Speaker 1: All Zone Media. Welcome to IKE It Happened Here, a
Speaker 1: podcast that has increasingly become about tariffs in the second
Speaker 1: Trump regime. I am your host, Miil Wong, and oh boy,
Speaker 1: it has been a big few weeks for tariff news.
Speaker 1: We have tariff numbers on China that I'm not even
Speaker 1: going to bother to actually record right now because by
Speaker 1: the time this goes out, the numbers will probably be different.
Speaker 1: There are supposed to be major negotiations underway between Trump
Speaker 1: and the Chinese government to attempt to come to yet
Speaker 1: another trade agreement and stave off yet another round one
Speaker 1: hundred percent tariffs. Now, if you want to follow the
Speaker 1: sort of blow by blow of what exactly is going on,
Speaker 1: I'm going to just sort of refer you to my
Speaker 1: section tariff talk on Executive Disorder. However, Comma, we need
Speaker 1: to take a deeper look at what structurally is going
Speaker 1: on in the global economy that is resulting in the
Speaker 1: demand for tariffs in the first place. And I think
Speaker 1: the place to go if that's the thing that you're
Speaker 1: trying to figure out. And we've talked about the sort
Speaker 1: of ideological aspects of this in other episodes. We've talked
Speaker 1: about the ways that the sort of politics of fascism,
Speaker 1: the politics and anti semitism, the politics of masculinity lead
Speaker 1: people towards these extremely ulternationalist policies that are specifically supposed
Speaker 1: to sort of protect the domestic blood and soil national
Speaker 1: industry and are supposed to protect material goods over services.
Speaker 1: But there are things that are happening structurally in the
Speaker 1: economy that make it such that people would consider things
Speaker 1: like the tariffs that have been happening under this regime
Speaker 1: as a solution to things that are kind of structural
Speaker 1: problems of the economy specifically. And this is what we're
Speaker 1: going to be focusing on today. Over capacity and steel. Now,
Speaker 1: some of you may be asking, Mia, why are we
Speaker 1: talking about steel over capacity? And I think there's a
Speaker 1: few important notes here. One, steel is in some ways
Speaker 1: emblematic of American tariff policy. It is I guess you
Speaker 1: would call it the most material of the tariffs in
Speaker 1: the sense that it's the one where there's the most
Speaker 1: actual direct sort of material forces and direct lobbying groups
Speaker 1: asking for these specific tariffs. The American steel industry has
Speaker 1: been lobbying to some extent for some measures kind of
Speaker 1: like this Steel is also one of the industries whereas
Speaker 1: as tariff rates are fluctuated and up and down and
Speaker 1: whole waves of like Liberation Day, tariffs got put into
Speaker 1: place and then removed, and some of them we got
Speaker 1: put back into place a little bit. The steel tariffs
Speaker 1: were set at fifty percent and they've stayed at fifty
Speaker 1: percent since they were set. Basically, there's been a little
Speaker 1: bit of variation sort of before the final fix percent
Speaker 1: number was arrived at, but the steel tariffs had been
Speaker 1: one of the most stable tariffs. And the reason why
Speaker 1: it's been this stable if people can think back all
Speaker 1: the way to twenty eighteen, which I know that was
Speaker 1: a long time ago, but there was a miniature trade
Speaker 1: war between the US and China in twenty eighteen, and
Speaker 1: significant portions of it were focused on Chinese steel production specifically,
Speaker 1: and you know, this is one of the sort of
Speaker 1: fights that was had out Nothing really structurally changed much
Speaker 1: from those There was kind of a back and forth
Speaker 1: and then both sides kind of pulled back. But Comma,
Speaker 1: that's not happening this time. And what's interesting, and the
Speaker 1: reason that I'm specifically talking about steel here is that
Speaker 1: it's now not just Trump that is tempting to institute
Speaker 1: large scale tariffs on steel. The European Commission for the
Speaker 1: EU has released a proposal to double tariffs on imported
Speaker 1: steel up to fifty percent, which is matched in the US,
Speaker 1: and also reduce the amount of steel that could be
Speaker 1: imported into the EU without paying any tariffs at all.
