#100 - Trade war, Brexit - convulsions of a capitalist world in crisis

24 October 2018

If a Martian equipped with half a brain was to land on the planet Earth these days, he would probably come to the conclusion that this planet must be some sort of madhouse.

Indeed, what would he see? That a tiny minority of individuals are somehow able to live a sterile, idle life of luxury at the expense of the increasingly impoverished, overworked, majority which produces everything with its labour.

He would see a planet which is divided into rival fiefdoms by so-called "national borders", whose existence prevents the pooling together of human skills and material resources for the benefit of all. Not only that, but he would also see that, instead of being dismantled, as common sense would dictate, in order to facilitate a more rational use of the planet's resources, these borders are being reinforced - and new ones are even being created - in the name of something called the "national interest" - a weird concept based on the principle that an even weirder device called a "passport" is what determines the rights and duties of human beings.

Our Martian would also have to make sense of the daily show business orchestrated by Trump and his tweets and how he seems to be leading the world's richest and most powerful country into a trade war with China, a much poorer and weaker country, despite the huge size of its population.

Finally, our Martian would be even more puzzled by the farce which is being played out in Europe, around Brexit: on the one hand by the Brexiteers' bizarre insistence on little Britain isolating itself from the world's largest economic entity of which it has been an integral part for over four decades; and, on the other, by the way in which this process is being conducted, with May boasting of taking on the 27 member states of the European Union single-handedly, when, in reality, she seems to be spending most of her time negotiating with the hard-Brexiteers of her own party and to be making her choices as a function of their whims.

And yes, the bewilderment of our Martian would make a lot of sense. In fact, it is probably true to say that anyone who would have predicted such developments just a decade ago, would probably have been dismissed out of hand. Except that, in the meantime, a deep resurgence of the chronic crisis of the capitalist system has been taking place and this resurgence has had an impact not just on the economy, but also on the political scene.

So, in reality and despite the bewilderment of our Martian, there is logic in this madness, although it is potentially, a very dangerous logic. In any case, it is this logic that we intend to discuss in this forum and, more specifically, in what way both Trump's aggressive trade war rhetoric and the deluded move towards Brexit are by-products of the crisis of this decadent capitalist system - and what is really at stake in all of this for the working class.

"Populism" is a by-product of today's mess, not its cause

If political commentators are to be believed, the ills of today's world should be blamed on the rise of what they call "populism". By this, they mean political currents which have somehow managed to threaten the monopoly of the traditional political parties by resorting to demagogic grandstanding.

The question, however, is whether the rise of these "populist" currents is really the cause of society's problems, as we are told, or whether this is the consequence of a far more serious (and perhaps even terminal?) disease.

The fact is that world politics has become increasingly absurd over the past decade of crisis, with all kinds of buffoons occupying the forefront of the political scene.

So, we see governments, politicians and commentators standing to attention whenever Trump sends one of his ill-tempered, often hysterical, tweets. So much so, that some of Britain's apparently "serious", mainstream newspapers are now devoting a daily column to Trump's latest outbursts of tweeted paranoia!

Thanks to Trump, Twitter has become a compulsory channel for the overbidding and manoeuvring on which international diplomacy has always been based. Meanwhile, and for similar reasons, this social media outlet is now intensely monitored by financial speculators, who have learnt from bitter experience that the one thing their sophisticated computer models could not predict, was the market's reactions to tweeted bluster - whether it be from Trump or from the heavyweights of international finance.

Britain has its own home-grown buffoons. Not so long ago, UKIP, which David Cameron once described, probably quite accurately, as a party of "fruitcakes, loonies and closet racists", became so prominent for a while, that many Tory politicians saw it as a potential threat to their monopoly over right-wing policies. Likewise, today, Tory loonies, such as Boris Johnson, David Davis, Liam Fox or Jacob Rees-Mogg, all true believers in Britain's imperial destiny, are seriously considered as potential contenders for May's mantle. These second or third-rate politicians have long been vegetating in the shadow of the Tory right, in the hope that their time would come. Well, their time came, eventually - or rather, a combination of circumstances arose, which has allowed them to pass off their crass prejudices and bombastic posturing as some sort of political "alternative".

And, indeed, time is the decisive factor here - as much for the Tory hard Brexiteers as for Trump, the crooked billionaire. But also for the long list of far-right and aspiring neo-fascist currents, which have gained significant influence in a growing list of countries - from Italy and France to Hungary, Germany, Scandinavia and, more recently, Brazil.

Time is the real issue, because, ultimately, beyond their diversity, all these reactionary forces would never have been able to gain any sort of strength - let alone credibility - if it had not been for the austerity imposed by governments of all colours in order to satisfy the insatiable greed of the capitalist classes, against the backdrop of the on-going crisis of the capitalist system. Indeed, it was by capitalising on the frustration, disorientation - and often the despair - caused by the traditional parties' pro-business policies in the crisis, that these reactionary forces eventually managed to raise their profiles.

It all started more than 40 years ago, in the early-1970s, after the world economy was suddenly shaken by a deep economic crisis which marked the end of the so-called "post-war boom". From this point onwards, the capitalist classes demanded from their governments that they should help them in every possible way to make up for the losses they were facing as a result of the crisis. As it happened, their political personnel proved only too willing to oblige, whichever political party they were in. As the convulsions of the capitalist system became more frequent, from the end of the 1980s, the turn of the screw on the working class became more vicious. And, over time, the apparent differences that had existed in the past between the policies of the main established parties became increasingly blurred.

