Contemporary Politics, Volume 6, Number 1, 2000

Capitalism and the left at the millennium

ADRIAN BUDD South Bank University

The articles in this journal are written in English, a language of Indo-European origin with elements from Latin developed by Germanic peoples using an alphabet of Phoenician origin. Page numbers are of Arabic, and earlier Indian, origin and until recently it would have been printed using movable type developed in China.1 Localized human societies have always made connections with others and, although these connections have frequently been destructive, their cumulative effect has been the progress of humanity. Capitalism is currently giving added impetus to global interconnectedness but as we enter the new millennium there are widespread and justiable fears that the processes of globalization threaten, where they have not already caused, human regression. The challenge for the left internationally is to comprehend these processes and the social interests behind them, highlight their destructive consequences, articulate a coherent alternative, and mobilize around that alternative. Where 20 or 30 years ago the left debated `reform or revolution?, today the stakes are higher: `socialism or barbarism. Globalization The internationalization of capital is not new. In 1848 Marx and Engels wrote in the Communist Manifesto that `the need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere.2 The Russian Marxist Nikolai Bukharin noted 70-odd years before `globalization entered the social scientic lexicon that `there grows an extremely exible economic structure of world capitalism, all parts of which are mutually interdependent. The slightest change in one part is immediately reected in all. 3 These expressions of capitalisms general tendency were written before the consolidation of twentieth-century state capitalism, which reected national attempts to manage the contradictions of internationalization (notably imperialist rivalry and war) and the developing class consciousness of labour movements, via measures such as protectionism, welfare and immigration controls. These measures, although irrational for abstract capital, which John Holloway argues `knows no spatial bounds, persist today. 4 Yet, when capitalism returned to crisis in the early seventies after the long postwar boom capitals began a process of international restructuring that has now lasted for a quarter of a century. Capitalisms tendency towards internationalization has clearly reasserted itself. In challenging some of the wilder assertions associated with globalization (such as Kenichi Ohmaes notion of a `borderless world) broadly leftist critics
ISSN 1356-9775 print/1469-3631 on-line/00/010029-08 2000 Taylor & Francis Ltd

30 Adrian Budd have made a number of important points.5 Paul Hirst and Grahame Thompsons Globalization in Question, for example, argues that globalization does not represent a qualitative epochal leap, that its processes are geographically uneven, exclude millions of people across the world, and are not therefore unequivocally global. 6 These critics emphasize the concentration of economic processes within a triad of advanced regionsthe EU, Japan and its neighbours, and North America which, they argue, suggests a process of `regionalization or `triadization rather than `globalization. The worlds trans-national corporations (TNCs) are based in just 25 states and 28% of the worlds population took 91% of its FDI in the early nineties.7 Meanwhile, the chair of Citicorp, one of the worlds largest banks, has argued that 80% of the world is `not bankable, 80% of the worlds people have never used a telephone, Tanzania having just three lines per 1,000 people, and 88% of Internet users are concentrated in the advanced industrial countries containing just 15% of the worlds population.8 Hirst and Thompson bolster their scepticism towards globalization with the argument that trade as a proportion of world output only reached its 1913 level in 1973. 9 They show average exportGDP ratios of 10% for the USA, Japan and the EU, concluding that `a key issue for domestic prosperity and welfare is the productivity of the remaining 90 per cent, which is domestic productivity per se and not relative to other nations.10 Yet, Stephen Cohens gures, showing that 70 % of US home production is subject to international competition compared with 4% in the early sixties, illustrate that it is the possibility of imports (the market principle), not just actual imports (the market-place), that inuences domestic producers.11 The degree of internationalization is similarly minimized in the sceptics interpretation of data on TNC assets. Ruigrok and van Tulder argue that of the worlds 100 largest rms `only eighteen keep over half their assets abroad and that the top 100 rms in terms of assets abroad hold, on average, `only 37 per cent of their assets abroad. 12 Yet if we look at developing trends we see that against the relatively statized national economies of the period from roughly World War I to the early seventies, capitalism has undergone a remarkable degree of internationalization. Intra-EC foreign direct investment (FDI) grew at an annual average of 38% between 1980 and 1987 and European FDI in the USA grew more rapidly still such that European rms had a greater investment stock in the USA than in other European countries.13 Overall, FDI between 1980 and 1987 was greater than the entire accumulated stock before 1980. Against Ruigrok and van Tulders `only eighteen of top 100 rms holding over half their assets abroad, `fully eighteen would be more appropriate.14 Their gures, showing 49 of the 89 rms providing data holding more than a quarter of assets abroad in 1990, and the growth of strategic alliances between rms from different triad regions, only underline the trend towards internationalization. In the words of the then chief executive of Thomson SA, Alain Gomez, `you do not choose to become global. The market chooses for you; it forces your hand . . . 15 It is also forcing the hand of states. States The interpretation given to the data by the sceptics reects a commitment to the continuing viability of state regulation. Allen argues that `the world is still one of national economies and protected markets; Hirst and Thompson that `success

