Sandra Halperin, International Relations and Politics, University of Sussex s.halperin@sussex.ac.uk
.
. . .The world, even if it is no longer a God, is still supposed
to
be capable of the divine power of creation, the power of
infinite
transformations; it is supposed to consciously prevent
itself
from returning to any of its old forms; it is supposed to
possess
not only the intention but the means of avoiding any
repetition....
The
recently attained preponderance of the scientific s
spirit
over the religious, God-inventing spirit leads us to the belief
that
the world, as force, may not be thought of as unlimited, that
the
world lacks the capacity for eternal novelty. By rejecting the
belief
in the 'beyond', the limitless, the transcendental, we reject
also
the belief in the capacity for eternal novelty.
Friedrich
Nietzsche, The Eternal Recurrence.[1]
If
the French Revolution were to recur eternally, French historians
would
be less proud of Robespierre. But because they deal with
something
that will not return, the bloody years of the Revolution
have
turned into mere words, theories and discussions, have become
lighter
than feathers, frightening no one. There is an infinite difference
between
a Robespierre who occurs only once in history and a
Robespierre
who eternally returns, chopping off French heads.
Milan
Kundera, The Unbearable Lightness of Being.[2]
‘It is one of the most widespread and characteristic
beliefs among students today,
that our times are so unique, so unlike anything which
has been known before, that
study of the past is of no value, is irrelevant’
(Dumoulin 1973: vi).
The
eminent historical comparativist, Karl Polanyi believed that the great
transformation from free unregulated markets to welfare states represented a
permanent change, both in the nature of the international system, as well as in
its constituent states. But Polanyi did not live to see the beginning of the
rise, once again, of the ‘unregulated’ market. Had he done so, he perhaps would
have seen the rise and demise of Europe’s nineteenth-century system, not as a
once-and-for-all occurrence, but as part of an on-going struggle over the
distribution of costs and benefits of industrial capitalism. It is a struggle,
this paper will argue, that continues today.
Though
the free market and the laissez-faire state gave way, in varying
degrees, to regulated markets and interventionist states after World War II, the
liberal international order survived. The hybrid system that this created has
been characterized as one of ‘embedded liberalism’ (Ruggie 1982).
It
was, in fact, Polanyi’s analysis of Europe’s nineteenth century market system
(in The Great Transformation, 1944) that inspired the notion of markets
as embedded and dis-embedded. Polanyi argued that, before the rise of the
unregulated market system at the end of the eighteenth century, exchange
relations were governed by principles of economic behavior (reciprocity,
reallocation, and house-holding) that were ‘embedded’ in society and politics.
At the end of the eighteenth century,
however, states began to institute changes that formed the basis of the
dis-embedded capitalist development that characterized Europe’s nineteenth
century industrial expansion.
The collapse of the nineteenth century system and the conclusion of a ‘compromise’ between
capital and labor, led to the re-embedding of European economies after
1945. Welfare reforms partially de-commodified labor, and by means of market
and industry regulation, investment and production were made to serve the
expansion and integration of national markets. Now, however, a campaign to
promote the dispersal of capital investment and production to foreign locations--the
current ‘globalization’ campaign--is seeking to reverse the post-World War II
compromise and to dis-embed national markets, once again.
In the history of capitalism, then,
there have been phases of nationally embedded and global free market capitalism--periods
when capital is relatively more, and relatively less, free from national state regulation. Markets were
embedded until the end of the eighteenth century; after that, and throughout
the nineteenth century, they were dis-embedded; then, after the nineteenth
century system collapsed in the course of the world wars, a compromise was
concluded which resulted in markets being re-embedded. Today, efforts are being
made to reverse this compromise and to return, once again, to the dis-embedded
capitalism that characterized nineteenth-century Europe.
Globalization, then, is not, as Francis
Fukuyama and others have argued, the end point of an evolutionary process (nor,
as is often argued, is it one that is working to move all societies in the
direction of liberal democracy). ‘Globalization’ is neither a radical and
absolute break with the past nor the result of an evolutionary process, but a
recurring phenomenon within capitalism.
A similar campaign to free capital from
restrictions imposed by local communities was launched at the end of the
eighteenth century. As with the current campaign, it worked to reconfigure the
structure of political power by means of a broad-based, far-reaching, and
all-encompassing ideological and political assault on what was depicted, and
rapidly came to be seen, as the ‘old order’. This paper endeavors to bring this
history to bear on what may be the beginning of another iteration of a
recurring process of accelerated capitalist globalization. In doing so, its aim
is to highlight what this history can illuminate about the nature and the
consequences, both at home and abroad, of imperialism today and the processes
of globalisation associated with it. Only by delineating the continuities and
points of contact between the present and recent past history of imperialism,
can we be clear about what is new about globalisation and the ‘new
imperialism’, and other supposedly new constellations and mechanisms of
power.
Here, globalisation is defined as a period of
acceleration in the globalisation of capital—a process that has been on-going
for at least four centuries, and that involves the dis-embedding of markets
locally, and dependence primarily on external expansion for accumulation. This
paper will argue that globalisation today resembles in important ways a
previous phase of acceleration in the globalisation of capital: the
globalisation that began at the end of the eighteenth century; and that the Imperium
associated with this earlier globalisation is, in significant respects, similar
to Imperium today. The definition of ‘Imperium’ used here is the one
suggested by Ronnie Lipschutz in his paper for this conference (‘The Clash of
Governmentalities: the Fall of the U.N. Republic and America’s Reach for
Imperium’): a situation characterized, like Empire, by an integrated global
network of accumulation and exchange; but one in which governmentality emanates
from the center. In developing this argument, I will endeavor to show that,
contrary to Martin Shaw’s assertion that ‘since the Second World War, classic
theories of imperialism have lost much of their purchase’ (in his paper for
this conference, ‘Exploring Imperia: Western global power amidst the
wars of quasi-imperial states’) Hobson’s theory of imperialism continues to
have, at least as much relevance today, as do recent efforts to theorise
(re)current trends in world politics.
Perhaps
the most crucial chapter in modern history for understanding the accelerating
globalisation of capital today is the dismantling of eighteenth century
Europe's systems of national welfare and regulated markets, and the social
conflicts that emerged as a result. The context of these events was the attack
on the regulations of the Absolutist (‘interventionist’) state.
In the eighteenth century, ‘Absolutist’
governments in England,[3]
France, and elsewhere in western Europe were regulating local markets, as well
as controlling employment, and settlement. ‘Absolutism’ was attacked by its opponents
for its over regulation. However, the aim of much of this regulation was to
provision the local community and ensure fair practice, to protect the local
population against monopoly and speculation, and against shortages and high
prices. Thus, in England, marketing, licensing and forestalling legislation set
maximum prices on staple foods such as meat and grain. Market officers ensured
that sellers adhered to regulations and statutes governing quality and price.
Magistrates surveyed corn stocks in barns and granaries, ordered quantities to
be sent to market, and attended the market to ensure that the poor were
provided with corn at a favorable price. Official regulations prevented
middlemen merchants from bypassing or cornering the market, and ensured quality
control, a ‘just price’, and an adequate domestic supply of goods; and market
courts enforced them (Lie 1993: 282). Those in
England who demanded ‘freedom of trade’ during the eighteenth century were
actually demanding freedom from the requirement to trade inside open markets,
by means of open transactions, and according to the rules and regulations which
ensured fair practices and prices (Lie 1993: 283).
