‘There is no escape for European capitalism’

Trotsky’s assessment a century ago seems even more relevant today. Tanroop Sandhu provides a wide-ranging evaluation of global politics in the age of Trump.

In 1924, the Russian revolutionary Leon Trotsky gave a speech surveying the economic and political state of affairs in Europe and abroad. Since the First World War – with its industrial slaughter in Europe, Africa, and the Middle East, the financing of much of the war by the United States, and the increasing exhaustion of the old imperial states of the continent – world capitalism had undergone fundamental shifts that many were slow to recognise.

The European ruling classes, Trotsky wrote, were in denial about the fact that they had ‘been shoved to the background, that it is the USA that rules the capitalist world.’ As the United States’ economy continued to grow by leaps and bounds, and as it continued to reap the benefits of its loans to Europe, which was struggling to recover, the continent was ‘beginning to pay America for its own ruination.’ US capital had helped the war machine run for four years, and now the bill was coming due. 

Yet despite the United States’ unprecedented economic strength, US capital still complained about being ‘isolated and exploited on all sides.’ US secretary of commerce Herbert Hoover, for example, castigated the British Empire for its artificial inflation of the price of rubber. He published ‘29 questions’ in an article, ‘each of which came like a pistol shot’ under the British government’s ‘very ears’ – the price of rubber duly came down. This, in Trotsky’s view, ‘illuminates the world situation far better than would scores of statistics.’ Dependent on European empires for raw materials, US capital saw ‘each rise in prices of raw materials she lacks as a malicious assault upon her inalienable right to exploit the whole world – it is to this new America,’ Trotsky wrote, ‘wildly on the offensive, that dismembered, divided Europe finds itself counterposed – a Europe, poorer than before the war, with the framework of its markets still more restricted, loaded with debts, torn by antagonisms and crushed by bloated militarism.’

But the traditional narrative of the United States returning to isolationism after the war is not quite right. As the historian Adam Tooze points out, the ‘key figures in the Republican Party were not ‘isolationists’. They had their own vision of an international order held together through dollar diplomacy and disarmament’, as did their allies in Wall Street and business. Elites from both parties saw the need for allowing some concessions to their creditors in Europe, like Britain and France. However, the costs of stabilising Europe, and world hegemony more broadly, would ‘rebound directly and to a significant degree on US tax-payers’ – this was not something the US public was going to stomach. At least, not yet. 

Washington bullets 

After the world was once again plunged into war in 1939, the United States’ hegemony over Europe deepened further. In the waves of decolonisation that followed World War II, European empires collapsed and the colonial order began to give way to the ‘liberal international order’ (which, of course, was neither liberal, nor international nor much of an order). With the Marshall Plan, a large US economic recovery package for Western Europe after the war, the continent was once more relying on US capital to bring it back to its feet. The Cold War rivalry with the Soviet Union saw the creation of NATO. Trotsky had forecast US ascendance and European decline in 1924, but it was after World War II that the infrastructure of the US-led world order which we still largely live in, and the ideology of the ‘Atlanticism’ that binds together US and European elites, was truly created.

In many ways, the Biden presidency was also its swan song. Democratic foreign policy under the last administration resembled ‘Second World War revivalism in a slick 21st century package.’ Much was made of the US fighting for ‘its values’, and liberals increasingly talked about a battle between democracy and autocracy – managing, somehow, to cast themselves in a heroic role while aiding, abetting, funding, and denying Israel’s genocide in Gaza. Yet the ambitions to cosplay World War II, and to rediscover a sense of purpose for the Empire, are increasingly difficult. Once again, the United States is experiencing profound domestic crises, and appetite for interventionism abroad is in short supply among the US people. 

The difficulty is that the US is aware that the gap is being closed by its competitors. Trump’s secretary of state Marco Rubio recently admitted that the US’s unipolar dominance of the global system is at an end – ‘that was an anomaly… eventually you were going to reach back to a point where you had a multipolar world, multi-great powers.’ The reality of this is undeniable. In US ruling circles, there is some consensus on this diagnosis – it is on the treatment that they apparently diverge.

