Download: earthgauge-podcast-dec20-2012.mp3 This week on Earthgauge Radio, I have a feature interview with Aiden Enns of BuyNothingChristmas.org and we discuss some ideas about how you can have a “greener” and less stressful holiday season. I …
By Jamie Stern-Weiner, Leo Panitch
Leo Panitch is Canada Research Chair in Comparative Political Economy and Distinguished Research Professor of Political Science at York University. A leading left-wing political economist, he is a long-standing editor of The Socialist Register and the author, with Sam Gindin, of The Making of Global Capitalism(Verso, 2012).
He spoke with NLP about the role of states in global capitalism, elite cooperation in the wake of the 2007-08 financial crisis and the possibilities for left politics in an economically integrated world.
In what sense is capitalism a ‘global’ system?
Our world is still very much made up of nation states with quite discreet economies and class and social structures.
That said, many of those economies are integrated into the production networks of multinational corporations (MNCs), which produce, outsource or contract in many different countries. Many states are now highly dependent for a massive proportion of their GNP on exports and trade, which is in turn linked inextricably to international banking (through trade credits, currency market derivatives, and so on). Investment and commercial banks have become thoroughly internationalised. In these respects one can say that what Marx spoke about in the 1850s—capitalism as a system with globalising tendencies—has been more or less realised.
What role do states play in underpinning this global capitalist order?
Our book begins with two quotations. One is by David Held, formerly of the London School of Economics, who in the early 1990s spoke of an increasingly transnational world economy bypassing even the most powerful states. The second is from Eric Hobsbawm, in his wonderfulAge of Extremes, saying that MNCs would prefer a world ‘populated by dwarf states or by no states at all.’ The book is an attempt to correct those terrific misconceptions.
MNCs need states. When they move around the world, they land on so many more states. Far from wanting these states to be dwarfs, they require states with the capacity to protect property, take contract disputes through relatively efficient and competent legal and juridical systems, build infrastructure and ensure a stable labour force. The notion that MNCs, foreign direct investment and transnational banking operate outside state systems, or that they don’t depend on states every bit as much as capitalism depended on states to emerge in the first place, is simply other-worldly.
But is it true to say that economic globalisation, while not dispensing with the need for a state, does sharply restrict the economic policy options (capital controls, welfare programmes) a state may pursue by rendering many prohibitively expensive?
Yes. But states were never in a position in which capital controls, insofar as they were interfering with access to capital accumulation, were not costly. Social democratic welfare policies and the types of capital controls that existed in war-time and after WWII (although the Americans only adopted them temporarily) were designed to facilitate the rebuilding of capitalism.
During WWII capital controls were intended to secure a type of capitalism that was oriented towards free trade and transnationalisation (and, to be sure, liberal democracy) as it battled a type of capitalism that was economically nationalist. Capital controls after WWII were explicitly designed, on all sides, to give Western European and Japanese states breathing space, so that all their capital didn’t immediately flee to New York. But they were always designed to be temporary. The type of capital controls adopted, then, facilitated the development of capitalism and financial markets within the countries that retained them.
The same is true of twentieth century welfare policies. There is no question that the welfare state was a product of real reforms. But whether introduced from above or as a result of working class pressures from below, they were for the most part structured so as not to undermine capitalist social relations. Even universal unemployment insurance was structured in such a way as to avoid undermining labour markets: you only received unemployment stamps after you’d been in the labour market and you only stayed on them for as long as your stamps, for which you’d paid in, let you. So it’s important to avoid drawing a sharp distinction between capital controls and welfare reforms, and the reproduction of capitalist social relations.
That said, I think the way you pose the question is correct. One does need to look at the way in which the internationalisation of capitalism has shifted the costs of certain policy compromises that were struck when labour was strong. More generally, one should examine how globalisation affects the balance of class forces within each nation state, and vice versa.
How should we interpret the interaction of international economic and national political forces? Are international economic forces best understood as inter-state pressures taking economic form? Should we be looking primarily at how international economic pressures aggrandise or undermine the power of particular domestic constituencies?
Again I think the dichotomy is a false one. First, when MNCs or international banks locate within a given nation state—and they are never located anywhere else—they become class forces inside those societies. That already affects the inside/outside question. Second, when Third World states started introducing neoliberal policies in the 1980s and ’90s, they were interpreted by many as IMF impositions. But, in all those cases, there were also domestic bourgeois forces inside each state which were pushing for those reforms. Having to go cap in hand to the IMF enabled governments to say to their own societies, ‘well we didn’t want to do this, but the IMF made us.’ But in fact what the IMF did was to bolster political and economic forces inside those states which were alreadypushing for a removal of capital controls, the opportunity to be outsourcers for MNCs, and so on. What you saw, then, were domestic and international pressures coming together.
That also operates at the level of international fora where states meet. At the IMF, the G7, the G20 and elsewhere, state leaders, finance ministry officials and central bankers become socialised to speak a common language, think in common terms, develop common policies and cultivate a sense of friendship and obligation to one another. That becomes a factor in the harmonisation of policy. Again, however, one should see it not as a process that begins ‘outside’ and is then imposed ‘inside’, but as a product of a dialectic between the ‘inside’ and ‘outside’.
International solidarity is typically associated with popular movements. In your account, however, the capitalist order is crucially underpinned by an elite internationalism, with elites in different states cooperating to ensure the reproduction of the system. Could you elaborate on that, and talk about why this elite solidarity persisted following the 2007-08 financial crisis, rather than breaking down into WWI-style rivalry?
I’m afraid that international solidarity among capitalist classes and capitalist state leaders is much stronger than the international solidarity of the ‘proletariat’ or the alter-globalisation movement. This elite solidarity is a consequence of the increasing international penetration of capital and the common material base that creates.
