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Chapter 9
The Crisis of Atlantic Integration
1.
Europe Versus America
In
spite of the various setbacks to Atlantic integration, an imaginative optimism
as to the eventual full de-nationalization of capital remained strong throughout
the 1960s. George Ball in two articles in Atlantic Community Quarterly in
1967 and 1968 argued the need to overcome national legal constraints imposed on
internationally operating companies by creating a commensurate legal sphere
through international law. In the same period, Carl Gerstacker was making his
famous wish about locating the Dow Chemical headquarters on an island owned by
no nation and 'pay any natives handsomely to move elsewhere'.1 But in the real
world of the North Atlantic area, the national states, or the natives for that
matter were not so amenable. The reality of capital as a totality of competing
individual capitals, and their concrete existence as class relations within
specific spatial confines, worked against the unifying trend.
Enjoying
new prestige on account of its economic prosperity and its domestic and
international reformism, Western Europe compared favourably in world opinion to
a militarist United States applying unrestrained violence in Indo-China. In the
emerging climate of detente with the Soviet Union, the internationalization of
capital from Europe, which in the course of two decades had been transformed
from a commercial parasitism on the spread of American capital to a major
process in its own right, increasingly could be supported by the European states
irrespective of American preferences.
Taking
its distance from the excesses of American imperialism however, implied that the
European bourgeoisie also had to restructure the basis of its hegemony at home.
As in the immediate postwar years and again in the 1950s (albeit now commanding
an economic structure nearly matching the American one), the bourgeoisie in the
various Western European countries was forced to formulate its concept of
control in less transcendent terms, articulating national rather than
international interests and aspirations. More particularly, American hegemony
itself, and the entire structure of Atlantic integration developed in its
context, lost its effectiveness as an expression of a presupposed general
interest. The emancipation of West Germany, formalized in 1968 by the transfer
of the Allied right of intervention to the Federal Republic by the Emergency
Law, moreover removed a linchpin of the supranational European component of
Atlantic integration. Helmut Schmidt asserted the new sense of Germany
sovereignty when he wrote that 'Dreams of "Atlantic Union Now" or
"Instant Europe" must give way to expectations more closely geared to
realities: wider and deeper cooperation, without necessarily institutional
perfection.'2
The
tendency towards a more pragmatic approach to Atlantic and European relations,
abandoning the supranationalism of the previous era (and dramatized in that
respect by the 1965-66 crisis of the EEC), was noticeable in the other countries
as well. Here, too, it was a corollary of the primacy that economic issues had
assumed over international political and military arrangements. 3 For the
Americans, acceptance of the new international posture of Western Europe ran
against the ingrained perception of Europe as part of a US-led Atlantic system:
'Looking back over the statements of leading State Department officials',
Senator Frank Church wrote upon his return from a fact-finding tour of Europe in
1966, 'one is struck by the fact that they seem to hold out for Europe no
alternative between our form of unity or chaos, no awareness that European
sentiment may have shifted towards a different arrangement, that what might have
been achieved in the vision of such men as Jean Monnet when Europe lay prostrate
after the war may no longer represent a practical possibility.'4 New attempts at
ultra- imperialist collusion would be made in due course, but the old framework
was definitively abandoned.
Le
Defi Americaine
The
tendency of the internationalization of European capital to acquire increasing
autonomy was augmented by state intervention intended to raise the level of
concentration and centralization of capital. In Germany in 1966, the Grand
Coalition ofcDu-csu and SPD replaced the Christian-Democrat/Liberal coalition of
Chancellor Erhard. In the fall of Erhard, there was already an aspect of
removing the comprador Atlantic Union tendency considered too subservient to the
United States. 3 The new government reste on a broad national class compromise
and symbolically included Franz Josef Strauss, now as financial specialist but
still committed to attending nuclear status for the Federal Republic (he did not
shrink from comparing the 1967 non-proliferation treaty to Versailles)6, - as
well Willy Brandt, who within a few years would launch the peaceful opening
towards the East. Meanwhile, within the labour movement, the DGB parted ways
with the AFL-CIO in 1966 when it decided to disregard the 1955 ICFTU decision to
refrain from contact with trade unions in socialist countries. 7
Steps
towards a more active state intervention had been taken already in the final
stages of the Erhard government, but it wasn’t until the first major postwar
crisis hit the West German econmy in 1966, that a systematic intervention in the
economy was launched under the aegis of the Grand Coalition. In 1967, a change
in the German Constitution reorganized federal and state finances in order to
allow their subordination to a coherent economic policy. The Stabilization Law
of 1%7 provided the legal framework for active intervention. Karl Schiller was
put in charge of its exection as Minister of Economic Affairs, coordinating with
Strauss at the Ministry of Finance. A Nazi since 1933, Schiller in his doctoral
dissertation of 1940 had argued the advantages of an orderly agricultural world
market against a liberal one. In 1946, he became a Professor of Economics, a
Keynesian, and a member of the SDP. In the context of European self-assertion at
the close of the era of Atlantic integration, Schiller's state-monopolistic
background and brought beliefs fitted the prevailing international configuration
and b him thejob.8
In
an immediate reaction to the crisis, the new government headed by Chancellor
Kiesinger) launched an investment programme of DM 7.1 billion, together with a
strict anti-cartel policy aimed at reinforcing the centralization of capital in
the same way that US anti-cartellegislation in the Progressive Era had done.For
the first time since the promulgation of the emaciated Erhard Law of 1957, fines
were dealt to cartel law offenders in 1967.9 Other countries also introduced
measures to accelerate the formation of multinational companies capable of
standing up to their Americarian counterparts. This was the period whenJ.J.
Servan-Schreiber atered the continent that the 'only real federalism in Europe
on the idustrial level' resided in American companies reorganizing their
subsidiaries on a European basis. 10
But
the American challenge was taken up primarily along national lines. In Britain,
the Industrial Reorganization Corporation (IRC) was established in 1966. Given
the relatively low level of concentration of British capital, mergers were much
more numerous than in continental Europe, and had been since the Macmillan
period. Now that the state was actively engaged in speeding up the process, a
new wave of mergers, in which 10% of all British capital assets changed hands,
was set loose in 1967-68. When the Heath government in 1970 abolished the IRC to
economize on its costly successes, British companies had re-established
themselves firmly among the leading world corporations. 11
In
France, a policy of selective accumulation was continued when Giscard in 1966
was replaced by Oebre. A special tax deduction to stimulate the modernization of
equipment was introduced in the same year. In the Fifth Plan for 1966-70, the
concentration and centralization of French capital was one of the principal
goals. 12
In
Italy, the major chemical company, Montecatini, was re- organized with an eye to
a more active international role. The production structure reflecting the
autarkic and protectionist tradi- tions of Montecatini, subscribed to by the
original owners and by president Carlo Faina, no longer was adequate for an
international strategy. Montecatini by this time sold half of its output abroad
and 35% outside Europe. In 1965, a coalition of corporate-liberal elements,
working through the second man, G. Macerata, and not informing Faina, engineered
a merger with the electricity holding, Edison. The owners of Edison in this way
secured a foothold in an expanding private company after the nationalization of
the electri- city holdings by the Centre-Left government of Fanfani. 13 This
example illustrates the subordination of state intervention to private capital
accumulation; wherever major private interests were prejudiced, public action
was corrected promptly. A notorious example was in the case of the Italian
energy monopoly ENI and its independent-minded head, Mattei, whose mysterious
death in 1962 cleared the way for the agreement with ESSO concluded a year
later. 14
In
the Netherlands, the Centre-Left Cals cabinet of 1965 did not survive the
challenge posed to the oil companies on the issue of North Sea oil exploitation.
