By Doug Lorimer
The following article is abridged from a talk presented to the Marxism 2000 conference in Sydney, January 5-9, 2000.
Utilising Karl Marx's theory of capitalist development, V.I. Lenin concluded 85 years ago that all the features which Marx had forecast in 1865 as characteristic of "capitalist production in its highest development" — joint-stock companies, separation of capital ownership from managerial functions in the direct process of production, monopolies, extensive state intervention in economic activity, the existence of a "financial aristocracy" consisting of "parasites in the guise of company promoters, speculators and merely nominal directors" — had become dominant in western Europe, North America, Japan and in his native Russia.
On the basis of economic data compiled in the early years of the 20th century, Lenin argued in December 1915: "... at the end of the 19th and the beginning of the 20th centuries, commodity exchange had created such an internationalisation of economic relations, and such an internationalisation of capital, accompanied by such a vast increase in large-scale production, that free competition began to be replaced by monopoly".
The dominant type of capitalist businesses were, Lenin wrote, "no longer enterprises freely competing inside the country and through intercourse between countries, but monopoly alliances of entrepreneurs, trusts" which were carving up the world market between themselves.
"The typical ruler of the world", Lenin wrote, "became finance capital, a power that is peculiarly mobile and flexible, peculiarly intertwined at home and internationally, peculiarly devoid of individuality and divorced from the immediate processes of production, peculiarly easy to concentrate, a power that has already made peculiarly large strides on the road to concentration, so that literally several hundred billionaires and millionaires hold in their hands the fate of the whole world".
This new epoch in the history of capitalism, Lenin explained in his 1916 book Imperialism, the Highest Stage of Capitalism, would be marked above all by the drive by each of the financial oligarchies of the advanced capitalist countries to use the coercive power and organised violence of the state machines they commanded to maintain their domination over the economic and political life of the backward countries and to increase their wealth at the expense not only of working people at home and abroad, but also in competition with the financial oligarchies that dominated the other advanced countries.
It is often claimed that the extent of internationalisation of production today has far outstripped the levels that existed when Lenin made his analysis of imperialist capitalism, and that his analysis, based on a world market still fragmented into many national economies, is therefore "outdated".
Hype
It is certainly true that there was a phenomenal increase in international movements of money-capital over the last two decades of the 20th century. However, claims that there has been a dramatic increase in cross-border trade in goods and services, or in transfers of productive capital, are vastly overstated.
In 1913, for example, world trade in goods and services amounted to 16% of world output. After a sharp fall in the interwar years, it gradually climbed back up to 15% only in 1990. Similarly, the world's accumulated stock of foreign direct investment was equivalent to 12% of world output in 1913. By 1990, it stood no higher than 10% of world output.
The US economist Doug Henwood has shown that the much-hyped increase in the "globalisation" of the production operations of transnational companies is just that — hype. By 1994, transfers of partly finished goods to or from foreign manufacturing affiliates by companies operating in the US had risen from 12% of US trade in 1977 to 13%, that is, by a relatively negligible amount. Cross-border transfers of partly finished goods within transnational companies operating in the US rose from 2% of US trade in 1977 to 3.2% in 1994.
Today, it should be obvious to everyone that the features that Marx forecast back in 1865 as characteristic of "capitalist production in its highest development" are the dominant form through which the process of accumulation of capital occurs on a world scale.
The bourgeois pundits who describe modern capitalism as a "casino economy" do not acknowledge that this is the end result of the very laws of development of capitalism that Marx discovered. Instead, they attribute it to the changes in communications technology (the so-called information technology revolution) and the deregulation of the world's financial markets, that is, markets in financial assets such as company shares.
The latter, they claim, was made "inevitable" during the 1980s by a combination of the IT "revolution" and the "globalisation" of the production and marketing of goods and services by transnational companies. Furthermore, it is claimed that transnational companies have brought into being an integrated, borderless (at least for capital) worldwide market in which all nation-states have lost their ability to regulate their economies.
Many left liberals and ex-radicals from the 1960s and '70s, while nostalgic for the Cold War period of Keynesian liberal-democratic "welfare" capitalism, have completely bought these claims and accepted the social and economic policies that have accompanied the supposed new rise to dominance of finance capital as being as irresistible as the change in the seasons. But what is now called neo-liberalism was the dominant approach of the capitalist ruling classes, particularly in the richest capitalist countries (Britain and the US), toward government economic policy right up to the mid-1930s.
Keynesianism
Based upon the classical liberal bourgeois economic theory that the unfettered pursuit of private gain by individuals will, through the rationality of the market, ensure the satisfaction of the common good, orthodox liberal economists argued that intervention by the state into the operations of the market to create jobs and protect working people from the vicissitudes of supply and demand of labour power would do more harm than good.
