What will Trump's victory mean?

I wrote in my last post about the possibility of Donald Trump being elected. Now that it has happened, I want to share some preliminary thoughts about what it means. Of course, much is unknown. Trump is an unpredictable character anyway, and in any case all politicians find that their freedom of action is more curtailed than either they or their electors expect.

In my book I frame much of the analysis of contemporary organizations in terms of ‘the new capitalism’, meaning the neo-liberalized, globalizing form of capitalism that has been dominant since the 1970s, especially in the US and the UK. I also (nevertheless) record scepticism about ‘epochalism’ (p.104), but with that caveat it is at least possible that we are witnessing a significant shift away from the new capitalism.

What is distinctive about Trump, as the Guardian journalist Martin Kettle wrote today, is that he is both socially and economically illiberal. That, Kettle argues, has not been true of recent US presidents: they have been illiberal in one or other meaning, or in neither, but not in both.

Trump’s social illiberalism is what made his campaign so controversial and divisive. But it is his economic illiberalism that is truly remarkable amongst, especially, Republicans. He appears to be hostile to the global free trade system that defined the new capitalism. He has promised to reverse the offshoring of US jobs, to punish US companies that relocate abroad and to impose high tariffs on, especially, Chinese imports. It seems highly likely that he will abandon the Trans-Pacific Partnership (TPP), the TTIP negotiations with the EU, and if not scrap then comprehensively re-negotiate NAFTA.

These policies, which I have described as nationalist populism, are, like many forms of nationalist populism, similar to left-wing economic programmes. Equally, Trump’s ambitions to create jobs through national infrastructure projects are akin to neo-Keynesian economics (although likely to be funded by foreign investors rather than state investment and so in that sense understandable as a form of privatization, and somewhat at odds with Trump's 'America First' rhetoric).

These are potentially profound shifts, then, but as a counter to epochal thinking, it should be recalled that other parts of his economic agenda, most notably (probably) holding down the minimum wage, cutting corporation and other taxes and financial deregulation, are part of the familiar repertoire of the political right. Moreover, Trump’s calling card that he can run the country as if it were a business and his embrace and embodiment of macho leadership also suggest continuity rather than abandonment of many aspects of new capitalism.

If aspects of Trump’s rejection of economic liberalism have a leftist tinge to them, it’s important to recognize that their nationalism means that they do not offer any general relief from the consequences of globalization. It is in fact questionable whether they can even deliver this for the people of the US. Globalization may simply be too far advanced for that to be possible: it is highly unlikely that the American rust belt will be re-industrialised. At all events, Trump’s nationalism (like Brexit) marks a retreat from the multi-lateral, global governance that offers to best hope of taming and regulating global capitalism, with climate change agreement the most likely early casualty.

Trump is also likely to reverse Obama’s ‘pivot to Asia’ policy. That is apparent in relation to the points mentioned above about TPP and tariffs against China, but also to the likelihood of his administration taking a relaxed view about Chinese sovereignty claims in the South China Sea and agnosticism on the issue of Taiwan. This links with the wider foreign policy aspect of Trump’s presidency, which appears to entail significant withdrawal from global leadership. Some of that leadership has, of course, been highly damaging and other parts of it ineffective. Nevertheless, Trump’s apparent admiration for Vladimir Putin (it’s no coincidence that the Russian Parliament applauded the result: Trump’s election, like Brexit, represent major foreign policy boosts for Russia) and lukewarm support for NATO could be highly de-stabilising for, especially, the Baltic States and the Balkans. This could have potentially devastating consequences, both for those regions and for the wider world, making anything and everything else that Trump’s presidency may mean completely trivial.

Going back to economic issues, I’ve depicted Trump’s election, like Brexit, as triumphs for nationalist populism. But they also represent a huge threat for it. Nationalist populism operates primarily as a vehicle of protest against the establishment. But when it is victorious it itself becomes the establishment and has to take responsibility for the policies it espouses. So what happens if (and, in my view, when) those policies fail? One possibility is that its supporters realise the error of their ways and return to liberalism and social democracy. Another, far more likely, outcome is that those supporters conclude that their leaders have been thwarted by the establishment or, even, that they have betrayed them. The reaction will be to turn even more harshly against perceived enemies: immigrants, liberals, democracy itself. And to seek and support even more extreme leaders. Many people around the world are scared about what Trump’s success means: the greater fear is what his failure will mean.

