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The U.S. Election: It’s over at last, or is it?

Almost everyone is astonished at Trump’s victory. It is said that even Trump was astonished. And of course now everyone is explaining how it happened, although the explanations are different. And everyone is talking about the deep cleavages that the election created (or it reflected?) in the U.S. body politic.

I am not going to add one more such analysis to the long list I’m already tired of reading them. I just want to concentrate on two issues: What are the consequences of this victory of Trump (1) for the United States, and (2) for U.S. power in the rest of the world.

Internally, the results, no matter how you measure them, move the United States significantly to the right. It doesn’t matter that Trump actually lost the national popular vote. And it doesn’t matter that if a mere 70,000 votes in three states (something under 0.09% of the total vote cast) had been lacking to Trump, Hillary Clinton would have won.

What does matter is that the Republicans have gained what is called the trifecta – control of the Presidency, both Houses of Congress, and the Supreme Court. And while the Democrats might win back the Senate and even the Presidency in four or eight years, the Republicans will hold on to a Supreme Court majority for a very much longer time.

To be sure, the Republicans are divided on some important issues. This is apparent just one week after the elections. Trump has already begun to display his pragmatic side and therefore his priorities: more jobs, tax reduction (but certain kinds), and saving parts of the Affordable Care Act (Obamacare) that are widely popular. The Republican Establishment (a quite far right Establishment) has other priorities: destroying Medicaid and even Medicare, different kinds of tax reform, and rolling back social liberalism (such as abortion rights and gay marriage).

It remains to be seen if Trump can win against Paul Ryan (who is the key figure in the Congress-based rightwing), or Paul Ryan can push back Trump. The key figure in this struggle seems to be Vice-President Mike Pence, who has positioned himself remarkably as the real number two in the Presidential office (as had Dick Cheney).

Pence knows Congress well, is ideologically close to Paul Ryan, but politically loyal to Trump. It was he that chose Reince Priebus as Chief of Staff for Trump, preferring him to Steve Bannon. Priebus stands for uniting the Republicans, while Bannon stands for attacking Republicans who are less than 100% loyalists to an ultra-rightwing message. While Bannon got a consolation prize as an inside counselor, it is doubtful that he will have any real power.

However this intra-Republican struggle turns out, it is still the case that U.S. politics are now significantly further to the right. Perhaps the Democratic Party will reorganize as a more leftwing, more populist movement, and be able to contest the Republicans in future elections. That too remains to be seen. But Trump’s electoral victory is a reality and an achievement.

Let us now turn from the internal arena in which Trump has won and has real power to the external arena (the rest of the world) in which he has virtually none. He used the campaign slogan “make America great again.” What he said time and time again was that, if he were president, he would ensure that other countries respected (that is, obeyed) the United States. In effect, he alluded to a past in which the United States was “great” and said that he would recover that past.

The problem is very simple. Neither he nor any other president – be it Hillary Clinton or Barack Obama or for that matter Ronald Reagan – can do very much about the advanced decline of the erstwhile hegemonic power. Yes, the United States once ruled the roost, more or less between 1945 and circa 1970. But ever since then, it has been steadily declining in its ability to get other countries to follow its lead and to do what the United States wanted.

The decline is structural and not something within the power of an American president to stem. Of course, the United States remains an incredibly powerful military force. If it misuses this military power, it can do much damage to the world. Obama was very sensitive to this potential harm, which accounts for all his hesitancies. And Trump was accused throughout the electoral campaign of not understanding this and therefore being a dangerous wielder of U.S. military power.

But while doing harm is quite possible, doing what the U.S. government might define as good seems virtually beyond the power of the United States. No one, and I mean no one, will follow today the lead of the United States if it thinks its own interests are being ignored. This is true not only of China, Russia, Iran, and of course North Korea. It is true as well of Japan and South Korea, India and Pakistan, Saudi Arabia and Turkey, France and Germany, Poland and the Baltic states, and our erstwhile special allies like Israel, Great Britain, and Canada.

