Join the Socialist Party Join us today!

Printable version Printable version

Facebook   Twitter

Link to this page: https://www.socialistparty.org.uk/issue/1053/29482

From The Socialist newspaper, 28 August 2019

Imperialist tensions escalate as world economy teeters

US President Donald J. Trump and China's President Xi Jinping

US President Donald J. Trump and China's President Xi Jinping   (Click to enlarge)

Robin Clapp, Socialist Party national committee

In a special report that scrutinised the increasingly tense breakdown in geopolitical and economic relations between the United States and China, the Economist sombrely concluded on 18 May that the world has entered "a new kind of cold war."

While trade between the two reached $2 billion a day in 2018, Trump's 'America First' policy has slapped harsh tariffs on Chinese imports. This has prompted reprisals from Beijing against "naked economic terrorism, economic homicide, economic bullying."

The epoch of globalisation, around 25 years up to 2007, which demanded completely open, largely unregulated markets, has decisively ended. Geopolitical relations have not been this disturbed since the era of the Great Depression in the 1930s.

Lubricated by unprecedented levels of unrestricted speculative finance capital, the boom contained the seeds of its own destruction. The bursting of the bubble in 2007-08, and the severe world recession that followed, lit the fuse for today's slow unravelling of the great neoliberal convergence.

Doom-laden capitalists peer myopically into a future they describe as a 'post-global world'. One where regulatory harmonisation is breaking down, global supply chains are seizing up, and cross-border investment is slowing - already dropping by 20% in 2018.

A fragmenting world economy is one more manifestation of changed capitalist global relations since 2008. Trump's punitive tariffs are mainly aimed at China, which he decries as a "currency manipulator." But he has threatened or applied them increasingly indiscriminately, against Mexico, the European Union, and other nations seen to threaten America's economic interests.

Economic tsunami anger

The anger of working and middle-class people suffering this economic tsunami have not in general turned into victories. This is a result of the unpreparedness, and in many cases unwillingness, of workers' leaders to coordinate struggles and argue for socialist policies.

Hundreds of millions continue to protest against capitalism's consequences, but feel utterly disenfranchised by the established parties that claim their support. Where left-wing leaders use class language to condemn capitalist austerity and advance even a limited vision of a socialist alternative, their message is embraced enthusiastically.

Witness the swing to Jeremy Corbyn in 2017, and Bernie Sanders' campaigns for the Democratic nomination in 2016 and today. Into these charged conditions, a new breed of right-wing populists has emerged.

They feed on workers' alienation towards politicians who bailed out the bankers but consigned ordinary people to a diet of austerity. They seek to capture the ground vacated by these discredited parties to refashion capitalism for this new age.

Jair Bolsonaro in Brazil condemns ineffective rivals and has a special venom for the Workers Party, while claiming to be the friend of ordinary people standing up against the rich. Yet he has given the keys to the precious Amazon rainforest - the lungs of the world - to rapacious capitalists hastening its destruction.

He lambasts other Latin American leaders and the UN, who plead with his government to halt - or at least slow - this reckless destruction. Brazil's economy minister contemptuously asserts that other countries should pay Brazil for oxygen produced there and used elsewhere!

The arch-right-wing populist Trump government, not content with economic conflict with China, tries to bully an incredulous Denmark to sell it Greenland! Its valuable minerals are now more extractable, due to faster melting of permafrost resulting from climate change.

Another breakdown

In another breakdown of international relations, the US administration has announced it will leave the Intermediate-Range Nuclear Forces Treaty signed with the then Soviet Union in 1987. Trump barely conceals his contempt for the western capitalist military alliance Nato, condemning erstwhile allies for not paying more to relieve the US of its 'burden'.

The US has now begun to unilaterally test a new generation of cruise missiles. This has prompted condemnation from the Russian state, and a warning from the Chinese regime that further testing could lead to "another round of the arms race" with a "serious negative impact" on global security.

Trump's stoking of nationalism and interference in free trade has been condemned by the boss of BHP, the world's biggest mining company. He warns that deteriorating relations between Washington and Beijing will do inestimable damage to world relations and the global economy, unless both sides pull back.

Similar warnings are heard in boardrooms across Britain and the EU, as the clique around Boris Johnson seems to be hurtling towards an acrimonious 'no-deal' Brexit. This would cause further economic chaos for business at a time when the spectre of another recession looms large over the world economy.

The EU wants to avoid the UK crashing out without a deal. Brexit is just one symptom of the growing centrifugal forces in the EU.

Right-wing populists in eastern Europe increasingly ignore Brussels' entreaties. In Italy, Matteo Salvini ridicules EU institutions, while crudely attempting to breach laws that have been pivotal to maintaining this club of capitalists for over 60 years.

In Asia too, old rivalries have once again exploded into life. Japan and China are locked into an unresolvable struggle over disputed ownership of the Senkaku Islands, rich in oil.

