The State and the Making of Global Capitalism
The central theme of our book, The Making of Global Capitalism, is the role of states in the making of global capitalism, and especially the role of the American state as an informal empire in that making—and in superintending it to this day.
The question of the state’s relationship with capital remains an important—and still highly contested—one for scholars as well as activists. In the work of most economists, capitalism is seen as virtually synonymous with markets. Globalisation in this framework is essentially the geographic extension of competitive markets, a process dependent on the removal of state barriers to this, and the overcoming of distance through technology. Political scientists, for their part, have usually understood that markets are not natural and had to be made, and that states are fundamental actors in this process, but they rarely probe deeply into the ways this process has been shaped by the intersections of capitalist social relations and the dynamics of capital accumulation.
The mutual constitution of states, classes and markets has been the main focus, of course, of political economists working within a historical materialist framework. But they have often been hampered by Marxism’s inclinations to analyse the trajectory of capitalism as derivative of abstract economic laws.[1] The conceptual categories Marx developed to define the structural relationships and economic dynamics distinctive to capitalism can be enormously valuable, but only if they guide the understanding of the choices made, and the specific institutions created, by specific historical actors. Building on earlier attempts to develop a theory of the capitalist state along these lines, it is this approach that guides our study of the role of the American state in the making of global capitalism.[2]
Politics and economy under capitalism
One of capitalism’s defining characteristics, compared with pre-capitalist societies, is the legal and organisational differentiation of state and economy. This is not to say there was ever anything like a complete separation between the political and economic spheres of capitalism. Indeed, as capitalism developed states became more involved in economic life than ever, especially in the establishment and administration of the juridical, regulatory and infrastructural framework in which private property, competition and contracts came to operate. Capitalist states also were increasingly major actors in trying to contain capitalist crises, including as lenders of last resort. Capitalism could not have developed and expanded unless states came to do these things. Conversely, states became increasingly dependent on the success of capital accumulation for tax revenue and popular legitimacy.
It is one thing to say that capitalism could not exist unless states did certain things, but what states do in practice, and how well they do them, is the outcome of complex relations between societal and state actors, the balance of class forces, and not least, the range and character of each state’s capacities. Capitalist states have developed varying means of promoting and orchestrating capital accumulation, as well as anticipating future problems and containing them when they arise, and this has often been embodied in distinct institutions with specialised expertise. It is in these terms that we should understand the ‘relative autonomy’ of capitalist states: not as being unconnected to capitalist classes, but rather in having autonomous capacities to act on behalf of the system as a whole. In this respect, capitalists are less likely to be able to see the forest for the trees than officials and politicians whose responsibilities are of a different order from that of turning a profit for a firm. But what these states can autonomously do, or do in response to societal pressures, is ultimately limited by their dependence on the success of capital accumulation. It is above all in this sense that their autonomy is only relative.
The differentiation of state and economy eventually allowed for the organisation of class interests and their representation vis-à-vis opposing classes and the state. As capitalists, farmers, and workers developed distinctive institutions, the arbitrary authority of states was constrained, but the capacities of states were at the same time generally enhanced. One aspect of this was the establishment of the rule of law as a liberal political framework for property, competition and contracts. Another was the establishment of specialised agencies to facilitate accumulation through regulating markets. Yet another was the establishment of liberal democracy as the modal form of the capitalist state, although this was not realised in any stable fashion even in the advanced capitalist states until the second half of the twentieth century.
The imperialism-capitalism entanglement
The age-old history of empires as involving the political rule over extended territories was fundamentally affected by the differentiation between state and economy under capitalism.[3] As part of the differentiation of economic and political spheres, particular capitalists extended their range of activity beyond the territorial boundaries of their respective states. Insofar as states often encouraged and supported capitalists in doing this, there was always a specifically national dimension to processes of capitalist internationalisation. And as the interaction with foreign capital affected domestic social forces, this in turn contributed to generating that combination of inside and outside pressures whereby states came to accept a certain responsibility for reproducing capitalism internationally. It is mainly in this sense that we can properly speak of the ‘internationalisation of the state’.[4]
It is therefore wrong to assume an irresolvable contradiction between the international space of accumulation and the national space of states. Rather, when looking at the role that states have always played on the international economic stage, we need to ask how far their activities have been consistent with extending capitalist markets internationally—and also consistent with the actions of other states. The role of some states has been much greater than others in this respect, of course, and this cannot be analysed without taking into account the relationship between state and empire in capitalism.
The analysis of the international dimension of capitalism, and the insight that the export of capital was transforming the role of the state in both the capital-exporting and importing countries was the most important contribution of theorists of imperialism writing at the beginning of the 20th century. But the link these theorists made between the export of capital and the inter-imperial rivalry of those years was problematic, and would become even more so over the years from 1945 onwards. The problem was not only that the classical theories of imperialism saw states as merely acting at the behest of their respective capitalist classes, and thus did not give sufficient weight to the role of pre-capitalist ruling classes in the inter-imperial rivalries of their own time. It was also that they treated the export of capital itself as imperialist, and in doing so their theories did not really register the differentiation of the economic and political spheres in capitalism, and the significance of informal empire in this respect. This was itself a product of the failure, as Colin Leys once noted, to ‘disentangle the concept of imperialism from the concept of capitalism.’[5]
In the ‘golden age’ after 1945 domestic markets were anything but saturated; the profits were realised through expanding working-class consumption, yet capital exports continued, driven by quite different factors, as the export of capital itself was transformed over the twentieth century in the context of the international integration of production through multinational corporations and the extensive development of international financial markets.[6] In the passage from Britain’s only partially informal empire to the predominantly informal American empire something much more distinctive had emerged than Pax America replacing Pax Britannica. The American state, in the very process of supporting the export of capital and the expansion of multinational corporations, increasingly took responsibility for creating the political and juridical conditions for the general extension and reproduction of capitalism internationally.
This was not just a matter of promoting the international expansion of American MNCs. That state actors explained their imperial role in terms of universal rule of law considerations was not mere dissembling, even if they always also cast an eye to whether this would benefit American capitalism. As with the informal regional empire that the US established in its own hemisphere at the beginning of the twentieth century, a proper understanding of the informal global empire it established at mid-century requires a scale of analysis that can identify not only the domestic but also the international role of the American state in setting the conditions for capital accumulation. It also requires a very different understanding of the roots of US empire than those advanced by critical historians who linked the US ‘policy too directly to its capitalists’ needs for exports due to over-accumulation at home (or even to businessmen’s belief in that need).[7] It is incorrect to try to explain US imperial practices in aid of commercial interests merely in terms of capitalists imposing them on the American state. The danger with this type of interpretation is that it exaggerates the extent to which capitalists’ consciousness of their interests was always so fixed and clear. It also often leads to drawing far too rigid distinctions between internationally-oriented and domestically-oriented elements of the US capitalist class. The tensions as well as synergies between the American state’s role vis a vis its own society and its growing responsibilities for facilitating capital accumulation in the world at large cannot be reduced to the lobbying of various ‘class fractions’.[8] Most crucially, such an interpretation gives insufficient weight to the relative autonomy of the American state in developing policy and strategic directions and bringing about political compromises among diverse capitalist forces—and between them and other social forces.
