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The Making of Global Capitalism

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Posted on Jan 31, 2013
Verso Books

(Page 4)

When in 1942 An American Proposal envisaged the replacement of ‘a dead or dying imperialism’ with an American empire of a new kind in order to establish ‘universal free trade’ through reorganizing ‘the economic resources of the world so as to make possible a return to the system of free enterprise in every country’, it acknowledged that the primary barrier to this was the ‘uprising of the international proletariat’ that had occurred over the previous twenty years. Despite all the subsequent Cold War rhetoric, it was not the threat of external Soviet military expansion but the new political and economic strength of working classes in so many societies, including within the advanced capitalist countries, which was the real barrier. It was only overcome, as we have seen, once the postwar contradictions of strong working classes coexisting with increasingly strong capitalist classes had led to the crisis of the 1970s, and then to the defeats suffered by the working classes in its wake. To the extent that in the course of the postwar years the working classes increasingly lost interest in the idea of socialism, this had much to do with the belief that the Bretton Woods agreement and Keynesian economics would usher in a crisis-free, socially just, ‘mixed economy’. Yet not only the crisis of the 1970s, but also the economic instability and the growing inequality of the neoliberal decades that followed, proved this to be an illusion.

The belief that there is a way back to a supposed postwar ‘real economy’ from the finance-led capitalism which greased the wheels of globalization is equally illusory. Capitalist finance is in truth no less real than capitalist production, and not just because of the way it affects the rest of the economy during both boom and bust, but because it is integral to capitalist production and accumulation as well as to the extension and deepening of global capitalism. There is in fact no possibility of going back to the largely mythical ‘mixed economy’ the New Deal and Keynesian welfare state are imagined to have represented. In the US itself, as the last chapter showed, just as democracy appeared to trump race with the election of a black president so did he reinforce once in office, even through his timid reforms, the neoliberal system of class power and inequality. We today see southern and eastern Europeans being sharply rebuked for even having aspirations to catch up with what Northern Europeans still can claim from their reduced welfare states after the neoliberal reforms of recent decades. We see an already marked democratic deficit being further expanded in Europe, with the crisis in Greece and Italy leading to national unity governments headed by central bank technocrats, whose mettle will be tested by whether they can calm German anxieties about ‘moral hazard’, which will largely depend on whether they ‘can get tough enough with the unions’.

The real danger which the eurozone crisis poses to global capitalism is that states that had sworn off capital controls forever may be forced by domestic class struggles into adopting them.. Similar external pressures to those that led most developing states to abjure capital controls for pragmatic rather than ideological reasons in the wake of the Asian crisis, as we saw in chapter eleven, are being felt by states in Europe today. Whether other pragmatic considerations - not only the concern with their own legitimacy, but the growing irrationalities of an orthodoxy that demands austerity without much prospect of growth through exports - will instead lead these states to opt for capital controls will be a key sign of whether the American empire is indeed unable to control the spirits it has called up by its spells. Yet to break with the politics of austerity by defaulting on public debt and adopting capital controls is daunting for any state. This is not only due to the strength of external and internal capitalist forces that are opposed to it. It is also because the costs for most of its citizens would in fact be severe.

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 popular sacrifices required would be reduced in any given country were there to be a shift in the balance of class forces in other countries that would lay the grounds for measures of international solidarity with, rather than retribution against, any state that set out to break with the logic of capitalist financial markets by introducing capital controls. This brings us back to one of the central dilemmas of the revolutionary politics earlier associated with the ‘uprising of the international proletariat’. It was the widespread conviction that global socialism would be the alternative to global capitalism that was one of the greatest strengths of the world’s proletariat in the middle of the last century. As it turned out, the working class political institutions that fostered the socialist idea in the 20th century proved unsuitable for realizing it. Even so, it was only through a long and contradictory path that individualized consumerism rather than collective services and a democratized state and economy became the main legacy of working class struggles in the 20th century. Yet capitalism’s capacity to sustain this is now in severe doubt, especially when it is put in the context of the ecological limits to capitalist growth. Whether there can be a radical redefinition of socialist politics in the context of new working class struggles, both in the North and the South, is now on the agenda as never before.

The enormous inequalities as well as insecurities that the state’s promotion of capitalist markets engenders within each country, and the protests and even revolts that this provokes, provide fertile ground for replanting the idea of an alternative to global capitalism. For well over a decade before the onset of the current crisis there were many signs of the exhaustion of popular faith in capitalist markets, and a growing impatience with the political institutions that fostered their globalization. The lesson the World Bank claimed states needed to draw from the 1994 Mexican crisis was that neoliberal reform was ‘a continuing process which never stops…The global economy is a bit like Alice, Through the Looking Glass: it takes all the running you can do to keep in the same place.’ It was as an indignant response to such an all-encompassing competitive capitalist logic, in good part inspired by the uprising in Chiapas, that the anti-globalization movement took root in the 1990s.

A revival of progressive economic nationalism in most developing states today is ruled out by the absence of anything like a national bourgeoisie for popular classes to ally with. This is an old story within the advanced capitalist countries, which increasingly determines just how limited is the room for progressive reform within them. It is thus hardly surprising that the relentless drive to reduce living standards amidst this crisis has triggered not only riots but also searches for new forms of collective action and social organisation. ‘The trouble with the American Dream’, read one hand-made sign at Occupy Wall Street in October 2011, ‘is that you have to be asleep to believe in it. Wake up!’

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