Capitalism and the left at the millennium 31 in the international economy has national sources and that `it is not beyond the powers of national governments to regulate these companies.16 Peter Gowans powerful critique of what he calls the `Dollar-Wall Street Regime follows a similar logic: globalization `has been not in the least a spontaneous outcome of organic economic or technological processes, but a deeply political result of political choices made by successive governments of one state: the United States.17 Elements of these arguments are true, especially for the more powerful states. There is no doubt that states retain important instruments of economic management and that globalization is a strategy of the most powerful capitals, seeking to mobilize resources and break into markets on a global scale, which have sought state assistance for their accumulation strategies. States, then, clearly have powers of agency, and where some accounts of globalization suggest the end of the nation-state, Robert Holton, while accepting that the states role has been recongured, argues for its `continuing robustness.18 But to claim that these powers can be used against globalization is a very different matter. Much discussion of the state tends to reify it and rests on a false dichotomy between states and capitals, as if they operated under quite different pressures and according to different dynamics. Of course, states concentrate or aggregate social relations within particular territories and can appear independent of the concerns of individual capitals. But while it is important to analyse the specicities of state actions, it is equally important to recognize the constraining effects of the law of value and competitive accumulation on even the most powerful states. To argue, as many anti-globalizers do, that globalization has been state led not only states the obvious but also conceals the very pressures on states to globalize. Since the return to crisis in the mid-seventies, states, under pressure from big capital restructuring on a global scale, have not reconstructed protected national economies but become more open to international inuences. World capitalism has become more integrated. Integration has exposed national economies, welfare states and protective legislation to the international law of value with devastating consequences for the weaker capitals and states. Now, after two decades of neo-liberal assaults on the state, capital and its political agents have begun to realize that states continue to perform a number of essential functions on private capitals behalf. The World Bank, which has wrought such havoc on the Third World in association with the International Monetary Fund, has argued that the poorer parts of the world face a crisis of the state and require state-led reation to boost demand, sales and protability rather than interest rate hikes to satisfy international capital. But this is not resistance to globalization so much as a minimal programme to ensure that the world remains safe for private capital: it argued in 1997 that `the state is essential for putting in place the appropriate institutional foundations for markets.19 In imposing state restructuring to guarantee repayment of loans to western banks, the WB/IMF has, in Ankie Hoogvelts words, `had to uphold the state and destroy it at one and the same time.20 Thus, while potentially protable state enterprises have been privatized and welfare programmes, food subsidies, etc. cut, debt has been nationalized and thereby imposed as a burden on the poorest sections of society. In large parts of the postcolonial world states have become agents, in Robert Coxs words, of `global poor relief and riot control.21 These developments are part of a more general process of what James Petras has called `the internationalization of the state whereby parts of the state

32 Adrian Budd executive promote and protect the international expansion and interests of capital. 22 States everywhere have been subordinated to a neo-liberal restructuring `that places emphasis on the state as supporting, sustaining and introducing international goals within a domestic context . . . The rule of the market and transnational capital is actively being legitimised through a reconceptualization and mapping of the ``national economy.23 States have agency but this is increasingly in the interests of the most powerful capitals. Indeed, `so effectively is the state serving the interests of multinational capital that it enters into international agreements like the WTO and NAFTA that actually diminish its own abilities to serve ordinary citizens.24 Meanwhile, on the ip side of the marketization coin, there has been a general shift towards authoritarianism in dealing with its victims.