It was brought down by Norbert Schmelzer, the future Foreign Secretary, whose
allegiance to the oil companies (it was revealed later that he was on the
payroll of Gulf Oil) in this case proved stronger than his party loyalty. The
sub- sequent governments, however, continued to support the reinforcement of
industrial capital, and the formation of AKZO out of AKU and the chemical
company KZO may be mentioned in this respect.
In
Belgium, 'mini-Gaullism' under Van den Boeynants hardly reversed the passive
role of Belgian capital in the internationalization process, of which only the
'denationalized' holdings like Empain were excepted. After the merger ofGJvaert,
the photographic firm, with the German Agfa in 1964, this plriod saw the sale of
the Belgian rayon monopoly Fabelta to AKZO in 1969.
The
centralization of public funds and energies necessary to weld together the
strongest capitals into viable international firms, and the corresponding
elevation of the rate of exploitation, everywhere required renewed compromises
along national lines. Thus the national counterpoint to the imminent Atlantic
circuit of capital was strengthened. The need to mobilize the entire spectrum of
nationa1 capitalist interests - expressed in the profit-distribution process as
an across-the-board reinforcement of all forms of profit incomc (except for
Belgian small capital: cf. the Appendix) - inevitable galvanized retrograde
elements as well, which in turn hampered the envisaged rationalization process.
In
Belgium, a fiscal reform made the collection of the 20% dividend and interest
tax dependent on its being declared by the rentiers;15 in Italy, the
nonproductive ruling strata of the South likewise reinforced themselves as
parasites on the productive economy of the North in spite of the modernization
attempts undertaken, sometimes with US capital involved, in the 1950s. (A
related problem in Italy was the diminishing dynamism of the state sector.
Led by progressive Catholics like Mattei, the state sector had played a
crucial role in the transformation of the Italian economy and class structure.
As the once all-powerful position of the Christian Democratic Party came under
fire, however, government banks and industrial firms increasingly became part of
the defence-line, and the intensity of political struggles over appointments in
them increaed to the detriment of efficient management. 16)
In
Britain, on the other hand, successive measures prejudicing rentier incomes
(repealed only in 1979 by Mrs. Thatcher) tended to favour the active segment of
the lesser bourgeoisie (represented in the income distribution data as
'households' entrepreneurial income') instead. 17
The
mobilization of backward elements and the concomitant reassertion of retrograde
concepts of control produced specific contradictions, notably in France, where
after the modernization spurt under Giscard the full weight of authoritarian
nationalism sought to re-impose
itself. The explosion of May 1968, ten years after de Gaulle had come to power, should be considered in this light
as well.
On
the other hand, this episode had a wider significance in that it marked a
grounds well of popular aspirations elicited by the changes implied by a new
mode of accumulation. 1968-69 in all of Western Europe saw the working class the
most combative since Liberation. But whereas in the strongest economy, West
Germany, the wage slice of income for the first time since the war declined, 18
in the Southern European countries the consummation of the break- through
ofFordism through these class struggles worked to enhance the position of the
working class to a level befitting the more complex productive and consumptive
function ascribed to it by the new mode of accumulation.
Coinciding
with the crisis of Atlantic solidarity, this synchroniza- tion of the
reproduction conditions of the working classes of the various countries further
contributed to the specific European format, as well as the eventual co-determinationist
content, of the response to their militancy. In 1969, when the AFL-CIO left the
ICFTU on account of European trade unions' contacts with Eastern Euro- pean
counterparts, the ICFTU EEC unions formed the European Free Trade Union Congress
(ECFTU). In 1973, this organization was expanded to include unions from Western
European non-EEC countries and renamed the European Trade Union Congress (ETUC).
Between the two dates, the adjective 'Free' was dropped as a conse- quence of
the detente with Eastern Europe, achieved by Pompidou and Brandt. The concept on
which the ETUC was formed still was firmly capitalist, only the Atlantic Free
World concept was exchanged for the co-determination tradition of the German DGB.
This corporatist approach in the early 1970s became the criterion by which WFTU
unions were admitted to the ETUC. CGIL admission (over DGB opposition) coincided
with its agreement with FIAT on union participation in investment decisions.
This step was applauded as 'Mitbestimmung a la FIAT' by sympathetic West
German observers, but was criticized by the Italian non-Communist Left as a form
of complicity with capital. The CGIL's participation in the WCCs also worked to
pave its way into the ETUCI9 Also in 1973, the French CFDT was admitted into the
ETUC. The CGT, however, which stuck to its traditional militant line of action,
was not admitted in spite of its application.
The
'European' option in the circumstances could not but present itself as a
possible solution to some other common problems of the Western European
bourgeoisie. In his comments on Servan- Schreiber's Deft americain, Louis
Armand, a prominent leader from the French state sector who briefly had served
as the first president of Euratom, argued that Europe should unite, not in the
1950's scense of a closed bloc, but 'a la carte', to develop new
technologies to reconquer a world position.20 Nuclear energy obviously was such
a new technology, with an obviously important military dimension. For a time,
Britain, although still outside the EEC, in this respect played an important
role as a catalyst.
Britain
in this area held some of the keys to a European answer to the American
challenge, and the prospective pay-offs of its technological leverage probably
were crucial considerations in the renewed attempt to join the EEC. At a time
when the number of new orders for nuclear reactors was still sharply rising,
Britain possessed the technology of both gas diffusion and the ultra-centrifuge
methods of enriching uranium. This gave it the opportunity to add critical
weight to either the French plans for defining nuclear integration in Europe on
the basis of gas diffusion, or to join (as it eventually did in 1970) the'
Atlantic axis' linking Britain, the Netherlands, and West Germany in the
ultra-centrifuge project, with General Electic (US) in the background. In a 1969
article, Edward Heath, who eventually was to perform the feat of British entry
in 1972, argued that a British-French nuclear deterrent might be formed which
'could be held in trust for Europe'. Emphasizing his distance from the United
States by contrasting the American idealist tradition with British realism,
Heath had some warm words for Strauss's nuclear plans and also referred to the
willingness to contemplate the common deterrent (which the Tory leader had
proposed as early as 1966) on the part of the recently established government of
Presiden Pompidou.21 Events however showed that in this case, the crisis of
Atlantic integration was not compensated for by Western European unity. 22
In
fact, the general tendency towards disintegration along national lines proved
the strongest also in cases where a 'European' approach apparently prevailed.
One such area concerned the organization of a European neo-colonial preserve.
