the imbricating of global capitalism by leo panitch and sam gindin

8/12/2019 The Imbricating of Global Capitalism by Leo Panitch and Sam Gindin

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he ne+ relations +ere most pronounced +ith ;urope. he arshall plan signalled the

US states commitment to under+riting the ;uropean states as capitalist states. hey

argue !"#$"% $$"-$$:( that the US state positively supported the 3ommon arket, +hich+as not intended to be, and it did not become, the basis for a ne+ inter-imperialist

rivalry based on a ;uropean super-state.


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hese transformations C the ne- age of finance, the restructuring of manufacturing, the

e>plosion of high-tech, the ubiDuity of business services, as +ell as the profound

+eakening of +orking class organisation and labour identity C reconstituted the materialbase of the American empire.

y the ne+ millennium there +as clearly a very remarkable, if still highly uneven,process of capitalist development taking place in the global South some states +ere able

to break out of capitalist underdevelopment. he ma)or shift across so many

de"eloping counties to e2port3led manufacturing productionmeant that their place

in global capitalism +as no longer that of mere suppliers of ra- materials to the

advanced capitalist states. this transformation reconfiguration social relations in onecountry after another, yielding ne+ capitalist classes linked to international capital a

massive e>pansion of the global proletariat.

he integration of these regions of the +orld into global capitalism has been e>tremely

uneven. At the end of the t+entieth century the advanced capitalist countries accounted

for , 6'B of +orld 1=4 C B of all financial assets C 7'B of global /=* C recipientof 8#B of /=* recipients C 8#B of global e>ports of manufactured goods C 8#B of

+orld manufacturing production by value =espite the enormous volume ofmanufacturing production taking place in developing countries by the first decade of the

t+enty-first century C over 6#B of the value of manufactured e>ports. C ost 23

production and sales still took place in the developed +orld,. the increase in globalproduction taking place in the hird World lead to anything near a corresponding

convergence in income relative to the advanced capitalist countries, as evidenced not

only by conditions in the factories but especially in the slums of most hird World cities.

uch of this analysis is simply reading off the real trends and tendencies in global

political economy -ithout flinching or self3deceptionC empirically grounded seekingto e>plain ho+ the current balance of forces emerged. his is neither fatalistic nor

pessimistic. 4anitch and 1indin constantly emphasise the contested nature of the globalorder and in particular the efforts of labour movements to come to grips +ith it. hus

they see that +ithin the drive to+ards globalised capitalist production increased the

po+er of capital but also the social +eight of the +orking class. he apparent triumph of

the American empire only reinforces the global terrain of +orking class politics and theimportance of international +orking class struggle.

0ne of the chief contributions made by 4anitch and 1indin, not only in this book but in a

range of articles they have produced over the last decade in the Socialist pressed by the SW4 and most of the left in ritain C mechanically transposes Eenins

vie+ of inter-imperialist rivalry leading to the /irst World War onto todays very

different conditions. ehind arguments about *srael-4alestine, Syria, *raD, *ran and a hostof other debates lurks an interpretation of imperialism largely inherited from Stalinism.

3learing a+ay the debris is vital to understand the dynamics of current politics.


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4anitch and 1indin !"#$"% '( applaud the classical ar>ist analysis of the international

dimension of capitalism. hey regard the insight that the e2port of capital -as

transforming the role of the state in both capital3e2porting and importing countries

as *the most important contribution of theorists of imperialism -riting at the

beginning of the t-entieth century,. Fo+ever the link these theorists made bet+een

the e>port of capital and the inter-imperialist rivalry of those years +as problematic, and+ould become even more so over the years from $&:' on+ards. he problem +as not

only that classical theories of imperialism sa+ states as merely acting at the behest of

their respective capitalist classes, and thus did not gi"e sufficient -eight to the role of

pre3capitalist ruling classes in the inter3imperialist ri"alry of their o-n time. *t +as

also that they treated the e>port of capital itself as imperialist, and thus the theories did

not really register the differentiation bet+een the economic and political spheres in

capitalism, or the significance of informal empire in this respect.

4anitch and 1indin !"#$"% 6( do not dismiss the value of these theories at the particular

con)uncture of the /irst World War. Fo+ever their tendency to directly associate the

ne+ e>port of capital +ith the old history of imperialism !as the e>tension of rule througharmed conDuest of territories(, led them to mistakenly conclude that this fusion defined

the historical terminus of a mature capitalism. Whatever one believes about

imperialism! the form it too in 1914 cannot in retrospect be described as the final

or highest stage of capitalism0/urther, the notion offinance capital (extrapolated fromthe monopoly trusts between industrial and financial firms at the turn of the century in

Germany+as a hindrance to understanding the much looser relationship bet+een

production and finance that became the American norm,.

the attempt to e2plain the e2port of capital in terms of the saturation of domestic

marets in the ma)or capitalist countries n the .golden age/ after 1945 fails to

recognise domestic marets -ere anything but saturatedprofits -ere realisedthrough e2panding -oring class consumption, yet capital e2ports continued, drivenby Duite different factors, as the e>port of capital itself +as transformed over the

t+entieth century in the conte>t of the international integration of production through

multinational corporations and the e>tensive development of international financialmarkets.

after $&:' the densest imperial net-ors and institutional linages! -hich hadearlier run 7orth3South bet-een imperial states and their formal and informal

colonies! no- ran bet-een the S and the other capitalist states. the

interpenetration of capitals *did largely efface the interest and capacity of each

national .bourgeoisie/ to act as the ind of coherent force that might ha"e supported

challenges to the informal +merican empire,0he ne+ relationship bet+eencapitalism and empire established at this time should not be understood in terms of the

old imperial @territorial logic of po+er merely becoming fused +ith the @capitalist logic

of po+er associated +ith @capital accumulation in space and time. he US informal

empire constituted a distinctly ne+ form of political rule.


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hey build on the insight of ar>ists such as ;llen eiksins Wood, about ho+ the

separation of the economic and the political that characterises capitalism0 his plays

out globally as +ell as +ithin particular states. he prototype for this kind of imperialhegemon +as of course ritain, +hich emerged as the first global capitalist po+er.

efore the late eighteenth century, all empires had combined economic control +ith

military and political control. t -as left to 8ritain! *-here the differentiation bet-eeneconomy and state -as most ad"anced! to de"elop a conception of empire based asmuch on economic e2pansion and influence 3 the .mperialism f 'ree Trade/ : as

on the military and political control of o"erseas territories,00f course the ritainempire mi>ed the old territorial conDuest !such as in *ndia( +ith the more informal

methods !such as in Eatin America(. 4anitch and 1indin puncture the conventional notion

that free trade and imperialism did not mi>, a misconception carried into the t+entieth

century by ar>ists such as autsky and Eenin. he ritish e>perience and latterly therole of the US decisively refute this )u>taposition.

4anitch and 1indin !"#$"% "$7, 99#( e>tend this analysis of the imperialism of free

trade to understand the hegemony the US state has e>ercised globally since $&:'. heyalso make some +ider insights that are valuable. /irst, those observers +ho have sought

since the $&8#s to predict a recrudescence of inter-imperial rivalry, in the form of US

conflict +ith either ;urope, or ?apan, !or latterly +ith 3hina( have been +rong. he

continuing centrality of the American state in the global economy has been reinforced inthe current crisis unfolded, +ith virtually no trace of such inter-imperial conflict that a

century earlier had given rise to +orld +ar. he conflicts that have emerged today in the

+ake of the greatest capitalist crisis since the $&9#s are taking shape, not only in ;uropebut much more generally, less as conflicts bet-een capitalist states and their rulingclasses than as conflicts -ithin capitalist states,0

here are also implications of their analysis for our understanding of the 3old War andits place in the last half-century of history. 4anitch and 1indin !"#$"% $"(, rightly in myvie+, did not regard SS; as a capitalist state! but rather as a different form ofe2ploiting class society0 The SS; -as imperialist in the classic, general historical

sense i.e. a territorial imperialist, both internally in dominating other people, such as inthe Ukraine, and e>ternally in its post-+ar control over ;astern ;urope. he 3old War

+as undoubtedly a conflict bet+een imperialist blocks, and bet+een different modes of

production. here is no doubt about the real threat of global -ar that it entailed! or its

terrible impact on labour mo"ements0

Fo+ever many on the left made the US-USS< rivalry simply a species of the inter-

imperial rivalry thesis, and thus the main dynamic in international relations bet+een $&:'

and $&&$. *f * read 4anitch and 1indin right, they regard the Cold #ar as a secondary

phenomenon! subordinate to the global capitalist pro)ect of the S state. * think they

are right about this. he USS< +as never able to mount a systemic challenge to

capitalism and Stalinism never caught up +ith the productivity of capitalism. Stalinism

+as a blind alley C and for the +orking class movement a terribly destructive diversion C+ithin an epoch in +hich capitalism +as the dominant mode. he collapse of Stalinism

and the endurance of capitalism underline the analytical priority. his is not to render the


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3old War irrelevant, but rather to understand it as a sub-plot +ithin a much +ider global

political economy that emerged after $&:'.