However, these nostrums were abandoned by the imperialist ruling classes after World War II. The recovery from the Great Depression of the 1930s as a result of pumping massive amounts of government credit into the capitalist economy to purchase war goods to defeat their imperialist rivals (and reap huge profits) convinced bourgeois policy makers and economic theorists that there was some worth in the ideas put forward in the mid-1930s by the British economist John Maynard Keynes.
According to Keynes, capitalist governments should undertake deficit spending in hard times to provide funds for production and jobs which the capitalist economy, left to its own mechanisms, could not provide. These deficits, (government expenditures over and above what the government takes in in taxes), would be raised by large-scale bank loans to the government.
In good times, the government would be able to repay the loans at interest and the banks would also profit from the whole exercise. But in a downturn, government deficit spending to create jobs would lead to a flight overseas of money-capital unless the government imposed tight currency exchange controls. Furthermore, in an economy dominated by monopolistic businesses, such Keynesian policies would stimulate an inflation of prices on goods and services unless the big investors who controlled these businesses — the financial oligarchy — could see an expanding market for an increased production.
Throughout the Great Depression, no such expanding market existed, which is why Keynesian policies — the essence of which is to inflate the capitalist economy to stimulate purchasing power — were only applied in a very limited form. Only a major war — or preparations for it — could create such an expanding market, a market for war goods purchased by the state.
There is a widely held myth that the US imperialist rulers sacrificed their own narrow interests at the end of World War II to rebuild the world economy through initiating a range of multinational institutions such as the World Bank, the International Monetary Fund (IMF), the International Trade Organisation and the General Agreement on Tariffs and Trade.
In fact, the US imperialists marched into World War II with their eyes solely on their own interests of world domination. The wartime and postwar trade, financial and political arrangements they initiated were aimed at making the rest of the 20th century one that they would dominate — the "American century".
All of their wartime assistance to their imperialist allies and all of their postwar assistance to their defeated imperialist rivals came with strings attached. These strings ensured that US finance capital would dominate the postwar capitalist world.
For example, in the Marshall Plan (and NATO), Washington simply accepted the necessity of pouring money and armaments into the weakened European countries to protect them from internal "communist takeover" (the Cold War euphemism for working-class revolution). It thus ensured that European workers would be open to exploitation by subsidiaries of US corporations.
Force
Certainly, Washington had to pay a strategic price for helping its imperialist rivals in Europe and Japan recover their positions in the world economy, but it protected its own economic dominance by placing its imperialist rivals' ability to militarily protect their own international economic interests under the control of the Pentagon.
The imperialist policy makers in Washington have always understood that force — the organised violence that is the essence of state power — is a crucial tool of economic policy and a decisive instrument in deciding who will be the winners and the losers in the global competition between profiteers to accumulate capital. That's why, despite the end of the Cold War and all the claims that "neo-liberal globalisation" is weakening the power of nation-states, US capital has continued to strengthen the coercive power of its nation-state, spending more on its military machine than the combined amount of military spending of the next six major powers.
"Neo-liberal globalisation" is just that: the extension to the entire world of neo-liberal economic and social policies. But these policies have nothing to do with, and are not aimed at, weakening the coercive power of nation-states over their own working people, or of weakening the coercive power of the imperialist nation-states over the rest of the world. To the contrary, they are aimed at ensuring that the markets of the rest of the world are open to their goods and investments.
The organisations the imperialist rulers have used to impose neo-liberal policies upon the underdeveloped capitalist countries — the World Bank and the IMF — are not supra-national bodies. They express the power of the imperialist nation-states, above all the US nation-state, within the global economy.
'Welfare' capitalism
In the immediate postwar period, millions of working people in these countries, particularly in western Europe and Japan, were politically attracted to the Soviet model of state ownership and centralised planning as an alternative to capitalism. This posed an enormous threat to stable capitalist political rule in western Europe and Japan.
In the US itself, an explosion of labour struggles had erupted with the end of the war as workers sought, on the basis of the wartime boom conditions, to restore the value of real wages eroded by a decade of depression and five years of inflation. The US rulers urgently needed to buy social peace at home if they were going to win mass acquiescence in their postwar drive to contain and roll back "communism".
This led to the modification of liberal bourgeois ideology in the postwar period from doctrinaire free-market nostrums to the extolling of national Keynesian, social-liberal, state-regulated, "welfare" capitalism.