The solidarity capitalist elites have shown in the face of economic crises is the product of intensive state efforts. These began with the institutions created after WWII to promote elite cooperation between North America, Europe and Japan, and continued with the set of institutions developed in the 1960s to deal with the strong class conflicts that were producing Third World economic nationalism, and to manage tensions between Europe, Japan and the U.S. over the dollar. These institutions, where central bankers and finance ministry staff met, laid the basis for the G7, and eventually the G20.
What happened after the 2007 financial crisis was, compared to what happened before WWI and during the Great Depression, remarkable. Already during the crisis of the 1970s, when everyone was predicting a resurgence of inter-imperial rivalry, one saw an enormous degree of cooperation between the North American, European and Japanese states in managing the crisis. This has been even more striking since 2007. G20 leaders—not just central bankers and finance ministers, but the political leaders—were summoned to Washington and issued a joint communiqué, in which they pledged not to pursue any domestic policy in handling the crisis that would obstruct free trade and capital flows. Meeting again in Toronto in June 2010 they recommitted themselves to this. And indeed, we have not seen the introduction of beggar-thy-neighbour tariffs, trade wars, or capital controls designed to undermine the internationalisation of finance.
However, despite this remarkable degree of solidarity amongst capitalist states, they have not been able to end the crisis. This is the fourth great crisis of global capitalism, after the late-nineteenth century, the 1930s and the 1970s. Like its predecessors it will last at least a decade, and though capitalist elites have been able to contain it, they have not been able to resolve it.
If inter-state rivalry hasn’t been inflamed by the crisis, what are the main fault lines that have been provoked by it?
To be clear, while the crisis has not destroyed inter-elite solidarities, there are constant tensions and re-negotiations of states’ statuses and positions in global capitalism. But this international economic diplomacy does not, in any sense, betoken a new outbreak of inter-imperial rivalry.
Neither is the main conflict aggravated by the crisis one between industrial and financial capital. Much left-wing economic analysis has focused on conflicts between fractions of capital; for instance, between a ‘productive’ industrial capital and a ‘speculative’ financial one. But the main players in industrial capital are now so transnationalised and so linked, because of that, to transnational finance that they are no more likely to break with a globalised capitalism than finance is. This means that the traditional strategy of reformist labour movements—of allying with industrial capital against international finance—is no longer on the cards.
The main fault lines in the years since the crisis appear to be not between but within each nation state. They of course spill over to transnational protest (the World Social Forum, the recent attempt in Florence to revive the European Social Forum) but this is always brought back, in real terms, to efforts to change the balance of forces within national states. So conflicts within the state are the real fault lines today. To give just two examples: we need to look at what the successive waves of strikes in China might mean for the way in which China has heretofore been integrated into global capitalism, and we need to examine the forces inside Greece that have produced Syriza as the most promising anti-neoliberal party on the European political stage.
That said, to take the Greek example, no matter what happens in Greece and no matter what the successes of Syriza would be in this respect, they are only going to be able to go so far in the absence of corresponding shifts in the balance of forces in Europe, especially in northern Europe and, crucially, Germany. We’re back to 1917: the shift occurs in the weakest link, but the ability of the forces of fundamental change in a society like Greece to carry it through in a way that would be democratic and realise their goals depends on complementary shifts inside other nation states, above all the more powerful ones.
So the fault lines lay within states—but, again, it’s not a matter of ‘in’ or ‘out’, it’s about the synergy between them.
Could small and medium size economies unilaterally break from the global economic order? Would that be too painful?
That will only be known when it’s tested. It will depend on the natural resources a particular country has, the arrangements it can reach with other states given the geopolitical balance of forces, and so on.
But you’re right: the inside-outside dialectic is such that it’s difficult to imagine a break occurring, of a kind that would permit the realisation of democratic socialist ambitions, without complementary shifts in the balance of forces in other states, above all in the most proximate other states to us.
What are the implications of this for left-wing strategy?
First, it means we have to rid ourselves of the illusion that you can change the world without taking power. It is utterly impossible to progress towards a better world unless the balance of social forces that are in conflict in any society find expression in the transformation—in terms of organisation as well as policies—of the states in those societies.
Relatedly, it means we have to move beyond a politics of protest. While tremendously energising and creative, street protest ought to feed into the creation of political organisation, which is aimed not simply at standing outside the state and throwing tomatoes at it, or having a punch-up with police, but at building the types of organisations which can go into the state and change its make-up.
How do you respond to that as a 23 year old, no-doubt politicised in a very different era than I was?
I agree that the lack of institutions able to translate upsurges in protest into more sustained organisation is a big problem. But I’m wary of repeating the standard criticism—’you need to develop a programme’—without having a clearer idea of what that programme should be. The other thing I find frustrating, and which is part of the rationale behind organising this series, is that economic commentary and reporting often takes place at the wrong level of analysis: it will focus on specific details in the latest budget review, for instance, without placing them in an international context.
I couldn’t agree more.
Even if one does develop a programme one that is visionary as well as substantive, where does that take us if we don’t have political vehicles which have a chance of getting into the state and trying to implement it? It leaves us trying to influence Ed Miliband, who is so structurally constrained by the role of the Labour Party and the elite forces inside it that, even if he were sympathetic, he couldn’t do much to realise it.
So we do need to start thinking about how to build new political organisations. But I understand your generation’s concern to avoid reproducing the old Communist or Social Democratic parties. That’s going to depend on taking the creativity of the street protests and putting it to work in building organisations which are able to transcend those—quite undemocratic—models.
This interview is part of NLP’s series, Left Politics in an International Economy.
Jamie Stern-Weiner co-edits New Left Project.
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