Fissures In The Globalist Ruling Bloc: The Politics Of Globalization From Above And Below (page 1 of 2)

Globalization has become the main dynamic in the world today. We are witness to a new stage in the evolution of the capitalist system characterized by the hegemony of transnational capital and the rise of a new global capitalist ruling bloc. At the helm of this bloc is a transnational capitalist class based among the huge corporate and financial institutions that are integrating the world into a single productive apparatus. The globalist bloc has its corresponding representatives in the political parties, civil societies, and state apparatuses in both the developed and third world nations.

The politics and policies of this bloc are conditioned by the new global structure of accumulation made possible by the revolution in information technology and new capitalist strategies of production and labor control fostered by these changes. This revolution in the means of production has created a new technological economic sector, evolved industrial manufacturing, and transformed financial markets. It's the electronic skeleton through which globalization works, connecting every performing part of the world economy. The convergence of telecommunications and computers has made possible a global command and control structure for transnationals, building a global assembly line for manufacturing. Secondly, the same information systems have established 24-hour global financial markets that function in real-time, leading to world capital integration.

The groups that make up the globalist bloc are united only in their defense of global capitalism. Beyond that, they have shifting alliances and competitive contradictions. Throughout much of the 1980s and 1990s they marched virtually unchallenged in building their new world order. But underneath their triumphant banners a host of contradictions have been building in intensity. Fissures within the bloc have now become more apparent in the face of mounting economic crises and a groundswell of resistance from popular classes around the world. These came together at the ministerial meeting of the World Trade Organization (WTO) in Seattle in November '99 in a way hitherto unseen. The WTO creates a concentrated crossroads for world politics and economics as the organization strives to build a new regulatory superstructure to house these global forces of production. Thus it also provides a forum where these tensions can explode in their most exposed form.

Seattle witnessed this explosion as the birth of a new movement that continued with demonstrations in Washington, Australia and Prague. Changes in the political landscape have been accelerating in scope since the Asian market crisis. Europe has been the scene of large-scale anti-global demonstrations for several years. But North Americans seemed unaware of this growing movement, even as the United States fostered some of the most powerful transnationals, and housed the International Monetary Fund (IMF) and World Bank in Washington. While many observers have commented on the demonstrations, our purpose here is to concentrate on the major issues of unity and contention within the globalist bloc. An analysis of the rising splits within the globalist bloc may offer lessons for emancipatory action from below in the new century.

There are, among others, three tactical and strategic issues we will discuss that are generating fissures in the summits of global power which became exposed in Seattle with particular clarity: 1) political tensions between dominant groups in the North and the South over the social crises that global capitalism has wrought; 2) a strategic split within the bloc between traditional neo-liberals and a "Third Way" or "softer" version of neo-liberalism; 3) recent shakeups at the IMF and the World Bank, reflective of these first two fissures, over how to reform the world financial system and bring greater order to the global economy.

The WTO, Transnational Classes, and the Third World

Prominent among the fanfare at Seattle was the apparently militant position a number of Third World ministers took up against their Northern counterparts, such as those from Brazil and India. This was interpreted by some observers as a contradiction between the Third World and the core in the new capitalist order, or even as a renewed anti-imperialism. Closer inspection, however, suggests the protests mainly represented a struggle within the globalist bloc, not an anti-imperialist contest between the Third World and the capitalist core.

The complaints of Third World ministers at the WTO were a complex mix of calls for necessary reforms, anger over G-7 arrogance, and expressions of competitive pressures. While their grievances over the arrogant disregard of their concerns were justified, fundamentally they were demanding greater access to global markets for the Third World bourgeoisie and a greater role in managing the global economy, not its dismantlement. These Third World elites are as much part of the new global system as their counterparts in the developed nations. This is not the national bourgeoisie of the 1960s who promoted state directed modernization projects, local industry, and import substitution. Production worldwide has been reorganized by the giant transnational corporations (TNCs) that operate through new methods of finance and production brought about by the revolution in information technology and new accumulation strategies fostered by these changes. National productive apparatuses have been broken down and integrated into emergent global production processes. On the one hand, the material bases for the old Third World national capitalist projects have eroded. On the other, globalization has opened up new opportunities for third world capitalists and state elites, whose interests lie increasingly in integration into global capitalism rather than in the construction of autonomous national capitalisms.

