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The Precarious Future of The Nation-State
The Precarious Future of The Nation-State
21 – 2008’s post-crisis
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D - The arrival at neoliberal suffocation
In the first half of the cycle begun in the post 1939/45 war period, an upward trend
was observed which corresponds to high GDP per capita growth, all the more
relevant because it appeared at a time of high population growth, with the “baby
boom" that followed the war and the importation of immigrants that, in Europe, moved
from the poorest to the richest countries, as well as those from the Maghreb, the
Pakistani and the Caribbean. The second part of the cycle portrays its downward
phase, which trails beyond the subprime crisis, with the affirmation of the neoliberal
paradigm:
With the financialization, offshores, and debt that drowns families, companies
and state entities;
With precariousness in work and life; with the development of the internet,
communications and computing in general, segmentation of production and
relocation, automation, acceleration of economic integration, disintegration of
borders, and the monitoring of our lives scrutinized in the so-called big data
were facilitated;
With the market logic being applied to goods and services, but also to people,
and political regimes as in the management of climate drift, becoming
commonplace;
With the impunity of various traffics, such as women, children, slaves, arms,
organs and drugs;
With the constant presence of long duration wars of great destructive impact,
before the indifference of those who are outside them and watch the
destruction of people and goods on a screen. The "art" of the war abandoned
(even more) any rules, to be carried out by cowards who destroy from a
distance, without taking risks or showing their faces, ensconced thousands of
miles away, and killing as in computer games.
The following table is quite illuminating on the two phases of the fourth Kondratiev
cycle until 2008; later, we shall discuss the subsequent period. If the Keynesian
paradigm took advantage of conditions conducive to GDP growth and the relative
improvement of people's living conditions, particularly in the West, in the mid-1970s it
was bogged down by the economic and political problems of the capitalist system and
opened the doors to the reactionary figures that were grouped in the Mont Pelerin
Society, among them Friederich Hayek, Milton Friedman and Karl Popper, paladins of
the economic liberalism, contrary to the State’s strong intervention, as happened
then, and of setting capitalists as creators of humanity’s well-being. As shown in the
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following table, after the crisis of the 1970s, neoliberals, taking control of the world
economy, showed the limitations of their paradigms and that the problem that remains
to be solved is called capitalism; whether under neoliberal evangelism or with the
strong commitment of the Keynesian state.
The upward phase that began the fourth Kondratiev wave suffered a first shake when
Britain devalued the pound in 1967 and then the US (1971) suspended the possibility
of converting its currency into gold... which, in fact would be impossible to meet
because the available metal no longer had any correspondence with the circulating
currency. The Bretton Woods architecture suffered, thus, a rude blow, and the
monetary instability returned.
The closure of the Suez Canal in 1967 (only reopened in 1975) caused major
changes in the transportation of goods between Europe and Asia, as well as Europe's
supply of oil from the Middle East. Then come the shock of the quadrupling of the oil
price in 1973, following the concerted attitude of the Arab states after the war against
Israel; which also served to increase the value of the energy component of the global
product, by the OPEC countries, to the detriment of the industrialized countries; and
also for the nationalization of the oil producing facilities in the possession of the latter
which would, in the twenty-first century, regain possession of those energy resources
in Iraq and Libya following the (or the cause?) of the Western invasions. In 1979 a
new hike happened, due to the disturbances resulting from the American
commissioning on Iraq to attack Iran; which originated a bloody war that dragged on
for ten years.
These changes in oil prices and logistics have created difficulties in key industries
such as the steel industry, shipbuilding, heavy chemicals and the automobile industry,
with consequences for unemployment levels which were residual up to those changes
– and especially for less skilled workers, women, and immigrants. On the other hand,
the dominant Keynesian logic will promote a strong intervention of the national State
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and the support of the unemployed, whose numbers grow again; and also the
exploitation of the virtues of public investment and the public deficit, with the growth of
indebtedness and the issuing of currency. To the increases in prices resulting from
higher energy prices, the inflationary effects of public spending are added, in a
context of continuous productivity stagnation.
