Globalisation (success)

Mon, 16 Jun 1997 22:12:20 +0000
Karl Carlile (joseph@indigo.ie)

The following is a recently written article by David Yaffe.

Globalisation 2
===============

The politics and economics of globalisation
===========================================

Globalisation is an ideological term. It encompasses the frenetic
international expansion of capital - an expansion which has had
devastating consequences for the majority of humanity. The debate
around it, however, has tended to obscure rather than clarify our
understanding of the forces at work. In his second article on this
subject David Yaffe looks at the politics and economics of
globalisation.[1]

Among those whose primary concern is for a more competitive and
efficiently functioning national capitalist economy, there are
diametrically opposite positions concerning the reality of
globalisation. The neo-liberal right strongly approves of
globalisation and the limited effectiveness of national government
intervention. 'A more globalised economy is in many ways a more
efficient one' forcing governments to be more careful in handling
their economies (The Economist 23 December 1995 - 5 January 1996). The
removal of market constraints - free trade and deregulated labour and
capital markets - is seen as the only way to increased growth,
balanced trade and lower unemployment. At the other pole, with the old
social democratic Keynesian strategy no longer viable, former social
democrats, concerned to retain some progressive role for a reforming
capitalist government, have argued that much talk about globalisation
is exaggerated. The notion that there is 'one global, borderless,
stateless market' is a myth. 'This global economy needs superintending
and policing. Governments can and should co-ordinate their policies to
manage it' (Will Hutton The Guardian 17 June 1995).

This polarisation is mirrored on the socialist left. On the one side,
we are told that there has been an epochal shift in capitalism in
which new technology has substantially (irreversibly?) increased the
power of capital over labour, fragmenting and even destroying working
class organisations, and creating global market forces beyond national
government control. Not to recognise these developments 'freezes us in
modes and forms of struggle which are effete and ineffectual'(A
Sivanandan). On the other side, globalisation is seen as 'an
ideological mystification' which 'serves as an excuse for the most
complete defeatism and for the abandonment of any kind of
anti-capitalist project.' And that, while not denying the impact of
new technologies and the destructive effects of deregulation, mass
unemployment and growing poverty, we need to look elsewhere for an
explanation of the long-term structural crisis of capitalism than in
simplistic formulas about 'globalisation'(Ellen Meiksins Wood).[2]

Globalisation and national governments
======================================

The policies of national governments in capitalist countries are
mainly determined by two important dynamics: the first is the state of
the national process of capital accumulation and its relative
international strength; the second is the balance of class forces both
nationally and internationally. It is of little surprise that the
concept of 'globalisation' is being discussed; (1) during a period of
stagnating national capital accumulation as excess capital is
aggressively exported or deployed speculatively on the stock markets
of the world to stave off a profits collapse and (2) following a
dramatic shift in the balance of class forces nationally and
internationally in favour of capital after the successful
counterattack against labour in the 1980s, an attack which highlighted
the weakness of working class and socialist forces world-wide.

Tony Blair, the new British Labour Prime Minister, was simply giving
expression to these realities when he told a conference of Rupert
Murdoch's News Corporation in 1995:

'What is called globalisation is changing the nature of the nation
state as power becomes more diffuse and borders more porous.
Technological change is reducing the power and capacity of government
to control its domestic economy free from external influence'
(Financial Times 20 March 1996).

In effect he is reassuring the dominant sections of British capital
with a very strong international presence, that, with domestic capital
accumulation stagnating, he will not stand in the way of British
capital even if this is at the expense of millions of people in
Britain confronting drastic cuts in state welfare and growing
impoverishment. On no other basis, given the balance of class forces,
could he lead a capitalist government in present day Britain.

The neo-liberal Financial Times journalist Martin Wolf reaches similar
conclusions about the limited role of national governments in a global
economy but plays down the impact of 'globalisation':

'When people write off the end of national economic sovereignty, it is
an historically brief era that they lament. It ended not so much under
the assault of an external force, the global market, but of an
internal one, perceived failure. Governments were bad at much of what
they were doing...Globalisation reinforced the limits already imposed
by domestic constraints' (Financial Times 18 September 1995).

Wolf's attack on the economic role of government again gives
ideological expression to the changed needs of capital in today's
circumstances. His explanation differs from Blair - they speak to a
different constituency - but inevitably they reach the same class
standpoint.

