The state isn't back - it never left.
Review of Thea Riofrancos' Extraction: The Frontiers of Green Capitalism.
If you ask liberals about the greatest threat to the “international rules-based order”, most would say “Donald Trump”. Trump has implemented more policy measures to protect US industry and weaken its competitors than any other President since the Great Depression.
He has unleashed a global trade war, slapping tariffs on many of the US’ largest trading partners. He has imposed export controls on critical technologies and shocked the liberal establishment by taking an equity stake in chipmaker, Intel. He’s gone to war with the Fed in an attempt to hold down interest rates, devalue the dollar, and boost US exports. He’s even touted a so-called Mar-a-Largo accord to weaken the dollar without sacrificing its reserve currency status, including measures like forcing foreign holders of US Treasuries to convert their holdings from short- to long-dated government bonds.
These moves are about ‘taking back control’ over the US’ trading relationships. Liberals see this approach as misguided at best, and irrational at worst. They hold fast to the Ricardian view that free trade is the fastest route to prosperity for every nation individually, and for the world economy as a whole. Protectionism, they argue, can only lead to inefficiency and corruption.
Protectionism has, of course, always existed in economies nominally committed to free trade – whether the EU’s common external tariff, or US subsidies to industries from fossil fuels, to steel, to aerospace. Capitalism – whether in its laissez faire, social democratic, neoliberal, or developmentalist versions – has never been a free market system (as I explain in Vulture Capitalism).
Liberals use free market ideology as a way to justify a capitalist status quo based on centralised planning, monopoly power, and venality. The theoretical benefits of free markets are used to defend policy measures that will promote the interests of capital – from privatisation to tax cuts for the wealthy – while market distortions that benefit capital and harm people and planet are ignored – from fossil fuel subsidies, to monopoly power.
The same is true of ‘free trade’. Rich countries have spent decades using arguments about the benefits of free trade to force open ‘closed’ economies – whether through unequal trade deals, or IMF lending programmes – while continuing to provide extensive protection to their own industries where required. This careful balance between free trade and protectionism has allowed US multinationals and financial institutions to ravage the global economy, displacing competitors and under-developing the global South.
The economies that escaped this treatment have been the major success stories of the last half century. Japan and South Korea pursued a ‘mixed economy’ models that facilitated rapid development, before dismantling many protectionist measures. At the opposite end of the spectrum, the Chinese state supported a controlled approach to marketisation and trade liberalisation, without ever ceding control of the commanding heights of the economy.
Like the west, these nations have strategically deployed both free market and protectionist policies with a view to supporting the interests of domestic capitalists and crushing alleged enemies - whether foreign or domestic. Their rise has fundamentally reshaped the global economy. Trumpism is a reaction to these changes. As I explain in this piece, his trade war is less about protecting workers, and much more about maintaining American technological supremacy.
In other words, it’s not that the US has suddenly switched from free trade to protectionism under Trump. Instead, the changing balance of power at the global level has shifted the calculus of US imperialism.