Now Japan in seeking to flex its muscles against South Korea, has taken a leaf out of Trump's book by restricting exports of three specialist chemicals used to make semiconductors and smartphones.

Japan accounts for 90% of global production of these commodities which are integral to South Korea's ability to manufacture memory chips.

In turn, as South Korean firms produce most of the world's memory chips, Japan's move will not only curtail production and therefore profitability, but also have a destabilising impact across global tech supply chains.

China likewise threatens to restrict rare earth elements going to the US, designated as critical for sectors including national defence by the US Geological Survey.

The World Trade Organisation is supposed to settle disputes of this sort. But it seems an impotent relic of a bygone age, when multilateral trade agreements and supra-national institutions like the IMF, World Bank, UN and Nato were partly able to smooth the progress of production, trade and investment.

It is clear that the US ruling class sees China as its most threatening economic, political and military rival. China's regime cannot afford to be frozen out of the US market, but faced with mounting economic difficulties of its own, cannot either acquiesce to Trump's bullying.

Trade war blow up?

Even if Trump pulls back from further tariffs, this is an unpredictable era. There is no guarantee that the trade war won't extend into a full-blown technological cold war after his threats against Chinese tech giant Huawei.

The credit rating agency Moody's estimates that such a conflagration would hit real GDP in the US by 1.8% in the first year and reduce growth rates throughout Asia by 1% or more.

These figures would be sobering enough if capitalism was otherwise in rude health. Given the unresolved economic hangovers from 2007-08, however, such a precipitous curtailing of productive forces would have a calamitous impact, far greater than so far predicted by the soothsayers of private enterprise.

Already, investment bank JPMorgan Chase has suggested that global capital spending is slowing, and survey after survey illustrates business investment confidence collapsing.

In the rarefied world of the international bond markets, investors are spooked by the appearance of an 'inverted yield curve'. Traders now think that debt due to be paid back in the short term is so risky that they will pay more to have their money inaccessible in ten or 20-year bonds, an inversion of the normal relationship.

All these phenomena, and many more indicators beginning to flash red, show that capitalism is likely heading towards imminent recession, but with far fewer tools for combatting slowdown than in 2008.

Then, central banks cut borrowing rates aggressively; pumped cheap money into their economies through 'quantitative easing'; rescued collapsing banks with taxpayers' cash; permitted larger budget deficits in most countries; and crucially, cooperated across international borders to resuscitate the economy.

The IMF warns that growing numbers of homes in both China and the US are teetering on the brink of a price slump, the UK economy has contracted in the last quarter by the largest amount since 2012, and Germany seems set to enter recession.

Brazil is weakening as a result of reduced demand from China for raw materials. Economies from Singapore to Australia are affected by blowback from the US-China trade war.

This, and social and political instability in Hong Kong, are draining confidence from the world's money markets.

One inevitable consequence of the next recession, whatever its character and depth, will be a further escalation of imperialist rivalries.

Even now, Japanese capitalism is contemplating risking US wrath by devaluing the rising yen against the dollar. This would make Japanese exports to the US better value relative to US imports to Japan, precipitating another phase in world currency wars.

Trump has announced new 10% tariffs on $300 billion of Chinese goods. Although he subsequently postponed some of them until December, they hang over a weakening Chinese economy. In response, the Chinese state bank has let its currency value fall in an attempt to offset tariffs making its export less competitive.

Unemployment in the US is at a 50-year low. But storm clouds are unmistakeably present for those with eyes to see beyond Trump's Twitter account.

Business investment is declining, despite a 2.1% annual growth rate in the second quarter of 2019. And the Federal Reserve has cut interest rates for the first time since 2015, in a sure sign that policymakers anticipate choppy waters ahead.

Never harmonious

So-called 'globalisation' never described a harmonious world economic and social order. It was a euphemism to disguise the modern intensification of the struggle between capital and labour, leading to a spiralling polarisation between the poor and the super-rich.

The present economic and social crisis reveals the contradictions inherent within the capitalist system in this new era of more aggressive imperialism. Old alliances are fracturing.

Proxy wars to secure territorial and geopolitical interests can in the future boil over into outright military exchanges, as is latent between India and Pakistan in the dispute over Kashmir.

There cannot be a stable integrated world system resting on market forces, any more so than when Lenin traced the rise of modern imperialism.

The unipolar domination of US imperialism after the demise of the Stalinist Soviet Union in 1991 has given way to an unstable, multipolar world.

Politics is concentrated economics, and decaying imperialism is the essential manifestation of modern capitalism.

It is only the working class internationally that can liberate the world from what Lenin correctly called capitalist "horror without end."

Why not click here to join the Socialist Party, or click here to donate to the Socialist Party.