Speaker 1: And this is actually massive because this is an example
Speaker 1: of the EU effectively following US trade policy for very
Speaker 1: very similar reasons as the US. And if we can
Speaker 1: get to the bottom of what is going on here,
Speaker 1: and I promise we will, and I promise this will
Speaker 1: go towards something that is explaining really truly the macro
Speaker 1: dynamics of the entire global economy and why it's fucked.
Speaker 1: If we can actually trace out what's going on with
Speaker 1: these steel tariffs, we can do that. So well, let's
Speaker 1: talk about steel over capacity. Over Capacity as a concept
Speaker 1: is sort of convoluted. You know, you have to sort
Speaker 1: of ask the question, what is the quote unquote correct
Speaker 1: amount of steel? Because over capacity, you know, implies that
Speaker 1: there's capacity to produce steel over the amount that should
Speaker 1: be produced. So, okay, how do you figure how much
Speaker 1: steel should be produced? Eh? Very nebulous. It's also very
Speaker 1: difficult to measure because, okay, we're gonna try to measure
Speaker 1: steel over capacity. There's a lot of ways to do
Speaker 1: it that rely on things like utilization rates. Right, So
Speaker 1: you look at the steel facilities, you see how much
Speaker 1: they're being used at You see how much you know
Speaker 1: excess capacity, there is, how many how many factories are
Speaker 1: sitting empty BOE percentage of factories, you know, total outputs
Speaker 1: being used. This doesn't work because the utilization rates of
Speaker 1: these factories of this fixed capital varies seasonally, for example,
Speaker 1: and it varies due to not just the season, but
Speaker 1: a whole bunch of other factors, things like you know,
Speaker 1: labor supply, weather, demand, polls, and a whole bunch of
Speaker 1: other factors. Utilization rates of steel producing facilities are very
Speaker 1: rarely at one hundred percent, even in Marcus where demand
Speaker 1: a shrip supply, and this makes it very, very difficult
Speaker 1: to measure China's actual quote unquote overcapacity. I am not
Speaker 1: going to even really try to give numbers because it's
Speaker 1: extremely subjective. How do I say this? Based on the
Speaker 1: research that I have done, I think the numbers you
Speaker 1: normally see in the West are inflated because they are
Speaker 1: not accounting for things like the weather, because it is
Speaker 1: in the interest of sort of Western research institutions, but
Speaker 1: for example, Western financial institutions, specifically steel companies, and they're
Speaker 1: sort of like allied China Hawk, you know, sort of
Speaker 1: like academics to have the number be as high as possible.
Speaker 1: You will also see numbers from people who are tied
Speaker 1: to Chinese government, and when I say tied to, kind
Speaker 1: of in a loose ideological sense, in the same way
Speaker 1: as the Chinahawks are of the Chinahawks tend to actually
Speaker 1: be more directly connected to the US government. Their numbers
Speaker 1: are probably also too low. But I don't want to
Speaker 1: give you the impression that I have a extremely certain
Speaker 1: understanding of what the exact number of millions of tons
Speaker 1: of XSDEO production is happening. What we can sort of
Speaker 1: agree on is that there does seem to be some
Speaker 1: kind of overcapacity in the Chinese economy, right, and this
Speaker 1: is something that the Chinese Communist Party also agrees on.
Speaker 1: If you go back to a document that really really
Speaker 1: few people in the US have ever seen to have
Speaker 1: heard of, which is the wonderfully titled Opinions of the
Speaker 1: CPC Central Committee and the State Council on further promoting
Speaker 1: the development of Ecological Civilization, which was one of the
Speaker 1: founding documentary Chinese Environmental Police and the ideological sort of
Speaker 1: underpinnings of this thing called ecological civilization, which is the
Speaker 1: basis of Chinese environmental policy. One of the things that
Speaker 1: they mentioned a lot is specifically overcapacity. Right, they are
Speaker 1: actually very concerned about the overcapacity of steal from an
Speaker 1: ecological perspective. And this is sort of fascinating because we'll
Speaker 1: be looking at some scholars later who are favorably quoted
Speaker 1: in Chinese state media's sources describing how there isn't actually
Speaker 1: overcapacity because states say different things in different places, and
Speaker 1: this is in fact extremely common. But there does seem
Speaker 1: to be some kind of overcapacity, and the Chinese government
Speaker 1: was to some extent making attempts to reduce it during
Speaker 1: this sort of period of trade war. Now, the other
Speaker 1: issue we're talking about overcapacity is that overcapacity is an
Speaker 1: extremely political issue. Now, right, It's extremely weird because try
Speaker 1: to seal overcapacity is like my most niche thing that
Speaker 1: I've studied. I've had like a paper on this sitting
Speaker 1: in a drive on my computer for over half a decade.
