Donald Trump’s victory in the US elections has already led to and will lead to a lot of, perhaps valid, explanations and counterfactuals.
What if the Democrats had someone other than Kamala Harris or Joe Biden as the candidate? What if the Biden administration had chosen fiscal prudence-induced economic pain during the pandemic instead of what many economists (not all though) argue is a stimulus fuelled inflation which cost them the elections? What if the Biden-Harris administration had done better in managing the fall-out of the ongoing conflict in West Asia? These are questions which perhaps will keep election and data wonks engaged for a long time.
This column does not have a comparative advantage in framing or answering these questions. What it can and does want to ask is the following. Forget a win or loss. How does one explain the fact that Donald Trump has increased his popular support, as seen in national vote share, in each of the three elections he has contested?
Clearly, he has a message which has growing; even if incrementally, traction among the voters in the US. What exactly is that message?
Is it just the opposite of political chivalry which has earned him bipartisan loathing within the old establishment but helped him portray himself as an anti-establishment crusader? Is it a set of incoherent, perhaps even counter-productive, but seemingly potent economic rhetoric which has made him an attractive political option for the American underclass? Or is it something much more profound yet simple?
The answer, in this author’s wisdom, is to be found in Trump’s promise of putting “America First”. Trump’s USP vis-à-vis the American voter, more than anything else, is that he will make their country renege on the responsibility, and therefore the costs, of being the leader of global capitalism; what Marxists also like to call the empire. Let us look at a brief summary of the story so far.
US leadership of global capitalism is, historically speaking, a much more recent phenomenon than the advent of modern capitalism. It only became a claimant for the position after the First World War and assumed it after the Second World War, by which time, the US’s economic and military might were far ahead of the erstwhile European powers, especially Britain.
The rise of American capitalism (or empire) followed a different route compared to the vintage imperial powers. The latter’s capitalist evolution, was critically dependent, at least for a significant period, on their colonies in, what is today the global south. US’s economic rise, on the other hand, is primarily a story of exploiting a large domestic market after getting rid of colonial dominance and then using export markets, both for capital and commodities, in Europe.
The US is the first geography outside mainland Europe to achieve full development of productive forces of capitalism. While the proliferation of capitalism and its productive forces gave the US its initial advantage, the proverbial Rubicon of capitalism crossed many rivers in the later period.
First, it was post-war Japan which, ironically under the US’s guidance, tasted success and eventually became a threat to the US’s dominance. Then there were the South-East Asian tigers which imbibed capitalist dynamism. Both these success stories and their threat perception to the US were if one were to crudely describe it, mitigated by the US’s dominance in the financial and money markets, which forced these countries to embrace deflation after a financial crisis triggered in either currency or asset markets. And then, came China, which is a very different story.
A comparison of global GDP shares from World Bank data is useful to illustrate this point. The US’s share in global GDP (in current dollars) was about 40% in 1960. It fell to 25% by 1980 and had settled at this level by the mid-1990s. It is almost the same today as well. Japan’s share in global GDP, between 1960 and 1995 increased almost continuously from 3.5% to almost 18% before it started falling monotonically to reach just about 4% today. Japan’s economic decline almost coincides with China’s rise. China’s global GDP share peaked in 2018 at almost the same level where Japan found its peak in the 1990s.
The difference between the Japanese and the Chinese situation is that the latter has had a much more interventionist regime in its financial markets which has made a financial market-driven taming of the Chinese dragon a far more difficult task at least until now. To be sure, there are enough signs that the Chinese state’s manipulation of its financial and asset markets has created systemic problems in the economy. However, to predict a Japan-like economic downfall of China would be premature if not outrightly delusional.
While the geo-economic game has undergone a paradigm shift between Japan’s economic rise to its downfall and China replacing it, the US economy has undergone a critical economic churn to the predicament of its economic underclass. In its transition from what can be described as the global factory to the global boardroom, the US has seen a sustained shift in income distribution against the working classes over the last five decades. Its political mitigation – the underclass still has decisive political power – was first managed by vilification of the so-called communist contamination of American animal spirits under the neoliberal revolution. What followed was a period of mediocre growth driven on asset market-based and financial sector-generated cocktail steroids until it all came down crumbling in the global financial crisis of 2008.
The American voter, when seen in hindsight, displayed a proverbial dead cat bounce version of prioritising progressive and multicultural bonhomie in electing Barak Obama for two terms before embracing a clearly reactionary and sectarian Donald Trump in 2016 and voting for him in greater numbers in 2020 and 2024.
While Trump’s social messaging has been diametrically opposite to Obama’s all-in-unity and prosperity rhetoric, his economic messaging has had a clear bipartisan appeal. Nothing else explains the resurrection of things such as industrial policy in the US to bring back manufacturing jobs. Where Trump has scored a point over Biden-Harris and the old political establishment at large is his assertion that tariffs or Chinese factories are not the only albatrosses around the US’s neck.
Trump’s additional critique, which is completely unpalatable to the old US establishment or deep state, is that the US abdicate and defunds its self-ordained responsibility of being the global policeman in ensuring the existing geopolitical order. If it means weakening NATO against Russia, reneging on climate crisis consensus or even raising a toast with some of the most despicable autocrats in the world, so be it. His justification for preaching this abdication is essentially economic. The empire, in his view, has become an unrewarding, at times punishing, proposition.
Trump, to be sure, is not the only first-world politician selling this idea. There are many in Europe, from Germany to Hungary, who are finding increasing political traction in advocating an abdicationist geopolitical stance – democracy and freedom (of Ukraine) be damned – in the name of minimising the economic pain of such endeavours. Of course, the US advocating such a line and a Hungary or some provincial leader in Germany doing so has drastically different geopolitical ramifications. So where does it leave the US, and more importantly, the world?
“The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum, a great variety of morbid symptoms appear”, Italian Marxist Antonio Gramsci wrote in his Prison Notebooks.
That the trailblazing rebel (or saboteur) against the American deep state which has built and maintained the global economic order since the 1950s has been funded by the super-rich and voted for by the underclass has indeed inflicted a morbidity of different sort on the American democracy. There is more than enough economic wisdom to tell us that Trump’s mumbo-jumbo of an economic plan cannot offer any meaningful bargain to the have-nots who have been voting for him in bigger numbers since 2016. This means that this is anything but a progressive change in America’s political economy.
The cardinal sin that Trump’s opponents made was turning upside down Gramsci’s dictum of “pessimism of the intellect, but optimism of the will”. They did very little in terms of praxis to protect the economic interests of the underclass over a long period of time but showed a lot of hubris in believing that the poor will continue to choose economic hardship because of some metaphysical commitment to US’s liberal and democratic values and also its geopolitical might. They can choose to occupy themselves with counterfactuals or begin a sincere process of realigning optimism and pessimism between their intellect and political praxis. Either way, the world is bound to be affected.
Roshan Kishore, HT’s Data and Political Economy Editor, writes a weekly column on the state of the country’s economy and its political fall out, and vice-versa