I am fairly sure that Trump does not yet realize this. He will boast about the easy victories, like ending trade pacts. He will use this to prove the wisdom of his aggressive stance. But let him try to do something about Syria – anything – and he will soon be disabused of his power. He is most unlikely to retreat on the new relationship with Cuba. And he may come to realize that he should not undo the Iran agreement. As for China, the Chinese seem to think that they can make better arrangements with Trump than they would have been able to do with Clinton.

So, a more rightwing United States in a more chaotic world-system, with protectionism the major theme of most countries and an economic squeeze on the majority of the world’s population. And is it over? By no means, neither in the United States, nor in the world-system. It’s a continuing struggle about the direction in which the future world-system (or systems) should and will be heading.

Brexit 사태를 맞이해서 오래간만에 찾아본 Wallestine 옹의 글입니다. '그렇군' 님이 블로그에서 지적한 바와 같이 영국의 EU탈퇴를 미국의 패권 몰락 측면에서 바라보는 입장이 참 재미있네요. 

http://iwallerstein.com/brexit-symptom-not-cause-of-turmoil/

On June 23, the referendum on a British withdrawal from the European Union (EU) won by a clear margin. Politicians and pundits have treated this as an unprecedented and earth-shaking decision. They have been giving various and quite contradictory explanations about the causes of this event and the consequences of this event for Great Britain and the rest of the world.

The first thing to note is that no legal decision to exit the EU has yet been taken. The referendum was, in legal terms, merely advisory. In order to withdraw from the EU, the British government must formally inform the EU that it is invoking Article 50 of the EU’s Lisbon Treaty, which is what provides the right and the mode of withdrawal. No one has ever invoked Article 50, so yes, it would be unprecedented. No one therefore can be sure how it would work in practice. While it seems most unlikely that any British government would ignore the referendum, strangely there has been no major British politician who seemed in a hurry to invoke Article 50, an action that would be irreversible.

Prime Minister David Cameron, who campaigned against Brexit, has said it will not be he who invokes Article 50. Rather, he has announced his resignation as Prime Minister – however not immediately but when the Conservative Party chooses a new leader. Cameron believes this person should be the one who invokes Article 50. This seems on the surface to be sensible. Once Article 50 is invoked, there will be many issues about Great Britain’s future relations with the EU and with other countries that will have to be decided and it might be best that these decisions be made by his successor.

The first question therefore is who will be his successor and when will this person be chosen. There is considerable pressure from other countries in the EU that this succession be done as soon as possible. In response to this pressure, the Conservative Party has set the date as September 2. There were until June 29 two main candidates: Boris Johnson, a leading advocate of Brexit but not yet a member of parliament; and Theresa May, who opposed Brexit but who shares some part of the objectives of the supporters of Brexit. It is stunning to learn that Johnson actually expected to lose the vote and therefore did not prepare a political map for what he should do after the referendum.

It seemed that Johnson wanted to “negotiate” Britain’s withdrawal. Article 50 provides a two-year period for working out post-withdrawal arrangements. This seems to allow for such negotiations. It also says that, if no agreement is reached, the cutting of all ties is automatic. What Johnson apparently wanted was a deal in which Great Britain retained the advantages of a common market but would no longer be bound by the EU’s constraints on immigration and human rights. The other countries in the EU have been showing no sympathy for such an arrangement. As Germany’s quite conservative Finance Minister Wolfgang Schäuble said, they feel that “in is in and out is out.” Since “out” will have immediate negative consequences on the economic situation for most persons in Great Britain, and especially many of the supporters of Brexit, Johnson and others have been dragging their feet about invoking Article 50. This is probably what underlay Michael Gove’s last-minute decision to cease being Johnson’s campaign manager and to announce his own candidacy, backed immediately by most strong Brexit supporters. Gove, it seems, will not hesitate. Johnson has withdrawn his candidacy and is possibly quite relieved not to be the one who gets the blame for invoking Article 50.