As far back as 2012, Obama inaugurated a ‘pivot to Asia’ strategy, intended to counter the blindingly rapid rise of China. Trump’s first presidency saw a further development, as he directed US strategy ‘away from the war on terror and towards Great Power competition.’ Biden largely continued the same strategy, despite surface-level differences. Trump had been all bluster, and had the world looking to his unhinged Twitter posts every day to see the latest provocation. He angered and insulted US allies. Biden preferred the softer-touch of the US ‘leadership’ – for example, overseeing genocide and mass starvation while giving speeches at the UN about the ‘soul of democracy’. Nonetheless, the approaches of both presidents had much in common – for example, a commitment to trying to impede the rise of China through trade wars and pushing us closer to the brink of military conflict. Trump in his second term, however, seems set to go farther than he did from 2016-2020. 

Trump 2.0 

The new administration’s foreign policy is ‘simultaneously purposeful and improvisational’. It’s difficult to parse the rapid about-faces in Trump’s declarations, to know what to take seriously and what to chalk up to his eccentricities. Still, a few general trends can be discerned.

Firstly, there will be significant amounts of continuity with existing US policy. There may have been a ceasefire in Gaza, soon after Trump came to office, but it has been repeatedly violated by Israel since it was first implemented. On 5 March, he issued a bone-chilling threat on social media: ‘to the People of Gaza: A beautiful Future awaits, but not if you hold Hostages. If you do, you are DEAD!’ Aside from such threats, or his desire to ‘have’ Gaza, he has also appointed extremists to diplomatic positions in Israel, and has turned a blind eye to Israel’s rampant aggression in the West Bank.

Trump has also been making headlines with his threats of tariffs – first threatened, then ‘postponed’- on Mexico and Canada. He has also floated the idea of 60 per cent tariffs on Chinese imports, and has left vacancies in the World Trade Organization – a body which might have been the venue for challenges to the tariffs. In the latter case, however, he would be following in the footsteps of previous administrations – in 2011, Obama had also blocked a nominee to the WTO in the name of US interests. Of course, he is also not the only president to adopt a hostile posture towards China. There is an increasing sense that the world order the US has created is no longer fit for purpose. Again, drawing on Adam Tooze: ‘globalisation was an American project, from which American businesses profited handsomely, until technological and industrial developments threatened to undermine US state power.’ Since then, the US has joined the ranks of ‘revisionist’ powers. As in 1924, the United States sits astride the world and yet complains about being ‘exploited on all sides’. So, Trump is continuing down a well-worn path but in a characteristically vulgar fashion.  

However, he also represents the increasing domestic weariness in the US with footing the bill for global dominance. His calls for NATO members to increase defence spending, his move towards demanding more direct forms of ‘tribute’, and his insistence that the US is being ‘ripped off for decades by nearly every country on Earth’ are all in this vein. Many Americans are tired of the Empire, at least financially. Despite his own imperialism, Trump has cynically, and selectively, played on the exhaustion with endless war in both of his campaigns.

Europe is now feeling the brunt of this demand that US hegemony more directly pay for itself, as Trump hurries to disentangle the United States from the war in Ukraine – while also demanding ‘tribute’ from Ukraine in the form of a minerals deal – and essentially washes his hands of what he sees as Europe’s problem. There is also less patience for the work of building soft-power through foreign assistance and organisations like USAID. In the latter case, the economist and analyst Daniela Gabor has written about how the Trump administration is ‘turbo-charging the lesser known but increasingly dominant agenda within USAID: mobilizing private capital’. In this view, ‘development is no longer a public good to be directly financed by states, but a market opportunity.’ 

A hint of how this shift towards corporations and the private sector might play out more broadly was also apparent in the recent Blackrock acquisition of two major ports on the Panama Canal, which Trump had claimed was being run by China. The US corporate giant bought out the ports from the Hong Kong-based CK Hutchinson, after securing the US government’s backing for the deal. In many ways, Trump’s second term may well augur a shift in how US hegemony is exercised around the world; with a move away from soft-power and lip-service to idealism, which no one can seriously believe anymore, towards what Trotsky called ‘America, wildly on the offensive’ and feeling perpetually aggrieved. 

