A background document for the 2013 annual conference of the Alliance for Workers’ Liberty (26-27 October), by Paul Hampton and Martin Thomas.
1. The AWL has pioneered a distinctive assessment of the development of global capitalism over recent decades, which underpins our orientation, concrete slogans and differences with much of the left.
We have argued that since 1945, global capitalism has experienced an epoch of the “imperialism of free trade”, in which it has been successively restructured into an aggregate of politically independent states which are authentically bourgeois (rather than being states dominated by pre-capitalist factions, or colonies) and which accept and internalise the discipline of the world market.
2. The step-by-step ending of the old era of colonial imperialism, and the vast expansion to new areas of industrial production for the world market, bring shifting sub-hierarchies; but they do not mean a “flat” or even development. Global capitalism remains highly uneven, and keystoned and policed by the US superpower.
3. This regime, overseeing the combined and uneven development of capitalism across the globe, survived the economic crises of the 1970s, mutating into neoliberalism. Then in the 1990s it expanded to incorporate the former Stalinist states and to include at a higher level many centres which had developed manufacturing industry for the world market at a substantial scale since the 1960s. It has thus far survived the economic downturn that began in 2007. The “imperialism of free trade”, despite many contradictions, is likely to dominate for the foreseeable future.
4. The “imperialism of free trade” — or “Empire of Capital”, as Ellen Wood has called it; or “Global Capitalism”, as Leo Panitch and Sam Gindin call it — differs from earlier periods of capitalism. It is broadly a world of capitalist states, which act to make the conditions for capital accumulation. It is a world where multinational corporations produce and trade across borders, reinforced by international institutional structures (IMF, World Bank, WTO) designed to facilitate these global production chains.
In the neo-liberal era, since the 1980s, it is increasingly a world in which capitalist states set their policy by the priority of making their territory a safe and workable area for global capital to invest in, rather than that of constructing a more-or-less integrated national industrial base.
5. This regime is also the imperialism of finance. Money capital, bank capital, credit and speculation are necessary moments in circuits of capital. Capitalism is inconceivable without them. Financial capital plays a dominant economic role, pooling and distributing the social surplus, creating credit in advance of production, disciplining wayward firms and determining channels for new investment. The relative weight and speed of global financial markets has increased enormously since the 1980s, and that trend continues.
6. The “imperialism of free trade” is superintended by the US hyperpower, which has overwhelming military superiority and uses military force to police global capitalism.
It is what Marx called “the dull compulsion of economic relations”, reinforced by states and especially the US state, rather than resort to military occupation and colonisation, which largely shapes the international economy. Bourgeois society, organising its fundamental processes of exploitation through more-or-less free market relations rather than the relations of personal subordination characteristic of serfdom or slavery, nevertheless requires much larger police forces than those older societies: in the same way the “imperialism of free trade” is accompanied by the growth of big armies acting as global police, and especially the US armed forces.
In the Cold War era, the US frequently used military might to topple regimes it thought to be too friendly to the USSR or likely to “go Communist”. It sustained dictators like Somoza or Batista, Trujillo or Pinochet or the Shah of Iran, the type it deemed to be “a son of a bitch, but our son of a bitch”. Even then, it did not seek colonial rule.
In an era when even the poorest countries had gained substantial urban populations and where national awareness was widespread, the USA judged the costs and repercussions too great. The USA’s economic strength would, with much less strict political conditions than required for colonial rule, give it enough clout; and seeking colonial rule would help the USSR gain support from and control over anti-colonial movements.
Since the early 1990s, the USA has generally preferred to sustain bourgeois democracies (of a sort, and on condition, of course, that they accept the rules of the world market, which generally they do out of the self-interest of the local bourgeoisie). The USA maintained that preference even while deploying large military actions (Kuwait 1991, Kosova 1999, Afghanistan from 2001, Iraq 2003-11).
Since George W Bush agreed, in 2008, to full US military withdrawal from Iraq, the US has been more cautious about military action. It retains a very large military machine, and the readiness to use if it sees its interests threatened seriously and in a way which military action can fix.
The global capitalist economy does not have, and is not likely to have, a proper system of bourgeois-democratic global law. We cannot and do not endorse the “liberal interventionist” illusion (Euston Manifesto, etc.) that the US military will be, or might if nudged be, an agency of a bourgeois-democratic international rule of law, even to the extent that a bourgeois police force can administer a rule of law in a bourgeois democracy like Britain.