Speaker 1: I have never brought it out until now, but it's
Speaker 1: become an extremely political topic because the different theories of
Speaker 1: stealover capacity have become a basis for a lot of
Speaker 1: genuine trade policy. Now. I think a very very interesting
Speaker 1: book at Chinese stealover capacity is from the book Understanding
Speaker 1: China's over Capacity. She's written by two Chinese economists that
Speaker 1: I think is a really interesting literature survey. This This
Speaker 1: is fround By twenty eighteen. But I think what's interesting
Speaker 1: about it it's from before the period where everyone in
Speaker 1: the West had sort of decided what they think caused
Speaker 1: Chinese steal over capacity, and so you can go back.
Speaker 1: You know, it's not just useful to sort of go
Speaker 1: back in time and look at the other theories that
Speaker 1: were sort of floating around academia before a few of
Speaker 1: them got specifically selective for ideological purposes. Now I mentioned earlier,
Speaker 1: we'd be talking about some economists. You don't think that's
Speaker 1: Chinese steel over capacity is real, that's these people. I
Speaker 1: think that part of their thesis is not very good.
Speaker 1: I think their survey of the literature on overcapacity, though,
Speaker 1: is very good and one of the very interesting arguments
Speaker 1: they make this doesn't argue with a couple of other economists,
Speaker 1: that has sort of disappeared from the literature is in
Speaker 1: argument about, Okay, so there's steel production that's happening that
Speaker 1: doesn't need to happen. I think it's pretty fair to
Speaker 1: say that something is over capacity if it's producing a
Speaker 1: bunch of steel that sits there in rots because no
Speaker 1: one can sell it, which is a thing that happens
Speaker 1: with Chinese steel. And one of the most interesting theses
Speaker 1: that has really been abandoned, even though I think it
Speaker 1: is actually to a decent extent explanatory of a lot
Speaker 1: of very very weird stuff that happens in Chinese policy
Speaker 1: circles and a lot of just very baffling investment decisions,
Speaker 1: is specifically something about local caudras and their performance incentives. So, okay,
Speaker 1: something that's very important to understand about the structure of
Speaker 1: the CCP is that Chinese government institutions are sort of
Speaker 1: run by these caudras, right, and so if you are,
Speaker 1: for example, I don't know, you are the mayor of
Speaker 1: a mid size city, right, you get performance evaluations and
Speaker 1: those sort of yearly performance evaluations sometimes there's less frequents
Speaker 1: than that, but those those performance evaluations rank you at
Speaker 1: sort of how good you're doing your job. And obviously
Speaker 1: there's political maneuver rank here too, But if you do
Speaker 1: a good job of hitting your targets, this is your
Speaker 1: path to advance upwards in the party and be moved
Speaker 1: from you know, like sort of running a small city
Speaker 1: to like being brought into caudra in larger cities, and
Speaker 1: you know, moving your way of the party, moving to
Speaker 1: national positions. These evaluations are extremely important. You can also
Speaker 1: get sort of busted down if your evaluations suck. Again,
Speaker 1: there's also why politics are too, but these evaluations actually
Speaker 1: do matter. And one of the issues with these evaluations
Speaker 1: and these are also policy making implementation tools, right, you know,
Speaker 1: the central government can decide what kinds of policies they
Speaker 1: want to pursue, and then they can use these codure
Speaker 1: evaluations to make people at the sort of local level
Speaker 1: who are usually semi autonomous in ways that I think
Speaker 1: is not very well understood in the West. These countra
Speaker 1: evaluations are ways to try to ensure that Chinese sort