In The Socialist 28 August 2019:


What we think

Workers' movement must launch a campaign for a general election


News

Amazon fires: Big business is destroying the environment

Stop the latest Tory attack on our pensions

Notts child abuse scandal: Socialist Party demands action programme to prevent future cases

Knife and gun crime a product of poverty and austerity


International socialist news and analysis

Imperialist tensions escalate as world economy teeters

Italy: Governing coalition fractures as Salvini looks to capitalise on crisis


Workplace news

Interview with Sean Hoyle - left candidate in RMT general secretary election

Postal union ballots 100,000 workers for strike action

Strike action wins privatisation reprieve at Bradford hospitals

Barry Hospital workers fight to save ward from closure

Retail workers fight back against Scrooge bosses

DVSA workers strike for four weeks over conditions and workload

Merseyside Matalan workers walk out over pay deal

Liverpool RMT seafarers protest against super-exploitation

Probation hostel rest room win

Harland and Wolff occupation

BEIS strike


Northern Ireland

Brexit and the border in Northern Ireland- will there be a return to the 'Troubles'?


Socialist Party reports and campaigns

Lincolnshire health visitors' solidarity rally

Worcestershire: Stop the fire cuts!

Bangladeshi campaigners fight mining giant for justice


Opinion

The Socialist Inbox


 

Home   |   The Socialist 28 August 2019   |   Join the Socialist Party

Subscribe   |   Donate   |   Audio  |   PDF  |   ebook






Related links:

World economy:

triangleWhat lies behind the US-China trade war?

triangleNew recession fear stalks the world economy

triangleTrump's tariffs raise international tensions

triangle10 years since the financial crash - the socialist answer to capitalist crisis

triangleTory crisis deepens - demand a general election now!

Economy:

triangleWhat strategy can end the retail jobs massacre?

triangleYork Socialist Party: Was Marx right about the economy?

triangleGeneral election looms... Capitalists in chaos: Fight for socialism

triangle50 years since Apollo 11 - 'One giant leap': how political conflict launched the moon landing

US:

triangleProbation hostel rest room win

triangleMass movement topples governor of Puerto Rico

triangleThe Socialist Inbox

Trump:

triangleRatcheting up of Iran-US tensions

triangleD-Day for fighting Trump attack on NHS

China:

triangleHong Kong protests: No let-up in trial of strength

Global:

triangleTories look in wrong place for climate solutions

Capitalism:

triangleLondon Socialist Party: Capitalism in Crisis

EU:

triangleStand firm against the pro-capitalist politicians

Asia:

triangleThe Tiananmen Square massacre - 30 years on

Brexit:

triangleThe Socialist inbox

IMF:

triangleRevolution and counter-revolution in Sudan

News and socialist analysis

News and socialist analysis

18/9/19

PCS

Building a new left in PCS

18/9/19

Climate change

Climate change: what's socialism got to do with it?

18/9/19

Workers

Stand firm against the pro-capitalist politicians

18/9/19

EU

Trade union movement must put its stamp on swirling events

18/9/19

Northern Ireland

Northern Ireland: Campaign mounts over historic sexual abuse allegations cover-up

18/9/19

Students

How students can fight and win

18/9/19

Tories

Ditch the Tories - and austerity

11/9/19

Scotland

Scotland and Brexit: Developing threat to the capitalist union

11/9/19

General election

Tory meltdown - Organise to finish them off

6/9/19

Government

Tories in tatters: Corbyn must seize the time

4/9/19

Demonstration

Marches, blockades, strikes, occupations... How can protests win?

4/9/19

Socialist Party

Dozens of protests say Boris must go - Socialist Party policies heard on TV

4/9/19

Retail

What strategy can end the retail jobs massacre?

4/9/19

Wales

Austerity anger feeds movement for Welsh independence

4/9/19

Bury

Bury expelled from football league: Boot out the bosses ruining our game

triangleMore News and socialist analysis articles...


Join the Socialist Party
Subscribe to Socialist Party publications
Donate to the Socialist Party
Socialist Party Facebook page
Socialist Party on Twitter
Visit us on Youtube

LATEST POSTS

CONTACT US

Phone our national office on 020 8988 8777

Email: info@socialistparty.org.uk

Locate your nearest Socialist Party branch Text your name and postcode to 07761 818 206

Regional Socialist Party organisers:

Eastern: 0798 202 1969

East Mids: 0773 797 8057

London: 020 8988 8786

North East: 0784 114 4890

North West 07954 376 096

South East: 020 8988 8777

South West: 07759 796 478

Southern: 07833 681910

Wales: 07935 391 947

West Mids: 02476 555 620

Yorkshire: 0114 264 6551

ABOUT US

ARCHIVE

Alphabetical listing


September 2019

August 2019

July 2019

June 2019

May 2019

April 2019

March 2019

February 2019

January 2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999