Trump wages the economic war and threatens Iran

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From 1944 to 2016, the American State strove to manage world capitalism

With the First World War, the American bourgeoisie gained supremacy.

The productive forces created by capitalism could no longer be contained within the framework of the social forms of capitalism, including the framework of national states. Hence the war. What has the war brought Europe? A situation ten times worse than before… America is today the basic force of the capitalist world. (Trotsky, Europe and America, 15th February 1926)

During the period between the signing of the Treaty of Versailles (1919) and the Japanese attack in Pearl Harbour (1941), and while expanding and reinforcing its sphere of influence, the political representation of the American bourgeoisie refused to take responsibility for the world order.

By contrast, from the end of the Second World War, the US promoted multilateral treaties (Bretton Woods, GATT…) and created worldwide oriented institutions (UN, IMF, IBRD-WB, WTO…). Since it had then little to fear from rivalry, the American State put pressure in favour of lower barriers on trade and on cross-border investment. It negotiated on a global framework (GATT-WTO). In this context, it called for an equal treatment for all the capitalist countries (“most-favoured-nation clause”).

While managing the world, the American State did not disregard its own interests. However, this led it to take some risks. With the attack against the Soviet Union (“cold war”) and with the Chinese Revolution (Korean War), this economic settlement was supplemented by regional military alliances (NATO in 1949, SEATO in 1954…). The US overwhelming military superiority in nuclear, conventional and intelligence matters did not prevent the conquest of Eastern Europe by the Soviet Union, the defeat in Cuba and in Vietnam, and humiliating failures in Afghanistan and in Iraq.

In the late 1970s, a substantial part of the world had not fallen under capitalism: Soviet Union and Eastern Europe, China, Vietnam, Laos, Cuba. However, the collectivized economy was everywhere weakened by a parasitic and privileged caste. World capitalism exerted an economic, ideological and military pressure on these degenerate workers’ States. Building upon the national segmentation of the Stalinist bureaucracy (splits between Soviet Union and Yugoslavia, between china and Soviet Union, tensions between China and Vietnam…), the American State consciously led the charge against any revolutionary threat and for the restoration of capitalism.

The American economy is still the first producer in the world with 19 300 billion dollars GDP in 2017 (followed by China with 11 900 billion). The US are first in the world in the extraction of oil and of natural gas, as well as the first agricultural exporter. Regarding industry, American groups appear in many international trusts: refining, cars, aeronautics, weapons, electronics, food, pharmacy, personal care, sportswear… They are dominant in finance, and their stock markets in financial products and in raw materials (NYSE, NASDAQ, AMEX…) clearly prevail over the City. The dollar largely heads currency change (and the derivatives on currencies) before the euro.

Research and higher education attract researchers and students from all over the world. As a result, the US are still leaders in patents’ ownership. The whole world is under the influence of the US culture. The English language, even if it is much less spoken than the Chinese language, is the language for international trade, as it was already the language of the hegemonic power during the upward stage of capitalism in the 19th century.

If any country can bully the world, America can. Its total military, diplomatic, scientific, cultural and economic power is still unmatched. (The Economist, June 9 2018)

The American supremacy is more and more undermined, not only because of the increasing power of Chinese imperialism, but also because of the ambitions of all the other imperialisms that enter any space left by the American imperialism. Such a withering power cannot last without far greater consequence on the American bourgeoisie.

The weakening American rule

The victories of the Soviet army over German imperialism, the Chinese revolution and its possibility to spread over Asia, the revolution in Yugoslavia and in Albania, the revolutionary rise in Europe from 1943 (Italy, Greece, France…) led the American governments, be they Democrat or Republican, to take care of their imperialist rivals (Britain, France, Netherlands) and even to rebuild them (Japan, Germany). The Vietnam war facilitated the emergence of new capitalisms (Brazil, South Korea…). As for any emerging capitalism, their bourgeoisies first protected themselves with protectionist measures.

