The modes of capitalism

The world market which frames capitalism is not an organic evolution. It has been restructured several times in the last centuries. In this article I propose that we should define eras of capitalism mainly by successive modes and phases of the world market.

More usual in Marxist discussion has been to define those eras by successive technologies, or successive forms of industrial organisation. Those dimensions are surely important. My argument here is that phases of world-market organisation and technology are, however, the primary determinants.

Some see the 1950-73 “long boom” as defined by the technology (assembly-line production) and associated industrial and social organisation of “Fordism”. Ernest Mandel, in his big book Late Capitalism, saw it as defined by new technologies of automation and nuclear power. (Yes, there was much talk of automated industry sweeping all before it even in the early 1950s, and yes, until the late 1970s, “modernist” and most leftist thought saw civilian nuclear power as a great boon). Some writers have seen the neoliberal era (roughly 1980-2008) as shaped by the rise of microelectronics.

Marx

In a flourish in his 1847 The Poverty of Philosophy, Marx declared: “The hand-mill gives you society with the feudal lord; the steam-mill, society with the industrial capitalist”. But it was plainly only a flourish, and not a whole philosophy of history in a single sentence. Who is supposed to “give” society the steam-mill? Although the first steam mill (producing flour) started in London in 1786, that one closed after being gutted by fire in 1791, and generally the industrial capitalists, after first mostly using water-power, “gave us” society with the steam mill, rather than vice versa.

In his more worked-through analysis, in Capital, Marx argued that it was the political and technological changes which created a broad world market, beyond the centuries-old thin strands of long-distance trade routes for special, mostly luxury goods, which spawned capitalism.

“The modern history of capital” – i.e. not the old pre-capitalist-society forms of merchant and usurers’ capital — “dates from the creation in the 16th century of a world-embracing commerce and a world-embracing market…”

Or, at greater length: “The discovery of gold and silver in America, the extirpation, enslavement and entombment in mines of the aboriginal population, the beginning of the conquest and looting of the East Indies, the turning of Africa into a warren for the commercial hunting of black-skins, signalised the rosy dawn of the era of capitalist production. These idyllic proceedings are the chief momenta of primitive accumulation. On their heels treads the commercial war of the European nations, with the globe for a theatre”. All that depended, of course, on some technological developments, notably in ocean-going ships.

Capitalist production means, minimally, large-scale cooperation of wage-workforces, then developing into minute division of labour within the factory, and then into large-scale machine industry. These require “trade” (and, historically, plunder) preconditions.

The factories, and the transport, distribution, and other service industries which surround them, require steady supplies of distant inputs for production (historically, for the Industrial Revolution in Britain, cotton) and for markets where the basic workers, and also the managers, accountants, maintenance crafts, etc., can buy for consumption (think tea, sugar, etc.) They require large-scale, not merely local, markets also to sell their production.

Markets

Capitalist society generates national markets. But those do not come first. The huge countries where industry can find domestically many (not all) of its inputs, and outlets for much (not all) production – USA, China, Russia – were not the first sites of capitalism. Capitalism arose first in small countries (Britain, Netherlands, Belgium…) with small national markets. And in the earlier times of capitalism, trade by sea, or by rivers which might run through several countries, was more expeditious than by land. There were no hard-surfaced roads, no motor vehicles, no railways.

By the time Marx was writing, the world market had evolved beyond its 16th century shape and into the era of the Cutty Sark (fl. 1869-95), large and fast sailing ships able to make long journeys. This was also an era of British domination of the seaways, and world trade on a gold standard with London as the centre for mediation. Railways were developing and allowing international trade in coal, although in Europe, for example, countries and regions still had different gauges, requiring loads to be transferred from one set of carriages to another at points along their journeys.

In 1847 (On the Question of Free Trade), Marx had declared that free trade was the recipe for “the freedom of capital”, “the more advantageous application of capital”, and generally hastening capitalist development. After the defeat of the 1848 revolutions across Europe, and as governments across Europe sought by bourgeois reforms from above to extinguish the combustibles which flamed up in those revolutions, a phase of a British-centred “imperialism of free trade” did follow, with its high point about 1860.

It was not a phase of a single line of development for all countries, when the more industrially-advanced countries generally showed the less-advanced their future (as Marx, in Capital, said British industry showed the future for German industry). It was one of a lopsided division of labour (high industry in a few countries, agricultural and mining output from the rest), which would continue in the next era, of high imperialism from the 1880s to World War 2.

That high-imperialist era was identified by many Marxists as shaped by changes in industrial organisation: large national-market dominating corporations and cartels in place of smaller-scale competitive capitalist firms. Those changes were surely part of the era.

But, as I wrote thirty years ago: “Large concentrations of highly mobile capital can operate under different regimes, as since the mid-1980s. The structure of the world economy, rather than just the growth of big capitalist money-fortunes in a few countries, was the fundamental basis of ‘high imperialism’. The later twentieth century proves that ‘monopoly capitalism’ — a capitalism dominated by huge corporations — tends to divide the world into territories policed and tariff-walled by rival states only under certain conditions. Under other conditions the huge transnational corporations desire free trade”.

The division into territories policed and tariff-walled by rival states was impelled more by the drive of rising powers (e.g. Germany, unified only in 1871) to rival the hinterlands held by Britain and the USA (expanding to the West Coast, and with dominance also in Central and parts of South America). This was an era of more trade but also national cartels, tariffs, militarism, colonial expansion.

New technologies of world trade both shaped and were shaped by the new era: steamships (SS Aberdeen, RMS Mauretania); Suez and Panama canals; the telegraph (crossing the Atlantic 1866); some standardisation of rail gauges (Berne 1886). Of national trade, too: hard-top roads (tarmac 1902); motor trucks; more steamships on the Rhine and Danube. And new technologies of conquest, such as the Maxim gun (invented 1884). As the anti-imperialist and Catholic anti-modernist Hilaire Belloc put it: “Whatever happens, we have got/ The Maxim gun, and they have not”.

