By Jasper Bernes

Writing about David Ricardo and Adam Smith, Marx was always careful to distinguish between the history of economics and economic history, between what these writers thought capitalism would do and what it did. One might say, in fact, that critique of political economy attends to the gap between economic ideology and the economy itself. For Marx, error is baked in. Elites make constrained choices that lead — because of the constrained choices of others — to unexpected and undesired outcomes. There is a danger, therefore, in treating Stephen Miran's A User's Guide to Restructuring the Global Trading System as a guide to the present. Even if the book were the playbook for the Trump administration, the unfurling of such programs does not take place in a void. As Réalité notes, Trump's tariff blitzkrieg is part of a negotiation, a negotiation that will be determined not just by the reaction of members of Trump's coalition but US trading partners and the global economy.

Réalité nonetheless offers a useful portrait of one of the economic ideologies at work in the Trump administration, and gives us insight into the motives of some fractions of capital that have aligned with Trump and MAGA. But when it comes to sussing out "the implications for the international circuit of capital," they are entirely too credulous. The main claim is that Trump intends to partially devalue the dollar while retaining its status as world reserve currency, and to make US trading partners pay more for US military protection. So far so good. It is possible — though by no means likely — that the US can negotiate deals with these outcomes, even if so far few countries are willing to trade. The problem here is that Trump already showed his hand, pausing the tariffs in the face of rising bond yields. Lack of progress in negotiations will continue to lead to higher borrowing costs, bringing more pressure on the administration to settle. Pyrrhic victory is the most likely outcome.

Miran believes that the US can avoid the economic and political consequences of such a devaluation — i.e., inflation — by reducing taxes for lower- and middle-class households and deregulating the energy industry, bringing down a core driver of inflation. First off, it must be said that oil and gas companies are currently reluctant to invest in new production because of the energy-transition underway. The fossil fuel industry is in a double bind — new production is higher cost but lowers prices by increasing output rendering that new production unprofitable. Disinvestment raises prices, rendering those new fields once again profitable. Trump's Big Beautiful Bill does not look set to lower taxes significantly enough that the costs of the tariffs will be offset, unless they lead to the economic growth expected. Réalité cautions against over-estimating the "inflation" caused by such tariffs but they forget that beyond the tariffs devaluation is also inflation. If the result of the negotiations is a partial devaluation of the dollar, prices will rise sharply. Trump was elected, in part, with a mandate to halt inflation and keep the economy humming, but it seems that by the time his terms ends he will have done neither. As far as perceptions of the economy go, what consumers care about is price levels not rates, so the fact this inflation is one-off, time-bound event is likely to matter little. People care about how much more expensive things are, not how quickly they are becoming expensive. How can this become the basis for an enduring coalition?

Réalité is most credulous when it comes to the long-term implications of Miran's détournement of the global trading system. As is well-known, Trump promises to reindustrialize the US by means of economic protectionism. But deindustrialization in the US and elsewhere is driven first and foremost by automation, and not economic competition. The US is the second-largest industrial producer by output next to China, but its industrial labor force is far smaller. Because automation is an ongoing process, the reindustrialization of the US due to economic protectionism may increase industrial output, but it will not increase industrial labor. If a big toilet-paper producer returns to a mill town it left thirty years ago, the new factory will employ far fewer people, and additions to the industrial labor force will, in the medium-term if not the short-term, be offset by ongoing deindustrialization of labor due to automation. The only way that the US could build a new industrial working class would be by clawing back the market share taken by China. But this would require domestic producers to compete on the global market where tariffs are no help. This could only happen by way of a massive (not partial) devaluation of US labor to levels competitive with global producers — such a devaluation would be commensurate with economic and political breakdown and surely not the basis for an enduring "nationalist social compromise." In sum, tariff-driven reindustrialization might increase profits for some producers but it will not increase wages. In fact, as is noted, it requires a devaluation of labor.

Perhaps the most interesting and the most unpredictable aspect of the new economic nationalism is its confluence with military conflict. The biggest players in Trump's coalition sell security and defense products and services to states. Trump has massively expanded funding for defense and security and therefore stands to enrich these companies massively. But such profits come at the cost of other capitalists elsewhere — they are paid for by borrowing or taxes. Perhaps the best prospect for US capital is as armorer to the world. If the US can not only supply arms to a world at war, but make other states pay for it, then perhaps there is a path toward labor reindustrialization. But it is a path to hell and likely to end in US defeat. What we see are symptoms of American decline. The more the US fights it, the worse it will get.

Jasper Bernes is a communist writer and lecturer at the University of California, Berkeley. He regularly contributes to the Field Notes section of the Brooklyn Rail and has written and published several books, including the recent The Future of Revolution