+o other insights also make sense. 4anitch and 1indin argue that to characterise the

S economy a century ago change, +ith little

focus on +hat distinguished the US from other empires. he +orld systems, dependency

and other third +orldist nationalist theories that dominated left thinking, particularly inthe $&6#s and $&8#s, have been crucially undermined by developments over the last

generation. 3apitalist development has been and +ill al+ays be highly uneven, but therehas been significant combined development,particularly the creation of ne- centres ofaccumulation -ith sub3imperialist states! and crucially the gro-th of the industrial

-oring class! -hich has rene-ed and e2panded the ob)ecti"e basis for

international socialism0 t is on these tendencies that a re"i"ed labour mo"ement can

arise0

Since the $&8#s, much of the international left has claimed that the US is in decline and

thus the cannibalised Eeninist position of inter-imperial rivalry leading to +ar became

operative again. Get even a superficial familiarity +ith the real relation of forceschallenges this thesis C the US retains absolute superiority in military, economic,

technological and cultural matters. /or e>ample, the US state had around :## militarybases in the $&6#s, +hile today it has over 8##. he US also outspends all its possible

rivals put together, never mind its allies, alliances, nuclear and cyber capability, and other

advantages. he aking of 1lobal 3apitalism !"#$"% $9', "7&-&$( sho+s very clearly

that apocalyptic interpretations of S decline are misplaced, the evidence for it scantyand the political conclusions dra+n from it hugely problematic. 4anitch and 1indin

+eigh up key decline arguments% gro+th, technology, trade and rivals, finding them

unsatisfactory at present.

he first argument concerning +orld production shares is simplistic. he US share of

global G>Pdid shrinfrom 9'B in $&'# to "8B in $&8# and has reduced since then to

around "#B. Fo+ever the S state/s pro)ect for a global capitalism -as al-ays

predicated on re"i"ing the other capitalist economies and their capitalist classes. heperiod since the $&8#s has seen the further integration of ;uropean, ?apanese and

American capital, as +ell as intensive cooperation bet+een the ;uropean and ?apanese

states and the American state. he US economy has not stagnated compared +ith otheradvanced states. he average annual real rate of gro+th of the American economy in the


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Duarter-century after the resolution of the crisis of the $&8#s !from $&79 to "##8( +as

9.'B. his +as higher than in any similar period from $79# to $&'#, and only marginally

less than during the post-+ar @golden age. US 1=4 gro+th in the Duarter-century after$&79 surpassed that of all other advanced capitalist countries.

he second argument concerns the gro+th of the US trade deficit, +hich some observersclaim threatens the dollar and ultimately US hegemony. 4anitch and 1indin !"#$"% "&$(

argue that the S trade deficit -as not an ade?uate measure of the o"erall

producti"e po-er of +merican capital rather! it indicated its place in global

capitalism. he gro+th in the volume of US e>ports in the t+o decades up to "##8 C

even as the trade deficit accumulated C averaged a very robust 6.6B, leaving it onlymarginally behind 1ermany and 3hina, the +orlds largest e>porters. *t +as the relative

e>pansion of US imports that +as the source of the gro+ing deficit. he deficit in other

+ords, primarily came from increased US consumption. A more rounded picture isgleaned from looking at overall flo+s. otal US trade !e>ports plus imports( eDualled

9#B of 1=4 in "##8, +hereas it had still been under $#B four decades earlier. ut

perhaps the best measure of the intert+ining of US and global capital +as foreigncapitals increased presence inside the US,0 'oreign direct in"estment into the S!-hich -as still under 5@ of US non-residential investment until the mid-$&7#s,

e>ploded in the follo+ing t+o decades5 by "##8 '> to the S -as running at &@of

US non-residential investment.

he third argument concerns technological leadership, +hich US capital continues to

dominate. 4anitch and 1indin !"#$"% $-$, "#"( point out that in the $&8#s, US

e>penditure on research and development +as about four times that of the countries of

Western ;urope combined. y the $&s American * corporations such as +pple!

Ae-lett3Pacard! 8B and Bicrosoft -ere supplying o"er @ of $urope/s

soft-are and computer maret0y the end of the century, of the top doHen global firmsby sector, the US accounted for 88B of the +orlds aerospace sales, 8'B of all sales ofcomputers and office eDuipment, &$B of computer soft+are sales, and 6"B of

pharmaceuticals. he US share of global high-tech sectors !aerospace, pharmaceuticals,

computers and office machinery, communications eDuipment, and scientific C medical,precision, and optical - instruments( remained relatively steady at 9"B bet+een $&7# and

"##$, +hereas that of 1ermany +as halved !to 'B( and that of ?apan fell by a third !to

$9B(, and 3hinas and South oreas shares +ere still only &B and 8B respectively.

4anitch and 1indin !"#$"% "7&, "&$( argue that the @commanding heights/ of global

accumulationhas shifted to these high-tech sectors, and to a range of business services.

As of "##8, the top three or four firms in such diverse sectors as technological hard-are

and e?uipment! soft-are and computers! aerospaceDmilitary! and oil e?uipment and

ser"ices -ere +merican, as +ere fourteen of the si>teen top global firms in healthcaree?uipment and ser"ices. 2ine of the top ten corporations in global financial ser"ices

+ere American C a dominance that +ent beyond that in any other sector. y "##8, five

S in"estment bans accounted for E5@ of -orld re"enue generated by

under-riting bond issues! organising Ps! e?uity trading! syndicated loans! and

o"er3the3counter deri"ati"es0ore than half the +orlds pension, insurance, and mutual


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funds +ere under the management of US financial firms, as +ere t+o-thirds of hedge

funds and private eDuity funds. Get the US +as still producing more manufactured goods

and receiving more foreign investment in "##8 than all the t decade,

although in per capita terms it remains far behind. Fo+ever by &5 aggerated claims of 3hinas gro+ing economicdominance, given that 3hinese capital is still catching up technologically to orea and

ai+an, let alone the US. hey point to Chinese3S interdependence, +ith 3hinareliant on the US as an e>port market and as the holder of huge dollar reserves, +hile US

capital is no+ producing much more in 3hina itself. hey believe that since China/s

admission to the #T in &1! it has been integrated into global capitalism .Fo+ever the crucial Duestion about rivalry concerns +hether the 3hinese state has the

capacity to take on e>tensive responsibilities for managing global capitalism. heir vie+

is that 3hina is manifestly still a very long +ay from being able to do so. here are

international institutional ties, from the U2 to the 1"#, +hich at present bond the3hinese state to the current global order.

he situation of 3hinese +orkers is perhaps the biggest factor in shaping the type of state

3hina becomes in the coming decades. The number of manufacturing -orers in

China alone is no- double the ten leading de"eloped countries combined and its

total labour force is larger than that of the S! $urope! %apan and all Latin

+merica combined0 Panitch and Gindin


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neoliberalism misses the continuities bet+een their prescriptions for free markets and

the long term goals already articulated by the American state at the time of the

relaunching of global capitalism into the post-+ar era. hey Duote 4er ?acobson, +horan the ank of *nternational Settlements !and later the */( reassuring American

policymakers in $&:7 that something he called neo-EiberalismI has begun to gain

ground in ;urope. hird, they believe that neoliberalism -as essentially *a politicalresponse to the democratic gains that had been pre"ious achie"ed by -oringclasses,0

hese are valid insights, but their description does in fact !and for good reasons( feed the

idea of that the past three decades have been significantly different from +hat +ent on fora generation before.

Panitch and Gindin eri"ati"es ;e"olution -as

*crucial to the stabilisation of currency marets in the -ae of the end of fi2ed

e2change rates! and -as also intimately lined to the internationalisation of the S

bond maret,0

The significance of the triumph of monetarism in 8ritain in the late 19s -as *the

class alignment that -ent -ith it,0*n accepting the need to give priority to fighting

inflation, industrial capital accepted that a finance-led accumulation strategy +as in itsinterests too. he +ay in +hich this +as achieved C high interest rates, a deep recession,

and the liberalisation of markets C also laid the basis not only for the ne+ age of finance,

but also for the restructuring of US industry.

et+een $&7# and "##8, global 1=4 doubled, trade gre+ t+ice as fast as 1=4, and /=*gre+ t+ice as fast as trade. 4anitch and 1indin !"#$"% "7:, "76( believe that this

accelerated capitalist globalisation entailed ma)or changes every+here. his could beenseen in three interrelated areas% a( the massive e>pansion of finance in global

accumulation5 b( the impact of net+orks of integrated production on the global division

of labour5 and c( the novel aspects of US economic centrality in global capitalism.