The internationalisation of the capitalist state
The most important novelty of the relationship between capitalism and imperialism that World War II set in train was that the densest imperial networks and institutional linkages, which had earlier run north-south between imperial states and their formal or informal colonies, now ran between the US and the other major capitalist states. The creation of stable conditions for globalised capital accumulation, which Britain had been unable to achieve (indeed hardly even to contemplate) in the nineteenth century, was now accomplished by the American informal empire, which succeeded in integrating all the other capitalist powers into an effective system of coordination under its aegis. The significance of this can only be fully appreciated with a proper understanding of what it meant in terms of the internationalisation of the capitalist state. The creation of new international institutions in the postwar era did not amount to the beginnings of a proto-global state; these institutions were constituted by national states, and were themselves embedded in the new American empire. National states remained primarily responsible for reorganising and reproducing their respective countries’ social relations and institutions of class, property, currency, contract and markets. But they were now 'internationalised' in a different way than they had been before. Now they too had to accept some responsibility for promoting the accumulation of capital in a manner that contributed to the America-led management of the international capitalist order. The American state did not so much dictate this to other states; rather it ‘set the parameters within which [the others] determined their course of action.’[9]
Many US administrative, legal and constitutional forms were imitated in other states, but this was always mediated and refracted by the specific balance of social forces and institutional make-up of each of them. Their politics were never a direct reflection of American economic penetration of their economies. Nor did other states become merely passive actors in the American empire; ‘relative autonomy’ characterised the internationalisation of these state as well. It was their relative autonomy within the American empire that allowed them to pressure the US governments to carry out their pre-eminent responsibilities in the management of global capitalism in ways that would not simply reflect the political and economic pressures to which they were subject at home. But in doing so, they recognised, usually explicitly, that the US alone had the capacity to play the leading role in the expansion, protection and reproduction of capitalism.
The interpenetration of capitals
As capitalist states increasingly sought to attract foreign investment, their policies became more oriented to offering equal treatment to all capitalists, independent of their nationality, which was precisely what the American state had pressed for. MNCs came to depend on equal national treatment by many states; and these states were also internationalised in the sense of coming to take on more and more responsibility for creating and strengthening the conditions for non-discriminatory accumulation within their borders. This eventually included legal and regulatory changes that facilitated the development of their own MNCs along the lines pioneered by the American state. This did not spawn a ‘transnational capitalist class’, loosened from any state moorings or a supranational global state; ‘national capital’, in the shape of firms with dense historic linkages and distinct characteristics, did not disappear.[10] Nor did economic competition between various centres of accumulation. But the interpenetration of capitals did largely efface the interest and capacity of each ‘national bourgeoisie’ to act as the kind of coherent force that might have supported challenges to the informal American empire about to spawn. Indeed they usually became hostile to the idea of any such challenge, not least because they saw the American state as the ultimate guarantor of capitalist interests globally.
The new relationship between capitalism and the informal US empire should not be understood in terms of the old ‘territorial logic of power’ long associated with imperial rule merely becoming fused with the ‘capitalist logic of power’ associated with ‘capital accumulation in space and time’.[11] The US informal empire constituted a distinctly new form of political rule. Instead of aiming for territorial expansion along the lines of the old empires, US military interventions abroad were primarily aimed at preventing the closure of particular places or whole regions of the globe to capital accumulation. This was part of a larger remit of creating openings for or removing barriers for capital in general, not just for US capital. The maintenance and indeed steady growth of US military installations around the globe after World War Two, mostly on the territory of independent states, needs to be seen in this light, rather than in terms of securing territorial space for the exclusive US use of natural resources and accumulation by US corporations.[12] Most important, however, and very different than the previous imperialisms based on territorial expansion, American state apparatuses like the Pentagon and CIA are actually much less important in the making and superintending global capitalism than the US Treasury and Federal Reserve. It is the latter which play the key roles, not just in sponsoring the penetration and emulation of US economic practices abroad, but much more generally in promoting free capital movements and free trade while also trying to contain the international economic crises spawned by a global capitalism.
This article is adapted from the introduction to Leo Panitch and Sam Gindin’s The Making of Global Capitalism and is the first in our series, Global Capitalism and the State.
Leo Panitch is editor of the Socialist Register and distinguished research professor at York University, Canada.
Sam Gindin is the former Research Director of the Canadian Autoworkers Union and Packer Visiting Chair in Social Justice at York University.
[1] As in much of social science, there is an unfortunate tendency within Marxism to write theory in the present tense. We are sympathetic to E.P. Thompson’s famous lament that Marx himself became for a period ‘caught into the trap’ baited by classical political economy’s search for ‘fixed and eternal laws independent of historical specificity.’ The Poverty of Theory and Other Essays, London: Merlin, 1978, esp.pp.251-3.
[2] In light of widespread misguided assumptions—and often misrepresentations—of what is entailed in such a theory, it is important to stress that we are not proceeding from an ideal-typical notion of what capitalism requires, and then asserting in a functionalist manner that states must meet such requirements. Nor do we see the relationship between policy-making and capital accumulation as a matter of capitalists telling state actors what to do. For excellent discussions of the extent to which Miliband, Poulantzas and others who have sought to develop a theory of the capitalist state successfully avoided such problems, see especially Stanley Aronowitz and Peter Bratsis eds., Paradigm Lost: State Theory Reconsidered, Minneapolis: University of Minnesota Press, 2002; and Paul Wetherly et al., Class Power and the State in Capitalist Society, London: Palgrave Macmillan, 2008.
[3] Before the late eighteenth century all empires had combined economic control with military and political control. It fell to Britain, where the separation of a capitalist economy from the capitalist state was most advanced, to develop a conception of empire based as much on economic expansion and influence—the ‘imperialism of free trade’—as on the military and political control of overseas territories. This prototype of an ‘informal empire’ did not of course mark the end of territorial expansion, military conquest and colonialism. Well into the twentieth century international capitalist competition was still accompanied by formal imperial rule, and a tendency to dangerous inter-imperial rivalry. Nonetheless, by the late nineteenth century, even at the height of the ‘scramble’ to extend old-fashioned formal empires, the development of capitalism had gone so far that when capital expanded abroad it was increasingly looked after by other states that were themselves spawning capitalist social orders.
[4] See Panitch, ‘Globalization and the State’, pp.69-71; as well as Robert Cox, Production, Power and World Order, New York: Columbia University Press, 1987, esp. pp.132-3; and Nicos Poulantzas, Classes in Contemporary Capitalism, London: NLB, 1974, esp. p.73.
[5] Colin Leys, ‘Conflict and Convergence in Development Theory’, in W. J. Mommsen and J. Osterhammel, eds., Imperialism and After, London: Allen and Unwin, 1986, p.322. See also Norman Etherington, Theories of Imperialism: War, Conquest and Capital, London: Croom Helm, 1984. The failure to make this distinction ensured that the words that opened Kautsky’s infamous essay in 1914—the one that so attracted Lenin’s ire—increasingly rang true: ‘First of all, we need to be clear what we understand from the term imperialism. This word is used in every which way, but the more we discuss and speak about it the more communication and understanding becomes weakened.’ ‘Der Imperialismus’, Die Neue Ziet, Year 32, XXXII/2, 11 September 1914, p.908.
