GLOBALISATION, THE HIGHEST STAGE OF IMPERIALISM
This working paper was written in 1995. It does not therefore include important developments that took place since then. It is distributed to offer a rough perspective and theoretical framework for more systematic analysis of the subject-matter.
In 1917, in his seminal work on imperialism, Lenin proclaimed “the final victory of finance capital.”[1] Decades later, in 1994, eminent American Marxist Paul Sweezy, expounding the worldwide ascendancy of finance capital, traced the full realization of its ultimate triumph into the 1980s and 1990s.[2] By the “victory of finance capital” both men meant the international domination of a mode of accumulation which is, to a large degree, divorced from production paving way for a decaying parasitism with inherent destructiveness. Here, within the framework of intra- and inter-capital relationships, strategic choices are determined by the financial oligopoly due to the pivotal place it occupies in the hierarchical structure, and in the decision-making process, of the capitalist economy.
Between the first and the present stages of the dominance of finance capital (between Lenin’s “final victory” and Sweezy’s “ultimate triumph”) there lies the changed patterns of internationalization of capital and international division of labor, changed correlation of forces on the world scale, different modes of concentration, centralization and accumulation processes, technological breakthroughs, all sorts of armed conflicts, divergent world orders, etc., i.e., the entire history of imperialism to date. In the first phase of this process, financial capital began dominating industrial capital, albeit at a level of subordination to industrial production. In the course of the twentieth century it moved to a stage where its dissociation from production for human need reached such a point that, today, it “inevitably becomes speculative capital geared solely to its own self-expansion.”[3] So, as Sweezy wrote, “What happened a hundred years ago set the stage...but fell short of that outcome.”[4]
In the first phase of the final victory of finance capital, i.e., the first stage of imperialism, the means to alleviate the problems created by excess capacity (in capital and in production) were mainly related to the expansion of markets worldwide and to the productive capabilities of industrial activity. Therefore, within the framework of the fusion of financial and industrial capitals, to assuage the problem of accumulation, industrial capital continued to be the main force.
First, new markets had to be accessed to solve the conflict between over-production, slackened demand and limited markets. This was, In Lenin’s words, “A new stage of world concentration of capital and production, incomparably higher than the preceding stages.”[5] The scramble toward open doors started and the imperialist division-redivision of the world followed.
Second, as the need to export capital arose, profitable investment abroad, either as public and private loans or as direct capital participation in industrial undertakings, resulted in the development of capitalism, expansion of productive forces, increase in commodity production and exchange on the world scale. In other words, the way out from the crisis brought about more production, more investment to augment industrial development and therefore to continue to focus on industrial capital. Capital mobility mainly took the form of working, rather than loan capital. During this phase, and for a long time afterwards, dominant capitalist interests were still essentially tied to productive capital and therefore finance capital geared its international mobility accordingly, that is, to meet the needs of industrial production.
The world capitalist economy then passed, with all its contradictions and inherent conflicts, through a mined field of imperialist rivalry, arms race, world wars, the First Socialist Revolution, the Great Depression, fascism, state monopoly capitalism, Keynesian New Deal, etc. to reach safe waters in mid-1940s.
The quarter century following the Second World War witnessed extremely favorable conditions in the world capitalist market. A number of factors contributed to the new dynamism. Postwar reconstruction, military-generated scientific-technological advances, regional wars, international conflicts have helped the emerging state monopoly capitalism to undertake massive economic intervention and military spending. New developments in durable consumer goods technologies, shifts in manipulated consumer patterns and growth in material forces of production have tremendously expanded the market and created new investment opportunities in the global economy. Transnationalization, together with the progress in communication and transportation, greatly facilitated capital penetration and accumulation.
The flourishing real economy that produces goods and services for human needs, and the earnings of the productive capital further enlarged the huge profits of the oligopolists. The amassed capital was beyond their capacity to invest. The mode of accumulation itself depressed the very demand new investment required. Over-capitalization through monopolistic accumulation and the world market’s incapacity to absorb the products of excess capacity, together, have set the stage for the perennial problem of industrial capitalism to reach crisis proportions once again. Thus, the world entered a new period of stagnation in the early 1970s.