While the hegemonic imperialism had borne most of the militarist burden, the restoration of capitalism in Eastern Europe and in Russia since 1989 first benefited the Western European rival imperialisms, especially German. Thanks to the size of their territory and to the cultural and industrial legacy of the formerly planned economies, the Russian and Chinese new bourgeoisies resisted the older imperialist powers and they became imperialist powers.

Since the 1970s, The US import more than they import wealth. In 2017, the US deficit in trade of goods and services increased by more than 12% to 566 billion dollars, and to 796 billion on goods (the difference being a surplus in the balance of services). Even the world recovery increases the loss of competitiveness of the US economy. The China trade surplus with the US increased by 10% in 2017, with more than 375 billion dollars according to the White House (which the Chinese deny in reducing it by 100 billion). In the first quarter 2018, it grew by nearly 20% compared to the first quarter 2017!

The American bourgeoisie will not be comforted with Europe, since its trade deficit has been recurring and always increasing for several years, notably with Germany. This led Trump to claim, in Davos, that “the European Union has been very, very unfair to the United States” (28th January 2018). He accuses it to maintain taxes on the American exports higher than the American taxes on the European products. Actually, the US are suffering a trade deficit with almost all the world, from Canada to Japan, from Germany to South Korea…

A headlong rush into protectionism

Until recently, the US government entered foreign markets under the pretext of free trade. The protection of local firms by the not only includes custom tariffs. It also includes “non-tariff barriers”: administrative procedures, norms, reserved public contracts, subsidies, lower business taxation, manipulation of the exchange rate, patents and other “intellectual properties”, restrictions on foreign investment…

The message to Beijing is clear: twice this week, the German government prevented the Chinese investors to take hold of German firms. In order to prevent the State-owned Chinese firm SGCC from entering the capital of the network operator 50Hertz, the German public bank KfW acquired a 20% stake in it. In addition, the take-over of the Westphalian machine tool manufacturer Leifeld Metal Spinning by Chinese investors is banned. (Deutschlandfunk, 27 July 2018)

Because of the Vietnam War and of the declining dollar, Nixon started the US abdication of their world responsibilities in destroying the Bretton Woods international monetary system. In 1971, he unilaterally cancelled the convertibility of the US dollar to gold.

Trump goes much further in the renunciation.

When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy! (Trump, 2 March 2018).

The American bourgeoisie is frightened to lose its position. It is why it accepted Trump, through the highs and lows -he was elected with less votes than his opponent-, as a demiurge, despite his bad manners that scandalise its elites.

The existence of a ruling class is becoming daily more and more a hindrance to the development of industrial productive power, and equally so to science, art and especially cultural human relations. There never were greater boors than our modern bourgeois. (Engels, The Housing Question, 1872).

Contrary to the official doctrine of his Democrat or Republican predecessors, the US president discards the multilateral negotiations and agreements, unilaterally increases customs duties, and turns his back on the US commitments. As Hegel explained, what is contingent achieves what is necessary. With his cowboy style and his schematic solutions, Trump stresses the critical need for the American bourgeoisie to get out of a situation that weakens it more and more every day, to keep an industrial basis. At the same time, this unveils its difficulty, except if going to war, undoubtedly an economic war, eventually a military war.

Trump confirms, on 31 May, that 25% tax will be levied on steel and 10% on European aluminium, which will mainly affect Germany and Italy, though they are old allies of the US. Other allies are also affected -Canada and Mexico- while Argentine, Brazil and Australia escape in accepting a reduction of their production. As far as Chinese steel is concerned, duties will be applied as soon as in March. China is the main world steel producer and it even undergoes an overproduction crisis. In being partly ousted from the American market, China will necessarily try to sell its production elsewhere, hence the fears of steel groups located in Europe. Yet steel is not the only America’s target.