The development aid programmes of the EEC through the European Development Fund
in practice served to perpetuate the former national empires, of which the cost
was socialized among the EEC member states while the benefits continued to
accrue to the original overseers, notably France. The contraction of US
international involvement, which include by two-thirds drop in American
development aid to the Third World states associated with the EEC between 1962
and 1972, only countributed to the renewed pertinence of the original bonds.23
Within
the established EEC domain, agricultural policy had been elevated to the
supranational level in 1967 as national tariffs were eliminated. Several
ambitious plans were launched to rationalize European agriculture, aimed at
lowering food prices and setting free the hidden labour surplus on the land;
both as a complement to the policy of enhanced industrial accumulation. The new
agricultural policy, however, was jeopardized when the German mark re- valuated
and the French franc devaluated in 1969, and a solution was found in artificial
exchange rates for agricultural products which proliferated as monetary disorder
increased. Soon, not even a semblance of a common agricultural market was left
except for giant common surpluses produced at supported prices. From a class
point of view, this was still rational since farmers everywhere constituted a
key factor in the conservative bourgeois blocs supporting the inter-
nationalization policy domestically.24 At the EEC Summit in The Hague in 1969,
the French demand for artificial exchange rates was conceded in exchange for
French leniency with respect to the admission of Britain, Ireland, and Denmark,
crucial to the sphere- of-inteterest strategy pursued by Schiller. For Pompidou,
as a close collaborator commented later, the envisaged economic union also
implied the independence of the European continent. 25
The
new dynamic of European integration, and its redefined conditions (of which the
abandoning of supranationality, the price of French 'reentry' in 1966, was the
most important), was capably exploited by the Heath government (elected in 1970)
to break the domestic stalemate in British politics and provide the British
ruling class with a new international concept. Redefining the national interest
rather than remaining within the previous coordinates, Heath succeeded in
temporarily restoring bourgeois unity by the bold turn towards Europe: giving
the ruling class, as Nairn writes in a perceptive analysis of this juncture,
'new political élan and
a desper- ately needed sense of achievement and purpose'. 'What the European
question provid.ed was the perfect catalyst for such unity, subjec- tively.
Hard-pressed, in the middle of the game, the ruling class simply changed the
rules to make quite sure they stayed on top. '26
However
the European strategy, and the Heath policy for that matter, proved valuable
only for a short time. The integrative trend, amplified in 1973 with renewed
federalist emphasis, culminated in late 1974, when the Belgian Prime Minister,
Tindemans, was com- missioned to write a report on the issue. When the Tindemans
Report, recommending a common economic, foreign and defence policy, was
published a year later, Europeanism had spent itself and the report fell in a
void. Only the direct elections for the European Parliament, harmless in
themselves but useful for legitimizing the assertion of the international
interest in national economic po! even a possible strong-arm policy, or in case
of an emergency in one of the member states, were endorsed. 27
Another
dimension, further transcending the regional confines which a new international
concept of control was projected, was the area of East-West detente. If the new
Europe hardly caused concern among US policy-makers, the Ostpolitik of Pompidou
and Brandt did so all the more. The Third Force projections of de Gaulled had
been rejected by the Atlanticist bourgeoisie, for one thing, because they were
thought to weaken the Western European spirit of resistance against the Soviet
Union. When the detente policy was continued by Pompidou and Brandt, confusion
within the American ruling class was manifest - adding to a more general
uncertainty about the position of the capitalist system now that the United
States was bogged down in Vietnam and was unable to shape the course of events.
The
Ostpolitik had been cautiously embarked upon in 1967, but entered a new phase
when Brandt, at the head of a Socialist-Liberal coalition, assumed power as
Chancellor in 1969. In his concept of rapprochement with the East, Brandt
inherited the Kennedy approach. As Braunmuhl writes, the fact that the states of
Eastern Europe had maintained themselves for a quarter of a century could not
remain without consequences for anti-Communist ideology. Taking the long-term
view, instead, Brandt proceeded from the assumption that sooner or later, the
imperatives of modern production (rather than an 'awakening' of Eastern Europe
to Social Democracy), established by long-term cooperation agreements between
East and West, would force 'normalcy' upon the socialist states.
Whereas
in Kennedy's view, however, 'slowly undercutting the foundations of the Soviet
order' was to be achieved through unity, for Brandt an enlarged and vigorous
Western European Unity was the preferred means.29 Since this option presupposed
an economic emphasis of East-West relations if the Western side was to retain
the initiative, Brandt took up the heritage of Stresemam (and also was awarded a
Nobel peace prize for it). Stresemann had settled the issue of Germany's Western
borders in order to gain a free hand in the East; Brandt in the changed
circumstances had to settle the issue of West Germany's Eastern borders to do
the same.
Although
never really abandoning their mistrust of Brandt, the fraction of German capital
which in the inter-war years had attempted to develop a 'Middle-European'
strategy for expansion (the IG-Farben complex, the electrical firms, and the
autonomous internationalist element in heavy industry Krupp, GHH, Mannesmann)
were prominent in expanded trade with the Eastern European countries, and their
representatives accompanied the Chancellor and other cabinet members to Moscow
in 1970 and 1971.30
Among
the 'old German hands' in the American policy-making elite, concern over
economic advantages which in this way might accrue to their European rivals at a
critical juncture for American capitalism mixed with a more basic anxiety that
the wider interests of imperialism could be jeopardized by Brandt's policy. As
the conditions for coordinating foreign policy in an Atlantic framework
deteriorated, the Western European countries might be induced to jump to any
commercial opportunity and eventually succumb to neutralism. McCloy in 1970
declared that a 'race to Moscow' between Paris and Bonn was already in full
progress. 31
One
of the policy strategists who was able to project the Brandt policy in the wider
context of a renewed, global offensive was Zbigniew Brzezinski - David
Rockefeller's international adviser who eventually would assist in working out
the Trilateral concept for inter-imperialist relations as an alternative to the
Nixon policy. In 1966, Brzezinski had argued that the quest for autonomy by the
Western European countries should be made part of a new offensive, in which the
reunification of Europe was the ultimate objective. He argued that the
reintegration of Eastern Europe into the world market would compensate in the
long run for the temporary disinte- gration of the Atlantic alliance. Moreover,
the attraction radiating from a European Community showing a willingness to
cooperate with the East would be incomparably greater that that of a troubled
Atlantic partnership based essentially on the division of Europe. 32 'The proper
course for Washington', he recommended in 1970, '. . . . is not to warn the West
Germans against moving too fast, thereby making it easier for the Christian
Democrats to oppose Brandt. . . but to take an active part in shaping the
initiative on the East-West front'. 33
Common
to the yet disparate strategic initiatives undertaken in 1969-71 was their
departure from the conceptual basis on which bourgeois hegemony in Europe had so
far been based: American supremacy, Atlantic integration, and the Cold War, as
well as a passive attitude towards American neo-colonialist penetration in the
formerly European periphery. Significantly, the two European leaders who at this
juncture cleared the way for new policies and concepts, Brandt and Heath, in
1977 would undersign a proposal - named after Brandt - which synthesized their
international concept and extended its basic elements (i.e., reduced arms
spending anI international integration and reconciliation) to the Third World.
The Brandt Report was an obvious attempt to meet the aspirations of the
underdeveloped states for a New International Economic Order and at the same
time foster the internationalization of European capital.
2. Nixon's New Order
In
the United States, the disintegration of the Pax Americana showed itself on the
home front in a crisis of the social-imperialist consensus which soon left the
confines of the cyclical oscillations between offensive and defensive
configurations of the corporate-liberal synthesis. Backlash against anti-war and
subcultural protest, on top of fear and hatred of the black liberation movement,
mobilized segments of the white middle class behind new leaders appearing on the
fringes of the established bipartisan political order. In the support of George
Wallace, the ultra-conservative, racist governor Alabama, the traditional party
allegiances were dropped in favour of his stand on the issues mentioned.
