27 April 2025
Out of the devastation of World War II, the United States emerged as the industrial and financial center of the global capitalist order. At the Bretton Woods Conference in 1944, the US and its allies established an economic framework of fixed exchange rates (with currencies pegged to a gold-backed US dollar) and a free-trade regime regulated by the Washington-based International Monetary Fund (IMF) and World Bank. An additional element of the system was Keynesian economic policy, particularly in the more “social-democratic” countries of Western Europe, where the state funded infrastructure and social welfare programs to “prime the pump” of the economy, putting money into consumers’ pockets to bolster “effective demand.”
In many countries, workers were openly hostile to the economic system they understood had for a second time plunged the world into mass slaughter. This weighed heavily on the scales of imperial decision-making, in the fear that workers would opt to sweep the “democratic” capitalist regimes into the dustbin of history alongside the fascists. Seeking to stave off the threat of Communism and ensure the neocolonial exploitation of so-called developing countries, the imperialists soon completed the Bretton Woods system by launching a cold war against the Soviet Union and the new deformed workers’ states erected on a similar economic and political basis. Marxists had anticipated neither the level of economic expansion still possible under capitalism—accompanied, in the West, by rising wages often won through a highly bureaucratized labor movement—nor the degree to which imperialist rivalries could be muted to save the system as a whole.
By the mid 1960s, the postwar agreement was showing signs of strain. Valéry Giscard d’Estaing, the finance minister and future president of the French Republic, complained of America’s “exorbitant privilege” whereby the US, whose dollar was the global reserve currency, could run persistent trade deficits while maintaining the ability to borrow at low interest rates and essentially print money. Expressing the internal contradictions of the capitalist mode of production, the US rate of profit began a long-term decline, contributing—along with the quagmire of the Vietnam War—to the end of the postwar economic boom (see Murray E.G. Smith, Invisible Leviathan, 2019, chapter 10).
Faced with rising inflation and demands from countries for the gold to which their reserves of US dollars theoretically entitled them, in August 1971 President Richard Nixon imposed wage and price controls, levied a 10 percent tariff on imports and “temporarily” ended the convertibility of the greenback, effectively uprooting the Bretton Woods system. By the end of the 1970s and the beginning of the 1980s, a new “neoliberal” era of floating exchange rates, government austerity, privatization, financialization, the rise of mass public and private debt and turbocharged globalization of production was ushered in, first by the US and British states, and shortly after by other imperialist powers following suit to varying degrees.
Social counterrevolution in Central and Eastern Europe and finally the Soviet Union in 1991, along with the open pillage of poor countries—often via “structural adjustment programs” imposed by the IMF—gave a temporary boost to the fortunes of the imperialist ruling classes. This was particularly true in the US, which saw “a rise in the current-cost rate of profit from around 5 percent in 1986 to 16.5 percent in 2006—the highest of the entire postwar period”:
“Indeed, between 2001 and 2007, the nominal profit rate of the total social capital skyrocketed, but the puncturing of the housing bubble in the US and the ensuing financial crisis of 2007–08 revealed the extent to which fictitious profits and 'an array of dubious financial assets (collateralised debt obligations and other derivatives)’ [Smith, 2019] had been central to the illusory 'prosperity’ of the preceding period. Insofar as the non-financial profit rate rebounded to a very limited extent in the era of neoliberalism, it appears the causes were a reduction in the corporate tax rate and a sharp increase in the rate of exploitation of productive wage-labor (the ratio of surplus value to variable capital).”
