JBF: The made-up Obama story I told was about the financial crisis. The equivalent Trump story would be about Russia and U.S. intelligence. This is the way I imagine it. Trump went to the headquarters of the CIA in Langley, Virginia on January 23. They ushered the new president and his advisors, Michael Flynn, the new national security advisor, and Steve Bannon, the White House chief strategist, into their inner quarters. The other sixteen intelligence agencies were represented. There, after the usual congratulations, Trump was informed by the CIA director that in the view of the intelligence agencies the New Cold War with Russia needed to continue. Trump declared that the White House was already working on a deal with Putin. A representative of the intelligence agencies said they knew. Flynn, in a bellicose statement, declared that the CIA sponsored war against the Assad regime in Syria was to end, and that all their efforts in cooperation with Russia would be directed at wiping ISIS off the face of the earth. China was to be the next target, although it would have to be approached differently. Bannon stepped in at this point, in response to questions from the representatives of the intelligence agencies, and told them all to “shut up” and that they were going to be brought into line with the new political order. There was hushed silence on the side of the CIA and other spy agencies. So I imagine.
A couple of weeks later—and this we know—a record number of leaks were issued from the “deep state” within the national security state in a strike against the administration. The leaks were released to the major newspapers and were aimed at Flynn and the administration’s negotiations with Russia on dropping sanctions. Flynn was forced to resign to protect the president. Three days later, Trump, in a counterattack, asked billionaire Stephen Feinberg, head of Cerebus which owns Dyncorp one of the top five defense security corporations to investigate the intelligence agencies from within the white house.
In other words, Trump and Bannon are convinced that they can use manipulation and intimidation to bring the deep state into line.
RR: Economic Policy. In Europe Trump’s economic politic is labeled protectionism, i.e., against free trade agreements. (Angela Merkel said there would be no TTIP with Trump). This is seen as an attempt to get industry back to the United States, put tariffs on imports, and so on. An illusion? Or should we really understand it as a rupture with the post-Second World War Bretton Woods economic policy of Washington to impose world hegemony with free trade politics? And even if he wants protectionism, will he be able to put it into practice? Likewise, with the capital that went global? Moreover, what do you think of the $1 trillion investment in construction and infrastructure that has been announced? Keynesian stimulus and the end of stagnation, or new bubbles? And more generally, should we consider Trump as representing a specific section of capital—energy, construction and so on—while Clinton was the candidate of Wall Street?
JBF: Let’s start with basics. The Trump White House is neofascist in terms of its political base, its ideology, and the policies it is advocating. The rest of the U.S. state, the Congress, the judiciary, the military, the National Security State, the state and local government, and, if we include the ideological state apparatus, the corporate media and the educational institutions, are not at present neofascist. So we are in a period which is analogous to what the Nazis called Gleichschaltung (bringing into line), which means a fight within the state. Steve Bannon calls it the period of the “deconstruction of the administrative state.” Trump has the complete support of Wall Street, which saw its shares go up by 13 percent between the election and late February. He always had considerable support from sections of the “billionaire class,” while other parts supported Hillary Clinton. Trump’s biggest support within capital comes from the fossil-fuel-financial complex and from military contractors. But at this point he is the darling of the 1 percent, having promised to remove 75 percent or more all regulations on business. (It is well to remember that the concept of “privatization” emerged in Germany in the 1930s.) Trump, although his poll numbers are low, has the support at present of 88 percent of Republican voters, who currently approve of the actions of his administration.
Trump’s “America First” policy is all about economic nationalism and military nationalism. His infrastructure proposal has been called by the Financial Times a case of “bait and switch.” He doesn’t actually plan a significant increase in civilian government spending. Rather his claim that his policies will generate a $1 trillion increase in infrastructure expenditure in the economy is based on an extremely questionable analysis by his Secretary of Commerce Wilbur Ross that claims that giving $137 billion in tax credits to corporations related to infrastructure spending will provide the financial leverage allowing infrastructure expenditures in the economy as a whole to go up by a trillion dollars over ten years. Most economists consider it flim-flam, giving capital to capital to capital so it can make more profit on spending that it would mostly have done anyway. This is far removed from direct federal spending on infrastructure, and it is likely to deepen the contradictions of overaccumulation characterizing monopoly-finance capital.
