The recent upheaval within modern geopolitics is a revolt against the promises of neoliberal globalism. With the West winning the Cold War, the world seemed to be on the precipice of achieving some relative world peace, but instead it created another inequitable economic global system.
I submit that neoliberal capitalism shares the same goals of and international socialism: a world standardised under a single ideology. This may initially appear controversial, but I contend that the parallels have always been present. Therefore, I argue that current geopolitics is symptomatic of a totalitarian global economic system and the way to reform is returning to the notions of economic nationalism.
In order to prove my argument, this paper will carry four pillars. Firstly, I will explain how neoliberalism was destined to descend into the abyss of totalitarianism by following the model of Marxism. Secondly, I will analyse the reasoning and promise of a US inspired neoliberal world and why it is contemptuous towards protectionism.
Thirdly, I will underline the fact that Free Trade carries the undercurrent of tyranny and is ultimately destructive. And finally, I will show the reasoning for economic nationalism and why it is returning to the forefront to public debate via former Free Trade champions and the current Trump phenomenon.
The Genesis of Globalism
The infancy of modern globalization can be found in 19th century intellectualism with the creation of Marxist socialism. It will quickly become apparent, in regards to the nation state and protectionism, that current proponents of free market fundamentalism actually echo Marxism and therefore were always susceptible of being seduced into despotism.
According to Marxist thought, the nation state is an artificial construction by the capitalist middle class, which acts as a tool for working class domination and thus stales the historical evolution towards world communism (Shafter,1955, 41). He went on to declare that the state did not liberate people, but actually offers a different set of shackles, therefore civil society is not enough to emancipate humanity (Kasprzak, 590).
Furthermore, in order for his communist revolution to succeed, it must take place globally as it would allow socialism develop more quickly (Szporluk, 1988, 47). Once this occurred, the state will disappear and become replaced by a classless society that will usher in the end of history, as there will be no classes and no class struggle and therefore no need for the State (Quiguly,1966, 380).
In regards to the capitalist system, Marx believed that an unrestricted free economy is ultimately self-destructive and thus can be weaponized against the barrier to socialism, such as: the nation state, national culture and protectionist policies. This would discredit the notion of capitalism and allow socialism to take root and eventually achieve its own brand of universalism. Marx himself, when addressing the 1848 Democratic Association of Brussels, articulated this plan by stating:
” The Protective system…is conservative, while the Free Trade system works destructively. It breaks up old nationalities and carries antagonism of proletariat and bourgeoisie to the uttermost point. In the word, the Free Trade system hastens the Social Revolution. In this revolutionary sense alone, gentlemen, I am in favour of Free Trade.” (Marx 1848)
The notion of that Karl Marx being free trade capitalist may be shocking, but it exposes that the dialectic between the two competing systems is a myth. I would submit that after claiming victory over their ideological enemy, the West unwittingly came to the same conclusions as socialism and then set out to remake the world in their own image.
The Neoliberal Utopia
The idea of liberal-capitalism sharing the same worldview as socialism may go against conventional thinking, but I contend that this is the outcome of any unipolar world, regardless of ideology. However, in order to understand how such a transformation could transpire, a comprehension of the neoliberal worldview must be investigated.
It was Friedrich Von Hayek’s Road to Serfdom that warned that tyranny was a result of government intervention into the realm of economics via central planning. This inevitably leads to the loss of individuality, freedom and classical liberalism. This would result in an oppressive society and the rise of a dictator, with the people returned to serfdom (Hayek, 1994, 24).
He went on to say that authoritarian ideologies all emerge from central planning as it grants the power of the state over the individual. (Hayek, 1994, 29). This brand of economics was later made by fashionable by Milton Freidman and his Chicago School of Economics, which transformed theory into economic reality.
He promoted the program of lassie-faire capitalism, which imposed the shrinking size of state bureaucracy, eliminating tariffs, removing restrictions of foreign investment, discard quotas, privatizing state-owned industries, deregulating capital markets privatisation of public assets, mass deregulation of the financial and banking sector, the cutting of tax rates and social safety nets (2009).
It argued that through freedom of choice, expressed via the free market, any failing entities would naturally correct itself or go bankrupt. Those units that are artificially propped up by tariffs would liquidate the human ambition of entrepreneurship and the good work ethic. (2009). Being that the ethos of capitalism and individualism was being challenged by collectivism, the Western world naturally gravitated to such a theory.
This doctrine gained global success with the fall of the Soviet Union and the declaration of the ‘End of History’ (Fukuyama, 1992). Due to the Western world employing neoliberalism when the Fall of Communism occurred, it was believed that this was the ultimate economic system. Therefore in order to achieve world peace, neoliberalism must spread across the globe. So sure of its superiority, British PM Margret Thatcher declared the ‘There Is No Alternative’ (Jenkins, 2007, 168).
This philosophy was put into practice by following the teachings of Thomas Freedman who advanced the idea of the Golden Straitjacket. Essentially, in order to survive a globalized world, a nation must don the neoliberal Golden Straightjacket.
This meant free markets, regardless of domestic issues, must be accepted as the only alternative left: One road. Different speeds. But one road (Friedman, 2000, 104). If there was any doubt of neoliberalism also wished to see the end of the state, International Banker George W Ball stated that he felt frustrated and unduly redistricted by the traditional nation-state system (Buchanan, 1998, 106).