[6] The increasingly severe analytic problems with Hobson’s as well as the Marxist theories of imperialism gave rise by the 1970s to complaints that their association of imperialism with ‘an undifferentiated global product of a certain stage of capitalism’ reflected its lack of ‘any serious historical or sociological dimensions’. Gareth Stedman Jones, ‘The Specificity of US Imperialism’, New Left Review, I/60, March-April 1970, p.60, n. 1. Giovanni Arrighi went so far as to say that ‘by the end of the 60s, what had once been the pride of Marxism—the theory of imperialism—had become a tower of Babel, in which not even Marxists knew any longer how to find their way.’ Giovanni Arrighi, The Geometry of Imperialism, London: NLB, 1978, p.17.
[7] The classic study in this vein is William Appleman Williams, The Contours of American History, Chicago: Quadrangle, 1966. Andrew J. Bacevich embraced this interpretation in his American Empire: The Realities and Consequences of US Diplomacy, Cambridge, MA: Harvard University Press, 2002, even though it fails to register the small contribution that exports made to capital accumulation relative to the domestic economy at the time, and gives vastly disproportionate weight to the significance of US capitalist expansion in Central America at a time when California was barely yet a site of US capital accumulation. Others who have recently embraced this Open Door explanation of US foreign economic policy have acknowledged that ‘US economic well-being did not objectively depend on trade,’ but still insist that ‘policy makers in Washington believed that prosperity was tied to its exports abroad.’ Christopher Layne, The Peace of Illusions: American Grand Strategy from 1940 to the Present, Ithaca: Cornell University Press, 2006, p. 72. As Gabriel Kolko long ago pointed out, this interpretation suggests a kind of ‘transcendental false consciousness’ whereby capital and the state ‘failed to perceive where it was their main gains were to be made.’ But despite his insistence on the need for a more sophisticated explanation than ‘the specifi c needs of this or that business interest,’ Kolko unfortunately offered only an uncritical reference to the ‘general theory of the role of imperialism in resolving United States capitalism’s structural contradictions.’ Gabriel Kolko, Main Currents in Modern American History, New York: Harper & Row, 1976, p. 36.
[8] An insistent line of interpretation, originally advanced by radical scholars but today also embraced much more widely, has made this error in directly tracing US policy to the influence of ‘large capital-intensive corporations that looked to overseas markets and outward-looking investment banks’ (as opposed to ‘labour intensive industries that favoured economic nationalism’). And if it is admitted, on this interpretation, that it is not quite correct to speak of these capitalist ‘dominant elites’ as ‘hijacking the state’, it is only because they allegedly ‘are the state.’ See Layne, The Peace of Illusions, esp. pp.200-201, who is explicitly drawing here on Tom Ferguson’s famous essay, ‘From Normalcy to New Deal’, International Organization, 38(1), Winter 1984.
[9] ‘Even when it did not speak first, the allies always had to figure America’s response to their actions. This defining function was crucial.’ Geir Lundestad, The United States and Western Europe since 1945, Oxford: Oxford University Press, 2003, p.64.
[10] On the transnational capitalist class, see Leslie Sklair, The Transnational Capitalist Class, Oxford: Blackwell, 2001; William I. Robinson, A Theory of Global Capitalism, Baltimore: Johns Hopkins University Press, and especially, Jonathan Nitzan and Shimshn Bichler, Capital as Power, New York: Routledge 2009. Apart from Poulantzas’s penetrating theoretical critique of this in the 1970s in his Classes in Contemporary Capitalism, and the strong empirical refutation in Winfried Ruigrok and Rob van Tulder, The Logic of International Restructuring, London: Routledge, 1995, see the more recent analysis by Geoffery G. Jones, which demonstrates how much, in the new millennium as before, ‘the influence of nationality on multinational corporations is still strong today. The composition of boards of directors remains heavily biased toward home-country nationals, despite the fact that equity ownership of large corporations is now widely dispersed among countries… Today, technological advances may permit different parts of the value chain to operate in different places, companies may hold portfolios of brands with different national heritages, and leaders, shareholders, and customers may be dispersed. Still, the nationality of a firm is rarely ambiguous. It usually has a major influence on corporate strategy, and it seems to be growing in political importance.’ ‘The Rise of Corporate Nationality’, Harvard Business Review, October 2006, pp.20-22. See the argument more fully in his ‘Nationality and Multinationals in Historical Perspective’, Geoffrey G. Jones, Harvard Business School Working Paper, 06-052, 2005.
[11] See David Harvey, The New Imperialism, New York: Oxford University Press, 2003, pp.26-33.
[12] Despite their contributions in detailing the extent of US foreign interventions and global military installations, many critics often fail to see the significance of this crucial point. See, for instance, Noam Chomsky, Hegemony or Survival: America’s Quest for Global Dominance, New York: Henry Holt, 2004; Chalmers Johnson, The Sorrows of Empire: Militarism, Secrecy and the End of the Republic, New York: Metropolitan Books, 2004
Leo Panitch and Sam Gindin on "The Making of ...vimeo.com2012년 11월 13일 - 113분 Leo Panitch and Sam Gindin, authors of the book "The Making of Global Capitalism" in a discussion of ... |
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Professors Leo Panitch and Sam Gindin talked about their book, [The Making of Global Capitalism: The ...
The Making of Global Capitalism
[The Making of Global Capitalism] - C-SPAN Video ...
Professors Leo Panitch and Sam Gindin talked about their book, [The Making of Global Capitalism: The ...
Groundbreaking account of the development of capitalism.
The all-encompassing embrace of world capitalism at the beginning of the twenty-first century was generally attributed to the superiority of competitive markets. Globalization had appeared to be the natural outcome of this unstoppable process. But today, with global markets roiling and increasingly reliant on state intervention to stay afloat, it has become clear that markets and states aren’t straightforwardly opposing forces.
In this groundbreaking work, Leo Panitch and Sam Gindin demonstrate the intimate relationship between modern capitalism and the American state, including its role as an “informal empire” promoting free trade and capital movements. Through a powerful historical survey, they show how the US has superintended the restructuring of other states in favor of competitive markets and coordinated the management of increasingly frequent financial crises.
The Making of Global Capitalism, through its highly original analysis of the first great economic crisis of the twenty-first century, identifies the centrality of the social conflicts that occur within states rather than between them. These emerging fault lines hold out the possibility of new political movements transforming nation states and transcending global markets.
Book Details
- Hardcover
- October 2012
- ISBN 978-1-84467-742-9
- 6.5 × 9.5 in / 464 pages
- Territory Rights: USA and Dependencies and the Philippines.
