to a 60-70% decline of the workforce in different factories. If these robotization programs are rolled out on a massive scale in the framework of China’s Manufacturing 2025 program, backed with financial support of various levels of the state (as it is planned), there will be an enormous increase of underemployed surplus population all over China (Huang 2017).