Speaker 1: of local and provincial government policy kind of aligns with
Speaker 1: national party policy and the waiting on these examinations is
Speaker 1: such that it has very, very weird effects. And what
Speaker 1: I'm specifically talking about here is that GDP numbers are
Speaker 1: very very important to these CAUDRA evaluations, and it matters
Speaker 1: that it's specifically gross domestic product because GDP is a
Speaker 1: very very weird number, and there's a lot of stuff
Speaker 1: you can do to sort of juice GDP numbers that
Speaker 1: aren't really necessarily beneficial to an economy. So you can
Speaker 1: have a bunch of firms that are basically unprofitable or
Speaker 1: doing something that's like not particularly economically or socially useful,
Speaker 1: and that can still boost GDP numbers. And one of
Speaker 1: the things that happens with this is that you can
Speaker 1: boost GDP numbers by making a shit tot of steel
Speaker 1: that nobody actually really wants or uses. And because of
Speaker 1: the priority that's set on GDP numbers specifically, and there's
Speaker 1: also a whole bunch of these sort of weird financial
Speaker 1: games that you can play. That's also played a major
Speaker 1: role in the way the Chinese housing bubble has played
Speaker 1: out and the way that the government has been unwilling
Speaker 1: to sort of you know, and when I say the
Speaker 1: government here I be in both the national governments and
Speaker 1: also sort of these lower level governments have been unwilling
Speaker 1: to sort of let a bunch of debt bubbles that
Speaker 1: they've accumulated pop because those things prop up GDP numbers,
Speaker 1: and the incentive on the local level is to keep
Speaker 1: these numbers up. This used to actually be one of
Speaker 1: the things that people would talk about when they talked
Speaker 1: about Chinese steel over capacity. But it's complicated, like you
Speaker 1: can't very very easily explain this to you know, like
Speaker 1: a right wing congress person and have them go, oh, yeah, right,
Speaker 1: this is unfair to the American market, and so it
Speaker 1: kind of has like fallen out of favor and sort
Speaker 1: of like the explanation to steal over capacity you see
Speaker 1: in places like the New York Times. But I actually
Speaker 1: think this is one of the things that does, to
Speaker 1: some extent cause Chinese steal over capacity. Now do you
Speaker 1: know what doesn't cause Chinese steal over capacity? That's right,
Speaker 1: it is the products and services that support this podcast.
Speaker 1: So I wanted to talk about the local quadra explanations
Speaker 1: because I actually think these are kind of important, and
Speaker 1: I want to talk about one other argument that's also
Speaker 1: not really used much that used to be a lot
Speaker 1: more common, which is an argument that Chinese economist makes
Speaker 1: that one of the reasons that there's overcapacity in Chinese
Speaker 1: steel production is that upwards wealth distribution leads to lower
Speaker 1: levels of consumption and thus over capacity. And so what
Speaker 1: what this basically means, And this is something that I
Speaker 1: think is actually also I think that's the best structural
Speaker 1: problem in in the Chinese economies, that the Chinese economy
Speaker 1: is extremely highly unequal and wages, you know, like they
Speaker 1: have risen to some extent, but they're not rising anywhere
Speaker 1: near you know, like we've everyone in the US have
Speaker 1: seen that famous charge of productivity versus like labor gains,
Speaker 1: right like wage gains versus prouctivity increases. Wages in China
Speaker 1: have gone up. They have absolutely not kept pace with
Speaker 1: sort of productivity growth, and they also absolutely like have
Speaker 1: not kept pace with the amount of the profit being
Speaker 1: produced that is going to a very very small number
Speaker 1: of capital owners. And this actually creates a structural problem.