Demands to deregulate markets were accompanied
by a clamour to end the state’s role in the provision of welfare. In the
sixteenth century, and in line with a Europe-wide movement, the government of
England had begun a campaign to eliminate poverty, to push for legislation to
set up new institutions for poor relief, and to establish a system of hospitals
to provide medical care for paupers. By 1700, England had a national welfare
system.[4]
Ancien regime France established a nation-wide welfare system in the
eighteenth century. By 1770, Prussia had introduced measures establishing a
cradle-to-grave welfare system that guaranteed every Prussian subject adequate
food, sanitation, and police protection.[5]
In eighteenth century Britain, entrepreneurs
sought to escape government regulations through long-distance trade and
expanded production for export.[6]
As a result, competition for labour increased, and this enabled workers to
bargain for wages and regulate their work time. Wages rose throughout the
century and labourers were able 'to take on less work and spend more time at
leisure without endangering their traditional standard of living' (Gillis 1983: 41). Economies in Europe at the time were
based on local markets and face-to-face relations between seller and consumer,
so workers were often able to exercise economic power as consumers, as well.
On the eve of the 'industrial revolution',
then, European governments regulated markets on behalf of local people,
instituting wage controls and other labour protections, and were active in
providing welfare. As a result, workers could exercise power both as labourers
and consumers. However, by the end of the eighteenth century these features
became the target of a broad campaign to
‘dis-embed’ capitalist development. Britain’s most effective elites,
those that shaped and directed the expansion of production, were aristocratic
landowners and financiers; and its agricultural, financial, and industrial
spheres reflected aristocratic interests and values. Land and industry became
concentrated in fewer and fewer hands in the course of the century; methods of
increasing absolute surplus value production, and traditional manufacturing,
persisted; and an unprecedented degradation and intensification of labor, both
within and outside of Europe, produced an increasing volume of goods and
capital for circulation among a transnational network of property-owners.
Starting
in England at the end of the eighteenth century, and in western continental
countries around 1840, the lower classes in rural areas began to demand a
larger share of the land and reduced obligations to the landlords; in the
cities, they demanded higher wages and public works to provide employment,
along with restrictions on the introduction of machinery.[7]
As the power of organized labor grew and the strike replaced the food riot, conflicts
involving labor became a continuous source of tension, leading to recurring
outbreaks of violence nearly everywhere in Europe. Conflict between classes
erupted for or against changes in property relations, higher wages, extension
of the suffrage, redistribution of the national product; shorter hours of
employment; the right to secure bread at an affordable price, to organize, and
to work in safe conditions.
Enfranchisement,
nationalist, and imperialist conflicts were connected with these struggles.
As labor solidarity developed, action to
defend and improve living standards developed in a way that was 'radically new,
specifically illegal and in its practical application a direct challenge to
state power' (Foster 1974: 43). Thus, as the century progressed, labor
struggles increasingly overlapped with enfranchisement struggles. Nationalism,
originally an outgrowth of class and social conflict, and despite the new uses
that it found in the nineteenth century, remained integrally related to class conflict.
Nationalism targeted foreign and minority elements. It transferred economic
power to a dominant 'national' group through restrictions on land ownership and
confiscation of properties owned by groups it defined as foreigners or
minorities. In this and other ways, nationalism was bound up with the struggle
for control of industrial capitalist development locally, as well as of markets
and sources of cheap food abroad. Thus, nationalist, as well as imperialist
conflicts, were related to and interconnected with the class struggles that
characterized the expansion of industrial capitalism during the nineteenth
century.
In
order to consolidate their position in these class conflicts and maintain their
control over labor, dominant classes sought to keep labor poor (political power
was based on wealth, not citizenship) and in excess of demand (in 'reserve');
gradually but persistently, they worked to destroy the market position of the
skilled laborers of previous centuries who were more independent and valuable,
and could therefore command higher wages and regulate their own time. By
pursuing a strategy of expanding production largely for export, they obviated
the need to furnish laborers with sufficient means to buy what they produced
and deprived them of the ability to exercise power through consumer choice or
boycott, as they had in the eighteenth century. They kept peasants and rural
workers poor and weak by blocking land reform; monopolized domestic industry
and international trade through the creation of cartels and syndicates, and
through tariffs and various other controls; instituted corporatist arrangements
of a discriminatory and 'asymmetrical' nature to place further limits on
competition; and obstructed rising entrepreneurs and foreign competitors. As a
result, industrial expansion in Europe was shaped, not by a liberal,
competitive ethos, as is emphasized in most accounts of European industrial
development; but by feudal forms of organization; by monopolism, protectionism,
cartellization and corporatism; and by rural, pre-industrial, and autocratic
structures of power and authority.
While it is generally assumed that foreign
trade was the primary engine of economic growth in England in the eighteenth
century and the major cause of its industrial revolution, the verdict of more
recent scholarship, is that it was the home market that gave the impetus to
industrial growth in England between 1750‑1780 (See,
e.g. McKendrick, Brewer, and Plumb 1982: 29; Thirsk 1978).
England’s breakthrough in production was
equaled by one of home consumption. Britain’s industrial output quadrupled
during the century, and the bulk of this output was mass consumption goods (Eversley
1967: 221; also, Mathias 1983: 16, 94). However, despite the growth of the domestic
market in the eighteenth century and the fact that, at the end of the
Napoleonic Wars, abundant opportunities remained for investment and the
expansion of production for home consumption, in the nineteenth century, the
home market ceased to play a major role in Britain’s industrialization.
For
Polanyi, it was the commodification of land and labor that was the substance of
the ‘dis-embedded’ economic relations in the nineteenth century. But, European
economies were dis-embedded in another sense, as well. Throughout the nineteenth century, European economies grew through the
expansion and integration of external markets while home markets remained
underdeveloped. This dualism was evident everywhere in Europe. Even in the most
protectionist and interventionist states, external markets were developed in
lieu of internal ones; capital was largely invested either abroad or in home
production that was chiefly for export. It was chiefly in this sense that economic
relations were ‘dis-embedded’ in the nineteenth century; and it is in this
sense, too that, today through ‘globalisation’, they are becoming dis-embedded,
once again.
With
the ‘industrial revolution,’ elites in Europe used the wealth and privileges that
they had acquired in the past to ensure that processes of industrialization
would not adversely affect their interests.
Throughout the nineteenth and early
twentieth centuries, various forms of economic protection and monopoly, as well
as restrictions on labor organization and on political participation, enabled
Europe’s small elite of landowners and wealthy industrialists to monopolize
land as well as the entire field of industry and trade. This produced a ‘dual’
pattern of development that, in all aspects, resembles the dual economies
described by theories of contemporary Third World development.[8]
Most perspectives on development converge
on the assertion that, while industrializing countries in the West had leading
sectors that were essentially indigenous and closely interwoven with the other
sectors of the economy (e.g., cotton textiles in the British `take-off' from
1783 to 1803, railroads in France from 1830 to 1860), the dynamic sectors found
in contemporary developing countries are imposed by external agents and remain
largely alien to the other sectors. The foreign-oriented sector in these
countries encompasses all capital-intensive enterprise, reproducible capital,
and financial profit. Profits are either reinvested there or exported; improvements
in technology do not diffuse outward to agriculture or to cottage industry.
Thus, the economy as a whole is characterized by a lack of internal structural
integration, and dependency on outside capital, labor, and markets.
Dual economies, and all the structures we
associate with "dependent" development, were as common to Europe
before the world wars as they are to the contemporary Third World.[9]
European countries were also characterized by a lack of internal structural
integration, and dependency on outside capital, labour and/or markets. Great
Britain, France, Italy, Germany, Spain, Portugal, the Austro-Hungarian Empire,
Russia, Belgium, and much of the Balkans all had dynamic, foreign-oriented
economic sectors that failed to transform the rest of their economies and
societies. Some European countries experienced widely-spread growth, though
less wide-spread and much later than is usually supposed; but in most, modern
industrial sectors oriented to and dependent on international markets, formed
enclaves within non-industrial, mainly agricultural and backward hinterlands
linked, not to other sectors of the domestic economy, but to similar industrial
enclaves in other countries. Production was largely for external markets; trade
was external; capital was invested abroad.
This is not the conventional view of Europe’s
nineteenth century industrial development. In fact, only one feature of
Europe’s dualistic development has attracted substantial scholarly attention:
the flow of foreign investment funds from Britain during the nineteenth and
early twentieth centuries. However, in 1913, one third of Britain's net wealth
was invested overseas, as a result of annual flows of foreign investment; one‑third
of everything owned by Britons was in a foreign country (Floud 1997: 164).