We will impose custom duties on 50 billion [Chinese products], and then on 100 billion. You know, at some point, they will run out of ammunition. (Trump, 12 April 2018)

On 15 June, the US announced that a tax should be applied on 1102 Chinese-origin products as soon as 6 July. China responded with similar measures on 659 American products. The escalation began, and now Trump threatens to tax ten percent more on 200 billion dollars in Chinese imports. Xi denounces the blackmail and promises retaliation…

Of course, the other imperialisms, both large and small, cry treason of the trade regulations, they announce retaliatory measures in taxing American products at the same level, and they intend to refer the World Trade Organization to have such practices convicted. The problem is that the US now denounce and reject the WTO, it accuses it of covering its rivals’ dumping, and it obstructs the nomination of WTO judges supposed to decide upon the appeal, so that it becomes powerless… Trudeau judges that this is “an affront to the long standing security partnership between Canada and the United States”; Macron allegedly phones Trump to tell him that his decision is a mistake and is illegal”; the Chancellor Merkel denounces “a spiral of escalation, which in the end harms everyone”, and more especially since the German car exports are at risk of being taxed by Trump. On the G7 meeting on June 3, all condemned the US.

If the US introduce trade sanctions, including an increase in custom duties, then all the benefits of trade and of economic negotiations will become useless. (China News, 3 June 2018)

On the G7 meeting on the eighth and ninth of June, Trump refused in the end to sign the joint statement that had been laboriously agreed. He specifies his threats against the Canadian and German trade surpluses. The other States are still divided by their own interests, depending on whether they win or lose the most in entering a wrestling match against the US. The European bourgeoisies, led by Germany in the front line of trade with the US, only decide modest retaliatory measures. Yet, such a balanced response does not stop the US harshness, since Trump immediately threatens to tax 20% -against 2.5% today– all the European cars imports, that is mainly the German industry.

The political power can do great damage to the economic development and result in the squandering of great masses of energy and material. (Engels to Conrad Schmidt, October 27, 1890)

One cannot separate trade war from militarism, and it is the first step to war as such.

The US unilaterally negotiate with North Korea and break the multilateral agreement with Iran

A more military front occurs on the background of US-China competition: North Korea. While blowing hot and cold, Trump obtained the freeze of its nuclear projects by the Pyongyang Stalinist clique. A top-level meeting took place in Singapore on 12 June. This initiative aimed at the full restoration of capitalism in North Korea and then at the unification of the country under such influence. In this way, Trump expects to put pressure on China. At the same time, he tramples its traditional partners that are not involved in the negotiations.

A deal of that sort is a nightmare for America’s closest allies in the region, South Korea and Japan. (The Economist, 9th of June 2018)

American imperialism attempts to regain a prominent role in the Middle East where he has lost ground. On the 8th of May, Trump announces the US withdrawal from the 2015 agreement with Iran and with other imperialist powers (including Russia and China) imposing the halting of the nuclear programme in return for the gradual lifting of the economic sanctions.

Therefore, Trump intends to win Turkey over and he relies more than ever on Israel and on Saudi Arabia. On the 6th of December 2017, he announces the relocation of the American embassy in Jerusalem. This amounts to give full support to the continuing Zionist settlement. Since March 30th, Netanyahu had maimed and massacred hundreds of disarmed Palestinians at the Gaza Strip border. During the night from 9 to 10 May, 28 Israeli Air Force aircrafts attacked Iranian positions in Syria. The Turkish Islamist regime can quell on a large scale. The Turkish army receives the American approval to take action against the Kurds in Syria and in Iraq. Assad the bloody tyrant receives the approval for reducing the last bastions of his opponents in Syria.

The US Secretary of State Pompeo threatened Iran with the “strongest sanctions in history”, while stating that Iran will never again have carte blanche to dominate the Middle East” and that he was ready to “track down Iranian operatives and their Hezbollah allies around the world and we will crush them”. Such threats are aimed to prompt the clerical regime, which will disappear if it capitulates, to forge ahead and to warrant far better the military intervention. The most conservative wing of the regime bets on the national and anti-imperialist sentiment. The State restricts the tiny space of freedom that had been gained by the working class and youth.

The US are not only threatening Iran, they also clearly warned the other countries which signed the agreement with Iran –Russia, China, the UK, France and Germany- that their firms would be subject to serious prosecutions and financial penalties if they maintain trade and financial relations with Iran.

