key: cord-0059225-kc8a8w3d
authors: Fouskas, Vassilis K.; Roy-Mukherjee, Shampa; Huang, Qingan; Udeogu, Ejike
title: Conclusion
date: 2020-11-20
journal: China & the USA
DOI: 10.1007/978-3-030-61097-5_10
sha: ee7b89f6f59577dc6360e0de454f04883c21f3d4
doc_id: 59225
cord_uid: kc8a8w3d

In this conclusive chapter we summarise the findings of the book. We summarise how global production networks have benefitted China more than the USA and that the slow and protracted decline of the transatlantic economies as a whole can be traced back to the 1970s. In the long run, US-led globalisation and supply chains, in particular, brought about more benefits to Chinese rather than western global corporations. Official Chinese discourse calls this “Extensive consultation, joint contribution and shared benefits”. This is why America has been seeking for some time now to replace China as a supply chain hub with India and other minor Asian countries, in an effort to isolate Chinese high-tech companies from global production networks and joint ventures. Is war, then, between the USA and China looming large?

under the leadership of Dean Acheson and Paul Nitze. However, globalisation is not a spontaneous fundamentalist economic ontology in perpetual motion. As such, it is not agency-free. Political and even cultural interferences from many agencies matter. Our analysis here has re-confirmed that the Poulanzas thesis holds: capitalist development and its accompanying competitive constraints are relatively conditioned by statenational power, which is present at the genesis, constitution and reproduction of social-economic relations, that is the global capitalist development per se. This applies to all states in an uneven, complex and combined way. America and its protracted structural decline since the 1960s is a case in point.

Successfully outcompeted by Japan and (West) Germany in the 1960s, the USA opted to devalue and exit the Bretton Woods constraint, liberating the exchange rate and unleashing global money and the dollar. Although this was the result of a balance of payments crisis in America's accounts since the early 1960s, the key structural cause in all three major centres of capitalism-western Europe, Japan, USA-was the tendency of the (average) rate of profit to fall, mounting a major over-accumulation crisis in the 1970s manifested in a long period of stagflation. But money and the dollar unleashed because of the floating exchange rate regime post-1971. The bloated Keynesian sector came under massive attack by western neo-ordo-liberal elites, whereas the interest rate hike of Paul Volcker bankrupted the global South and, along with "breaking the back of the inflation", also broke the back of the working class by, essentially, destroying the Fordist (high) wage. Overall, the USA amounted a global statecraft opening up the markets of Eastern Europe and the "global South", whereas its financial and banking sectors pursued a relentless strategy of financialisaiton of corporate profits at the expense of industrial capital and investment. Industry, in the form of the new global corporation and production networks-or TNC/MNC-migrated abroad. We have no supporting evidence suggesting that China is responsible for the decline of the West's manufacturing base before the 1990s, a view that transpires in the Rosenberg-Boyle argumentation. The pressure on western industrial capital to migrate was internal to national formations within which it rose, got out-competed and declined under the international competitive constraint of the Bretton Woods system. Moreover, the process was contingent upon the policy choices of sovereign states. In fact, as we saw, both Germany and Japan, did not completely de-industrialise. Germany is in a position to lead within the EU/Eurozone because of the strong position of its exporting industries within the bloc. 1 Deindustrialisation is an Anglo-American phenomenon, which shows that state power and state economic choice can determine the orientation of the real and fictitious sectors of social economy. China has had very little to do with the historical causes of the West's de-industrialisation. China, nevertheless, enters gradually the uneven and combined mechanism of globalisation and its competitive constraint operating in the core from the mid-1980s onwards, and especially after its entry in the WTO in 2001. Adam Tooze is right when, along with Matthew Klein and Michael Pettis, he argues that China and Germany have been the net beneficiaries of trade flows since the 1990s, never mind the primacy of the dollar in international markets. 2 In this book, unlike other approaches on the subject, we showed that global production networks have benefitted China more than the USA and that the slow and protracted decline of the transatlantic economies as a whole can be traced back to the 1970s. In the long run, US-led globalisation and supply chains, in particular, brought about more benefits to Chinese rather than western global corporations. Official Chinese discourse calls this "Extensive consultation, joint contribution and shared benefits". 3 This is why America has been seeking for some time now to replace China as a supply chain hub with India and other minor Asian countries, in an effort to isolate Chinese high-tech companies from global production networks and joint ventures.

