Every exploiting ruling class has had its global dimension and
"global" aspirations. The level of the development of the
productive forces and the economic relations of a society
determine the form of this imperial oppression and exploitation.
The Romans with their highly organized slave empire subjugated the
world as they knew it and extracted taxes and slaves as their main
source of wealth. Similarly, every stage and phase of development
of capitalism has had a corresponding form of global activity.
At the beginning of this century, Lenin described the stage of the
development of capitalism at that time as "imperialism."
Developing from major technological breakthroughs like electric
generators and motors, the internal combustion engine, new steel-
making processes, the telephone and the radio, the 19th-century
system of competitive, industrial capitalism gave way to a global
form of monopoly capitalism.
This new stage of development of capitalism was characterized by
the concentration of production such that monopolies controlled
the economy; the emergence of "finance capital" as the decisive
form of capital; the growing importance of the export of capital,
as opposed to the export of commodities; and the territorial
division of the world among the major capitalist powers.
Today, this system of imperialism is giving way to globalization -
a new stage of capitalism characterized by electronics-based
production; the desperate attempt to maintain value and surplus
value production by whatever means possible; the
internationalization of capital; and the replacement of productive
capital with speculative capital as the dominant form of capital.
"Imperialism" was capitalism in the age of electro-mechanically
based monopoly capitalism; "globalization" is capitalism in the
age of electronics.
THE END OF IMPERIALISM
World War I and World War II grew out of the struggle among the
imperialist powers to territorially redivide the world. The end of
World War II, with the European and Japanese economies in ruins,
marked the beginning of the end of direct colonialism, a system
which had seriously constrained the ability of capitalist
countries to invest outside their own colonies. The process of the
dismantling of direct colonialism lasted over the next several
decades.
Led by the efforts of the United States, which had emerged as the
economically dominant power by the end of the war, the agreements
made at the Bretton Woods meetings in 1944 formalized the new
international economic order. The U.S. dollar, fixed in relation
to gold, was made the chief international currency. The United
Nations was the political counterpart of the institutions made
possible by the Bretton Woods agreements - the World Bank and the
International Monetary Fund.
With the revival of the European and Japanese economies by the
mid-1960s, the period of U.S. economic hegemony was over. The end
of this period was signalled by the dissolution of the Bretton
Woods agreement in the early 1970s. Capitalism is driven by the
maximization of profit. The drive for profits requires both a
constant advance in technology to cheapen production and eliminate
competitors, and a constant expansion of the markets in which to
sell the commodities. This demanded the ultimate expansion of the
market to encompass the entire world, free of national barriers;
and, at the same time, the lowering of the cost of production to
the absolute minimum. This expansion demanded the end of a
territorially divided world, which was accomplished by dismantling
direct colonialism.
At the same time, the introduction of labor-replacing technology
means the beginning of the end of productive investment capital.
All value (and profit) comes from the exploitation of labor.
Laborless production means valueless production - and hence,
profitless production. With laborless production, capital can no
longer be utilized to create more value and more surplus value.
So, capital is being shifted into purely speculative investment. A
critical portion of capital is no longer "exported" (in the sense
of being invested overseas for the production of more
commodities). It is merely shifted, moved, transmitted around a
global roulette table.
Imperialism extended industrial production throughout the world.
The introduction of electronics into capitalism is ending the
stage of imperialism, and opening the new stage of globalization.
ELECTRONICS-BASED PRODUCTION
The stages of development of capitalism are defined by specific
developments in the productive forces; the microchip defines the
current stage of the development of the productive forces.
Introduced in the early 1970s, the microchip is a light, tiny,
cheap device that can be widely deployed to control production
processes. It was the result of an effort to satisfy the growing
demand for devices to reduce production costs and to cheapen the
cost of coordinating the growing world economy.
The microchip and its sister developments in electronics made
possible practical robotics. It cheapened the cost of the
instruments of scientific production, paving the way for
breakthroughs in other fields like "smart" materials,
biotechnology, and digital communications; and it dramatically
reduced communication costs.
The introduction of the microchip threw a radically new quality
into an already global economy. Twenty-five years after its
introduction, the power of the microprocessor continues to double
every 18 months. As chips develop, they infiltrate new areas of
production, increasing output and replacing the need for living
labor - workers - in production.
At the same time, as the British newsweekly The Economist noted,
"by reducing the cost of communications, [new technologies] have
helped to globalize production and financial markets. In turn,
globalization spurs technology by intensifying competition and by
speeding up the diffusion of technology through direct foreign
investment. Together, globalization and [new technologies] crush
time and space." Cheap transportation and communication have also
created a global commodity market, including a global labor
market.