The 'historically brief era' of state intervention in the capitalist
economy after 1945 was the product of unique historical circumstances.
First, inter-imperialist rivalry between the major capitalist powers
since the beginning of the century had ended, temporarily, with the
dominance of US imperialism over the capitalist world economy. This
allowed the US economy, facing limited competition, to develop at the
expense of other national capitals. Through Marshall Aid and export of
capital, the US laid the basis for increasing control of world markets
for US capital and a faster rate of capital accumulation at high rates
of profit. Britain, with its access to the markets and resources of
the British Empire and with little competition from its European
rivals, followed in its wake. Second, a change in the balance of class
forces in favour of the working class had occurred internationally
after the devastation of depression, fascism and two world wars, a
change reinforced by the standing of the Soviet Union and the spread
of socialist revolutions and independence movements after the war.

The restoration of capital accumulation after the war was achieved,
therefore, at a political cost to capital. The balance of class forces
necessitated this. But it was a cost that, initially in the victorious
nations and, later, in the rebuilt European economies, capital could
afford. State intervention in the capitalist economy, state welfare
and military spending, in these unique circumstances, underpinned the
most rapid accumulation of capital ever. But the fundamental
contradictions within the capital accumulation process remained. When
the rate of profit began to fall and inter-imperialist rivalries
re-emerged at beginning of the 1970s, capital accumulation began to
stagnate in most capitalist countries. The rising consumption
institutionalised in state welfare became a barrier to the further
accumulation of capital as high inflation accompanied stagnation in
the major capitalist nations. State spending and state welfare had to
be cut back. In Britain the first steps were taken by a Labour
government a few years before Thatcher came into power. Capital went
on the offensive and succeeded in changing the balance of class forces
nationally and internationally but the problems within the capital
accumulation process remained. State intervention was neither
responsible for the post war boom nor the cause of the later
stagnation. It was the particular circumstances of the capital
accumulation process nationally and internationally which underlay
both. Keynesianism and neo-liberalism are no more than ideological
reflections of the changing requirements of capital in the two
periods.

The growing stagnation in the capital accumulation process and the
re-emergence of inter-imperialist rivalries were the result of an
overaccumulation of capital - insufficient surplus value to secure
both the normal profitable expansion of productive capital and to
finance the growing state sector together with a rapidly expanding
unproductive private sector. The huge increase in the export of
capital, the growing monopolisation of capital through mergers,
acquisitions and privatisations, the unprecedented autonomy of the
financial system from real production alongside the cuts in state
welfare, downsizing and outsourcing, mass unemployment and rapidly
growing inequality, in short, globalisation, was capital's response.

Globalisation, therefore only reinforces the limits imposed by
domestic constraints on national government intervention because both
result from a stagnating capital accumulation. This is the context in
which we can examine the differing class positions on globalisation.

Globalisation and class interest
================================

Martin Wolf quite brazenly represents the dominant ruling class
interests. As a spokesperson for large capital, he is an unashamed
apologist for neo-liberalism. In a recent glowing tribute to
globalisation, dismissing all evidence to the contrary, he maintains
it has been a force for prosperity in much of the world.
'Globalisation is the great economic event of our era. It defines what
governments can - and should do...Technology makes globalisation
feasible. Liberalisation is responsible for it happening.' He
celebrates its success. From 1970 to 1997 the number of countries
removing exchange controls on goods and services increased from 35 to
137. A year ago, more constrained, in an article 'The global economy
myth' (Financial Times 13 February 1996),[3] he argued that much of
the talk about globalisation was exaggerated and governments on their
own or together could do a great deal. Today he has no such
reservations. In his latest article 'Global opportunities' he tells us
that governments have learned the lessons of experience and have
chosen or been forced to open their economies. Running with the tide,
he now argues that, on balance, globalisation has gone further than
ever before (Financial Times 6 May 1997).

New Labour stands for the same ruling class interests. In the run up
to the General Election Blair was forever stressing how Labour would
accommodate multinational business. Immediately after the election he
appointed Sir David Simon, chairman of British Petroleum, as a
Minister of Trade and European Competitiveness. BP is accused of
collaborating with military death squads in Columbia. Simon will be
made a life peer. Almost the first act of the new government was to
hand over control of interest rate policy to that bastion of
neo-liberalism, the Bank of England. Nevertheless Blair cannot, as
Wolf is able to do, conflate the 'can' and 'should' of government
policy in relation to a global economy. For Blair is reliant to some
degree on the middle class constituency which elected him to power. He
will have to reassure the middle classes, as real economic
developments threaten their security, that he will do what he can
within the constraints imposed by the global economy ('external
influence'). He is acceptable to the ruling class because, unlike the
discredited and divided Tories, Labour is in a better position, as
economic conditions deteriorate, to prevent an alliance against
capitalism developing between the poor working class and sections of
the middle classes threatened with proletarianisation.