As inflation coexisted with a recession, it called into question the Keynesian logic for
which inflation could only arise in situations of proximity to the full use of resources
but not in recession and unemployment phases when there are "available production
factors". This phenomenon, that came to be called stagflation, has encouraged the
reawakening of neoliberal theses in experimentation in Chile since 1973, and where
all the freedoms for the accumulation of capital, for the massive entry of foreign
capital, for the reduction of the public spending, especially that with social content,
with privatizations and brutal repression of workers' incomes and rights, took hold
under the political cover of a fascist military regime.
Chile, until then one of the Latin America countries with a stabilized market
democracy, moves to the situation of neoliberal laboratory. The social expenditure
borne by the State does not in any way resemble the "European social model"; while
in the latter the state managed generous social security, advanced rights in the
context of employment stability, the right to strike, safety in sickness and
unemployment, the Chicago Boys, in their Chilean essay, reduced social burdens to
indigence situations, subordinated labour rights to the aims of corporate profitability,
rendered employment precarious through greater power of the capitalists, making any
labour challenge highly penalized and repressed. The Chilean example has been
replicated in Argentina, Uruguay, Bolivia, Paraguay, Ecuador, among others, although
not all dictatorships have had the same neoliberal character but rather the oligarchic
domination of traditional wealthy classes, in connection with fascist military.
The Keynesian model demanded high and incessant GDP growth that became
difficult to achieve in a context of stagflation; keeping the GDP fetish as a goal, the
neoliberal paradigm, to achieve growth, would come to use instruments such as
deregulation, privatization, state support to creation of competitiveness, free market to
the detriment of labour, wage and social constraints, and borders open to the
movement of goods, capital and (not always) people. From the point of view of the
multitude of workers and dispossessed, Keynesian management, as the neoliberal,
are only two genres of capitalist management; capitalism is always a system
dependent upon capital accumulation.
In relation to this dependence, it should be emphasized here that the incontinent drive
for capital accumulation makes capitalism expansive, in terms of geography, society,
and time, the latter being the object of a constant struggle for its reduction; a neurotic
drive. Producing more per unit of time or the same in less time corresponds to an
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increase in productivity that tends to raise profit margins; getting the worker to
produce more per unit of time is a way of reducing the cost of labour; and if the
consumer is motivated to binge on more food, more services, and more debt for every
day of his/her life, that is to insert him/her into the struggle of capital against time in
the web assembled by capital to dominate it. The capitalist logic for the incessant
growth of GDP is part of this avidity of anticipation of the passage of time; and which
is clearly applied in the functioning of so-called financial markets. And none of this
disturbs the incorporators of neoliberal or Keynesian logic, even those who call
themselves "left."
The drive of capitalism for the shortening of time entails the development of
technology, beginning with nautical, when it became necessary to make the long
voyages from Europe to the East or to America, which globalized the planet and
allowed the latter to come to be ridden by capitalism, especially since the seventeenth
century onwards, with extensive colonization and slavery. As we have already
mentioned, the problem is not globalization, with the exchange of goods, cultures
and affections among humans; the problem is the capitalism that dehumanizes and
bastardizes these exchanges destroying, among other collateral damages, the
environment, which private appropriation is impossible.
Continuing the approach about paradigm transition in capitalism, the crisis of the
1970s shows the interdependence between Western countries, especially in Western
Europe, with little differentiation and, on the other hand, their collective integration
with oil-producing countries within an increasingly globalized logic that did not
facilitate specific solutions within the scope of nation-states. And this interdependence
will require articulation in a competitive context and great inequalities, with the use of
war applied, then, only to colonial and neo-colonial spaces.
While in the USA the contestation of the Vietnam War was increasing – as the defeat
approached – and the Watergate case wrought political havoc, the USSR, taking
advantage of the American paralysis, secured a strong influence in Angola and
Ethiopia. The Iranian revolution and the disastrous US military intervention in Iran was
another element that favoured a qualitative change, with Reagan in 1981, towards the
unrestrained and brutal application of the neoliberal paradigm which, with enormous
determination, had already been applied by Margaret Thatcher in Britain since 1979.
