The Stakes Rise
Inter-Capitalist Warfare in the USA Ruling Class - Dumping Trump
by Hari Kumar
It is obvious that both the crisis of COVID-19 and the united American people’s resistance to racial oppression have exacerbated the underlying economic crisis of the ruling class. The significance of an escalating division within the ruling class of the USA is less appreciated. We review a few recent events on these inner-capitalist divisions.
1. The objective problem facing all USA capitalists regardless of sector
Current ruling class divisions reflects contradictions between big finance capitalists and new technology industries - and big oil, and old manufacturing. 1 This is not an absolute contradiction since capitalist interests inter-penetrate, and have done since Lenin examined it. Nonetheless, there are sectional contradictions.
Loosely spealing, the Democratic Party predominantly represents financial capital, while the Republican party predominantly represents oil and old manufacturing. But what is exacerbating divisions is that capital is finding it impossible to solve its problems. At core this reflects the falling rate of profit, and the increasing fragility of the environmental burden of unrestrained capitalism. The new problems post COVID and ‘Black Lives Matter’ make it worse for the ruling class.
The Federal Reserve Governor Lael Brainard recently warned:
“the non-financial business sector started the year with historically elevated levels of debt. Already this year, we have seen about $800 billion in downgrades of investment-grade debt and $55 billion in corporate defaults—a faster pace than in the initial months of the Global Financial Crisis.” 2
2. Trump’s ‘Strategy’
Trump was strongly supported by two main capitalist sectors, the big oil and extractive industries, and manufacturing. His vaunted 2019 tax-cuts were designed to assist them:
“From tax cuts to relaxed regulations to tariffs, each of President Trump’s economic initiatives is based on a promise: to set off a wave of investment and bring back jobs that the president says the United States has lost to foreign countries. “We have the greatest companies anywhere in the world,” Mr. Trump said, “They’re all coming back now. They’re coming back to the United States.” 3
Indeed there has been a big jump up in the so-called ‘Re-Shoring Index’ measuring US manufacturing at home versus overseas (Figure 1). Nonetheless, this has not been as dramatic as Republicans had hoped for. USA companies deserting China have generally opted to go to other Asian countries or Mexico, increasing labour exploitation and profits.
“The Reshoring Initiative data show fewer than 30,000 jobs that companies say they will relocate to the United States because of Mr. Trump’s tariffs on imported steel, aluminum, solar panels, washing machines and a variety of Chinese goods...
Mr. Trump’s trade policies, including tariffs, had pushed factory activity not to the United States but to low-cost Asian countries other than China, like Vietnam. …
Manufacturers of primary metals, which include steel and aluminum, have added fewer than 15,000 jobs since Mr. Trump took office, with more than half of those gains coming before he imposed tariffs on foreign-made metals last year.” 2
Other business analysts make the same point, for instance Forbes:
“U.S. companies are leaving China thanks to the trade war. They’ll leave even more thanks to the pandemic…
Global manufacturing consulting firm Kearney released its seventh annual Reshoring Index on Tuesday, showing what it called a “dramatic reversal” of a five-year trend as domestic U.S. manufacturing in 2019 commanded a significantly greater share versus 14 Asian exporters tracked in the study. Manufacturing imports from China were the hardest hit. Last year saw companies actively rethinking their supply chain, either convincing their Chinese partners to relocate to southeast Asia to avoid tariffs, or by opting out of sourcing from China altogether.” 4
Hence Trump’s trade war and trade war aggression have not helped the industrial worker in the USA. Some sectors of industry are also finding increased tariffs onerous.
Meanwhile Trump's other brief – to expand the profits of the oil industry is not doing too well either. It is true that Trump has succeeded in stripping out the environmental barriers to even cursory ecological dangers. But a dramatic over-supply of oil internationally, and the COVID depression of world economies, have put his pet industry on the edge:
“Oil and gas companies in the United States are hurtling toward bankruptcy at a pace not seen in years, driven under by a global price war and a pandemic that has slashed demand.….
Almost 250 oil and gas companies could file for bankruptcy protection by the end of next year, more than the previous five years combined, according to Rystad Energy, an analytics company. Rystad analysts now expect oil demand will begin falling permanently by decade’s end as renewable energy costs decline, energy efficiency improves, and efforts to fight climate change diminish an industry that has spent the past decade drilling thousands of wells, transforming the United States into the biggest oil producer in the world.” 5
3. Escalating the degree of corruption – whitewashing the Russia probe
Of course capitalist governments govern for their side. Corruption is endemic to capitalism. However, recently the scale of what the Trump-ites are doing was made dramatically more visible. The head of law enforcement in the USA is the Attorney General - William Barr, who has faithfully pushed Trump‘s agendas. Overt signs of interference with ‘due process of law’ came in June, as Barr colluded with Michael Flynn’s lawyer. Flynn – Trump’s former National Security Adviser - had pled guilty to charges of lying to the FBI. With Barr’s help, and a Trump appointed judge presiding, charges were stopped. 6
Most recently Barr blatantly lied as he tried to push out the federal prosecutor of the Southern District of New York – Geoffrey Berman – falsely claiming Berman had resigned. Why did Barr want Berman out? To replace an adversary of Trump with a stooge - Jay Clayton. Who is currently Chairman of the Securities and Exchange Commission, and has never been a prosecutor. Clayton was a legal counsel for Goldman Sachs – up to their eyeballs in the Malaysian sovereign wealth fund scandal “1MDB”.