I argue that such absolutism reveals a totalitarian mindset and the existence of an agreement between classical capitalism and Marxism.
The Failed Promises of Neoliberal Globalization
According to Naomi Klein’s The Shock Doctrine, when Free Trade is regimentally applied it becomes a form of ‘economic shock therapy’. An example of this ‘therapy’ came under the pretext of aiding a recovering post-Soviet Russia. When President Gorbachev approached the US for financial assistance, he was informed that he would receive no help unless he accepted the neoliberal program (2009).
Although Gorbachev was hesitant about accepting such an ultimatum, he was replace the much more compliant Boris Yeltsin, who enthusiastically championed the Chicago School and saw brutal capitalism inflicted upon his own people. The aftermath saw state industries cheaply sold off and by 1992 the average Russian consumed 40% less then in 1991. A third of Russians fell below the poverty line.
Furthermore, wages went unpaid for months. The reaction to this program was mass rioting and demonstrations, uncontrolled corruption along with booming organized crime (2009). I would argue that this outcome vindicated Marx’s critique of capitalism being self-destructive, as the legacy of Yeltsin economics saw the Russian Parliament dissolved and the will of the people wanting to maintain their safety nets dismissed once again (2009).
The example of Russia losing its governmental authority to a transnational ideology is not an exclusive affair. As Susan Strange explains, the disillusion with politicians is worldwide is reaching the same extant that brought down the Soviet Union.
Populist contempt is now directed at capitalistic countries and institutions along with the decline of state power. Now that States are no longer master of the markets, due to neoliberalism, the markets are now the master of states (Strange, 1996, 4).
I argue that this vindicates my thesis that neoliberalism is just as destructive to nation states as Marxism had previously had been. Strange goes on to state that established liberal-capitalistic governments are now suffering a rapid loss of real authority as cultural autonomy is being rediscovered (Strange, 1996, 6).
The Great Epoch and the Return of National Protectionism
In order to understand why Marxism and its neoliberal counterpart hold such contempt for protectionism and why the push for geopolitical reform resonates with economic nationalism is to understand the strength and benefits of national sovereignty.
In order to keep geopolitical aggression at bay, a strong economic structure is essential. It was US Founding Father and first Secretary of the Treasury Alexander Hamilton who first to truly understand the relationship between economics and national sovereignty, and formulated the ‘National System of Economics’.
It argued for protection, regulated trade, tariffs, subsidies and government intervention. By putting ‘America First’ the US saw its young industries protected from aggressive foreign powers and allowed time to strengthen, it created revenue generation and drove investment into infrastructure and internal improvements (Ferling, 2013, 214-215).
By adopting Hamiltonian economics, the United States the prevailed as a global economic powerhouse from its Founding Fathers until the late 20th Century (Buchanan, 1998, 106). However, as previously stated, it was the battle with communism that saw US repudiate the very same brand of capitalism that ushered in its greatness. But with the creditability of neoliberal capital recently being declared bankrupt for reasons akin to the failed socialistic experiment of the Soviet Union, it appears that the current geopolitical world is now seeking a more reasonable economic system and thus gravitating towards a return to national sovereignty and protectionist policies.
The reconsideration of neoliberalism began during the aftermath of the Cold War. It was former United States Assistant Secretary of the Treasury and co-founder of the neoliberal theory of Supply-side economics; Dr Paul Craig Roberts is now a vocal critic of the dangers of stripping away the economic legacy of Hamilton. According to Roberts, Free Trade and globalization are guises of undeclared class warfare on the American middle class (Roberts, 2013, 99).
This allows US corporations to dump their workers, avoid Social Security taxes, healthcare and pension provisions and offshore their factories to locations of cheap labour (Roberts, 2013, 99). It will essentially act as an instrument to deindustrialize America and recreate the horror of post-communistic Russia.
Despite the best efforts by the American protectionists, their warnings were ignored. Although Putin’s Russia is an example of a protectionist nation being about to regain control of itself, being the US is still the world’s hyperpower, I would argue that the implications of American returning to protectionism is even greater. This possibility has only recently revealed itself within the 2016 President Campaign of Donald Trump.
By declaring his credo as ‘Americanism, not Globalism’, Trump exposed his sympathies for the Hamiltonian Economics. In doing so, he has mainstreamed both, patriotic capital and the critique of Roberts, by promoting infrastructure building and attacking the apparent unfair international trade deals (Trump 2016).
He declared that no longer would the US surrender it economic power and will seek renegotiating international agreements, such as the North American Free Trade Agreement and the Trade Pacific Partnership. If talks fail, he would counter by withdrawing and imposing tariffs upon nations to protect domestic industries and keep jobs within America (Trump 2016).
I would argue that regardless if Trump wins the presidency or not, given the historical levels of support he has received by the American people, I would state that economic nationalism has returned and is being seen as the way to reform and thus pacify international system. By readopting the foundations of American economics, Trump could theoretically ensure the rejection of both brands of globalism and return America into being the Shining City of a Hill and economically lead the world through inspiration and example.
In conclusion, not only is the global economic system capable of reform, but the type of reform that is gaining traction is not only a rediscovery of protectionist policies but ultimately a renewed faith of the system of nation states.
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