In Britain, when Blair came into office after 18 years of Thatcherism, it soon became clear that what his Labour government had in store for the working class was just Thatcherism in different packaging. The main thrust of government policy was pro-business and anti-working class. The aim was to put more and more state resources at the disposal of capitalist profiteering. The wholesale privatisation of state companies and public services was used to provide the capitalist class with new sources of profits, while taxes on wealth, company profits and financial speculation were reduced. To fund all these handouts, social budgets were cut to the bare bone, while punitive measures were taken against the unemployed, in order to force them into low-paid, increasingly casualised jobs.

The ugly offshoots of the latest financial crisis

However, the worldwide banking crisis marked a turning point. In 2007, when it first broke out in Britain with the collapse of Northern Rock, it was Labour which initiated the bailout of the bankers, thereby mortgaging the economy for years to come. And it was also Labour which prepared the ground to make the working class pay the exorbitant cost of helping the capitalists and their dysfunctional system to limp on, through the crisis.

By 2010, the Tories swept easily into office on the back of Labour's discredit. But, following on from Labour's policies, they proceeded to drive the knife of austerity into the most deprived sections of the population, while the capitalist class flaunted its affluence.

The result of the previous four decades of anti-working class policies under the watch of the main traditional parties, was a drastic deterioration in the conditions of the working class, the meteoric rise of under-employment and casualisation, the impoverishment of large sections of workers, an unprecedented housing crisis and the collapse of vital public services, in particular the NHS and social care.

By that time, whole sections of the population had become alienated from the only kind of politics they knew - that is, parliamentary politics. In fact turnout in elections had already begun to fall, under Blair. A growing number of workers felt they had no-one to turn to, in order to defend their most basic material interests against all these attacks. Not only did they see no hope whatsoever in the ballot box, but they felt let down by union leaders who had been far too busy maintaining their partnership with the bosses to even try to oppose their attacks.

But there was even worse to come. Over all these years, successive governments had been trying to divert the attention of the electorate from their anti-working class policies by looking for scape-goats. This too, had already begun under Blair and Brown, who covered up their underfunding of public services by blaming the on-going collapse on abuse by migrant workers. Predictably, Cameron and Osborne were quick to go even further in this direction, accusing EU workers of being an intolerable burden on the NHS and the welfare state and claiming that they were living as parasites, at the expense of the British working class. Lies, of course, but very convenient! And this blame game created a poisonous, xenophobic, atmosphere which quickly crept through the whole of society.

Eventually, it was out of this rotten, xenophobic manure that UKIP was able to grow, by resorting to even worse xenophobic demagogy, blaming every possible ill on foreigners, especially EU workers - and more generally, on the EU itself. Since the main parties had already given respectability to this kind of scapegoating, a growing section of voters went along with it, without a second thought, as a way of venting their frustration - thus paving the way for UKIP's short-lived electoral rise.

What happened next probably does not need to be recalled in any detail. Terrified by what they saw as a threat to their seats and careers, a large number of Tory MPs - as well as a smaller, but nevertheless significant number of their Labour colleagues - adopted some of UKIP's demagogic rhetoric.

This sparked off the Brexit frenzy, leading to a referendum in which voters were given a fake choice: either they endorsed the EU's distant, pro-business institutions and, by the same token, they condoned the disastrous state of affairs left by decades of pro-capitalist policies; or else, they voted against the status quo, despite the lies peddled by the Leave camp. As these lies were made more acceptable by the fact that both camps were scapegoating migrant workers, many saw no other way to express their anger and frustration against the traditional parties than to vote against the status quo. As far as they were concerned, in the absence of any other political perspective on offer, any change was better than no change.

In the end, just over one third of all registered voters opted for Brexit, but this was enough to produce a narrow majority. Overnight the Leave vote was proclaimed to be the "Will of the People" and the Tory hard-Brexiteer buffoons took front stage.

A similar process has taken place in all the rich countries. The time-scale, speed and precise scenario may have been different - but, ultimately, the result is more or less the same. Everywhere, the pro-business policies of the traditional parties, driven by the greed of the capitalist class in the crisis, has propelled demagogues to the fore.

In some countries, like Britain and the US, they still operate from within one of the traditional parties and they may even manage to take it over - but not necessarily for very long, because they will quickly discredit it as well.

In other countries, like France, Italy or Hungary, a populist right came out of the mainstream parties and recycled itself to form new parties in order to get into office. But these new parties will, undoubtedly, also become discredited over time - because their policies are in no way different from those of their predecessors.

Some of the demagogues are still stuck in smaller, far-right parties. But these parties are no longer the fringe groups they used to be. A few have even managed to build enough support to be able to bargain their way into power-sharing agreements with the traditional parties, such as in Holland, Denmark and Austria. Others, as in Greece or Germany, are still waiting on the sidelines. But they are using their relative isolation from parliamentary institutions, to train anti-working class militias which could quickly threaten the working class.

Either way, these demagogues are by-products of a system in crisis, in that they raise their profiles by whipping up the most dangerous social prejudices in order to shore up their ambition. So, despite their often buffoonish behaviour, they nevertheless represent a potentially lethal threat to the working class and society as a whole and, for that reason, they have to be taken seriously.