—“Whither America?,” 1917 No.43
Exacerbated by the failed (and costly) imperial adventures in Iraq and Afghanistan in the first decade of this century, the neoliberal house of cards came tumbling down in the 2008 global financial crisis (see “Capitalism in Crisis,” 1917 No.31). Across the imperialist countries the state stepped in to bail out the banks and other large corporations, adopting a more “interventionist” role. Massive government spending and other costly injections to benefit capitalists have been matched by ratched-up austerity and inflation for workers. US public debt has more than tripled in the years since the 2008 crash, standing today at $34 trillion. The imperial core of global capitalism is incapable of overcoming its anemic economic growth—on average, less than 2 percent per annum GDP growth (including the fictitious contributions of the financial sector) over the last decade and a half. Faring somewhat better are the more advanced “developing” countries, which have often had GDP growth rates double, or more, those of the G7 countries. China, which encouraged, contained and harnessed unprecedented levels of capitalist development within the framework of a deformed workers’ state, has become the world’s largest economy.
The post-WWII institutions such as the IMF and World Bank that were created by the US to ensure global stability, neocolonial exploitation and its own hegemony are no longer congruent with the economic reality. While they are still relevant and powerful, the rise of the BRICS has provided other options for rich and poor countries alike. American dominance has declined to the point where even the US Secretary of State has acknowledged the existence of a “multipolar” world. Indeed, China’s economic rise has granted it a significant role in global affairs, with an increase in “soft power” on every continent. Russia, which reemerged two decades ago as an imperialist state, has played an outsized role on the world stage despite its comparative backwardness and sanctions imposed by an American imperialism bent on encroaching on Moscow’s spheres of influence in Eastern Europe and Central Asia.
Politically, the collapse of neoliberalism has in many countries been expressed in significant reconfigurations of the domestic ideological and party landscape, such as the rise of right-wing authoritarian and neo-fascist movements in Central and Western Europe (see “Capitalist Necrosis & Right-Wing Populism,” 1917 No.46). The co-optation of the language of various petty-bourgeois social movements to sweeten up the austerity program of Western liberalism—the spectre of “wokism” that haunts the world’s reactionaries—is politically dead. The most consequential example of the rightward shift is, of course, the re-election of Donald Trump.
Trump’s first stint in the White House from 2017 to 2021 was mostly one of continuity with the policies of the Obama administration, despite MAGA’s charged rhetoric, crude chauvinism and a handful of tactical departures. Tensions between Trump and the military-industrial-intelligence complex (including leading elements of “deep state” agencies like the FBI, CIA and NSA) limited his room for maneuver, as did his own lack of a coherent ideology.
Ironically, his loss to Joe Biden in the 2020 presidential election afforded Trump the time and political space he needed to build a new team—including “Big Tech” CEOs and a rearmed conservative Heritage Foundation—and emerge stronger than before. It was clear even before Trump took office in January that things would be different this time around. Gone is the quasi-debilitating “Russiagate” campaign orchestrated by the Democratic Party and its allies in the corporate media and intelligence apparatus. Indeed, the first phase of Trump’s presidency has been marked by self-confident and aggressive assertion on the world stage.
There are competing interests and perspectives within the Trump administration, and it is unclear to what extent one faction (e.g., technology billionaires) or ideology (e.g., “America First”) dominates. Insofar as one can discern a coherent goal, it would appear that Trump is aiming to halt America’s declining economic capacity by squeezing the US working class and shaking down its trading partners for better terms. Elon Musk’s DOGE chainsaw represented the first line of attack, while Trump’s tariffs—initially announced against Canada, Mexico and China but then expanded to the whole world in early April—indicated the second. Trump claims to want to re-industrialize the US and redesign the global trading order, which he argues allows the US to be “ripped off” by virtually everyone. Economist and former Greek Finance Minister Yanis Varoufakis has argued that Trump has sought to use tariffs as a tactic and a tool to create “a cheaper dollar that remains the world’s reserve currency” (UnHerd.com, 12 February 2025). Contradictory impulses in the administration and pressure from US business elites obscure the extent to which there is an overall strategy, but the eventual outcome of the gambit is clear: a shrunken yet more openly extortionate American Empire.