The scale of global financialisation *-as especially stunning,0 #hile in the years

1993& -orld trade great an impressi"e annual rate of 0@! cross border

financial flo-s great 1404@! e2ploding o"er those years from H101 trillion to o"er

H11 trillion0 'inancialisation in the global South also *facilitated the out-ard flo- of

capital from de"eloping countries,0 Capital flo-s bet-een the de"eloping countriesincreased significantly! and this came *not only from the foreign bans operating

there! but also from local capitalists -ho -ere e2panding their hori(ons beyond

their home base,0

he ne+ division of labour corresponded to something eDually crucial to a globalised

capitalism% the development of ne- net-ors of integrated production0 The result -as

a more interdependent global capitalismthat reDuired more than ever the consolidation


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of @free trade to facilitate borderless production. Again, the process has not been +ithout

contradictions. 7o less than se"enty3t-o financial crises broe out in the 199s . he

crisis that began in "##8 also indicates the state of the global po+er relations, includingthe neoliberal continuities +ith the previous period.

he current crisis is a crucial test for theories of imperialism and capitalist development.4anitch and 1indin !"#$"% 9##, 9$$( argue that the first global crisis of the t+enty-first

century +ould not be caused by the build-up of e>ternal imbalances, such as the UStrade deficit and indebtedness to 3hina, triggering collapse of the dollar. 0n the

contrary, it +as caused by the build-up of domestic contradictions in US societys o+n

envelopment in the volatility of finance. *t +as a crisis made in America. The +merican

crisis that started in & *-as not caused either by domestic industrial

.o"eraccumulation/ or international trade and capital imbalances! but rather by the

"olatility of capitalist finance,. *t +as because US finance had become so integral tothe functioning of t+enty-first century global capitalism that the ultimate impact of this

crisis throughout the international economy +as so profound.

4anitch and 1indin !"#$"% "#, 9"&( oppose efforts to subsume the e>planation for all

crises to one universal, such as the tendency of the rate of profit to fall. hey opposeattempts to go back to the theories of imperialism a century earlier, +hich suggested that

overaccumulation is the source of all capitalist crises. There are fundamental

differences bet-een the 19s crisis and the present oneF for e2ample *it -as only

after the financial meltdo-n in &3 that profits and in"estment declined,0 The

stagnant gro-th and employment since are not due to falling profits : corporate

profits ?uicly reco"ered after the &9 do-nturn! and by mid3&11 -ere not only

&E@ abo"e the mid3& le"el but e"en 16@ abo"e their record pea in mid3&60

'or Panitch and Gindin


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social relations of production, is essentially sound. At one point !"#$"% $$'( they

describe the -ay national bourgeoisies forged ties -ith +merican capitalists and

-ere integrated into +merican imperial hegemony asCanadianised. he authorshave observed the pattern of US-3anadian relations first-hand during their lives, and

those relations have served as a model for the global order.

4anitch and 1indin !"#$"% 997, 9:#( make some pertinent points for the future, +hich

should be assimilated by sober ar>ist analysis.

/irst, the belief that there is a +ay from finance-led capitalism back to a supposed post-

+ar real economy is illusionary.

Second, there is no real possibility of going back to the largely mythical @mi>ed

economy the 2e+ =eal and eynesian +elfare state are imagined to have represented.

hird, a revival ofprogressi!e economic nationalismin most developing states today is

ruled out by the absence of anything like a national bourgeoisie for popular classes to ally+ith.

they look to the organised labour movement for the social agency capable and +illing totake on the forces of capital.

/ighting global capitalism

USAJ3anada

ooks

Kladimir Eenin

4aulFamptonLs blog

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Comments

AWE M " ?anuary, "#$: - $:%":

#as it all JimbricatedJK

y artin homas

he main theses of 4anitchLs and 1indinLs book, restatements of +hat they have argued inmany articles, are, * think, plain fact and important fact.

he forty-odd years of turbulence since the end in the early $&8#s of the $&'#s-6#s

Ngolden ageN of West ;uropean, ?apanese, and American capitalism have not brought a

relative decline of the USA and a rise of inter-imperialist rivalries.
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12/44

hey have brought the e>tension of global capitalist markets and global capitalist

interpenetration.

hat has not been a process of the pushing-aside or marginalising of states by markets,but of ne+ active roles, and in many cases ne+ capacities for capitalist states.

US hegemony has been a lynchpin. *t not disappeared or declined, but remains strong.

he forty years have not been a time of permanent crisis or permanent depression,

leavened only by NspeculativeN or NartificialN booms. hey have included long periods of

profit-rate recovery and capitalist e>pansion, as shaky and contradiction-ridden ascapitalist e>pansions al+ays are, but also as real as capitalist e>pansions often are.

*n "##" * +rote !WorkersL Eiberty "J9(% Nhe unremarked surprise of the $9 years since

$&7& is that the +eb of international regulatory institutions built up on the US side of the

3old War, and mostly lynchpinned by the USA - */, W0, 18, World ank, 2A0,

;uropean Union - has proved strong and fle>ible enough to integrate vast ne+territoriesN, despite follies, pauperisations, and shocks.

;ven more surprising no+. he ;U has by some measures been through its +orse andmost discreditable period ever. =espite that, Eatvia has )ust )oined the euro, Eithuania

+ants to do so soon, 3roatia has )oined the ;U, Serbia is a hopeful candidate, and

urkeyLs ;U membership application talks restarted in 2ovember "#$9. *n Ukraine there

have been mass demonstrations in favour of Ukraine moving to+ards the ;U.

As 4anitch and 1indin rightly e>plain, ;U development is not the development of an

alternative pole to the USA, but the development, encouraged from the start by the USA,

of an integrating mechanism +ithin a US-hegemonised +orld order.

All that is true.

* +orry, ho+ever, that in +orking their researches up into a book 4anitch and 1indin tendtoo much to NrationaliseN, to read back events as having turned out as they did because

previously-established capacities and Dualities of the US state ensured that they had to

happen that +ay.

hey are careful at points to stress contradictions, fumblings, and cross-currents in theprogress of US po+er. Get they sum up the process in these +ords% Nhe ambitious

pro)ect for the making of global capitalism, imbricated in the American empire and firstarticulated during World War **, +as realised in the last t+o decades of the t+entiethcenturyN.

What does NimbricatedN mean hereO =ictionaries define NimbricateN as to overlap,

especially in the manner of roof-tiles, or to place so as to overlap. he +ord comes from

the Eatin imbre>, meaning a conve> roof-tile. aybe the +ord +as nudged into 4anitchLsand 1indinLs minds by memories or half-memories of ; 4 hompsonLs use of it in "he


13/44

#o!erty of "heory% Nla+... +as imbricated +ithin the mode of production and productive

relations themselvesN. *n any case, the nudge for the reader is to+ards thinking that the

pro)ect +as built into +hat their chapter one calls Nthe =2A of American capitalismN anddeveloped in a +ay analogous to that in +hich a personLs =2A shapes their gro+ing-up

!+hich is, of course, not unilaterally or totally(.

*t is +ith 4anitch and 1indin a bit as /euerbach said it +as +ith Fegel% Nhe form of both

conception and method is that of e>clusive time alone, not that of tolerant space5 hissystem kno+s only subordination and successionN.

heir te>t hesitates to endorse oni 2egriLs and ichael FardtLs claim that N;mpireN is

driven by the uniDue Nnet+ork po+erN that the US constitution gives to the US state as amanager of global capitalism. ut in a footnote 4anitch and 1indin give a modified

version of that claim% Nthe remarkable informal imperial Lcarrying po+erL of the American

constitutionN.

*t is true that arl ar> could, in the US 3ivil War, find reason to +rite of the USA asNthe very spot +here... the idea of one great democratic republic had first sprung up,

+hence the first declaration of the plain the empire in terms of ritainhaving a special facility at Ngood governmentN.

Studying parliamentary inDuiries into ritainLs trade, arl ar> found the banker

William 2e+march !homas ookeLs collaborator on ookeLs great history of prices(

e>plaining that Nthe ritish import Lgood governmentL into *ndia for these P9,8##,###NQtribute e>tracted by ritain from *ndiaR.

ar> commented +ith a snort% NWood Qthe DuestionerR, as a former inister for *ndia,

kno+s full +ell the kind of Lgood governmentL +hich the ritish import to *ndiaN !3apital

vol.9 p.'79(.