The not-so new trade warriors

In line with this right-wing populism, one of Trump's first moves was to implement controls against immigrants - and of course, he had already promised to build that wall against the Mexicans. So it was logical that import controls would come next.

After months of threats and about-turns these were duly announced on the 31st May this year, when Trump tweeted that he was immediately slapping a 25% tariff on steel imports and a 10% tariff on aluminium imports from Canada, the EU and Mexico - in fact the US's biggest trading partners. Added to that were tariffs against some Chinese finished products. And Trump certainly used the occasion to complain bitterly about China's low level of US imports, including the old story of how it has stolen US intellectual property. He followed this with a threat to impose duties on imported German cars.

Childish tweets can still cause havoc

None of this was innocuous, despite the usual Trump flippancy which accompanied these pronouncements. Turkey's steel exports to the US make up 15% of its total export volumes. After Trump's tweet, the Turkish lira immediately plummeted causing a ripple effect on currencies of all the so-called emerging economies, including Brazil, which is, along with Canada and South Korea, a major steel exporter to the US. The Turkish lira hasn't recovered to date, meaning that the poor - that is the majority of the working class and rural population, cannot afford to buy basic foodstuffs, due to the sudden huge inflation of prices.

Trump's pretext is of course the saving of American jobs. But in fact these tariffs - if implemented - and that is still in question in most cases, would actually cost jobs. Some estimates give a figure of 400,000 jobs lost, and even more, if tariffs are imposed on cars and auto parts.

But at the same time as the imposition of the tariffs, the administration put a mechanism in place for companies to object to its decisions and seek exemptions. Apparently since August there have been 38,000 requests for exemption and 17,000 objections from US steel and aluminium manufacturers.

Ford Motor Company has said that the steel and aluminium tariffs would cut $1bn off its profits by the end of 2019. By early October 5,300 exclusions from steel tariffs had been granted and 3,100 rejected. Imports from Japan and Thailand have succeeded in escaping most tariffs, but Canada and Brazil have been given no exemptions so far. South Korea's imports have been capped instead of being taxed - and the free trade agreement it has with the US is being changed accordingly, allowing more access for US cars into the country. South Korea is the third largest steel exporter to the US - but ironically, it is also the world's top importer of Chinese steel. Work that one out...

...and tit-for-tat

Of course, retaliation and tit-for-tat is being prepared: the EU has drawn up a list of over $3bn worth of US imports like bourbon, tobacco and motorcycles, which will be subject to retaliatory tariffs. Canada likewise announced targets for retaliatory tariffs on everything from toilet paper to ballpoint pens. As for the North American Free Trade Agreement (NAFTA), it is currently under re-negotiation, so it cannot be used to "trump" Trump's tariffs against Canada and Mexico, which are his NAFTA partners.

Trump has also pulled out of the Trans-Pacific Partnership in the meantime. Ironically, though, this Trans-Pacific Partnership was originally set up by Obama as a weapon in the regional trade war, designed to keep China isolated and under control. Apparently, however, the mere fact that Obama had anything to do with it, was enough for Trump to ditch it altogether and to wage his own trade war against China single-handedly. Hence the 10% tariff officially imposed since September on $200bn worth of Chinese imports into the US. But how much of this is posturing and how much will actually be enforced, is anyone's guess. The point, however, is to impress on the Chinese leaders the idea that, if need be, Trump will not hesitate to act.

That being said, Trump's seemingly crude offerings and justifications are not really that different from the official Brexiteers' rhetoric and promises: they boast that they will create British jobs for British workers - even if they are careful not to use this precise slogan. They claim that this can be done by adopting a more aggressive trade policy with the rest of the world, which would involve no concessions to the interests of EU companies. But of course, in their case even more than in Trump's case, this is just empty rhetoric. Britain was only interesting as a destination for investment from both the US, Japan and indeed even China, because of its presence inside the free trade area of the EU. That interest disappears with Brexit - unless, of course, it turns out that May's Brexit does not really "mean Brexit" after all. As for developing relationships with Africa or the Indian subcontinent - these already exist, and promise nothing particularly new, especially given the crushing effect of the crisis on the poorer countries of this world, even those with the status of "emerging economies". For the time being they are not emerging out of poverty, nor indeed, out of their ongoing dependence on the rich imperialist powers.

However, despite their deluded rhetoric, the Brexiteer politicians' aggressive posturing has a significance beyond just their desire to improve their own career prospects. They are also promoting an alternative choice of policy for their capitalist masters in the present crisis, and offering their services to implement it, whether or not it seems viable or logical, at present.

Of course, so far, the main institutions and spokespersons of British capital have been quite upset by the threat of disruption to their profits implied by Brexit. And as far as they are concerned, they would certainly have preferred to remain within the EU, one way or another.

But the situation may change. The crisis may become much deeper and the capitalists may eventually feel the need for another, more aggressive policy towards their trading rivals, which would require politicians who are able to mobilise support among the population on the basis of much more loud-mouthed nationalist demagogy. This is the kind of situation for which the hard-Brexiteers are positioning themselves. Despite all the hype surrounding the threat they are supposed to represent for May, they are probably in no position to step into her shoes today. Nor, maybe, do they wish to, since, after all, this would mean risking discredit even before the capitalists come to the point of adopting the hard line they are proposing.

The trade war as a cornerstone of the capitalist economy

Let's not forget that, crisis or not, the trade war is a built-in feature of the capitalist system - the expression, on an international scale, of the fact that this system is based on the permanent competition between individual owners of capital. Of course, this trade war can take very many different forms. Even when and where it is invisible, it is still taking place behind the scenes.

