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The Making of Global Capitalism

Posted on Jan 31, 2013
Verso Books

The following is the conclusion to Leo Panitch and Sam Gindin’s new book, “The Making of Global Capitalism: The Political Economy of American Empire” (Verso Books, 2012). It is used with permission and protected by copyright.

Read a review of the book, “a masterful century-long history of US corporate activity and state economic strategy,” by Patrick Bond at Red Pepper.

Although Marx discerned in the middle of the 19th century that a new class of capitalists was creating ‘a world after its own image’, it actually took until the beginning of the 21st century before ‘a constantly expanding market’ could be said to have fully spread capitalist social relations ‘over the entire surface of the globe’. Moreover, it was not a generic ‘bourgeoisie’ driven by competition to ‘nestle everywhere, settle everywhere, establish connections everywhere’ that alone made global capitalism after its own image. It took an empire of a new kind, founded on US capitalism’s great economic strength and centred on the capacities of the American state, to make global capitalism a reality. Yet no sooner did the task look to be more or less complete when the fourth great crisis of global capitalism (after those of the 1870s, the 1930s and the 1970s) spread rapidly across the world. Marx’s observation 150 years earlier, that the making of capitalism on a global scale was ‘paving the way for more extensive and more destructive crises’ while at the same time ‘diminishing the means whereby crises are prevented’, seemed all too fully confirmed. And it was now the American empire that seemed to resemble ‘the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells’.

Given the severity and duration of the latest crisis in a global capitalist economy that the American state had been so central to constructing, it was hardly surprising to see a resurgence of pronouncements that US hegemony was coming to an end. As pundits of every persuasion once again blur the lines between a capitalist crisis and the decline of the US empire, it is especially important to recognize the central role which the American state continues to play in reproducing global capitalism. To be sure, the current crisis has amply demonstrated the many challenges and contradictions it faces in doing this, but it has also demonstrated that while the American empire is certainly not always able to control the spirits it has called up from the deep, it nevertheless remains critical to the system’s survival.

book cover


The Making of Global Capitalism: The Political Economy of American Empire

By Leo Panitch and Sam Gindin


Verso, 464 pages


Buy the book

The new crisis has confirmed more generally the continuing significance of states in global capitalism. Although the institutions of the European Union have more constitutional authority than other international organizations, their inability to intervene so as to resolve the debt crisis of their smaller member states is largely due to the internal political dynamics within other member states, above all Germany. The eurozone crisis also confirms a basic fact about the nature of both globalization and informal empire: state sovereignty is not effaced within it. This can be seen in the difficulties the American state has continually had to confront in getting the German state, from the time of the Herstaat banking crisis in the 1970s to the Mexican crisis in the 1990s to the crisis of the Euro today, to overcome its obsession with inflation and ‘moral hazard’ and to take its share of responsibility for containing crises. Yet this cannot be understood in terms of states, least of all Germany, retreating from free trade and free capital flows in favour of economic nationalism. After decades of economic integration, there are no national bourgeoisies like those that supported the fascist turn in Germany or Italy in the interwar period.

When the term ‘empire’ was openly embraced to characterize the American state at the time of the Bush administration’s response to 9/11 (including by some of its advisors), the stress was placed, in Niall Ferguson’s words, on the ‘potential advantages of a self-conscious American imperialism’ as against ‘the grave perils of being an “empire in denial”’. The anxieties of a Kansas farmer that ‘we are trying to run the world too much… like the Romans used to’ were taken as exemplifying not just the difficulties of mediating the American state’s international and domestic roles, but the loss of imperial vigour and discipline, the main measure of which, allegedly, was that the bill for Social Security in the US was larger than the bill for national security. Notably, it was not a new world of rival imperial states that occupied the minds of such analysts of US empire. The eyes cast askance at Germany and France over the tensions which the invasion of Iraq initially produced were largely overcome once these states introduced the motion at the UN to have it endorse the occupation a year later; while the US integration with China was such that Ferguson himself dubbed it ‘Chimerica’. With the typically absurd hyperbole that was so common in the years after 9/11, he rather claimed it was now only ‘non-state actors’ like criminal organizations and terrorist cells ‘who truly wield global power’.

The real problems of the US empire today appear in a very different light. As the global economic crisis triggered by the American financial crisis of 2007-8 persists, these problems have more to do with the difficulties of implementing adequate measures for ‘failure containment’, let alone ‘failure prevention’. Yet unlike the 1930s this has not been due to a breakdown of cooperation among capitalist states. As the G20 Toronto Summit communiqué of June 2010 proclaimed: ‘While the global economic crisis led to the sharpest decline of trade in more than seventy years, G20 countries chose to keep markets open to the opportunities that trade and investment offer. It was the right choice.’ The leaders renewed their ‘commitment to refrain from raising barriers or imposing new barriers to investment or trade in goods and services… [and] minimize any negative impact on trade and investment of our domestic policy actions, including fiscal policy and action to support the financial sector.’

But capitalist solidarity itself could not resolve the crisis of a finance-led global economy, where the orthodoxy of insisting on austerity - both to ensure that states pay their bond holders and to maintain vigilance against inflation - reinforces the stagnationist tendencies of under-consumption that comes with the diminished consumer credit available to sustain effective demand. The liberalization and expansion of finance, as this book has shown, was essential to the making of global capitalism, yet it came with a degree of volatility that threatened economic stability. Reviving capitalist health today requires strengthening the confidence of bankers that their activities will be appreciated and their assets protected. The unresolved dilemma for all capitalist states today is how to both stimulate the economy and regulate financial markets so as to limit increasingly dangerous volatility without undermining the ability of finance to play its essential role in capitalism.

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