Hutton, generally regarded as ideologue for the New Labour Party,
deals with the question of globalisation from a different class
standpoint. He articulates the fear of the middle classes at what
might occur if the New Right (neo-liberal) agenda succeeds. 'If there
are no real economic and political choices...the way is open for the
return of totalitarian parties of the right and left.' He fears the
consequences of social breakdown. Hence his concern to play down the
impact of globalisation, arguing that governments can co-ordinate
their policies to manage it, to prevent the extreme consequences of an
unrestrained market and to create a less degenerate capitalism.

The relative prosperity in Britain during the post-war boom gave rise
to new privileged sections of the working class - a new middle class.
This layer of predominantly educated, salaried, white collar workers
grew with the expansion of the state and services sector and, in the
more recent period, with the information technology revolution.
Sustaining its privileges is the key to social stability in all the
major capitalist nations and playing to its prejudices is the
necessary condition for political parties to be elected to power. As
long as there were sufficient profits from production at home and
trade and investment abroad, both to give an adequate return to
capital, and to finance state welfare and the growing unproductive
private sector, then the social democratic consensus of the post war
years could be maintained. It was possible to guarantee the relatively
privileged conditions of higher paid workers and the middle classes
while sustaining adequate living standards for the mass of the working
class.

In the new conditions of capital stagnation and growing
inter-imperialist rivalries in the middle of the 1970s, this consensus
began to break down. The 1974-79 Labour government set monetary
targets and cut state spending. The low-paid state sector workers
fought back and the 'winter of discontent', 1978/9, drove the higher
paid skilled workers and the middle classes into the arms of the Tory
Party. Thatcher embraced this new constituency and, as Hutton says,
'the liberal professions, affluent council house tenants, homeowners,
all benefited from her tax cuts, credit boom and privatisation
programme.' The price was growing inequality as state welfare was cut
and millions of working class people were driven into poverty to pay
for Thatcher's programme. The privileges of the middle classes could
only be preserved at the expense of ever increasing numbers of
impoverished working class people. In spite of the revenues from North
Sea Oil, productive investment stagnated in Britain, and record
amounts of capital were invested abroad. Britain was rapidly becoming
a rentier state.

With the failure of Thatcher's economic policies at the end of the
1980s and with poverty and inequality rapidly accelerating, inroads
began to be made into the standard of living of sections of the middle
classes. It is the potentially explosive consequences of this
development that drives Hutton. He offers his alternative to
'globalisation', to an unrestrained and deregulated capitalism. First,
he says, we must alter the way the British financial system works -
essentially from seeking high, liquid, short-term gains, irrespective
of location, to giving a long-term commitment to regenerating the
productive base of the British economy - a process which, he says,
requires a political revolution to take power away from the entrenched
'conservative hegemony'. Britain has to be transformed into a high
investment, high growth economy. Second, a coalition supporting social
welfare has to be rebuilt. For this to happen the middle classes must
opt in, rather than opt out into the privatised provision of the
neo-liberal agenda. The middle classes, he argues, can be given 'a
vested interest in the entire system' by 'incorporating inequality
into the public domain'. A core system for the mass of the working
class with the middle classes able to buy in the extra quality
services they require - in short 'nationalising inequality' within the
state system.

However, if the degeneration of capitalism into a parasitic and
rentier form is now a necessary trend emerging in all the mature
capitalist nations, Hutton's response to globalisation - what I have
called the political economy of the new middle class - is both
idealist and reactionary.[4]

We can now understand the significance of Sivanandan's standpoint.
Living in a country where knowledge, culture and politics are
dominated by the concerns and prejudices of middle class people; in
which the poor and oppressed working class are outside the political
process and ignored by the official labour movement; and where social
relations seem frozen, repetitive and unchanging, it could appear that
an epochal shift has occurred in capitalism and that the socialist
project, at least as it is traditionally understood, has to be buried.
We note Sivanandan's warning not to underestimate the dangers posed by
the so-called 'culture of postmodernism', in a society where
'"knowledge workers" who run the Information Society, who are in the
engine room of power, have become collaborators in power'. But we
respond as materialists. History has not ended. And globalisation, if
it is anything, is a sign of the crisis of capitalism, of increasing
instability, of rapidly changing circumstances in a world of obscene
and growing inequality. Social relations are not fixed. The conditions
which spawned a new middle class and turned it into a bedrock of
social stability in the imperialist nations after the war have ended.
Today it is those privileged conditions which are being threatened.
Hutton, at least, recognises this - hence his terrible fear of a
return to the extremes of class conflict that dominated the 1930s.
Sivanandan is far too preoccupied with the ideological posturing of a
small elite of academics and opinion formers caught up with
globalisation and beneficiaries of it.