The left Where, in Robert Coxs words, over the last two decades states `willy nilly became more effectively accountable to a nebuleuse personied as the global economy, it seems that the old Marxist argument that the working class cannot simply take over the state and use it in its own interests is more relevant than ever.25 The traditional vehicle of workers demands, social democracy, has itself restructured in tandem with the restructuring of capital and states. New Labour heaps praise on the market and private enterprise, and the French socialist prime minister, Lionel Jospin, has presided over a privatization bonanza. Germanys SPD chancellor Schroder, although forced by popular pressure to organize the state rescue of construction company Philipp Holzmann in late 1999, is committed to welfare cuts. Whenever social democracy has found itself in ofce in the advanced capitalist countries since the seventies it has prepared the ground for and/or initiated neo-liberal restructuring and the erosion of the postwar class compromise. The subordination of its programme to the health of national capitalisms is well summed up by Donald Sassoon: `the rst political casualties of capitalist crises in Western Europe would be the parties of the left . . . while their greatest successes occurred during the thirty glorious years of capitalist growth (194575)the Golden Age of capitalism. 26 Today, in the face of globalization and without acknowledging an economic reductionism that would shame any Marxist, social democrats have rallied to the `modernizing call of global market forces. Schroder, for example, argues that globalization has occurred not only in product and service markets `but has also subjected labor markets to unprecedented international competition. Using national policies to protect these markets has become largely impossible. Rather ominously for those who have witnessed the `modernization of much of the world via neo-liberal adjustment programmes and restructuring, Schroder continues that `the only open path is comprehensive economic and social modernisation.27 Are we then to conclude that the game is up for the left, that reforms are impossible and that the twentieth century played a cruel but mercifully shortlived trick on those who strove for a better life beyond (or even within) capitalism? Are more and more people likely to suffer the devastating consequences of a situation in which `the patrimonial glue that holds society together is dissolved?28 Is the fate of those who live beyond capitalisms

Capitalism and the left at the millennium 33 heartlands likely to be similar to that of the former Yugoslavia, where an IMFimposed restructuring programme in the eighties undermined the very federal government which the IMF insisted should implement the strategy and created conditions in which rulers and would-be rulers whipped up ethnic hatreds to disastrous and murderous effect?29 Indeed, does not the rejuvenation of the European far right indicate that the future in the advanced countries could be remarkably similar? 30 The answer to all these questions will be `yes to the extent that the exploited and oppressed allow it to happen. According to Immanual Wallerstein:
pervasive anti-statism, by delegitimating the state structures, has undermined an essential pillar of the modern world-system, the states system, a pillar without which the endless accumulation of capital is not possible. The ideological celebration of so-called globalization is in reality the swan song of our historical system. We have entered into the crisis of this system. The loss of hope and the accompanying fear are both part of the cause and the major symptom of this crisis.31

Capitalist crises are not necessarily resolved in favour of the working class. As xed and fast social relations are undermined and millions nd that established structures melt into air, so hopelessness and fear can breed passivity or susceptibility to the imagined security of more particularistic points of reference. Certainly, after the hopes of the late sixties and early seventies, when `everything was possible, were dashed, there was a generalized disengagement from political activity.32 This was punctuated briey by temporary hope and activism in many parts of the world, but was reinforced by the collapse of the Stalinist states: whatever the horrors perpetrated in the name of socialism and however much their working classes were subordinated to essentially the same processes of competitive accumulation as their western counterparts, they did appear as an alternative for those who did not live there. Yet as we enter the new millennium there are hopeful signs of a rebirth of the left internationally. In recent years organized mass activity has beaten back the Juppe plan in France, forced the withdrawal of welfare cuts in Germany and Italy and, most signicantly, overthrown Suharto in Indonesia. Victories have not always been sustained, but it is becoming clearer that even defensive struggles require the sort of mass activity that can begin to break down divisions within the working class, and between it and other oppressed social groups, clarify an emancipatory vision and locate an emancipatory agency. The demonstrations against the World Trade Organization meeting in Seattle in November December 1999 mark a signicant step towards this. For, while the might of the worlds most powerful state was visited upon them, the tens of thousands of protesters engaged in intense debates over politics, power, equality and democracy and `mutually respectful ties developed between usually fragmented constituencies (turtles and Teamsters, Lesbian Avengers and steel workers).33 The contradictions of a system in which the USAs largest companies paid up to $250,000 each for a place on the ofcial WTO host committee while the USA threatens import duties against countries that manufacture cheaper generic versions of AIDS drugs have contributed to a whiff of the sixties across the USA. The state is so clearly perceived as an agent of the largest corporations that barely half the population bother to vote. Meanwhile, students have begun

34 Adrian Budd to challenge received neo-liberal orthodoxy and the Seattle demonstration was a `festival of ideas.34 Popular agency, whether against Monsantos GMOs, the use of sweated labour in the manufacture of college clothes, or the US militarys training School of the Americas for Latin American thugs, is again in the air.