We have brought evidence that bears on the robustness of Chinese SOEs, the benefits of capital controls and China's two regional platforms of expansion. One such platform is territorial located in China proper (western China and onwards to Eurasia and Africa); and the other is maritime South-east Asia and onwards to China and the world). Opting to pursue supply-side economics even after the crisis of neo-liberal financial statecraft of 2007-2008 (the Great Recession), the western governorates of the Left and the Right, combined with China's turn to demand-led reforms and wage growth, accelerated the decline of their economies even further. Western debt levels soared as a result of reckless pursuits of supply-side policies and harsh austerity at the expense of the poor, the labourer and the vulnerable. Covid-19 seems to be delivering a further blow to the West, bringing to the fore a Polanyian/Keynesian moment challenging even the neo-liberal elites in power to consider it.

"Every child knows a nation which ceased to work", Marx wrote in a letter to Kugelmann in 1868, "I will not say for a year, but even for a few weeks, would perish". 4 Airlines, tourism and hospitality, commercial rents, entertainment, football, theatres, schools, universities, gyms, retailers, shopping centres have been in total lockdown for more than three months (March-June 2020). Britain and the USA, once again, seem to be resorting to half-baked Keynesian measures to save "free market capitalism". On the EU front, typically, surplus countries that benefit from the austerity of ordoliberal Treaties, refuse debt mutualisation. In absence of a vaccine that can defeat the virus and lack of medical support for the ill, the neo-liberal governorates of the Left and the Right are caught, once again, without a strategy: shall they let people die by re-opening business, shopping centres and schools or re-introduce lockdowns in face of a second wave of the pandemic, thus destroying "free market capitalism"?

On 15 March 2020, the American Fed announced a major intervention, cutting its interest rate by 1% to near zero. This was followed by other major interventions, such as buying mortgage-backed securities and government bonds to the tune of nearly $1 trillion. The latest announcement on the Fed's part made clear that this purchasing of assets (quantitative easing) is unlimited. 5 Trump, on the other hand, who used the crisis to increase his popularity as Presidential election was looming in November 2020, proposed a generous pro-business package of roughly $2tn, which was provisionally "blocked" by the Democrats in the Congress. The Democrats, however, soon folded their hypocrisy and agreed to the package exhilarating the markets.

Britain followed suit. 6 On 17 March, the British government delivered an unprecedented financial handout to UK corporations, which accompanied a further slash in the interest rate, bringing it down to almost zero. Rishi Sunak, the Chancellor, announced £330 billion in loans to be made available at "attractive" rates and said he would "go further if required," promising an "unlimited lending capacity." This is tantamount to 15% of the country's GDP. A further £20 billion was pledged in the form of tax breaks, cash grants and compensation to firms that have to pay statutory sick pay. 7 As in 2008, however, similar fiscal packages were slated for shoring up big business with minimal impact on SMEs and the real economic sector.