As
far as international relations were concerned, both the frustration over
American impotence in Vietnam and the burgeoning anti-war movement fostered an
awareness among the ruling class that the corporate-liberal concept of control
had to be trimmed of some of its international implications. 'One lesson of the
last fifteen years most conspicuous in the Vietnam War', Nixon's later UN
ambassador Charles Yost wrote in October 1968, 'is that the capacity of even the
strongest power to intervene effectively in other states has been eroded by
time, space and history'.34 A few months later, Nixon inaugurated his Presidency
with an express reference to the need to cut back on missionary idealism.
'America has suffered from a fever of words, from inflated rhetoric that
promises more than it can deliver', he declared in his Inaugural Address of
January 1969. 'After a period of confrontation, we are entering an era of
negotiation. Let all nations know that during this Administration our lines of
communication will be open. '35
In
the tradition of Eisenhower, Nixon presided over a calculated demobilization of
public opinion as far as America's mission in the world was concerned. He sought
to consolidate a domestic, and basically defensive, alliance of the bourgeoisie
rather than preserving the offensive configuration of the Kennedy period. Still
the administration was well-stacked with prominent corporate-liberal figures.
With established corporate lawyers William Rogers and Elliott Richardson at the
State Department, David Kennedy of the Continental Illinois Bank at the
Treasury, Morgan director George slhultz at the Labour Department, as well as
lesser figures trusted by billionaire aristocracy like Melvin Laird at Defence -
Nixon seemed assured of sufficient Establishment backing. The continuation of
stable ruling-class influence in the Executive was also enhanced by the support
given Nixon by renowned internationalists like Arthur Watson of IBM, who had
turned away from the Johnson regime in protest against the enforcement of the
balance-of- payments programme (Nixon made him Ambassador to France).
However,
as domestic labour unrest grew and international problems accumulated without a
comprehensive American response, the pressures increased from the less
established and more iconoclastic elements in the administration for a
fundamental refor- mulation of policy. With respect to labour, Nixon's
appointment of Jim Hodgson of Lockheed to the Labour Department after George
S{hultz's brief incumbency aimed at consolidating the last bulwark of capital-labour
agreement, the defence industries. 36 Special counsel Charles Colson, lawyer of
the Teamsters Union and Grumman Aerospace, carried proxies from the same
quarters.
The
reactionary law-and-order entourage of Nixon, headed by the President's law
partner John Mitchell as Attorney General, with Vice-President Agnew as
cheer-leader, was reinforced dramatically when former Texas governor John
Connally, a New Right convert from the Democratic Party and a lawyer with
extensive relations to Texas oil and construction companies, replaced David
Kennedy at the Treasury in 1970. Connally; together with Ralston Purina manager
Earl Butz, who became Secretary of Agriculture in 1971; Peter J.Peterson,
chairman of Bell & Howell, who headed the cabinet-level Council on
International Economic Policy (and became Secretary of Commerce in 1973); and
Henry Kissinger, the National Security Adviser who bypassed Secretary Rogers on
all major issues and replaced him in 1973; supervised the turn to American
unilateralism terminating the era of Atlantic integration.
Kissinger's
balance-of-power approach to international relations (reflecting the
preoccupations of his patron, Nelson Rockefeller) was particularly appropriate
in the defensive situation which the United States had been forced to assume. On
the other hand, the state-centred diplomatic paradigm that Kissinger adhered to
dimmed his perception of global interdependencies and the many-layered class
conflicts running through them. Only with respect to East-West relations was his
outlook, placing inter-state conflict and diplomacy over transnational
relations, temporarily useful for the overall interests of capitalism. On both
the North-South an inter-imperialist axes it collided with the powerful forces,
eventually swept Nixon from the scene in spite of his laslide victory in 1972.
The
first element of the new American foreign policy, détante, was pursued from the
start of the Nixon period. Congressional hearings in 1968-69 linked export
interests with the more transcendent goal of influencing the internal
development of the socialist countries. The new Export Administration Act of
1969 removed the 1962 amendment extending the embargo to civilian goods in an
attempt to catch up with the growth of Western European trade with Eastern
Europe (which in the last ten years had more than tripled to a level 20-times
the value of US trade with that area in 1967-69).37 For Kissinger, expanding
trade with the socialist countries was seen as the means to obtain leverage on
the Soviet Union and China with respect to Vietnam; Nixon's trips to the two
countries in the election year 1972 were accompanied by a simultaneous show of
force in Vietnam in order to demonstrate US strength. The subordination of the
Sino-Soviet split to American diplomacy clearly appealed to the internationalist
bourgeoisie, but the underwriting of the Soviet- European agreement on postwar
borders in Helsinki in 1972 was criticized as weakness. 38
The
second dimension of the new foreign policy concern the economy and, more
particularly, the rapidly deteriorating trade balance. In
1970, the Nixon administration embarked upon an expansionist policy
meant to bolster the productive element in the capitalist class and mollify
organized labour. Both corporate and small capital incomes improved relatively,
and even the dramatic decline of productive capital in the profit-distribution
process was temporarily reversed. Its price, however, was rampant inflation as
the fiscal and monetary brakes suddenly were released. With the exchange rate of the dollar fixed, inflation quickly spread
across the Atlantic.
The
unilateralism underlying this policy, although not yet fully unfolded, caused
grave concern in the traditional East Coast centres of Atlanticism. The New
York Times warned early in 1971 ‘that a return to protectionism, capital
controls, unilaterally fixed exchange rates and all that would be a tragedy for
the industrial nation of the West, both economically and politically'.39 In May,
the West German government stopped supporting the dollar. With the mark floating
upward, Connally and Federal Reserve Chairman Burns flew to Munich to address a
bankers' meeting and exhort the European states to assume a greater part of
'world responsibilities'. European reactions, however, were sceptical and the
West German Minister of Economic Affairs Schiller ostentatiously stayed away
from the meeting.
In
August, the Nixon administration unilaterally decided to suspend gold
convertibility of the dollar. It also introduced a 10% surcharge on imports.
These measures, which bluntly terminated the era in which the United States
assumed responsibility for capi- talism as a whole, and thus may be seen as the
single most important date marking the end of Atlantic integration under
American hegemony, were crucial in mobilizing the internationalist elements on
both sides of the Atlantic. Of the remaining internationalists in the Nixon
administration, Assistant Secretary of State Tresize, Ambassador to the EEC
Schaetzel, and C. Fred Bergsten, assistant to Kissinger, left their posts in
protest against the Nixon policy. 40
The
apparent unwillingness to mend Atlantic relations made the Nixon measures all
the more detrimental to Western unity. At a meeting of the Group of Ten in
London in September, Time reported that Connally 'put on a rare show of
obstinacy'. Confronting the European finance ministers with proposals 'too
arrogant to be believed', the United States was apparently ready to risk a trade
war with the rest of the world.41 Since the capitalist countries had a common
interest in preventing a collapse of world financial order, however, an
agreement was reached in December 1971 at the Smith- sonian Institution in
Washington, which introduced the system of flexible exchange rates that lasted
until 1973.