Endorsements & Reviews
“Lucid and indispensable guides to the history and practice of American Empire.” — Naomi Klein
“This is a major work in political economy—rigorously researched, compellingly written, and bursting with fresh insights on nearly every page.” — Robert Pollin, Professor of Economics, University of Massachusetts Amherst
“Combining the ferocity of investigative reporters, sophisticated skills in interpreting the historical archive, and a profound grasp of theory, Panitch and Gindin provide an astonishingly illuminating account of the making of global capitalism through the organization of a global financial system under US hegemony since World War II. A must read for everyone who is concerned about where the future of capitalism might lie.” — David Harvey, author of The Enigma of Capital
“Panitch and Gindin give us a history of global capitalism that brings together what has often been represented as unconnected. The authors help us see the active making of global capitalism mostly overlooked in mainstream explanation. A great book.” — Saskia Sassen, author of Territory, Authority, Rights
“They have few rivals and no betters in analyzing the relations between politics and economics, between globalization and American power, between theory and quotidian reality, and between crisis and political possibility.” — Doug Henwood, editor of Left Business Observer, author of Wall Street
http://books.wwnorton.com/books/978-1-84467-742-9/
The nature of the beast: Leo Panitch and Sam Gindin on 'The Making of Global Capitalism'
| October 19, 2012
Leo Panitch and Sam Gindin have just released their latest book, The Making of Global Capitalism. Gindin is the former Research Director of the Canadian Autoworkers Union and Packer Visiting Chair in Social Justice at York University, and Panitch is Canada Research Chair in Comparative Political Economy and Distinguished Research Professor of Political Science at York University. The two have worked together on many books and publications. Aaron Leonard recently sat down with them in New York City to discuss their work. The interview will be presented here in three parts over the coming days.
Part I: "An American Proposal"
Aaron Leonard: Let's start by dialing back, before this global capitalism was in place. Your book recounts something called, "An American Proposal," a joint statement from the editors of Fortune, Time and Life published in the midst of World War II (1942). In it they lay out the aims of a post World War II world, "to organize the economic resources of the world so as to make possible a return to the system of free enterprise in every country." This is rather shocking in its brazen capitalist class-consciousness -- what did it portend?
Sam Gindin: You have to understand that in the context of a developing awareness within the American state -- and the development of corresponding capacities -- that to preserve and strengthen American capital it was essential to keep the world more open to capitalism more generally. If that wasn't achieved and other parts of the globe closed themselves off to capitalism, the threat was reviving the kind of problems faced with Germany in the interwar period -- countries that can't get access to resources and markets turn to o autarky, with profound implications for the U.S. itself.
Leo Panitch: I think the historical context is important as well. Roosevelt's second New Deal ended in 1937-38 and there was a truce with business in which it was made clear that a very soft and weak Keynesian would be adopted and there would be no more major reforms for trade unions and for labor. Indeed some of what looked like the more radical elements of the Wagner Act had already been constrained by the Supreme Court and by the Labor Relations Board. A deal was done with capital. Then as the war approached the State Department was encouraging the Council on Foreign Relations and businessmen on Wall Street to form a roundtable, which they did in 1939 under the auspices of Fortune. They were working very closely and though it sounds like capitalists coming together and then telling the American state what to do, it was as much an interaction between corporate lawyers and officials inside the American state who were doing this thinking together.
Dean Acheson, who went on to be Secretary of State and wrote the great book Present at the Creation, gives a speech to the International Ladies Garment Workers Union in 1939 that says pretty much the same thing: that it's going to be up the U.S., if the war is won, to remake the postwar world using the capacities that were developed with the New Deal -- in a sense internationalize those capacities -- so as to construct a world which is open to free enterprise. They do what wasn't done after World War I, including forgiving loans, the refusal of which was one of the things that generated the economic crisis of the thirties.
AL: While the business of the U.S. building this global empire was going on, there were two major states, the Soviet Union and the People's Republic of China that stood outside that paradigm. What impact on global capitalism did the absence of such a significant amount of the productive forces -- people, technology, machines, raw materials etc. -- have?
LP: At one level, you can say that these were arenas closed to capital accumulation. The American state was extremely worried about that in terms of the Soviet Union and they were very surprised to have lost China by 1949. But it wasn't only a matter of these being places that American capital could not enter, though it has of course always been very important to the American state to be able to open markets for American multinationals and banks. And yes, important portions of the world's resources, especially in the case of the Soviet Union, were not available to American capital.
But beyond this those resources were critical to Europe and Japan as they were remade as capitalist societies. The United States guarantees access, above all in the Middle East, to oil as part of rebuilding of Japan and Germany and Britain and France. A lot of people tend to think of American military interventions, or CIA interventions, in terms of 'what they're trying to do is secure oil for the United States.' No. On the contrary they're playing the role of the global state in the absence of an international global state. They are guaranteeing, to those countries they are rebuilding as capitalist states, access to resources that they otherwise would have had from Eastern Europe and that portion of Soviet Asia that is now closed to them.
SG: The other dimension is that the Soviet Union and China were examples of staying out of capitalism that spurred on liberation movements abroad. They also were supportive of economic nationalism on the part of Third World states, which by the late 1960s undertook a growing number of expropriations of foreign capital, but these numbers faded through the later 70s as the liberation movements were defeated and as Third World countries got more integrated into capitalism.
LP: What was attractive to many Third World countries was that aspect of the Soviet Union which was motivated by 'socialism in one country' which was essentially Russian nationalist. Of course the national bourgeoisies in Third World countries were very much holding onto private property, but nevertheless they, to some extent, emulated the space that communist governments had ostensibly carved out for themselves.
AL: The period in the wake of the U.S. defeat in Vietnam was a troubled and critical one. The depths of the crisis were such that, as you note, there was a TIME magazine cover of 1975, asking, "Can capitalism survive?" For all the complex mix of things going on, your conclusion is that it was indicative of "neither decline nor moderation but restructuring." What do you mean by that?
LP: I do think the context for that was not so much Vietnam. It was rather these increased expropriations from nationalist regimes. In 1974 the UN General Assembly overwhelmingly voted for a charter of economic rights of states, which included the provision that they could expropriate foreign capital, even without compensation. To some extent, Wall Street discounted this as rhetoric because they knew that while Saudis had taken over the operations of foreign oil companies they paid them for this, and they were investing their surpluses on Wall Street. But the wording of the UN economic rights charter still did sound very shocking. And this rather militant sounding economic nationalism abroad came was all the more frightening in that it coincided with a lot of labour militancy at home.
The inflation of the 1970s stemmed from the inability to quell that militancy in the advanced capitalist countries. To top it all off, the breakdown of Bretton Woods, itself a product of such inflationary tendencies, had created consequent uncertainty about the impact on trade, just as Japan and Germany had become major exporters to the U.S., and as the United States was by this point starting to import a lot of capital from these countries as well. In other words, there were a whole number of things coming together at the time TIME magazine asked whether capitalism could survive. Things looked quite frightening -- but if the U.S. initially responded shock and horror, it soon took more practical steps that Sam calls restructuring.