'Never before or since has one nation committed so much of its national income
and savings to capital formation abroad'.[10]
As a result, the City of London, where more fortunes were made than in the
whole of industry, depended 'only slightly' on Britain's economic performance
(Boyce 1987: 18-19).
The usual explanation for the nineteenth
century trend in Britain, as well as in France and elsewhere in Europe, is that
the domestic market was not yet developed enough to absorb the output of
expanded production and to provide profitable investment opportunities for
surplus capital. As a result, capitalists were forced to seek for larger
markets and more profitable fields of investment abroad.
This was the view of Lenin and of John Hobson
who, like many have since, contended that Britain’s foreign investment and that
of other advanced countries was a result of the super-abundance of capital that
had accumulated in them and the consequent pressure of capital for new fields
of investment. This view and, particularly the notion that advanced countries
had capital-saturated economies, was current at the time when Lenin and Hobson
wrote and has since been embraced by a wide variety of theorists and
historians. While both Lenin and Hobson were, to varying degrees, concerned
with the blockages that tended to produce the appearance of ‘saturation’, the
language of ‘saturation’ and ‘pressure of surplus capital’, both in the
conventional historiography of nineteenth and early twentieth century Europe
and in analyses of the contemporary international economy, tends to obscure the
fact that capital exporters did not then, and tend not to have now, capital‑saturated
domestic economies.
The view of economies as suffering from ‘over
production’, ‘saturation’, the ‘pressure of surplus capital’, and the need for
new markets is misleading, as Hobson makes clear. Hobson argued that the market
that was ‘saturated’ in Britain, in 1902 and before, was the one constituted
solely by the wealthy classes. In fact, the discourse of ‘saturation’,
generally, implicitly assumes that the domestic market consists solely of
owners of capital, and that the mass of the population is irrelevant to demand
and consumption of any goods other than those necessary for their own physical
reproduction.
As
numerous scholars have since argued, the funds used for British foreign
investment could have found productive uses at home and that, had they remained at home, they
could have ‘helped to augment the stock of domestic housing and other urban
social overhead projects that would have expanded the domestic market for the
expanded output of the British economy.’[11]
Moreover, after 1880, the rates of profits on Britain’s colonial investments
fell below comparable returns from Britain itself. During the next 34 years, returns
from overseas investment were a good deal less than what might have been earned
through investment in the expansion of domestic industry (Davis and Huttenback 1988). In
general, these investments
were also exposed to more risk than domestic investments.
Hobson noted in 1902 that ‘Every advanced
industrial nation has been tending to place a larger share of its capital
outside the limits of its own political area, in foreign countries, or in
colonies, and to draw a growing income from this source’. The reason, he
argued, was that there was a strong tendency for these countries to generate
too little consumption and too much savings. Too little of the national income
was allocated to wage earners who did most of the nation's consumption and too
much income was allocated to property owners who did most of the nation's
saving (1902: 51). He wrote that, if the mass public
‘raised its standard of consumption to
keep pace with every rise of
productive powers, there could be no excess of
goods or capital. . ..
Foreign trade would indeed exist, but there
would be no difficulty in
exchanging a small surplus of our manufactures
for the food and raw
material we annually absorbed, and all the
savings that we made could
find employment, if we chose, in home
industries’ (Hobson 1902: 81; my
emphasis).
Thus, ‘It
is not industrial progress that demands the opening up of new markets and areas
of investment, but mal-distribution of consuming power which prevents the
absorption of commodities and capital within the country’ (Hobson 1902:
85).
While Hobson saw this as a typical consequence
of capitalism, he argued it was not a necessary one. ‘Home markets,’ he
argued, ‘are capable of indefinite expansion’ given ‘a constantly rising
standard of national comfort . . . . Whatever is produced in England can be
consumed in England, provided that the “income” or power to demand commodities,
is properly distributed’ (1902: 88). If the industrial revolution had taken
place ‘in an England founded upon equal access by all classes to land,
education and legislation’, then
foreign trade would have been less
important…the standard of life for all
portions of the population would have been
high, and the present rate of
national consumption would probably have given
full, constant, remunerative employment to a far larger quantity of private and
public capital than is now
employed.
Instead,
more than a quarter of the population of British towns ‘is living at a standard
that is below bare physical efficiency’ (1902: 86).
While
agreeing with Hobson that the colonial trade was not necessary as a means of
securing markets for surplus goods and capital, world systems and dependency
theorists argue that colonialism was, nonetheless, necessary to the
industrialization of Europe as a means both of acquiring raw materials and of
accumulating capital (see, e.g. Wallerstein 1974a: 38, 51, 93-95, 237, 269,
349).
This
contention has become the focus of considerable dispute. According to P.K.
O’Brien (1982), England’s trade with the periphery, and the profits from it,
were still too small a percentage of its total economy to explain its expansion
through the eighteenth century. Paul Bairoch has argued that the ‘core’
countries had an abundance of the minerals of the Industrial Revolution (iron
ore and coal); they were almost totally self-sufficient in raw materials and,
in fact, exported energy to the Third World.[12]
Colonialism, Bairoch argues was, therefore, not a necessity for industrial
growth in Europe; in fact, it may have hampered national economic growth and
development there:
If one compares the rate of growth during the
nineteenth century it appears that non-colonial countries had, as a rule, a
more rapid economic development than colonial ones. There is an almost perfect
correlation. Thus colonial countries like Britain, France, the Netherlands,
Portugal, and Spain have been characterized by a slower rate of economic growth
and industrialization than Belgium, Germany, Sweden, Switzerland and the United
States. The 'rule' is, to a certain extent, also valid for the twentieth
century. Thus Belgium, by joining the colonial 'club' in the first years of the
twentieth century, also became a member of the group characterized by slow
growth. The loss of the Netherlands' colonial Empire after World War II
coincided with a rapid acceleration in its economic development (1993: 77).
Britain’s
decline, when it came, was heralded by its relative absence in the
"new" industries that emerged at the end of the nineteenth century;
and this may have been due, in part, Bairoch suggests, because its
"ability to sell easily non-sophisticated manufactured goods to its
colonies forestalled the need for modernization" (1993: 167).
Why, then, didn’t investors take advantage of
unexploited fields of investment at home? Why did they neglect opportunities
for profitable home investment, leaving British industry, throughout the
nineteenth century and relative to that of its nearest competitors, slow to
mechanize and to introduce new technologies? Why, instead, did they pursue
investments overseas that were riskier, more difficult and costly to acquire
and, in some cases, not as lucrative?
Decisions about whether and how to
increase or restructure production are based on calculations about the conditions
necessary for the realisation of profit.
Disadvantageous social externalities produced by the introduction of new
production methods and by an expansion of output would be part of those
calculations. Had the ‘democratisation of consumption ‘ of the eighteenth
century continued, and had a broad-based industrial growth developed, along
with the mass purchasing power and internal market needed to support it, the class, land, and income structures
on which the existing structure of social power in Britain rested would have
been destroyed.
The consumer revolution and the
expansion of production in the eighteenth century had important implications
for the structure of British society.
Mass consumption is associated with democracy,
and elites were certainly aware of its corrosive effects. That these were
widely recognized is evident in the laws regulating consumption that were
everywhere evident throughout history, in Europe and elsewhere, and persist in
many places throughout the world, today.[13]
Sumptuary laws restricted the personal consumption of goods based on class and
income and were enacted in Europe between the fifteenth and eighteenth
centuries, and they were retained by many states well into the nineteenth
century (see Hunt 1996). The emergence of a domestic market for mass‑produced
consumer goods, because it worked to undermine class distinctions and increase
social mobility, was politically threatening and, thus, was not encouraged.