Steel yourself

There are two big news stories in the UK today. One is the closure of the Port Talbot steelworks, following a decision by its Indian owners, Tata, and due mainly to the flood of cheaper Chinese steel into the UK and other markets. The other is the death of the veteran comedian Ronnie Corbett.

They could hardly be more different stories, but I think they are in a certain way linked. The closure of Port Talbot is expressive of the consequences of neo-liberal privatization and globalization. British Steel was privatised in 1988, one of a wave of privatizations under the second Thatcher government, and was subsequently merged with the Dutch group Corus, taken over by Tata in 2007. In recent months the influx of cheaper Chinese steel (a consequence of the slowdown in China) has rendered Port Talbot’s steel uncompetitive.

The fallout of that has exposed many ironies. Some insist that steel must continue to be produced in the UK because of its strategic importance to the defence industry. Here, as in Thatcherism, the tensions of free market and nationalist ideology are evident. Others, arguing for Brexit, complain that the EU has not prevented Chinese steel-dumping. The irony here is that those same people routinely argue against EU ‘meddling’ and yet are now bemoaning the lack of it. A further irony is that the lack of EU action derives from being blocked by the UK government, yet Brexiters say that they are in favour of decisions being made by the UK government, and that the UK has no influence on EU policy. A further irony – or, really, a re-run of the first - is that most Brexiters are free market liberals and yet in their desire to trash the EU they bemoan its lack of protectionism.

What, then, of the death of Ronnie Corbett (a resident of my home town, Croydon, by the way)? Well, the connection for me is that Corbett’s popularity was greatest in the heyday of 1970s broadcasting when he appeared in The Two Ronnies which routinely had audiences of 20 million people. That collective experience was all of a piece with the pre-neo-liberal world of nationalization and of the limited choice (of, in this case, TV channels) to which neo-liberals so vehemently object.

I’ve written elsewhere on this blog about Jonathan Coe’s novels and in particular about his sense of nostalgia, quoting the passage in his 2015 novel Number 11:

“Roger was convinced … that life was better, simpler, easier, in the past … it wasn’t just a hankering for childhood. It was bigger than that. It was to do with what the country was like … in the sixties and seventies …. For Roger it was about welfarism, and having a safety net, and above all … not being weighed down by choice all the time … he loved the idea of trusting people to make decisions on his behalf. Not all of them. Just some. Just enough so that you were free to live other parts of your life the way that you wanted.” (Coe, 2015: 176)

In an earlier (2001) novel, The Rotters’ Club, the central character Benjamin Trotter reflects on watching The Morecombe and Wise Show, which, like The Two Ronnies, attracted mass audiences in the 1970s. I don’t have the book to hand, but the gist of the passage was about Benjamin’s awareness that all over the country millions of people were watching the same show, and that he was part of a collective experience as he sat watching it with his family. Indeed I can remember myself how discussing these kind of shows the day after was the common, shared experience in schools and, I imagine, workplaces in the 1970s.

So what I am suggesting is that there was a relationship between a variety of forms of commonality at that time, ranging from shared ownership of industry to shared cultural experience. Some of that was, surely, nostalgic even at the time: shows like Morecombe and Wise and The Two Ronnies were the lineal and in some cases literal descendants of the music hall and seaside pier traditions of Victorian Britain.

If the two stories are connected, then so are the responses. A significant segment of the Brexit vote (and especially the older demographic from which it derives much of its support) is nostalgic for the days of British economic dominance but also for those shared cultural experiences and, probably, even the peculiarly British tradition of the music hall. I actually share some aspects of that nostalgia but I also recognize that it is not enough. And in particular, I can see that its sentimentality makes easy fodder for a Brexit campaign led not by those who want to protect Britain from the forces of globalization and neo-liberalism but by those whose most fervent dream is for their greater and more untrammelled application. In that dream, any number of workers and strategically important industries will be sacrificed; and as for The Two Ronnies well those who want it can subscribe to a pay-to-view channel or buy the DVD, right?