SG: The restructuring was mainly about coping with the profit squeeze of the 1970s that was produced by many of the above factors. Mainstream economists, describing the period from the 1980s through the 1990s refer to it as a period of moderation. Basically after '83, apart from the brief recession at the turn of the 1990s was the longest period of uninterrupted U.S. growth in the postwar era. Yet at the time both the left and the right saw this period as one of U.S. decline, arguing first that Japan and then that Europe were going to replace the U.S. as the dominant capitalist force in the face of was a 'hollowing out' of American economic strength. We've argued that it wasn't hollowing out, it was restructuring.
In fact American capital came through that period very successfully. That doesn't mean working people did well. It was obviously a period of great inequality and insecurity, with stagnating wages, etc. But for the corporations, the period included a major restructuring of workplaces, new technologies, changes in the relative importance of specific industries, and dramatic shifts between manufacturing and services, consumer services like retail, and business services like engineering, consulting, accountancy, legal become very important at home and internationally. There were also regional shifts in economic activity (Detroit vs. the American South) and major geographic shifts such as the integration of Eastern Europe and then China. This has to be seen as a major period in which American capital, having defeated labour, was left with more autonomy to do what it felt needed to be done to revive capital and restructured, establishing the material base for the revival of the American empire.
AL: How did the collapse of the Soviet Union fit into all that?
LP: Even before that, it seemed in the seventies, as the crisis was accelerating, a political left was emerging inside the major working class-affiliated political parties that had a chance of getting elected, and when TIME said, “Can capitalism survive?” they were also thinking about the bubbling up of radicalism inside those government parties. What was being argued by the left in these parties was that the welfare state reforms that had previously been won were now coming under enormous pressure and would be lost unless workers could go beyond them, to take the decisions about what is invested and where it is invested away from capital. You were hearing this from the forces behind Tony Benn in Britain, Rudolph Meidner in Sweden, from the German unions calling for investment planning, from those forces on the left in France that eventually got Mitterrand's Socialist Party elected in France in conjunction with the Communists on the most left-wing program in the postwar period. And even in the U.S., the left in the Democratic Party was very strong in the mid-1970s.
Yet all this was turned around. By the late 1970s, the Democrats under Carter eviscerated the left wing of the Democratic Party. The Humphrey-Hawkins full employment bill, which was calling for economic planning to secure full employment again, was turned into an empty piece of legislation. The unions by the late seventies either were giving concessions to the auto companies like Chrysler in exchange for a bailout, or they were more explicitly aligning themselves with a need for competitiveness. The union militancy was broken in Britain even before Thatcher by the Labour government, and the German Socials Democrats eviscerated the left in the unions, as did their Swedish counterparts. And once Mitterrand had to choose between either imposing capital controls and interrupting the capitalist process of European integration, or giving up his radical program -- he famously did the U-turn.
Moreover, if you look at what happened to Third World economic nationalism Wall Street was right, the rhetoric of these nationalist bourgeoisies needed to be very heavily discounted. Even in the face of the debt crisis of the 1980s they came on board with the IMF and American Treasury in introducing the kind of structural adjustment program that would invigorate their markets, make them competitive, restrain their internal balance of class forces. As Larry Summers said, the main affect of NAFTA was to insure that Mexico would follow market oriented policies and be favourable to the United States instead of following socialist policies and be unfavourable to the United States, very explicitly. That was a process begun in the 1980s carried through in the 1990s.
This was much more important than the collapse of the Soviet Union. That's not to say that the Soviet collapse didn't have an effect in terms of a sphere becoming open to capital accumulation and demoralizing those portions of the left which thought a different world was all tied up with this very disappointing and undemocratic authoritarian example. I think one tends to enormously over-blow the significance of that collapse in fact, given that the important things inside the capitalist world had already largely taken place by then.
SG: The main periodization isn't before the Berlin Wall falls and after. Even going back to 1948 and the common understanding of the Marshall Plan as revolving around the external Soviet threat, we argue rather that you have to understand it more in terms of what was happening inside European countries and the internal threat from the left and the American concern, apart from the Soviet Union, of how to keep a world open to the making of global capitalism. One of the things that does happen with the collapse of the Soviet Union is that Third World countries trying to find some space vis-à-vis the American state have lost the leverage coming from the kind of support they would have from the Soviet Union. But a lot of that had been broken already.
AL: It puts the whole concept of containment into a whole different light...
SG: Yes, in a very different light. Its much more of a political economy explanation than one based on the cold war explanations.
The role of the State: Panitch and Gindin on the 'Making of Global Capitalism' - Part II
| October 26, 2012
Leo Panitch and Sam Gindin have just released their latest book, The Making of Global Capitalism. Gindin is the former Research Director of the Canadian Autoworkers Union and Packer Visiting Chair in Social Justice at York University, and Panitch is Canada Research Chair in Comparative Political Economy and Distinguished Research Professor of Political Science at York University. The two have worked together on many books and publications.
Aaron Leonard recently sat down with them in New York City to discuss their work. This is Part II of a three-part series.
Aaron Leonard: You make a startling and revealing statement, "American workers were not only attacked, but also materially integrated into the making of global capitalism." What does this mean and what effect has it had?
Sam Gindin: I think this is crucial in understanding the nature of the defeat of the working class over that period. A few things happened that were very important. Workers will always find a way of surviving. The left wasn't all that strong in this period of the seventies -- though there was a left. The consequent absence of alternatives meant that people survived in very individual ways. They worked longer hours, went into debt, young people stayed at home longer, older workers hoped that the stock market going up would help their pensions. That was important culturally, but it was also important because it lead to an atrophy of collective strengths, sensibilities and solidarity.
The other thing that happened was competition was intensified in this period. Finance was being liberalized and globalization was accelerating. The impact of this on the working class was uneven. Union members could perhaps defend themselves a little, hang on to the status quo, but not make gains, while the poor got really hammered. You have the working class itself being more fragmented, which makes it even harder to build solidarity. The resentments go both ways. Union members paying taxes complain about people on welfare, and people on welfare complain about unions wanting more. So the very formation of the class is negatively affected. That's one very important thing that begins to happen. Moreover, consumption actually increases over this period, further materially integrating workers. But consumption is increasing because workers are exploiting themselves more and debt becomes so important because it also affects the growth of finance. Crucial to the growth of finance was the earlier growth of pensions earlier and later consumer credit and especially mortgage credit. The dependence of workers on credit means that the system is especially fragile as workers wages aren’t rising but their debt is growing. And as finance is liberalized and competes by increasing its leverage and moving into new riskier areas, its volatility intensifies.
That combination of the growth of finance and the credit dependence of workers are central factors in this crisis. Housing overlaps the two because it was at the center of the increase in credit. When you have a stock market bubble it is one thing, you can more or less wait it out. When you have a housing crash, however, it is directly linked to the economy and is not just financial. It affects construction, furniture and appliances, and especially how workers view their savings and future security and so whether they are going to spend. So the form through which workers accessed consumption was very important in terms of the formation of the working class and to the nature of the crisis that followed.