Speaker 1: And this is we're seeing a very similar structural problem
Speaker 1: to this in the US, where there is a lot
Speaker 1: of consumption that if that money wasn't just all going
Speaker 1: to a bunch of rich people, people would actually be
Speaker 1: spending it on things, And particularly in Chinese context, the
Speaker 1: argument was that if if there was a better distribution
Speaker 1: of wealth, people would buy more houses, and this would
Speaker 1: actually reduce over capacity because suddenly a bunch of the
Speaker 1: slack capacity will be being used to like build houses,
Speaker 1: except people can't afford the houses. And this is a
Speaker 1: structural problem that like economists sort of note about for
Speaker 1: decades and decades, which is that China has been for
Speaker 1: a very long time. The whole thing was that they
Speaker 1: were trying to transition into a consumption economy, which is
Speaker 1: to say, they were trying to transition into an economy
Speaker 1: that was fueled by its own internal consumption. The US
Speaker 1: is to a large extent sort of kind of works
Speaker 1: like this, where you know, you want to increase the
Speaker 1: level of consumption and the amount of stuff that people
Speaker 1: in your country are buying, and this is this is
Speaker 1: a way to sort of like create a middle income country, right,
Speaker 1: And China has historically not been able to do this
Speaker 1: and haven't been able to do this because they won't
Speaker 1: raise wages. But you know, if they won't actually raise
Speaker 1: wages enough to increase people's consumption levels. Then you're left
Speaker 1: for structural overcapacity because demand is being lowered because people
Speaker 1: don't have any fucking money. Now, this is another argument
Speaker 1: again and I think is also probably correct that is
Speaker 1: very much not talked about anymore because the argument that
Speaker 1: is used in sort of understanding what's going on with
Speaker 1: Chinese seel capacity is about the Chinese subsidization of state
Speaker 1: owned enterprises at the expense of sort of private firms.
Speaker 1: And the argument here basically said, the state is propping
Speaker 1: up a bunch of unprofitable enterprises and they're they're holding
Speaker 1: sectors of the economy that should be you know, taken
Speaker 1: over by more efficient private firms, but they can't because
Speaker 1: they're being subsidized by the government. And this is sort
Speaker 1: of true, but this became a massive geopolitical argument because
Speaker 1: the argument from the American side, and when you hear
Speaker 1: anyone talking about steal of capacity, now this is the
Speaker 1: argument that you hear right which that China is flooding
Speaker 1: the world with cheap steel because there's a whole bunch
Speaker 1: of like Chinese state owned industries or just like Chinese
Speaker 1: businesses are just getting money from the Chinese government to
Speaker 1: produce steel and they're pumping cheap steel to the rest
Speaker 1: of the world. And this is not really I mean,
Speaker 1: like kind of this is happening, but it's also not
Speaker 1: the reason why there's large scale steal over capacity. And
Speaker 1: of course the argument is that China isn't competing fairly
Speaker 1: in the market, like this is very silly. Markets have
Speaker 1: never worked without large scale state quote unquote interference, Like
Speaker 1: American companies also get extremely high level subsidization et cetera,
Speaker 1: et cetera, cy all of US COREGN policy. But you know,
Speaker 1: this is the political imperative that's behind a lot of
Speaker 1: the rhetoric coming out of steel producers and out of
Speaker 1: the American right about why there should be terroriists on steel.
Speaker 1: Now there's a problem though, which is that all of
Speaker 1: these arguments are very specific to China. Right. The argument
Speaker 1: is that there are specifically steal over capacity in China
Speaker 1: because it's something structurally specifically wrong with the Chinese economy
Speaker 1: that's like ma it not a free market, and because
Speaker 1: of that, China's like unfairly competing global market. And this
Speaker 1: is why there's so much of a capacity of Chinese steel.
Speaker 1: This is wrong. There are individual parts of this where yeah,
Speaker 1: like there are things where there is excess capacity being
Speaker 1: produced by quadre evaluations and by to some extent like
Speaker 1: so we subsidization. However, Comma, there's a problem. And the
Speaker 1: problem here is that overcapacity and overcapacity and steel is
Speaker 1: not just a Chinese phenomena. It is a global phenomena.
