Muslim Press has conducted an interview with Professor Alan Nasser, author of United States of Emergency American Capitalism and Its Crises, to discuss the U.S. presidential election and the impact of Donald Trump’s presidency on the world.
Below, the full text of the interview has been presented:
Muslim Press: What’s your take on Donald Trump’s victory? How did he win against all odds?
Alan Nasser: That’s the most important question of all. Trump’s victory cannot be understood in isolation from major structural transformations that have been re-shaping the entire global capitalist system. The rise of crypto-fascist Parties and movements across Europe, the emergence of a fascist government in India, the Japanese government’s movement to the right, Brexit and the imposition of austerity economic policies across the capitalist national board are all part of a global phenomenon that includes the Trump victory.
What exactly is that global phenomenon? It consists in the rejection by political and economic elites of what’s called the “postwar social contract,” and the intense reaction of the beneficiaries of that contract, namely the working classes of these countries, to its withering away. The best way to understand the nature of the contract is to contrast it with the political-economic settlement in e.g. the U.S. prior to its establishment. The best example is the U.S. political economy of the 1920s. Its most relevant features were 1. the total absence of labor unions in manufacturing, the defining productive sector of that decade, and the almost complete absence of organized labor in the rest of the economy, and 2. the virtually non-existent role of government in offering socially funded support to those most vulnerable to the vicissitudes of the then-unregulated “free” market. There was no unemployment insurance, no food stamps, no Social Security, no Medicare, no Medicaid for the elderly, no government subsidies for the disabled, etc. Working people, the majority of the population, were entirely on their own. The result was as we’d expect: wages were stagnant during that decade, so that the spectacular productivity (output per unit of labor input) gains in manufacturing accrued not to labor but to capital. The result was that profits soared and 1928 saw the greatest inequality of the century in America. The vast majority of the population, 71%, was on, below or just above the poverty line and 50% were barely able to meet subsistence needs.
But wasn’t that decade, the “roaring twenties,” a time when Americans for the first time lived lavishly, with a majority enjoying for the first time the pleasures of automobiles, electric ranges, refrigerators, radios, phonographs, electric fans and a host of other “consumer durable goods”? How could they afford all that if most were very poor? They took on increasing debt which ultimately proved unsustainable in the face of stagnant incomes. So around 1926 consumer spending declined, overproduction became evident and sales and profit rates began a steady decline. The stage was set for the Great Depression. (I’ll say something a bit later about how and why we are seeing now a return, in more and more capitalist countries, to the dismal conditions of the 1920s.)
After the Depression working people demanded a postwar economic transformation that would preclude a return of the 1920s and its inevitable consequence, deep recession or outright depression. The transformation was in fact instituted in virtually all the capitalist countries, most effectively in Europe. The postwar anti-depression arrangement required a radical transformation of orthodox economic theory and policy, the rejection of an exclusively “free market” economy. The fundamental economic refiguration that came about was based on the economics of John Maynard Keynes. He argued, correctly, that the “free market” left to its own devices was a recipe for depression; the private sector of the economy was insufficient to keep workers out of poverty. The experience of the 1920s and 1930s illustrated his claim perfectly. Keynes’s most important insight was that the wages or spending power of the majority must be high enough to purchase the output of America’s vast productive power. After all, working households’ spending on consumption accounted for at least two thirds of total spending or Gross Domestic Product (GDP).
After the war, in America and elsewhere, a new social contract featured government support of strong unions, a fairly high rate of unionization, productivity growth shared by labor and capital, strict regulation of finance and a broad range of government social programs aimed at supporting the incomes, spending power and general economic security of working people. The advanced capitalist countries became what Americans call “welfare states,” and what Europeans call “social democracies.” It was what made these countries “middle class” societies, and it made possible the longest period of sustained prosperity, for white people, in the history of capitalism, 1949-1974. Government spending over and above the spending power provided by the private economic system was seen to be essential for creating and sustaining a middle class society. This period has been called the “Golden Age” of world capitalism. The living standards of the working majority had been elevated to a level hitherto unknown anywhere. This made possible the “American Dream” and required a strong government contribution to the spending power of working people.
In order to grasp the significance of the Trump victory we must understand that the political-economic underpinnings of the Golden Age, i.e. the commitment to strong government contributions to working people’s economic security, came to be repudiated by global political and economic elites in the mid-1970s. This precipitated what we may call the Age of Austerity, with continuously declining living standards for the non-wealthy majority, record wealth growth for the 1% and the rise of far-right movements, including of course the Trump phenomenon, throughout the capitalist world. Thus ended the American Dream and its counterpart in the rest of the economically advanced countries.