Leo Panitch: When the unions were defeated, when the welfare state was pushed back, when you couldn’t get any public housing to solve the crisis of American cities, the compensating great reform was to get workers more integrated into the private financial system. Just as with the reforms that helped women get credit cards under pressure from the feminist movement, the mots significant reform under Carter was the Community Reinvestment Act which required all banks in the U.S. to set aside 5 per cent of their capital in every area where they were doing business and lend into previously redlined areas where black people were not able to get mortgages and black businesses were not able to get credit. This was seen as a great victory, but it was a reform that totally depended on financial capital to solve social problems.
The Clinton administration was very proud of expanding mortgage credit and business credit to American blacks, that financial innovations had allowed secondary mortgages to be sold off around the world. The Treasury proudly pointed to all the institutions around the world competing to lend money to American blacks to buy houses. Then Bush gets in and he lets every shyster into the business. The Congressional report on the crisis showed that over 10,000 people who were selling mortgages in Florida already had criminal records and 4,000 had been convicted for fraud. Of course that is the nature of the Republican party -- the Party at the local level consists of real estate dealers, brokers, loan sharks -- often 'respectable' loan sharks, rather than kinds of loan sharks in black communities we see on a television series like The Wire.
More generally, even though the Democrats were complicit in creating the housing bubble, and the Bush administration blew it up, this was also something that workers actually embraced. They depended on secondary mortgages to keep up their standards of living, wanted to get into the game -- and why shouldn't even black Americans want to get into the game of the American Dream? The only asset most workers will ever have to speak of, apart from their pension, is their home. Why shouldn't they try and get into this game of that singular asset bubble. And it was dangerous and disastrous.
SG: There is a general point here. There are reforms that might strengthen working people and there are reforms where you might get something in the short term, but you get them at great cost. In focusing on the short term, the working class is itself complicit in reproducing neoliberalism. The other dimension in which this occurs is around ‘competitiveness’. Once unions accept the logic of competition and are selling it to their members - you have to accept this to be competitive - neoliberalism is reproduced within the institutions of the working class.
LP: In the run up to NAFTA, Sam and another economist in the Canadian autoworkers issued a wonderful pamphlet which argued that competition is a constraint, it's not the union's goal. But for most unions it eventually becomes the goal and this undermines every aspect of solidarity.
AL: Early on you discuss, "The roles of states in maintaining property rights, overseeing, stabilizing currencies, reproducing class relations, and containing crisis has always been central to capitalism." This really goes against "common sense" view of states -- which most people think are ideally supposed to be instruments for the common good. Could you talk a more about what you mean by your definition and how this works?
LP: This is the central theme of the book. When the right ideologically articulated a market versus states perspective, the left tended to speak in terms of: 'they say free markets are good and states are bad, but in fact states are good and the unregulated market is bad' -- shifting the dichotomy from one end to the other. That confused people enormously in terms of the extent to which the states in question are capitalist states. Not merely in the sense that politicians are bought off, that political parties depend on donations from corporations, and banks etc. But more profoundly in the sense that as they have evolved over the course of the 20th century these states are thoroughly capitalist in the way they are structured. They are dependent on capital accumulation to provide the taxes that fuel the operations of any given department or agency. They are dependent on capital accumulation for employment that will yield them legitimacy as well as mass taxation.
Marxists have themselves failed traditionally to develop a sophisticated understanding of this, often speaking as though it's the wishes of the capitalists that determines what the state does. No! The state figures out things that capitalists individually can't figure out because they are competing with one another. But because the state is dependent on capitalist accumulation it takes responsibility for seeing the forest for the trees. Of course, certain states do this more and better than others. The attempts to develop a more sophisticated Marxist theory of the state in the 1970s, whether by Ralph Miliband -- who was my teacher in the UK, or by the Greek theoretician Nicos Poulantzas in France, largely got interrupted throughout the 1980s. The political defeat of the left together with the pressures of professionalism and careerism among so many leftist intellectuals who previously would have gone into revolutionary organizations but now found themselves in universities, contributed to the rise of a postmodernist, post-structuralist, post-colonialist discourse that deflected from further attempts to properly understand the capitalist state.
This contributed by the turn of the century not only to the view that you can change the world just by changing discourse, but also to the resonance of quasi-anarchist chant that you can change the world without taking power. Part of what this book is about is trying to revive and develop further a Marxist understanding of the state that will be of use in the class struggle. Not least so people won’t be as confused by the right-wing ideologues’ ‘states are bad’ rhetoric. All they mean by that is that they want states to be doing the things that help to accumulate capital rather than doing those things that fulfill the basic needs of the mass of working people.
SG: What we are doing in terms of developing the centrality of this notion is to ask certain questions about states. How did the American state come to have a special capacity that it can play this role on behalf of global capitalism? Or if you have a world of multinational corporations does this mean that states are irrelevant or does it mean that multinational corporations depend on many states? One of our arguments is that this kind of empire is unique because it is based on sovereign states.
LP: Not on colonies. In a sense Canada is the model state for a world made up of autonomous individual sovereign states that are part of an integrated global capitalism. Its happenstance that Canada became the model state but it had a form of capitalist development based on a form of well-paid independent commodity producer farming class in the middle of the 19th century. Which, as in the U.S. was the basis of a very dynamic manufacturing economy because local manufacturers linked up with those local farmers in the American Midwest and the wheat heartland of Ontario in Canada. The first multi-corporation was the Singer sewing machine company. Canada introduced a tariff barrier in 1879, to ensure that capital wouldn't just flow out to the United States. Well the American corporations jumped over the tariff barrier to sell to those well-paid Ontario farmers who were making good money in the wheat economy, then to the high wage proletariat inside the cities. They were able to use Canada as a staging post to sell in the Commonwealth of the British Empire.
Canada always gets a great deal of foreign direct investment from the United States. Engels comes to Canada in the 1880s and says it will only be a matter of years before this country is absorbed into the United States, the Canadian are going to demand it themselves. That isn’t what happens. There’s a free trade agreement proposed in 1911 by Laurier - a previously very popular prime minister - and its defeated! Partly because they identify with the British empire, but partly because there is a sense already of Canadian identity, nationalism, nationhood etc. That doesn't prevent American capital from becoming a major force inside Canada and Canadian capital allying with it. Canadian financial capital is increasingly lending money to American industrial capital to accumulate inside Canada, with the Canadian capitalist turning themselves into a very concentrated and powerful fraction of the financial capitalist class, which retains a Canadian identity, and a special relationship to the Canadian state. At the same time, American capital operates as a class force inside Canada, not so much in the sense of GM telling the Canadian state what to do, but because workers in Windsor are saying what’s in interest for GM is in our interest.
When free trade happens it is not that Reagan shoves this down Canada’s throat. Afraid of those forces inside the United States concerned about Japanese imports, Canadian business is desperate not to get caught by the US introduction of tariff barriers. Because of the depth of their century-long integration into the American empire, it is the Canadian bourgeoisie that takes the lead in advocating free trade, even more than the Americans. The same then applies in Mexico. The most difficult place to get NAFTA passed was in the United States! More generally, you need to see the extent to which world’s bourgeoisies looked to the U.S. as the state that would do most for them. This isn’t a matter of American domination in the sense of defining the American interest as imposing it and marginalizing other national interests. Other states and ruling classes define their best interests in terms of getting into this empire.
