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?
In essence there is nothing new about capitalism: it is a system of exploitation of one class by another. Like all previous forms of exploitation, its core is nothing other than the ability to dispose of and direct the work of a working class that it exploits. The novelty lies in how it is done: no Roman patrician comes to enslave us to go work in his fields, nor does a feudal lord come to take away by force part of what we produced on our own in our fields, but rather the impossibility of producing on our own forces us to sell “freely” hours of our labor power to organizations, called businesses, which own capital. Exploitation is mainly carried out by economic means, not by armed compulsion or violent and overt imposition.
But this is only part of it. Capitalism is called so because the whole system, with all its automatisms, organizes and arranges the use of resources and social production around capital. Capital is nothing more than a right that can be accumulated in order to use labor and resources. The system rewards the most productive uses, that is, those that were more efficient in exploiting labor, with an increased amount of capital.
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.
It is this principle of accumulation around the most profitable applications that leads to the capitalist economy living in and for growth. But beware: in reality its driving force and goal is not to physically produce more goods, although that may be a by-product. What growth means is something else: the increase in total unpaid work produced by the system, the famous surplus value. That is the “value” that is expected to grow each year and is measured as “GDP growth”. When we are told that a country’s economy grew by 3%, we are actually being told that the result in terms of “value”, that is, unpaid work, was 3% higher than the previous year. That is why now a simple halt in activity, in which neither facilities nor infrastructure have been destroyed but workers could not be put to work, translates into a sharp fall not only in GDP, but also in the value and capitalization of companies.
Protection against “strategic” foreign purchases
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.
What are these “strategic purchases”? Capitalism is in a historical phase of decadence leading to the ultimate consequences of the trends that define imperialism. Imperialism is nothing but the result in the organization and practices at all levels of the system of the chronic absence of profitable markets for the growing mass of products and the consequent lack of sufficient “productive” applications for the new capital created at each cycle. When an external national capital buys a local company that is “struggling”, it deprives a local national capital that already suffers from not having an easy place to place itself of a possible investment outlet. If the purchase is accompanied by new foreign investments that increase the return on invested capital – thus raising the national average – and sales growth in other markets, it may well pay off. But if it’s just a matter of “occupying a strategic position,” it will not pay off. That is the reason behind the protections and obstacles to purchases of banks, electricity, etc., businesses which are fundamental to every national capital and in which it is not at all clear that the arrival of new owners will increase real profitability, benefiting the whole of national capital.
Renationalization of production chains
The renationalization of production chains is part of the same logic. Historically, the Brexiter movement and Trumpism politically embody the passage to the forefront of sectors of the industrial bourgeoisie and the petty bourgeoisie as a response to the permanent tendency to crisis. It was recently explained quite clearly Robert E. Lighthizer, US trade representative and it is worth reproducing a bit of a long quote:
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.
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.
The expansion of the playing board of capital in a context of falling transport costs stretches the production chains to the maximum and distributes them throughout the world. The result is apparently contradictory: new investments in countries like China, Vietnam, Brazil or Mexico are bringing millions of people out of extreme poverty, many of them former peasants who are experiencing an accelerated process of migration and proletarianization. At the same time precariousness and pauperization are starting a long drawn-out race in the central countries. The capitals oriented to local production take refuge in the construction and services sectors, unable to compete with the “globalized” companies that have “delocalized production”. In doing so, internal markets are weakened by the increasing atomization and relative impoverishment of workers. The bursting of the real estate bubbles since 2008 convinces them that globalization has been “suicidal”. As if this weren’t enough, the crisis, which is also global, is exacerbating imperialist tensions between different national capitals, producing all the more insecurity for investment the more extensive and the more different regions and countries are involved in the production chains that receive capital. And to top it off: China is becoming a global competitor, not only in the consumer market with its own brands, but also competing in investments and credits, that is, competing for the ownership of new capital applications even in places where the capital of the central countries was reluctant to invest like Africa.
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
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?