Speaker 1: It has been a global phenomena for a long time,
Speaker 1: and it is largely a product of the fact that
Speaker 1: we do not live in a global economy that can
Speaker 1: actually support the amount of production capacity that exists in
Speaker 1: the world. This has been a problem really since the
Speaker 1: seventies and arguably even since the sixties, where as countries
Speaker 1: rebuild from World War Two, and as some some sort
Speaker 1: of developments in global capital that we're going to be
Speaker 1: sort of like talking about soon happens that the product
Speaker 1: of all of this is that production has and this
Speaker 1: is this is kind of the thing that the sort
Speaker 1: of fascist right kind of intuitively understands. Production has become
Speaker 1: zero sum. Right, It's very difficult to increase production in
Speaker 1: one country without having it, you know, affect production in
Speaker 1: the countries. There isn't enough demand in the market to
Speaker 1: sort of like fuel all of these things. So why
Speaker 1: is there not enough demand to fuel the amount of
Speaker 1: supply that would be that would be necessary to make
Speaker 1: there not be over capacity. The answer to this, in
Speaker 1: sort of marketing theory is that, as they sort of
Speaker 1: put it, overproduction and under consumption are doubly constructed. I'm
Speaker 1: going to read a quote from end Notes, volume two,
Speaker 1: and then we're going to explain a little bit what
Speaker 1: that means. The wage allocates workers to production and at
Speaker 1: the same time allocates the product to workers. So what
Speaker 1: that means is that under consumption and overproduction are in
Speaker 1: effect the same thing, right, Because the way that we
Speaker 1: allocate workers to what thing they're going to do, and
Speaker 1: at the same time allocate products to those workers is
Speaker 1: the wage, which is one thing. So overproduction and under
Speaker 1: consumption are the same thing, right, and they're caused by
Speaker 1: the same structural elements of the wage relation. Now this
Speaker 1: means that the Chinese capacity crisis is actually part of
Speaker 1: a larger crisis. Right. You know the thing about the
Speaker 1: double construction, you know of overcapacity and under consumption, right,
Speaker 1: the fact that they are really the two things unified
Speaker 1: in the fact that like your wage allocates what kind
Speaker 1: of production you're doing and what you can consume the
Speaker 1: fact that both those things combined are realized in this
Speaker 1: sort of secular crisis in what's called Marxist absolute general
Speaker 1: law of capitalist accumulation. So what the fuck is that
Speaker 1: the short version is? Over time in capitalist economies, there's
Speaker 1: supposed to be an increase of what's called the organic
Speaker 1: composition of capital. Basically, they're a composition of capital is
Speaker 1: a way to measure how much in the pro labor process.
Speaker 1: It's like fixed capital, variable capital, so it's like how
Speaker 1: much factory is there relative to the amount of worker
Speaker 1: there is. And Marxist thesis, which has generally been born out,
Speaker 1: although we'll talk a little bit about that more later,
Speaker 1: is that this composition is going to increase, and as
Speaker 1: it increases, accumulation also needs to increase in order to
Speaker 1: maintain employment levels. This is sort of accomplished by things
Speaker 1: like automation, which reduces the size of the labor force.
Speaker 1: And thus, to quote and notes again, as accumulation proceeds,
Speaker 1: a growing superabundance of goods lowers the rate of profit
Speaker 1: and heightens competition across lines, compelling all capitalists to, as
Speaker 1: Mark said, economize on labor. So basically, what this means
Speaker 1: is like, as capital gets turned into more capital and
Speaker 1: larger amounts of capital, this is the accumulation process. As
Speaker 1: this continues, right, you get this massive sort of increasing
Speaker 1: the amount of goods that are being produced. Eventually that
Speaker 1: lowers the rate of profit in a sector. And eventually
Speaker 1: what that does is, you know, in order to sort
Speaker 1: of economize on labor, capital increases the amount of automation
Speaker 1: reduces the amount of people that they need in the
Speaker 1: labor process. You know, this is what what's generally known
Speaker 1: as automation and the sort of crisis of people getting
Speaker 1: kicked out of their draws because of it. As this
Speaker 1: process is sort of generalized across sectoral lines across different
Speaker 1: parts of the economy, the relative to demand for labor
Speaker 1: decreases and workers are spin out of the wage relation,
Speaker 1: which is the fancy Marxist way to say they become
Speaker 1: structurally unemployed. And you know, the thing that happens when
Speaker 1: you get kicked out of the capitalist wage relation is
Speaker 1: you get kicked into informal labor and slums, which you know,
Speaker 1: decreases demand and increase overproduction. At the same time, over
Speaker 1: capacity is skyrocketing, right, because you have increasing numbers of
Speaker 1: people who have been spat out the formal economy who
Speaker 1: no longer have access to regular wages. The wages they
Speaker 1: get in the informal economy are less than the ones
Speaker 1: they would get in the formal economy. And as we
Speaker 1: were saying, write, access to like the wage, both determines
Speaker 1: production and consumption. So if you lose access to the wage, right,
Speaker 1: and there's still more stuff being produced because of automation levels,
Speaker 1: what you get is a massive, skyrocketing double increase of
Speaker 1: overproduction and under consumption, right, because there's just not enough
Speaker 1: money to fucking buy the stuff. And the result of
Speaker 1: this is a miseration. Everything gets fucking worse. This sort
Speaker 1: of used to be an academic argument. It is no
Speaker 1: longer an academic argument. It is just the terrain on
Speaker 1: which economic policy unfolds. Now. The miseration thesis is this
Speaker 1: is you know, it's a sort of like general law
Speaker 1: of capitalist accumulation is called has been argued about constantly.