Looking from the perspective of internationalization of capital and its links with industrial production, it can be asserted that the world economic crisis, and the subsequent sharp recession of 1974-1975, together with the enormous amounts of petrodollars deposited in Western banks, stimulated two divergent tendencies that did not seem mutually exclusive at the time. On the one hand, there was a change in the internationalization of capital pattern. First, as oil revenues began piling up in the banks, private lending to the Third World tremendously grew and parts of the loans were naturally put into use to finance industrial projects. Along with direct foreign investment, “there has [also] been a remarkable growth in the internationalization of other forms of capital like portfolio investments, private and public export credits, bank loans, and commodity exports in the form of turn-key projects intended to build up production and reproduction processes in the Periphery.”[6] That these developments did not solve the problem of Third World industrialization is beyond the point; productive capital still had large enough outlets in the world market through new investment opportunities and therefore it was still dominant in the accumulation process even during the stagnant years of the 1970s.
The process of Détente also provided a new impetus for industrial capital during the stagnation and crisis years of the 1970s. Between 1970-74 share of imports from the West in total imports rose by 97% in Poland, 36% in the Soviet Union, 28% in the GDR, and 20% in Hungary.[7] There have been dramatic increases in joint ventures and in the flow of Western credits together with technology transfers and export of capital goods.[8] Following Nixon’s visit to Beijing, the Chinese market was also opened to Western capital goods and commodities. This, too, helped to enlarge the real economy and became yet another source of revitalization and relative dynamism for productive capital.
On the other hand, there was a creeping development that was neither readily apparent nor seemed to be significant at the time. Stagnation, limited capacity of the Third World to absorb the gigantic amounts of excess capital, and the problem of overproduction and underconsumption relative to it, have all created a “leak” in the surplus capital. Growing amounts began to leave the unprofitable productive economic activity to enter into the rentier world of mainly speculative financial sector. There began a worldwide increase in portfolio investments and an enlargement of the total volume of purely financial transactions.
In the 1980s, this process accelerated as capitalist crisis deepened. The new offensive of international capital started in the capitalist centers right after the second slump in 1980. Ronald Reagan and Margaret Thatcher led and personified the aggressive policies of monetarist counter-revolution. The result was shattering for labor. In the 1980s, real wages and salaries fell drastically. While corporate profit margins expanded immensely, general poverty, even hunger and homelessness bloated to extreme proportions. Tens of millions of people were rendered superfluous and were treated as such. And when corporate capital, freed from the constraints of big government and big labor within a new wave of de-regulation, began its new global thrust, metropol population became the first victim--before the wretched of the earth in the Third World. As for the United States, Noam Chomsky made this analogy: “A corollary to the globalization of the economy is the entrenchment of Third World features at home...”[9] After a few years of delusive revitalization as a result of massive trade deficits, international borrowing, high interest rates, and cost cutting through delocalization and segmentation, The United States ended up as the most debtor country in the world with further weakened demand, diminished social spending and an impaired home production base. The number of poor people in the U.S. increased from 2,522,000 in 1979 to 3,425,000 in 1986 while low income rentals decreased in the same period by almost half a million and by 1986 the Reagan Administration was spending $17 billion less than in 1981 for low income housing. The decline for needy families with dependent children was as dramatic as the drastic decrease in Federal spending on education. On the other side, military spending skyrocketed while the rate of taxation on corporate profits plunged to 21% in 1986 from 46% in 1960.[10]
The monetarist offensive of international capital naturally subsumed and engulfed the whole world. Ronald Reagan’s arrogant remarks were nevertheless true: “We have meant to change a nation, and instead we changed a world.”[11]
In the South, globalization was preceded by the “Globalization of Adjustment.”[12] As a result of the imposition of structural adjustment programs by the World Bank and the IMF, most Third World countries had to set aside large amounts of their already meager foreign currency earnings for debt servicing. This siphoning was so massive that former director of the World Bank said, “Not since the conquistadors plundered Latin America has the world experienced a flow in the direction we see today.”[13] “As a result of this latest form of extortion, together with big and continuing declines in the prices paid for most Third World commodity exports and contraction in their markets in industrialized countries, nearly all of the Third World countries’ already low income levels have declined severely since 1982.”[14] Third World’s share of world income fell from 5.6% in 1978 to 4.5% in 1984 and the income ratio between the rich and poor countries went up to 60:1 in 1989 from 20:1 in 1960 and 46:1 in 1980.[15]
In the end, structural adjustment crushed the Third World. From the ruins of state intervention, social security, public expenditures, planning, price controls, industrialization drive, there arose privatization, devaluation, decapitalization, mass unemployment, poverty, hunger, legitimatization of extreme social inequalities, political instability, and indeed Somalization.
