- by William Briggs
- The Guardian
- Issue #2134
Stockpiling of bauxite ore – a rock with a relatively high aluminium content. Photo: João Ramid – flickr.com (CC BY-NC-SA 2.0)
When Trump launched his trade war, some nations responded with threats of retaliation. Others sought to find ways to ‘deal ‘with the most powerful economy on the planet. The European Union’s response was ‘tough’ but it carries, as a trading bloc, more clout. Smaller economies can only hope for the best.
Australia, as one of those smaller capitalist states, is both beholden to the USA and simultaneously relies for its economic life on free trade. There are, as in all readings of capitalism, contradictions. The Australian state appeals to the US state for exemptions on aluminium and steel tariffs, while being accused of effectively breaking an agreement with the USA to keep its exports within a quota. Free trade on one side and regulation on the other.
The current row is more than just a dispute over which state wins or loses by trade. It goes to the very heart of the anarchy of capitalism and of capital’s relationship with the state.
The state, it must be remembered, is the state of and for the dominant economic formation. Capital has no allegiance to the state that facilitates its growth.
The aluminium and steel issue is a case in point. While governments dance around each other, individual capitalist concerns are already becoming either winners or losers. Capitalism is not state-controlled. It is not confined by national borders.
Whatever happens, workers in these industries will not be among the winners, whether dealing with capitalism or with a state that serves capitalism.
From BlueScope’s perspective, the tariffs will produce greater profits. BlueScope is a major steel producer, but has large steel operations in the USA. Its share value soared on the news of the tariffs.
Alcoa is another that will do rather well. It has big mining operations in Western Australia and a smelter in Victoria, but is based in the United States. Rio Tinto, on the other hand has massive operations in Canada where it is responsible for half of global aluminium production.
Bourgeois economists and political and economic commentators continue to speak of ‘Australian’ aluminium, steel, iron ore and all the rest. The ore might be mined on land that is notionally ‘Australian’ but the miners, the companies, the multinational corporations that dig the ore, process the ore, export the product are answerable only to capital and to the extraction of profit. When governments intervene, as is the case with Trump’s trade war, some individual capitalists might suffer, but the state intervenes, not from any sense of either empathy nor enmity towards this or that sector, but for the overall health of the system that it supports.
The contradiction lies in the ‘defence’ of one state and its economic health at the expense of another’s. The states that serve capitalism are in a perpetual struggle to maintain profitability. It is this that drove capital to rapidly globalise in the 1970s and 1980s to stave off economic slump. The slump was in capital. Production moved off-shore in the quest of profit. Industrial bases of states were torn asunder. Communities were left reeling as jobs and industries moved to cheaper wage regimes.
The cure-all of globalisation stemmed the problem for a time but the same crisis of profit and its tendency to fall continued to haunt capital. Economic nationalism returned and with it the rise of populism, nationalism, and the beggar-thy-neighbour attitudes that prevail. Politicians rode on the back of fears and economic crisis. Trade wars inevitably followed. The state returned to prominence but any welfare-statism has long since died.
What exists today is a state that privileges capital as it always has, a state that squeezes the working class as capitalism squeezes the state.
Trump, under such conditions, appeals to a fearful American population. He promises the working class a return of the industries and jobs that were destroyed by the system he embodies; capitalism.
The big economies, the stronger economic blocs, can compete and wage economic war, even the wars will be self-defeating. The global economy will shrink. Jobs will be destroyed. Poverty will increase as costs soar. Inequality will grow. Governments will denounce governments while ignoring the root cause of the problem.
Capitalism is the cause. It is fighting with itself and against rivals for market share, for sustained and growing profits. Capitalism is the cause and the state is the weapon it is using. The state engages in economic battle for capital and does not care about the cost.