Transnational class formation is a key aspect of the globalization process and has involved the increasing integration of Third World contingents into the ranks of the globalist bloc. Elites in both North and South have become divided along a new national-transnational axis. National fractions are those groups grounded in national circuits of accumulation, whereas transnational fractions are those grounded in new globalized circuits. The former tend to pursue their interests through national regulatory, industrial, and protectionist policies, whereas the latter, in an expanding global economy based on worldwide market liberalization. The clashes between national and transnational groups underlie many surface political events and ideological battles in recent years. These two fractions have been vying for control of local states since the 1970s. Transnational fractions of local elites swept to power around the world in the 1980s and 1990s and have used national state apparatuses to dismantle the old nation-state projects and integrate their countries into the global economy and society.

The leading capitalist groups in the Third World have transnationalized by integrating into global circuits of accumulation through a variety of mechanisms, ranging from subcontracting for global corporations, the purchase of foreign equity shares, mergers with corporations from other countries, joint ventures, and increasing foreign direct investment (FDI) abroad of their own capital. In the 1980s, $170 billion in FDI entered the Third World. In the 1990s, this figure shot up to $1.3 trillion. Third World based transnationals themselves had invested $51 billion abroad by 1995, or about 8 percent of total world FDI stock, up from only one percent in 1960 and three percent in 1985. Between 1993-1995, the top 50 Third World TNCs augmented their foreign assets by 280 percent, compared to a rate of 30 percent for top corporations based in the developed world. Petroleos de Venezuela and Daewoo joined the ranks of the top 100 transnational in 1996 (although Daewoo may shortly be taken over by G.M. or Ford). The Third World bourgeoisies of countries such as Singapore, South Korea, Taiwan, Brazil, Chile, and Mexico, are becoming important "national" contingents of the transnational capitalist class.

These contingents have increasingly used the infrastructure of global capitalism to attempt to strengthen their standing with the globalist ruling bloc. Venezuela pursued a successful WTO case against America's clean air standards, which resulted in allowing dirtier Venezuelan gasoline to be imported into the U.S. The famous "turtle protesters" at Seattle were reacting to a case won by Pakistan, Malaysia and Thailand. These are examples of ongoing competitive struggles amongst the globalists, which naturally were continued in Seattle. The Third World ministers who came to Seattle represent for the most part the new transnationalized elites in the developing world. This explains why most of the third world countries at the WTO are wedded to the IMF and the global market. Whether the former Asian tigers, or Brazil or India, these governments are carrying out vast neo-liberal restructuring, often under the co-direction of the IMF and World Bank. A few weeks after the uproar in Seattle, WTO Director General Mike Moore was in New Delhi addressing the Confederation of Indian Industry to work out new deals at the conference "Partnership Meet 2000."

To fully integrate their countries as parts of the global economy, Third World states use. the superprofits from the exploitation of their working class and the rape of their country's natural resources. These are seen as their competitive advantage in global competition. In Seattle they fought hard to maintain these advantages for themselves and their transnational partners. Arguing for low wages is not a plan for national development, but a defense of Nike paying 25 cents an hour, and Third World sub-contractors running industrial zones for the TNCs that drive the global economy.

