These Revolutionary Times is a project of The Political Revolution. Each Sunday, we focus on a small selection of papers, articles, and essays published in various publicly available sources that reflect political change already happening or that we think ought to happen or ought not to happen in 21st Century America. Our goal is to spur people to read these pieces with an open-minded but critical focus and engage here in an interchange of ideas about the issues raised in them.
------------------------------------------------------------------------------------------------------------------------------------------
Trade and globalization can be difficult issues for the left to deal with in the era of Brexit and Trump. Much of the focus on the left during the Great Recession and the Euro Crisis focused on the excesses of globalization. In the early 2010s, much of left discourse was led by people like Paul Krugman, Joseph Stiglitz and Thomas Picketty, among others, who were advocating for at least a serious overhaul of the global economic system.
And this was for good reason. Neoliberal globalization had created, or at least exacerbated, the macroeconomic imbalances that had caused these crises. The policies of austerity pushed by the EU, much like Washington Consensus era IMF restructuring plans before them, created substantial human suffering in Greece and elsewhere and ran roughshod over their democratic institutions. It contributed to yawning inequality, enabled the wealthy to evade paying taxes, and created a system for multinationals to strong arm national governments. It provided a means for businesses to undercut unions and avoid environmental regulations. And the list could go on and on.
When the right was neatly on the side of unfettered free markets, the lines of battle seemed pretty straight forward. But then Neo-nationalist right wing parties started to surge in Europe, the UK voted for Brexit and Trump rode into the Republican nomination and the Presidency promising economic nationalism. This trend has come to a head in the last 8 months as Trump has rushed the US into a big trade war with China and others.
All this dramatically shifted the terms of the debate on globalization, and has put the left in a difficult position. The left needs to thread the needle between explaining why we reject this right wing backlash against neoliberal globalization, while at the same time not losing sight of the fact that it is still a deeply flawed system.
So lets take a look at how some on the left have dealt with this challenge.
The Global Economic System Is Still Horribly Flawed And Needs To Be Fixed
Some argue that Democrats and the left should respond to things like Trump’s trade war and Brexit by committing themselves to unfettered free trade and neoliberal globalization. This doesn’t just mean appreciating the positive aspects of globalization and trade, but going a step further by arguing that the old system of neoliberal globalization was always great and dismissing all critiques as just reactionary parochialism from the losers of the globalization process.
This would be the easiest response, and also the worst.
For one thing, the issues people were raising about neoliberal globalization prior to Trump and Brexit are still valid. Free trade did contribute to the collapse of the middle class, far more than we thought in fact. Unfettered systems of global finance are still making the world dangerously vulnerable to financial contagions. Shock Doctrine style disaster capitalism is still in full force in places like Puerto Rico. Global supply chains are still dependent on appalling working conditions, and the race to bottom created by trade pressures is still degrading working conditions domestically. In a time of rampant abuses of intellectual property rights, people are still pushing trade deals that would make them worse. Trade negotiations are still opaque and cut out the public. And at a time of spiraling inequality, globalization still makes evading taxes easier than ever. All this needs to be rectified.
Politically speaking, it’s also short sighted. Doubling down on a status quo that people recognize is broken is a dead end. Maybe people will agree that it’s still better than right wing xenophobia, but unless you give people an alternative then at best they’ll still become discouraged and will drop out. At worst, they may conclude that right wing neo-nationalism is the only way forward. As Thomas Picketty put it just after the 2016 election:
It is time to change the political discourse on globalization: trade is a good thing, but fair and sustainable development also demands public services, infrastructure, health and education systems. In turn, these themselves demand fair taxation systems. If we fail to deliver these, Trumpism will prevail.
Moreover, the current structures of globalization themselves actually create obstacles to implementing a truly transformative left economic program. As Costas Lapavitas wrote on the issues the European Single Market creates for Labour:
The Single Market today is a highly restrictive neoliberal environment that not only induces austerity but also limits the scope for radical industrial policy. Moreover, even in Germany – which has benefited extraordinarily from the EU rules and the introduction of the euro – the so-called “social market” increasingly means a society with a deeply segmented labour market in which precarious labour and income inequality have soared.
So does this mean that the efforts of Trump and others on the right to undermine globalization are potentially good?
Not at all. There are so many problems with their approach, from their tactics to their basic underlying philosophy, that everyone on the left should find them totally unacceptable.
Trump’s Trade War Is A Disaster
The first reason to oppose the anti-globalization policies of Trump and the right is that, basically, they’re just reckless and stupid. There’s a thriving subgenre of articles out that that get into what exactly is wrong with Trump’s trade policies on a technical level. For example, J.W. Mason points out that Trump’s understanding of international trade is outdated, since nowadays it’s largely the trade of intermediate goods in extended supply chains instead of finished products.
What you have, rather, are commodity chains, where different parts of the production process take place in different countries. In most cross-border transactions, the buyers are not consumers, or even distributors, but producers who use the imported goods as inputs. And in many cases, the relevant transactions are not arm’s-length market exchanges, but transfers within a single corporate structure. Even the final purchasers may not be consumers: in general, investment goods and exports have higher imported content than consumption goods do.