SG: To give an example, you could say Japan wants to be into the U.S. auto market because it is the richest and you can do it by exporting. Part of coming to the U.S. is that they want to be inside the U.S. Empire because not to be inside of it might mean protectionism at some point. But how does that work? It sounds pretty complicated. Leo’s done a lot of work, before this book, on the internationalization of states. As you can often see in the practices of the Canadian state, we want to ask how do other states than the US also come to take responsibility for global capitalism? And out of this the crucial political point arises: The left should not be saying we’ll administer capitalism better than them.’ Politics for us is about transforming the state.
LP: Some people on the left say this is a depressing argument. Because what it says is, when you get elected and it is so difficult to transform this capitalist state, what can you really do? It does mean that people need to understand that when you get elected you need to transform the structures of the state, not just the policies of the state. So much of the left can't think beyond 'we'll carry this or that set of progressive policies into the state, and we will really hold onto them. We're committed to these policies...' No, this can’t happen unless there is a fundamental restructuring of the state apparatus. Lenin called it smashing the state, which is not such a good metaphor because it suggests taking a hammer and knocking down the building. No, but what it does mean is changing the mode of administration, and this requires developing the capacities in left political organizations to change the way states are structured. This is the only way forward for those who are not naively anarchist, and want to claim 'we can do this without states.'
An uncertain future: Panitch and Gindin on 'The Making of Global Capitalism' - Part III
| October 30, 2012
Leo Panitch and Sam Gindin have just released their latest book, The Making of Global Capitalism. This is the final installment of an in-depth three-part interview of the authors by Aaron Leonard in New York City.
Gindin is the former Research Director of the Canadian Autoworkers Union and Packer Visiting Chair in Social Justice at York University, and Panitch is Canada Research Chair in Comparative Political Economy and Distinguished Research Professor of Political Science at York University. The two have worked together on many books and publications.
Aaron Leonard: You make a convincing argument for how this has been the United States' world since the end of World War II, and as a result there has been a certain submission of national power to that. Yet isn't the diminishment of U.S. power -- or at least the indications of decline -- we are seeing now suggest a reassertion of national power, regional alliances, if not the re-emergence of outright blocs? Doesn't capitalism and the capitalist enterprises that are tethered to various national economies, go hand and hand with a rapacious nationalism? As something of an addendum Zbigniew Brzezinski, in his recent book Strategic Vision, makes the point, to paraphrase, don’t worry about China as a superpower, worry about it moving toward being a regional power, and similarly countries like India etc. How do you see this?
Leo Panitch: Historically we would say that the exact opposite is true. That the post-war period in which the American empire establishes itself as the state of global capital, taking into account global capital's interest, not only American capital's interest, is a world in which America itself is sponsoring decolonization and the development of states.
The break-up of the Soviet Union produces states like firecrackers. This is not something that gets in the way of the making of globalization -- on the contrary. It becomes a very important aspect of its management and extension. Those states are encouraged to develop legal systems, sometimes pressured to develop legal systems, of the kind that guarantee the rights of property, the rights of contract etc. That is done usually in conjunction with their bourgeoisies. In the case of the anti-colonial movements of the 1950s, you do tend to get nationalist elites turning themselves into bourgeoisies -- the most horrific example is South Africa. In the case of the post-communist regimes you get communist elites turning into bourgeoisies and we’re seeing the Chinese Communist elites retaining a communist identity politically, while turning themselves and their children into capitalists, and while China is being made a capitalist society, with a legal system where contract is protected, where property is protected, where capital flows are allowed for, etc.
The book in many ways traces how that happens, it's not an automatic thing. It is often the case that the local capitalist, who given the balance of forces inside their countries can't do these things on their own, will blame the IMF for making them do it, but will have had these policies on the agenda long before the crisis leads.
I don't like the phrase so much, 'American dominated.' I think the American state has a responsibility, almost a burden that other states don't. Therefore this world has an American colouring. The United States knows American law, so the type of law that it encourages are those that it is familiar with and has expertise with. Finally, what Sam shows, is the role of American accounting firms, financial services, legal firms and their role -- their services are constantly bought by other states -- in teaching them how to get into the global system. They are making a profit out of showing Third World states, even as they still occasionally make nationalist noises, how to adopt the kinds of laws that will integrate them better into global capitalism. And often these are laws that resemble those first developed in the American legal system.
Sam Gindin: We would use the concept of asymmetry. The American state has a certain ability to do things that others don't have. You don't see Germany deciding we should invade Iraq because of the oil situation. Were not saying that the national capitalist class has disappeared, they're still there. We're not going to the other extreme that people have argued that there is an international capitalist class. Our argument is that there are national capitalist classes but they've been integrated into a global system and that the American state has played a special role in that. That includes a lot of -- as someone coined the phrase -- imperialism by invitation. It makes a lot of sense. When you look at China, no one imposed free trade on China -- they wanted to get into the WTO. Nobody was fighting with China about opening its borders to foreign technology and capital. China invited it in. Nobody is telling China that you have to hang on to the U.S. dollar. There’s just nothing else you can do with it. There are structurally integrated and interdependent.
You have to have the concept of empire itself, it sounds academic, but it so important because once you start thinking about empire you can begin to see that the spread of capitalism is something that the American state wants to do. But the questions always is, can the U.S. reproduce itself to play the dominant and crucial role in the making of global capitalism? This is actually an empirical question. There's nothing that says it will forever be able to do this. You actually have to look at, does this have the dynamic capacity to keep changing because every time it opens up the world there are new competitors. So far, we are arguing, the U.S. has shown that capacity.
LP: People like Brzezinski have been saying since the sixties that there is a threat to this from a new emerging regional power ... but the rise of Germany and Japan as economic powers was expected and even welcomed, as we could see in the 'An American Proposal' during World War II, which explicitly said that unlike the previous empires we aren't afraid to build up industrial competitors for ourselves. So you get a flow of Japanese and German goods coming into the United States and Japanese and German investment coming into the United States, but it doesn't have the same kind of effect inside the U.S. that American capital going abroad has. The largest investor inside the United States is Canadian capital, but who says this amounts to Canadian imperialism?! Whether Chinese or Japanese capital operating inside the United States will amount to a new inter-imperial rivalry, as opposed to trying to get the American state on their side and to find arenas of accumulation there, is not something that is given theoretically. You need to look at the balance of forces in each society.
What's happening today in China -- although who knows what will happen in 50 years -- reveals a deep dependence on its integration into a global capitalism operating under the U.S. aegis. China has the greatest foreign direct investment and greatest dependence on trade in history. And foreign capital is also operating as a class force inside China. It's not the dominant class force, I am not saying that at all, but it's a player in the determination of what the Chinese state now does.
How do you interpret a Chinese nationalism with all this foreign direct investment inside? When people like Brzezinski warn about the regional dominance of China they really want to ensure that Japan doesn't have a rapprochement with China. But if you look at the actuality of the regional divisions in Asia there is no love lost between Japan and China, India and China, the list is long. It's not to say it couldn't happen, but that's going to take a long time and we should not take seriously superficial warnings about China of the kind that were heard in the eighties about Japan as the new Asian empire. We hope our book will help undermine that type of superficiality in the media and much of academe.