This elite rejection of social democracy and the welfare state consisted, among other things, of an attack on government social programs, an assault on the wages of workers and a withdrawal of government support of unions. In effect, what elites called for was a return to the political economy of the 1920s. As a result, debt replaced wages as the principal driver of household purchasing power; consumer debt grew much faster than wages. This led to sustained austerity, i.e. long-term and increasing economic insecurity. The popular reaction to politically imposed reduced living standards has made variants of Trumpism the new normal in one capitalist country after another in our time. Let me say something about why Keynesian policy was eventually repudiated by political and economic elites, and how this led to the rise of extreme right-wing, including fascist, movements and political Parties, including of course the Trump phenomenon.
If the social-democratic social contract was the global phenomenon, adopted by virtually all the developed capitalist countries after the war, that kept capitalism out of both depression and prolonged recession for almost a quarter century after the Second World War, why did elites launch a campaign in the mid-1970s to dismantle the welfare-state economic policies that had produced unprecedented prosperity for so many working people? The answer lies in the fact that the Golden Age’s strengthening of the economic and political power of the working population brought about a historically unparalleled redistribution of national income from the very wealthy to “ordinary” citizens. The Golden Age was the only period in American history when national income was distributed downward, in increasing percentages from decade to decade, from elites at the very top to the middle and lower classes. This was the result of the new power of labor unions and an unparalleled series of labor actions -strikes, sitdowns and walkouts- during this period when labor felt newly empowered and emboldened in the first relatively labor-friendly period in the nation’s history. It comes as no surprise, then, that the social contract was repudiated by elites in the mid-1970s, ushering in the Age of Austerity. What followed, predictably, was a sharp divergence, as in the 1920s, between wages and productivity, such that productivity continued to climb after 1974 (albeit a bit more slowly than during the Golden Age) even as the median wage began a secular decline that continues to this day. It is remarkable that wages have been declining, not merely stagnating, for more than 40 years. That is what initiated the much-discussed decline of the middle class and the gradual disappearance of the American Dream for more and more workers. It is therefore unsurprising that, after 32 years of austerity, the U.S. saw in 2007 its second year of record inequality after 1928, the twentieth century’s year of greatest inequality. It is no coincidence that both 1928 and 2007 were followed by historic financial crises.
MP: What’s the significance of his victory in our time?
Alan Nasser: We should keep in mind that the elite consensus to withdraw the Keynesian social safety net was an international capitalist phenomenon. This call for a return to pre-Keynesian economics is called neoliberalism, referring to the classical liberalism of Adam Smith and John Locke, the economics of “free markets” with no redistribution of income by government. Hillary Clinton was a card-carrying neoliberal. What have Americans experienced under this creeping return to the 1920s? They have experienced the deregulation of business, privatizations of formerly publicly owned assets, free trade and its accompanying plant closures, outsourcing, offshoring and job loss, the loss of pensions, an unending series of unpopular wars, mostly against Muslim countries, and the gradual shredding of government programs that have functioned as a safety net for workers vulnerable to the inevitable vagaries of the private market. One of Trump’s major constituencies, white men without a college degree, saw their median incomes fall by more than 20% between 1975 and 2014. Between 2007 and 2014 their incomes fell 14% under Obama, who had promised to restore their standard of living.
The result of all this has left working people worse off than they have been since the Great Depression. Most Americans started 2016 only one paycheck away from the street. 67% of Americans don’t have enough savings to cover an emergency such as a $1,000 emergency room visit or a $500 car repair. In such cases they would have either to borrow from friends or relatives, take on more credit card debt or reduce spending elsewhere. Much of this neoliberalism-induced misery was concentrated in large industrial states where millions of workers were devastated by plant closures and the destruction of decent-paying jobs (Michigan, Pennsylvania, Wisconsin, Ohio and Iowa – Hillary Clinton never even visited Michigan or Wisconsin during the campaign, and Pennsylvania and Wisconsin cost her the White House.) These states had gone for Democratic candidates in 2008. In the 2012 election they remained Democratic, hoping that Obama would change course and support legislation that would reverse the worst trends begun under the neoliberal Democrat Bill Clinton. But things got worse under Obama and these voters finally lost trust in both the Republicans and the Democrats. The Democrats were supposed to be “the Party of working people” but the Party was no less committed to neoliberal austerity as were the traditionally pro-business Republicans.