DESPERATE MEASURES
Unless the market can absorb the constantly expanding output of
capitalism, the economic system freezes up and enters a crisis.
Ultimately, this crisis is a result of the introduction of
advanced technologies that brings on a crisis in profitability,
but it appears as a crisis of overproduction, the inability to
circulate commodities that the market cannot absorb.
William W. Keller, director of the Office of Technology, has
complained, "Capitalism everywhere is turning out to be too damn
productive." So, to out-compete the other capitalists on this
world stage, each capitalist is compelled to seek out the cheapest
labor and the most advanced technology.
The increased productiveness of capital has not been matched by a
proportionate increase in markets. William Greider defines the
"central economic problem of our revolutionary era [as] the
growing, permanent surpluses of goods, labor and productive
capacity inevitably generated by technological innovation and the
free-running industrial globalization." (Chicago Tribune, January
20, 1997.) These surpluses affect steel, auto, textiles,
electronic appliances - virtually every industry, except those on
the cutting edge today (like semiconductors or communications).
To maintain profitability, corporations must lower their break-
even point, redeploying parts of the production process overseas,
reducing fixed costs by selling plants and other assets, cutting
out middle-level employees, converting jobs to temporary work.
This results in reserves of idle people and unused production.
The problem is further complicated by the fact that some countries
still have varying amounts of control over their markets.
The United States has tried repeatedly to break down market
barriers in Japan.
China has been successful in limiting its home market, while
benefiting from open markets, particularly in the United States.
China's strategy is to build up high-cost, high-tech exports based
on technology (gained from trading foreign technology for access
to their markets), while producing cheap goods made by low-cost
labor for its rapidly growing domestic market. Foreign goods enter
China under strict rules.
The Japanese feel particularly threatened by China's growth. As
Harou Shimada, a Keio University economist, bluntly put it:
"China is a horror story for the rest of the world if it simply
grows as an exporting nation. Overcapacity will have to be
squeezed down. It will be increasingly unprofitable for companies
to build new capacity in advanced nations. If the Chinese develop
the technology and become productive without wages rising, then
they will be a tremendous competitive menace against the rest of
the world. If you bring in 1.2 billion workers at those wages,
that can destroy the global trading system." (Quoted in One World,
Ready or Not: The Manic Logic of Global Capitalism by William
Greider, Simon & Schuster, New York, 1997, p. 162.)
Already, high rates of economic growth in China coupled with low
wages have produced a glut in the Chinese market, with goods worth
$64 billion stockpiled, representing about one-fifth of China's
total production. ("Bloom is Off China's Boom," Chicago Tribune,
February 4, 1997.)
At the same time, the United States is running up huge trade
deficits as it attempts to soak up excess commodities. For the
first time in a century, in the fourth quarter of 1993, the United
States passed a critical threshold. The outflow of financial
returns paid to foreign investors on the assets they held in the
United States exceeded all of the profits, dividends and interest
payments that American firms and investors collected from their
investments abroad. In 1994, the annual outflow was negative for
the first time since 1914. Trade deficits reached a record volume
in 1995. (Greider, p. 201)
A MAJOR BREAKDOWN?
Many of the leading players in the global economy fear the system
cannot continue indefinitely without a major breakdown.
Christopher Whelan, a conservative financial economist in
Washington, predicts that, "We are headed for an implosion. If you
keep lowering and lowering wages in advanced countries, who's
going to buy all this stuff? You look around and all you can see
is surplus labor and surplus goods. What we don't have is enough
incomes. But the only way people find out there are too many
factories is when they wake up one morning and their orders are
falling. If this keeps up, we're going to face a lack of demand
that's worse than the 1930s." (Greider, p. 221.)
George Soros, a billionaire investor who is mentioned frequently
on the front pages of the financial sections of the world's
newspapers, foresees a general breakdown - the collapse of the
global financial system and the trading system with it. He bluntly
states: "I cannot see the global system surviving. ... In my
opinion, we have entered a period of global disintegration only we
are not yet aware of it." (Soros on Soros: Staying Ahead of the
Curve, quoted in Greider, p. 248.)
THE INTERNATIONALIZATION OF CAPITAL
The drive toward cheap production - cheap labor (whether it be at
gunpoint, in prison, by children or slaves), lax environmental
laws, low taxes - drives capital across the globe. With the
internationalization of these markets in labor and commodities
comes internationalized capital.
