Where the west will rest in new economic order

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There is a joke that there are two kinds of economic system. One is socialism, in which the government owns the means of production. The other is capitalism, in which the means of production owns the government.

WASHINGTON, DC - AUGUST 31: U.S. President Donald Trump arrives at the White House on August 31, 2018 in Washington, DC. President Trump is returning from a trip to Charlotte, North Carolina. (Photo by Mark Wilson/Getty Images)There is more than a little truth in this quip. When the former Labor senator Sam Dastyari said that ten companies control Australian politics many, including myself, thought he had probably signed his own political death warrant. So it turned out. Stating such an unacceptable truth in the public arena was, to use the phrase from Yes, Minister, 'courageous'. His demise was probably only a matter of time.

Much of what is currently happening in western geopolitics is a battle to maintain that corporate control: roughly globalism versus nationalism. Corporations are aggressive proponents of globalisation because it gives them access to the 'cheapest hands and sharpest minds'; they are able to pick and choose their labour force from anywhere in the world. This has not just destroyed organised labour in many Western economies, it is fast degrading the Western middle class as well, especially in America (on the plus side, though, it has arguably raised hundreds of millions out of poverty).

Globalisation also gives corporations access to world consumer markets, which gives them scale and allows them many strategic options on getting a return on their capital. Usually this involves techniques of arbitrage designed to circumvent national governments — especially their taxes.

The corporations have pretty much had it all their own way for most of this century but two recent events have startled them. One is the election of a US president who says he is an economic nationalist, Donald Trump. The other was Brexit. These events are demonised as 'populism': a curious term of disapprobation in a democracy.

It is true that Trump is an economic nationalist. He immediately rescinded the deeply flawed Trans-Pacific Partnership (TPP), which would have further cemented corporate global control over the Pacific, half the world economy. He has attacked NAFTA and exploited the inconsistency in Germany's security position by pointing out that Russia is characterised as a mortal threat, yet Germany is creating a gas pipeline that increases its dependence on a supposed foe.

Most of all, Trump has started to hollow out the World Trade Organisation, threatening to walk out 'if it doesn't shape up'. The architecture of globalisation, established over decades, is slowly falling apart, replaced by economic nationalism.

 

"The west does not appear to have a winning hand but it is hard to predict the outcome, at least in the near term."

 

The battle lines (in one sense literally, as this also has a military dimension) have been drawn between a unipolar, American dominated world and a multipolar world. Eurasia is integrating fast — but as a coalition of nations, not a bloc. China is pursuing its national interests by building its One Belt One Road. Russia has no choice but to be nationalist because of ever-more aggressive Western sanctions, which is forcing it to be more self reliant.

The Shanghai Cooperation Organisation is rapidly starting to rival the EU. Remarkably, in June both India and Pakistan became members and Turkey may soon follow suit, which may mean the end of its membership of NATO. Meanwhile, the former dominant powers, Europe and Japan, are being left on the fringes; small wonder they have struck a trade deal.

How this plays out will decide the direction of this century. The west does not appear to have a winning hand but it is hard to predict the outcome, at least in the near term. The three major actors, Trump, Xi Jinping and Vladimir Putin, are all counter punchers: Trump's approach is to create chaos and look for an opening, the Chinese will be using something like the subtle tactics of Sun Tzu, and Putin is a judo fanatic who likes to use the opponent's energy against them.

What is predictable is that little of it will be well covered in the West. As the satirist C. J. Hopkins jokes, media coverage has become a kind of corporate psyops, especially the coverage of Trump:

'The corporatist ruling classes need to make an example of Trump to dissuade any future billionaire ass clowns from running for high office without their permission, but even more so, they need to put down the "populist" opposition to the spread of global capitalism and the gradual phase-out of national sovereignty that began with Brexit and continued with Trump, so they can transform the smouldering remains of the Earth into one big happy neoliberal market run by supranational corporations and the "democratic governments" they have bought and paid for ... which, by that time, folks won't even notice because we'll all be shuffling around like zombies staring down into the screens of our phones.'

That is only the view from the west, though. The perspective of the emerging nations, especially in Eurasia, is very different.

 

 

David JamesDavid James is the managing editor of businessadvantagepng.com. He has a PhD in English literature and is author of the musical comedy The Bard Bites Back, which is about Shakespeare's ghost. Despite his name, he is more like a Bruce than a James.

