Donald Trump: as the 1929 crash gave rise around the world to movements fuelled by racist nationalism and populism, so the 2008 crash has followed suit.
The election of Donald Trump symbolises the demise of a remarkable era. It was a time when we saw the curious spectacle of a superpower, the US, growing stronger because of – rather than despite – its burgeoning deficits. It was also remarkable because of the sudden influx of two billion workers – from China and Eastern Europe – into capitalism’s international supply chain. This combination gave global capitalism a historic boost, while at the same time suppressing Western labour’s share of income and prospects.
Trump’s success comes as that dynamic fails. His presidency represents a defeat for liberal democrats everywhere, but it holds important lessons – as well as hope – for progressives.
From the mid-1970s to 2008, the US economy had kept global capitalism in an unstable, though finely balanced, equilibrium. It sucked into its territory the net exports of economies such as those of Germany, Japan and later China, providing the world’s most efficient factories with the requisite demand. How was this growing trade deficit paid for? By the return of around 70 per cent of the profits made by foreign corporates to Wall Street, to be invested in America’s financial markets.
To keep this recycling mechanism going, Wall Street had to be unshackled from all constraints; leftovers from President Roosevelt’s New Deal and the post-war Bretton Woods agreement which sought to regulate financial markets. This is why Washington officials were so keen to deregulate finance: Wall Street provided the conduit through which increasing capital inflows from the rest of the world equilibrated the US deficits which were, in turn, providing the rest of the world with the aggregate demand stabilising the globalisation process. And so on.