We must distinguish the usual real role of big-power military action in the world today both from those “liberal interventionist” illusions and from the illusion that the action is just a re-run, or the beginning of a re-run, of old-style colonial conquest.
7. US hegemony persists, despite its setbacks due to the Iraq fiasco. Since the early 1980s, US economic growth, manufacturing productivity and volume of exports have been higher than other G8 countries. The US continues to dominate R&D spending and maintains its share of global high-tech production, e.g. aerospace, pharmaceuticals, computers and office machinery, communication equipment and scientific instruments.
8. American-based corporations continue to invest huge flows of capital abroad and employ 10 million workers overseas. The US also receives large inflows of capital, which are channelled into domestic consumption and investment. Its capacity to capture global savings reflects the structural strength of its imperial form of rule. The US trade deficit is not evidence of its weakness. During the recent crisis, capitalists have continued to purchase dollars and US Treasury Bills because they remain the most stable store of value in a volatile capitalist world.
9. Capitalist globalisation consists of spreading capitalist social relations and world-market imperatives into every corner of social life and to all parts of the world.
Over the last half century, close linkages have been established between the American state and the other Western states. The internationalisation of capital is now based on foreign direct investment and multinational corporations. American capital now exists as a material social force inside most other social formations, with a consequent impact on social relations, property rights and employment relations. Capitalist states compete primarily by trying to make their territorial spaces attractive as sites of accumulation for foreign as well as domestic bourgeoisies.
10. While China may perhaps emerge eventually as a pole of inter-imperial power, it is currently far from reaching that status. Contradictions and tensions persist between and within states across the globe, but China currently enjoys a symbiotic relationship with the American state. Although certain elements within the US are concerned to maintain its current unipolar power and prevent the emergence of future imperial adversaries, this is not evidence that such contenders already exist.
11. The combined and uneven capitalist development in recent decades has generated rapid economic growth in parts of the South. New centres of capital accumulation have developed, and in certain cases, sub-imperialist states vying for regional predominance have emerged. Whilst many states (particularly in Africa) remain mired in poverty, the rapid spatial extension of capitalist social relations of production and the spread of waged labour have characterised the modern epoch of capitalism.
12. An essential corollary of capitalist globalisation is the massive growth of the world proletariat. The international working class has at least doubled in size in the last 30 years. The working class in East Asia increased nine-fold — from about 100 million to 900 million workers. China’s employed working class tripled, growing from 120 million to 350 million. By the turn of the century, China had more than twice the number of manufacturing workers than the world’s largest industrial nations combined. The large size of the “semi-proletariat” in many countries — people engaged in a fluctuating combination of casual waged work, petty trade, etc. — makes it difficult to draw precise boundaries, but we have probably passed the tipping point, whereby more of the world’s direct producers do waged work than do peasant agriculture. Far from the working class disappearing, globally its social weight has never been greater.
13. The run-up to the 2007-8 crisis was a period of capitalist exuberance. The onset of crisis was not rooted in any sharp profit decline or collapse of investment. In 2006–07, profits were at peak, productivity continued to increase substantially in manufacturing (with wages lagging behind) and low-cost production chains continued to spread. In spite of some important exceptions (notably in the car industry), American corporations went into the crisis in generally solid financial shape in terms of profits, debt and cash flow.
14. The crisis was rooted in the dynamics of finance. Before it broke, the market in titles to future surplus-value inflated. It expanded particularly fast in the last period because of the growth since the 1980s of an increasing variety and depth of global financial markets. Bad debts which were fairly small on the scale of the whole system produced considerable turmoil in the global system, because no one seemed to know where the bad debt was, or which apparently sound debt might in fact depend on bad debt. What had appeared to be calculable risk of financial mishap, which could be offset and managed, was revealed to be incalculable uncertainty (so-called “Knightian uncertainty”).
15. There are some signs of recovery, although the revival may be weak. It may predictably make for another crisis on similar lines before too long. But often capital ‘lives with’ that: there is no automatic, or even reliably vigorous, mechanism to make capitalist classes seek, identify, and implement more serious problem-solving or even problem-displacement. The crisis has reaffirmed the centrality of states (particularly the American state) in the global capitalist economy, while multiplying the difficulties of managing it.
16. No major state has seen the crisis as an opportunity to challenge or undermine the American state.
Rather, the integration of global capitalism has meant that there has been extensive international coordination across states in the provision of liquidity to financial system, in fiscal stimulus, the avoidance of tariff wars and in establishing new regulatory regimes for finance.