More gloom

In the second edition of the book I made some remarks that turned out to be prescient about what at the time I wrote it was the nascent financial crisis. Since it is rather rare for my – or any other social scientist’s - predictions to come true I rather regretted the fact that in updating for the third edition I had to excise them. I’m now working on the fourth edition but by the time that comes out (at the end of this year) I suspect that I will have been overtaken by events and that by then we will be well into another, probably worse, crisis. So I’m going to get my prediction in now.

Of course I’m not the only person saying this. Last week a leading strategist at Societe Generale said the same thing and the Royal Bank of Scotland advised its clients to sell their equity holdings in anticipation. Stock markets across the world are in sharp decline, and the collapsing prices of oil and basic commodities are precipitating a global deflation. At the heart of all this is the slowdown in China and, in particular, the massive growth in corporate debt there, much of it due to a real estate bubble and the rise of a secondary banking sector.

Meanwhile, personal debt in most countries – from Sweden to Thailand - is also rising to higher levels than at the time of the 2008 crisis. Although in the UK and US it is not yet at the same levels as it was then, it is also rising. Once again in the UK much of this debt is related to a house price bubble and lax bank mortgage lending, but also rising is unsecured debt sometimes used simply to cover basic living costs.

If there is another financial and economic crisis the consequences will be much graver than in 2008 for two reasons. One is that the capacity, both financial and political, of nation states to bail out banks will be much more limited. So much the worse for the banks, it might be said; but it will not just be the banks that suffer. The reason why, post-Lehmann’s, the US and other governments stepped in was not because of an outbreak of Keynesianism but because they saw the political and economic consequences that would follow if the cash machines, literally, ran out of money. This time round there's every chance that that will happen.

Second, the intervening years have seen a growing precariousness of employment, symbolised but not limited to the rise of the zero hours contract, as I have written about elsewhere on this blog. At the same time there has been an erosion of welfare provision. Thus the ability of ordinary people to weather another crisis is much more limited. In many countries – Greece and Spain amongst the most obvious examples – the capacity of families to provide support for unemployed young people and pensioners has already reached breaking point. It is one thing to give such support to tide over short-term problems, quite another to do so on a more or less permanent basis.

For, as the distinguished political economist Andrew Gamble (2014) suggests in an excellent book, crisis is now likely to be permanently embedded within the global economy, in the absence of some major shifts in ideology and public policy. Of that, there seems little chance. Despite some initial impetus for reform after the 2008 crash almost nothing came of it. There was no new settlement and no new deal, and every prospect, therefore, of another crash. It looks to me as if 2016 will be the year we see it. 

Reference

Gamble, A. (2014) Crisis Without End? The Unravelling of Western Prosperity. Basingstoke, UK: Palgrave Macmillan.

Trading places

This week, the Indian Prime Minister visited the UK just a couple of weeks after the Chinese President did the same. Both were sumptuously hosted, but the main events were trade deals. In between the two visits, though much less reported, the UK-Brazil Joint Economic and Trade Committee (JETCO) met in London.

This in itself tells us something about the global world economy. Whilst of the BRICs Russia’s relations with the UK remain frosty, for complex political reasons, the other three countries in this admittedly artificial bloc are being actively wooed by the Britain and many other countries.

This gives, in part at least, the lie to the repeated claim by those who want Britain to exit it that EU membership precludes the signing of trade deals. In part, because it is of course true that the UK cannot negotiate deals with third parties that would give EU single market access. But that should be good news for Eurosceptics since, were it possible, it would also be possible for any member state to do the same and thereby commit the UK to trade deals it had had no input into.

And these deals also reveal something else. They are predicated in large part upon UK membership of the EU. The Chinese President – in a highly unusual intervention – made it clear during his visit that his country saw trade relations with the UK in terms of the EU, and urged against Brexit. The Indian PM was entirely unambiguous in saying that he saw the UK as India’s “entry point into the EU”.