SG: It is not just that it would be so difficult to meld them into a coherent unit -- which is even difficult in Europe -- the different parts of Asia do look to the U.S. as a counterbalance to China. And China and Japan look to the U.S. as a counterbalance to each other as well.
AL: Brzezinski actually does make the case that the U.S. is needed, that if you removed that level of power and influence from the world scene, it would be greatly destabilizing and problematic.
SG: What Madeline Albright as U.S. secretary of state in the 1990s called 'the indispensable state.'
AL: You write: "The major shift across so many developing countries to export-led manufacturing production meant that their place in global capitalism was no longer that of merely supplier of raw materials to the advanced capitalist states. In fact, this transformation in the international division of labor involved a reconfiguration of social relations in one country after another yielding not only new capitalist classes which became ever more linked to international capital accumulation, but also a massive expansion of the global proletariat." [212] Could you talk about the potential implications of that both in immediate terms and in terms the future, including the potential of a future beyond capitalism?
SG: It's useful to start with the argument that was often made on the left that development was just impossible in the Third World, that it was just condemned to be a resource base. What the making of global capitalism has shown is that it can actually spread -- it has been difficult, it has been uneven, it hasn't spread everywhere -- but that capitalism can be developed in the countries of the global south and the U.S. has been fundamental to that process. Now you have a lot of ex-‘Third World’ countries whose share of exports and manufacturing is very high, though the developed countries still dominate, those areas of the world are substantial and growing very fast.
One implication of this is that you are seeing the making of a global proletariat, which impacts on wages everywhere as this also means that -- there is a global reserve army of labor. But where is global demand going to come from if we are seeing wages being depressed in the developed countries? Can it come from a growing Third World -- China, India, Brazil etc -- and how long will that take?
I think what we would caution against is the notion that the only sensible response to this is to form international unions to engage in international collective bargaining with MNCs., that it's only that kind of formal international solidarity that will now work. Yet as Marx said the class struggle is always international in substance because whatever you do in one country shapes the options and parameters in another country, but in form it's national, and the working class first needs to come to terms with its own bourgeoisie.
We've actually seen, going back to the seventies, unions saying 'we need more international unions,' but what they really meant was international business unionism, rather than saying what we need is international class solidarity, which is hardly the same thing. The real question is how do actually engage in struggles in our own country in ways that creates spaces for struggle in other places? There's no way to coordinate this easily internationally, but what you can do is fight where you are with the awareness that this creates spaces for other struggles. This also means always learning from new experiments in carrying forward class struggles that may emerge elsewhere -- that is a critical part of international solidarity. That means not just looking at the latest development in Venezuela or Brazil as a model for us to follow, but rather as involving certain practices we should view critically as well as sympathetically, as we look to them to learn things from.
LP: You could say that with globalization there are that many more proletarians for capital to land on. This is different than the [old] Leninist theory, imperialism -- the term was adopted to refer to relations between capitalist core and the periphery, the Third World etc. Part of that was the theory of the development of underdevelopment, if you had foreign direct investment you were then going to be doomed within capitalism to being exporters of resources and you would not get economic development at all. Well this was disproven two ways. It was disproven by countries that came to be known as the Newly Industrializing Countries (NICS) of Asia, which followed Japan's model and usually because Japan used them as staging posts for exports to the United States and Europe.
How did that happen? American aid policy in the sixties shifts from the granting of aid to the granting of loans. This is done very explicitly. If you have to pay back the loans in dollars, you need to export in order to get dollars to pay them back. This begins the turn toward countries looking more and more to export-led development. If you don't have enough resources to do that you start looking to using cheap labor to do it. And being open to capital inflows you offer multinational corporations that you can produce women working a dollar a day producing for you here.
Increasingly though, those corporations also are looking to have the kind of proletariat they can sell to. Canada's been a rich dependency because it's had a high wage proletariat. The multinational corporations haven't only wanted to come for resources, they wanted that sure, but they wanted to sell to the Canadian proletariat. Now they're hoping they'll be able to sell to the Chinese proletariat.
The big question about the strikes in China today is whether or not they will be oriented to regaining a sense of collective purpose, trying to win collective goods or whether they will emulate the Western working class whose tragedy after two centuries of organization both at the union and party level is that they ended up being individualist consumers. If that is where Chinese class struggle is going to take us we're in for a very ugly world in the future.
If they don't take that path it will have big affects on the rest of the world. Not because they'll create international unions that will bargain collectively but because this will have a dynamic impact on what Western workers do, how they respond to a fall in the standard of living, which is inevitable once you get that large a proletariat from the global South coming into integrated production, it's bound to pull down wages in the rich capitalist North, no matter what you do in collective bargaining. What will happen in the future depends on what kinds of class struggles you engage in today. Whether you can shift particular countries off the path determined by private capital accumulation, depends on the kinds of more profound working class solidarities you develop inside as well as between labour movements in the more immediate term.
SG: I think when we stress what's happening with the international proletariat, it is restraining wages globally, we don't just mean it in a mechanistic way. A lot of what is also restraining wages is the role of the state, which isn't inseparable from what's happening globally, but it also gets back to our argument about the importance of domestic forces.
LP: Today the U.S. Empire still has the upper hand in the making of global capitalism. But this doesn't mean it is all hunky dory. We now can see that when there's an American crisis it's a global crisis. And this also means that when there is a major crisis elsewhere it can result in an American crisis. But it is wrong to think that this amounts to the decline of the American Empire.
With the crisis of global capitalism today, the G20 states are trying to work this out together. This is unlike what led to World War I, and unlike the 1930s. What is remarkable about this crisis is that it hasn't led to interstate conflicts -- there have been tensions -- but the leading capitalist states are coordinating their attempts to contain this crisis. We tend to focus far too much on the tensions and far too little on the degree of coordination that is going on.
AL: But can they actually solve this?
LP: No. At the moment they can't. The hope that the South would pick up on effective demand has proved to be impossible in the short run. And it would lead to a destabilization of those societies if the working class were strong enough to become the mass consumers of the world. What impact would that have on Brazilian or Chinese social relations?
There's no easy solution to this. This is the fourth great crisis of capitalism. Which is not to say they are not going to get out of it. Increasing the level of exploitation everywhere is one way they can get out of it. Provided that states start doing not just monetary easing but infrastructure spending, some of which the left is calling for. Probably, unless we rebuild revolutionary organization, what the left is calling for today is probably going to have the affect of reproducing capitalism and renewing the possibilities of capital accumulation for another period. Maybe that's the best that we can hope for, however, especially since we need a lot of time to rebuild anew working class identity and organization.
Aaron Leonard is a writer and freelance journalist. He is a contributor to truthout.org, History News Network, rabble.ca and other publications. He is based in New York City. His writings can be found by clicking here.
http://rabble.ca/news/2012/10/uncertain-future-panitch-and-gindin-making-global-capitalism-part-iii