Ellen Meiksins Wood develops a number of crucial points in her reply
to Sivanandan. Firstly, more giant corporations with a global reach,
and more international organisations serving the interests of capital,
in no way imply a unified international capitalist class. The 'global'
market ensures the 'internationalisation of competition' - a
contradictory process. On the one hand it does mean new forms of
capitalist integration and co-operation across national boundaries but
on the other hand, it also means active competition between national
and regional capitalists. 'So the 'global' economy if anything may
mean less and not more capitalist unity.' The overall consequence of
'globalisation' far from integrating capital is at least as likely to
produce disintegration.

Secondly, the proposition that there is an inverse relation between
the internationalisation of the economy and the power of the state
fails to acknowledge that 'globalisation' presupposes the state. 'The
nation-state is the main conduit through which national (or indeed
multinational) capital is inserted into the global market.'
Transnational capital may be more effective than the old-style
military imperialism in penetrating every corner of the world but it
accomplishes this, in the main, through the medium of local capital
and local states. It may well, ultimately, rely on the military power
of the last remaining 'super-power' to sustain the sovereignty of the
market. Further, it depends on such local political jurisdictions to
maintain the conditions of economic stability and labour discipline
which are the conditions for profitable investment. And finally, new
kinds of inter-imperialist rivalry will emerge in which the nation
state is still the principal agent.

>From this she advances her most important political point: the nation
state is still the terrain of (class) struggle. 'If the state is the
channel through which capital moves in the "globalised" economy, then
it is equally the means by which an anti-capitalist force could sever
capital's lifeline.'

These arguments go a great deal of the way to undermining Sivanandan's
position. But there is something lacking. It is perhaps best
highlighted in the undue weight Wood gives to the ideological impact
of the concept of globalisation as it is commonly understood. 'It is
the heaviest albatross around the neck of the left today'. 'In the
current conception of globalisation, left joins right in accepting
that "There Is No Alternative" - not just to capitalism, but...to a
more or less (the right goes for more, the left somewhat less)
ruthlessly "flexible" capitalism.' She continues, if their conception
of globalisation were an accurate reflection of what was happening in
the world today her ideological objections wouldn't count for much and
we would have to accept that the socialist project is dead.

This is all very true but something more is surely needed. Ideas only
become a material force when taken up by the masses. The ideological
struggle is of political importance when it falls on fertile ground.
In periods when the poor and impoverished working class are outside
the political process, the politics of the left, in the main, reflect
their class position in capitalist society - as part of the privileged
working class or educated white collar and professional workers who
form the backbone of the new middle class. The recomposition of the
working class as a fighting force against capitalism has to be the
product of developments within capitalism itself, it will not be the
result of ideological combat alone. This process is already taking
place as capitalist governments deregulate labour, attack state
welfare, undermine the democratic right to protest and workers' rights
to organise, attempt to divide the working class through racism and
sexism, and destroy the environment. The ideological struggle has to
be combined with the political organisation and defence of those
sections of the working class under attack and fighting back. We need
to show how developments within capitalism are making this possible.
That is why a great deal more is required from the analysis of the
latest stage of capitalism to finally lay to rest the ghost of
globalisation.

The reality of globalisation
============================

It is important not to underestimate the significance of
globalisation. It might well be an 'ideological mystification' in the
hands of a Martin Wolf or some intellectuals and academics on the
political left, but its impact on the economic and political lives of
the vast majority of humanity is of great political consequence. To
say, as I have argued in my earlier article on globalisation, that
'far from it being new it is a return to those unstable features of
capitalism which characterised imperialism before the First World War'
is not to dismiss its importance but, on the contrary, to highlight
it. It is beginning to create the very conditions which produced those
dramatic shocks to the international capitalist economy and which led
to the revolutionary developments in the first decades of the
twentieth century. So what then are the crucial components of
globalisation which suggest these developments.