From this perspective, the old school tariffs that Trump and the right favor would not only be ineffective, they’d be totally counterproductive.
Another issue, which Joseph Stiglitz points out, is that Trump apparently has no overall strategy and is attacking the wrong targets. For example, by focusing on strictly bilateral trade deficits, penalizing specific countries like China but ignoring the big picture, Trump isn’t actually resolving trade imbalances, he’s just shifting them.
Even if Trump had no economists advising him, he would have to realise that what matters is the multilateral trade deficit, not bilateral trade deficits with any one country. Reducing imports from China will not create jobs in the US. Rather, it will increase prices for ordinary Americans and create jobs in Bangladesh, Vietnam, or any other country that steps in to replace the imports that previously came from China. In the few instances where manufacturing does return to the US, it will probably not create jobs in the old Rust Belt. Instead, the goods are likely to be produced by robots, which are as likely to be located in high-tech centers as elsewhere
A basic point a lot writers make is that protectionist measures can be good, but they need to be applied strategically as part of a broader industrial policy. This is part of the reason why leftist critics of globalization, for example, emphasize that strategic investments need to be a part of any effort to reform globalization as anything else.
Trump’s tariff’s and the Brexit, on the other hand, are applied extremely recklessly. They’re treated as short term, putative measures with very little consideration for their long term impact. So, predictably, they’re extremely costly.
One early estimate of Trump’s plans, for example, uses a variant of a well-respected model to project that the tariffs would eliminate five jobs for every one they save, because the help they offer steel producers is more than offset by the elevated prices that users of manufactured steel, like car manufacturers, wind up having to pay. This is often a risk with tariffs: By raising the price of imported goods, tariffs strain the budgets of companies — and consumers — who buy those goods. In addition, tariffs can provoke an escalating trade war in which foreign countries who resent the new border tax fight back by implementing protectionist measures of their own.
Overall, these economic costs are expected to add up to something like $430bn by 2020. For perspective, that’s more than the annual of produce of Austria.
And the costs aren’t just economic, they’re also political. Whatever one’s attitudes towards multilateral trading blocs and the like, the modern world is largely defined by such multilateral organizations. Trump’s trade policies leave the US dangerously isolated. Moreover, as the United States’ economic and political dominance becomes increasingly challenged by countries like China, multilateral organizations offers the United States means to continue exercising influence in the world. By destroying them, Trump would be permanently handicapping the US’s long term well being.
But it’s not just that Trump’s trade policy or the Brexit are being executed badly. Their goals are totally wrong.
Birds of a Very Different Feather
One point that people have emphasized in the era of Trump and Brexit is that the left and right have total different visions of what a reformed system of globalization would actually look like.
We can identify the roots of this difference by looking at Andrew Weber Cohen’s Unions, Modernity and the Decline of American Economic Nationalism. As Cohen explains, since at least the time of Woodrow Wilson, the left had tended to approach trade as something of a compromise. The left can accept more or less free trade on the understanding that it’s paired with good policies like environmental regulations and labor rights that ensure that trade will benefit everyone. The objection to modern neoliberal globalization is that it breaks this tacit agreement, and instead undermines such good practices. Ultimately, though, what the left wants is a system that internationalizes practices that are equitable and benefit the public at large, or at least doesn’t undermine them domestically.
On the other hand, what the right wants is a system that protects the prerogatives of big business, whether through free trade or protectionism. As a recent article in Jacobin put it:
However,one effect of the tariffs is clear: to the extent that steel prices do rise, it will increase profit margins for US-based steel companies — and those companies will be under no obligation to raise their workers’ wages or invest in expanded domestic steel facilities. It’s no wonder that former steel executives like Commerce Secretary Wilbur Ross and Trump adviser Dan DiMicco are enthusiastic about the tariffs: their friends and cronies will reap the lion’s share of the gains. Meanwhile, downstream companies that purchase steel — including construction companies and machinery manufacturers — will face higher steel costs, which could squeeze their profit margins. This is a battle between rival industrial interests; progressives should not be taking sides.
In other words, it’s still crony capitalism, even if the capitalists are different. Unlike the left, the right has no interest in creating equitable economic systems. On the contrary, they want to destroy them.
This is basically why predictions that there might be some sort of left-right alliance on trade has never panned out, and attempts to paint people like Lopez Obrador with the same brush as Trump ring so hallow. It’s hard to imagine that the ever actually agree on the terms of any revised trade deals because, at the end of the day, they want completely different things.
But these differences go beyond simple narrow economic objectives. They also differ in their basic philosophy.
Cooperation, Not Coercion
Even before Trump and Brexit, there was always a bit of an internal contradiction in how the left views the institutions of globalization. On the one hand, the left generally embraces international solidarity and cosmopolitan values like openness and shared human progress. Global institutions can be a way of achieving these goals and coordinate on share projects like fighting climate change. On the other hand, the left also emphasizes the right of self-determination of peoples, particularly those on the margin, and rightly have an antipathy for anything that might be seen as imperialistic or chauvinistic. On this basis, global institutions like the IMF are often accused of being instruments of neo-colonialism.