Indeed, what they call "free trade" is just another form of this war, due to the unequal exchange which shapes the relationship between rich and poor countries. The so-called free trade areas (including the EU Single Market, of course) are actually weapons in this trade war between, and even within, these free-trade blocks. This war takes place under the cover of non-tariff duties and regulations, which are designed to protect the market shares of some big companies from their competitors. And just so, for the promised trade deals with the poorer countries after Brexit.

Said Liam Fox when recently delivering the "Margaret Thatcher Freedom Lecture" (yes!) in Washington: "The thriving economies of south and east Asia and, increasingly, Africa, are, and will become, ever more important". He spoke of the "golden economic opportunities" presented by the "rise of the collective wealth of developing countries". Except that these countries are experiencing increasing poverty. But never mind, when May danced in Africa, she pledged £4bn in investments for "economic and security concerns", but not for poverty reduction...

"Empire 2.0"

In fact, Whitehall officials themselves have apparently branded the latest scramble for Africa as "Empire 2.0". But how can a free trade area between Britain and poor African countries do anything other than exacerbate inequalities, trade deficits and the dependency of the poor countries on Britain? What is more, these new trade deals, if they ever come into being, would be likely to incorporate an "investor-state dispute system" which allows corporations to sue countries for alleged discriminatory practices which hamper their activities or profits. For instance, Chevron, the US oil giant, just won a ruling against the government of Ecuador after it had tried to sue Chevron for dumping toxic wastewater in the Ecuadorian Amazon over the course of 30 years, leading, among other things, to high rates of cancer among indigenous people in the area. In fact not only did Ecuador lose the case, but it has to now pay compensation to Chevron!

Intra-EU rivalry

Even within the EU single market the regulations are designed to protect the strongest at the expense of the weakest. The adoption of the euro as a common currency is a case in point. EU treaties provided that all members should eventually join the euro-zone, once their economies met certain criteria. But opting out was allowed - which Britain immediately did, followed later by Denmark. Sweden quite openly, does nothing to even try to meet the euro-zone criteria and six other EU members are "trying", more or less enthusiastically, to meet these criteria. In total, as a result, only 19 EU members out of 28 use the euro. On the other hand, two countries which are not part of the EU but aspire to be - Kosovo and Montenegro - have unilaterally decided to adopt the euro without meeting the criteria, which means that they cannot issue euros themselves. But there again, the hypocrisy, limits, and fragility of the euro-zone was recently exposed by the Greek crisis. It highlighted how the euro could be used as a weapon for the EU's richest capitalist classes to exercise their domination - and the dictatorship of their banks - over the Union's weaker members.

In fact the EU's common agreements probably exclude more things than they include, which leads to illogical and costly differences which seemingly could not be ironed out. Like driving right hand drive cars on the left side of the road in Britain, for instance. In fact within the single market, non-tariff barriers are often just as much obstacles as tariffs would be. So for instance wine produced now in the south of England from identical French champagne grapes cannot be called champagne, even if it is champagne, in order to protect French producers against British ones. In fact the EU has a designation of origin scheme to protect regional products from competitors or non-genuine reproduction by a nearby rival. Britain has just 65 such products designated, like for instance Bramley apples, Melton Mowbray pork pies, Cumberland sausages and Shetland wool, whereas France has as many as 217!

Trade war and national borders... against the population

Hard-Brexiteers like David Davies and Liam Fox often boast about the "wonderful" free trade deals that they will be able to negotiate, at last, on behalf of British companies, once Britain has reclaimed its so-called "sovereignty" from the EU. But what is really behind this?

Obviously they are trying to con voters into believing that Brexit will boost the British economy and create more jobs and affluence. And never mind that this goes against all evidence. As if, these days, British capital had the kind of economic and political weight needed in order to impose its terms on foreign competitors, whether suppliers or customers, except on maybe a handful of tiny, poor, countries which are part of Britain's historical colonial backyard - like Barbados or the Solomon Islands!

But there is more to this boasting than just this crass demagogy. Above all, the hard-Brexiteers are trying to convince a reluctant British capitalist class that they are willing to bend over backwards in order to support British companies in their trade war with their international rivals.

These politicians talk about the beauty of a "small state", meaning one which takes an arm's length approach in dealing with the economy, allegedly to allow the capitalists to make the best of their so-called "entrepreneurial" skills. But in reality, today all the state apparatuses of the rich countries actually play a decisive role in supporting their respective national companies in their on-going trade wars.

For a start, it is the states themselves which negotiate all sorts of bilateral and multilateral trade agreements, as mentioned before. At the same time, they produce reams of regulations which are designed to protect their own companies despite - and against - the provisions of these deals.

But there are many other ways in which the big companies use their respective states in the trade war. In the field of finance, for instance, all the rich countries have a state agency whose function it is to help exporters retain or increase their markets, by taking over the financial risks involved in export operations.

In Britain, a ministerial department called "UK Export" does this job under Trade Secretary Liam Fox himself. Officially, it says that its mission is "to ensure that no viable UK export fails for lack of finance or insurance, while operating at no net cost to the taxpayer." So, whenever a big export contract is negotiated by a British company with a foreign customer, "UK Export" can be called in. It helps the customer to borrow the funds it needs to pay for the goods, by organising loans from the banking system or the money market, or even by providing the loans out of public funds. In fact, according to its latest annual report, the taxpayer provides 26% of the total funding! What's more, if the customer fails to pay back its loans, "UK Export" steps in and compensates the lender - which also means that if the loan happens to have been made out of public funds, this will necessarily result in a net cost for the taxpayer, while the exporting company will keep a tidy profit!

