The West: White Domination to Free Market Capitalism

The Brexit, rise of Trump, the triumph of Salvini in Italy and gradual rise of neo-Nazis in Germany clearly shows that something is wrong in the Western liberal system based on free-market capitalism. Trump’s trade war declaration against China, EU, Mexico, Canada, India and policies against immigration again clarifies that the US is suspending its role as the global consumer in neoliberal globalization order. Now the question is why the West is turning against free market and plurality in society nourishing white racism.

The journey of Western Whites from Lower Civilization to Higher Civilization

To understand this complex situation one has looked into the dynamics of Western society in the last five hundred years. West tried to reach the developed civilizations of West Asia to search for milk and honey by waging Crusade wars. Being defeated in the Crusade West has to go to the 16th-century global production hubs like China, India, and South East Asia by moving around the southern tip of Africa and by rotating the Earth through oceans. From the 16^th century AD to mid-18^th century AD the Western powers like Portugal, Dutch, England and France could only dominate the seas using their superior naval technology and the superior social organization called nation-state. But Asians continued to remain the production centre.

Thus Western countries always had the trade deficit with Asian kingdoms. Asians produced better and the West had little to offer. Western powers relied on piracy, abduction, slavery and all notorious activities to cover this deficit. This age was called the Age of Mercantile Capitalism. In this age, having the trade surplus and reducing trade deficit are considered to be the sole motto of the Western ruling class. But these methods were never enough to counter huge old Asian mode of production. To dominate production and to defeat Asian production and reverse the trade deficit into trade surplus in their favour the Western powers made three moves:

• Using superior war techniques conquer the Asian kingdoms and destroy their production deliberately using coercion.

• Destroy all the feudal and tribal relations inside the Western societies which help people to sustain a need-based life and force them to become cheap productive wage labour class.

• Destroy all the feudal, clergy and noble classes which feed on the surplus from the then agriculture and artisan based economy so that the surplus can be invested back in the production process for further production.

These three moves finally gave birth to the automated production process and the Age of Industrial Capitalism began. After defeating Chinese in the opium wars in the 1840s, Western industrial capitalism emerged victorious over Asian mode of production. Using the automated production process West created not only trade surplus with the Asian countries and also turned themselves into biggest economies despite having the lower population. This is because Western people were left with no feudal or social arrangements through which they could sustain and so they have to become productive to earn from the market.

In this age, the Western ruling class found that allowing cheap imports makes the economy competitive by reducing the overall price level of the economy. Thus the Asian colonies of West were turned from final good producers to cheap raw material suppliers. Thus Western countries started making more colonies for cheap raw materials and cheap labour. During this time West began to justify the process of colonialism in the name of “white man’s burden” which means rich Western whites had the burden of uplifting undeveloped non-white civilizations. This is an amazing transformation from poor whites going to Asia searching for milk and honey to rich whites projecting Asian civilizations as undeveloped.

Communism Transformed White Man’s Burden to Democracy

By 1890s, the British domination in world production is taken over by more populous countries USA and Germany. Thus too many industrialized Western countries and industrialized Japan created an overproduction crisis in the global economy. This led to two world wars. Before World War II, the US total economy was double the size of all European countries combined together. By the end of World War II, it was then found that British and other Europeans devastated in war and were externally indebted to the US. Thus British, French and Dutch all had to surrender all their colonial assets to the US. Thus the US ended up with military assets all across the globe.

The rise of communism led by the Soviet Union was calling for the eradication of feudal relations in the non-West world and use liberated resources under state direction for rapid industrialization. Communism was targeting colonialism and Western domination all over the non-Western world too. Thus the US after getting hold of all geopolitical assets of the European powers tried to counter the growth of communism. Firstly, the decolonization process began where the US undertook the mission of propping up comprador ruling class in the former colonies of non-West against the communists. Secondly, the US invested heavily in war-wrecked Western Europe and Japan. Thirdly, the US also got engaged militarily in East Asia, Indo-China and Latin America. Lastly, politically Western world under the leadership of the US uphold democracy, free market to fight communism. It is the rise of communism that actually transformed “white man’s burden” to “democracy and free market”.

Former Colonial Assets transformed into Security Guaranty

From the very beginning after World War II, the US failed against communism. The newly independent states of non-West though mostly remained loyal to democracy were impressed by the success of Soviet planned economy ushering in rapid industrialization. Though the West witnessed the post-war economic boom their growth rate fell short of Soviet and most communist-ruled countries. The US had to accept the division of Germany and Korea, communist victory in China, Cuba and Vietnam. By 1971, current account deficit forced the US to abandon the gold standard of US Dollar. Nixon administration at that time was to abandon the worldwide struggle against Communism, reach an accommodation with Communist China, and pursue détente with the Soviet Union. In 1973, Nixon called for US allies in the region to provide more for their own self-defence and signalling that Washington would not again involve itself in another land war in Asia.

The economic stagnation in the 1970s, loss of Vietnam War, oil price hike by Arab states during the 1973 Arab-Israel war and China-US relations establishment totally transformed industrial capitalism. In the 1970s, the value of USD started to get determined by demand and supply of USD. The US made a deal with Saudi such that oil will be sold only in USD and high income from oil price will be given as credit to US Federal Reserve in return for US military protection to the oil-rich Gulf Arab States. Thus all countries using oil had to use USD as the medium of exchange and store of value. Thus USD got a constant source of real demand from global oil transactions. US military engagements across the globe which it inherited from European colonial powers began to be used as security guaranty against which all countries were required to give the US credit. These credits were used by fractional reserve banking inside the US to inflate asset prices and make the profit by trading with the assets. Thus Financial Capitalist Age came into being in which overaccumulation crisis is tackled by creating profit making the investment in non-productive asset trading through debt.