Europe adrift 

The European Union has been adrift for quite some time now. If the EU elections of 2024 were any indication, the prevailing political current in Europe is what Alberto Toscano has called a ‘right-wing turn to nowhere’. Amidst austerity, the continued mainstreaming of the far-right and a hateful and deadly anti-immigrant politics, Europe is now also faced with the prospect of losing the ‘security umbrella’ the United States provided since the end of the Second World War. 

The swift dealignment of the US regarding the war in Ukraine has caused a veritable political crisis in Europe. Starmer, in an expression of simultaneous servility to the US and delusions of grandeur, played nice in Washington, invited Trump for an unprecedented second state visit and thanked him for changing ‘the global conversation’ around Ukraine, while also floating the idea of British troops being sent to Ukraine. The problem is, that not even the Defence Secretary John Healey thinks the British army is in a condition to do any such thing. Other leaders like France’s Macron have been slightly more standoffish with Trump, but the moves towards a renewed militarism on the European continent are clear. In a statement on 5 March, Macron talked about the need for ‘more arms, more equipment,’ for Europe in this ‘new age’. The third-largest exporter of arms, France, has called for a circumvention of deficit rules which have hampered effective EU action for years – and which was so devastating in the aftermath of the financial crisis of 2008 – in the name of essentially creating a European military-industrial complex.

After the EU decimated the economies of countries like Greece, Spain, and Portugal in the name of fiscal discipline after the 2008 crash, it is galling to see how quickly they have pivoted towards calls for ‘common borrowing’, and how even countries like Germany are implementing reforms of debt policy to allow for half a trillion euros of military spending. No similar urgency, no similar shirking of neoliberal economic orthodoxy, has been seen in the realms of climate policy, or rebuilding public services. 

The EU’s military ambitions face an uphill climb. Since the Russian invasion of Ukraine, Europe has sourced nearly two-thirds of its defence needs from the United States. Trump’s recent dressing-down of Zelenskyy in the Oval Office has given a boost to the sections of Europe that the analysts Kate Mackenzie and Tim Sahay call the ‘sovereigntists, or the strategic autonomists, associated with France, who want to build out a larger European military industrial complex.’ In anticipation of this, European defence companies have seen their stocks surge by nearly 40 per cent while the US defence contractors have seen a (very modest) 4 per cent drop. As the British communist Rajani Palme Dutt put it, in 1936: 

each advance of war in one or another part of the globe, each advance of tension, and each advance of rearmament, is accompanied by a rise in the values of leading shares on the Stock Exchanges of the world… Truly of capitalism it may be said: ‘We have made a covenant with death, and with hell are we at agreement.’

Mackenzie and Sahay rightfully point to the danger of ‘military Keynesianism for business and the state; [and] austerity for the people’. Already, papers like the Financial Times are carrying opinion pieces titled ‘Europe must trim its welfare state to build a warfare state’. The author argues that the ‘fear’ of Russian aggression may be needed to popularise the need for ‘difficult reforms’. ‘The welfare state as we have known it must retreat somewhat,’ he writes, ‘not enough that we will no longer call it by that name, but enough to hurt.’ The rhetoric of ‘tough choices’ is no doubt on the horizon, and will be invoked repeatedly in the days to come. The chancellor Rachel Reeves is set to deliver billions in cuts to welfare, all while the government prepares to increase defence spending more than at any time since the end of the Cold War.

Even before the current crisis, the stagnant economies of Europe and Britain had been looking for something to ‘jump-start growth’. It seems that governing elites feel they have found it in a 21st-century redux of ‘military Keynesianism’. Starmer has adopted such messaging already. In a recent tweet, he claimed that an ‘increase in defence spending will benefit British businesses and drive growth across the country. Rebuilding our industrial base.’ In another, quite bizarre, post, a series of students are asked to share their thoughts on how increased defence spending will help ‘small to medium-businesses’ and young people. Starmer’s quixotic hopes of ‘unleashing AI’ across Britain, or the prospects of a green industrial revolution on the continent, it seems, are giving way to a militaristic vision of growth.