Hillary Clinton and Donald Trump communicated very different messages to the American people in connection with these critical issues. Clinton promised to continue the policies of Obama – more of the same. Trump argued that both Parties represented business as usual and had proven that they had nothing to offer that would “Make America Great Again,” i.e., nothing that would improve the deteriorating condition of the working class. And about that he was right. Of course Trump will surely worsen the condition of most Americans, but for many he was the only alternative to the two-Party duopoly. He represents the rebellion of the American people against the political elites of both Parties. Americans’ trust in the federal government is at an all-time low, having fallen from 77% in 1964 to 20% today. The Democrats are in an especially bad position: more voters switched from Clinton/Obama to Trump than had switched from the Democratic Party to Reagan in 1980.
Active voters on both the Left (Sanders) and the Right (Trump) hate and/or have lost faith in the political system. This could be more momentous than it seems at first blush. For the first time in more than a century, and thanks to Bernie Sanders, the possibility and desirability of ‘socialism’ is a respectable subject of discussion in America. Will Americans’ loss of faith in the political system lead to a loss of faith in the economic system as well? This is the biggest of the Big Questions.
We need to see the victory of Donald Trump as part of a global resistance by ordinary people to the neoliberal policies and false promises of established political institutions. As Vincent Bevins of the Los Angeles Times put it: “Both Brexit and Trumpism are the very, very wrong answers to legitimate questions that urban elites have refused to answer for 30 years… Since the 1980s, the elites in rich countries have overplayed their hand, taking all the gains for themselves and just covering their ears when anyone else talks, and now they are watching in horror as voters revolt.” [For the record, I do not believe that Brexit was “very, very wrong.” The euro and the institutions associated with it have functioned to impose austerity upon many millions of working people. I suspect that we will see in the near future more countries (Italy next) exiting the euro regime.] Greece and is only the most extreme example of what the neoliberal dismantling of the social safety net and the upward distribution of income, with its concomitant growing inequality, has visited upon masses of working people across Europe. Popular revolt is reflected not only in Brexit but also in the rise to power in Britain of Jeremy Corbyn on the Left, and in the victory of Trump, on the Right. In Britain, the gap between the democratic aspirations of the people and the establishment that is supposed to represent them is most vivid: Corbyn has brought about the biggest increase in membership in the history of the Labor Party, even as the Labor Party’s leadership denounces him. These developments together re-teach a lesson that was taught most clearly during the global Great Depression: when capitalism exhibits slow growth, economic crisis and the widespread immiseration of its working classes, the result is the emergence of polar opposites, fascist and socialist movements.
The world’s choice may in the end prove to be: fascism or socialism? This could be the greatest significance Trump’s election has for our time.
MP: How do you evaluate Trump’s cabinet choices?
Alan Nasser: When we look at the cabinet choices Trump has made, and those he is considering, the prospects for America and for the world are not good. Trump himself is arrogant, impulsive, extraordinarily ignorant and a full-size bigot. We can expect his cabinet members and advisors to be in his image. His National Security Advisor is Michael Flynn, who does not distinguish Muslim terrorists from Muslims in general and who therefore has looked favorably on banning Muslims from entering the United States as an effective counterterrorism measure. He Tweets frequently, and some of his messages stink of dangerous bigotry. One Tweet: “Fear of Muslims is RATIONAL: please forward this to others: the truth fears no questions…” Another Tweet: “Not anymore Jews. Not anymore.” Muslims, of course, will have much more to fear from this man than will Jews.
Jeffrey Sessions, Trump’s Attorney General, is no less odious. He was one of the most conservative members of the Senate and has supported a ban on gay marriage, severe immigration policies targeting Muslims and other minorities -Muslims are by no means minorities globally, but in the U.S. they of course are- and harsh judicial prosecution of minorities. He has prosecuted civil rights activists for trying to register black voters. As Attorney General he could make racism, homophobia and Islamophobia virtually national policy. Legal scholars fear that he will erase progress that has been made in civil rights, and will likely swell the prison population by initiating draconian sentencing rules. Remember that the U.S. has the largest prison population in the world, both in absolute numbers and as a percentage of the population. It is likely to get larger still. And Sessions is likely to attempt to reduce police accountability, opening the door to even more police violence against black people and increased violent harassment of Muslims.