Get over half a century later the then ory leader Arthur alfour used the same idea of a

ritish facility for Ngood governmentN to )ustify ritainLs rule in ;gypt.


14/44

;d+ard Said makes alfourLs speech, from $&$#, the keynote te>t for his +hole book,

$rientalism. *n fact the Duotation sho+s alfour languidly sidestepping claims that

ritish culture +as superior to ;gyptian. Nhe civilisation of ;gypt... goes far beyond thepetty span of the history of our raceN.

he ritish )ust happened to have a facility for government. NA true ;astern sage +ouldsay that the +orking government +hich +e have taken upon ourselves in ;gypt and

else+here... is the dirty +ork, the inferior +ork, of carrying on the necessary labourN.

Self-interestedly, the ritish ruling class really did think, and convinced some others, that

it had a special capacity for governing. *ts methods of indirect rule in the colonies did

+ork more smoothly than the cruder methods of /rance or the 2etherlands or otherpo+ers.

*n reality, the ritish ruling class appeared to have that capacity for governing, and

developed nuanced methods and fle>ibility and an eye to the long term, because it had

great po+er. he capacity arose +ith and from the success. What also arose, in large part,from the success, +as the greater stability and security of the ritish state, +hich also

enhanced its capacity.

2one of that saved the ritish ruling class from carrying through debacles like the

partition of *ndia or its ignominious collapse in 4alestine, or atrocities like its campaignagainst the Nau auN in enya.

*s there not the same +ith the US stateO hat it seems to have special capacities because

it has such po+er and stabilityO ploit it by the most corrupt means and for the mostcorrupt endsNO

he US has one of the most complicated ta> codes in the +orld. 4anitch and 1indin note

that almost all the top international la+ firms are American. hat fact also reflects the

enormous drain on productive effort in the USA from its army of la+yers and its muchhigher rate of )ailing people than other countriesL. Eegal liability costs for businesses in

the USA are the highest in the +orld, and over t+o-and-a-half times higher than in

;urope. he US has a Duarter of all the +orldLs prisoners, and )ails people at a higher rate


15/44


16/44

4anitch and 1indin say that the US defeat in Kietnam +as not follo+ed by a Ndomino

effectN. he effect +as not as large as the most an>ious US strategists, or those most

concerned to colour things so as to sustain support for the infamous US +ar in Kietnam,said. ut there +as a domino effect.

y about $&6& it +as clear that the US +ould +in no clear victory in Kietnam, and in$&89 the US +ithdre+, leaving it only a matter of time until the Stalinists took South

Kietnam in $&8'.

4ortugalLs former colonies in Africa, +inning independence in $&8:-', s+ung into the

orbit of the USS< until around $&. /rom $&8: to $&&$ ;thiopia had a Stalinist regime

allied to the USS


17/44


18/44


19/44

Eeo 4anitch and Sam 1indin have )ust released their latest book, "he a)ing of Global%apitalism. his is the final installment of an in-depth three-part intervie+ of the authors

by Aaron Eeonard in 2e+ Gork 3ity.

1indin is the former


20/44

point! to paraphrase! don/t -orry about China as a superpo-er! -orry about it

mo"ing to-ard being a regional po-er! and similarly countries lie ndia etc0 Ao-

do you see thisK

Leo PanitchFFistorically +e +ould say that the e>act opposite is true. hat the post-+ar

period in +hich the American empire establishes itself as the state of global capital,taking into account global capitalLs interest, not only American capitalLs interest, is a

+orld in +hich America itself is sponsoring decoloniHation and the development ofstates.

he break-up of the Soviet Union produces states like firecrackers. his is not something

that gets in the +ay of the making of globaliHation -- on the contrary. *t becomes a veryimportant aspect of its management and e>tension. hose states are encouraged to

develop legal systems, sometimes pressured to develop legal systems, of the kind that

guarantee the rights of property, the rights of contract etc. hat is done usually in

con)unction +ith their bourgeoisies. *n the case of the anti-colonial movements of the

$&'#s, you do tend to get nationalist elites turning themselves into bourgeoisies -- themost horrific e>ample is South Africa. *n the case of the post-communist regimes you get

communist elites turning into bourgeoisies and +ere seeing the 3hinese 3ommunistelites retaining a communist identity politically, +hile turning themselves and their

children into capitalists, and +hile 3hina is being made a capitalist society, +ith a legal

system +here contract is protected, +here property is protected, +here capital flo+s areallo+ed for, etc.

he book in many +ays traces ho+ that happens, itLs not an automatic thing. *t is often

the case that the local capitalist, +ho given the balance of forces inside their countries

canLt do these things on their o+n, +ill blame the */ for making them do it, but +ill

have had these policies on the agenda long before the crisis leads.

* donLt like the phrase so much, LAmerican dominated.L * think the American state has a

responsibility, almost a burden that other states donLt. herefore this +orld has an

American colouring. he United States kno+s American la+, so the type of la+ that itencourages are those that it is familiar +ith and has e>pertise +ith. /inally, +hat Sam

sho+s, is the role of American accounting firms, financial services, legal firms and their

role -- their services are constantly bought by other states -- in teaching them ho+ to getinto the global system. hey are making a profit out of sho+ing hird World states, even

as they still occasionally make nationalist noises, ho+ to adopt the kinds of la+s that +ill

integrate them better into global capitalism. And often these are la+s that resemble those

first developed in the American legal system.

Sam GindinFWe +ould use the concept of asymmetry. he American state has a certain

ability to do things that others donLt have. Gou donLt see 1ermany deciding +e should

invade *raD because of the oil situation. Were not saying that the national capitalist classhas disappeared, theyLre still there. WeLre not going to the other e>treme that people have

argued that there is an international capitalist class. 0ur argument is that there are

national capitalist classes but theyLve been integrated into a global system and that the


21/44

American state has played a special role in that. hat includes a lot of -- as someone

coined the phrase 33 imperialism by in"itation. *t makes a lot of sense. When you look at

3hina, no one imposed free trade on 3hina -- they +anted to get into the W0. 2obody+as fighting +ith 3hina about opening its borders to foreign technology and capital.

3hina invited it in. 2obody is telling 3hina that you have to hang on to the U.S. dollar.

heres )ust nothing else you can do +ith it. here are structurally integrated andinterdependent.

Gou have to have the concept of empire itself, it sounds academic, but it so important

because once you start thinking about empire you can begin to see that the spread of

capitalism is something that the American state +ants to do. ut the Duestions al+ays is,can the U.S. reproduce itself to play the dominant and crucial role in the making of global

capitalismO his is actually an empirical Duestion. hereLs nothing that says it +ill forever

be able to do this. Gou actually have to look at, does this have the dynamic capacity tokeep changing because every time it opens up the +orld there are ne+ competitors. So

far, +e are arguing, the U.S. has sho+n that capacity.

LPF4eople like rHeHinski have been saying since the si>ties that there is a threat to this

from a ne+ emerging regional po+er ... but the rise of 1ermany and ?apan as economicpo+ers +as e>pected and even +elcomed, as +e could see in the LAn American 4roposalL

during World War **, +hich e>plicitly said that unlike the previous empires +e arenLt

afraid to build up industrial competitors for ourselves. So you get a flo+ of ?apanese and1erman goods coming into the United States and ?apanese and 1erman investment

coming into the United States, but it doesnLt have the same kind of effect inside the U.S.

that American capital going abroad has. he largest investor inside the United States is

3anadian capital, but +ho says this amounts to 3anadian imperialismO Whether 3hineseor ?apanese capital operating inside the United States +ill amount to a ne+ inter-imperial

rivalry, as opposed to trying to get the American state on their side and to find arenas ofaccumulation there, is not something that is given theoretically. Gou need to look at thebalance of forces in each society.

WhatLs happening today in 3hina -- although +ho kno+s +hat +ill happen in '# years --

reveals a deep dependence on its integration into a global capitalism operating under the

U.S. aegis. 3hina has the greatest foreign direct investment and greatest dependence ontrade in history. And foreign capital is also operating as a class force inside 3hina. *tLs not

the dominant class force, * am not saying that at all, but itLs a player in the determination

of +hat the 3hinese state no+ does.

Fo+ do you interpret a 3hinese nationalism +ith all this foreign direct investmentinsideO When people like rHeHinski +arn about the regional dominance of 3hina they

really +ant to ensure that ?apan doesnLt have a rapprochement +ith 3hina. ut if you

look at the actuality of the regional divisions in Asia there is no love lost bet+een ?apanand 3hina, *ndia and 3hina, the list is long. *tLs not to say it couldnLt happen, but thatLs

going to take a long time and +e should not take seriously superficial +arnings about

3hina of the kind that +ere heard in the eighties about ?apan as the ne+ Asian empire.