Prospects

Trotsky, when he surveyed the world a century ago, was convinced that there was ‘no avenue of escape for European capitalism.’ Even in the absence of a conscious policy, US economic superiority was so far advanced that it would ‘no longer permit European capitalism to raise itself. US capitalism, in driving Europe more and more into a blind alley, will automatically drive her onto the road of revolution.’ Of course, Trotsky’s predictions on this specific count were wrong – or, at least, premature. However, it does beg the question – what prospects are there for Europe? 

The current US administration seems torn between wanting Europe to strengthen and securitise itself – so the US might focus more directly on China – and a stream represented by J.D. Vance, which seems to prefer ‘a weak and divided Europe, with right-wing populists in the vanguard’. The political winds in Europe are currently in the right-wing’s favour, a fact that only adds to the unease at the prospect of a re-militarised Europe. However, it remains to be seen how the right will react to the current reconfigurations – Georgia Meloni, for example, seems to be a supporter of Europe’s turn towards a more independent course.

The EU has also made recent overtures to South America, signing trade deals with the trading bloc of Mercosur and Mexico and floating the idea of deepening engagement with China. Europe is still taking its cues from Washington – with repeated pleas for the US to back security arrangements in Ukraine despite Trump’s tantrums – but there is also the possibility of embracing the increasing multipolarity of the world system. This would be a welcome shift away from the current alignments towards states like the US and Israel which draw on antiquated and racist ideas of ‘Western civilization’. This would be the first step towards moving beyond ‘Europe’ or the ‘West’ as the horizon of politics and towards a more global outlook, a shift that is sorely needed.

As socialists, we are confronted with interlocking emergencies. The profound political crises roiling America were always going to make themselves felt worldwide, and Europe is no exception. We can recognise that, while remaining clear-eyed about the fact that we must resist the shift to a militarism that diverts state capacity away from social spending and green energy and towards an ‘industrial base’ built on technologies of death. The speed with which deficit breaks have been scrapped, the willingness to spend in the here and now in exchange for the future, demonstrates that, contrary to dead-end neoliberalism’s pronouncements, the state can be a powerful economic actor in exceptional times. We can and must urge the shifting of state capacity towards addressing the crises climate, healthcare, and social care. Alternative visions exist and have roots going back decades, as with the Lucas Plan of the 1970s. A contemporary vision of this plan, proposed by Khem Rogaly, in which we repurpose Britain’s already huge military capacity ‘towards civilian sectors, in this case green manufacturing’ is the kind of thinking we need. Surely this would be a much better use of this country’s industry, and one which addresses the most pressing crisis of our time.

That is the immediate task ahead. In the long-run, perhaps there is something in Trotsky’s framing after all. ‘It is impermissible’, he wrote, ‘to look upon Europe as an independent entity. But America, too, is no longer a self-sufficing whole. In order to maintain its internal equilibrium the United States requires a larger and larger outlet abroad; but its outlet abroad introduces into its economic order more and more elements of European and Asiatic disorder. Under these conditions a victorious revolution in Europe and in Asia would inevitably inaugurate a revolutionary epoch in the United States.’ Writing in the tumultuous 1920s, when proletarian revolution seemed within the left’s grasp, he forecast a future for Europe more and more entwined with the colonial world. A revolutionary Europe, ‘in revolutionary collaboration with the peoples of Asia’, would find itself facing-off against the United States. The prospect of the union between ‘the toilers of Europe and Asia,’ for Trotsky, held out the possibility of seizing ‘the control of world economy’, and laying ‘the foundations for the Federation of Socialist Peoples of the whole earth.’ 

We are, of course, far away from such a horizon now. But it captures something real – on a planetary scale, we are all increasingly bound together. The existing international order is in a period of profound rupture and crisis – few socialists will mourn its passing. The ambitions of our politics need to rise to the occasion and propose an alternative world order. It must be one that rejects our current trajectory: militarism, genocide, the hardening of boundaries, anti-migrant hysteria, and trying to sabre-rattle our way out of social, political, and economic disfunction and malaise. Any oppositional project will have to entail wresting ‘the control of world economy’ away from the United States. In the midst of the maelstrom of world politics, with one eye on the future, the ‘Federation of Socialist Peoples of the whole earth’ seems simultaneously utopian and the urgently necessary guiding-star of revolutionary socialism in the 21st century.