The marginalization of the poor countries created a state of global apartheid. The new international cast system produced its own untouchables; “If God gave it [Africa] to you and made you its economic dictator, the only smart move would be to give it back to him.”[16]
But when “a system of world economic governance with parameters defined by the unregulated market and the rules administered by supranational banks and corporations”[17]took its sway, the ensuing destitution also contracted world markets, limited investment opportunities[18], curtailed growth, and aggravated global stagnation.
Although the demise of the Soviet Union and the developments in Eastern Europe fully exposed the hitherto guarded doors to Western capital, this new opportunity could not significantly add either to the productive capital’s realm of operation to offset lost ground in the world market.
Under these conditions, the global network of financial markets in the deregulated world capitalist market where national barriers were demolished began to eagerly receive idle surplus capital looking for profit and expansion. Speculation, international usurer bankers, coupon clippers, globetrotting black money held sway in the system. “The daily foreign transactions have now reached the astronomical level of one thousand billion dollars, the equivalent of all the gold and foreign currency reserves of all countries belonging to the International Monetary Fund.”[19] Every state and government in the world is now vulnerable to the caprices and blackmails of financial markets. Almost any government irrespective of the support it receives from the society is doomed to the wrath of the financial market if it is not responsive enough to its whims. When, for instance, a private consultative firm decreases a country’s credit rating within the scope of a trifle (+) or (-), this may very well precipitate an economic, social and political crisis that could topple governments, dislocate the economy, block credits, hamper trade, depreciate the currency, crush the home financial market, provoke bankruptcies and layoffs, etc. Even grimmer and more grotesque scenarios are amply available in the world of globalization.
In 1917, Lenin discerned a tendency in capitalism, which acquired increased pertinence today: “Capitalism, which began its development with petty usury capital, is ending its development with gigantic usury capital.”[20] The predatory mode of accumulation Lenin referred to, matured over the years into the kind of neo-mercantilism we observe today. Mercantilism as an economic policy and activity, “overemphasized...the process of exchange versus production, exchange value versus use value, accumulated money versus consumable commodities, and international sources versus national ones for capitalist development...”[21] Looking at today’s world of globalization, it is indeed possible to recognize the workings of a “corporate mercantilism”[22] with a capital accumulation reminiscent of primitive accumulation that was based upon “a process by which producers were deprived of their means of production, and also the process of the accumulation of capital in money form...and...a process of robbing and commercially exploiting other countries...”[23] From the “rosy dawn” of capitalism we enter today’s world of expropriation of social production through privatization, worldwide plunder through institutionalized unequal exchange, and the erosion of the world’s productive base through financial extortion.
Today’s parasitism and decay of imperialism with globalized speculation, usury, stagnant production, private appropriation of immense wealth amidst appalling poverty, and financial strangulation of billions of human beings, domination, contradictions, conflicts and violence point to its peculiar stage of development commonly called Globalization. In the first phase of imperialism, commodity production, though undermined, still formed the basis of economic life. Today financial speculations and manipulations reign supreme. Transition from industrial capitalism to financial capitalism has now been completed with all its inner contradictions.