 

 

Main image: WASHINGTON, DC - AUGUST 31: U.S. President Donald Trump arrives at the White House on August 31, 2018 in Washington, DC. President Trump is returning from a trip to Charlotte, North Carolina. (Photo by Mark Wilson/Getty Images)

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Good stuff David and roughly agreed too. I think we are only at the start of a surge in nationalism for the simple reason that nation states are far better than corporations at generation mass loyalty and trust. When populations feel sufficiently threatened they will turn to that and the elites can squirm and redirect that energy, but it will transform them nevertheless.
Paul Frijters | 03 September 2018


It’s interesting how both Left and Right were seduced by Globalization. Opposition to Globalization brought together former bitter enemies such as Bob Santamaria and the ALP left-wing firebrand Clyde Cameron. Cameron ended up writing for Santamaria. Both Santamaria and Cameron were products of the Great Depression and had an overriding concern for the welfare of the ordinary working person. That was also true of a person like George Orwell. The historian Paul Johnson wrote how Orwell always put experience before theory, and how “human beings mattered more than abstract ideas; it was something he had always felt in his bones.” That was why Orwell got most things right. That archetypical conservative, Edmund Burke, often emphasized the stability of the property-owning middle class and their custodianship of custom and tradition. Alex de Tocqueville saw how the small American property owners were suspicious of both hereditary aristocracy and monarchy, and yet were economically autonomous enough to resist calls for radical government intervention. Contemporary USA Republicans downplayed the effects of globalization and de-industrialization on traditional small communities of property-owning citizens. Ignoring the cultural effects of globalization was most un-Burkean, and led to the political revolt of 2016.
Ross Howard | 04 September 2018


In Australia those who make big donations to political parties have undue influence and effectively undermine our fragile democracy. Climate change is by far the biggest challenge of our time, but look at the way the fossil fuel industry exerts pressure on both the Coalition and Labor. Opening up the massive coal deposits of the Galilee Basin makes no economic or environmental sense but the major parties haven't ruled this out! If you care for the future of Planet Earth and the future of your children and grandchildren, VOTE GREEN!
Grant Allen | 05 September 2018


Dear David, You always seem to have such a pessimistic and suspicious view of the world when you write for ES. There is always give something to think deeply about, but usually I think you overdo the negative. As you say globalisation of trade has brought huge benefits to many hundreds of millions of people in the poorest parts of the world; it was the colonisation of weak nations by strong ones that it replaced that was truely rapacious and exploitative. Globalisation of trade ensures that the economic advantages of each people can be used for mutual advantage; that is tough for those who were previously protected from competition such as heavily unionised Western unskilled workers , but the answer there is better education and up-skilling. Trade linkages in a multi-polar world also make for a safer world as war then becomes mutually destructive; compare that with the 20th century competing economic blocks that lead to catastrophic wars as extensions of that competitions. Finally, governments are really now getting to grips with the down-side of large multinational corporations in terms of tax avoidance and trade distortions; note for example the multi-billion fine recently imposed by the EU on Google. I see mainly positives!
Eugene | 05 September 2018


The West is aging. The new economic order belongs to regions where population is young -Asia and Africa. All countries with European ancestry are aging at different rates. Average age of EU is mid 40s. America will be impacted first as most common age of white Americans is 58 and they have excluded nonwhites from system by mostly undereducating them. now whole country and its allies will pay hefty price. This undereducation is rooted in racist past and failure to undo its negative consequences including redlining of neighborhoods and failure to provide equitable education funding.
Marge Faire | 06 September 2018


The US has been led by the elite from the beginning. Nothing new that elite still leads it. Same goes for Australia. Why? The British connection. In Canada, Australia, and South Africa the corporates captured the state. There extractive enterprises served British needs. But since British settled there their institutions were of better quality than the authoritarian ones established in nonsettler colonies. See for South Africa: https://www.wits.ac.za/news/latest-news/general-news/2017/2017-05/this-centurys-most-important-south-african-book.html This century’s most important South African book https://www.dailymaverick.co.za/opinionista/2016-03-24-state-capture-its-criminal-and-it-is-nothing-new/#.WatGdNEpCUl State Capture: It's criminal, and it is nothing new https://www.slideshare.net/socialmediacjpme/001-south-africa-mining-industry-and-apartheid-v1 Roots of Apartheid: South Africa’s Mining Industry
Marge Faire | 06 September 2018


Globalization has been a scapegoat. Real roots of rightwing population are in US case : malinvestment in defense -see Seymour Melman), financialization, and southernization. In Western European countries it is because of expansion of EU; and in Eastern European countries it is because of loss of workers to richer countries and failure to sign improve economy at home. See article about why there is rise of rightwing in Eastern Germany: https://www.socialeurope.eu/what-does-chemnitz-tell-us-about-the-growth-of-right-wing-radicalism-in-germany What Does Chemnitz Tell Us About The Growth Of Right-Wing Radicalism In Germany?
Marge Faire | 06 September 2018


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