22/44

We hope our book +ill help undermine that type of superficiality in the media and much

of academe.

SGF*t is not )ust that it +ould be so difficult to meld them into a coherent unit -- +hich iseven difficult in ;urope -- the different parts of Asia do look to the U.S. as a

counterbalance to 3hina. And 3hina and ?apan look to the U.S. as a counterbalance toeach other as +ell.

+LF 8r(e(insi actually does mae the case that the 0S0 is needed! that if you

remo"ed that le"el of po-er and influence from the -orld scene! it -ould be greatly

destabili(ing and problematic0

S1% What adeline Albright as U.S. secretary of state in the $&s called Lthe

indispensable state.L

+LF Mou -riteF JThe ma)or shift across so many de"eloping countries to e2port3led

manufacturing production meant that their place in global capitalism -as no longerthat of merely supplier of ra- materials to the ad"anced capitalist states0 n fact!

this transformation in the international di"ision of labor in"ol"ed a reconfiguration

of social relations in one country after anotheryielding not only ne- capitalist

classes -hich became e"er more lined to international capital accumulation! but

also a massi"e e2pansion of the global proletariat0J &1&Q Could you tal about the

potential implications of that both in immediate terms and in terms the future!

including the potential of a future beyond capitalismK

SGF*tLs useful to start +ith the argument that +as often made on the left that

development +as )ust impossible in the hird World, that it +as )ust condemned to be a

resource base. What the making of global capitalism has sho+n is that it can actuallyspread -- it has been difficult, it has been uneven, it hasnLt spread every+here -- but that

capitalism can be developed in the countries of the global south and the U.S. has beenfundamental to that process. 2o+ you have a lot of e>-@hird World countries +hose

share of e>ports and manufacturing is very high, though the developed countries still

dominate, those areas of the +orld are substantial and gro+ing very fast.

0ne implication of this is that you are seeing the making of a global proletariat, +hichimpacts on +ages every+here as this also means that -- there is a global reserve army of

labor.ut +here is global demand going to come from if +e are seeing +ages being

depressed in the developed countriesO 3an it come from a gro+ing hird World -- 3hina,

*ndia, raHil etc -- and ho+ long +ill that takeO

* think +hat +e +ould caution against is the notion that the only sensible response to this

is to form international unions to engage in international collective bargaining +ith

23s., that itLs only that kind of formal international solidarity that +ill no+ +ork. Getas ar> said the class struggle is al+ays international in substance because +hatever you

do in one country shapes the options and parameters in another country, but in form itLs

national, and the +orking class first needs to come to terms +ith its o+n bourgeoisie.


23/44

WeLve actually seen, going back to the seventies, unions saying L+e need more

international unions,L but +hat they really meant +as international business unionism,

rather than saying +hat +e need is international class solidarity, +hich is hardly the samething. he real Duestion is ho+ do actually engage in struggles in our o+n country in

+ays that creates spaces for struggle in other placesO hereLs no +ay to coordinate this

easily internationally, but +hat you can do is fight +here you are +ith the a+areness thatthis creates spaces for other struggles. his also means al+ays learning from ne+

e>periments in carrying for+ard class struggles that may emerge else+here -- that is a

critical part of international solidarity. hat means not )ust looking at the latestdevelopment in KeneHuela or raHil as a model for us to follo+, but rather as involving

certain practices +e should vie+ critically as +ell as sympathetically, as +e look to them

to learn things from.

LPFGou could say that +ith globaliHation there are that many more proletarians forcapital to land on.his is different than the QoldR Eeninist theory, imperialism -- the term

+as adopted to refer to relations bet+een capitalist core and the periphery, the hird

World etc. 4art of that +as the theory of the development of underdevelopment, if youhad foreign direct investment you +ere then going to be doomed +ithin capitalism to

being e>porters of resources and you +ould not get economic development at all. Well

this +as disproven t+o +ays. *t +as disproven by countries that came to be kno+n as the

2e+ly *ndustrialiHing 3ountries !2*3S( of Asia, +hich follo+ed ?apanLs model andusually because ?apan used them as staging posts for e>ports to the United States and

;urope.

Fo+ did that happenO American aid policy in the si>ties shifts from the granting of aid to

the granting of loans. his is done very e>plicitly. f you ha"e to pay bac the loans in

dollars! you need to e2port in order toQ get dollars to pay them bac0 his begins the

turn to+ard countries looking more and more to e>port-led development. *f you donLthave enough resources to do that you start looking to using cheap labor to do it. Andbeing open to capital inflo+s you offer multinational corporations that you can produce

+omen +orking a dollar a day producing for you here.

*ncreasingly though, those corporations also are looking to have the kind of proletariat

they can sell to.3anadaLs been a rich dependency because itLs had a high +age proletariat.he multinational corporations havenLt only +anted to come for resources, they +anted

that sure, but they +anted to sell to the 3anadian proletariat.2o+ theyLre hoping theyLll

be able to sell to the 3hinese proletariat.

he big Duestion about the strikes in 3hina today is +hether or not they +ill be orientedto regaining a sense of collective purpose, trying to +in collective goods or +hether they

+ill emulate the Western +orking class +hose tragedy after t+o centuries of organiHation

both at the union and party level is that they ended up being individualist consumers. *fthat is +here 3hinese class struggle is going to take us +eLre in for a very ugly +orld in

the future.


24/44

*f they donLt take that path it +ill have big affects on the rest of the +orld. 2ot because

theyLll create international unions that +ill bargain collectively but because this +ill have

a dynamic impact on +hat Western +orkers do, ho+ they respond to a fall in the standardof living, +hich is inevitable once you get that large a proletariat from the global South

coming into integrated production, itLs bound to pull do+n +ages in the rich capitalist

2orth, no matter +hat you do in collective bargaining. What +ill happen in the futuredepends on +hat kinds of class struggles you engage in today. Whether you can shift

particular countries off the path determined by private capital accumulation, depends on

the kinds of more profound +orking class solidarities you develop inside as +ell asbet+een labour movements in the more immediate term.

SGF* think +hen +e stress +hatLs happening +ith the international proletariat, it is

restraining +ages globally, +e donLt )ust mean it in a mechanistic +ay. A lot of +hat is

also restraining +ages is the role of the state, +hich isnLt inseparable from +hatLshappening globally, but it also gets back to our argument about the importance of

domestic forces.

LPFoday the U.S. ;mpire still has the upper hand in the making of global capitalism.

ut this doesnLt mean it is all hunky dory. We no+ can see that +hen thereLs an Americancrisis itLs a global crisis. And this also means that +hen there is a ma)or crisis else+here it

can result in an American crisis. ut it is +rong to think that this amounts to the decline

of the American ;mpire.

With the crisis of global capitalism today, the 1"# states are trying to +ork this outtogether. his is unlike +hat led to World War *, and unlike the $&9#s. What is

remarkable about this crisis is that it hasnLt led to interstate conflicts -- there have been

tensions -- but the leading capitalist states are coordinating their attempts to contain this

crisis. We tend to focus far too much on the tensions and far too little on the degree ofcoordination that is going on.

+LF 8ut can they actually sol"e thisK

LPF2o. At the moment they canLt. he hope that the South +ould pick up on effective

demand has proved to be impossible in the short run. And it +ould lead to adestabiliHation of those societies if the +orking class +ere strong enough to become the

mass consumers of the +orld. What impact +ould that have on raHilian or 3hinese

social relationsO

hereLs no easy solution to this. his is the fourth great crisis of capitalism. Which is notto say they are not going to get out of it. *ncreasing the level of e>ploitation every+here

is one +ay they can get out of it. 4rovided that states start doing not )ust monetary easing

but infrastructure spending, some of +hich the left is calling for. 4robably, unless +erebuild revolutionary organiHation, +hat the left is calling for today is probably going to

have the affect of reproducing capitalism and rene+ing the possibilities of capital

accumulation for another period. aybe thatLs the best that +e can hope for, ho+ever,


25/44

especially since +e need a lot of time to rebuild ane+ +orking class identity and

organiHation.

#art * and #art ** of this inter!iew were published earlier this month on rabble.ca, andare a!ailable hereand here.

Eeo 4anitch and Sam 1indin have )ust released their latest book, he aking of 1lobal

3apitalism. 1indin is the former


26/44

+as as much an interaction bet-een corporate la-yers and officials inside the

+merican state -ho -ere doing this thining together0

=ean Acheson, +ho +ent on to be Secretary of State and +rote the great book 4resent at

the 3reation, gives a speech to the *nternational Eadies 1arment Workers Union in $&9&

that says pretty much the same thing% that itLs going to be up the U.S., if the +ar is +on,to remake the post+ar +orld using the capacities that +ere developed +ith the 2e+ =eal

-- in a sense internationaliHe those capacities -- so as to construct a +orld +hich is open

to free enterprise. They do -hat -asnt done after #orld #ar ! including forgi"ing

loans, the refusal of +hich +as one of the things that generated the economic crisis of the

thirties.