Israel and Saudi Arabia are supported by the US; but the support of Russia and China to Iran as a regional power, which is guilty of overshadowing Israel and Saudi Arabia, is far less secure in consideration of the United States’ huge military advantage case of confrontation. The American imperialism’s pressure, far from facilitating the struggles of the workers and of the young Iranians, is an additional blow, while it is an additional blow against the Palestinians through the incentives and support given by the Israeli colonization in exchange of its military commitment against Iran.

For the conscious workers, the opposition to all economic sanction and all military intervention against Iran goes along with the support of all the struggle of the Iranian working class and youth for overthrowing the reactionary Islamist dictatorship, and also with the support of the Palestinians’ fights for their rights against the State of Israel.

The inextricable contradictions of the imperialist governments

After having heavily acted out his friendship and closeness with Trump, supposed to restrain him, Macron had to face the evidence. Besides Merkel, he regained a fighting emphasis for opposing: “Let’s not be weak, let’s not suffer! Will we accept the other’s rule or his tyranny? Who should take our choice in trade matters?” (10th May 2008).

Yet, reality is harsh behind the boasts. The European bourgeoisies –almost– do not have the means to protect their firms from the American penalties. Indeed, as soon as the European multinational companies do business with the US (a more important market than Iran), they cannot escape the penalties.

In resurrecting a so-called “blocking statute” 1996 resolution aimed at preventing American prosecutions in Europe, the European Commission wears quite a risible protection. Thus, first Total and then Engie gave up their commitments in Iran. Germany will be the most affected, notably with Siemens and Chrysler, but Italy and France too with oil and gas, and also with PSA and Renault, not to mention Airbus’ sale commitments, which concern both Germany and France. The positions lost by the European imperialisms should be taken by Russian and Chinese imperialisms. Russia is already subject to the American sanctions, and China is not determined to give in to the American injunctions.

There is no European imperialism strictly speaking. The European Union is a shaky compromise between bourgeois States with excessively narrow boarders. The EU has been weakened by Britain’s departure but also by the dissent from Baltic and Central European countries (“Visegrad Group”). The disagreement appeared in 2015-2016 with the refusal by Poland, Czech Republic, Slovakia, Hungary… to receive refugees. It did not mitigate since the CDU-SPD coalition led by Merkel in turn closed its boarders. Indeed the “populist” governments prefer allying with American imperialism than with Russian imperialism… and than with German imperialism. It is the reason why they are close allies with Israel, even if they internally spread antisemitism.

On July 22, the EU appears ready to seek a compromise with the American State on the back of China.

Donald Trump, the president of the United States, and Jean Claude Juncker, the president of the European Commission, announced an agreement to defuse the conflict between Washington and Brussels about reciprocal custom duties. According to a European source, a new customs tariff will apply to the car imported from the United States. Trump stated that the EU will immediately increase its purchases of soy and that he promised on his part to reconsider the customs duties that now hit steel and aluminium imported from Europe… Trump also specified that the US and the EU discuss together about reforming the WTO. This would chiefly aim China, accused of failing to meet the intellectual property rights; this would coerce it to transfer its technology. (El País, 25 July 2018)

International exchange is for Trump a “zero-sum game”: he claims that what a country wins necessarily equates what another country loses. Such an archaic view refers to mercantilism. This doctrine has been superseded since late 18th century. Adam Smith and David Ricardo demonstrated that the international trade fosters the development of the productive forces: the total global wealth is higher with specialization than if every country stays in autarky. Obviously, the “Classical economists”, related to the British industrial bourgeoisie, forgot that capitalism emerged from the colonial plundering ad left unanswered the issue of distribution of the gain obtained by the international division of labour.

If the free traders cannot understand how one nation can grow rich at the expense of another, we need not wonder, since these same gentlemen also refuse to understand how within one country one class can enrich itself at the expense of another. (Marx, On the Question of Free Trade, January 9, 1848)

The internationalisation of the productive forces is irreversible as a trend, and even the largest and strongest national economy cannot escape from it.