What are the matters underlying this debate? There are essentially four: popular anger at the so-called Establishment and its parties; the geopolitical decline of the United States; the politics of austerity; and identity politics. All of them have contributed to the turmoil. But all of them have a long history that predates by far the Brexit referendum. The priorities among these four are different for the multiple actors, including the British who voted to leave Europe.

There is little doubt that popular anti-Establishment anger is a strong force. It has often erupted when economic conditions are uncertain, as they surely are today. If this seems a stronger motivation now than previously, it is probably because economic uncertainty is far greater than in the past.

Still it should be noted that anti-Establishment movements have not won out everywhere or consistently. The movements sometimes win out, and just as often do not. For successes, one can point to Brexit, Trump’s rise to being the de facto Republican presidential candidate in the United States, Syriza‘s becoming the governing party in Greece, and Rodrigo Duterte’s election as President of the Philippines. On the other hand, see the recent electoral defeat of Podemos in Spain or the signs of some voter remorse already in Great Britain. The life span of such movements seems to be relatively short. So, even if stronger today than in the past, it is not at all sure that such movements are the wave of the future.

The geopolitical consequences of Brexit are probably more important. Great Britain’s withdrawal from Europe deals a further blow to the ability of the United States to maintain its dominance in the world-system. Great Britain has been in many ways the indispensable geopolitical ally (or is it agent?) of the United States in Europe, in NATO, in the Middle East, and vis-à-vis Russia. There is no substitute. That is why President Obama strongly and publicly supported the Remain vote in Great Britain and, after the referendum, has sought to persuade Great Britain to remain a close ally. That is why Henry Kissinger, in an op-ed in The Wall Street Journalof June 28, called for the United States to seek “to transform setback (the Brexit turmoil) into opportunity.” How? By reinforcing the “special relationship” with Great Britain and for the United States to redefine its role in “a new kind of leadership, moving from dominance to persuasion.” Kissinger is clearly worried. It sounds like whistling in the dark to me.

Austerity is obviously nobody’s desired policy, except for the ultra-rich who alone profit from it. The fear of increased austerity, as promised by the British government, surely contributed significantly to the move for Brexit, which was promoted as a way to reduce austerity and secure a better future for the vast majority of the population. Austerity is another theme that today is worldwide – both as practice and as cause for fear and anger. There is nothing special about the British situation in this regard. Modal income has been going down there for a quarter-century at least, as it has been everywhere.

The economic turmoil and the fears it provokes have resulted in the prominence of identity politics – Britain for the British (actually for the English), Russia for the Russians, South Africa for the South Africans, and of course Donald Trump’s America for the Americans. This underlies the call for controlling, even eliminating, immigration. As a bugaboo, there is nothing easier to use than immigration. But identity politics is a loose cannon. It doesn’t have to center on immigration. It can concentrate on secession – in Scotland, in Catalonia, in Chiapas. The list is long.

What shall we conclude from all these currents and countercurrents? Brexit is important as a symptom but not as a cause of turmoil. Since the turmoil is part of a chaotic structural crisis in the modern world-system, it is impossible to anticipate the many ways in which this scenario may play out in the next few years. The short run is too volatile. We are not paying enough attention to the middle run, where the long-run successor world-system (or systems) will be decided, and where the decision remains dependent on what we do in the middle-run struggle.

오래간만에 찾아 본 월러스틴 옹의 세계 체제 분석 코멘터리입니다. 

이번 글의 주제는 증가하는 인건비 압력을 피해 캄보디아로 다국적 제조업체들이 이동하는 경향에 대한 글입니다. 

글의 주제는 여전히 같습니다. 계서적/착취적/양극화 된 현재의 세계체제 보다도 악화된 새로운 체제를 만들것 인가? 지금까지 인간의 역사에 없었던 보다 인간적인 체계를 만들 것인가? 갈림길에 우리가 서 있다는 노학자의 견해입니다. 

Commentary No. 351, April 15, 2013

                                                "End of the Road for Runaway Factories?"