The Brexiters’ idea that outside the EU there would be a queue of countries lining up to sign preferential trade deals is quite clearly nonsense, as the US have made clear. And any notion that the Commonwealth would be the locus of a new trade bloc is equally preposterous. Australia and Canada have made that clear and the fact that India’s visit to the UK came after visiting 28 other countries speaks volumes. This isn't any longer the world of Imperial Preference.

What did interest both China’s and India’s leaders was something quite different to trading with the UK post-Brexit. Both were concerned about the restrictions put upon visas to visit, work and study in the UK. All these – like the Brexit debate – have got caught up in the British panic about immigration, which is doing real damage, both economic and cultural, to the UK. International students are increasingly turning their backs on British universities as a result. But Brexit also matters to British universities, and this week they came out and said that it would be a catastrophe.

The over-arching debate in all this is not simply about Brexit, it’s about a realistic understanding of what the world is, and the UK’s place within it. These recent events underscore, like it or not, the realpolitik of that place. And it certainly isn't where Brexiters think it to be.

Shaping the EU debate?

In a previous post, I mentioned my article on The Conversation website, which tried to clarify what different Brexit options would mean. It has received over 16,000 hits – apparently an unusually high number – and although I certainly can’t claim that it has shaped the debate, the points raised are beginning to be more widely discussed. Thus last the British Prime Minister spelled out that the ‘Norway model’ would not be viable for the UK.  And this week the Policy Network published a pamphlet insisting, exactly as I had in my article, that the Brexit options be differentiated.

This isn’t an arcane issue, it is the central flaw in the Brexit case. If they champion Norway (or Switzerland) as models then they can’t leverage their main populist argument of reducing immigration, because if the UK remains in the single market, even if not in the EU, then free movement of people still obtains. So, then, they have to argue for a free trade agreement model. But that position is fraught with difficulties. There is no way of knowing what the terms of such a deal would be, nor its timeframes. Moreover, it would mean exiting (and having to try to re-negotiate over unknown timeframes) the EU deals with third-party countries, and from a much weaker position since the UK market is so much smaller than that of the EU.

The US have said this week that they would not be interested in a free trade deal with the UK, and that is very significant since the same thing would likely be true of many other countries. The issue is a simple one: trade deals are increasingly between platforms and blocs rather than individual countries. China, too, is urging the UK to stay in, as is German Chancellor Angela Merkel.

Meanwhile, it’s beginning to be recognized that trade and economics are not the only problems for the Brexit cause. The notion that ‘taking control of our borders’ is unproblematic is also starting to be debated. Of the many issues around that (including moving the border from Calais to the UK, and the position of Brits living in the EU), this week the position of Ireland has been raised. A full Brexit would mean creating a hard border between Northern Ireland and the Republic of Ireland, bringing with it serious problems for the still fragile peace process in Ulster.

Of course none of this makes a dent in the determination of hardcore opponents of British membership. Nothing could or will. What matters is what floating voters make of it all. At the moment, opinion is 54-46 in favour of staying in, but it is reckoned that the ‘hard’ vote for both in and out is 25%. There is much to play for still, especially as most of the ‘soft vote’ are not yet engaged with the still embryonic campaign. There is still plenty of time to reshape the debate. Watch this space as the story unfolds.

Power at any cost

It was announced today that a new nuclear energy plant is to be built in Britain, a development described by the government as ‘historic’. Well, it is historic but perhaps not in ways that give any great cause for celebration. It is the first time that a nuclear power station has been built in Britain not by the government but by private investors, principally state-owned companies in China and France. It is an extraordinary irony that the privatization of British electricity generation – on the basis of the supposed virtues of the private sector – has ended up with paying overseas public companies to do what used to be done by the British state. It is nevertheless underwritten by the British state: there is no risk for the investors both in the specific sense that they are guaranteed a future revenue stream set at twice the level of present prices and in the more diffuse sense that, ultimately, the state will be responsible for ensuring power supplies come what may.

The deal resembles the PFI deals extensively used for public investment in Britain and elsewhere over recent decades. In these, present private investment is paid for by guaranteed long-term future expensive payments from the public purse. Notionally risk is transferred from the state but that is indeed notional since, when public services are at stake, the risk ends up back with the government, as happened for example with the London Underground. PFI has been widely criticised for its poor value.