In looking at some of the major spokespersons that emerged among the Third World ministers at the WTO meeting their motives become clear. The government of Brazil, for example, is carrying out a vast neo-liberal project after its defeat of the Workers Party and receiving a $42 billion bailout package from the IMF last year. Another voice was from the ruling BJP of India, a reactionary Hindu nationalist party that is implementing a neo-liberal program of privatization, dismantling the Indian economy's state sector, and promoting genetic engineering in agriculture. Of course there are competitive conflicts over how programs are carried out. But much of the nationalist rhetoric displayed by government officials in Seattle was simply a cover to legitimatize their policies at home, where the deepening economic crisis is turning up the political heat.

However, beyond the rhetoric, there was another set of underlying political tensions within the globalist bloc reflected in the ministers' protests in Seattle. Third World globalists have born a disproportionate brunt of the political fallout from the social crises brought on by global capitalism. They face rising mass unrest, instability, a legitimacy crisis, and the threat of losing their grip on power, whereas their core country counterparts seem only concerned with assuring that global accumulation continue unhindered. Having born the brunt of recent upheavals, Third world globalists are now insisting on a greater say in policy matters. None of these ministers want to face the type of turmoil experienced by Indonesia, nor suffer the fate of Suharto.

This issue came to a head in Seattle when small groups of rich nations held informal meetings on key issues without informing Third World ministers. These so-called "Green Room" meetings were a crude manipulation of the WTO, which has been much criticized for its non-transparent and undemocratic nature. The breakdown of general deliberations, and the resultant failure to reach any new trade agreements, was in part due to the rift between the Third World ministers and G-7 countries. But the issue here is one of democracy and justice within the globalist bloc, not of a struggle between this bloc and the Third World, much less over substantive democracy and social justice in global society. Given continued North-South inequalities and the long history of core country interventions in the Third World, progressives must be particularly sensitive to demands emanating from the peripheries of world capitalism. But the voices to listen to are from the grassroots.

The "Third Way": Globalization with a Human Face?

If one major fissure among the globalists is this rift between the G-7 "senior" partners and Third World "junior" partners in the ruling bloc, a second is between the more dogmatic neo-liberals and a "softer" neo-liberalism as expressed in the emergent "Third Way" political project.

Former U.S. President Bill Clinton is a key political leader for the globalists. He has been a major figure in promoting the "Third Way" strategy for globalism, which is an important adjustment to the pure neo-liberalism of the Reagan/Thatcher period. His support for labor and environmental rights is part of this approach, and seeks to stabilize globalization into an acceptable institutionalized form with a broader social base. Its origins in the U.S. goes back to Clinton's initiation of the Democratic Leadership Council. These "New Democrats," as the Clinton wing is known, moved the Democratic Party away from traditional liberalism towards an alignment with neo-liberal conservatism. The Third Way was first picked-up in the United Kingdom by Tony Blair (who actually coined the phrase), then in Germany by Gerhard Schroder, and now a number of other parties throughout the world.

The Third Way argues the state should enable the market to function more smoothly and avoid radical swings that produce periodic crisis. Government's role is to create an institutional framework for a flexible global economy that recognizes a place for social concerns. Unemployment, poverty, educational and health are seen as issues effecting the labor force and the proper use of "human capital." But the Third Way political program is not a return to a Keynesian project. The program does not question the premises of an every more open and integrated global economy or the prerogatives of capital. The state is neither to replace the private sector nor to intervene directly in the circuits of accumulation, but to structure market rules that enable capital to enjoy a more dominant role in a stable financial environment. The program reaffirms the set of macroeconomic fiscal and monetary policies associated with neoliberalism, with withdrawal of the state from "economic issues" (state regulation of capital) and the continued rollback of the welfare state. But these aspects are combined with a new emphasis on "social issues." Social programs such as education and health care that generate the "human capital" which high-tech information capital requires are emphasized, as is the creation of "flexible labor markets." Welfare is replaced with "job readiness" and market opportunities" (read: cheapening labor and tailoring it to the changing needs of capital while abandoning the state's and capital's reciprocal obligations to labor). Limiting the destruction of nature is also promoted as a necessary step in managing a profitable and productive environment. More >>