Following
Nixon's spectacular trips to Peking and Moscow and his landslide re-election in
1972, relations with Western Europe, which at this juncture passed through a
brief period of renewed self-confidence, further deteriorated. As was revealed
afterward, Kissinger and Peterson in 1972 worked out a strategy of linkages to
force Western Europe into compliance with US preferences in international trade.
By threatening to withdraw the American nuclear guarantee, Kissinger and
Peterson thus expected to create disunity and provoke old rivalries between West
Germany and France, un- dermining European unity and power.42 On 23 April 1973,
Kissinger at a meeting of newspaper editors in New York inaugurated the 'Year of
Europe' and announced Nixon's intention to work out a new Atlantic Charter
before the end of the year. On this occasion, Kissinger outlined his concept of
the United States as the power with global interests and responsibilities, while
Western Europe was merely a regional power. Afterwards, he apologized for a
statement in which he called into question the legitimacy of the Western
European governments, but relations with the European states were damaged beyond
repair. In May, Pompidou and Heath rejected the offer to meet with Nixon in the
framework of a conference of Atlantic leaders as 'premature'.43
The
Nixon/Kissinger/Connally policy destroyed the Atlantic constraint and
precipitated the crisis of the mode of accumulation which had developed under
it. In the monetary field, the unilateral dollar policy provided the liquidity
for a global restructuration of capital and at the same time put the United
States at an advantage. As Parboni writes, 'The system of floating exchange
rates also eliminated any need for the United States to control its own
balance-of- payments deficit, no matter what its source, because it was now
possible to release unlimited quantities of non-convertible dollar into
international circulation'. 44
The
October War in the Middle East provided the Americans with an opportunity to
force compliance with the new American international concept on the part of all
Western European countries except France. At the same time, it made it possible
to shift a huge load of dollars from the European oil-importing states to the
OPEV states, who for lack of an alternative continued to bank on American and
dollar supremacy. At the time of the Marshall Plan, John D. Rockefeller had
declared that to the degree Western Europe shifted from a coal to an oil
economy, the Middle East valve would be turned into the control panel of Western
European affairs. 45 Now this son's adviser was in a position to turn
some switches on this panel. Capitalizing upon Arab anger over NATO support for
Israel and the temporary boycott raising oil prices, the United States obtaine a
crucial competitive advantage over Western Europe due to its lesser dependence
on OPEC oil. At the same time, it augmented its financial power through the
recycling of surplus dollars from Europe into the Atlantic circuit, through the
Euro-dollar market or straight to United States. Of the $60 billion OPEC surplus
channelled abroad almost one-third according to Wall Street bankers was
deposited or invested in the United States by 1974.46
The
Disintegration of Corporate Liberalism
The
crisis of Atlantic integration was ordained by objective changes in the
structure of the world economy. Central to these changes was the interruption of
the Atlantic extrapolation of US corporate liberalism and its tendential
disintegration into its original components: liberal internationalism and state
monopolism. The equalization of accumulation conditions on both sides of the
Atlantic disorganized the previous complementarity between the two positions.
The Atlantic economy as a distinct entity 'dividing a common fund of incremental
energies between its regions in varying proportions from time to time'
(Phelps-Brown), which in this sense had allowed the runaway internationalization
of American Fordism, disintegrated as American hegemony was recast into a
unilateralist framework and the scope of the international circuit of finance
capital widened. This development entailed the breakdown of the monetary and
trade arrangements established between 1944 and 1947, and, more fundamentally,
of the agreement between the American and the European bourgeoisies that their
class hegemony rested on the observance of these arrangements and the underlying
Atlantic power equation.
The
disintegration of corporate liberalism developed along two axes: (1) the loss of
industrial capacity and the concomitant disorganization of reformist
working-class unity in the face of creeping unemployment; and (2) the
hypertrophy of ('stateless') money- capital in the international circuit of
capital, interacting with a re- surgence of money-capital in the national class
configurations. Both developments converged to resurrect a reactionary-liberal
tendency in national politics.
The
Atlantic extrapolation of the New Deal presumed wage differentials justifying
the transfer of production from the United States to the Old World. At the
aggregate level, these differentials narrowed quickly from the second half of
the 1960s onwards. In Table 2 overleaf, gross wage costs in the Western European
coun- tries are taken as percentage of US gross wage costs.
From
this table, it can be seen that the aggregate wage cost differentials between
the USA and some main recipient countries of US direct investment were
eliminated or sharply reduced between 1970 and 1975. However, important
structural changes affecting the working class took place simultaneously. The
acceleration of real accumulation in Western Europe in the second half of the
1960s tended to exhaust the reserve army of labour, thus encouraging a wave
of immigration of foreign workers from the Mediterranean region. By 1969, France
and West Germany each had about 3 million foreign workers inside their borders,
out of a total of at least 10.7 million for nine industrial countries in
Northern Europe.41
The
differentiation in the Western European working class which resulted from this
influx of foreigners complemented the equalization of the reproduction
conditions of the privileged segment of the workers in the Atlantic area through
the WCCs and (more diffusely) the successive 'European' trade-union
internationals modelled a the organizing principles of the German DGB and
strongly under its influence. Throughout the North Atlantic area, this
privileged segment of the working class, organized on a tendentially
transnational 'business union' pattern and distributing benefits of transnatij
company bargaining within their class, was matched by a subordinate layer of
immigrant workers.
This
bifurcation which brought the European countries on par with the United States,
activated the entire inventory of racial prejudice, hitherto latent and largely
exteriorized through social imperialism. The tendency to promote indigenous
workers into jobs above their qualification level, and the corollary segregation
of immigrants in low-paid manual jobs whatever their talents reinforced the
existing identification of foreigners with 'dirty work' and fostered chauvinist
sentiment among better-paid indigenous workers. 48
Between
these two extremes, a wide range of unemployed, underemployed, and otherwise
'marginal' workers developed in response to the combined effects of deflationary
policy and the growth of runaway internationalization of Western European
capital. Burgeoning direct foreign investment from the continental Western
European countries and other newcomers reduced the world share of Anglo-American
capital in total direct foreign invest- ment from two-thirds in 1970 to one-half
in 1978. This investment notably was directed at remaining pockets of cheap
labour within or adjacent to the metropolitan areas. From about 1970, employment
in manufacturing industries in the traditional centres decreased, while (still
within the metropolitan countries) the number of workers employed in new plants
created by relocating production increased; rates of exploitation in the latter
were higher, and wages below, the corresponding levels in the traditional
industries and areas. 49
It
was Ford which in 1969 started
organizing its European net work of affiliates with an eye to exploiting these
differentiations, using a system of 'double-sourcing' (producing components and
parts always in two different countries) in order to cut down trade- union
power; European carmakers tried the same by pooling resources, while General
Motors even achieved a world-wide intra- company division of labour. Fordism
however suffered decisively, as cost-cutting on wages cut into the potential
mass market for automobiles at the same time.50
The
investment flowing into the periphery for obvious reasons did not find such a
mass market either. As Lipietz shows, investment in apparently booming
peripheral areas like Singapore and Hong- Kong, mostly involved the export of
Taylorism rather than Fordism, and was concentrated in super-exploiting women in
tex- tiles and electronics components production. Where an industrial
productivity/mass market articulation seems in the offing, as in Brazil, it is
constricted by the fact that the organized mass-produc- tion workers constitute
but one segment of the working class, while a Taylorist secondary segment
(notably women workers), and a rural subproletariat living under conditions
approximating slavery , are also part of the working-class structure. Any
attempt to adjust the form of bourgeois rule to the requirements of Fordism and
the first category of workers would jeopardize the conditions for con- trolling
the remaining two segments. Thus the social whole is chained to a vicious circle
of authoritarianism and crisis. 51
The
deflationary policies of the metropolitan countries, however worked to foster
tendencies in the same direction. Although clearly not as extreme as in the case
of Brazil, the trend is unmistakable. In most metropolitan countries the
contours of a new working-class stratification are visible: (1) a privileged but
too small segment of 'compromised' workers; (2) an intermediate segment of
under-employed and underpaid part-time and irregularly ell workers, struggling
to resist their submersion into the (3) sub-proletariat of immigrants and
permanently unemployed.