An exhaustive list of the ways used by states to support their exporting companies is beyond the scope of this forum - because there are just too many of them. One thing should be remembered, though - that, one way or another, the big companies' trade war and the super profits they make out of it, are partly paid for by the same public funds which are supposed to be so overstretched that there is never any money available for the NHS, social housing and other socially useful expenditure!

In addition to its parasitism on society, the capitalist trade war has a meaning of its own for the working class. Indeed, it is in its name that workers here - but also in every other rich country - are being told that they must work harder and make themselves cheaper, in order to help their employers beat their foreign competitors. Never mind that this can sound kind of ironical, for the many workers at, for instance, the BMW plant in Oxford or the Ford factory in Dagenham, who happen to carry a foreign passport themselves! In any case, if the capitalists' trade war means that workers should kill themselves on the job and live in poverty, it is obvious that they have absolutely no stake in it and should have nothing to do with it, no matter where they come from!

"National interest"? No, just those of capitalist parasitism!

In fact, capitalism has long ceased to be a national phenomenon.

So, for instance, the largest so-called "British" bank, HSBC, has separate share listings in no fewer than 9 different national stock markets across the world and its largest operations are in Asia, where it originates from, and in the US. Likewise for the 20 largest companies listed on the London Stock Market, which to a large extent dominate it. Virtually all of them make most of their profits outside Britain and some are actually based outside Britain: such is the case of banks like HSBC, oil companies like BP and Shell (which is half based in Holland), mining giants like BHP-Billiton (based in Australia) and Anglo-American (based in South Africa), drink and tobacco groups like Diageo, BAT and Imperial Brands, commodity traders like Glencore (based in Switzerland), pharmaceutical giants like AstraZeneca (originally Swedish) and Glaxo-SmithKline, etc. What's more, the majority of these companies' shares are owned by investment funds, which are mostly based in the US and the EU, anyway.

But never mind, the British state and its politicians, including the most vocal hard-Brexiteers, insist on the fact that they are defending the interests of these companies - not because they have very much to do with Britain, but simply because they are the bread and butter of the British capitalist class. What the politicians call "nation" has nothing to do with anything here - the only thing that matters to them is the capitalists and their cherished profit system.

And this brings us back to our friendly Martian who is visiting the Earth madhouse and trying to understand the logic of its territorial divisions. He would hear that the politicians' rationale to justify the capitalist trade war is that the "nation's industry" needs to be protected in order to defend the so-called "national interest" and to put "Britain (or America) First", etc. Our Martian would note that, in the name of the same "national interest", national borders are supposed to be tightened up, immigration is supposed to be drastically controlled, refugees fleeing war zones or starvation who are lucky enough to have escaped drowning on their way to Europe, are supposed to be sent back to certain death in their native lands.

Regarding Britain itself, our Martian could not fail to notice that over 40% of the components used to produce a car here are imported from the EU, and that 80% of these cars are exported, with more than half to the EU. He would note that the car giants have developed a division of labour in the production process, which uses factory networks spanning the whole of Europe and beyond - so much so, that some parts have to cross the Channel several times in both directions, before their final assembly into a car in Britain.

Our Martian would not fail to notice either, the successful launch, on 20th October, of the BepiColombo space project, whose aim is to study Mercury, the planet of the Solar system which is closest to the Sun. He would have noted that this project actually involves two satellites working together. One was designed and produced by the European Space Agency and the other by its Japanese counterpart, but both were put into orbit by the same European launcher.

He would also have noted that, on its own, the design and production of the European probe has involved the cooperation of scientists from 14 EU countries (plus Russia and Switzerland) and the coordinated work of 30 research facilities and production centres dotted across the EU, with just two in Britain. In the light of all this, our Martian would have been very surprised - and rather shocked - to hear the BBC announcing that "a British-built space craft [is] to blast off to Mercury" and how it failed to mention the international nature of this technological feat, the involvement of so many EU countries, and the fact that Britain's role in it had, in fact, been very modest!

As a result of all these findings, our Martian would have found it completely incomprehensible - and irresponsible - that Brexit should even have been raised as an option by British politicians, given that it will undoubtedly prevent the involvement of British scientists in similar future projects.

Our Martian would inevitably have come to the following conclusions: that the Earth's economy could - potentially - make considerable progress, if only it was to become really internationalised, allowing the rational use of all the planet's human and material resources; and that the existing national borders are obsolete remnants of the past, without use nor justification, except to help the big capitalist companies in their potentially destructive trade wars; and that the survival of these borders and, even more so, their reinforcement, can only act as a brake on technological and economic progress, if not as a factor of catastrophic regression. And we, revolutionary communists, would entirely agree with our visitor!

Trade war and capitalist crisis

Of course, having no knowledge of capitalism and its history - let alone of Marxism - our Martian would not know anything about the recurrent crises that the capitalist system keeps going through as a result of being based on the blind, frantic competition between individual capitalists who also control all productive forces.