In this scandal:
“Goldman raised over $6 billion in bond offerings for 1MDB but, according to the Justice Department, $4.5 billion of that was “misappropriated” and used “to fund the co-conspirators’ lavish lifestyles, including purchases of artwork and jewelry, the acquisition of luxury real estate and luxury yachts, the payment of gambling expenses, and the hiring of musicians and celebrities to attend parties.” Goldman made more than $600 million in fees from the bond offerings, according to the Justice Department.” 7
Just before Berman was pushed out, Goldman Sachs was pleading with the Justice department for softer deals. Other big names are implicated. J.P. Morgan, “a bank that previously pleaded guilty to three criminal felony counts, is named 61 times in the 1MDB complaint for its role in wiring the looted funds.” 8
As investigative reporters concluded:
“There’s an awful lot of folks in the Southern District of New York who would stand to benefit if it gets a Wall Street crony as its federal prosecutor.“ 9
Intent on white-washing - Senator Graham, Republican of South Carolina and the chairman of the Judiciary Committee, instructed the former special counsel Robert S. Mueller III to testify: “We need to look long and hard at how the Mueller investigation got off the rails,” Mr. Graham said.” 10
Just days before - Trump commuted the sentence of his friend - Mr. Stone, “just before he was set to serve a 40-month sentence in federal prison” for “obstructing a congressional investigation into Mr. Trump’s 2016 campaign and ties to Russia”. 7
4. The anti-Trump caravan
So Trump is manifestly failing to control COVID-19 – this is so widely understood that we do not need to dwell on it any further. Trump is failing to deliver to the section of the capitalist class on oil and manufacturing base. Trump is endangering international stability. On top of this he cannot rein in his overt racism – just as the ‘Black Lives Matter’ has finally ignited both Black and White workers and middle classes. 11
So… “what use” is he to the full gamut of the ruling class – both industrial and financial? The ruling class as a whole needs to somehow co-opt the rebellions of BLM. It needs somehow to retain its world supremacy, against a rampant China. Hence we see rats deserting a sinking ship.
An article in the “Atlantic” by Foer puts it clearly:
“Twitter’s decision to label Trump’s posts as misleading was a hinge moment. For years, the company had provided the president with a platform for propaganda and a mechanism for cowing his enemies, a fact that long irked both critics outside Twitter and employees within…
Once Twitter applied its rules to Trump—and received accolades for its decision—it inadvertently set a precedent... A cycle of noncooperation was set in motion. Local governments were the next layer of the elite to buck Trump’s commands. After the president insisted that governors “dominate” the streets on his behalf, they roundly refused to escalate their response. Indeed, New York and Virginia rebuffed a federal request to send National Guard troops to Washington, D.C. Even the suburb of Arlington, Virginia, pulled police officers who had been loaned to control the crowd in Lafayette Square.” 12
But the situation remains fraught for the USA ruling class as a whole, and is, as Michael Roberts explains, a long term problem. This is easily seen in Figure 2, some projections of GDP by the US Congress Budget Office:
“The US Congressional Budget Office has drastically revised down its real GDP forecast for the US. It now expects US nominal GDP to fall 14.2% in the first half of 2020, from the trend it forecast in January before the COVID-19 pandemic broke. “
We believe that a significant section of the ruling class has decided that Trump does not deliver enough for their needs at this time. They are about to dump Trump. But to whom will they turn? Of course the Democratic Party. So what should the workers and progressive peoples - of all colours - in the USA do? We hope to address this in our next article.
Hair Kumar is a member of theleftberlin's editorial group. We will be publishing part two of his article soon.
1 Hari Kumar What is Behind Trump - Is There Method Behind His Madness? Finance Capital and Industrial Capital - An Evolutionary History September 28, 2018; Marxism-Leninism Currents Today
2 Pam and Russ Martens Warnings Grow, “We are in a massive Economic Downturn Wall Street on Parade; July 15th 2020
3 Jim Tankersley Trump’s Push to Bring Back Jobs to U.S. Shows Limited Results Aug 19, 2019
4 Kenneth Rapoza New Data Shows U.S. Companies Are Definitely Leaving China Apr 7, 2020; Forbes Business
5 Hiroko Tabuchi Fracking Firms Fail, Rewarding Executives and Raising Climate Fears New York Times 12 July 2020
6 Mark Mazetti, Charlie Savage, Adam Goldman How Michael Flynn’s Defense Team Found Powerful Allies June 28, 2020, New York Times
7 Pam Martens and Russ Martens U.S. Attorney Geoffrey Berman’s Ouster: The Untold Story June 23, 2020