Even with the end of the Bretton Woods agreement, capital faced
national constraints on its movement around the globe. While new
technologies made the rapid movement of capital technically
possible, the freeing of capital from national controls came from
the growing power of the multinational corporations (MNCs). The
intense concentration of productive capacity in a handful of
corporations has carried forward from imperialism and grown more
intense. William Greider estimates that the 500 largest MNCs
produce one-third of the world's manufacturing, three-fourths of
all commodity trade, and four-fifths of the trade in technology
and management services.
These capital flows are not just from the former imperial powers
to the former colonies. Foreign direct investment increased almost
fourfold in the 1980s, with the largest part being invested in the
United States. "Hong Kong" capital is invested in the United
States, "U.S." capital is invested in Russia, "Russian" capital is
invested in who-knows-where. (Some $150 to $300 billion has left
Russia in the past five years, according to one Russian government
official - The Nation, March 31, 1997). It is silly to speak of
this capital belonging to any nation anymore. The new global
regime creates an international class of investors with no tie to
countries, only to stable havens where money can be parked and
from which it can be moved rapidly.
Under imperialism, capital was "national" in the sense that it was
deeply connected to a multinational state. There was U.S. capital
and German capital and British capital. This fed the recurring
territorial conflicts. Under the new globalization, capital is
transnational, or even supranational.
Capital has been increasingly successful in freeing itself from
national restraints - from restricted markets, tariffs, taxes,
environmental restrictions, and organized labor. Freedom from
national controls allows this capital to roam everywhere - freely
and quickly - in the search for the highest rate of return. Some
$1.2 trillion flows through New York currency markets each day.
As Greider notes:
"[T]hese transactions are carried out by a very small community -
the world's largest 30 to 50 banks, and a handful of major
brokerages. ... The new communications technology has created a
small, elite community of international finance - perhaps no more
than 200,000 traders around the world who all speak the same
language and recognize a mutuality of interests despite their
rivalries." (Greider, p. 245-246.)
THE EMERGENCE OF SPECULATIVE CAPITAL
One of the key features of this free-flowing capital is the change
in the ratio of productive capital to non-productive (or
speculative) capital. Lenin noted that one of the key features of
imperialism was the emerging dominance of finance capital. Finance
capital is the merger of industrial capital and bank capital,
under the control of the financiers. It represented the domination
of the financiers over the industrial capitalists. Nevertheless,
this capital was destined to go back into production. The
financiers invest it in order to produce more profit from the
exploitation of human labor.
Today, the use of capital for productive purposes is being
replaced by capital invested for purely speculative purposes -
that is, the hope that its value will somehow rise in relation to
other speculative adventures: Tokyo real estate versus baseball
cards; or New York stock futures versus rare paintings.
There are still significant amounts of finance capital seeking out
profits. The World Bank estimates that between 1988 and 1995 some
$422 billion was invested in new factories, supplies and equipment
in select developing countries.
Many boats have been lifted by this tide. But the general,
historical trend is such that for this capital to generate
profits, it must plunge workers into slave (or near-slave)
conditions. Thus, it cannot generate the purchasing power
necessary to circulate commodities and hence sustain profits or
the economy.
Since sufficient returns cannot be made from electronics-based
production, increasing amounts of capital seek returns from
speculative adventures. The attempt to maintain the circulation of
goods through the extension of credit is itself a speculative
exercise, a maneuver done in the hope that consumers or debtor
countries will eventually be able to pay off their mounting debt.
Noam Chomsky cites estimates that in the early 1970s about 10
percent of the capital in international exchanges was for
speculation and about 90 percent of it was related to the real
economy, for investment in productive capacity and for trade. By
the 1990s, those figures were reversed - 90 percent was for
speculation and never destined to be invested in raw materials, or
factories, or transportation systems, or for trade. Chomsky also
quotes David Felix's study for the United Nations Conference on
Trade and Development which cites estimates that by 1994 the ratio
was about 95 percent speculative to about five percent real
economy-related." (Class Warfare: Interviews, Noam Chomsky with
David Barsamian, p. 106)
According to Grieder:
"As capital owners and financial markets accumulate greater girth
and a dominating influence, their search for higher returns
becomes increasingly purified in purpose - detached from social
concerns and abstracted from the practical realities of commerce.
In this atmosphere, investors develop rising expectations of what
their invested savings ought to earn and the rising prices in
financial markets gradually diverge from the underlying economic
reality. Since returns on capital are rising faster than the
productive output that must pay them, the process imposes greater
and greater burdens on commerce and societies - debt obligations
that cannot possibly be fulfilled by the future and, sooner or
later, must be liquidated, written off or forgiven." (Greider, p.