Some have tackled this topic head on. Arguing for international institutions, Benjamin Studebaker at Current Affairs sums up the trade offs pretty well:
Left-leaning people often have mixed feelings about [political unions]. They like the idea of international cooperation and universally-recognized human rights, but they also often have a certain fondness for glorious revolutions, especially when a plucky minority carves out their own autonomous region from a large, centrally-administered territory. Many people on the left opposed Brexit, for example, but support Scottish or Catalan independence. And, to be fair, there are all sorts of legitimate complaints one can make about unions. They dilute or destroy cultural distinctiveness, and seem to privilege some cultures over others. They concentrate power in faraway places, in the hands of people who are unfamiliar and possibly untrustworthy. They’re run by faceless bureaucrats. They undermine our autonomy and our level of influence within our democracies.
But the trouble is that while many of us want autonomy and democracy and cultural distinctiveness, we also want to stop climate change and austerity. We want to reduce inequalities within our societies and protect our workers and public services from races to the bottom and privatization. And the reality is, it’s simply not possible to pursue these other goals through the nation-state in the 21st century. We think we can have it both ways, but we can’t. I’m here to argue that unions provide overriding net benefits which we cannot otherwise obtain. Unions destroy, but what they create is greater than what they destroy. This doesn’t mean I don’t care about the things unions destroy—I do. But we’re living in a brutal century, and hard choices must be made. If we think stopping climate change and inequality aren’t humanity’s most important priorities, it’s likely because we don’t really imagine these problems will affect us. But they certainly will affect us, whether we want to admit this to ourselves or not. We can’t hide from this essential 21st century question—which is it going to be, unity with sustainable, shared prosperity, or distinctiveness with death and destitution?
The compromise between these views is that globalization needs to be pursued on a basis of voluntary cooperation, equality, democratic accountability from below and respect for local autonomy. This would basically be the basis for any replacement system for neoliberal globalization. For example, Andrew Gamble at Open Democracy offers a model for such an approach that he calls Open Globalization.
There are also clear policy priorities for an Open Left. The first is an open multilateral international order. The current one is broken, and what replace sit must go beyond the western-centric order of the past and fully involve the rising powers in Asia, Africa and South America in determining the rules which should govern this order. If we fail to maintain multilateral institutions,imperfect although all of them are, we risk a return to economic nationalism and military adventurism.
In contrast to all this, right wing aversion to trade and globalization tends to be viewed through a prism of national exceptionalism. From this perspective the socioeconomic system of the United States and Britain are fundamentally tied to their national identities, and trade, immigration, etc. are regarded as potential sources of contamination. Hence, the US and Britain either needs to wall themselves off from such things, or they need to dominate them.
The first part of this equation is obvious enough through things like the push for closed borders and the like which have created so much misery over the last few years. This aspect of right wing neo-nationalism, the xenophobic impulse to wall off the country from the rest of the world, is the one people tend to focus on when criticizing them.
But the second part, the need to dominate, is less explored but no less important. Much of the rationale for why people on the right reject globalization is because they reject the whole idea of multilateralism. They believe that negotiating with the rest of the collectively world as equals prevents the US and others from fully using their strength to coerce other countries into giving them the better deals they think they deserve.
From this vantage point, right wing anti-globalization isn’t the turn towards isolation it’s often portrayed. On the contrary, in some ways it’s just a more naked form of imperialism. As economist Thomas Palley points out, Trump’s penchant for unilateral strong arming makes him more similar to establishment Neoconservatives than is commonly understood, and serves as a partial explanation why Republicans have largely gone along with him on trade.
The importance of the neocon factor is it dramatically changes the interpretation of Trump’s unilateralist international economic policy chatter. Instead of just being Trump bluster, such chatter is consistent with the neocon construction of international relations. That construction provides the over-arching frame for US foreign policy, and international economic policy must therefore conform with it. That explains why Trump’s NATO strictures have raised so few ripples within Washington, and why the Washington establishment has been so quick to engage the border adjusted tax (BAT) proposal despite its unilateralist character and inconsistency with the WTO. Trump has surfaced such thinking because it plays well with his nationalist domestic political strategy, but proclivity for such thinking was already in place within the establishment.
The left, and most people, should face no contradiction in opposing that.
Conclusion
All this points to the same general conclusion. The left must reject things like Trump’s trade war and Brexit wholeheartedly. They are reckless and just as harmful and exploitative as the systems they seek to replace, if not more so. But we also can’t settle for the obviously flawed status quo of neoliberal globalization. Instead, the left needs to offer its own alternative to both, a system of open globalization that works for everybody. This means reworking existing institutions of globalization, as well as building international linkages for solidarity from the grassroots up. This will be difficult, but it can be done.