Speaker 1: There have been ways that has been avoided. One of
Speaker 1: the biggest ways traditionally has been by capitalism sort of
Speaker 1: transforming goods into services. So for example, like the operative
Speaker 1: example of this is the transition in the us from
Speaker 1: rail lines to cars on something that points out, So
Speaker 1: you know, you get these new industries that are both
Speaker 1: labor or capital intensive. By replacing train with car, you know,
Speaker 1: you can absorb huge populations of workers as well as
Speaker 1: incorporate the peasantry into the industrial economy by sort of
Speaker 1: like converting these things into services. This has sort of
Speaker 1: been what the economy has been increasingly converted into a
Speaker 1: service based economy of various kinds. That's kind of what's
Speaker 1: happening now, you know, and you and you can see
Speaker 1: this process that work in the Chinese economy back when
Speaker 1: it was you know, really growing in the nineties and
Speaker 1: two thousands. But you know, once the peasantry had been
Speaker 1: absorbed as sort of both a new market and a
Speaker 1: new labor force with lower cost of reproduction because wages
Speaker 1: are cheaper for a bunch of structural reasons, the old
Speaker 1: tendencies of capital set in. And so what happens inside
Speaker 1: of China was what was happening everywhere else in the world,
Speaker 1: which is that as labor saving technology begins to be implemented,
Speaker 1: and you know, a bunch of services refused to be
Speaker 1: turned into new goods to like bolster the ranks industrial
Speaker 1: working class. You know, you get what's happened in the US,
Speaker 1: which is this this full transition to service economy shit
Speaker 1: that doesn't actually really grow. And you know, if if
Speaker 1: you look, if you look at Chinese growth rates, like
Speaker 1: they've been slowing for a decade, actually a little bit
Speaker 1: longer than a decade. And so you know, as China
Speaker 1: was integrated to the global economy, it too became caught
Speaker 1: in this cycle of industrial booms where you know, you
Speaker 1: get an industrial boom where you have a country with
Speaker 1: favorable exchange rates, you a stallar that inevitably set off,
Speaker 1: you know, the economies on the bad end of the
Speaker 1: exchange rate to collapse as they're forced to bear the
Speaker 1: way to global over capacity. As as I've mentioned one
Speaker 1: hundred billion times on this show, it is the one
Speaker 1: thing I will make sure every it could happen here
Speaker 1: listener will be able to explain the Plaza Accords and
Speaker 1: the Reverse Plaza Cords. You know, but this is sort
Speaker 1: of this is sort of what the Reverse Plazai Cords
Speaker 1: and the Plazai Cords were about. Was the US. This
Speaker 1: is the last time the US tried to you know,
Speaker 1: use its to sort of like pure political power and
Speaker 1: military might to be like, eat shit, I'm going to
Speaker 1: force all of your countries to fuck with your currency
Speaker 1: so that our manufacturing economy will come back. And again,
Speaker 1: the US did that successfully and the Japanese economy collapsed
Speaker 1: because we needcap Japanese economy to do it right. And
Speaker 1: to some extent, Trump is attempting the farce as farce
Speaker 1: version of this with with these steel terriffs. Right to
Speaker 1: some extent, these tariffs are his attempts to pull the
Speaker 1: Reagan maneuver of Okay, we can just like force other
Speaker 1: countries to lower their capacity and increase our capacity at
Speaker 1: their expense. The problem is that, again, this production is
Speaker 1: zero sum, and if you do this, it will annihilate
Speaker 1: the rest of the global economy. And this is the
Speaker 1: sort of context behind all of the stuff that we've
Speaker 1: been seeing for the last like thirty years, which that
Speaker 1: actual profit rates have been collapsing for ages. And right
Speaker 1: now we're in the middle of a just unbelievably hideously
Speaker 1: staggeringly massive bubble that is maintaining the sort of last
Speaker 1: like fake vestiges of economic growth where billions and billions
