From: "Karl Carlile" <joseph-AT-indigo.ie>
Date: Mon, 16 Jun 1997 22:12:20 +0000
Subject: M-I: Re: Globalisation this time 


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.



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