227.)
A report on global capital by McKinsey & Company, a global
consulting firm, estimated that the total stock of financial
assets from advanced nations expanded in value by six percent a
year from 1980 to 1992, more than twice as fast as the underlying
economies were growing. The report estimated that by the year 2000
the total financial stock will triple the figures for the economic
output of these economies. [These figures were adjusted for
inflation.] (The Global Capital Market: Supply, Demand, Pricing
and Allocation, quoted in Greider, p. 232.)
The chief concern of this new speculative capital is a stable
currency to protect the value of its money. It demands of
governments a deflationary policy - preventing inflation by
keeping pressure both on wages and government spending by use of
the interest rate.
We have seen the results of this policy in the United States - the
growth of long-term unemployment (much of it not showing up in the
statistics), the stagnation of wages, the dismantling of social
programs, and the sharply growing inequality in incomes. This new,
speculative capital is able to set the rules for the world economy
because governments have little or no control over the actions of
the speculative capital which determine their economies.
NEW POLARITIES, NEW POSSIBILITIES
The process of globalization is driven by the dynamics of
capitalism. Capitalism's survival rests on the extraction of
profit on a constantly increasing scale through the extension of
production. While electronics has enabled the unification of the
world commodity market (including the labor market) and the
financial market - by dramatically cheapening communications and
transportation - it also introduces a radical new quality -
electronic production. This new element attacks the very
foundation of capitalism - the extraction of surplus value from
workers - by introducing laborless production.
To maintain profits, capitalists seek out the cheapest production
costs (regardless of whether production is done by robots or by
human muscle, or whether it takes place in Detroit or in Jakarta).
So, as electronics extends throughout the global economy, workers
around the world are compelled to compete not only with each other
but with their electronic counterparts - robots and automated
machinery of increasingly diverse types.
For a number of reasons, employment under these circumstances can
actually increase while electronics is at the same time destroying
the value of labor power. With electronics driving down the value
of labor power, and therefore wages, more members of the household
are compelled to enter the job market, or to work past retirement
age, or to take on multiple jobs in unsuccessful attempts to
maintain a slipping standard of living. Others are being driven to
the bottom of the job market by the end of welfare. This is
temporarily providing a cheaper alternative to technology.
The capitalist does not care if production is done by the
"gratuitous labor of machines" or by the "free" labor of slaves.
The critical indicator of the impact of electronics on production
is not "employment" statistics, but the polarization of wealth and
poverty. With the destruction of the value of labor power and
wages, wealth polarizes and the economic center disappears. In
this process, capitalism is compelled to destroy whatever social
base it may have maintained in the old imperialist center.
A NEW PROLETARIAT
During the period of imperialism, the main arena of class struggle
was the struggle between the peoples of the earth and the
imperialist powers. Under globalization, a new proletariat is
emerging in the imperialist center, to join ranks with a
proletariat in the former colonies - propertyless, with little or
no permanent tie to the capitalist system.
This process is, of course, tremendously uneven, with some Third
World countries emerging as "tiger economies," with the standard
of living improving for many workers. But overall, the pattern of
deepening polarization is becoming clearer.
A U.N. Human Development Report in 1996 noted that even though the
world's economy surged during the past three decades, 1.6 billion
people (one-quarter of the world's population) are actually worse
off than they were 15 years ago. (Chicago Tribune, July 17, 1996.)
Thirty-two countries representing a half billion people are buried
under unsustainable debt burdens. Richard Barnett estimates that
two-thirds of the world's population has neither the cash nor the
credit to buy anything of note in the global marketplace. (Global
Dreams: Imperial Corporations and the New World Order, Richard
Barnett)
This vast majority of the world's population stands opposed to 358
billionaires whose income is equal to the total income of the
poorest 45 percent of the world's population. (This statistic was
quoted in The Nation, July 15-22, 1996).
While capitalism looks to the electronically united world market
to sell its prodigious output, it is at the same time compelled to
destroy the world market by driving down socially necessary labor
time and, as a result, the value of labor power - and ultimately
wages - to the wage of the robot.
The economic middle ground is destroyed, resulting in a handful of
international capitalists on one side, and a vast majority of
marginalized or destitute proletarians, incapable of purchasing
the flood of goods, on the other. Such is the inescapable dilemma
faced by capital in the age of globalization.
(c) 1997 by the League of Revolutionaries for a New America.
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