Trump selected Stephen K. Bannon as his senior counselor and chief West Wing strategist. Bannon had been head of Breitbart News, a far-right website that has characterized Islam as a “hating” religion. The website has also been contemptuous of Jews and women.
Under consideration for Secretary of State is John Bolton, whose March 26, 2015 op-ed in the New York Times was titled “To Stop Iran’s Bomb, Bomb Iran.” The title speaks for itself.
Everything about Trump and his advisors portends a crypto-fascist regime featuring overt racism, gynophobia, rampant militarism, domestic authoritarianism and repression, and fanatical nationalism. Minorities, especially Hispanics, blacks and Muslims will have much to fear. A silver lining on this very dark cloud is that a large number of Americans are disgusted and terrified of what may come and do not share the coming administration’s hatred of what I suggest are endangered minorities. Many Americans are prepared to defend threatened minorities with sanctuary and what could well be massive street demonstrations. The coming administration’s atrocities will be met with resistance. It is too early to say much more than that.
MP: Many political commentators think Donald Trump’s coming decisions would be very unpredictable. What could that unpredictability mean for the world in general and the Middle East in particular?
Alan Nasser: The policy specifics of Trump’s administration are indeed unpredictable. But in general, most observers know that Trump will encourage the vices I mentioned above: persecution of minorities (except of course the wealthy…), violent reaction to domestic dissent, an assault on democratic procedures and an intense ultra-nationalist insistence on America’s right to organize the world as it sees fit. Under recent more “liberal” administrations, America has developed the infrastructure of a police state. The police have been equipped with heavy military equipment and have on a number of well publicized occasions used these instruments of violence against peaceful dissenters. There is the well founded fear that fascistic practices like this could become commonplace under Trump. Will military repression be used domestically only in case of large-scale expressions of resistance, or will local occurrences, like the demonstrations in Ferguson and elsewhere against the unjustified police murders of blacks (or Hispanics or Muslims), also elicit brutal attempts at suppression? Trump’s rhetoric and advisors are strong indications that dissenters at every level will be met with considerable brutality.
MP: How would US-Iran relations change during his time in office? How do you predict the future of Iran nuclear deal?
Alan Nasser: Let me start by saying that I reject the U.S.-propagated assumption behind the deal, that Iran is planning the development of nuclear weapons. U.S. intelligence agencies have reported that Iran abandoned any such project in 2003. Presidents often ignore intelligence reports that are inconsistent with U.S. global strategy. E.g. Obama persisted in accusing Assad of using poison gas when his intelligence reports indicated otherwise. It is difficult to forecast the fate of the Iran nuclear deal. On the one hand, Trump seems to want peaceful relations with Russia, a close ally of Iran. This could work against sabotaging the deal. On the other hand, if Bolton is made Secretary of State, war with Iran could become a real possibility.
Because Trump has no knowledge whatever of government and perhaps even less of the tacit and implicit understandings that world leaders have among one another, his unpredictability will have the tendency to give his decisions a random character. But this could be tempered by the extent to which he is prepared to defer to his advisors. But of course many of them will be as ignorant of the real world of politics as he is. The unpredictability of his administration’s key policies and decisions is therefore compounded. This is perhaps the main reason why established Washington and corporate elites are not happy with the outcome of the election. In almost every respect Washington politicians are under the control of longstanding established insiders, mainly in the State and Defense Departments, the network referred to as the “deep State.” Because Trump does not recognize this elementary fact of political life in America, these elites are deeply disturbed that he is out of (their) control. For these power wielders, this is the most disturbing liability of Trump’s unpredictability. If he turns out to be out of step with the Deep State, all bets are off.
MP: It’s been 10 months since the deal went into effect but the big European banks have been reluctant to return to Iran market. What’s the reason behind this?
Alan Nasser: This is a difficult question to answer. I can only venture a more-or-less-educated guess. There are powerful elements in the U.S. power structure who oppose any deals with Iran, and there are some who favor “cautious” accommodation. Obama’s rhetoric and policy towards Iran has not been consistent. This signals instability to investors. It’s possible that the Europeans view the current settlement between Iran and the U.S. as unstable and therefore an unfavorable climate for investment.
Alan Nasser is professor emeritus of Political Economy and Philosophy at The Evergreen State College. His website is: http://www.alannasser.org. His book, United States of Emergency American Capitalism and Its Crises will be published by Pluto Press next year.