Trump’s announcement of a 10 percent minimum “baseline” tariff on imports (with double, triple, quadruple and more that rate on select countries) on “Liberation Day” in early April rattled the bond markets and frightened the more incontinent of his billionaire backers. Undermining his leverage, Trump bowed to the pressure and agreed to stick to the baseline 10 percent tariffs for 90 days while his administration negotiated bilateral deals with a reported 75 countries. The exception, of course, was China, which was always the principal target. China now faces 145 percent tariffs and has retaliated by imposing 125 percent tariffs on US imports.
Whether or not Trump’s plan ultimately falls apart, his initial salvos in the trade war—cracking the whip over the heads of friend and foe alike—represent an important step towards a post-neoliberal capitalist world in which the US will not be the center. The reason Washington could impose the Bretton Woods system and later initiate the shift to a US-dominated neoliberal order was that America was recognized as the sole leader of global capitalism, with the world’s largest economy and unparalleled military domination. Things are different now. China is the world’s largest economy. Not only has the US fought a string of failed wars in poor countries over the past quarter century and shown itself unable to defeat Russia via its Ukraine proxy, American capitalism, while still enormously powerful, is no longer the only game in town. Trump will succeed in getting many countries (possibly even China itself) to sign deals offering a more lucrative arrangement for the US, but his maneuvers will push some countries further away, accelerating American decline rather than halting it.
A reconfiguration of the global order is ultimately inevitable. It is difficult to say with any degree of certainty what this will look like, but current tensions indicate possible fault lines along which tectonic shifts may occur.
Britain is expected to remain within the American economic and military-intelligence framework. Canada, which has retaliated against Trump’s tariffs, seeks to reach an agreement to guard its sovereignty, which Trump has openly and repeatedly threatened. It remains unclear how enthusiastic the antipodean imperialists in Australia and New Zealand will be with their pro-US orientation (reinforced via their participation in the US-dominated “Five Eyes” intelligence network alongside Britain and Canada) as China is each country’s largest trading partner.
Japan also wishes to remain in the US orbit but was not pleased to be slapped with an initial 24 percent tariff on “Liberation Day.” Its cars are subject to the blanket 25 percent import tariff the US has imposed on automobiles, steel and aluminum. Europe, too, has been hit by the latter, affecting 92 billion euros in goods, while the EU is also subject to the 10 percent general tariff (initially 20 percent). Europe remains weak, divided and dependent on exports to the American market, and there will be pressure to come to an agreement with Washington.
At the same time, however, the EU powers are increasingly unhappy with their relationship with the US. The first signs of discord go back at least to the Yugoslav War of the 1990s, and tensions mounted the following decade during the Iraq War in which “Old Europe” was chastised for sitting out Washington’s delusional attempt to subjugate and remake the Middle East. While united with Washington in fighting the proxy war in Ukraine against Russia, European leaders did not take kindly to Trump’s berating of Zelensky and his calls for peace. The war has caused significant harm to the European economy, but has also provided a pretext to rearm, allowing Paris and Berlin to posture on the world stage as though it were 1914. It was Washington that—either directly or indirectly—blew up the Nord Stream II pipeline supplying Russian natural gas to Germany and Western Europe, an astounding act of industrial sabotage (indeed, an act of war) not just against Russia but against America’s supposed allies. Adding salt to the wounds are Trump’s repeated threats to seize Greenland, a possession of an EU member state, Denmark.
Trump’s attitude towards Russia remains somewhat ambiguous, though it may be that his alternation of diplomacy and sabre-rattling over Ukraine is intended to feel out the possibility of converting Russia, if not into a junior partner, then at least into a neutral actor. But the Russia-China bloc appears stable. Moreover, the US views Russia as a threat in the Arctic, which Washington seeks to guard for its natural resources and the shipping lanes that will open up as the ice melts. Russia was not hit with “Liberation Day” tariffs because the US already has high tariffs on Russian goods alongside sanctions.