Ever since there has been a capitalist world-economy, one essential mechanism of its successful functioning has been the runaway factory. After a period of significant accumulation of capital by so-called leading industries (usually about twenty-five years), the level of profit has gone down, both because of the undermining of the quasi-monopoly of the leading industry and because of the rise in labor costs due to syndical action of some sort.

When this happened, the solution was for the factory to "runaway." What this means is that the site of production was transferred to some other part of the world-system that had "historically lower wage levels." In effect, the capitalists who controlled the leading industries were trading increased transaction costs for reduced labor costs. This maintained significant income for them, if nonetheless lower than in the previous period when they still had a quasi-monopoly.

The reason why labor costs were lower in the new location is that the runaway factory recruited labor from rural areas that were previously less involved in the market economy. For these rural workers, the opportunity to work in these runaway factories represented a rise in real income, while at the same time for the owners of the runaway factory these workers were being paid less than those who had been working in the previous location. This is what is called a win-win solution.

The problem with this seemingly wonderful solution has always been that it was not lasting. After about another twenty-five years, the workers in the new location began to launch syndical action, and the cost of their labor began to rise. When it rose enough, the owners of the runaway factory had only one real option - to runaway once again. Meanwhile, new leading industries were being constructed in zones that had accumulated wealth. Thus, there has been a constant movement of the location of industries of all sorts. Quasi-monopolies after quasi-monopolies! Runaway factories after runaway factories!

It has been a marvel of capitalist adjustment to a long process of constant change of circumstance. This marvelous system has however depended on one structural element - the possibility of finding new "virgin" areas for relocation of runaway factories. By virgin areas, I mean rural zones that were relatively uninvolved in the world market economy.

However, over the past 500 years, we have been "using up" such areas. This can be measured quite simply by the de-ruralization of the world's populations. Today, such rural areas are reduced to a minority of the world's surface, and it seems likely that by 2050, they will be a very, very small minority.

To see the consequences of such massive de-ruralization, we need only turn to an article in The New York Times of April 9. It is entitled "Hello, Cambodia." The article describes the "flocking" to Cambodia of factories that are fleeing China because of the rise of wage-levels in China, a previous recipient of such runaway factories. However, the article continues, "multinational companies are finding that they can run from China's rising wages but cannot truly hide."

The problem for the multinationals is that the incredible expansion of communications has caused the end of the win-win situation. Workers in Cambodia today have begun syndical action after only a few years, not after twenty-five. There are strikes and pressure for higher wages and benefits, which they are receiving. This of course reduces the value for the multinationals of moving to Cambodia, or Myanmar, or Vietnam, or the Philippines. It now turns out that the savings of moving from China are not all that great.

The Times article notes that "some factories have moved anyway, at the request of Western buyers who fear depending on a single country." Conclusion of a manufacturing consultant: There are risks of moving to Cambodia, but "there's a risk in staying in China, too." In any case, is there somewhere to move the runaway factory? Or is Cambodia the end of the line?

The bottom line is that the combination of already enormous and still increasing de-ruralization and the rapidity with which workers can learn of their relatively low wages and therefore begin to take syndical action has resulted in a continuing rise in the pay levels of the least skilled workers, and therefore a worldwide negative pressure of the possibilities of accumulating capital. This is not good news for the large multinationals.

This is all one element in what has become the structural crisis of the modern world-system. We are experiencing a combination of ever-increasing austerity pressures on the 99% with a capitalist system that is no longer so profitable for capitalists. This combination means that capitalism as a world-system is on its way out.

Both sides are seeking alternatives - but obviously different ones. We are collectively facing a "choice" over the next decades. One possibility is a new non-capitalist system that replicates (and perhaps worsens) the three essential features of capitalism - hierarchy, exploitation, and polarization. The other possibility is a new system that is relatively democratic and relatively egalitarian. The latter system, one should underline, has never existed in the history of the world. But it is possible.

In any case, Cambodia is not the future of the modern world-system. It represents rather the last vestiges of a mechanism that no longer performs its task in salvaging capitalism.

by Immanuel Wallerstein