The commitment to limiting the expansion of
industry and consumption at home was reflected in the continued allegiance of
influential elites to mercantilist notions: the notion that domestic trade does
not make people rich, that low wages and restricted consumption were necessary
to economic prosperity,[14]
that foreign trade was the sole source of surplus and, thus, accumulation; that
domestic trade was a means only of transferring wealth among individuals
(rather than increasing the surplus). Mercantilist policies promoting overseas
trade had provided governments with a source of tax revenues and loan capital
that had fewer negative domestic consequences than other available
sources and enabled them to gain a certain degree of ‘autonomy’ from the local
nobility. Those mercantilist policies that had offered states a means of
gaining autonomy from local elites had become a target of aristocratic wrath.
But after aristocratic landholding and financial interests succeeded in gaining
control of the state, these very same policies became useful to them, and
probably for the very same reason: as a means of acquiring autonomy from local
social forces. Thus, while a mass of government rules and restrictions on
economic activity ‘were swept out of the statute books’ between 1760 and 1850
(Deane 1979: 220), many mercantilist policies and doctrines were retained.
Promoting overseas, rather than domestic, commerce as a means of generating
income was among these. And it is reasonable to assume that it was for the same
reasons—i.e., that it had fewer negative domestic consequences for those who
were promoting it. By the twentieth century, a full-blown restoration of
mercantilist thought was evident in the policies and doctrines associated with
the various forms of fascism that emerged following World War I.
Mass production also had serious implications
for the existing structure of social power in Britain. A fully industrialized
economy requires mass mobilization. Mass mobilization for industry (as for war)
creates, out of the relatively disadvantaged majority of the population, a
compact and potentially dangerous force; thus, elites showed little interest in
the expansion of industry at home. Marx, as in much of his writing, was here
perhaps only reflecting a general perception of his times when he wrote that
The advance of industry . . . replaces the
isolation of the labourers
. . .
by their revolutionary combination, due to association. The
development of Modern Industry, therefore, cuts from under its
feet the very foundation on which the
bourgeoisie produces and
appropriates products (Marx 1967: 93-4).
It might be argued that owners of wealth were not
conscious of the social externalities associated with the application of large
masses of labor to production. This seems hardly plausible. The problems of
setting to work and controlling masses of labor are not so substantially different in
capitalist production as to have made all prior problems and their solutions
irrelevant. For centuries landlords had been confronted with the ‘great fear’
of mass peasant uprisings, and had organized production in ways that reinforced
the existing relations of power and authority. The difference in capitalist
production, and it is crucial, is not the strategic power that workers
have—peasants had that too; but that for industry to grow and remain
competitive, a sizeable portion of the labour force must be educated, skilled,
and mobile. If property owners were not conscious of the dangers of mass
mobilization for industry, would they not have been after Marx spelled
it out for them in the widely read and cited Communist Manifesto?
Concerned to consolidate and maintain their
control of labour while, at the same time, mobilizing it for the expansion of
production, elites sought to increase profits through a dualistic system of
internal restriction and external expansion.
Europe's economic expansion was based on the
use of production methods that deskilled labor and kept it fragmented and
impoverished. Profits increased, not through increasing the productivity of
labor in wage goods industries, but by applying large quantities of unskilled
or semi-skilled labor to production, as is typical of primary export production
in the contemporary Third World. In Britain, whole families (women and
children) were put to work to earn, together, the same wage that once had been
paid to a single “head of household.” By making it necessary for the whole
family to contribute to its reproduction rather than a single “head of
household,” the employer got more workers for no additional cost. Profits
increased also by increasing the duration or the normal intensity of labor, by
making workers work longer and with fewer and shorter breaks, and faster. Cheap
food was imported from abroad to further decrease the cost of labor. Workers
were also forced to consume poorer quality food, either by dismantling
regulations prohibiting the adulteration of basic foodstuffs or, as in Ireland,
making them dependent on the potato crop for sustenance.[15]
Because the work force was, by
these means, rendered too poor to function as a factor of consumption, the
dynamic sectors of European economies were dependent on the development of
exogenous demand and consumption. The export of British goods and capital
played a leading role in creating an international circuit of investment and
exchange for this purpose.
Britain increased its industrial
production by expanding its shipbuilding, boiler making, gun and ammunition
industries. This enabled it to penetrate and defend markets overseas. British
exports of capital provided purchasing power among foreign governments and
elites for British built railways, canals, and other public works; banks,
telegraphs, and other public services; factories, and mines. All of this helped
to fund the development and transport of food and raw materials exports to
Britain, thus creating additional foreign purchasing power and demand for
British goods, and also decreasing the price of food, and thereby the value of
labor, in Britain.[16]
At the same time that British investors were
investing abroad, British industry was, relative to that of its nearest
competitors, slow to mechanize and to introduce new technologies. As a result,
Britain’s ‘Industrial Revolution’ was both sectorally and geographically
limited.[17]
Its industrial breakthrough in the 1780s and 1790s involved the mechanization of only one branch
(spinning) of one industry (cotton). The other branch, weaving, remained
un-mechanized for forty years.[18]
There was no mechanization outside the cotton industry. By 1850, the total
number of factory workers amounted to not much more than 5% in England (Lis and
Soly 1979: 159). Before World War II, less than a third of those employed in
the transport sector were employed by the railways (28% in 1931). Despite the
British origins of the machines and machine tools industry, it was not until
the 1890s that automatic machine-tools production was introduced in Britain.
The impetus came from the U.S., and the desire on the part of employers “to
break down the hold of the skilled craftsmen in the industry” (Hobsbawm 1968:
181). The building industries grew by expanding employment, rather than by
introducing innovations either in organization or technology.[19]
Though Britain had pioneered electro‑technics, by 1913 the output of the
British electrical industry was little more than a third of Germany's (Hobsbawm
1968: 180). Gas manufacture was mechanized late, and as a result of pressure
from trade unions. Even Britain’s export industries were slow to adopt new
techniques or improvements, not only in textiles, but in coal, iron, steel,
railways and shipbuilding. The supply of coal increased, not by the
introduction of labor‑saving techniques, but by increasing the numbers of
coalminers.[20] In the
1930s, “more than 40% of British coal was cut, and practically 50% conveyed,
without the aid of machinery” (Benson 1989: 16).
As
is typical throughout the contemporary Third World today, in Britain during the
nineteenth century, the structure of landholding and the low productivity of
the labor force engaged in growing food for home consumption limited industrial
production for the home market.
Throughout the nineteenth century,
the larger landowners continued to enlarge and consolidate their holdings. In
1897, 175,000 people owned ten-elevenths of the land of England, and forty
million people the remaining one-eleventh.[21]
The majority of farms in England and Wales did not possess either a tractor or
a milking machine until World War II, despite their having been available for
some thirty years or more. As late as 1935 18 % of all agricultural holdings
comprised less than 5 acres, and a further 45 % less than 50 acres (Benson
1989: 19). On the eve of World War I, more than 60 % of the adult agricultural
laborers of the kingdom received less than the amount necessary for the
maintenance of a laborer and his family on workhouse.[22]
Like its agriculture, Britain’s financial and
industrial sectors were bound by monopoly and restriction. The regulative,
protective system of mercantilism was only selectively dismantled; and by the
end of the nineteenth century, there was a full‑blown return to monopoly
and regulation. The City of London, in which greater fortunes were made than in
the whole of industry, remained “enmeshed in a pseudo baronial network of
gentlemanly non‑competition” (Hobsbawm 1968: 169). In the industrial
sphere, traditional corporatist structures—guilds, patronage and clientelist
networks—survived in some places and grew stronger; elsewhere, new corporatist
structures were created. As the nineteenth century progressed, industry became increasingly
penetrated by monopoly and protection. The modern cartel movement began to
develop in the crisis of 1873 and during the subsequent depression years. In
Britain and France industry maintained tacit limits on competition that were
about as effective as formal contracts. However, despite the strong tendency in
Britain to the kind of gentleman’s agreement that makes cartels unnecessary,
cartels did appear there in metallurgy, milling, chemicals, and glass making.