The
quest for a new concept of control by the metropolitan bourgeoisie, which began
in the late 1960s (and in the United States notably during Nixon's New Economic
Policy) not only implied an across-the-board mobilization of the bourgeoisie,
but also the mobilization of both the stably employed workers and the segment
actively selling their labour-power from a less secure position of part-time and
irregular work. In the course of the 1970s, the basis for the new concept
further cyrstallized around the introduction of new technologies in production
and specific new consumer goods. While incapable of supporting a self-sustaining
class compromise like Fordism because of their limited economic weight, these
technologies, notably micro-electronics, yet have further shaprd the new
individualism 'on the supply side', while exacerbating international rivalry
along a narrow range of hoped-for industries.
3. The
Resurgence of Money Capital
The
demise of the Bretton Woods system of stable exchange rates after 1971 forced
the major capitalist states to subordinate every aspect of economic policy to
the defence of the currency. The American turn to outright unilateralism in
trade and monetary affairs in 1971 was reciprocated by an active Western
European currency policy, combining regional ultra-imperialist (the European
monetary 'snake') and national unilateralist elements. Uder the new conditions
of imperialist rivalry and monetary instability cut-throat competition for the
remaining markets was exacerbated by competitive devaluations. As Parboni has
argued, Americal surpremacy henceforward rested on the fact that it could resort
to such devaluations without seeing them eroded again by inflation due to more
expensive imports. On the other hand, as private intenationall dollar liquidity
grew explosively after 1971, involuntary credit from the rest of the world not
only financed the American deficit, but all countries turned to the booming
capital markets to finance their deficits now that the regime of floating
exchange rates suspended the central banks' function of intervening in foreign
money markets. 52
The
financing rather than balancing of deficits opened enormous markets for bank
capital, and eventually, for all other forms of money-capital as well. The
liberation of banks from the Keynesian controls imposed on them in the 1930s on
both sides of the Atlantic still was part of the unifying trend of the mid
1960s, spurred on by the Kennedy offensive. Bank capital was encouraged to
insert itself into the emerging Atlantic circuit of finance capital, both in the
United States and, as part of the European response to the American challenge,
in the various European countries.
In
1966, French banks were freed from the rules separating banking functions.
Henceforward, commercial and deposit banks, which in France existed next to a
separate category of long-term and medium-term credit banks, were allowed to
expand into each other's spheres of activity. 53 The position of German banks,
unparalleled already given their own size, the size of their industrial and
commercial holdings, and the fact that they held proxy rights for more than half
of all share capital in circulation in West Germany (54% in 1967), was still
further reinforced in this period. In 1967, the last major constraint imposed on
German banks, the interest decree of 1965, was repealed. 54
In
the United States, banks in 1968 began reconstituing themselves into one-bank
holding companies in the sense of the 1956 legislation. In 1969, 34 of the
top-100 US banks had taken this step. In 1970, legislation was enacted which
further obliterated New Deal measures aimed at the separation of bank functions.
One-bank hold- ing companies henceforward were allowed to own property outside
the financial sphere (to which their holdings had still been confmed under the
1956 law). The new law, although still containing regula- tory elements,
typified the accelerating insertion of national capital into the international
circuit. 'The holding-company movement', Fortune wrote in 1969, 'is the
latest and most dramatic evidence of a long, gradual transformation of banking
from a custodial function to a competitive industry'. 55 Against the constricted
role of bank capital in the Keynesian era, the bankers now again saw the liberal
light on the horizon. As one US banker commented on the holding-company trend,
'One cannot help being struck by such a development, which is bringing US back
to the times of the London Merchant Bankers, who established their reputation in
import/export, shipping insurance, commodities, stock exchange, and by money
business, : the same token brought money, business, and fame to the City.56
The
actual City could not but thrive in the context of such a restoration of the
conditions of its original prominence. Apprently unharmed by the 1967
devaluation, British bank capital shifted its activities to the expanding
Euro-dollar market. Already constituting a would-be 'off-shore island' as far as
British banking regulations were concerned, the City's foreign transactions
actually boomed when the pound fell. The liberalization of bank capital
culminated in a banking reform in September 1971, which allowed British banks to
develop into finance capital directly, thus creating capital groups which gave
the City all the assets and experience to capture the pivotal position in the
emerging Atlantic circuit and to becol main financial centre of the EEC.57
In
the other countries, the pattern was the same. Belgian commercial banks
(separated from the holdings in the 1930s) were given the right to acquire
corporate equity in this period. In the Netherlands, a law of 1965 already
restricted central bank supervision of credit transactions to a limited number
of credit forms. In 1967-68, credit ceilings were abolished altogether in order
to allow bank capital to spread its wings. Only in Italy did it take until 1978
before the government moved to repeal the 1936 legislation on holding- company
functions of the banks. 58
In
the changing circumstances of the 1970s, however, the freedom accorded to bank
capital led to the restoration of a separate circuit money-capital rather than
to an integrated circuit of finance capital, as industrial firms, too, turned
towards the financial markets, not only to protect their cash reserves from
currency devaluations, but increasingly also to invest them in financial
ventures as quasi-bankers. 59 The banks, eager to exploit the new possibility
for financing operations through the Euro-dollar markets, formed 117
international consortia between 1969 and 1974, whereas before, only ten were in
existence. 60
As
Hankel explains, the financing needs of the new international circuit of
money-capital, mostly in US dollars, have turned the liberally produced American
currency into a scarce good, pushing up its price accordingly. Interest rates at
the same time have tended to rise due to the risks of refinancing international
debts. To speak of'black holes' in this connection, into which money capital
disappears,61 might be misleading though, for the revenues of the soaring money
economy are fairly well traceable. In the profit-distribution process of the
main North Atlantic countries, bank capital, or capital engaged mainly in
circulation, was able to increase its share of total profits dramatically from
the very moment bank liberalization began. It has continued to bring in a high
share ever since, whereas productive capital has lost weight correspondingly.