Determined to contain the influence of pro-Soviet leftists in the labour movement and enlist the bulk of organised labour to support the US-led drive to "contain and roll back communism", imperialist governments — whether led by Laborite "socialists" like Australia's Ben Chifley or rabid anticommunist conservatives like Robert Menzies — struck an unwritten deal with the top echelons of the trade union movement. This deal offered favourable conditions for unions to operate, relative job security for unionised workers, steady improvements in wages and working conditions, and "welfare" safety nets for unemployed or retired workers in return for support for pro-imperialist, anticommunist politics.
Economically, this deal was made possible by the long wave of expansion of capitalist production and accumulation of capital in the imperialist countries from the late 1940s to the early 1970s.
The deal served the political interests of finance capital up until the 1970s. But it then became clear to the imperialist ruling classes that the long postwar boom had run out of steam. As growth in the world capitalist economy slowed, competition between the nationally based rival financial oligarchies of the imperialist countries to dominate markets and fields of investment intensified.
Furthermore, the Soviet model of "socialism" with its bureaucratic mismanagement, political repression and low-quality consumer goods no longer appealed to broad masses of workers in the developed countries as an alternative to capitalism.
By the late 1970s, the material basis for the policies of "welfare" capitalism, and the political needs that had required it, had disappeared. Economically, the imperialist bourgeoisies needed to launch a sustained offensive against organised labour — and the working class as a whole in their own countries more generally — to take back the economic concessions granted during the long boom. Abroad, they needed to roll back the political concessions granted to the bourgeois regimes in the underdeveloped capitalist countries so as to force them to remove even the limited controls these regimes had in place to limit the extent to which imperialist finance capital dominated their economies.
Neo-liberal offensive
This switch proved beyond the capacity of most of the ruling-class politicians and policy makers then in government. It was to be carried out by a new breed of politicians and policy makers who would espouse classical liberal economic and social policies dressed up as "radical reforms" that would "restore prosperity", and who were not afraid to meet any manifestations of labour militancy or Third World resistance to imperialist dictates with the stick of repression rather than the carrot of concessions.
The election in 1979-1980 of the first of the politicians of "neo-liberal globalisation" — Margaret Thatcher in Britain and Ronald Reagan in the US — marked the beginning of imperialism's global offensive against wage labour at home and the semi-colonial peoples abroad. Within a few years, all of the mainstream imperialist politicians — whether they called themselves social-democrats, liberals or conservatives — followed Thatcher and Reagan's lead.
Of course, reversing the effects of policies pursued in the US from the mid-1930s and in most other imperialist countries from the mid-1940s could not and cannot be achieved within a few years, particularly because it generates increasing dissatisfaction and discontent amongst sections of the working class.
The chief source of concern among bourgeois commentators about the "globalisation" of neo-liberal economic and social policies is: will popular resistance explode into open revolts that challenge the stability, or even the survival, of capitalist rule?
Reflecting such concerns, Hans-Peter Martin and Harald Schumann, in their 1996 international best seller, The Global Trap: Globalisation and the Assault on Democracy and Prosperity, appeal to today's imperialist rulers to change course, to abandon their "deregulation of the market" and their "dismantling of the welfare state". They argue that the "subjection of human labour" to the unregulated laws of the market threatens the "social stability" of capitalism and risks provoking economic chaos and political turmoil. They plead with the imperialist policy-makers to recognise that, "... the taming of capitalism through basic social and economic rights was not some act of charity that can be abandoned when the going gets tough".
Possibilities
The imperialist policy-makers are well aware that the postwar controls on the operations of the market economy and the social reforms were not the result of philanthropic concern for the welfare of working people but rather because it was economically possible and politically necessary to contain and defuse the threat to their rule of mass working-class disillusionment with capitalism and widespread support for Marxism.
Like so many other left liberals today, Martin and Schumann fail to recognise that, in unfavourable economic conditions, social reforms are made by the exploiters only when "the going gets rough" for them politically; that is, when they begin to be haunted by the spectre of a revolution by the exploited.
Martin and Schumann correctly point out that as the drive to impose neo-liberal globalisation has deepened, "the contradiction between market and democracy has been regaining its explosive force". That contradiction, however, cannot be overcome within the framework of capitalism, no matter how democratic the political forms superimposed on it.
It can only be overcome by ending the "subjection of human labour to the laws of the market" and replacing it with the subjection of actually socialised human labour to the democratic control of collectively organised labour; that is, with socialism.
The task and challenge that Marxists face in the 21st century is to turn the potential explosive force of the growing popular discontent with the impact of neo-liberal globalisation into an organised, consciously anti-capitalist mass movement — a movement that can explode the capitalist fetters that enslave the creative force of socialised labour. Only if we succeed in doing this will we be able to ensure that the horrors inflicted on humanity by the process of the accumulation of capital in the 20th century are not repeated in the 21st.
[Doug Lorimer is a member of the national executive of the Democratic Socialist Party.]