17. Neoliberalism should be understood as a particular form of class rule and state power, which emerged in the late 1970s, although on foundations laid after the Second World War. It intensifies competitive imperatives for both firms and workers; increases social inequality and luxury consumption by the rich; increases insecurity for working-class people; and increases dependence on the market in daily life and reinforces the dominant hierarchies of the world market, with the US at its apex. The ruling-class hegemony which Gramsci wrote of is today organised as much through market transaction mechanisms, shaping people to see life as “an investment”, as through parties, media, schooling, etc.
18. Predictions of the demise of neoliberalism at the outset of this crisis in 2007-08 have proven to be false. Some neo-liberal dogmas have been discredited, but mainstream neoliberalism never excluded Keynesian measures, and the political-economic conditions that gave rise to the basic parameters of neoliberalism have not been exhausted or undone by this crisis. There is currently no move to a new regime.
At the peak of the financial crisis, governments nationalised, bailed out, and ran budget deficits, on a huge scale. That shows that economic life today cannot operate without social regulation; but the regulation remained “socialism for the rich”. Governments remain intent on having such crisis measures serve a new neo-liberal push, rather than having them become the start of a new departure.
We underline, in our explanations, the proof given of the irrationalities of the capitalist market — the wisdom and efficiency of which had been so lavishly praised since the early 1980s — and we argue for a workers’ government to replace the “socialism for the rich” by “socialism by and for the working class”.
19. The programme of the coalition government in Britain — more marketisation, more cuts in welfare, more privatisation, harsher pressure on organised labour, in short, more neoliberalism — is not an anomaly. The German government is driving a sharply neo-liberal course across Europe. The US administration is more cautious about rapidly reducing budget deficits than the European governments, but remains firmly within a neo-liberal framework.
20. Many on the left proceed like generals, who overtaken by events, make elaborate plans to fight the last war.
The spectre of the 1970s (and even the 1920s) still hang over much of the left. Many socialists still regard imperialism in terms of (a garbled version of) the analysis Lenin made during the First World War. They repeat a cannibalised “Leninist”, actually Stalinist account of imperialism. On this view, the world is still divided principally between a few large imperialist states and others that are little better than semi-colonies.
21. Lenin’s 1916 analysis of imperialism, which synthesised the best of Second International geopolitics, was a more-or-less adequate assessment of the First World War conjuncture. However in many respects it was flawed even for its time: its conflation of finance capital with, alternately, the merger of bank and industrial capital, or, in contrast, purely speculative or rentier; the derivation of the drive of capital to export abroad from a supposed “glut” or absence of investment opportunities in the home country.
And the commonly-accepted version of Lenin has much worse problems than his original analysis. Since Lenin’s 1916 pamphlet contains essentially no discussion of the economic effects of imperialism in subordinate countries (because that was not Lenin’s focus in that particular text), scattered phrases and offhand polemical swipes from Lenin have been reconstructed to theorise imperialism as a simple process of plunder rather than a species of capitalist development.
The end result is to conflate “imperialism” with “whatever advanced capitalist states do internationally” and, in turn, with simple plunder. There is, of course, no lack of real evidence that simple plunder is part of the routine international activity of advanced capitalist states: the question is whether that is all there is to it, and whether plunder is a feature uniquely of advanced capitalist states rather than of all capitalist states. In the cod-Leninist discourse, “imperialism” (meaning advanced capitalism) is opposed not so much because it is capitalist as because it is advanced.
22. Kautsky’s article on ultra-imperialism, which the AWL republished in 2001 when it had long been out of print, read in 1914 as a rationalisation of the SPD’s support for its own government and an evasion of the tasks of the day in favour of speculative hopes about better conditions emerging, of their own accord, in future. However Lenin never denied the possibility of interdependence and cooperation among the powerful states.
Kautsky’s scheme of a fixed division between “industrial” and “agrarian” territories was of course false. His idea that the big capitalist states would ally stably on a more-or-less equal basis was false too: the “ultra-imperialist” features of the current era rely on the role of the US as superpower. Yet a century on, after further capitalist development and state formation, and in the absence of socialist revolutions internationally to overthrow capitalism, some aspects of Kautsky’s picture are visible in the current mode of bourgeois rule and the global relations.