Conclusion After the fall of the Berlin Wall, George Bush expressed the triumphalism of the right when he declared a `new world order. Yet the globalization it entails is no supra-historical teleology but the contemporary expression of capitalism and imperialist expansion. It is the product of human agency with particular class interests and, potentially, subject to an alternative agency with its own oppositional interests. Certain of the more far-sighted bourgeois commentators and politicians have begun to seek ways to attenuate the destructive power of free markets via state regulation or multilateral governance, but the degree of state restructuring under the ascendancy of the most powerful transnational capitals in the last two decades has been such that it is difcult to see how, short of a massive systemic crisis, they can put the genie back into the bottle. Indeed, in the more regulated models of capitalism (such as Germany, Japan, South Korea, etc.) the trend is in the opposite direction. In these circumstances, commitment to a return to state regulation faces a crisis of agency which is unresolvable without a turn to Marxism. In 1930, criticizing Stalins notion of `socialism in one country, Trotsky wrote:
Marxism takes its point of departure from the world economy, not as a sum of national parts but as a mighty and independent reality which has been created by the international division of labour and the world market, and which in our epoch imperiously dominates the national markets.35

The dynamic of competitive accumulation in the world market makes `socialism in one country impossible, just as it made Mitterrands experiment in Keynesianism in one country impossible in 19823. But resistance to the law of value and its attendant oppressions can start on one bus (Birmingham, Alabama), on one university campus (the Sorbonne), in one factory (Putilov). Under the impact of globalization, in both rich and poor countries, social conditions are such that resistance can spread just as rapidly today. If and when it does, states will be in the vanguard not of resistance to globalization but of the forces trying to crush that resistance. As the world enters the new millennium it is in the throes of profound instability, fragmentation, devastation and disorder. For millions around the world hope has turned to despair. The last similar period of barbarism lasted from around the turn of the nineteenth century (Boer War, Fashoda incident, etc.) to the end of World War II and included inter alia two world wars, fascism, the Holocaust, and Depression. But there was one beacon of hope, the Russian Revolution of 1917. The globalization of capitalist social relations of production `means that any project in the late modern world, to be emancipatory, has to be revolutionary. 36

Capitalism and the left at the millennium 35 Notes

1. These remarks are based on the discussion of P. Curtin, Cross-cultural Trade in World History, Cambridge, 1984, in R. Holton, Globalization and the Nation-state, London, 1998, pp. 258. 2. K. Marx and F. Engels, `Manifesto of the Communist Party, in Karl Marx. Selected Works, Vol. 1, London, 1942, p. 209. 3. N. Bukharin, Imperialism and World Economy, London, 1987, p. 36. 4. J. Holloway, `Global Capital and the National State, in W. Bonefeld and J. Holloway (eds), Global Capital, National State and the Politics of Money, London, 1995, p. 123. 5. K. Ohmae, The Borderless World, London, 1990. 6. P. Hirst and G. Thompson, Globalization in Question, Cambridge, 1996. Charles Tilly warns against regarding any cross-border connection as signicant in his Big Structures, Large Processes, Huge Comparisons, London, 1984. 7. See Hirst and Thompson, op. cit., p. 68. On Third World trade shares see R. Kiely, `Transnational Companies, Global Capital and the Third World, in R. Kiely and P. Mareet (eds), Globalisation and the Third World, London, 1998, pp. 4950. On TNC regional concentration see A. Amin and N. Thrift, `Living in the Global, in A. Amin and N. Thrift (eds), Globalization, Institutions, and Regional Development in Europe, Oxford, 1994; P. Dicken, M. Forsgren and A. Malmberg, `Local embeddedness of transnational corporations, in Amin and Thrift (eds), op. cit.; J. Dunning, The Globalization of Business, London, 1993; E. Schoenberger, `Globalization and Regionalization: New Problems of Time, Distance and Control in the Multinational Firm, Presented to the Association of American Geographers, Miami, 1991. 8. Quote in A. Hoogvelt, Globalisation and the Postcolonial World. The New Political Economy of Development, London, 1997, p. 83. Figures from L. Elliott and C. Denny, Guardian, 12 July 1991. 9. `Sceptics is one of the categories used in D. Held et al., Global Transformations, Cambridge, 1999. This looks set to become the standard text on globalization. 10. Hirst and Thompson, op. cit., p. 112. 11. See S. Cohen, `Geo-economics and Americas Mistakes, in M. Carnoy (ed.), The New Global Economy in the Information Age, London, 1993, p. 98. Quoted in Hoogvelt, op. cit., p. 123. 12. W. Ruigrok and R. van Tulder, The Logic of International Restructuring, London, 1995, p. 156, quoting gures from UNCTAD, World Investment Report 1993: Transnational Corporations and Integrated International Production, New York, 1993, p. 28. 13. G. Junne, `Multinational Enterprises as Actors, in W. Carlsnaes and S. Smith (eds), European Foreign Policy. The EC and Changing Perspectives in Europe, London, 1994, pp. 867. 14. For counter-arguments to these which emphasize local production see K. Moody, Workers in a Lean World. Unions in the International Economy, London, 1997, part I; F. Fox Piven and R. Cloward, `Eras of Power, Monthly Review, January 1998; E. M. Wood, `Capitalism, Globalization and Epochal Shifts, Monthly Review, February 1997. 15. Quoted in J. McCormick and N. Stone, `From National Champion to Global Competitor, Harvard Business Review, May/ June 1990, p. 135. 16. J. Allen, `Crossing Borders: Footloose Multinationals?, in J. Allen and C. Hamnett (eds), A Shrinking World?, Oxford, 1995, p. 67; Hirst and Thompson, op. cit., pp. 98, 115. 17. P. Gowan, The Global Gamble. Washingtons Faustian Bid for World Domination, London, 1999, p. 4. 18. Holton, op. cit., p. 10. 19. Quoted in A. Cameron and R. Palan, `The National Economy in the Contemporary Global System, in M. Shaw (ed.), Politics and Globalisation, London, 2000, p. 37. 20. Hoogvelt, op. cit., p. 169. 21. R. Cox, `Critical Political Economy, in B. Hettne (ed.), International Political Economy. Understanding Global Disorder, London, 1995, p. 41. 22. J. Petras, `The Imperial State System, Paper presented to the American Political Science Association, Washington, DC, referred to in R. Cox, Approaches to World Order, Cambridge, 1996, p. 106. 23 Cameron and Palan, op. cit., p. 42.