In the late 19th and early 20th centuries, when rising capitalism was already running out and imperialism was beginning to shape global capitalism, the state began to expand as an economic agent. The rise of militarism led to a state-owned industrial sector. The absorption of big industry by the banks, forming what we call today finance capital and of the state bureaucracy with the private monopolies and oligopolies, prepared a new form of ultra-concentrated organization of national capital that would develop brutally with the world wars: state capitalism. The revolutionaries who studied those first steps correctly understood that it was a step further, one that had initiated the birth of the corporations half a century earlier: the “socialization of the figure of the capitalist”. The individual capitalist, the old “captain of industry”, dissolved as capitalism matured, in a function, in a collective social form that at the end of the journey, merged in one way or another with the state. So it was welcomed not because it was progressive in itself, but on the contrary: it showed that the system was entering its phase of historical decadence, the stage where the change of mode of production became a historical necessity.
On the other hand, the devastation suffered by the territories in which the Russian Revolution triumphed, suffocatingly awaiting the triumph of the socialist revolution in Germany and other central countries, led the Russian communists from 1920 onwards to try to revive production by means of a state capitalism of its own and restore relations with a gigantic peasant petty bourgeoisie always on the verge of reopening the civil war. There is no point in discussing it now, but the counterrevolution prospered and was affirmed precisely as its outgrowth, grouped around the managing bureaucracy identified with that national capital that was recomposed from the state under the theoretical supervision of the soviets, that is, of the workers self-organized as a class and imposing its interests. The revolutionaries of the time, beginning with Lenin and Trotsky, made the mistake of attributing to the counter-revolutionary bureaucracy the goal of becoming a classical bourgeoisie of individual owners, and confused the defense of the institutions of state capitalism, such as state property, with the defense of the class dictatorship. This was a mistake and a serious one, because on a world level the most rancid bourgeoisies had already entered that phase, state capitalism with a greater or lesser degree of state ownership was already their way of life and organization. Liberal capitalism would never come back. It is also true that Trotsky at the end of his life specifically stated that this was not a position of principle and should be evaluated in the course of the second imperialist war. And that both his widow Natalia Sedova and the fractions of the International that remained faithful to revolutionary defeatism in the course of those years, made a radical criticism and affirmed the imperialist and state capitalist character of Stalinist Russia. But the right wing of the Fourth International, what today is known as “Trotskyism”, simplified to the point of parody what had been an error of assessment, taking for granted the great lie of Stalinism and equating state capitalism with socialism. As a result, since the 1950s, the reactionary remains of the Second, Third and Fourth Internationals have celebrated every measure of nationalization or concentration of capital around the state as “socialism”.
Is there anything “progressive” about all this?
From those counter-revolutionary leftovers of the 20th century come the lies of the 21st century. What we are seeing, in the first place, is the re-nationalization of production that had been entrusted to cheaper foreign suppliers, basically medical materials, with the state as guarantor. That is, the state pays more per mask in exchange for having the necessary supply in all circumstances. It is not something that different from what it does with the Post Office to ensure postal delivery – and some other service – where it is not profitable for the capitals involved in the market to organize a whole distribution structure. It does the same with access to electricity using the power grid and will surely do the same with the Internet soon. These functions are derived from the state’s role as guarantor of the market and guarantor of the conditions to maximize the results of accumulation.
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”.
What are they really saying? That in order to maintain profitability and the capacity to accumulate and attract capital – which is what this is all about – the state’s intervention needs to be raised higher and higher. The banking sector, in a long crisis of profitability, has turned basic financial services into “increasingly public ones”; aluminum production, unable to be profitable due to rising electricity prices, has also become the “essential instrument”… in order to maintain the profitability of fewer and fewer applications of capital, it is necessary for the state to take over the capitalization of more and more productive sectors and fund them… through taxes paid mostly by the workers, which can be raised to necessity with less resistance than direct salary cuts. State Capitalism explained in a raw way. Nothing that points to a change in the driving forces and goals of production towards the satisfaction of human needs, on the contrary, the production of new sectors is nationalized or state-sponsored in order to maintain the race towards misery and the war economy required by the agonizing continuous re-valorization of capital. And they say so themselves.
Whoever is the owner of the business should not matter to us. We are the exploited ones and all those myths according to which we would be less exploited by state companies than by companies listed on the stock exchange, have turned out to be false to the point of hunger. We have nothing to gain from new, ultra-concentrated versions of state capitalism, nor from the supposedly more “liberal” ones. Today, the only progressive thing is to get rid of this anti-social and anti-historical crust of capitalist relations. And it only provides alternatives for humanity as a whole and in each concrete problem, that which confronts the destructive and impoverishing logic of those relationships. Starting from the most concrete of problems: to satisfy our basic needs which are being denied ever more virulently.