Metallurgy companies, starting with car manufacturers, complain about duties on steel, which translate into dramatically higher prices in their basic material… The announcements of a potential restriction of the Chinese investments in the American technology caused a drop of the NASDAQ this week. (Le Monde, June 29, 2018)

Thus, within a few weeks, the world roughly tittered on the brink of a full-scale trade war.

WTO members introduced more trade-restrictive measures from mid-October 2017 to mid-May 2018 compared to the previous review period (mid-October 2016 to mid-October 2017), according to the Director-General’s mid-year report on trade-related developments presented to members on 25 July at a meeting of the Trade Policy Review Body. (WTO, 25 July 2018)

The return of the 1930s protectionism as well as the new military threats demonstrate that the capitalist mode of production is rotted, in the first instance in the most powerful imperialism, the United States.

“Economic patriotism” always develops at the expense of the workers

As soon as a bourgeoisie loses in the capitalist competitive game, it accuses the disloyalty of the foreign countries and the protection of the local workers. This is true for the United States as well as for Italy, Britain or France.

Our Steel and Aluminum industries (and many others) have been decimated by decades of unfair trade and bad policy with countries from around the world. We must not let our country, companies and workers be taken advantage of any longer. We want free, fair and SMART TRADE! (Trump, March 1, 2018).

Trump won the presidential election thanks to the usual voters of the Republican Party, but also to a fraction of the white working class that usually votes for the other bourgeois party, the Democratic Party. Again he speaks to the Rust Belt, all this area that has been hard hit both by the international competition and by the decisions of the industrial groups (including the relocations to Mexico and to the South of the United States, which is less unionized). He intends to be reelected by these electorsin the next elections (the mid-term elections in November 2018, the presidential election in November 2020). The bureaucracy of the main American confederation, the AFL-CIO, helps with this mystification.

We applaud the administration’s efforts today to fix this problem… This is a great first step toward addressing trade cheating, and we will continue to work with the administration on rewriting trade rules to benefit working people. (Richard Trumka, chair of the AFL-CIO, March 6, 2018)

The bureaucracy of the rival confederation, CtW (based on the truckers’ union IBT), is equally social-chauvinist.

We stand ready to work with the White House and with other North American unions to defend and to describe how implementation of these tariffs will protect American workers and our national well-being. (Hoffa, 8 March 2018)

This is a mystification. In the United States, protectionism, intended to bring back factories, actually causes more damages than it creates jobs. For example, Trump trumpeted much that the Ford group renounced to produce one of its models in Mexico. Actually, it will eventually produce it in China in order to escape the higher price of imported steel taxed by Trump! About 15% of the cars sold by the three main American car manufacturers on the domestic market are produced abroad, mainly in Canada and in Mexico.

As for the foreign manufacturers, they go beyond exporting their cars to the US. In order to bypass both the State’s protectionism and the clients’ chauvinism, the Toyota, Honda, Hyundai, Nissan and Volkswagen companies have long created subsidiaries there that produce either for the domestic market or for export: 17 factories and 65 000 employees overall. Besides, Chrysler, one of the three historical corporations, was taken over by Fiat in 2010.

According to the office Trade Partnership Worldwide, if the tax on steel and aluminium could ultimately create 92 000 jobs, at the same time they could destroy some other 250 000 jobs. The workers have nothing to win with the coming economic war, on the contrary. Neither in the US nor anywhere else. Without any improvement of their situation to come, Trump sells them some illusory nationalism. Populism, xenophobia and racism are taken up by the governments in the US, in Britain, in Italy, in Austria, in Hungary, in Poland…

You wouldn’t believe how bad these people are. These aren’t people. These are animals. (Trump, May 16, 2008)

This is a sign of the historical rotting of the capitalist mode of production in its imperialist stage.