In what David Landes aptly calls “a commercial version of the enclosure
movement” (1969: 247). Britain’s
answered the cartel movement with the “combine,” which, like cartels, were
designed to control the market by eliminating competition, fixing prices,
sharing out supplies, buying raw materials
en bloc, and cutting out middlemen. By 1914, cartelization pervaded
industry everywhere in Europe.[23]
The development of exogenous demand and
consumption through the export of capital and goods, together with the continued
use of methods of increasing absolute surplus value at home, ensured that the
benefits of expanding production would be retained solely by the
property-owning classes. In 1914, British industrialization was still
sectorally and geographically limited in the way that dualistic colonial and
post-colonial economies have been described. Landed and industrial property had
become increasingly concentrated. Only in sectors producing for export was
there mechanization, skilled labor, and. rising productivity and real wages.
These sectors did not have a profound impact on the rest of the economy.
Revenues from these sectors were not invested in the expansion of production
for the home market. There was little attempt to expand or mechanize industries
producing goods for domestic household consumption. Instead, production
expanded through the development of a circuit of capital that operated among a
transnational aggregate of elites and governments. We now turn to a consideration of this circuit.
Europe’s
economic expansion before World War II was based on the development of external
markets for heavy industry and high-cost consumption goods, and through both
cooperation with, or imperialist exploitation of, other states and territories,
both within and outside of Europe.
The dynamic sectors of European economies grew
by means of an international circuit of investment and exchange. The City of
London was at the center of this circuit of capital.
The bulk of British investment between 1880
and 1913 went to the Dominions, Europe, and the U.S. (over 55%) (Barratt Brown
1970: xiv). Almost 70 percent of this went into social overhead capital
(railways, docks, tramways, telegraphs and telephones, gas and electric works,
etc.). The bulk of it went into the enormously capital-absorbing railways (as
did the bulk of French and Belgian foreign investment).[24]
Increasing blocs of territory throughout the world became covered with networks
of British built and financed railroads, provisioned by British steamships and
defended by British warships.
The circuit developed originally through
colonialism and imperialism. Britain established colonies in the Americas and
the tropics that, later, became sources of raw materials and markets for
British exports. By 1797, Britain’s North American colonies and the West Indies
accounted for 32% of British imports and 57% of exports (McCloskey 1981). But
markets abroad could be created either by bringing more countries into the
world market or by squeezing other countries out of their markets.
Britain and France both launched military
crusades aimed at usurping existing markets for textiles: British military
operations forced open the Indian sub-continent and usurped India’s
international market for British cotton textiles; France, through its
‘Continental System’ and colonial expansion in Europe, attempted to turn Italy
into a source of raw materials for French textiles and to usurp Italy’s
domination of international markets for high-quality textiles. Ottoman vulnerability,
revealed during the Napoleonic Wars, provided a new field for exploitation.
Britain developed Egypt and the Sudan as sources of cotton for its textile
industry; while a French claim to Lebanon (by virtue of its Catholic Maronite
community) ensured a nearby (relative to China) source of raw silk for the
French silk industry. Britain added territories to its colonial empire for
strategical/commercial purposes (e.g., Singapore, Aden, the Falkland Islands,
Hong Kong, Lagos), and as a result of the movement and activities of
land-hungry British emigrants (e.g. in South Africa, Canada, Australia).
Colonies also provided labor that was even cheaper than that which was
available at home and, in any case, was an alternative to mobilizing labor at
home.
European countries enslaved and forced 11-12
million Africans to work in their colonies in North and South America between
1600 and 1900. More than half (over 6 million) of these were forcibly exported
from Africa during the eighteenth century, principally to British- and
French-owned centers of production in the Caribbean (Jamaica and St. Domingue,
or what later became Haiti). This trans-Atlantic slave trade did not come to an
end until the 1870s. Though Britain declared the slave trade illegal in 1807
(but actually abolished slavery in 1832), the slave trade continued illegally:
almost 2 million more slaves were transported from Africa between 1810 and
1870, most to the major Caribbean sugar producer in the nineteenth century,
Cuba.
In addition, to the stream of slave labor from
Africa to the Americas, another stream of migration developed, consisting of
contract laborers. This was fed, in particular, by large numbers of Indian and
Chinese contract laborers who went to the tropics and to Africa to work in the
mines and on the plantations. Thus, despite the slow the progress of labor
legislation was in European countries during the nineteenth century, conditions
overseas generally facilitated a lower level of wages, a longer working day, a
greater exploitation of the labor of women and children, the absence or non‑application
of social legislation, and the use of forced labor or labor paid in kind.
Throughout the circuit, in Europe and among
the extra-regional states and territories brought within its ambit, the same
overall pattern of dualistic growth was repeated though with variations
according to each country’s place in the circuit and the type of goods it
produced for sale.
France,
whose empire was second only to Britain’s, exported high-cost textiles and
luxury goods and built and financed railroads in Russia. Germany’s dualistic
industrial expansion took off with its ‘marriage’, not of iron and finance’ as
in Britain, but of ‘iron and rye’, in 1879. In Italy and Austria-Hungary, industrial
development focused on expanding heavy industry and gaining railway concessions
in the Balkans.
Other
states—Russia, the United States, Canada, Australia--were incorporated into the
circuit as raw material producers. These increased their production of
agricultural and other raw materials exports to pay for railways, iron and
steel, armaments and other foreign manufactures. Russia paid for these imports
and its interest on its enormous foreign debt, by steadily increasing
agricultural exports even during famines (e.g., in 1891. Colonial territories
that became independent states—as, for instance, states in the Balkans and in
Latin America-- remained within the circuit. Local elites, whether in colonies,
former colonies, or states that had never been colonies, imported British
capital and goods, developed mines and raw materials exports, and built
railways and ports, in order to extend, consolidate and maintain their power
and become wealthy.
By 1870, the imperialist practices through
which these interactions operated had, together, assumed the character of an
international regime. Puchala and Hopkins (1983) describes the distinctive
pattern of activity that characterized European imperialism at that time:
‘extracted raw materials
flowed from colonies to European imperial
centers, light manufactures flowed back; investment capital flowed
outward from European centers, profits and returns flowed back;
administrators, soldiers, entrepreneurs, and missionaries went abroad
to rule new lands, make new fortunes, and win new converts to their
political, economic or religious causes ‘ (Puchala
and Hopkins 1983: 68).
Then, they
point to the regulation of this activity by a regime which ‘prescribed certain
modes of behavior for imperial powers vis-a-vis each other and toward their
respective colonial subjects.’ The managers of the regime were the ministries
and ministers of major states. These ‘made the rules of the colonial game,’ and
‘diplomats, soldiers, businessmen, and settlers played accordingly.’ Other
sub-national actors were involved, as well: ‘church societies, militarist
lobbies, and bankers’ and, in some countries, these ’exercised substantial
influence over the formulation of colonial policy’ (1983: 67). While ‘there
were conflicts, frictions, and collisions at points were empires came
geographically together and occasional armed skirmishes outside of Europe,’
there were also 'periodic conferences called to settle colonial issues, and
countless bilateral treaties and agreements between colonial powers that
defined borders on distant continents, transferred territories or populations,
and codified the privileges and obligations of each colonial power with respect
to the domains of others' (Puchala and Hopkins 1983: 68).
By the eve of World War I, the extremes of
wealth and poverty created by dualistic economic expansion were generating more
or less continual conflicts. In 1913, less than 5 percent of Britain’s
population over 25 years of age possessed over 60 percent of the wealth of the
country (Clough 1940: 672-3). ‘Up to a third of the population in 1914 had
incomes which did not provide them with sufficient food to sustain health
throughout the year' (Floud 1997: 3, 15), and ‘perhaps a further 40% or even
more lived so close to the margin that they could be, and often were, forced
below it by a variety of life events'.[25]
Britain, in 1914, ‘was a divided country, in which extremes of wealth and
poverty coexisted, often in a state of mutual fear and incomprehension' (Floud
1997: 7).