Yet these crises have a direct impact on the capitalist trade war. One of their consequences, whichever form they take initially, is to reduce the size of the market for goods. On the one hand, the crisis causes the capitalists to loose confidence in their own system. So, to avoid risking their sacred capital in new productive investment and to cut their losses they withdraw their investment from the sphere of production, as much as they can. As a result, they reduce the quantity of raw materials they buy and they stop buying new machines or building new production facilities. At the same time, the demand for consumer goods goes down, as more factories are closed, more jobs are cut and more workers are left without any buying power. And, of course, this is a self-feeding mechanism in that, once the demand for consumer goods starts shrinking, the very fact that it shrinks, results in more workers becoming unemployed, thereby reducing even more the demand for consumer goods. This is a vicious cycle.

In a rationally organised economy, the fact that the need for goods goes down would automatically result in a proportionate readjustment of production. But capitalism is not a rational system. On the contrary, each capitalist embarks on a frantic attempt to be among the survivors - and not everyone can win in this game. So, instead of being reduced, capitalist competition, which was the very cause of the crisis in the first place, intensifies. The capitalist law of the jungle - which is based on the survival of the fittest, or the most crooked, depending on the way you look at it - operates in its most naked form, with the strongest companies absorbing their weakest rivals. And what is true in each industry and each country, becomes true on a world-scale as well: instead of slowing down, the trade war becomes even more ruthless, with fewer players in the game, but bigger ones, who have even more powerful weapons at their disposal to wage war against their rivals.

After the workers who have already lost their jobs, the next victims of this evolution are those who are still in work. To improve their position against their capitalist rivals, the bosses increase the level of exploitation by a few notches, by cutting wages and attacking working conditions in their own factories, with the help of their national politicians. In parallel, a similar scenario is played out on the world market by the big companies of the rich countries. But this time, these companies get their national states to use their political and economic leverage to put pressure on the states and capitalist classes of the weaker and poorer countries, in order to force them to turn the screw on their own working classes themselves, so that these big imperialist companies can increase the profits they make out of their looting of these countries.

But, of course, this intensification of the capitalists' competition and trade war may eventually cause a snow-ball effect, with consequences which go far beyond the economic sphere. This was precisely what happened as a result of the Great Depression of the 1930s.

The 1930s revisited?

In fact Trump's tariffs are almost a "copy and paste" of the Smoot-Hawley Tariff of 1930 enacted by the then President Hoover of the United States. Although this bill was already going through Congress when Wall Street crashed in 1929, it undoubtedly made the impact of the subsequent Great Depression, far worse.

The human and economic consequences of the Depression of the 1930s are well-known. Measured in terms of trade, they were catastrophic. By the summer of 1932, world trade had shrunk by a third in volume and 60% in value compared to 1928. Despite a partial recovery, the value of European trade in 1935 was still only 36% of what it had been in 1928.

The Smoot-Hawley tariff was the first protectionist weapon wielded in the trade war which was sparked by the crisis. It had initially been intended to protect American farmers, after the post-WW1 recovery of agriculture in Europe. But in fact its purpose changed in its passage through the US Congress. The most drastic tariff increases were now aimed at industrial products, with import duties being increased on as many as 900 items, by over 40% on average. Of course, this was enough to bankrupt those US retailers and manufacturers who relied on selling imported food, or using imported raw materials, textiles, or manufactured parts. And it added tens of thousands of unemployed to the vast army of destitute workers who tramped the American streets over the course of the next 10 years.

Smoot-Hawley triggered immediate retaliatory responses in one form or another, from national governments across the world at the behest of their own frantic capitalist classes. Rivalries were thus exacerbated, pushing the German capitalist class into the arms of Hitler and fascism, while far-right nationalists, whose long-held advocacy of protectionism was now enacted, were reinforced and emboldened throughout the world.

From currency blocks to tariffs

Of course in every country, the so-called "solution" to this crisis, began with turning the screw of exploitation on the working class - with increasingly punitive measures. So for instance, in Britain, the Labour government which had won the 1929 election, gave way to a national coalition government in 1931, in order better to meet the demands of British capital - and effectively cut welfare benefits, forcing the now 3m unemployed (23% of the working population) almost literally, back into the Victorian workhouse. It also poisoned the social atmosphere enough to allow the birth of the so-called "New Party" in 1931, which became the British Union of Fascists, founded, ironically, by a former minister in the erstwhile Labour government, called Oswald Mosley.

All kinds of tougher protectionist measures were adopted. But, since all trade was done using a large variety of different currencies and since, as a result of the Great Depression, exchange rates were often subject to sudden changes, the richest countries tried to get other countries to join them to form currency blocks in which currency exchange rates would, artificially, be kept more stable. But, of course, since everything in the capitalist economy is a matter of the relationship of forces, the main beneficiary of each one of these blocks was the rich country which had initiated it in the first place - precisely in order to impose the exchange rates it needed on its weaker trading partners. Indeed, this was just another way for the rich countries to conduct their trade war.

So, for instance, the British government set up a "Sterling Area". This included all countries willing to peg the value of their currency to the pound and keep part of their central bank reserves in pounds rather than gold. How voluntary this was is another matter. If they refused, they faced restrictions on their trade with Britain. Most of the Empire was involved in the Sterling Area, except Canada and British Honduras, which were both part of the US dollar zone, which included all Central and South American countries.

France formed its own currency block in 1933, along with Italy, Switzerland, Luxembourg, Holland and Belgium, on the basis of a mutually agreed system of exchange rates. But this collapsed in 1936. As for Germany, it set up a trading bloc with its satellites in central and southern Europe.