Washington seeks to limit the influence and expansion of BRICS, particularly in the Middle East and Western Asia. BRICS now includes—in addition to founding members Brazil, Russia, India, China and South Africa—Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates. The toppling of the Assad government in Syria was a strategic victory for the US and Turkey and a setback for Russia, which had gained an important foothold in the region. Israel remains a key US ally in part because it can serve as a destabilizing force in the Middle East—and the Israeli objective of overthrowing the Iranian regime, even if it leads to civil war and chaos as opposed to an anti-BRICS client, might appear as the best option to foolhardy Trumpites who somehow imagine that the US would not be drawn into a costly regional quagmire.
The US is openly planning for war with China, meaning that the location of much of America’s cheap-labor supply chains (not to mention sophisticated computer chip production) in or near China is a strategic liability. While Trump has talked a lot about boosting “the American worker” by re-industrializing the United States, any significant increase in the production capacity of the US is likely to come, if it comes at all, through heavily automated, AI-controlled factories and massive wage reductions. Cheap-labor production for American capital already takes place in Mexico, and Latin America as a whole is viewed by the US ruling class as its own backyard. Trump has clearly articulated the desire to limit China’s reach into Latin America, and this could be achieved via the bilateral trade deals to be worked out in the wake of the tariff announcements, as well as by directly controlling the Panama Canal.
The inevitable outcome of this competition for profits, resources, markets and spheres of influence will, sooner or later, be global military conflict, a third World War. Currently, the most likely triggers remain the Ukraine War and Taiwan (see “Inching towards WWIII,” 1917 No.47), though surprising new flashpoints may emerge, particularly if any imperialist powers break from Washington. The international working class stands to lose most from a world war and has no interest in defending any one set of imperialists against another. At the same time, we understand that China remains a deformed workers’ state that must be given unconditional military support against the imperialists.
Necrotic capitalism has little capacity for bourgeois democracy. The Trump regime represents, as do other far-right governments (e.g., in Hungary and India), a kind of Bonapartism, a governing apparatus that operates with a great degree of autonomy from the ruling class whose material interests it is trying to defend. The paradox in the case of the Trump administration is that this semi-autonomy from the ruling class is achieved through the direct participation of American oligarchs, such as Musk and Trump himself. To ensure the continuity of their domestic and foreign policy in the event they lose control of one or more levers of government, they have adopted a battering ram approach that is shaking the institutions of the American state to its foundations.
Moreover, in attempting to achieve its long-term goals, the Trump regime is trampling on the rights of those who may present an obstacle. Migrants have borne the initial brunt of the attacks. The administration has already illegally deported green card holders, including Kilmar Ábrego García, who was denied due process and sent to the notorious CECOT “confinement center” in El Salvador. The first explicitly political targets have been foreigners who, while legally living in the US, have denounced Israel’s genocide in Gaza and the American government’s bipartisan complicity in it. American citizens, too, have had their freedom of expression and assembly suppressed, and the repression will only continue as the list of proscribed positions is expanded beyond opposition to genocide of Palestinians. Already Trump has suggested that boycotting products from Musk-owned companies is tantamount to “domestic terrorism.” It is a small logical step from that to the notion that protesting Musk and Trump’s policies should itself be considered terrorism.
The political configuration of ruling bourgeois ideologies and factions differs across countries, but the tendency towards the attrition of democratic rights has asserted itself within all Western imperialist countries. German police have rounded up protesters, again beginning with those who have come out against the slaughter in Gaza. In Britain and Canada, pro-Palestinian activists have been arrested and face prison sentences. As in the United States, so too in these imperialist countries will the space for bourgeois democratic norms continue to shrink. During war, it will vanish.
The state is not stepping up political repression simply to tamp down opposition to war, imperialist foreign policy or economic nationalism. More far-sighted elements of the ruling class understand that their attempts to reverse the decline of capitalism will eventually produce a response from working people in the form of convulsive class struggle, particularly as the tamed labor bureaucrats and social-democratic reformists prove to be too compromised to contain initial outbursts of anger. State repression will be used on working-class organizations and movements that resist layoffs, cuts to wages and the imposition of other draconian measures, as it will be used against workers who break free from the nationalist poison that is being force-fed to them by the bourgeois media, trade-union bureaucrats and social democrats and engage in international labor solidarity actions.