36 Adrian Budd
24. R. Du Boff and E. Herman, `Questioning Henwood on Globalization, at , http:// www.zmag.org/zsustainers/zdaily/1999%2D12/01herman.htm . . 25. R. Cox, `Global Perestroika, in R. Miliband and L. Panitch (eds), New World Order? Socialist Register 1992, London, 1992, p. 27. 26. D. Sassoon, One Hundred Years of Socialism. The West European Left in the Twentieth Century, London, 1996, p. xxii. See also P. Anderson and P. Camiller (eds), Mapping the West European Left, London, 1994. For a damning indictment of the New Zealand Labour Partys neo-liberal dismantling of the postwar consensus see J. Kelsey, Economic Fundamentalism, London, 1995. 27. G. Schroder, `German Economic Policy from a European and Global Perspective, in D. Dettke (ed.), The Challenge of Globalization for Germanys Social Democracy. A Policy Agenda for the 21st Century, Oxford, 1998, p. 11. 28. Hoogvelt, op. cit., p. 175. On the devastation of one particular state, see W. Reno, `Markets, War, and the Reconguartion of Political Authority in Sierra Leone, Canadian Journal of African Studies, Vol. 29, No. 2, 1995. 29. See S. Woodward, Balkan Tragedy: Chaos and Dissolution after the Cold War, New York, 1995; M. Chossudovsky, The Globalisation of Poverty. Impacts of IMF and World Bank Reforms, London, 1997, Ch. 13. 30. This appears to be what erstwhile socialist prime minister Edith Cresson has in mind. Her view of resistance to globalization is cast within a bourgeois discourse of race and nation. She sees the Japanese as the key `other, seeking world domination by staying up `all night thinking of ways to screw the Americans and Europeans, and presents them as `our common enemy. Quoted in Kiely, op. cit., p. 16. 31. I. Wallerstein, Utopistics. Or Historical Choices of the Twenty-rst Century, New York, 1998, p. 32. 32. See C. Harman, The Fire Last Time: 1968 and After, London, 1988, for an excellent account of the period. 33. M. Albert, `On Trashing and Movement Building, at , http://www.lol.shareworld.com/ZNETTOPnoanimation.html. . 34. J. Vidal, Guardian, 4 December 1999. 35. L. Trotsky, The Permanent Revolution and Results and Prospects, New York, 1969, p. 146. 36. J. MacLean, `Towards a Political Economy of Agency in Contemporary International Relations, in Shaw (ed.), op. cit., p. 201.