That new era culminated in World War One, a war which was for a redivision of the world among the biggest capitalist powers. And which produced that redivision. France became dominant in Eastern Europe; Britain took Germany’s colonies and new territories from the now-destroyed Ottoman Empire. Britain and the USA became the great rivals for world hegemony. That rivalry ended with quiet acceptance by Britain of US superiority.

Germany fought to redivide the world again in World War Two. Again came a redivision, but a different sort of redivision from after World War One.

The USSR acquired a new hinterland, and dominated it militarily in Eastern Europe, less so in China, which came into increasing conflict with the USSR from the early 1960s.

The USA was hugely hegemonic in most of the world after 1945, and remodelled the world market towards a new “imperialism of free trade”. After the war, Britain and France did not expand their colonial empires, but gradually, and under pressure of long and often bloody revolts, dismantled them.

Developments in the technology of the world market synergised with political drives

• GATT then WTO

• import-substitution industrialisation in many countries; export-oriented industrialisation, on the basis of establishing adequate infrastructure, in a few, then gradually several more

• much-increased trade in oil and gas (and then LNG), with supertankers and pipelines

• containerisation (on a large scale from the late 1960s, then accelerating)

• air freight.

Technologies

Technologies of national markets developed too (motorways in Europe, the Interstate Highway System constructed 1956-92 in the USA), but these were national markets increasingly immersed in world markets. World trade grew much faster than output.

From the early 1970s, West German and Japanese manufacturers were out-competing US firms. South Korean industry rose fast. A “New International Division of Labour” was developing. Oil-producing states gained stronger bargaining positions and pushed up oil prices in the 1970s. The US was unable to sustain its gold guarantee of the dollar.

This generated a period of high class struggle, from 1968 through the 1970s, and as those struggles moved towards eventual widespread defeat (such as in the British miners’ strike, 1984-5), the construction of a new era.

Nearly thirty years ago, I identified that new era as defined primarily by changes in world-market structure, with changes in technology embedded within them. Discussing Robert Brenner’s work on The Economics of Global Turbulence (1998) I wrote:

“All the 1970s theories [of the end of the ‘long boom’, late 1940s to early 70s, in leading capitalist economies] fundamentalist [based on the supposedly scriptural tendency of the rate of profit to fall], wage-push, and Regulationist [a school of thought based mainly in France], focused on contradictions burgeoning in an ‘average’ or ‘typical’ leading capitalist economy, each national economy being that average type written small, and the world economy being it written large. Brenner criticises that approach and explains the turning-point in capitalism around 1965-73, from ‘Golden Age’ to trouble, from a change in the interactions between national economies: specifically, sharpened international competition in manufacturing”.

The new era was not a new one of rival colonial-empire blocs: in fact, in a a process beginning with extensive East European borrowing from “Western” finance in the 1970s, it led to the collapse in 1989-91 of the USSR’s imperial bloc.

The US managed to reshape for the new its hegemony operated not through direct political domination, but by economic supremacy (supplemented by many military operations, but subsisting even when those military operations were defeated, as in Vietnam).

The US was still central. The dollar even without a gold link was the chief medium of world trade and credit. But US hegemony now operated through finance and selected industries. From the early 1980s the USA imported more manufactured goods than it exported. World financial markets grew explosively. A “New International Division of Labour” (in the words of the German Marxists Fröbel, Heinrichs, and Kreye) saw many more ex-colonial countries developing the basic bourgeois infrastructure for world-market industrial production. China has been the biggest and most spectacular, by far, but there are others. They did this using a new technology of world trade: microelectronics, the internet, international electricity grids, the multinational manufacturing corporations from the post-1950 era (and new similars) now developing complex global supply chains.

Neoliberalism

The whole world system now ran on US trade deficits, budget deficits, ballooning debt, and non-US capitalists buying up that debt.

This was neoliberalism, financialisation, and globalisation, from the early 1980s to 2008-9, with its heyday after 1989-91 and the fall of European Stalinism.

Like all the previous eras, it was inherently limited. Its limits were even more straightforward than of previous eras. No-one knew how far the ballooning US deficits and debt could expand, but everyone knew they could not expand forever.

It was an era of widespread economic growth, but also of many more financial crises than previous eras, and culminated in the great crisis of 2008-9.

That crisis sparked workers’ industrial struggles, and left-wing political rebellions, but on a smaller scale, and with less socialist-internationalist programme, than those of the years after 1968. In short, we, the socialist-internationalist left, had not done a good enough job of maintaining our forces and clarity through the adverse times (for us) of the neoliberal era. Right-wing, nationalist, and authoritarian forces have seized the initiative.

Most stridently with Trump 2.0, the world is being driven into an era of “new nationalism”. This is not an era of relatively-fixed colonial-empire-like blocs, nor an era of retreat into national markets. Almost every national capitalist class today is heavily integrated into world trade, and cannot even envisage a viable form of withdrawal from it.

Rather, trade is being restructured in a network of overlapping and more improvised trade deals rather than the “rules” of the WTO order, and with states which are “entrepreneurial” in at least two senses, in promoting firms based in their own country and in going out to make their own trade deals.

So far this new period seems to have none of the big innovations in world trade technology which were developed by, and helped develop, each previous period. But there is no law that eras of world-market structure must tally neatly with eras of world-market technology.

Whether this transitional period can develop into a full-scale new era, we don’t yet know. It may all be overtaken by the effects of ecological damage and the imperatives of “adaptation”.

Every transitional period so far has been shaped by working-class defeats, but also involves capitalist crises and openings for the left and the working class.