It is difficult to overstate the folly of these kinds of deals, and not just financially. Thinking about energy in particular (but also transport, healthcare etc.) the idea that key, strategic, services can so casually be handed over by governments is breath taking. With PFI it could be understood as an infatuation with the private sector in line with neo-liberal ideology. But in the case of the new power station there is not even that explanation. Instead, it actually shows the bankruptcy – literally – of that ideology, because it shows that the shrivelled neo-liberal state has no option other than to bribe the state-owned companies of other countries to do what it no longer has the skills or the capital to do itself – whatever the cost.

Suicide and organizations

I’ve come across two thought-provoking articles today, and the thoughts they provoked were not pleasant. One is a piece in The Guardian by Seamus Milne about the growth of ‘zero-hours contracts’ in the UK. With such contracts, workers are on standby to work, but with no guarantee of any actual work, and therefore payment, eventuating. In many cases, the contract forbids the person from working for anyone else either. Hailed by neo-liberals as an example of ‘flexible employment’, it is clear that all the flexibility is on the part of the worker. The consequent insecurity is obvious – no guaranteed income from week to week for a start, no pension or fringe benefits, no prospect of buying a home, difficult to sustain a family – in short, the full weight of the new insecurity I wrote about here a couple of months ago. And, although Milne does not make this connection, increasingly, there is little or no safety net, with recent clampdowns on benefits for the disabled in particular leading to a spate of suicides and an even greater upsurge in suicidal thoughts. Meanwhile, as I noted in my book (p.117), suicide rates in Greece have risen alarmingly since 2009 (and the rise has continued since I wrote that)  and there can be little doubt that the cause of this is the social and psychological dislocation caused by the economic crisis.

Suicidal desperation is at the heart of Jenny Chan’s recently published paper entitled ‘A Suicide Survivor: The Life of a Chinese Worker’ in New Technology, Work and Employment. Unusually for an academic article, this is a powerfully written paper and it recounts the life of a Chinese worker who attempted suicide, apparently a growing trend.  We often here of the rise of the knowledge economy and new organizational forms which stress creativity and freedom, but the hidden heart of this economy is what Chan describes as “a production model apparently based on classic Taylorism” (p.88). The intense discipline of life on the line of an outsourcing company producing Apple's i-phones is described in chilling detail, culminating thus: “The accumulated effects of endless assembly line toil, punishing work schedules, harsh factory discipline, a friendless dormitory and, rejection from managers and administrators, compounded by the company’s failure to provide her with income, and then her inability to make contact with friends and family, were the immediate circumstances of her attempted suicide. Her testimony reveals how she was overwhelmed, ‘I was so desperate that my mind went blank’. At 8 a.m. on March 17, Yu jumped from the fourth floor of her dormitory building in despair. After 12 days in a coma, she awoke to find that her body had become half paralysed. She is now confined to a bed or a wheelchair” (p. 91). It is not just in harsh factory conditions that work-related suicides are found. For example, in 2008 and 2009 there was a wave of suicides amongst employees of France Telecom, with many leaving notes blaming work pressures in an organization undergoing massive restructuring.

Suicide is undoubtedly the most powerful and extreme act of the powerless and desperate, a complex response to, and creator, of trauma and its causes are equally complex, and varied. One part of its power is to make it almost undiscussable and, certainly, one should never draw glib conclusions from and about suicides. But, equally, as Salford University academics Jo Milner and Ian Cummins note (and give links to further research on), the links between suicide levels and social and economic conditions are well-established, and have been since at least the publication of Emile Durkheim’s  1897 book, Suicide. So it would certainly be glib to consign suicide to the realms of individual psychology. If we have global economic systems and associated organizational systems of work and welfare which engender suicide then we (including and perhaps especially those of us whose profession is the study of organizations) should not be shy of saying so. Terms like flexibility, welfare reform, global supply chain efficiency and organizational restructuring sound neutral and unexceptionable. What lies behind them may be horror.