23. Many left analysts claimed that the crisis proves the US empire is in decline. They argue by analogy with Britain as the declining hegemon in the late 19th century, that the US is driven to war and occupation by its loss of power, prestige and position, e.g. in Afghanistan, Iraq and Syria. But this ignores the continuing centrality of the American state in global capitalism and its role in policing capitalist relations i.e. a more specifically capitalist form of imperialism, rather than the colonial imperialism of earlier epochs.
The Iraq fiasco was produced by overconfidence of a US ruling class drunk on success (collapse of the USSR 1991, Kuwait 1991, Kosova 1999, and, so they wrongly thought in 2003, Afghanistan 2001). It was not a desperate resort of a ruling class scared of eclipse by rivals. To posit a terminal decline in U.S. imperial power is to attempt to accomplish in theory what remains to be done in political struggle.
24. Yet many analysts argue that relations between the developed states of the “North” are characterised by the declining power of the hegemon (the US) and consequently rivalry leading ultimately to war. Every sign of disagreement between the big powers and the US is treated as the prelude to the anticipated repetition of earlier historical patterns and the mechanical, reasoning-by-analogy replication of previous inter-imperialist rivalry.
25. For others on the left, relations with other states of the “Third World” are governed by dependency and impeded capitalist (under)development. Such an assessment underestimates the development of the working class and the potential for an organised labour movement. It implies a nationalist alliance with the domestic bourgeoisie rather than the struggle for independent working class political representation.
26. There is a common assumption in Marxist discussion that crises — or, at least, serious crises, “Marxist” crises — are preceded, initiated, set off, by falls in the average rate of profit. But in fact they are not — or not always. In the recent discussions, few economists have based themselves on the old Marxological “tendency of the rate of profit to fall”, but that tendency has been much referred to on the activist left, and it casts a very large shadow on all discussions of the relation between profit rates and crisis.
27. The argument is that as capital expands, the ratio of constant capital (machinery and materials) to variable capital (laid out on living workers) rises. Profit is produced only by living labour. Therefore, even as the absolute mass of profit increases, its ratio to the total stock of capital required to produce it, the profit-rate, tends to fall. However theoretically, Marx identified numerous counter-tendencies, arising from the same processes that give rise to the downward tendency. We cannot assume a “law of the tendency of the rate of profit to fall”. A long-lasting tendency for the rate of profit to fall cannot be substantiated at the general level of argumentation by Marx in Capital. The rate of profit may tend downwards over a long-ish period. However, the rate of profit can also rise over long periods, as it did between the mid-1980s and 2006-7.
Whatever the trends, a downward tendency cannot provide a sufficient explanation for all capitalist crises, including the latest downturn.
28. Many on the left argue that the crisis of the 1970s was never resolved. They say that a decline in profitability which led to that crisis had continued. (To make the statistics fit this thesis is difficult, but, given the complexities of exactly defining profit rates, not impossible). Or they say that ruinous over-competition which triggered that crisis has continued because of inadequate scrapping of industrial overcapacity and constant growth of new industrial capacity in new areas. Thus stagnation: what appeared to be growth was only superficial flurries thanks to spatial-temporal fixes, asset-bubbles and other ad-hoc measures.
This is no adequate explanation for the neo-liberal resurgence of bourgeois power and of profitability from the mid-1980s. Nor does it yield an adequate prognosis of the current crisis and the prospects for revived working class struggle in the near future. If capitalist income as measured by the capitalists rises, that is a capitalist expansion whatever refiguring may be done to try to show that strict Marxist definitions could deflate the statistics. If growth was not as fast in Europe, Japan, and the USA as it was in the 1950s-60s “Golden Age”, it has been faster elsewhere (in East Asia, for example); and anyway growth does not have to be at “Golden Age” pace to be growth. If the growth was, on a certain level, a matter of unstable flurries — when is capitalist growth ever anything else?
29. To depict the last forty years as a constant crisis of global capitalism is also to slur over the specificity and the drama of the actual crisis which opened in 2007-8. It looks like leading into a stretch of depression rather than any quick recovery. The Tory government’s current ballyhoo about economic recovery in Britain glosses over the fact that capitalist business investment continues to shrink. The instabilities which set off the 2007-8 crisis are still in the system, and are likely to set off similar crises in future. The political repercussions of the economic crisis are as yet very far from being fully played out, and in substantial part depend not only on the general mechanisms but also on the character and energy of the working-class response. We shall see.
Our focus should be on fighting through the contradictions within capitalist development, and helping the increased economic weight of the working class find political expression, not on hoping for capitalism to bring itself down through (illusory) permanent crisis.