Nick
G.
The major capital-exporting (imperialist) nations are
caught in a vortex of trade rivalries, and are using “free trade” agreements (FTAs)
as weapons of trade warfare. And
rotating the fluid of trade rivalry are aggressive demands by speculative
finance capital for newer and bigger opportunities for capital gains through
arbitrage.
Both China and the US are pursuing their own respective
FTAs. The US has the Trans-Pacific
Partnership; China is creating a Regional Comprehensive Economic Partnership
(RCEP). The US has a Transatlantic Trade
and Investment Partnership (TTIP); China is somewhat more poetically pursuing
its “one belt, one road” strategy designed to link Asia, Europe and Africa in a
latter-day version of the Silk Road. The
US has the Trade in Services Agreement (TISA) which excludes Brazil, India,
Russia and China (the so-called BRICs grouping). Both China and the US have
bilateral FTAs with individual countries.
In his 1917 lecture on War and Revolution, Lenin approvingly quoted Clausewitz’s dictum
that “War is a continuation of policy by other means”. Lenin looked at the rivalry between the two
capitalist giants, Britain and Germany, and showed how they, “…long before the war, had caught
the whole world, all countries, in the net of financial exploitation and
economically divided the globe up among themselves. They were bound to clash,
because a redivision of this supremacy, from the point of view of capitalism,
had become inevitable.”
The ancient Chinese text by Sun Zi, The Art of War, has gained popularity in business and financial
circles for some decades now, further exemplifying the links between military
theory and business expansion.
Exclusion
and agenda-setting
The purpose of the current spate of FTAs is not so much
to include as many countries as
possible as to exclude a major rival
in particular.
Shintaro Hamanaka’s December 2014 paper for the Asian
Development Bank, Trans-Pacific
Partnership Versus Regional Comprehensive Economic Partnership: Control of
Members and Agenda Setting presents a refreshingly honest analysis of how
this FTA rivalry has taken shape.
“The exclusion of rival states is necessary for countries
seeking to assume leadership”, he writes, referring to the exclusion of China
from the US-led TPP, and the exclusion of the USA from the Chinese-led RCEP.
(Above: RCEP, the TTP, ASEAN and APEC: who's in and who's out)
Alongside the exclusion process is control over
agenda-setting. Hamanaka states “…economies
are playing two games simultaneously: control of membership and control of the
agenda. The core of the first game is
the exclusion of rivals. The essence of
the second game is to set the agenda that is convenient to the leader. Neither
comes before the other; both are determined at the stage of forming the
institution or group.”
Control of the agenda allows the dominant FTA leader to
allow its rival to join under very restrictive conditions of entry that may be
more favourable for the US, say, in the case of the TTP, than China’s permanent
exclusion. “…Incumbent leaders try to invite rivals as latecomers and put them
in a relatively disadvantageous positon vis-à-vis incumbents,” writes Hamanaka.
Finance
capital drives “trade” rivalry
When the pre-monopoly stage of capitalism ended and
modern imperialism emerged as its highest stage, the power of industrial
capital was increasingly restricted to the contradiction between wage labour
and capital at the point of production and within national economic frameworks. Greater power over international policy was
grabbed by finance capital in all its various forms of interest-bearing
institutions – banks, financial institutions, insurance corporations and the
like. Lenin spoke of the supremacy of
finance capital over industrial capital. This supremacy threatened manufacturing
where capital circulated through a money-commodity-more-money (M-C-M¹) process,
by attracting available capital to a quicker and more profitable, albeit
speculative, process of money-more-money (M-M¹).
(Above: typical advert for arbitrage software, gambling on profits from price interest points [differences between two currency exchange rates] in the M-M¹ circuit of capital)
That process emerged at the end of the 19th
and beginning of the 20th centuries.
Such credit capital as was available to industrial production was
applied behind the walls of nation-states for more than half a century. During
this early stage of imperialism, capitalist trade wars took the form of erecting
higher and higher tariff protections around national industry and agriculture
and, particularly in the case of the latter, complementary and ever higher
subsidies to producers within the nation.
Tariff barriers protected the industrial capital of a
nation’s capitalists engaged in production of commodities. As early as October 1926 finance capitalists from
the US, Britain and other countries published a declaration calling for the
removal of tariff barriers set up by the European states. This so-called
bankers’ declaration was an attempt by Anglo-US finance capital to establish
its hegemony in Europe.
In the later stage of imperialism, and especially from
around 1970 onwards, finance capital renewed its attacks on national trade and
investment barriers as a hindrance to its ability to penetrate other countries.
A massive wave of deregulation of financial practices took place facilitating
not just the international movement of finance capital but also its creation of
sophisticated new vehicles for speculative activity. A new vocabulary emerged: futures trades,
derivatives, collateralised debt obligations; together with new forms of finance
capital: hedge funds, private equity firms, margin traders; and new
technologies allowing high frequency trades via computerised algorithmic
searching of stock prices and currency trades.
