Is the comeback of national production and state ownership progressive?
It seemed inconceivable a few years ago, but in Spain, the eventual nationalization of Alcoa and Nissan is part of the "mainstream" political debate. It's not an isolated event. Since the beginning of the confinement, it is a part of the policies that Germany and France promote from Brussels. Trade unions openly call public banking and state-owned national production in "strategic" sectors. They do not only refer to the supply of medical materials. Britain is considering nationalizing British Airways and Germany is doing the same with Lufthansa. The German government is even considering capitalizing large automotive brands from the state. This is not just happening in Europe, Argentina and Turkey are doing the same thing- A new era of nationalizations is beginning in Europe and the world. And as always, these nationalizations are sold to us as some kind of more or less finished "socialism" or at least as a way of defending "good jobs" against capitalism. What does the renationalization and state control of production mean for the workers and why is capital now pleading for them?
The new wave of economic nationalism involves four vectors which, although they were already present and emerging in recent years, have gained strength with the pandemic, seemingly contradicting the "neo-liberal" hegemonic discourses of the last thirty years: limitations on the purchase of companies by foreign capital, renationalization of productive chains, nationalizations and the promotion of state production. Let's see what they are a response to, first of all.
First of all: what is capitalism about?
These uses, these capital applications are the individual businesses. If they lose the ability to "create more value", i.e. to squeeze more unpaid labor out of every hour of work spent, their share within a national capital will fall. They'll be de-capitalized. If, on the other hand, they manage to "improve their performance" their relative weight will increase and they will automatically be "entitled" to a proportionally higher percentage of the total earnings, i.e. of the new exploitation rights produced during each cycle. From the point of view of capital, the "business fabric" is a system of communicating vessels through which capital moves at full speed by means of financial "markets". Capital markets balance the results of money invested according to their share of total national capital, favoring those applications that exploit workers most efficiently and penalizing those that exploit workers least efficiently. Profits and losses are the signals by which capital is guided to move continuously from one to another, seeking where it can be used to increase the efficiency of its use, i.e. its "profitability" and thus the total return on national capital.
Protection against "strategic" foreign purchases
Piraeus Port. 51% of shares are held by Chinese capital.
Since financial markets directly connect large national capitals and their main applications, the de-capitalization of a country's companies becomes the relative de-capitalization of national capital compared to other competitors... By being "worth" relatively less, a country's companies quickly become "bargains" for the winning foreign capitals that will be tempted to take advantage of the situation and buy them out.
In general, national capitals welcome these purchases. If foreign capital comes with better technologies and forms of organization, it will raise the average return on national capital and the percentage of profits that it will receive in the distribution of global capital gains through the large financial markets. The ever-present example is the massive industrialization in China since the 1990s. The point is that if this is done through purchases it will not always be accompanied by real improvements in operating efficiency. It is quite possible that these are "strategic" purchases, against which, as we have seen these days, all capitals, starting with those of the EU, want to protect themselves.
Renationalization of production chains
In recent years, businesses have been rethinking the way that overextended, overseas supply lines expose them to unacceptable risks, a reassessment that got a boost from President Trump’s reorientation of U.S. trade policy. A lemming-like desire for “efficiency” had caused many of them to move manufacturing over the past two decades to China, Vietnam and Indonesia, among other places.
They did so to save on labor costs or to avoid environmental standards, but that wasn’t the whole story. Offshoring was a trend that morphed into a craze. Egged on by Wall Street analysts and management consultants, or simply swept up by the herd mentality of their peers, businesses came to see offshoring as something they were expected to do to serve the interests of shareholders. Many failed to weigh independently the long-term costs or meaningfully consider alternatives.
For business, this strategy paid off in the short term. Cheap labor meant higher profits. But for America, the effects were traumatic. The United States lost five million manufacturing jobs. That, in turn, devastated towns and contributed to the breakdown of families, an opioid epidemic and despair.
Trade policy actions in the 1990s and 2000s magnified this disaster by making offshoring easier. The decision in 2001 to establish permanent normal trading relations with China is the most regrettable example. Until then, the president had to make a determination every year whether to renew so-called most-favored-nation status, which allowed China to export to the United States at mostly single-digit tariffs, and Congress could challenge that determination.