The world of decaying capitalism is overcrowded. The question of admitting a hundred extra refugees becomes a major problem for such a world power as the United States. (Trotsky, Manifesto of the Fourth International, May 1940)

It is also the price to pay for the betrayals of the revolutionary fights of the proletariat by its old and new “reformist” leaderships. The leadership crisis of the world proletariat is deepening. The Communist International, which was a massive revolutionary international, became in the 1930s an instrument of the counter-revolution when it came under the control of the Stalinist bureaucracy of the Soviet Union. The 4th International, founded in 1938 for replacing it, broke down in the 1950s under the influence of Stalinism and of bourgeois nationalism. In France, even organizations coming from “Trotskyism” (POI, POID) insist in the defense of the nation together with the remains of Stalinism (PCF, PRCF) and of social democracy (PS, Générations, France insoumise…)

The slogan of social emancipation [in an imperialist country] was contrived uniquely to divert the attention of the workers from the basic problem, to weaken the blow against capitalism, and to compel one to seek the principal foe and author of poverty on the other side of the frontier. (Trotsky, Germany: The Only Road, September 14, 1932)

Petit bourgeois and bourgeois nationalism (from labourism to Stalinism) pretend that statism in general and protectionism in particular are progressive, whereas it is under fascism that they reach their peak. By contrast, the internationalist wing of the workers’ movement has always fought against protectionism, from the foundation of the Communist League in 1847 to the death of the 4th International in 1951-1953.

Do not imagine, gentlemen, that in criticizing freedom of trade we have the least intention of defending the system of protection. One may declare oneself an enemy of the constitutional regime without declaring oneself a friend of the ancient regime. (Marx, On the Question of Free Trade, January 9, 1848)

Among the electorate, it was inevitable that tendencies in favour of protection should appear here and there and there was a wish to take these into consideration too. (Marx, Circular Letter to SDAP leadership, September 1879)

Social Democracy… struggles against military, colonial, and customs protection, just as it combats the whole basic apparatus of the existing class state—its administration, legislature, school systems, etc. (Luxemburg, The Nation State and the Proletariat, 1908)

Thus, those in the present-day workers’ movement who condemn the disastrous effects of “globalization” instead of calling for the overthrow of capitalism, and who advocate a “solidary protectionism” (sic) like Mélenchon the LFI leader, or the Brexit advocates in Britain like CPB, SPEW and SWP, actually stand behind the most reactionary wing of their bourgeoisie.

For class independence, for the dictatorship of the proletariat

Trump is not the only problem. All the bourgeois governments reduce the expenditures that improve the workers’ lives, and they spend more and more in the State’s repressive machinery (secret services, armies, polices, prisons…)

After 13 consecutive years of increases from 1999 to 2011 and relatively unchanged spending from 2012 to 2016, total global military expenditure rose again in 2017. Military spending in 2017 represented 2.2 per cent of global gross domestic product (GDP) or $230 per person… The United States continues to have the highest military expenditure in the world. In 2017 the USA spent more on its military than the next seven highest-spending countries combined… China made the largest absolute increase in spending ($12 billion). (International Peace Research Institute, May 2nd, 2018)

The working class can save humanity from the economic, social, ecological and political disaster where the continuing rule of the bourgeoisie leads.

With the present level of technology and skill of the workers, it is quite possible to create adequate conditions for the material and spiritual development of all mankind. It would be necessary only to organize the economic life within each country and over our entire planet correctly, scientifically, and rationally, according to a general plan. So long, however, as the main productive forces of society are held by trusts, i.e., isolated capitalist cliques, and so long as the national state remains a pliant tool in the hands of these cliques, the struggle for markets, for sources of raw materials, for domination of the world, must inevitably assume a more and more destructive character. State power and domination of the economy can be torn from the hands of these rapacious imperialist cliques only by the revolutionary working class. (Trotsky, Manifesto of the Fourth International, May 1940)

It all depends on the building of a new workers’ international capable of restoring the flag of communism.

July 27 2018

Permanent Revolution Collective / Germany, Austria, Canada, France

Patronsuz Dünya / Turkey
Tendência Marxista-Leninista / Brazil