The way the fights of British miners and US air traffic controllers were crushed, in both
cases, is striking; without any reaction to the gravity of the moment from the
unionized, domesticated and bureaucratized structures.
In Europe, fascism was swept in Portugal and Greece while Franco's death carpeted
a soft transition in Spain that recycled the fascist oligarchy into a future rotational
system with the PSOE; and the then EEC, which had already integrated Britain,
Ireland and Denmark, would prepare itself to extend the area of economic integration
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– a single market – to the south, to the countries that had left fascism. The EEC was
then essentially a free trade area with a vague underlying political project.
In Portugal, at the time, this situation of structural, economic, social and political crisis
was very clear, requiring a transition or even a change. The oil crisis ruined the global
integration strategy set up in the last days of fascism and based on heavy chemistry
and metallurgy, both affected by the reopening of the Suez Canal. It was followed by
the fall of fascism and the absorption of hundreds of thousands of people from the
colonies, the cessation of the migratory movement to Europe, given the global crisis,
and then there was a huge investment in the under-capitalized companies – hence
their nationalization – transportation, heavy industry, banking and insurance, in
particular – to the development, in parallel, of a very encompassing state apparatus
faced with new or more intensive functions in the areas of education, health,
economic coordination, social facilities... The State thus assumed the typical functions
of safeguarding the interests of capital, in parallel with a great strengthening of its
social responsibilities, which would become unbearable in the short term, even if, in a
first phase, it had the support of the entire Portuguese political classes, from the right
or "left" wings.
This unanimity was quickly broken, giving way to the slow passage from the
Keynesian model well expressed in the program of the first PS government to the
reigning neoliberalism.
Still on the graph, it can be seen that the arrival of Community funds and
European integration, coupled with low labour conflicts, only lead to improvements
in the weight of labour income between 1990/93, followed by a regressive period1
and the stabilization of the weight of labour income in GDP by 2005 – with no
visible impact from the euro introduction – and, in 2015, the second lowest
position of a 56-year period, after the troika intervention.
1
We can’t resist telling two anecdotal episodes from the domestic economics. At the beginning of the 1990s, Abel Mateus, who in
the meantime circulated through the BoP and the Competition Authority, built a fabled macroeconomic model that announced a
GDP growth of... 10%. And at the same time, Minister [of Finances] Braga de Macedo, commenting on the recessive crisis in
Europe, referred to Portugal as an oasis (!)... which the chart shows to be a dry one, after all, unable to produce any dates,
although having camels parked there .
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Chart 1 - workers wages/GDP (%)
Source: Pordata
b) The second phase would emerge in the mid-90s, with the agreement on
privatizations between Prime Minister Cavaco (PSD) and Constâncio (PS, untill
2018, he was vice-president of ECB) under which the State "group" was alienating
the companies that had been nationalized and recapitalised; all in the name of
reducing the public deficit that had survived all the privatization stages that will
have reached their (provisional) end after those ordered by the troika. However, in
order to favour private capital, rents were created under public-private
partnerships (the first, for the concession of the Vasco da Gama Bridge, was in
1994) and the losses with the sinking of the autochthonous financial sector were
to be assumed by the State.
2
In his boorishness and arrogance Trump makes this very clear by recently referring to "shit countries” .
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United States, South Korea, Japan (even though they are militarily protected by the
US), China, Russia, India, Iran, Canada and a few others. The very way in which
within the EU, Greece, Ireland, and Portugal were intervened, with the monitoring of
the troika, was different from the attitude towards Spain, where the troika was not
introduced.