In 1932, following another run on the pound, the British government eventually introduced tariffs on most imports, initially set at 10%. In fact the main objective was to hit French companies - whose government had just raised tariff barriers, while introducing quotas for many imported products. To quote the then President of the Board of Trade: "... We have for some fifty years (...) enjoyed most-favoured-nation treatment for our goods in France by virtue of a French law and we had come to believe that there was a tacit understanding to this effect which had all the practical force of a treaty. It was therefore a rude shock when the French recently decided to submit the goods of this country to an additional surtax of 15 per cent... Discussions have taken place in regard to this measure of discrimination on the part of the French Government and at an early stage a fairly broad hint was given to them that persistence in this course could only lead to retaliatory measures on the part of this country."

The other measure which the British government took to bolster its position in what now became an overt international trade war, was to restore the old "Imperial Preference" system. This had given preferential treatment to goods imported from the Empire in the early 19th century, but also ensured a preferential market for British goods, which the British capitalists now needed more than ever.

From trade war to World War

Of course the European country worst hit by the 1930s Depression was Germany. Up to 1929, German capital had enjoyed 5 years of artificial prosperity, thanks to American loans, while the vast majority of the population survived in the most precarious conditions. These loans now suddenly ceased and US financiers began to 'call in' outstanding debt. In 1931 there were runs on German and Austrian banks and several of them folded. The US had been Germany's largest customer for industrial exports. Now factories and industries either closed or downsized. By 1932, German industrial production had fallen to just 58% of its 1928 levels. Unemployment spiralled. By the end of 1929 around 1.5 million workers were without a job; within a year this figure had more than doubled, and by early 1933, 6 million (26%) were out of work. Thousands of children died from hunger. Adult corpses lay on the streets.

In response to the crisis, the Brűning government proposed to increase taxes to reduce the budget deficit and implement wage cuts and spending reductions to lower prices. But these measures had eventually to be passed by decree as Brűning could not get them through parliament. What is more they had the effect of making the crisis even worse. This helped to clear the path for Hitler's election victory in 1933, and the offensive against the working class which dragooned workers into preparations for war, in conditions of industrial slavery.

Hitler was able, like his self-styled British copycat, Oswald Mosley, to use the nationalist rhetoric, which had become part of the mainstream political parties' normal public discourse, as a springboard for his own deranged demagogy. And while the circumstances today are different, there are similarities between what we are seeing around us and the way the economic crisis at that time provided Hitler's gang of thugs with a path to power.

Of course in the 1930s, unlike in Germany, the bourgeoisies of the US, Britain and France, were strong and able enough to use their respective states' political personnel to protect their profits. Neither were they particularly worried about any threat from a recently mobilised working class, as was the case in Germany. And last, and most importantly, France and Britain had their colonial markets and respective currency zones, while America had its vast domestic market and Latin American backyard to fall back on.

The German bourgeoisie, however, had no empire to feed off. It finally chose to use Hitler's fascism as a weapon against the working class. To achieve its recovery, German capital needed to raise the level of workers' exploitation to near slavery by smashing all existing trade unions and workers' organisations. And to be able to stand up to its rivals in the on-going trade war, it was obvious that German capital would need new markets - which were going to have to be taken at gun point.

But already from the early 1930s onwards, in other parts of the world, the trade war had taken on a military dimension. In 1931, Japan annexed Manchuria and in 1933 it invaded Northern China. In 1935, Mussolini sent troops to occupy Abyssinia. In 1938, Hitler annexed Austria, which had so far been a playground for British and US capital. Meanwhile, every single one of the rich countries was pouring state money into the arms industries, as a means of providing the capitalists with new sources of profits. But clearly this was not going to stop there. It could only mean war.

In fact this was how the capitalist time-bomb stoked by the 1929 Wall Street crash and the subsequent Great Depression, finally blew up in the face of mankind - and we all know at what cost.

Towards another crisis

Trump's decision to opt out of the nuclear Non-Proliferation Treaty, is another chilling reminder of how the bourgeoisie can boost its failing fortunes by developing and selling weapons to states - even if, when it comes to nuclear missiles, this is insane and a game which is in every sense terminal.

Does this mean, however, that we are heading towards a new World War? That is a question no-one can answer. History does not repeat itself in that way. But the past does provide warnings as to what the future may have in store. And these warnings cannot and should not be ignored.

There are things that we do know. For instance, the fact that we are heading toward a new crisis - or rather, toward another major convulsion of the present decade-old crisis of the capitalist system.

The fact that the capitalists themselves have no confidence whatsoever in their own system has been obvious for a long time. The fact that productive investment has not recovered in most of the rich countries - and even less so in Britain - is an unquestionable expression of this.

But what is even more striking is the long series of "gloom and doom" analyses issued by the economists of the capitalist class themselves, for the tenth anniversary of the collapse of Lehman Brothers, which was the final warning before the whole banking system collapsed, in 2008. While most of these experts consider that, ten years on, the banking system is in much better shape than it was back then, at the same time, they are really worried by two things: first, that if a new financial breakdown was to take place today, the central banks would no longer be in a position to put together a bailout on any scale comparable to what they did in 2008; and, second, they see warning signals more or less everywhere across the world economy, indicating that a new convulsion in the crisis is not a matter of if, but a matter of when.