Multinational companies (MNCs)are the principle vehicle of
imperialism's drive to redivide the world according to economic power.
In 1995 Foreign Direct Investment (FDI) outflows increased by a
massive 38 per cent to $317bn, with a record $100bn going to Third
World countries. That investment is concentrated in three competing
power blocs, the 'Triad' of the European Union, Japan and the United
States and their regional cluster of countries. 76 per cent of the
investment in Third World countries (1993-5) went to only 10
countries. Five imperialist countries, United States, UK, Germany,
Japan and France were responsible for almost two-thirds of the total
outflows in 1995. The United States ($96bn), UK ($38bn) and Germany
($35bn) all exported record amounts.[5] Most MNCs are nationally
based, controlled by national shareholders, and trade and invest
multinationally with a large majority of sales and assets in their
home country. A recent study showed 70 - 75 per cent value added by
multinational companies was produced in the home country. They are
highly concentrated. Only 100 MNCs, 0.3 per cent of the total, all
from imperialist countries, own one-third ($1.4 trillion) of the total
FDI investment stock. The process of concentration continues
internationally through mergers and acquisitions. Cross border mergers
and acquisitions doubled between 1988 and 1995 to $225bn.

Globalisation is devastating the lives of millions of people. Even the
World Bank admits that in the case of the ex-Soviet bloc 'transition
has relegated an entire generation to economic idleness.' Output in
Russia fell by 40 per cent between 1990 -1995 and between 16 and 30
per cent in the other countries. Growth has been falling over the last
15 years in about 100 countries, with almost a third of the world's
people, dramatically reducing the incomes of 1.6bn people. The
declines are unprecedented, exceeding in duration and sometimes in
depth the Great Depression of the 1930s. One billion people, 30 per
cent of the world's workforce, are either jobless or unemployed. Even
in the imperialist countries 100m people live below the poverty line,
30m are unemployed and more than 5m are homeless.[6]

The world is becoming more unstable. $1,230bn a day flows through the
foreign exchange markets. Third World Debt, at a record $1,940bn,
continues to increase despite massive debt repayment. A formidable $55
trillion is gambled on the world's derivatives market. All the major
banks are large players. Barclays, for example, has liabilities of
922bn pounds, more than 80 times its capital base. A crash in the
stockmarket will leave them facing huge losses. Growth in world trade
halved last year because of a sharp deterioration in the performance
of the so-called Asian 'tigers'. The conflict in Zaire has started a
new scramble for Africa as inter-imperialist rivalry intensifies.
Finally, inequality between rich and poor countries and between rich
and poor in all countries has reached unprecedented levels and is
still growing.

These are not the conditions of an unchanging world. They are one's
where the socialist message can once again take root. Throughout the
world, from workers in Korea to guerrillas in Mexico, from public
sector workers in France to landless peasants in Brazil, people are
fighting for change. In Britain new alliances are being built with
environmental campaigners taking to the streets to defend dockers in
Liverpool. Globalisation is a long-term structural crisis of
capitalism. It is laying the ground for turning what Ellen Meiksins
Wood calls 'various fragments of opposition' to capitalism into
conscious class struggle.

References
==========

1 See 'Globalisation: a redivision of the world by imperialism' in
Fight
Racism! Fight Imperialism! 131 June/July 1996.

2 These positions appear in 'Capitalism, globalisation, and epochal
shifts: an exchange' in Monthly Review Vol 48 No 9 pp19-32. That
diametrically opposed positions on the significance of globalisation
are held by writers throughout the political spectrum from 'right'
to 'left' only adds to the confusion.

3 This was a favourable review of a book by Paul Hirst and Grahame
Thompson Globalisation in Question Polity Press 1996. Material from
this book is used in my earlier article on globalisation. They hold
a similar position to that of Hutton above, arguing that 'nation
states, and forms of international regulation created and sustained
by nation states, still have a fundamental role in providing
governance of the economy (p185).'

4 Quotes from Hutton are from his book The State We're In Jonathan
Cape
1995. For my review of this book see 'The political economy of the
new middle class' in Fight Racism! Fight Imperialism! 124 April/May
1995.

5 See World Investment Report (WIR) UN 1996 for information. Other
figures are taken from my earlier article or earlier WIR reports.

6 Figures from The World Development Report OUP 1996 and The Human
Development Report OUP 1996.


Yours etc.,
Karl