The Day Vladimir Putin Passed NAFTA

EDITOR'S CHOICE | 07.11.2016

The Day Vladimir Putin Passed NAFTA

Rob Urie is an artist and political economist. His book Zen Economics is published by CounterPunch Books

The U.S. is entering a dangerous political phase where a distant and cloistered political class threatens the use of state power to legitimize itself in the face of declining popular support and serial military calamities of its own making. In 2001 the George W. Bush administration used the opaque and as yet not fully explained events of 9/11 to claim legitimacy as faux protector of the American people as it launched catastrophic wars that destroyed Iraq and Afghanistan and unleashed ongoing chaos across the Middle East.

With uber-hawk and unindicted co-conspirator Hillary Clinton favored to win election under a cloud of suspicion for pay-to-play practices as Secretary of State and in widely declining economic circumstances an imperative to change the subject will assert itself the day after election day. Having demonstrated a propensity for wanton slaughter in Bosnia, Iraq, Afghanistan, Yemen, Libya and the streets of major American cities (1994 ‘Crime’ bill), Mrs. Clinton is already busy stoking a new Cold War with Russia to cover her own activities.

The neo-con choice of Russia as menace-of-opportunity joins a long history of defining American politics through negation. In the original (‘classic?’) Cold War national identity served as an envelop-of-convenience for conciliatory economic policies within the U.S. and repressive and opportunistic policies abroad. Since the 1970s selective (class based) economic liberalization has cut labor and the poor adrift as a self-serving ruling class has gorged itself at the public trough through bailouts, privatizations and special privileges.

The Cold War was always largely a business enterprise— the communist boogeyman was used by the U.S. to overthrow democratically elected governments and install business-friendly regimes that would answer to U.S. (corporate) interests. Its resurrection is to reassert a national ‘envelop’ as cover for economic interests now ‘freed’ to treat a growing portion of the domestic population as imperial subjects. Growing resistance suggests a need for more convincing misdirection if the status quo is to be maintained.

Ongoing neo-con claims that Russia invaded Ukraine are to cover the U.S. role in facilitating a coup against the popularly elected government there and depend on American ignorance of the longstanding Russian naval base at Sevastopol for plausibility. Furthermore, against explicit promises not to do so, since the early 1990s the U.S. (through NATO) has built military bases in Eastern Europe surrounding Russia. This as the U.S. embarks on a multi-decade program to ‘upgrade’ its nuclear weapons arsenal.

Surrounding Russia with NATO (U.S.) military bases is generally analogous to the Russians building military bases on the Mexican and Canadian borders with the U.S., only without the historical precedent of sequential, devastating land invasions that the Russians have faced. What cloistered neo-cons in the U.S., led by Hillary Clinton, call military ‘strength’ is a perpetual upping of the ante where each step is ‘rational’ in some political-economistic sense while the broader enterprise risks collective suicide.

As strategy, doing so leaves either capitulation or full scale confrontation as likely responses. A ‘third-way’ was tried when American economists were sent to post-Soviet Russia in the 1990s to ‘help’ with privatization of the Russian economy. The result was a bifurcated economy where 99% of Russians were deeply immiserated while select ‘oligarchs,’ were made stupendously rich. Luckily for the economists, enough Russians died from privation during their ‘experiment’ to leave few witnesses to the fiasco.

For cynical Americans raised on Cold War propaganda, the idea of Western academics scamming gullible Russians with long-discredited capitalist ideology might be good for a laugh were these same people not the ‘brain trust’ behind the bi-partisan governing consensus in the U.S. in 2016. The economics used to loot Russia were absolutely conventional, the very same used by Bill Clinton to ‘liberate’ Wall Street from social accountability, to liberate the American working class from gainful employment and to ‘free’ the American poor from burdensome food and rent money.

The Russian reaction to being immiserated was to turn away from the American-style economic liberalization that remains the Democrats’ core economic program in the U.S. The seeming inability of the American political class to learn from its mistakes proceeds from the assumption that current outcomes are mistakes in any sense recognizable to it. Highly cloistered class divisions leave it impervious to the negative consequences of its economic policies much as it is to those of its foreign policies.