+LF #hile the business of the 0S0 building this global empire -as going on! there

-ere t-o ma)or states! the So"iet nion and the Peoples ;epublic of China that

stood outside that paradigm0 #hat impact on global capitalism did the absence of

such a significant amount of the producti"e forces 33 people! technology! machines!

ra- materials etc0 33 ha"eK

E4% At one level, you can say that these +ere arenas closed to capital accumulation. heAmerican state +as e>tremely +orried about that in terms of the Soviet Union and they

+ere very surprised to have lost 3hina by $&:&. ut it +asnLt only a matter of these being

places that American capital could not enter, though it has of course al+ays been veryimportant to the American state to be able to open markets for American multinationals

and banks. And yes, important portions of the +orldLs resources, especially in the case of

the Soviet Union, +ere not available to American capital.

ut beyond this those resources +ere critical to ;urope and ?apan as they +ere remade as

capitalist societies.he nited States guarantees access! abo"e all in the Biddle $ast!

to oilas part of rebuilding of ?apan and 1ermany and ritain and /rance. A lot of peopletend to think of American military interventions, or 3*A interventions, in terms of L+hat

theyLre trying to do is secure oil for the United States.L 2o. 0n the contrary theyLre playing

the role of the global state in the absence of an international global state.hey areguaranteeing, to those countries they are rebuilding as capitalist states, access to

resources that they other+ise +ould have had from ;astern ;urope and that portion of

Soviet Asia that is no+ closed to them.

S1% he other dimension is that the Soviet Union and 3hina +ere e>amples of staying

out of capitalism that spurred on liberation movements abroad.hey also +ere supportive

of economic nationalism on the part of hird World states, +hich by the late $&6#sundertook a gro+ing number of e>propriations of foreign capital, but these numbers

faded through the later 8#s as the liberation movements +ere defeated and as hird

World countries got more integrated into capitalism.

E4% What +as attractive to many hird World countries +as that aspect of the Soviet

Union +hich +as motivated by Lsocialism in one countryL +hich +as essentially


27/44

holding onto private property, but nevertheless they, to some e>tent, emulated the space

that communist governments had ostensibly carved out for themselves.

+LF The period in the -ae of the 0S0 defeat in Oietnam -as a troubled and

critical one0 The depths of the crisis -ere such that! as you note! there -as a TB$

maga(ine co"er of 195! asing! JCan capitalism sur"i"eKJ 'or all the comple2 mi2of things going on! your conclusion is that it -as indicati"e of Jneither decline nor

moderation but restructuring0J #hat do you mean by thatK

E4% * do think the conte>t for that +as not so much Kietnam. *t +as rather these

increased e>propriations from nationalist regimes.n 194 the 7 General +ssembly

o"er-helmingly "oted for a charter of economic rights of states! -hich included the

pro"ision that they could e2propriate foreign capital! e"en -ithout compensation0 o some e>tent, Wall Street discounted this as rhetoric because they kne+ that +hile

Saudis had taken over the operations of foreign oil companies they paid them for this, and

they +ere investing their surpluses on Wall Street. ut the +ording of the U2 economic

rights charter still did sound very shocking.And this rather militant sounding economicnationalism abroad came +as all the more frightening in that it coincided +ith a lot of

labour militancy at home.

he inflation of the $&8#sstemmedfrom the inability to Duell that militancy in the

advanced capitalist countries. o top it all off, the breakdo+n of retton Woods, itself aproduct of such inflationary tendencies, had created conseDuent uncertainty about the

impact on trade, )ust as ?apan and 1ermany had become ma)or e>porters to the U.S., and

as the United States +as by this point starting to import a lot of capital from these

countries as +ell.*n other +ords, there +ere a +hole number of things coming together atthe time *; magaHine asked +hether capitalism could survive. hings looked Duite

frightening -- but if the U.S. initially responded shock and horror, it soon took more

practical steps that Sam calls restructuring.

S1% he restructuring +as mainly about coping +ith the profit sDueeHe of the $&8#s that

+as produced by many of the above factors. ainstream economists, describing theperiod from the $&7#s through the $&s refer to it as a period of moderation. asically

after L79, apart from the brief recession at the turn of the $&s +as the longest period of

uninterrupted U.S. gro+th in the post+ar era. Get at the time both the left and the right

sa+ this period as one of U.S. decline, arguing first that ?apan and then that ;urope +eregoing to replace the U.S. as the dominant capitalist force in the face of +as a Lhollo+ing

outL of American economic strength. WeLve argued that it +asnLt hollo+ing out, it +as

restructuring.

*n fact American capital came through that period very successfully. hat doesnLt mean

+orking people did +ell. *t +as obviously a period of great ineDuality and insecurity,+ith stagnating +ages, etc.ut for the corporations, the period included a ma)or

restructuring of +orkplaces, ne+ technologies, changes in the relative importance of

specific industries, and dramatic shifts bet+een manufacturing and services, consumer

services like retail, and business services like engineering, consulting, accountancy, legal


28/44

become very importantat home and internationally. here +ere also regional shifts in

economic activity !=etroit vs. the American South( and ma)or geographic shifts such as

the integration of ;astern ;urope and then 3hina. his has to be seen as a ma)or period in+hich American capital, having defeated labour, +as left +ith more autonomy to do +hat

it felt needed to be done to revive capital and restructured, establishing the material base

for the revival of the American empire.

+LF Ao- did the collapse of the So"iet nion fit into all thatK

E4% ;ven before that, it seemed in the seventies, as the crisis +as accelerating, a political

left +as emerging inside the ma)or +orking class-affiliated political parties that had a

chance of getting elected,and +hen *; said, 3an capitalism surviveO they +ere also

thinking about the bubbling up of radicalism inside those government parties. What +asbeing argued by the left in these parties +as that the +elfare state reforms that had

previously been +on +ere no+ coming under enormous pressure and +ould be lost

unless +orkers could go beyond them,to take the decisions about +hat is invested and

+here it is invested a+ay from capital.Gou +ere hearing this from the forces behindony enn in ritain, change for a bailout, or they +ere

more e>plicitly aligning themselves +ith a need for competitiveness. he union militancy+as broken in ritain even before hatcher by the Eabour government, and the 1erman

Socials =emocrats eviscerated the left in the unions, as did their S+edish counterparts.

And once itterrand had to choose bet+een either imposing capital controls andinterrupting the capitalist process of ;uropean integration, or giving up his radical

program -- he famously did the U-turn.

oreover, if you look at +hat happened to hird World economic nationalism WallStreet +as right, the rhetoric of these nationalist bourgeoisies needed to be very heavily

discounted. ;ven in the face of the debt crisis of the $&7#s they came on board +ith the

*/ and American reasury in introducing the kind of Structural Ad)ustment 4rogramthat +ould invigorate their markets, make them competitive, restrain their internal

balance of class forces. As Earry Summers said, the main affect of 2A/A +as to insure

that e>ico +ould follo+ market oriented policies and be favourable to the United Statesinstead of follo+ing socialist policiesand be unfavourable to the United States, very

e>plicitly. hat +as a process begun in the $&7#s carried through in the $&s.


29/44

his +as much more important than the collapse of the Soviet Union. hatLs not to say

that the Soviet collapse didnLt have an effect in terms of a sphere becoming open to

capital accumulation and demoraliHing those portions of the left +hich thought a different+orld +as all tied up +ith this very disappointing and undemocratic authoritarian

e>ample. * think one tends to enormously over-blo+ the significance of that collapse in

fact, given that the important things inside the capitalist +orld had already largely takenplace by then.

S1% he main periodiHation isnLt before the erlin Wall falls and after. ;ven going backto $&:7 and the common understanding of the arshall 4lan as revolving around the

e>ternal Soviet threat, +e argue rather that you have to understand it more in terms of

+hat +as happening inside ;uropean countries and the internal threat from the left and

the American concern, apart from the Soviet Union, of ho+ to keep a +orld open to themaking of global capitalism. 0ne of the things that does happen +ith the collapse of the

Soviet Union is that hird World countries trying to find some space vis-T-vis the

American state have lost the leverage coming from the kind of support they +ould have

from the Soviet Union. ut a lot of that had been broken already.

+LF t puts the -hole concept of containment into a -hole different light000

S1% Ges, in a very different light. *ts much more of a political economy e>planation than

one based on the cold +ar e>planations.