A
corollary development took place at the level of rentier incomes. 'For about a
quarter of a century after the Second World War, the Keynesian inflationary gas
chambers were employed to carry out Keynes's recommendation for the Euthanasia
of the Rentier', Morris writes. 'But starting some ten years ago, the gasping
rentiers began to fight back, and in the past few years have made a comeback
worthy of description as the Revenge of the Rentier. '62
Dividends
and interest in the United States in 1950 amounted to a 8.1% of total personal
income; in 1982, this had risen to 17.1%.63 The mass of savings also was
siphoned directly to new companies in the dynamic hi-tech sectors through
'venture capital' centralized by special investment firms. Attracted by the
whirlwind successes of these companies and aided by a lowering of the capital
gains tax, the amount of money supplied by savers to US investment firms in 1978
already was equal to the total amount put at their disposal during the entire
1966-1977 period.64
In
the course of the 1970s, the rentier perspective reasserted its hegemony
throughout the North Atlantic area. Anew, aggressively orthodox liberalism
pitted the propertied classes against the Keyesnesian welfare states and the
mode of accumulation of which they were the complement. Interacting with the
imperatives of international monetary disorder, which tendentially forces governments to
apply sustained deflation,65 the 'monetarist' ruling class finds its militant
liberalism corroborated by the new individualism pervad- ing the remaining
'productive' classes.
A
New Empire of High Finance
As
bank capital gravitated to a dominating position in the world economy during the
1970s, the banks turned into the nodal points of the national industrial
structure as well. In some countries, like Germany and the United States, this
had been the case all along, but in most other countries, the articulation of
money-capital and pro- ductive-capital into finance capital did not run along
national lines. It was only under the specific conditions of the new prominence
of bank capital and the exacerbation of competition and rivalry that banks
became real nerve centres of integrated financial groups and allowed the
identification of such groups (defined as capitals joined by common policies,
ownership links, and joint directorates66) with specific international concepts
distinguished in this study.
It
should be stressed that as banks moved into the intemat arena in force during
the late 1960s, the difference in their backgrounds lost significance compared
to the new equality bestowed on them by the perfect anarchy of the international
money and capital markets. Bank strategy, moreover, aimed at eliminating
weaknesses in regional and sectoral jurisdiction by compensatory merge
cooperation agreements. 67
Yet
the liberalization of the banks, inaugurating the shift to an international
credit economy and enhancing the role of bankers and finance capitalists in the
Atlantic network of interlocking directorates 68 extrapolated the national
fractionation of bank capital to the international level. In the major bank
consortia formed in Europe in 1970-71, ABECOR and EBIC, the lineages to the
liberal-internationalist and the state-monopoly context, respectively, are
clearly visible. In ABECOR, banks whose international spread and connections
mainly took shape in the context of liberal internationalism and more
particularly, in the context of the Pax Britannica and the Atlantic circuit of
money-capital, have joined ranks: ABN, Baque de Bruxelles, Dresdner Bank, and
Barclays (the French and Italian participants cannot be identified in these
terms). In EBIC, on the other hand, banks which in the interwar years attuned to
the state-monopoly tendency and henceforward tended to reproduce an outlook
typically stamped by their experience within the compartmentalization of the
Atlantic economy and the maintenance of exclusive spheres-of-influence, grouped
together: Deutsche Bank, Midland Bank, the Banca Commerciale Italiana, AMRO, the
Be Societe Generale and the French Societe Generale. Whereas the banks of the
former group tended to be close to the Atlantic Union tendency in the European
bourgeoisie on account of their dependence on US imperialism (expressed for
instance in the banks plantation in Latin America), the EBIC banks more nearly
fitted i continental European, 'Euronational' or at most, 'Atlantic Parnership'
position. This pattern seems to be corroborrated if we review the available
evidence on national financial group structure.
Thus
in West Germany, the Dresdner Bank and the Deutshe Bank fitted the Atlantic
Union and the Atlantic Partnership profiles, respectively. The Dresdner Bank in
1970 was linked by three more directors to such traditional bulwarks of
Atlanticist liberalism as August Thyssen, Metallgesellschaft, and AEG. The
Deutsche Bank, on the other hand, was linked (by three or more directors) to the
'autonomous' electrical concerns, Siemens and Bosch, the chemical and rayon
groups ofBASF and AKZO (the Netherlands), and to Daimler Benz and Hoesch steel.
Compared to this, the few atypical connections pale in significance.69 In terms
of regional spread, the Atlantic and European orientations are likewise
significant. On the basis of the foreign affiliates listed in the 1972-73
edition of Who Owns Whom, one finds that the sphere of interest of the
Deutsche Bank outside Europe is preponderantly in Africa and Asia (21 out of28
foreign affiliates outside Europe), whereas the emphasis of the Dresdner Bank's
international activity is on Latin America, where 16 of its 21 non-European
foreign affiliates are to be found.
This
pattern extends to the Netherlands. The ABN shares with the Dresdner Bank a
distinct orientation towards Latin America, setting it apart from its rival,
AMRO, which has no Latin American affiliates. In a study of Dutch financial
group structure in 1962, the NHM and the Amsterdamse Bank had been still
considered as one group on account of their colonial interests and relations
with the much more important Royal Dutch Shell group. In 1964, they merged with
the Twentse Bank and the Rotterdamse Bank, respectively. As ABN and AMRO, the
original pertinence of their liberal-internationalist and the continental
orientations reasserted itself. In the interlock network of 1969, Fennema found
an ABN orbit composed of Heineken, KLM, Robeco investment, and a few
foreign-owned firms, whereas the AMRO group combined AKZO, two big insurance
firms, and state- supported heavy-industry enterprises. 70
Turning
next to Britain, Henk Overbeek's analysis of joint directorates in 1976 shows
that the clearing banks and S.G. Warburg (a relative outsider among the merchant
banks) on the one hand, and the big industrial corporations on the other, became
involved in a belated fusion into finance capital, yielding a distinct
bipolarity between bank groups. 71 The groups which according to his analysis
were emerging in this juncture again showed a general consistency between their
historical background and current international orien- tation. The least tightly
knit of these groups, with a pronounced liberal-internationalist profile, is the
group with Lloyd's Bank and S.G. Warburg at its centre. In line with the other
Western European banks identified as Atlanticist, Lloyd's (through its
subsidiary Lloyds & Bolsa) is strongly represented in Latin America and,
more generally, is a highly internationalized institution, which also applies to
S.G. Warburg, one of the pioneer banks of the Euro-dollar market. Compared to
Barratt Brown's findings for 1966, 0verbeek's conclusions point to a
centralization of hitherto more scattered;connections centering on merchant
banks like Lazards and Schroders into the orbit of Lloyd's and Warburg. The
presence of Morgan Grenfell in this group further corroborates the Atlantic
orientation. 72
In
sharp contrast, the Midland Bank, which is at the centre of the
sphere-of-interest group, lacks the international affiliations characterizing
its opposite number. This group, which is much more tightly knit (particularly
if the insurance companies are left out), is composed of, on the one hand,
companies likewise belonging to the interwar generation in terms of their rise
to prominence (BICC Dunlop, Unilever, and Rank Organization); and on the other,
of a few corporations of imperial lineage like Shell and Rothmans.
In
Belgium, the situation is complicated by regional division and the
interpenetration with French capital. In Wallonia, which as a region was
predominant in the liberal era, the Brussels holdings and their banks
constituted a liberal bulwark against the Flemish upstarts who advanced notably
in the interwar years. Within each region however, a cosmopolitan bank may be
distinguished from a more continental European one. Basing ourselves on a recent
overview,73 it is possible to assert, with due caution, that the Banque
Bruxelles- Lambert in Wallonia and the Bank van Parijs en de Nederlanden, the
Belgian affiliate of Paribas, in Flanders are cosmopolitan and Atlantic banks;
whose respective counterparts are the Société Generale and the Kredietbank. Fortune
in 1969 saw Belgian capital polarized between the semi-official Societe
Generale controlling its African mineral empire and the deficitary Walloon steel
industry, and the cosmopolitan Boël, Solvay, and Janssen financial aristocracy
with the Bruxelle-Lambert group, but also stressed the many overlaps between
them.