From this need for global management and subordination of nation-states and their
political classes results the emerging of a denationalized, mercenary elite, producer of
a unique thinking that is a central and present element in all societies. This elite
manifests itself in an institutional, formal, form – IMF, WTO, EU ...; at other times, at
formal – but not institutionalized – conclaves with the presence of representatives of
the main nation-states, be them the G20, G7, G8, G10 ...; and also at the discrete
Bilderberg, Davos and Trilateral meetings of the political elites with the top executives
of the banks, the multinationals and the media, where elements of small and medium-
sized countries appear annually for evaluation (some Portuguese are regularly
summoned to the Bilderberg meetings). And it would be unfair to forget what we call
the Hillbilly Bilderberg, a meeting of the richest members of the Portuguese
entrepreneur club and local parish’s think tanks, in the already distant year of 2009.
This management and political elite makes the 1% (referred to in the popular
movements of 2011/13) that constitutes the great obstacle to the 99%, and that holds
enormous power, even in a context of internal divergences, because it defends
competing institutions, often with conflicting interests. It is as a product of its action
and the management of conflicts within it, on a global scale, that the Empire as
defined by Hardt and Negri is instituted; an empire that removes from the decision-
making the other 99% of humanity – including those still voting in their respective
political classes – where all the candidates to the genocide to be perpetrated for a
"profitable" resizing of humanity are gathered.
It has long been discovered that the brute force of the State – military and police –
must neither, nor has it the ability to, be in the forefront of domination; they are
reserves for repressive action in a situation of constant alertness, attentive to the
voice of the government command, when the crowd awakens from its lethargy and
rebels, sending that unique thinking down the gutter.
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One of the areas where this unique thinking is generated and propagated lies in the
business schools, specialized in "business sciences", which have removed from
teaching economics, sociology, history as disciplines for understanding the integration
of the social and the political, focusing in ideological panaceas such as
entrepreneurship or competitiveness; or in techniques such as accounting and
taxation, integrated into standardized computer packages.
Top rated or media catechists divide their activities into various segments of this
diffuse thing called the market. They stand out in the business activities as top
managers or consultants3; as heralds in the parties market; in the well-paid media
market, as opinion makers, contributing with a mixture of banalities and falsehoods to
shape the thinking of the plebs, with oracles on the enigmatic and capricious designs
of the economy, which contrast with the very real domestic economy, which is limited
to balancing the salary with the payment of the essential expenses or the instalments
of debts, the creation of which banks so much enjoy.
Within this unique neoliberal thinking, there is a set of norms that the great economic
powers on the planet – multinationals and the financial system – have defined as for
widespread application by the various strains of political, national and multi-national
classes:
3
The top consultants are few and are characterized by "pack-saddling the donkey to the owner's satisfaction" (loose translation,
meaning their opinions/conclusions are issued according to the wishes of those who commissioned them). The Price Waterhouse-
Coopers (PwC) was recently banned from India; and, in Portugal, in the cases of BPN or BES, the auditors also "failed to detect" the
slip of the accounts (as, by the way, did the Bank of Portugal which also uses the precious audit firms), even if they were royally
paid.
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One is the privatization of everything publicly owned, formally or informally,
provided it can be a source of private profit, possibly with inflated prices for
this purpose, such as public-private partnerships or the so-called outsourcing
of functions; this is the hiring of companies to perform specific functions within
public bodies – computer services, security, cleaning, meals ... or this
miserable function of temporary work in which 21st century slave traders shine
under the modern name of businessmen. The troika's privatization program
was very clear on this point, as in the 1990s it had been under the Cavaco-
Constâncio agreement, as bosses of the PSD and PS gangs.
The liberalization of transactions and the functioning of the market requires the
dismantling of the rules which gave some security to the workers – within the
national contexts – inherited from the dwindling or extinct "European social
model"; the capitalists intend to and manipulate the political classes towards
making each salaried worker become an obedient, hard-working, without
rights and, if possible, paid by public money precarious worker. Another
aspect of this liberalization is the contempt for the extensive incorporation of
elements harmful to human health in food or, by the careless production and
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dissemination of garbage and pollutants that permeate air and soils,
contaminate the water and enter into the food chain of people and animals.