However, the structural pressure for state intervention is very strongthe Polanyian/Keynesian moment mentioned earlier. Thus, the British government has taken steps to nationalise the Rail operators. On 23 March, Britain's Department for Transport announced that "it would 6 On 3 March 2020, with Covid-19 spreading rapidly and 100,000 cases recorded globally, Boris Johnson, Britain's PM, told a press conference that he continued to "shake hands", and even when he visited a hospital ward with Covid-19 patients, he said he had shaken everyone's hand. Two days later, as the UK's first death from coronavirus was announced and the World Health Organisation designated the disease as a pandemic, Johnson was asked why there was no cancellation of public events or closing of schools. He replied, "One of the theories is, that perhaps you could take it on the chin, take it all in one go and allow the disease, as it were, to move through the population, without taking as many draconian measures." "Basically, we're saying", the British PM argued, "wash your hands and business as usual". On 12 March, Johnson and his medical officers announced the so-called "herd immunity policy". One day earlier a health minister, Nadine Dorries, announced she had caught the virus. She had been in touch with hundreds of people, including Johnson. Such was the carelessness of the British government to contain the pandemic in the first three weeks of March, that France threatened to close its border with Britain unless the Tory government took stronger measures to stop the virus; see, Sonia Delesalle-Stolper, "Covid-19: le Royaume-Uni ferme aussi et enfin", Liberation, 23 March 2020, https://www.liberation.fr/planete/2020/03/23/covid-19-le-royaume-uniferme-aussi-et-enfin_1782834 (accessed 28 July 2020). As deaths mounted, Johnson was eventually forced to announce "social distancing" measures and then a lockdown on 23 March. In the end, Johnson announced he had the virus himself, admitting that "there is such a thing as society". On 5 April, after ten days of self-isolation, he entered the intensive care unit of St. Thomas' hospital in London. Being entirely the victim of his own neo-liberal policy, as he exited the intensive care, he happened to be full of praise of NHS. 7 See, Heather Stewart, "'Whatever It Takes': Chancellor Announces £350bn Aid for UK Business", The Guardian, 17 March 2020, https://www.theguardian.com/uk-news/ 2020/mar/17/rishi-sunak-pledges-350bn-to-tackle-coronavirus-impact (accessed 27 July 2020). temporarily end normal franchise agreements and transfer all revenue and cost risk to the government for at least six months". 8 It also seems that side-lining the neo-liberal rulebook of "low inflation, low wages" is of vital importance for the survival of capitalism in the extraordinary conditions created by the pandemic. As a consequence, on 9 April, responding positively to Treasury's request, the Bank of England agreed to direct monetary financing of the government bypassing the bonds market, although this, the Treasury said, will be "temporary and short-term" and with the money paid back by the end of the year. 9 Clearly, the pandemic has brought up forcefully the structural need to support the demand-side of capitalism and the abandonment of neo-liberal financialisation, more forcefully, since 2009. Austerity-stricken EU is worse off, the reason being the lack of Keynesian instruments in dealing with the crisis. With the pandemic making headways in Italy and Spain in March-June 2020 and with the entire bloc constrained by the ordoliberal disciplinarian Treaties, surplus countries, such as Germany and Holland, refused to issue the so-called "coronabonds", a demand made forcefully by periphery states (Italy, Spain, Greece and Portugal) led by France. The rift between the surplus core and the indebted periphery of the EU is such that under pandemic and austerity conditions becomes impossible to be bridged with compromises, such as that achieved in early April 2020 or later in July, allocating 750bn Euros to the embattled European economies. 10 We have shown that China is neither an extension nor a proxy of the USA's globalisation/financialisation projects, let alone a "head servant" of the American empire-state. We have appreciated these arguments to the extent that they raised important issues about the ways in which the Chinese state is constraint by the structural competitive constraint of the existing imperial order, above all that of the USA, but also other powers. But the US-centred western edifice has been in decline since the 1970s, a decline which the Great Recession of 2008 and Covid-19 have accelerated. It should also be borne in mind that no imperial order in the past has lasted forever. There is always a historical moment of succession, which amounts to a formal concession of defeat, such as Britain admitted in 1944, after several decades of continuous decline and having persevered two global wars. However, this moment of formal concession of defeat is preceded by what Antonio Gramsci used to call interregnum, during which period many fenomeni morbosi-or "morbid symptoms"-appear, such as state authoritarianism from above and racism and xenophobia from below-with both trends feeding each other. 11 We seem to be right there, because, as The Economist put it amidst the Covid-19 crisis paraphrasing, rather unwittingly, the founder of Italian Communism, the "two diehard rivals refuse to lead. One is in the retreat; the other is uncertain whether it really wants to take on global responsibility. The world suffers". 12

k-steps-in-to-save-railways-as-johnson-warns-of-lockdown

Bank of England to Directly Finance UK Government's Extra Spending

No mutualisation of debt has been achieved in April 2020 and the compromise achieved is predicted to be short-lived

In July, the deal struck had had more elements of mutualisation, but no one proposed mutualisation of EU countries' "legacy debts; even the new common debt will not enjoy joint-and-several guarantees. And the question of how to repay it is left for later"; see