##############

+aron LeonardF Mou mae a startling and re"ealing statement! J+merican -orers

-ere not only attaced! but also materially integrated into the maing of global

capitalism0J#hat does this mean and -hat effect has it hadK

Sam 1indin% * think this is crucial in understanding the nature of the defeat of the

+orking class over that period. A fe+ things happened that +ere very important. Workers

+ill al+ays find a +ay of surviving. he left +asnLt all that strong in this period of theseventies -- though there +as a left. he conseDuent absence of alternatives meant that

people survived in very individual +ays. hey +orked longer hours, +ent into debt,

young people stayed at home longer, older +orkers hoped that the stock market going up

+ould help their pensions. hat +as important culturally, but it +as also importantbecause it lead to an atrophy of collective strengths, sensibilities and solidarity.

he other thing that happened +as competition +as intensified in this period. /inance+as being liberaliHed and globaliHation +as accelerating. he impact of this on the

+orking class +as uneven. Union members could perhaps defend themselves a little,

hang on to the status Duo, but not make gains, +hile the poor got really hammered. Gouhave the +orking class itself being more fragmented, +hich makes it even harder to build

solidarity. he resentments go both +ays. Union members paying ta>es complain about

people on +elfare, and people on +elfare complain about unions +anting more. So the

very formation of the class is negatively affected. hatLs one very important thing that


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begins to happen. oreover, consumption actually increases over this period, further

materially integrating +orkers. ut consumption is increasingbecause +orkers are

e>ploiting themselves more and debt becomes so importantbecause it also affects thegro+th of finance. Crucial to the gro-th of finance -as the earlier gro-th ofpensions and later consumer credit and especially mortgage credit0he dependence

of +orkers on credit means that the system is especially fragile as +orkers +ages arentrising but their debt is gro+ing. And as finance is liberaliHed and competes by increasing

its leverage and moving into ne+ riskier areas, its volatility intensifies.

That combination of the gro-th of finance and the credit dependence of -orers are

central factors in this crisis0Fousing overlaps the t+o because it +as at the center of

the increase in credit.When you have a stock market bubble it is one thing, you can more

or less +ait it out. When you have a housing crash, ho+ever, it is directly linked to theeconomy and is not )ust financial.*t affects construction, furniture and appliances, and

especially ho+ +orkers vie+ their savings and future security and so +hether they are

going to spend. So the form through +hich +orkers accessed consumption +as very

important in terms of the formation of the +orking class and to the nature of the crisisthat follo+ed.

Eeo 4anitch% When the unions +ere defeated, +hen the +elfare state +as pushed back,

+hen you couldnt get any public housing to solve the crisis of American cities, the

compensating great reform +as to get +orkers more integrated into the private financialsystem. ?ust as +ith the reforms that helped +omen get credit cards under pressure from

the feminist movement, the most significant reform under 3arter +as the 3ommunity


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speak of, apart from their pension, is their home.Why shouldnLt they try and get into this

game of that singular asset bubble. And it +as dangerous and disastrous.

S1% here is a general point here. here are reforms that might strengthen +orking

people and there are reforms +here you might get something in the short term, but you

get them at great cost. *n focusing on the short term, the +orking class is itself complicitin reproducing neoliberalism.he other dimension in +hich this occurs is around

@competitiveness. 0nce unions accept the logic of competition and are selling it to their

members- you have to accept this to be competitive - neoliberalism is reproduced +ithinthe institutions of the +orking class.

E4% *n the run up to 2A/A, Sam and another economist in the 3anadian auto+orkers

issued a +onderful pamphlet +hich argued that competition is a constraint, itLs not theunionLs goal. ut for most unions it eventually becomes the goal and this undermines

every aspect of solidarity.

+LF $arly on you discuss! JThe roles of states in maintaining property rights!o"erseeing! stabili(ing currencies! reproducing class relations! and containing crisis

has al-ays been central to capitalism0J This really goes against Jcommon senseJ

"ie- of states 33 -hich most people thin are ideally supposed to be instruments for

the common good0 Could you tal a more about -hat you mean by your definition

and ho- this -orsK

E4% his is the central theme of the book. When the right ideologically articulated a

market versus states perspective, the left tended to speak in terms of% Lthey say free

markets are good and states are bad, but in fact states are good and the unregulatedmarket is badL --shifting the dichotomy from one end to the other. hat confused people

enormously in terms of the e>tent to +hich the states in Duestion are capitalist states. 2ot

merely in the sense thatpoliticians are bought off, that political parties depend ondonations from corporations, and banks etc. ut more profoundly in the sense that as they

have evolved over the course of the "#th century these states are thoroughly capitalist

in the +ay they are structured. hey are dependent on capital accumulation to pro"ide

the ta2esthat fuel the operations of any given department or agency. hey are

dependent on capital accumulation for employment that -ill yield them legitimacy

as -ell as mass ta2ation0

ar>ists have themselves failed traditionally to develop a sophisticated understanding of

this, often speaking as though itLs the +ishes of the capitalists that determines +hat the

state does. 2o he state figures out things that capitalists individually canLt figure outbecause they are competing +ith one another. ut because the state is dependent on

capitalist accumulation it takes responsibility for seeing the forest for the trees. 0f course,

certain states do this more and better than others. he attempts to develop a moresophisticated ar>ist theory of the state in the $&8#s, +hether by


32/44

pre!iously would ha!e gone into re!olutionary organi+ations but now found themsel!es

in uni!ersities, contributed to the rise of a postmodernist, post-structuralist, post-

colonialist discourse that deflected from further attempts to properly understand thecapitalist state.

his contributed by the turn of the century not only to the vie+ that you can change the+orld )ust by changing discourse, but also to the resonance of Duasi-anarchist chant that

you can change the +orld +ithout taking po+er. 4art of +hat this book is about is trying

to revive and develop further a ar>ist understanding of the state that +ill be of use inthe class struggle. 2ot least so people +ont be as confused by the right-+ing ideologues

@states are bad rhetoric. All they mean by that is that they +ant states to be doing the

things that help to accumulate capital rather than doing those things that fulfill the basic

needs of the mass of +orking people.

S1% What +e are doing in terms of developing the centrality of this notion is to ask

certain Duestions about states. Fo+ did the American state come to have a special

capacity that it can play this role on behalf of global capitalismO 0r if you have a +orldof multinational corporations does this mean that states are irrelevant or does it mean that

multinational corporations depend on many statesO 0ne of our arguments is that this kindof empire is uniDue because it is based on sovereign states.

E4%2ot on colonies. *n a sense 3anada is the model state for a +orld made up ofautonomous individual sovereign states that are part of an integrated global capitalism. *ts

happenstance that 3anada became the model state but it had a form of capitalist

development based on a form of +ell-paid independent commodity producer farming

class in the middle of the $&th century. Which, as in the U.S. +as the basis of a verydynamic manufacturing economybecause local manufacturers linked up +ith those local

farmersin the American id+est and the +heat heartland of 0ntario in 3anada. he first

multi-corporation +as the Singer se+ing machine company. 3anada introduced a tariffbarrier in $78&, to ensure that capital +ouldnLt )ust flo+ out to the United States. Well the

American corporations )umped over the tariff barrier to sell to those +ell-paid 0ntario

farmers +ho +ere making good money in the +heat economy, then to the high +ageproletariat inside the cities. hey +ere able to use 3anada as a staging post to sell in the

3ommon+ealth of the ritish ;mpire.

3anada al+ays gets a great deal of foreign direct investment from the United States.;ngels comes to 3anada in the $77#s and says it +ill only be a matter of years before this

country is absorbed into the United States, the 3anadian are going to demand it

themselves. hat isnt +hat happens. heres a free trade agreement proposed in $&$$ byEaurier - a previously very popular prime minister - and its defeated 4artly because they

identify +ith the ritish empire, but partly because there is a sense already of 3anadian

identity, nationalism, nationhood etc. hat doesnLt prevent American capital frombecoming a ma)or force inside 3anada and 3anadian capital allying +ith it. 3anadian

financial capital is increasingly lending money to American industrial capital to

accumulate inside 3anada, +ith the 3anadian capitalist turning themselves into a very

concentrated and po+erful fraction of the financial capitalist class, +hich retains a


33/44

3anadian identity, and a special relationship to the 3anadian state. At the same time,

American capital operates as a class force inside 3anada, not so much in the sense of 1

telling the 3anadian state +hat to do, but because +orkers in Windsor are saying +hatsin interest for 1 is in our interest.

When free trade happens it is not that ico.he most difficult place to get 2A/A passed +as in

the United States ore generally, you need to see the e>tent to +hich +orlds

bourgeoisies looked to the U.S. as the state that +ould do most for them. his isnt amatter of American domination in the sense of defining the American interest as

imposing it and marginaliHing other national interests. 0ther states and ruling classes

define their best interests in terms of getting into this empire.