China’s most-favored-nation status was always renewed, but the uncertainty effectively raised the risk-adjusted costs of investing there. After 2001, that uncertainty went away — along with at least two million American jobs.
Trade accords during this time, such as the North American Free Trade Agreement, zeroed out tariffs on imports from low-wage countries, worsening manufacturing job losses. These agreements made gestures toward “leveling the playing field” for workers by requiring our trading partners to take on token labor and environmental obligations. But these measures proved toothless and unenforceable.
A result was pure regulatory arbitrage: Companies could avoid U.S. labor and environment standards by manufacturing abroad while still enjoying unfettered, duty-free access to our market.
These trade agreements also undermined a key remaining competitive advantage for the United States — commitment to the rule of law and a functioning, independent legal system. The agreements allowed companies to litigate disputes with foreign governments over expropriations and other issues not through local courts, but through so-called investor-state dispute-settlement provisions. In doing so, the federal government effectively purchased political risk insurance for any American company that wanted to send jobs abroad.
Recently, however, we have seen a change both in business attitudes and government policy.
Many companies have realized that offshoring creates risks that often outweigh the incremental efficiencies. Long supply lines flow at the whim of local politics, labor unrest and corruption. In some countries, like China, there have been governmentwide efforts to steal intellectual property for the benefit of domestic companies that become the main competitors for the victims of the theft.
At the same time, the trend in trade policy was also shifting rapidly. Businesses have seen that President Trump did not support their blind pursuit of efficiency in the global economy — manifest in the policy of theological free trade unconstrained by competing societal imperatives. Instead, his focus was on jobs, particularly in manufacturing, because he recognized the importance of productive work not only to our G.D.P., but also to the health and happiness of our citizens. Business success and economic efficiency, of course, remained important considerations. But they were no longer the be-all and end-all of trade policy.
Wage share in Spanish GDP since 1978 (including profit shares disguised as wages) The labor share only grows when capital crashes and has not yet had time to attack wages, spending on labor power maintenance and working conditions even more.
Let us translate by adding a little historical context: American and European capital in the 70s and 80s is facing a redoubled tendency to crisis and a wave of strikes and struggles of global dimensions. Without new markets in which to sell production, the national markets of big capital are stagnant waters, each transfer to the workers ends up turning into inflation which in turn leads to another round of strikes to recover what has been lost. The development of free trade agreements and the free movement of capital solves -temporarily- both things: capital exploits cheaper labor outside by increasing its profitability and strikes practically disappear from Europe and the USA and are reduced to funeral processions of entire industrial sectors that negotiate through strikes early retirements and layoffs.
Before the pandemic the geopolitical uncertainty felt by companies was already skyrocketing.
The pandemic, as can be seen by following the weekly trend of imperialist tensions has only further accelerated the "decoupling" that was already underway and that had been driven by the US trade war against China and the renegotiation of the trade balances it has been trying to impose since Trump came to power.
Nationalizations and state industrial production
Demonstrators call for the re-nationalization of British railways.
In the two previous sections we have seen how national capitals tried at all costs to preserve applications of capital against their rivals and how the risks of the development of imperialist tensions between them had set in motion a tendency to "re-nationalize production" even before the trade war. It is all part of a trend towards a "war capitalism" characteristic of pre-war times. Why would the nationalization of some industries and the creation of others by the state, which occurs in the same context and with the same objectives, be "progressive" in any way?
The representation of the proletariat in stalinist imagery makes clear its subordinate place while idealizing its exploitation by the state.
Is there anything "progressive" about all this?
Alcoa workers, Spain, demanding a reduction in energy prices for the company that is laying them off.
Creating new productive sectors or nationalizing companies that are closing down is also part of the same thing, they are even openly presented as such in the argument made by UGT when it says that it wants a public bank "not only to make public aid and incentives available to its recipients but also as an essential instrument to promote the sustainability of the business fabric". What is even more clarifying, UGT points out that "the State has to be involved in the recomposition of public services and the financial system needs to become increasingly state-held". Which is very consistent with its defense of the nationalization of Alcoa when it points out that "aluminium has to be one of those basic instruments that a state should possess".