The important thing is the "creation of value", the reproduction of capital, and
the distribution of profits to shareholders even in the most nonsensical way, in
management terms4. On the other hand, the disdain for regulating
environmental quality and not contributing to the containment of climate
change also happens, so that it does not affect the profitability and
competitiveness of companies; even if it is necessary to reduce Humanity to
some 600 million people, as was already floated around in the Bilderberg
conclaves.
Today, more valuable than these synergies is, on the one hand, to buy and
sell these bonds very frequently – as if they are burning – even if the gains in
these operations are small per unit; but as they are traded frequently and in
enormous volumes, this results in, after some time, these small gains
materializing in large increases in the initial value held by the speculator. The
instantaneous nature of information circuits worldwide and the use of powerful
computers for the analysis of quotations and transactions also make extremely
fast the options for the purchase of some securities and the sale of others or
even for their momentary parking in a bank account, waiting for an
advantageous application opportunity. Although economic journalists call the
protagonists of this frenetic activity "investors", investment is what matters
least to them, focusing on the gains of speculation, obtaining profits without
investment, without producing any goods or services; a pure parasitism from a
social point of view. Another aspect in which the domain of the financial
system is observed is the debt, of families and companies, to which the public
debt must be added. The latter, mutualised for payment by the multitude, is a
4
A Portuguese public company, the CTT (postal services), when privatized by the Passos government, was presented with an
authorization to practice the banking activity, which was transferred for free by the CGD public bank. This was a clearly
understood negotiation; the shareholders – including the great Goldman Sachs – were receiving hundreds of branches across the
country where postal services operate and that would see banking services coupled. The CEO in charge of this postal/banking
services merger was a certain Francisco Lacerda, with an annual salary of one million euros, certainly many times higher than the
average CTT workers’. Recently, the company presented high losses and the same Lacerda advocated 800 layoffs while distributing
fat dividends by shareholders; in an act of moving solidarity, Lacerda would have lowered his salary to a paltry € 750,000, an act of
self-flagellation that sits well on a former Catholic University student. On the subject we highlight here the commentary of the
journalist Nicolau Santos.
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means of creating, through the State, income favouring the financial capital
in general. Debt is a way of ensuring application to speculative capital, of
fuelling the bubble; one of the roles of the political classes as agents of
financial capital is to convince the plebeians of their duty to honour its
(impossible) payment.
21 - 2008’s post-crisis
Just as Keynesianism stumbled into the crisis of the 1970s and gave rise to the
neoliberal wave, the latter found in the aftermath of the subprime crisis its systemic
crisis that is far from being overcome, but is damped and hostage, in particular, to
China’s economic dynamics. And a paradigm that minimally satisfies the great
majority of Humanity remains to be built, so neoliberalism drags itself along politically
through alliances with fascist groups, without the assertive rise of a credible
alternative for change, able to enthuse the many millions of victims of the neoliberal
drift, being seen; even if we are before glaring scenarios of climate catastrophe or
deliberate genocide policies.
The connection between capitalism and the state, even though being permanent,
went through several phases:
In the nineteenth century and for a few decades, until the First World War,
liberals who understood the global system in the private enterprise’s image,
thought to remove the state from their path, with liberalization of labour,
repression of workers and free enterprise; but not doing without the affirmation
of the nation-state in the fierce defence of frontiers, war and colonial
expansion.
Things did not go well to the liberals, and the state was once again called to a
central role in economic activity, with the New Deal, fascism and state
capitalism, in a context of isolationist, self-centred nation state, which did not
prevent the most destructive and deadly war ever (1939/45).
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The opening of frontiers to trade and capital transactions, coupled with
substantial technological development, has increased the size and power of
multinationals; those, while continuing to not do without States’ support, went
on to control them, addition to their accumulation logic the political classes, as
mediators of their interests among the peoples, still kept on the illusion of the
power of the nation-states, in the great majority of the latter. More than ever
can it be said that capital has no country, only interests; but it certainly likes to
see people disunited, infected by the patriotic fetish.
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5
Rossiskaia Gazeta, 4/20/2016
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