Speaker 1: and billions of dollars have been sunk into all of
Speaker 1: this AI bullshit, and it's you know, like the tech
Speaker 1: driven AI is a significant specifically specifically the AI stuff
Speaker 1: is a significant portion of total US economic growth. If
Speaker 1: you want to live to why that's all going to
Speaker 1: go to shit? Turn on effectively literally any episode of
Speaker 1: COOLSI Media's own Exitron's podcast Better Offline and will you
Speaker 1: will hear a lot about this. But you know, this
Speaker 1: has been that, like tech has been sort of the
Speaker 1: escape strategy of the United States. Traditionally, it's going to implode,
Speaker 1: it's going to do tremendous damage to everyone. But in
Speaker 1: the remains of that, and in this world in which
Speaker 1: profit rates are declining, and in this world in which
Speaker 1: increasing portions of the population are being spat out of
Speaker 1: the capitalist production cycle, in which increasing percentages of the
Speaker 1: world population are being kicked into an informal economy, and
Speaker 1: in this world of generalized overproduction under consumption, what's happening
Speaker 1: is that there is an enormous effort to get everyone
Speaker 1: to think that this is because of very specific tendencies
Speaker 1: of like the bad government over there, right that you know,
Speaker 1: over capacity and steel. Oh, it's just because like the
Speaker 1: evil communist government in China is cheating at capitalism by
Speaker 1: giving their companies money, and so we're gonna do tariffs
Speaker 1: on them instead of that. And again, like it's easier
Speaker 1: for these academics to make this argument because there is
Speaker 1: kind of stuff going on, right, because there is this
Speaker 1: sort of cadure evaluation stuff, because there is to some
Speaker 1: extend stay subsidization of steel production. They can present this
Speaker 1: boogeyman to sort of pin what is really a global
Speaker 1: overproduction and under consumption crisis onto just you know, it's
Speaker 1: just as government we don't like, and then you can
Speaker 1: sort of implement these ultranationalists tariff policies. It's a way
Speaker 1: of deflecting the blame from capitalism onto another country and
Speaker 1: using nationalism to paper over the actual economic contradictions of
Speaker 1: capital And if you want to escape that, it's not
Speaker 1: enough to sort of just get rid of Trump and
Speaker 1: go back to the previous retrade regime. You have to
Speaker 1: actually structurally change the thing at the center of all
Speaker 1: of this, which is the wage relation. Right. You have
Speaker 1: to fundamentally change the fact that this economy, the entire economy,
Speaker 1: is based on there being classes of people who make
Speaker 1: money from owning things and that there's an entire class
Speaker 1: of people whose labor is stolen every single day so
Speaker 1: that those other people can make money by owning things
Speaker 1: who do all of the actual work. And that's what's
Speaker 1: actually fundamentally at stake here. It is this question of
Speaker 1: are we going to continue to do tariff bullshit? Or
Speaker 1: are we going to take power from the people who
Speaker 1: caused all of this? From Trump, from Elon Musk, from
Speaker 1: all of the billionaires, from Feel, from all of the
Speaker 1: tech billionaires that funded them, from all of the Republican
Speaker 1: Party Cook Breathern networks. Are we going to destroy these
Speaker 1: people completely by getting rid of the social relations of
Speaker 1: capital that make this all possible? Or are we going
Speaker 1: to sit here and let them continue to produce AI
Speaker 1: videos of them shitting all over us while they take
Speaker 1: all of our money and commit an ethnic cleansing and
Speaker 1: continue to fund genocides abroad. It could happen here is
Speaker 1: a production of cool Zone Media. For more podcasts from
Speaker 1: cool Zone Media, visit our website coolzonmedia dot com, or
Speaker 1: check us out on the iHeartRadio app, Apple Podcasts, or
Speaker 1: wherever you listen to podcasts. You can now find sources
Speaker 1: for It could happen here, listed directly in episode descriptions.
Speaker 1: Thanks for listening,