If
the picture for Belgium is far from unequivocal, the French situation is
contradictory. At first sight, the bipolarity of French capital around rival
bank groups seems to conform entirely to the presumed antinomy. As Morin's
comprehensive study of
1974
shows, French finance capital at the outset of the decade became polarized
between the Cie. financiere de Suez et de l'Union des Mines (which in 1972 got
control of the Banque de l'Indochine) and the Cie. financiere de Paris et des
Pays-Bas (Paribas). With its background in French colonial enterprise, Suez and
its group (S: Gobain-Pont-a-Mousson, Lorraine steel, CGE, mJin, and others
constitutes the liberal-internationalist pole, while Plribas (linked to Pèchiney,
northern steel, Hachette, and Schlumberger) is the sphere-of-interest
counterpart of state-monopolistic lineage.
Of
the characteristics setting the two banks apart, Morin contrasts the industrial
orientation of Paribas, with its receptivity to state planning, to the financial
outlook of Suez. Internationally, Paribas in 1972 had invested 48% of its
foreign portfolio in Europe, 23% in Africa, and 16% in North America; Suez, on
the other hand, has mainly invested in the formerly French periphery (49% of its
foreign investments). Owned partly by a US insurance group and the British
state, Suez has functioned more as a relay of foreign capital, while Paribas
represents the autonomous thrust of French fmar1ce capital into the
international circuit. 74
From
this position, Paribas recently, however, has emerged as the more aggressively
internationalist bank. Establishing links with the Bank of America (US associate
of ABECOR), S.G. Warburg, and the Bruxelles-Lambert group in Belgium, Paribas
has clearly embarked on a cosmopolitanism of its own, retaining its association
with Lazard Freres, but breaking loose from earlier associations with Rothschild
(which gravitated, instead, to the Suez alliance). Neuflize-Schlumberger-Mallet,
one of the main houses of the formerly Protestant high finance, resisted being
taken over by Pari bas in 1972 and passed under the influence of the Dutch ABN.
75
In
Italy, the Vatican Bank (Institute
for Religious Works) because of its freedom from Italian currency regulations
became a key relay for the financial interests activated by the swelling
international money economy. Next to its established orbit in Italy - which
centred
on the Immobiliare real estate group, the Banco di Roma, and the Banco di Santo
Spirito, and which interlocked with the orthodox liberal Milan group of Pesenti
(Italcementi) and Falck new aggressive partners of the Vatican came to the fore.
These newcomers, notably Michele Sindonh, who was on the board of a host of
Italian subsidiaries of Ameritan firms besides managing his own Banca
Finanziaria Privately (linked to Hambros in Britain and Continental Illinois in
Chicago), and Robert Calvi of the Banco Ambrosiano, the biggest private bank in
Italy, worked closely with the Vatican Bank's new manager, the American bishop
Paul Marcinkus, and shared his ruthless business approach. 76
Their
joint foray into international speculative finance soon assumed criminal
proportions as it linked up domestically with a terroristic tendency in the
liberal fraction, of which the international financier and power-broker, Lucio
Gelli, was the central figure, and the masonic lodge P2 in 1981 was
exposed as the main organizational centre. The impact of the new hegemony of
international finance in Italy hence became marked by a wave of terrorism, which
in 1970 included the murder of the conciliatory Aldo Moro and, according to a
recent account, that of Pope John Paul I, before it devoured several of the
financial tycoons themselves. 77
The
American banks traditionally at the centre of the most powerful US financial
groups and, in 1970, also at the centre of the Atlantic network of interlocking
directorates, J. P. Morgan, Chase Manhatten, and Chemical Bank, owed their international position
to American hegemony rather than to their own international acivities. In 1970
their foreign earnings ranged from 22% to 25% of earnings for Morgan and Chase,
and 13% for Chemical Bank. In 1976, they clearly had joined the movement into
the new international credit economy. By then, the profit share of their
international activities was 78% for Chase, 56% for Chemical Bank, 53% for
Morgan. In the process, their prominence in the Atlantic network of interlocks
diminished (of the Morgan group's four entries on the 1970 list of thirteen most
central firms, only the bank itself and US Steel remained in 1976/78), while
competitors cropped up both from abroad and from the American hinterland.
Regional American banks and financial groups generally had not achieved the
degree of internationalization necessary to take advantage of the opportunities
offered by the dramatic growth of the international capital markets. Therefore
the California-based Bank of America and Western Bancorporation tried to
compensate for the dominant position of their New York competitors by joining
the European consortia from which Morgan and Chemical, and to a lesser extent
Chase, largely kept aloof. The First National City Bank, which already made 40%
of its profits abroad in 1970 and 72% in 1976, but was not specifically oriented
to Europe, likewise was more active in the consortia than the three banks of the
Atlantic 'Establishment’.79
The
pertinence offinancial-group structures for international class formation,
however, resides not in their stability as such, but in the coincidence of
economic restructuration and political coordination. Thus, in the 1954
Declaration of Atlantic Unity, capitalists from both sides of the Atlantic
elevated their joint economic interests to a common political stand. But when
Nixon's policies destroyed the foundations of Atlantic integration, and the
Trilateral Commission was formed in an attempt to reassert the international
interests and work for an ultra-imperialist solution, it did not simply bring
together the same men.
Apart
from the inclusion of a Japanese membership reflecting the (still timid)
integration of Japanese capital in the international network of joint
directorates after 1970,80 the companies aspiring to take part in shaping the
emerging world system came from both the established set of Atlantic
internationalists and the sphere-of-interest groups now claiming a global role.
Thus, from the United States, next to the old guard of the Atlantic economy like
Chase, Exxon, Lehman Bros., Coca Cola, and Brown Bros., Harriman; were
runners-up like the Bank of America, Kaiser and Bechtel from California,
Continental Illinois and Sears Roebuck from Chicago, as well as Hewlett-Packard
and the Wells Fargo Bank. On the Euro- pean side, the established bulwarks of
liberal interntionalism like Thyssen, the Banque Lambert and the UCB of the
Belgian Jannsen family, AGP insurance (Indochine/Suez), Lloyd's, S.G. Warburg,
and Barclays, found themselves in the company of the former prota- gonists of
the Partnership policy like Unilever, Dunlop, Shell, Otto Wolff, FIAT,
Montedison, and the Kredietbank; or even of a bank group ofGaullist credentials
as Paribas.81
The
redeployment of the internationalist interest, however, rested on an industrial
base rapidly losing its regional cohesion. As the international circuit
one-sidedly developed into the direction of a unified circuit of money capital,
the dividing lines among the Tri- lateral firms in terms of historical
antecedents became less significant than the fact that, at least in the American
case, the big mass- production industries were not on the list. Thus on the
American side, the attempt to launch another round of constructive inter-
nationalism lacked the essential transmission belts along which a new offensive
could be fed back into domestic expansion and social imperialism. 82