On the eve of World War I, tensions were
rising not only within European states, but among them, as well. Overseas
expansion had helped to maintain the balance of power system in Europe by
providing a compensatory mechanism. And in spite of the heavily militarized and
competitive character o Europe’s overseas expansion, diplomatic instruments
were found to regulate it such that conflicts over territory were prevented
from escalating to war.
However, as more and more countries began to
pursue dualistic, externally- oriented economic expansion, conflict over still
unexploited territories in Africa and Asia increasingly threatened to lead to
war. At the same time that overseas tensions were increasing, Europe, itself
became the focus of expansionist aims. Networks of British built and financed
railroads already covered overseas territories; but, after 1870, an upsurge in
European railway construction began: France built railroads in Russia, German
steel and capital built the Baghdad Railway; Italy and Austria-Hungary competed
for railroad concessions in southeast Europe so that, as 1914 approached,
‘there was something of a railroad war between Italy and Austria-Hungary in the
Balkans’ (Kurth 1979: 21). Rivalry and rising tensions in Europe led to the
dissolution of the ‘Bismarckian System’; and this, along with the antagonism
created by German naval building, led to the reconfiguration and increasing
polarization of interstate relations in Europe. The European balance of power
and imperialist regimes began to dissolve. By 1914, war appeared to be the only
means by which ‘national’ capitals could improve the terms on which they were
integrated into the world circuit of capital.
Just as the use of massive and expensive
professional or mercenary armies in the seventeenth century worked to increase
the power of wealthy classes (by draining state revenues and making the British
monarchy reliant on London merchants and the commercialized gentry and
aristocracy allied with them), the use of mass ‘citizen’ armies in the world wars of
the twentieth century, and the consequent reliance of states on working class
cooperation, increased the power of labor in European societies. It was the
shift in the balance of class power that, after World War II, brought about a
transformation of European societies.
Two factors, in particular, helped to bring about an increase of working-class political power
relative to that of capital. First, World War I forced governments and ruling
groups to mobilize the masses for war for the first time since the
Napoleonic wars. This was decisive in increasing
the organizational strength, unity, and political power of labor. Second, was
the participation of labor in broad-based social movements in which
struggles for democracy, for workers’ and minority rights, and for protection
against the market merged. Today the role of unions in these struggles in
various parts of the world is seen as representing a new form of labor
politics, and is called ‘social movement unionism’.
But working-class
activism in nineteenth and early twentieth century Europe was always part of a broad social
movement Labor struggles were waged both in the marketplace and in the
political arena; and, because those who participated in them were embedded in
ethnic, national, and other communities and identities, class and minority
(ethnic and religious) issues and conflicts were often thoroughly intertwined.
Mass
mobilization for war and the increasing strength of social movement unionism in
national arenas were both products of a system of dualistic industrial
expansion that generated social conflicts at home and rivalries and tensions
among the advanced capitalist countries.
Some attribute
these changes to a shift in the balance of power, not of labor and capital, but
among different fractions of capital. They argue that the political and
military costs of developing and defending foreign markets made Keynesianism
attractive, not only to labor, but to productive capital, as well; and, they
argue, it was the increase in the power of this fraction of capital which
resulted in the post-war changes. But, given the resistance to state planning
and comprehensive welfare reform before World War II, and the vigorous
resistance of the U.S. to ‘national capitalism’ after the war, it is unlikely
that a massive capitulation to social democratic reforms and the
expansion and consolidation of nationally embedded capital formations would have
occurred in Europe had not the wars vastly increased the power of labor.
Moreover, this increase occurred in the context of a war against socialism. Thus capitalists
needing, not only to create an army of consumers but also to ‘keep workers away
from Communism’ (Lipietz 1992: 10), were
willing to commit some portion of their profits to wage increases and home
investment.
The
post-World War II class compromise reinstated the state welfare and regulatory
functions that had been relinquished in the nineteenth century.[26]
Throughout Europe, labor was partially
de-commodified through state provided health care and education, housing
subsidies and childcare allowances. States expanded domestic markets by increasing and regulating domestic
investment and this, in turn, increased production and raised the level of
earnings and of welfare of the working class. The
re-embedding of European economies led to a more balanced and internally
oriented development, and to an era of unprecedented growth and of relative
peace and stability. Although there was a strong growth of the volume of
exports after the war, the expansion of domestic markets for domestic goods and
services ensured that the proportion of resources devoted to experts (measured
by the current price ratio of exports to GDP) declined. Thus, 'It was not until
the end of the 1960s that production for international trade absorbed an
increasing proportion of labor within the advanced countries--in this sense
[Europe’s post-war] golden age growth could be regarded as primarily
domestically based' (Marglin and Schor
1990: 51).
The
territorial coincidence of production and consumption and the resulting
expansion of domestic markets brought to an end, for a time, intense social
conflicts and the great movements of colonialism and imperialism. The
integration of workers and minorities into the political process and changes in
their status and level of welfare ended the labor and minority conflicts that
had recurred throughout the nineteenth and early twentieth centuries. The
reduction of protection and monopoly increased domestic investment, and the
rising real wages of the workforce altered the structure of demand for domestic
goods and services. The resulting expansion of domestic markets ended, for a
time, the pursuit of profit through colonialism and imperialism.
For a time,
governments of advanced industrial countries pursued more internally oriented
policies that centered production and services on local and national needs. In the U.S., however, things began
to change in the 1960s, as the competitive advantage US industry had
enjoyed began to erode. As
international competition from Europe and Japan intensified, profit margins in the U.S. began to
narrow. Business blamed the
narrowing profitability on wage increases. Wage increases had previously been
paid for by higher prices; but when international competition began to act as a
constraint on pricing, capitalists were caught in a profit squeeze: at the same
time that foreign competitors were holding prices, reducing wages at home was precluded by labor
militancy and by the political radicalism engendered by mass conscription for the Viet Nam war.
By the
1970s, business was
engaged in concerted political action to get states to relax capital controls,
deregulate industry and markets, privatize their assets, and curtail their
welfare functions. In
1978, the U.S. introduced far‑reaching measures of deregulation; the
following year a series of measures began moving the UK in the same direction.[27]
The shift in the other OECD countries and the European Community began in the
early‑to‑mid 1980s.
In the
U.S., the increase in capital mobility and foreign
investment, and the ability to move production to low-wage areas, have brought
about a return to methods of absolute surplus value
production at home, and the expansion of export-oriented growth.
With a reduction in the
bargaining power of labor relative to capital, not only in industries
experiencing capital outflow, but in related industries, as well (Crotty and
Epstein 1996: 131), methods of absolute surplus value production have
returned: intensifying
work regimes, reducing real wages, and restructuring
employment away from full-time and secure employment into part-time and
insecure work
There has also been a return
to the export-oriented expansion. As Herman Schwartz notes, U.S. capital exports before the 1970s
had been relatively small: at their peak, barely as much as 2 percent of GDP.
Moreover, these capital flows had supported an overall system of welfare,
income equality, and higher wages at home. ‘While firms fought for market share
overseas, they did so in ways that boosted workers’ incomes and domestic demand
rather than suppressing those incomes (Schwartz 2001: 8).
In contrast, the U.S. capital exports that
began in the late 1970s, are part of an overall shift that involves downsizing
workforces and re-setting corporate activity ‘at ever lower levels of output
and employment’ (Williams et al 1989: 292).
In fact, despite the tendency to refer to
current trends collectively as
‘neo-liberal’ globalization, the expansion underpinning ‘globalization’
has been essentially anti‑liberal in nature. Like Europe’s
nineteenth century expansion, it is characterized by increasing concentration
and monopoly. As Jonathan Nitzan point out, large firms are tending increasingly to buy existing assets through
mergers and acquisitions rather than to build new ones. The purpose of these,
Nitzan argues, is to avoid creating new capacity so as to avoid glut and
falling profit, and to augment the power of dominant capital. (2001: 241).