The financial capitalism solved overaccumulation crisis temporarily and made Soviet’s planned economy redundant. The Soviet Union collapsed when they tried to integrate themselves with the global economy newly vitalized in the Age of Financial Capitalism. Thus the US emerged victorious in cold war with Soviet and it is hailed as the victory of democracy and the free market. In this way, West emerged victorious by changing the global mission from “white man’s burden” to “democracy and free market”. The US finding easy profit in finance specialized in asset trading further which raised USD value too high and US production gradually became uncompetitive. Chinese integration in the global market made it an attractive destination as the global production hub for its cheap productive labour completely liberated from feudal relations.

Thus while the US became the market of the globe, China emerged as the most important global producer by 2000s.  Entire globe got benefits from the US market to a different extent. This system is termed as neoliberal globalisation. After the 2008 crisis, it is apparent that Chinese economy is becoming too big to rely on USA as the market for its exports and US economy is becoming too small to act as the chief global market. Thus China formed Belt Road Initiative (BRI) to create state-led infrastructure investment demand and reduce export as the percentage of GDP from 36% in 2007 to 19% in 2017. Thus China had started working to reduce dependence on the global market. US imports as the percentage of GDP fell from 16.46% in 2007 to 14.69% in 2016.

The rise of White Peti-Bourgeoisie against Globalization

Another social problem started creeping in since the 1970s. The fertility rate in Western countries fell below the replacement rate (2.1) and this forced the Western governments to accept more immigrants from non-West. Thus Western ruling class included diversity, plurality, pro-immigrant policies as the basis of Western institutions. A Pew Research report in 2015 found that by 2044 the United States will become a ‘minority majority country’, with whites dropping to below half the population. Non-college-educated whites will still comprise the country’s largest voting bloc. Quinnipiac University Poll in April 2016 found that 85 per cent of Trump supporters agreed with the proposition that “America has lost its identity”, many believing that the government had gone “too far in assisting minority groups”. The competition with non-Western cheap labour reduced the bargaining power of the Western working class.

Thus the wage rate of the US failed to grow since the 1970s. The same Pew Research report in 2015 stated that the American middle class is no longer the nation’s economic majority and that it is falling further behind financially. Eroding productive sector on one hand and changing demography, on the other hand, created a perfect condition for the rise of white commoners with all grievances against the USA’s role global market. They took a peti-bourgeoisie view of USA’s global engagements. This led to the rise of Trump. Trump criticized external military engagement and the US transformation from a global production hub to the global market. He blamed neoliberal globalization as the cause of all miseries for the US. Trump’s recent tariff moves against all countries, policies against immigration, the threat against global institutions like UNO-WTO and repeated grievances about costly military protection given to allies clearly point this out. Farage of UK and Salvini of Italy further approves the trend of Trump. Hence it can be said that Trump is leading the transformation of white West from “white man’s burden of democracy” to “white men will take no burden” (including those of other whites).

Conclusion

So history tells that relatively undeveloped white Westerners went to richer Asia in search of milk, honey and spices. Being less civilized, the Western whites were better warriors and so indulged in coercion to counter Asian production. Destroying feudal relations at home West created industrial capitalism which made the West richer than Asia. Gradually, Asia most importantly China destroyed its own feudal relations completely or partially and started to become a global production hub again. Thus while capital seeking profit wants to move to Asia especially China where labour is cheaper and often as productive as West, white domination dreamers want to prevent capital from doing that. In both Asian production and automated production, Asia will have the higher percentage of global GDP too in the long run since it has the greater percentage of the global population.

The 168 years from 1840 Opium War to 2008 financial crisis when West had the higher share of GDP cannot be sustainable in the long run. It is simply a short run phenomenon because West is first to destroy feudal relations and liberate resources for industrialization. China is emerging as the centre of automated production. Capital seeking more profit will try to move to China while white commoners will seek policies to stop this movement. Thus while white-West elites will seek more capital and technology transfer to China and Asia white peti-bourgeoisie will try to prevent it. Similarly, elite-Whites will seek more immigrants to make the domestic economy more competitive, the peti-bourgeoisie white will try to prevent the change in demography.

This contradiction between elites and peti-bourgeoisie can devastate West in the near future. The point is can peti-bourgeoisie question the US military role as security guaranty across the globe that makes USD store of value of the globe which is making US production uncompetitive while finance eats away all resources unproductively? Trump has failed to deny the US military role as security guaranty though he signalled that he wanted to. Thus US finance is showing signs of bubble again and Trump administration feeling happy about this bubble led growth.

Tariff and anti-immigration policies will make US production further uncompetitive. Thus US elites would try to move out production from the US further. Thus tariff resulted in Harley Davidson moving operations out of US. Capital and white man are two different entities. Though white man gave birth to capitalism to counter Asian civilization, the son is finally adult enough to leave daddy and settle according to his wishes. Daddy’s spoiled child? Yes, in a sense. Daddy gave son anything he wishes for.

DISCLAIMER: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy and position of Regional Rapport.