How can the working class respond to these international convulsions of the capitalist system? Marxists fight to build a revolutionary current within the working class and labor movement to lay the foundations for a mass communist party capable of leading a successful socialist revolution. Given the tiny number of revolutionaries and the often necessary organizational divisions among self-described socialists that have contained and neutralized much of the proletarian vanguard, it is not possible to simply bypass the left to “go to the masses” at the present moment. Rather, the current task is one of programmatic clarification and revolutionary regroupment to forge a Bolshevik nucleus of hundreds and thousands of people in every country. This foundational work does not exclude, and in fact requires, active intervention in the struggles of the oppressed against the effects of decaying capitalism, e.g., defense of political prisoners, anti-war demonstrations and other united-front activities inside and outside the trade unions.
We in the International Bolshevik Tendency (IBT) seek to act as a catalyst for the regroupment of revolutionary forces around a hard communist program. Such a program must include consistent opposition to imperialist war (above all the view that the defeat of one’s own imperialist government would be the lesser evil); support for the independence of colonial peoples subjugated by imperialism and the military defense of colonial and neocolonial countries attacked by the imperialists; advocacy of working-class socialist revolution not simply in the advanced capitalist countries but in “developing” countries dominated by imperialism; unconditional military defense of the remaining deformed workers’ states (most significantly, China) with the perspective of proletarian political revolution to oust the Stalinist bureaucrats; opposition to class collaboration in the form of popular-front coalitions (whether in imperialist or “developing” countries) and advocacy of working-class independence; championing the democratic rights of oppressed nations, women and racial, ethnic, gender and other minorities while exposing the bourgeois and petty-bourgeois ideologies of the leaders of these groups; and fighting for the creation of a Leninist vanguard party through the application of a variety of tactics aimed at winning over working-class militants to the struggle for a workers’ government.
We are entering a period of global turmoil, in which the existential crisis of climate change is outstripped only by the dangers of nuclear world war. Working-class living standards will continue to decline, in some cases dramatically, while the repressive forces of the state and the political persecution of dissidents will increase. As revolutionaries, we are not in a good position to meet the challenges and opportunities that will present themselves in the coming months and years. Our most burning task is to improve our chances by building a Bolshevik nucleus now. Menshevik-style liquidationism, popular frontism and ultra-left sectarianism have only ever led to defeat. Individual Marxists who understand this but nonetheless cling to an organization that practices them are contributing to the problem, not working to overcome it. As many genuine communists as possible must be won from these organizations, but this cannot be done in isolation without an organizing center.
Periods of great upheaval have produced necessary and sometimes unexpected political realignments within the workers’ movement. WWI provides an instructive example. The Second International splintered as most of its leading cadre (and, initially, members) in many countries backed the war efforts of their own ruling class. The left-wing oppositionists were fragmented, operating in different groupings according to old pre-war divisions. Some of those divisions were no longer valid, while others took on a different meaning. The interaction of the oppositionists as they sought to grapple with the enormity of the war and its impact on the socialist movement led to a regroupment of forces, first through the ill-fated Zimmerwald movement, and then through its revolutionary wing that eventually crystallized into the embryo of the Leninist Third International.
One may hope that, tomorrow, a new communist international may emerge through a similar process of struggle, debate, cooperation, recruitment, splits and fusions. This is, in fact, not a matter of hope, but of hard work, and it matters how many of us commit to undertaking it. We call on individuals and organizations committed to revolutionary change to join us in this monumental task.
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Inching towards WWIII: US Imperialism Targets Russia & China (1917 No.47)
Capitalist Necrosis & Right-Wing Populism (1917 No.46)