Nitzan predicts that ‘far from contributing to growth,’ this wave of mergers
‘is likely to further exacerbate stagnation and unemployment’ (2001: 261).
Increasing
productive capacity can be achieved either by expansion--a simply multiplication
of the capacity at a given moment--or by intensification, i.e. an improvement
in production techniques. Before World War II, economic development in Europe
proceeded principally by means of lateral gains, through the acquisition of
spheres of interest, rather than intensive gains, through improved organization
or productivity. Similarly, U.S. expansion today is proceeding not through the
creation of additional capacity, but by lateral gains: by squeezing other
countries’ firms out of their markets, restructuring those markets and
integrating them into U.S. commodity chains; and, increasingly, through buying
existing assets through mergers. Adding
capacity is cheap when you are without competitors. Once there is competition,
there is the threat of glut and declining profit. Thus, key players are
concerned with keeping overall capacity from growing too fast.
The position of the U.S. following World War
II was similar to that of Britain at the end of the Napoleonic Wars. Britain
had emerged from the Napoleonic Wars with an economy that was far stronger than
those of its nearest competitors. Its ‘take off’ to industrial development
prior to the war had occurred on the basis of the expansion of its domestic
market. However, eventually its economic growth became dependent, not on a
further expansion of its domestic market, but on the development of
cross-national commodity chains, the acquisition of cheap labor abroad, and a
backflow of cheap goods to keep domestic wages down.
The United States emerged from World War II
with an economy that was far stronger than those of its nearest competitor.
Like Britain, it had industrialized on the basis of the expansion of its
domestic market. But, like Britain, its growth came to depend on the global
integration of cross-national commodity chains, the acquisition of cheap labor
abroad, and a backflow of cheap goods to keep wages down at home.
There is another similarity between U.S.
expansion today and that of Britain in the nineteenth century. Hobson argued
that in the nineteenth century the ‘taproot’ of British imperialism’ was a
politically created mal-distribution of income in the British domestic economy.
Today, it appears that ‘the taproot of U.S.-driven “globalization” is located
in a politically created mal-distribution of income in the U.S. domestic
economy’ (Schwartz 2001: 15).
There would appear to be significant
differences between the U.S. position today, and that of Britain in the
nineteenth century. As Herman Schwartz points out, Britain was an ‘under-consumptionist’
capital exporter’ in the nineteenth century, while the U.S. today is an
over-consumptionist capital exporter. However, Schwartz argues that the
underlying dynamic fueling both British expansion in the nineteenth century and
U.S. expansion today is the same. The ‘inversion of over and
under-consumption’, he argues, ‘is simply the surface manifestation of a more
important underlying phenomenon that is consistent with Hobson’s analysis’.
The structure of British imperial finance,
Schwartz reminds us, rested not just on exports of British capital, but also on
imports of capital into Britain. Most non-British banks kept large,
low-interest, short-term deposits in London banks. As long as sterling was the
international reserve currency of choice and virtually all international
transactions cleared in London, Britain could borrow short-term at extremely
low interest rates and then loan that money long-term, at higher interest
rates. The Bank of England aggressively raised short-term interest rates when
capital flowed out of London, to avoid maturity mismatches and also to profit
from arbitraging between different interest rates.
Schwartz argues that the structure of U.S.
lending after 1971 parallels Britain’s in the nineteenth century. The discussion,
below, summarizes his argument.
Beginning in the 1970s, enormous flows of
long-term capital from the U.S. produced, in turn, enormous imports of
short-term capital back into the U.S. As in Britain, in the U.S., holders of
capital issue fixed income securities and invest the proceeds in higher
yielding equities and productive investments. In this way, Asian and European
holdings of liquid US financial assets finance the continued expansion of the
US economy by creating additional purchasing power in the US domestic market,
and financing continued investment by US firms in real productive capacity.[28]
It also creates more fictitious capital, permitting US firms to continue to
invest at home and abroad with a low cost of capital.
As with consumers of British investment goods
in the nineteenth century, today consumers of U.S. investment goods tend to
have dualistic economies: underdeveloped domestic markets and large export
sectors. While Asian trade surpluses are ‘parked in U.S. financial
instruments’, local consumption is constricted through fairly strict control
over labor unions and workers,[29]
making Asian economies increasingly reliant on a narrow range of exports to the
U.S. economy. The 1990s investment wave made Asia even more structurally
reliant for growth on exports to the US market.[30]
These investments produced extensive growth in low-priced Asian textiles, toys
and household goods, as well as low-end electronics, cars, and car parts. This
increased output flowed into the US market.
The huge increase in Asian and especially
Chinese production had exactly the
effects
that Hobson predicted. Hobson argued that
Once encompass China with a network of
railroads and steamer services,
the size of the labour market to be tapped is
so stupendous that it might
well absorb in its development all the spare
capital and business energy
that the advanced European countries and the
United States can supply for
generations. . . . the pressure on the
working-class movements in politics and
industry in the West can be met by a flood of
China goods, so as to keep
down wages and compel [labor discipline]….
(Hobson 1902: 313).
The
difference, however, is that these effects have been largely felt by Asian
workers and not, immediately, by U.S. ones. The huge reservoir of purchasing
power that workers retain has prevented the emergence of the
‘under-consumptionist’ dynamic that Hobson described. In the U.S., real wages
remained essentially flat between1980 and 2000, permitting valorization of
overseas investments in basic goods. But U.S. investment in mass-consumption
articles made with cheaper foreign labor keeps U.S. wages down in all
sectors and compels labor discipline. This will eventually erode working class
power and lead, again, to a withdrawal of ‘rights’ previously held (power over
wages and prices).
Overall, the circuit of capital that underpins
U.S. expansion redounds to the benefit of those who hold US equities, and to
the detriment of overseas workers and those in the US who work in basic
manufacturing and/or pay the taxes that fund the US public debt. The circuit, as Greg Albo points out, is leading to
an unstable
vicious circle of “competitive
austerity”: each country reduces domestic
demand and
adopts an export-oriented strategy of dumping its surplus production, for
which there
are fewer consumers in its national economy given the decrease in workers’
living
standards and productivity gains all going to the capitalists, in the world
market
. . . . So
long as all countries continue to pursue export-oriented strategies, which is
the conventional wisdom demanded by IMF, OECD, and G7 policies and the logic of
neo-liberal
trade policies, there seems little reason not to conclude that “competitive
austerity”
will continue to ratchet down the living standards of workers in both
the
North and the
South (1994: 147).
The globalized integration of cross-national commodity-chains,
together with the process of increasing enclosure and deepening commodification
of all possible aspects of daily life, leads inevitably toward the depression
of working conditions and wages in the core.
In current discourses,
‘globalization’ tends to be misrepresented in two ways. First, it is wrongly
represented as either a radical and absolute break with the past or the result
of an evolutionary process. Second, it is treated as impelled by macro-economic
forces and the technological evolution of capitalism. Globalization is not new:
capitalism 'globalized' from the start.[31]
Moreover, throughout its history, the
globalization of capital has been driven by processes that are largely national
and political. A broad-based political campaign is endeavoring to
accelerate the globalization of capital today. While it is being waged on many
fronts, it is specifically aimed at reversing the post-war social settlements
that tied capital to the development of national communities by shifting power
from labor to capital within states and undermining democratic national
governments.
Two factors had helped to increase working-class political power relative to that of
capital by the end of the Second World War: the participation of labor in
broad-based social movements, and mass mobilization
for war. Both of these sources of empowerment were gradually eliminated after
1945. With the re-embedding of capital after 1945, unions became more narrowly based and focused;
as a result, national union federations came to represent a declining and often
minor part of the working population (Norway and Sweden are exceptions). At the
same time, states ceased to raise citizen armies and to mobilize mass
populations to fight wars. The Viet Nam war ended the use of citizen
armies in the United States. Since then, the Cold War fight has depended on the
use of anti-communist mercenary armies wherever possible (the Contras in
Nicaragua, Renamo in Mozambique, Savimbi in Angola), selective military engagement, and the
occupation of strategic chokepoints (both geographically and institutionally).