S1% o give an e>ample, you could say ?apan +ants to be into the U.S. auto market

because it is the richest and you can do it by e>porting. 4art of coming to the U.S. is thatthey +ant to be inside the U.S. ;mpire because not to be inside of it might mean

protectionism at some point. ut ho+ does that +orkO *t sounds pretty complicated.

Eeos done a lot of +ork, before this book, on the internationaliHation of states. As youcan often see in the practices of the 3anadian state, +e +ant to ask ho+ do other states

than the US also come to take responsibility for global capitalismOAnd out of this the

crucial political point arises% The left should not be saying -e/ll administer capitalism

better than them0/ 4olitics for us is about transforming the state.

E4% Some people on the left say this is a depressing argument. ecause +hat it says is,

+hen you get elected and it is so difficult to transform this capitalist state, +hat can youreally doO *t does mean that people need to understand that +hen you get elected you

need to transform the structures of the state, not )ust the policies of the state. So much of

the left canLt think beyond L+eLll carry this or that set of progressive policies into the state,and +e +ill really hold onto them. WeLre committed to these policies...L 2o, this cant

happen unless there is a fundamental restructuring of the state apparatus. Eenin called it

smashing the state, +hich is not such a good metaphor because it suggests taking a

hammer and knocking do+n the building. 2o, but +hat it does mean is changing themode of administration, and this reDuires developing the capacities in left political

organiHations to change the +ay states are structured. his is the only +ay for+ard for

those +ho are not naively anarchist, and +ant to claim L+e can do this +ithout states.L


34/44

. ne of capitalism/s defining characteristics, compared +ith pre-capitalist societies,

is the legal and organiHational differentiation bet-een state and economy. 7othing

says commerce lie money0 8ut cash is stamped -ith the signs of so"ereignty and

references to public institutionsand la+s% a portrait of a national hero, emblems of

reasury and the /ederal change

- and validated by other largely private decisions to make payments at those prices.

4olicymakers are far from indifferent about the value of currency that emerges from the

economic net+ork, but if the state itself +ere responsible for price-setting, +e +ould no

longer talking about capitalist society. 4olicymakers can influence the value of money

only through strategic engagement in the economic sphere to influence the conditions in+hich the strategic pricing decisions are made. his @middle ground is trans-state social

system +hich has a very different organiHational logic but remains dependent upon stateits agencies and legal infrastructures.

he strategic situation facing policymakers in their attempts to influence the value oftheir states currency is, * think, a productive entry point to +ider Duestions about the

relationship bet+een capitalism.

*t +ould be +rong to start from the functionalist position that capitalism as such dependsupon some particular level of stability in the measure of value, +hich has thus al+ays

been the responsibility of !capitalist( states. easures of value have been anchored in a

variety of +ays over capitalisms history, and those anchors have involved a diversity ofstate agencies and practices in a range of different social conte>ts.

he plan eynes took to retton Woods vaguely stipulated that there should be theleast possible interference with internal national policies. 2ational economic policy is

not made in an vacuum, but +ithin economic-political conte>ts that al+ays rule out

many courses of action and makes some paths far easier than others.

*n both economic and political spheres, it can be difficult to make a firm distinction

bet+een constraints that come from inside and outside the nation. /or conservatives of

the inter+ar period, the advantage of resuming the gold standard +as precisely that it didconstrain policy. he internationalmonetary regime +as a tool for strengthening

capitalist po+er domesticallyagainst labor.

his is a point that resonates. As the authors put it to+ards the end, the conflicts that

have emerged today in the +ake of the greatest capitalist crisis since the $&9#s are taking

shapeI less as conflicts bet+een capitalist states and their ruling classes than as conflicts

+ithin capitalist states.


35/44

he @American empire of their vision is not so much an imperialism of state against

state, but a program in +hich the American state provided leadership and e>ternalpolitical pressure that +as +elcomed by agents and o+ners of capital around the +orld as

it reinforced them in their o+n political conflicts.

he evolution of standards of value is one field on +hich this has played out, because the

history of monetary systems is a history of class struggle0 'luctuations in the internal

!alue of a currency i.e. in terms of a price index are closely connected to wage-setting, and so to institutions that determine the bargaining power of labor and to the

macroeconomic conditions in which bargaining ta)es place. Anything that concerns one

concerns the others. his is +hy price level problems al+ays involve so much more than

the inconveniences, relative price distortions and redistributions of inflation itself.

he e>tent to +hich an international monetary regime seems constraining depends on

+hat policymakers are e>pected to do. The classical 19th century gold standard -as

not a ata"istic pre3capitalist sur"i"al fetish! as Samuel Rnafo has argued! it -asitself a highly modern and rational pro)ect to enhance central bans/s abiliuty to

stabili(e emergent pri"ate ban/s credit3money0 t only began to chafe -hen the

rising po-er of labor movementsmade it more difficult for technocrats to put the

burden of periodic disinflationary ad)ustment onto their -ages0

Reynes/s macroeconomic "ision raised e2pectations about -hat it -as possible for

policy action to do, but it made calls on instruments that could be pulled in another

direction by gold standard commitments. When eynes called for a system that +ould

minimiHe restraint on national governments, he +as not talking about freedom frome>ternal sanction C his plan increased official sanctions on member governments C for he

blamed gold-hoarding in the US and else+here for the inter+ar troubles and +anted to

discipline countries that ran chronic balance-of-payments surpluses. Fe meant positivefreedom% an increased capacity for go"ernments to pursue high employment0

Bichal Raleci/s -ell3no-n paper! .Political +spects of 'ull $mployment/ argued

that capitalism -ould not be able to sustain full employment! for political rather

than economic reasons% big business and rentiers -ould not abide it because it

challenged their social dominance!and they +ould probably find more than one

economist to declare that the situation +as manifestly unsound. his is often seen asprescient, predicting the rise of /riedmanism a Duarter-century before the fact. ut such

economists +ere already much in evidence in $&:9, +hen alecki +as +riting. /rom the

very end of the +ar, full employment had its naysayers, and they +ere by no meansmarginal characters. As 4anitch and 1indin rightly stress, the tension bet-een fullemployment and price stability -as *the central contradiction of the post-ar era C

not a problem that emerged only at the end of the $&6#s.

o make too firm a distinction bet+een @political and @economic aspects of the

opposition to full employment is a mistake. *n a democratic capitalist society, economic

dysfunctions appear as political issues. hey are open to different framings, but the


36/44

systematic nature of the economic structure favors some over others - capitalist

governments have been )udged on the e>tent to +hich they can stabiliHe the system.

As ob ?essop has +ritten, the state is )ust one institutional ensemble among others+ithin a state formation but one +hich is peculiarly charged +ith overall responsibility

for maintaining the cohesion of the social formation of +hich it is a part.

0nly political programs @connected to broader economic stability could thrive5 those

@connected to dysfunctions had a strong current against them. 0f course, +hat counted

as @dysfunction +as open to negotiation% in post+ar Australia, 9 per cent unemployment+as an outrage5 no+ ' per cent is considered very respectable. ut e>pectations

themselves have been managed by the e>tent to +hich they seem achievable.

At the end of the +ar popular e>pectations for @full employment +ere already beingseriously moderated by the political culture and system of the United States. *t never

achieved the kind of political consensus it had in the U or Australia% symptomatically,

the /ull ;mployment ill of $&:' +as +atered do+n into the ;mployment Act of $&:6,

+ith economists like Fenry Simons +arning 3ongress that a full employment targetcould mean unacceptable inflation. *n the $&:#s and $&'#s macroeconomic policy often

aimed at restraint rather than stimulus, +ith the 1951 +ccord bet-een Treasury and the

'ederal ;eser"e : establishing maret determination of the price of Treasury

securities : *designed to ensure that .forces more radical/ -ithin any administration

-ould not be able to implement inflationary monetary policies0 4anitch and 1indin+rite%

he roots of @monetarism C understood not in the sense of policy determined by arcane

measures of money supply, but in the sense of giving macroeconomic priority to@manipulating short-term interest rates to control aggregate demand and inflation C thus

really need to be located not in the $&8#s but in the $&'#s, during the supposed heyday of

the eynesian era.

he +eight of the US economy in +orld markets, and the role of the dollar !and dollar-

denominated reasury securities( as international standard and store of value, meant thatmacropolicy there had repercussions every+here. =omestic American politics also had a

serious impact on ho+ the retton Woods system managed the relationship bet+een the

international economy and the policy instruments of other states.

Baintaining a fi2ed e2change rate to gold


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any amount. /inally, e&g

the imbricating of global capitalism by leo panitch and sam gindin

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