Trump’s real stimulus will be in the form of a $54 billion defense increase, raising the amount spent on the military in the basic defense budget by more than ten percent. He is calling this one of the “greatest military buildups in American history.” It is well to remember that it was Hitler, who was the first military “Keynesian” (as figures like Michał Kalecki and Joan Robinson pointed out), who showed that an economy could be boosted (to a point) by spending on armaments. It has been done many times before and is now institutionalized within the U.S. system. But Trump is planning on doing it in a bigger way. He is also bragging that he is already getting the Germans and others to spend more of their “fair share” on NATO.
On trade, Trump is likely to combine economic nationalism and protectionism with so-called free trade, constantly changing the rules depending on what he sees is to the U.S. advantage. The United States is able throw its weight around more in bilateral agreements where other nations are forced to take it on one by one. But Trump’s strategy is to derail China, and is not aimed principally at Europe. Attempts will therefore be made to enlist the other parts of the triad, i.e., Europe and Japan, under the hegemonic leadership of the United States, in an economic alliance to pressure China. With respect to trade, however, as in other areas Trump has to deal with Congress. Traditional Republicans, even more than Democrats are opposed to protectionism (though willing to accept it when it is clearly in the U.S. interest), and it is possible that some of his plans will run up against obstacles. But the truth is that the United States is moving away from free trade precisely because its economic hegemony over the world economy is declining. We can see the same thing during the later phases of Britain’s period of hegemonic decline. And this represents a big shift that was bound to occur. What Trump has going for him is that U.S. corporations are increasingly worried about China even as they rely on offshoring production to China to enhance their own profit margins. Forbes declared in 2016 that China would overtake the U.S. economy in 2018. I have not studied their calculations so I cannot say if this is correct. But the fact that they are worried about it and see a hegemonic shift as imminent is significant. For the U.S. ruling class used to running the world this is a big change. The U.S. share of the global economy has been dropping steadily year by year since 2000.
RR: Military. In the 2016 interview with us you said that there are limits on expanding military spending because it is already huge, so military expense was not so much of an option nowadays to escape stagnation tendencies. Yet, Trump has promised to invest a lot in the military, increasing the size, including nuclear power (100,000 new ground troops, 18,0000 extra marines, a fleet towards 350 ships and 1,200 combat fighters). Can that counter stagnation. Is he preparing for war?
JBF: Increased military spending is the one thing that that Trump can do to stimulate the economy through direct federal spending, since the Republican Congress won’t allow him to increase civilian government spending. He will increase military spending by $54 billion, as noted above, in this budget cycle. But although that may sound like a lot it is a fairly small amount in terms of stimulating an $18 trillion U.S. economy, which grew only 1.6 percent in 2016 and is in deep stagnation (as is Europe) with growth below 3 percent for a decade. When you consider too that he proposes to pay for this by cuts in civilian government spending the stimulus effect of military spending is not going to be all that considerable. Trump’s real hope to stimulate the economy is not in terms of spending increases but in corporate tax and regulation reduction. However, this is likely to feed the financial sector rather than investment since U.S. corporations are already sitting on trillions of dollars that they are not investing. The regulation reduction is key in that he wants to make it cheaper and more profitable to invest. But the problems of market saturation and idle productive capacity, which deters investment, remain. Larry Summers estimates that there is a 1/3 chance of a recession in the U.S. in a year and a 1/2 chance in two years. Home ownership has declined, household debt has climbed enormously, the labor share of income has plummeted, and income and wealth inequality is at an all-time high. Unemployment/underemployment in the economy remains extremely high for this phase in the business cycle. In other words, the economy is in a perilous state.
Trump’s military spending will not solve these economic problems: the stimulus is too small. What the White House hopes to achieve is a set of geopolitical victories for the United States via military power that will leverage up the U.S. position in the world. This means strengthening control over the Persian Gulf and countering China, particularly in the South China Sea. Bannon, an open neofascist, is an advocate of a “Judeo-Christian War” against Islam and China. The imperial dispute in the U.S. ruling class is not about whether to use the U.S. military to expand the U.S. empire as a way of combating the decline of U.S. hegemony. Obama and Hillary Clinton, however, sought to do so by means of a New Cold War against Russia. Trump, in contrast, sees China as the ultimate enemy and is promoting a nationalist-religious-racist crusade, more in line with Samuel Huntington’s The Clash of Civilizations.
Trump’s White House is quite clear that they are ready to “put boots on the ground” again in the Middle East. He wants to expand nuclear. The military outlook is therefore very grim. As István Mészáros says, we are in the “potentially deadliest phase of imperialism.” James Mattis, Trump’s Secretary of Defense is seen as a restraining figure in the new administration, despite the fact that his nickname is “Mad Dog.” That in itself ought to give one reason to pause.