As was the case with nineteenth century European imperialism, the deployment of
military force to secure and defend capitalist globalization today is being
carried out by professional armies. Overall, this has weakened the bargaining
position of workers and strengthened the position of capital.[32]
NOTES
[2]. Translated by Michael Henry Heim, New York,
Harper and Row, 1984, p. 2.
[3] Many historians assume that England did not experience a form of state corresponding
to the absolute monarchies of the continent because English monarchs could not
take the property of their subjects without their consent in parliament. But
continental absolutism were also based on the rights of property. The term
‘absolutism was used by those who opposed state policies and reforms which,
today, we associate with the welfare state and progressive liberalism.
Conventional accounts of this history
assume that opposition to absolutism was
principally concerned with a variety of ‘freedoms’. The record of the state
that emerged with the defeat of ‘absolutism’ provides little, if any, support
for this view.
[4] Pat Thane (1998: 55) rightly points out
that ‘There is a real question as to whether the vastly richer Britain of the
twentieth century is relatively more or less generous to its poor that the
England of the seventeenth and eighteenth centuries’.
[5] The legal measures
were never fully implemented, however, because of resistance from aristocratic
office-holders whose job was to apply them.
[6] British exports increased 67%; production
for the home market increased only 7%
[7]. Machinery which intensified labor and
deprived skilled labor of employment
[8]. And erroneously restricted in their
application to that world; see, for this argument, Halperin 1997.
9. As
Phyllis Deane, and many others, have pointed out, a ‘distinctive and
significant dimension’ of British industrial growth was ‘the extent to which it
was dependent on the international economy both for material inputs and for
final demand’ (Deane 1979: 294). The crucial input in Britain’s cotton industry (its ‘leading sector’),
cotton, was imported, so linkages were with foreign rather than domestic
industries.
[10]. McCloskey 1981: 143. The United States,
which at the same time was the largest economy in the world, exported only 7%.
(Floud 1997: 90). At the height of the Marshall Plan, in 1947, the level of
foreign investment as a share of national income was around 3% (McCloskey 1981:
144).
10. Barratt Brown 1970: x. See,
also, Davis and Huttenback 1988. Similarly,
many studies have shown that while French investments were helping to
industrialize considerable parts of Europe, France was technologically
backward, and clearly in need of much larger home investment.
Cairncross argues that French industry was 'starved for capital' (1953: 225).
The issue was a matter of debate from at least the 1830s. See Cameron 1961:
123, 152; and Landes 1954: 260 n9
12. Bairoch 1993: 172. The minerals prominent in tropical
trade today did not come to the fore until the end of the nineteenth century.
Minerals amounted to only 13% of tropical exports in 1913, compared with 29% in
1965. Moreover, it was only after World War II (in the 1950s, and again in the
1980s) that terms of trade in primary goods deteriorated (Bairoch 1993: 113-4).
[13].
Dress restrictions based on income were common outside of Europe, e.g. in
Japan. Today they persist, for instance, in north Africa, where Tuareg women
and slaves are forbidden to veil.
[14].
As, for instance, the following sentiment:
There
is a very great consumption of luxuries among the labouring poor of
this
kingdom: particularly among the manufacturing populace, by which they
consume
their time, the most fatal of consumptions
(anonymous, An Essay
On
Trade and Commerce, London, 1770, pp. 47,153; in Marx
1990: 342, fn4).
[15] British overseas investment and, in
particular British railway and harbor and ship building for Baltic and, later,
North American grain, produced a backflow of cheaply produced/regulated raw
materials and foodstuffs that did not compete with domestic English agriculture
and drove domestic working class wages down. Britain imported a third of its
food after 1870 (Barratt Brown 1970: 66).
[16]
Britain’s industrial wage‑earners realized 55‑60% of their
wage in the form of food; the steady fall in prices of staple food imports
after 1874 (grain, tea, sugar, lard, cheese, ham, and bacon), allowed real
wages in Britain to rise until World War I (Mathias 1983: 345).
[17] Geographically, the industrial revolution
was limited to the great centers of the export industry in the North and
'Celtic Fringe' (Manchester was the capital of the basic export industries).
[18] The introduction of the factory system in
spinning, in fact, increased the
number of domestic weavers (to handle the expanded production in yarn).
Traditional manufacturing organized around the putting‑out system
continued to make profits of as much as 1000% (Gillis 1983: 41, 159); as long
as it did, there was little incentive to introduce new techniques having the
capacity to produce social externalities.
[19] New techniques were introduced “slowly and
with considerable reluctance.” In the 1930s, half the industry's workforce
still practiced “their traditional handicrafts, especially in house‑building,
largely untouched by mechanization” (Benson 1989: 20).
20 There were 200.000 coal-miners in Britain in 1850, half a million in
1880, and 1.2 million in 1914 (Hobsbawm
1968: 116).
[21] Romein 1978: 195. In 1900, less than 1% of
the population owned more than 40% of the land of Austria, Hungary, Romania,
Germany, Spain, and Poland; less than 4% of the population owned 25% of the
land of Denmark and France. Ten percent of landowners held 85% of Italy
(Goldstein 1983: 240).
[22] According to a semi-official Land Enquiry
Committee report in 1912; cited in Ogg 1930: 174.
[23] The table leaves out other countries with
cartelised industry; see Halperin 1997: Chapter 7.
[24]
Only the production of modern armaments is more capital‑absorbing
(the mass production of armaments in the United States, and their export to
Europe’s great and small powers, began in the 1860s.
[25] Floud 1997: 24. Various investigations
showed that, in the decade before World War I, a significant proportion of the
population of England and Wales were living in poverty without recourse to poor
relief (Bell 1907; Davies 1909; Rowntree 1913; Bowley and Burnett-Hurst 1915).
[26]
Most historical accounts treat the welfare provisions of the post-WWII ‘Welfare
State’ as the outcome of progressive developments and of a modern and
enlightened era which is immeasurably superior to anything which went before.
But studies have shown that, in Britain, transfer payments to the elderly (see,
e.g., Thompson 1984) and to single-parent families (see, e.g. Snell and Millar
1987) were significantly less under Britain’s post-WWII welfare system than
under the old poor law.
[27] Similar changes took place in France (1982‑3),
Australia (1983), Canada (1984) and New Zealand (1984).
[28]
By 2001 the Asian economies had huge
holdings of US Treasury and other passive foreign assets: Japan $404 billion;
China $196 billion; Taiwan $122; Hong Kong $111 billion; Korea $103 billion;
Singapore $77 billion (Hong Kong Monetary Authority 2002; in Schwartz 2001: 12).
[29]
‘Appeals to national pride, “Asian values” and a general sense that Asia’s
century had arrived were used to gloss over substantial dislocation of peasant
populations and worker unrest’ (Schwartz 2001: 12).
[30]
There is a high level of intra-Asian exports in comparison to other developing
regions. In 2000, for example, 38 percent of Asian (excluding Japan) exports
went to other Asian economies. But external demand remains critical for growth
(Schwartz 2001: 13).
[31] That
globalization is the necessary
product of capital’s expansion
was asserted, in 1848, by Marx and Engels in the Communist Manifesto: ‘The need of a constantly expanding market
for its products chases the bourgeoisie over the whole surface of the globe.’
[32] ‘The replacing of mass conscript armies with
professional armed forces’, as Joachim Hirsch has argued, ‘is incompatible with
maintaining the principles of citizenship. Universal liability for military
service has historically been inseparable from democracy’ (1999: 309). What would be the consequence, in the
current context of widespread anti-globalization sentiment, if governments
depended on mass citizen armies to advance and defend through military means
the further globalization of capital?
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