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Friday 26 May 2017

Trump and Stalin

President Donald J Trump believes, with a measure of justification, that he has a mandate from the US Electoral College [though not by a majority of the popular vote] to pursue a very different economic policy from that adopted by successive Administrations since the Second World War. He is determined to use political power to 'return' jobs to the USA. Various commentators have pointed out that there is no possibility of firms investing in the coalmines, blast furnaces and smokestack industries whose extinction has caused the 'rustbelt' that disfigures areas of the central continental USA; so it is literally impossible to recreate the self-same pattern of employment and thus return the former skilled men to their former situation and lifestyle.

Trump's intention is to impel US-based firms, and to encourage foreign-based firms, to open up their new generation plant, laboratories and other facilities in the US rather than in emergent countries where wages and welfare standards are lower. This is an opportune time for such a policy to be rolled out. Labour in China is becoming much more costly, as living standards there increase with mounting prosperity; and while China has now ahead of most other emerging economies in this direction others are close behind. Thus the advantage in cost of labour that newly-emergent countries have offered over recent decades has diminished dramatically. By offering tax concessions to installations in the USA, and threatening tariffs on imports to the US, Trump's Administration will be able to bring jobs into the US: and several announcements to that effect have been made already. If the already-huge US public sector sticks more rigorously to a policy of 'buy American', and if massive infrastructure schemes are authorised also with a 'buy American' tag on the inputs, government spending will also help to make firms that invest in the USA more profitable.

This whole policy thrust runs contrary to the dogma that is taught in the universities by the Econocracy. They argue that the maximisation of production and trade right across the world, with the minimum of government interference, will produce an optimisation of wealth: which they take as equivalent to overall human welfare: this is the essential theory that underlies globalisation and the professors are aghast to find that there is now a huge tide of public opinion opposed to the idea and its effects. If firms are able to maximise their profits from global activity, investing in new plant on virgin land with cheap labour and moving on at will, leaving rustbelts and unemployment [and often industrial diseases] behind them, they can be hugely successful in terms of making profits and paying their owners and executives well. Such firms make great contributions to net global product and to recorded economic growth: but the social and environmental cost can be massive: and it often falls to local communities and their governments to address the damage.

Trump's emphasis on employment and infrastructure can well be successful, if he is able to retain the presidency. If he does not remain in post, he has already in his brief tenure set changes in motion that are likely to adopted [probably with adaptations] under the next president: who would also retain most of the Trump team. He has changed the global economy.

How is this comparable with Stalin? When he consolidated his power over the Soviet union in the nineteen twenties, following the disability and death of Lenin, his principal appeal was to the concept of building ''socialism in one country'. During and after the Russian revolution, Lenin believed [and relied on] Marx's prediction that the advanced industrial countries would be the first to go through a revolution and adopt communism. Through the First World War Lenin believed that the masses would rise up against the rulers who had led them into the disastrous carnage [and waste of material resources], so in 1917 he just thought it was a historical accident that primitive Russia was the first domino to fall: Germany, France, Britain and Italy would follow soon. After the war, though there were attempts at revolution, especially in the defeated countries, they did not fall to communism. Thus Lenin and his gang, soon to be led by Stalin, had to invent a completely new script for their sort of socialism. Its limitations were obvious from the start, and the human price that it extracted quickly became apparent; but it seemed to those who were inclined to want it to succeed that it was succeeding. 'Fellow travelers' emerged in most countries, and some remained pro-soviet until 1990.

Some people will want Trump to succeed because he cuts across the grain of economic dogma. He might have very considerable success: whatever the consensus of the Econocracy may say against him.

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