Following passage of NAFTA economic competition was used to explain the engineered immiseration of the American working class. But without commensurability of circumstances the idea of a global labor market makes little sense. The implausibility of displaced auto workers in Detroit packing up their families and possessions to live for $10 per day in southeastern China illustrates the conundrum. ‘Capital,’ connected capitalists with extensive social resources, can build factories abroad. But without a standing army to repatriate profits, that scheme has never worked very well.

Conversely, with the racial repression that followed the nominal end of slavery in the U.S., at what point did American Blacks receive the market wage that no longer suppressed wages more broadly? Notice the formulation: Blacks whose wages were held down through systematic racial repression (Black codes, convict leasing, Jim Crow and now mass incarceration) acted in a ‘market’ sense to lower the wages of wage-dependent Whites. This is the ‘market’ explanation of race relations in a market economy when the (liberal) premise of market-driven outcomes is applied.

It is this latter point — that rigged economic institutions produce rigged outcomes, that liberal Democrats try to explain away with identity politics. NAFTA, like the TPP that follows, is designed to shift economic power from labor to capital. It is also designed to exploit residual imperial relations to divide labor along engineered lines of division. In the U.S. the state created and enforced racial repression to serve economic interests. This is the residual of imperial relations that to which NAFTA was added.

By siding with existing economic power Western liberals chose the paradox that by destroying the institutions that make markets ‘free’ like labor unions and collective bargaining (see Adam Smith on manufacturer combines suppressing wages) economic outcomes can still be claimed to be ‘market’ based. In a general sense in the case of Russia, the Russian people wanted none of it once it became clear that American intentions were collaborative looting of the Russian economy.

Americans have a longer history of market mythology to wade through. If slaves produce goods that have economic value then demand for wage labor is reduced relative to the goods produced and the difference accrues to capitalists. If NAFTA ‘frees’ capitalists to produce goods in Mexico or China under neo-colonial conditions (see Foxxcon suicide nets) a similar process takes place. This sleight-of-hand works by tautologically defining all labor, including slave labor, as freely undertaken.

It is hardly accidental that Barack Obama, and soon most probably Hillary Clinton, frame corporate-power enhancing agreements like the TPP in terms of geopolitical competition. Much as Democrats use Republicans (and vice-versa) as foils, the U.S. powers-that-be need a Russian ‘strongman’ and Chinese economic ‘connivance’ to sell trade deals and foreign entanglements to an already hard-pressed American working class. Here the relation of economic interests to geopolitics re-enters.

Like her husband before her, Hillary Clinton has committed to the economically paradoxical position of increasing social spending and balancing the Federal budget. Bill Clinton addressed this paradox by reneging on his promise to increase social spending. In terms of factual possibility, balancing the budget has always been a canard used by Republicans (and national Democrats) to cut social spending. There is no fact-based reason why a balanced budget is either necessary or virtuous.

The political-economic position that this leaves Mrs. Clinton in is that her major benefactors on Wall Street and in executive suites want policies that weaken the position of labor and immiserate the bottom 90% or so of the population. And the pressure relief value of increased social spending will be ‘off-the-table’ much like it has been under Barack Obama and Bill Clinton so as to balance the budget. Even if neo-Keynesian pleaders get through to her the response will be ‘public-private partnerships,’ privatization and tax cuts that benefit the wealthy.

The political problem for the establishment is that the polity is in various stages of open revolt. In the long-held American tradition of dividing to conquer, Mrs. Clinton has drawn battle lines in a class war by dismissing the most economically put-upon half of the polity as ‘deplorables,’ as racist hicks who lack the vocabularies and table manners to properly earn their keep. That these same people had jobs until the Clintons sent them to Mexico and earned their keep until Wall Street cut their pay to nothing helps clarify precisely who it is that is deplorable.

Russia re-enters as the mythical boogeyman, a/k/a convenient foil, for the remote and calcified ruling class to pin its own misdeeds on. Julian Assange has now clarified that, Clinton ‘team’ assertions to the contrary, Russia is not the source of the Wikileaks revelations that will serve as fodder for ongoing investigations if Mrs. Clinton wins election. A crisis of legitimacy is all but guaranteed. If ‘things’ begin to unwind as circumstances suggest they might, expect the war drums to beat louder.