The tendency to globalization results from the historical conditions within which the reproduction and valorization of capital takes place. Since the end of the 1970s (beginning with the formation of the Thatcher government in the UK and the Reagan administration in the US), the economically most powerful states have reacted to increasing economic stagnation and generalized crisis – then signified by astronomically mounting public debt rates – by dismantling the ‘Keynesian’ ‘welfare state’, and pushing what has become known as the ‘neo-liberal’ agenda. The combination of recession and high inflation from 1980 to ’82 only strengthened the hand of the ‘neo-liberals’ (although they were then usually referred to as ‘neo-conservatives’) in more or less all of the advanced countries of Western Europe, North America, Japan, and Australia.
By the end of the ‘80s, every economically most developed capital, and many of those furthest along on the ‘developing’ path, had adopted and begun to put into practice this agenda. The agenda involves a complete restructuring of the national capital, a generalized liberalization of the restrictions imposed by the state on the functioning of the capital of its nation – restrictions which were originally imposed, mostly during the ‘Keynesian’ years, from the ‘30s to the ‘70s, in order to ‘protect’ the rights or well-being of workers, the environment, animals, historic communities, neighbourhoods, etc.1 In other words, the state itself scales back its own direct control over the day-to-day functioning and operation of the nation’s capital units. The policies involved include: the cutting of taxes, especially corporate and capital-gains taxes, deregulation, privatization, reduction of government spending on the ‘welfare state’ (i.e., social service benefits, subsidized public housing, healthcare, education, support for non-competitive ‘cultural industries’), reduction of the power and rights of trade unions, and reduction of public sector deficit spending and debt (although this latter was only realized later on, after several years of cutbacks to the ‘social wage’ the working class had struggled through the ‘70s to achieve). Thereby, the state reduces the massive burden it had become on the profitability, and thus, the very viability of the nation’s entire capital. Of course, this tendency towards a reduction of direct control by the state is resisted by those forces in the state and the ruling class which benefit from such control, and many bitter power struggles were fought in ruling circles throughout the ‘80s and ‘90s. However, by the beginning of the ‘90s, the neo-liberals had gained the upper hand within virtually all economically significant countries and their ideology, pushed heavily by the mass media, had apparently conquered ‘public opinion’.
These neo-liberal policies permitted the economically most powerful countries (organized today in the ‘Group of Seven’) to strengthen their competitive position – already dominant relative to all the others – on the world markets. Once these policies were in place, and their capitals had the room to expand unhindered by a domineering state apparatus, these self-same economically most powerful states began pushing the ‘Free Trade’ agenda, first amongst the countries of their geographic region (e.g., Western Europe, North America, and South East Asia), then, in the last decade, on a global scale. International multi-state organizations were set up to facilitate the orderly liberalization of trade and capital movement (e.g., the EEC, NAFTA, ASEAN, APEC, FTAA, etc.); finally, in 1996, the old (rather toothless) General Agreement on Tariffs and Trade (GATT), set up at the end of WWII along with the International Monetary Fund (IMF) and the World Bank (WB), was disbanded, and replaced with the far more ambitious, potentially far more powerful, World Trade Organization (WTO).
The WTO crystallizes the ambitions of the neo-liberals and their agenda on a global scale. It opens up markets, primarily amongst the ‘lesser developed’ and ‘developing’ countries, whose lesser developed and thus lesser competitive capitals required more state protection (in the form of tariffs and duties) on domestic markets from domination by the world’s most advanced capital units. This is a process most lesser developed nations feel forced to set into motion, since a few amongst them had already done it on their own – in an attempt to gain a competitive advantage for their own country over other lesser developed nations – and since it is seen by most of those in power in these countries as the only way to attract the foreign investment of capital necessary for further economic growth. But this whole tendency is fraught with contradictions, since many different factions within the ruling classes of the many lesser developed countries oppose neo-liberalism, in favour of maintaining a relatively sizable public sector, state regulations, higher taxes, and protective tariffs and duties to prevent cheaper imports from taking over their markets from their own capitals, state subsidies for exports, and entering into modest trade agreements with other similarly developed nations in their region.
Globalization, via the WTO, thus opens up and expands international markets, permitting the most competitive capitals – the most developed, generally also the largest, most concentrated ones – to dominate more and more, raising their profit and growth rates. Once the course towards global integration has been embraced by most, the lesser developed countries can only hope to benefit from this process by attracting more foreign investment of capital (by offering things such as prime geographic location, possession of raw material resources, minimal regulations of corporate activity, low wage workforce, low tax structure, etc.), leading to increased employment, consumer spending, and tax revenues. Their own lesser developed capital is no match for the more developed capitals, leaving them with the only option of somehow servicing or facilitating the operation of foreign capital invested in their country.
There was never really much choice in the matter of this course towards international neo-liberalism and globalization. It was only ever really just a matter of how much time it would take to get enough states on board necessary to implement the agenda. Ever since new technological developments in fibre optics, telecommunications, and computer software combined with the willingness of certain ‘rogue’ states to allow the fully unfettered operation of capital in and through their countries, globalization of capital to a limited extent has been a de facto reality. Failure to follow the course, or undue delay in taking it up, would only leave the enormous burden of bureaucratic state control over the nation’s capital, preventing that economic growth necessary to stave off stagnation and eventual recession, and ultimately, depression.
The so-called ‘Fair Trade’ agenda pushed by moderate pro-capitalist opponents of globalization (such as the trade unions, the mainstream environmental groups, and most of the various religious activist groups, peasant organizations, and other ‘civil society’ organizations), which aims to retain or re-impose bureaucratic state control over the movement and functioning of capital, would only work against any tendencies towards international economic growth and lead us back to stagnation and towards global depression It is no coincidence that, of all of the political parties which defend this agenda in almost every country today, only a handful are in power. To think that the ruling capitalist classes of the world’s various countries, foremost among them the most powerful ones, would opt for such a course is completely UTOPIAN.
At this crucial moment in human history, there are really only two options left open for humankind: either further on towards globalization and the removal of all restrictions on capital OR the global elimination of capital and the capitalist system (mode of production) itself, by the autonomous global working class.
Wage Slave X
18 March 2001
Vancouver, Canada
1 While the trade unions and left-wing political parties – claiming to represent the interests of the working class – pointed to these ‘protections’ as ‘gains’ of the class struggle, the reason the then-dominant factions of the ruling capitalist class, entrenched in the state, instituted these measures was to stimulate demand for commodities which were otherwise too abundant in supply for markets to realize the surplus-value necessary for the continued reproduction and accumulation of the national capital. See “The Roots of the Capitalist Crisis, part 3”, in Internationalist Perspective #32-33, for further details.