One example of this is provided by a recent issue of the business weekly "The Economist", published on 13th October, which featured the following front page headline: "The next recession. How bad will it be?". In fact, at the same time, a report produced by JP Morgan, one of the largest US investment banks, went so far as to set a date for the next crisis - 2020, to be precise! However, in this case, it was more a sort of PR exercise. JP Morgan wanted to show clients that their bank was alert to any sign of danger and well prepared for it, while reassuring them by giving them all sorts of reasons why the next shock would not be anywhere near as bad as the previous one.

Going back to the issue of "The Economist" mentioned earlier, it is far less precise, but also less optimistic than JP Morgan. But, while accepting the fact that a new crisis of the system is inevitable, its choice of words is deliberately misleading - or, in any case, ambiguous. Using the word "recession", instead of crash, implosion or something similar, is not innocent. Indeed, "recession" means something quite distinct in the world of finance - i.e. a situation in which economic output falls for two consecutive quarters. In fact, it is something which happens quite often and is normally associated with the "down" stage of what financial experts call the "business cycle". The implication, therefore, is that a "recession" is something which is temporary and is automatically followed by a period of expansion.

Except that no-one can say this any more in view of what happened since 2008. Of course, some things have recovered since then: for instance the total annual dividends distributed to the shareholders of British listed companies (in fact they are at a record high), the banks' profits and a few similar items which only concern the capitalist themselves. But 10 years on, many other indices haven't yet recovered: for instance, the standards of living of the working class, wages, working conditions (especially permanent full-time employment versus casual under-employment or self-employment). But there are others, like the all-important index of investment in machinery, which is still below its 2008 level.

The point - which, of course, The Economist would never dream of acknowledging - is that this time round, although the capitalist system has still not recovered from its previous crash (let alone seen a period of "expansion"), another crash is already waiting to break out. In other words, we are not talking about a benign cycle of "a recession followed by expansion", but a permanent crisis which keeps undergoing more convulsions without anything that can remotely be described as an "upturn", an "expansion" or a "recovery".

The fact is that the capitalist system has long been in a state of permanent sickness, but the periods of respite which used to occur in the past, no longer appear. Does it mean that capitalism is in a terminal state? Yes it does. But such a state can last for a very long time, unless radical new treatment is applied to the patient - i.e. a proletarian revolution, which would sort out the problem once and for all.

The stakes for the working class

What is somewhat different from the situation at the time of the banking crisis, in 2008, is the combination of economic and political instability which exists today. And, out of this combination, can arise a multitude of destabilising factors which could, in turn, trigger another significant convulsion of the system.

The collapse of the Turkish lira caused, earlier this year, by one of Trump's tweets, shows that political posturing can easily cause a major upset and a chain reaction leading ultimately to another crash. This is partly due to the present simmering political tensions, especially in the Middle East, but it is also due to the fact that over the past ten years, the colossal excess of unused capital in the rich countries, has resulted in a lot of this capital being temporarily invested in the emerging economies where it has created massive real estate bubbles. Meanwhile, in the rich countries, although the banks have reduced their indebtedness, the big companies have increased theirs, and so have households. There is now at least as much indebtedness across the industrialised world as there was in 2008, and much more across the world if the emerging economies are taken into account.

So all the explosive material for a new, drastic exacerbation of the crisis is already in place. And there is an oversupply of possible sparks that could set off the explosion.

One possible spark, in particular, and a fairly big one, could be Brexit itself - and not only if it's a "hard" Brexit. The financial markets' reactions after the 2016 referendum showed how quickly the pound could be driven down by a simple referendum with no short-term practical consequences. So it is not all that difficult to imagine what could happen. The fact that Brexit will have consequences on trade, within Europe and possibly beyond, is unquestionable. But how quickly will speculators realise the extent of these effects and, more importantly, how much will their fear of the impact of all of this on financial markets cause them to react? If they decide to react on the basis of their fears, then anything could happen, including a full-blown crisis comparable to the 2008 crash.

Against this backdrop, the problem for the working class is twofold. On the one hand, it has to prepare itself to defend its material interests against the attacks that the capitalist class is already preparing, using Brexit as a pretext, as we saw recently with the announcements made by the big car manufacturers. On the other, it has to prepare itself for the risk of a new crisis, knowing that Brexit could well be the trigger that sparks this off.

Yet whichever side of the political spectrum workers turn to, they only see politicians and union leaders, whose objective is to keep the system alive at any cost - meaning at an intolerable cost for the working class.

Not only does this mean that in the coming period, the working class will have no means to defend its social interests other than to use its collective strength and the weapons of the class struggle - which is not really new. But this also means that in order to be effective in this fight, it will have to aim at challenging the very foundations of the capitalist system - in particular, the right of the capitalists to manage the means of production - by imposing workers' collective control over the factories, offices and public services.

In other words, fighting the symptoms of the disease won't be enough. The working class will have to apply itself to fighting the causes of the disease - that is, the capitalists' stranglehold over the means of production and, ultimately, the capitalist order itself.

In order to do this, the working class still lacks a fighting organisation, which can be both its collective political voice and a backbone for its fights. It needs a party of its own. One which is determined to build up its collective strength and to lead its fight against the capitalists' attack; a party which, by aiming clearly at the overthrow of the capitalist system, will offer a real alternative to the chaos which capitalism imposes on society, without making any concessions to any form of populist demagogy; in short, a revolutionary communist party.