The US banker Nasser Saber said of finance capital: “Unlike
other forms of capital which are logically grown from, and are thus
historically connected with, production, speculative capital is born from
arbitrage trading. It has no connection
to either the production or circulation process of commodities and products.”[1]
Arbitrage trading basically means the near-simultaneous
(down to nanoseconds in computerised high frequency trading) purchase and sale
of an asset in order to profit from a difference in the price. It is just like
the old-fashioned scalping of concert tickets except that the price difference
can be minute yet still realise a huge profit given the quantity of assets
being traded, and you don’t have to waste your own time standing out the front
of a concert hoping for a sale.
Prior to the 1970s, the financing of trade was largely a
matter of the non-speculative provision of finance to bankroll the buying of
goods and services through letters of credit and bank guarantees. Increases in trade volume indirectly
increased the profitability of credit capital if larger volumes of credit
capital were required to grease the trade wheels.
After the 1970s, the financial returns from trade came
from the faster and less costly creation of fictitious value through
speculation on the rise and fall of commodity and resource prices and all the other wonderful opportunities in the new
world of derivatives and futures.
The domination of speculative imperialist finance capital
over industrial and merchant capital led to a big new push for “free trade”,
i.e. trade in which tariffs and subsidies are wound back or removed altogether
so as to promote the volume of trade into which speculative capital focuses
with the manic obsession of a problem gambler in the casino.
Trade
and finance capital
Those people who have said that trade is not the main
thing in FTAs, that rather, it is really all about guaranteeing investment
rights for big corporations over nation-states, are right.
However, it goes beyond ISDS clauses and intellectual
property provisions.
It is also about allowing the potentially most
destructive form of capital to further inflate the balloon of fictitious values
to the point where nobody will have the capacity to bailout the losers in the
coming crashes. The value of all this
fictitious capital far exceeds the value of global GDP: according to Time magazine, “While there’s no way of
knowing for sure, estimates of the face value of all derivatives outstanding tops
a quadrillion (1,000 trillion) dollars, or more than 14 times the entire
world’s annual GDP.”[2] And despite the chaos it caused is 2007-08,
the magnitude of this destructive capital has only grown. “The global
derivatives bubble is now 20 percent bigger than it was just before the last
great financial crisis struck in 2008.”[3]
That is why FTA manoeuvring is also about who will emerge
from a major financial crisis in the least weak position.
This involves China as much as the US. Events this year have shown that the Chinese
stock market is as susceptible to manipulation and instability as any other. At
the same time, the Chinese state responded with greater vigour than other
capitalist governments may have.
Indeed the differences between the financial capacity of
the US and Europeans on the one hand, and the Chinese (and other BRICs) on the
other have echoes of Lenin’s description of the major rivals in the first imperialist
world war: “On the one hand we have Britain, a
country which owns the greater part of the globe, a country which ranks first
in wealth…..On the other hand, opposed to this, mainly Anglo-French group, we
have another group of capitalists, an even more rapacious, even more predatory
one, a group who came to the capitalist banqueting table when all the seats
were occupied, but who introduced into the struggle new methods for developing
capitalist production, improved techniques, and superior organisation, which
turned the old capitalism, the capitalism of the free-competition age, into the
capitalism of giant trusts, syndicates, and cartels. This group introduced the
beginnings of state-controlled capitalist production, combining the colossal
power of capitalism with the colossal power of the state into a single
mechanism and bringing tens of millions of people within the single organisation
of state capitalism.”[4]
China is now a net exporter of capital. Between 2002 and
2013 there was a 40-fold increase in Chinese outward foreign direct investment[5]. Chinese investors channelled capital into
6,128 overseas firms in 156 countries in 2014, with outbound investment
reaching $102.89 billion, up 14.1 percent from a year earlier, according to a
Chinese source[6].
The Chinese government is following a strategy of ensuring that the export of
capital is developed alongside the export of goods and that China changes from
being the “workshop of the world” to its global finance capital headquarters.
Will the US take these changes lying down? Will it be content to restrict defence of its
global domination to the use of policy and trade and investment
agreements?
We are living in an era which could see the vortex of
trade rivalry draw the world once again into real war over whose finance
capital is to really rule the world. But
this will lead to increased resistance and struggle by the people.
Marx has proved right on so many matters. It is timely to recall his conclusion to a
speech on the question of free trade, delivered January 9, at the beginning of
the revolutionary year of 1848: “In a word,
the Free Trade system hastens the Social Revolution. In this revolutionary
sense alone, gentlemen, I am in favour of Free Trade.”
No comments:
Post a Comment