the Emerging
Powers of
the South
of Capitalism, and Its Implications
for China's Developmental Strategy
David Schweickart's
'After Capitalism'
SolidarityEconomy.net
Most schools of thought still define the international system as centered on nation/state competition based in the struggle for supremacy among groupings of nationally identified monopoly capital. The state represents these interests on the international stage and seeks security or hegemony as the ultimate guarantor of a strong nationally based economy. This interpretation of global capital, as an extension of industrial era imperialism, seeks to identify a single national hegemonic power. Within this analytical context only the United States qualifies as the dominant superpower.
But this analysis fails to place the US within the existing economic structures of global capitalism. Today’s dominant form of accumulation is based on transnationalized production and finance, global labor stratification, and the emergent transnational capitalist class. Yet the political and economic interests that are connected to the old industrial state system, its labor relations and international structure of accumulation still struggle to shape the new order more fully in their own image.
This is evident in the United States where the Bush White House, with its nationalist political base set within the military-industrial complex, is in constant conflict with globalist elements within US capitalism. One example is their debate over whether China is a strategic partner or competitor. The strategic think tank on China at the Pentagon’s National Defense University characterizes China as an enemy and advocates surrounding and limiting China’s growth. In fact, there has been much speculation that one reason for the US invasion of Iraq is to deny strategic oil reserves to China. But to the US globalists this policy makes no sense. Every major US transnational is producing, selling to and exporting from China. It is in their interest that China has proper access to energy and that a strategic friendly economic relationship is developed.
Having set the framework for the division between national and transnational capitalism, let’s examine the industrial system that arose with the electro/mechanical revolution in the 1800s. Here we see the dominant corporations had the majority of their assets, employment and sales in their nation of origin. I remember growing up in the U.S. when General Motors had the slogan, “What is good for G.M. is good for America.” Of course they no longer use that today because they are no longer a national business but a transnational corporation. For example, just this week they announced 25,000 lay-offs to hit U.S. workers while last week they announced the opening of two new facilities in China. During the industrial era there was a large and robust international competitive system, but it was mainly based on exports rooted firmly in national manufacturing. These industries were provided a host of protections and subsidies from governments that helped to advance their access to international resources while defending their monopoly position in the home market. There was also state directed economic development, an expanding national job base and the incorporation of large sectors of the working class into a social contract that provided welfare, health, pensions, unemployment pay and other benefits. In the U.S. this was the Fordist social contract, while in Europe it took the form of social democracy and in China the Iron Rice Bowl. In terms of the international system the North captured value added production while the South was trapped within imperialist relations that often relegated them to supplying natural resources. The South also struggled to overcome land ownership concentrated in a small rural elite rooted in pre-industrial social relations. These relations acted, (and in many cases still do), as a drag on modernization and development.
Let’s turn now to the transnational capitalist system. The transnational era emerging today is a structural shift in the forms of accumulation and social organization that undermine the Fordist model and do away with the decisive role played by the electro/mechanical technology of the industrial era. While capitalism has always been an expansionary system the digital/information revolution is the current framework through which this logic unfolds. The embedding of microprocessors in the tools of production and communication has allowed capitalism to reorganize itself on a qualitatively more integrated level. The entire global financial network, the world spanning command and control system of production and the communication and delivery of hegemonic cultural values are all accomplished with the digital/informational transformation of technology. Not only are the tools and commodities they produced transformed but also the organization of work has been reengineered to make use of new forms of worker control and access to global labor. I often ask my students in Chicago, many who go to work for Motorola, how far away is their economic competition in Bangalore. Of course the answer is not 25,000 miles but only a mouse click away. So space has been conquered because the new technologies bind the world together in real functioning time. In examining all these changes we see that information technologies form the skeleton around which transnational capitalism is built and has laid the foundation for a new era. How people work, how commodities are produced and the forms that power can be expressed have forever changed from the industrial era. The underlying logic of competition, accumulation and expansion has not.
So lets investigate the building blocks of this new transnational system. Here we find transnational corporations have between 45 to 90 percent of their assets, sales and employment outside their country of origin, and so too their profits. In addition we have the growth of cross-border merger and acquisitions running into the hundreds of billions of dollars as well as the rapid spread of joint ventures in country after country. There are thousands of foreign affiliates that operate throughout the global economy whose sales now far exceed the sales of export and imports. This points to the deeply integrated and co-dependent form of globalization in which national competition recedes to be replaced by competition based on transnational monopolies fighting to be the top corporation in their industry and markets throughout the world. For example, the German transnational Siemens is active in every state of the U.S., it delivers one-third of all energy in North America and is among the top 100 employers. As a German corporation it doesn’t seek to out compete the U.S. economy because it is part of the U.S. economy. It seeks to out compete General Electric and their competition spreads over the entire globe. Transnational competition isn’t based on one nation dominating another because the economic viability and stability of every nation is important to the overall success and accumulation of global capital. This is also evident in the spread of foreign direct investments; open capital flows, global assembly lines and the spread of technology.
As cities, regions and countries transform their structures to insert their economies and social institutions into patterns of global production contradictions between the national and transnational erupt. Most often this process is viewed from a national perspective, as if new policies are forced upon actors incased in a national cocoon reacting to outside forces such as China stealing jobs or immigrants flooding across the border. There are still very real existing material benefits connected to the remnants of the old industrial system in all classes throughout society and each affected group seeks to protect its own interests. But all this is under unending attack and change from the new form of accumulation that creates its own alternate relationships, benefits and concepts. The real push for change doesn’t come from the outside but the transnational capitalist class inside the national political and economic structure. This emerging class has its own logic and consciousness and seeks to rearrange the nation state to serve its own interests. New legal structures, tax regimes and job base create a new set of political and economic concerns that tend to be multilateral, multicultural and seek world stability. All this produces a period of instability between the old industrial accumulation model and new transnational capitalism.
Insertion into Globalization
As a new transnational system begins to emerge it contains both aspects of the industrial era and key elements of globalization. Here we have to avoid the dogmatic dualism that insists on either total acceptance of globalization, particularly in its neoliberal form, or total rejection in a nationalist reaction that attempts to chain the world to its past. We have to understand each particular country has its own unique process of insertion into the global economy. This is based on history, culture, the local political system, the balance of social and class forces, the level of development in technology and infrastructure, the rates of literacy, health of the population and much more. All these elements, different in every country, co-determine the pace and nature of rearticulation from the national to the transnational economy.
Therefore the main question becomes how to guide the process. And this is essentially a political process between government, business, labor and community. What becomes important is choosing the elements from both models of accumulation that best serve the needs of the nation. Such policy development can only come from a democratic and open discussion from all elements and stakeholders in society.
Such a process gets us past the old debate between markets versus state led economies. This either/or dead-end dualism fails to understand markets and state directed economics are both necessary tools to achieve politically determined social goals. Both tools should be used by all societies and their balance should be determined by the needs and development of each particular country. There simply is no perfect model or balance. Policy choices and their implementation change the very conditions that brought the policy into being. Therefore there needs to be continual adjustments between the state and market as new sets of problems arise that call for new solutions.
This is the process I see developing in the emerging powers of the South. China, India and Brazil are guiding the process of development through a balancing of the market and state in accordance to their own specific needs, not those of the IMF or Washington neo-liberals. This is beginning to have a global impact as it develops an alternative globalization with leadership coming from the South. The big economies of Brazil, China and India also provide the political space, economic relationships and cultural networks for mid-size and smaller countries, so that Argentina, Venezuela, Mexico, Colombia, South Africa, Thailand, Viet-Nam, Malaysia and others can join together and build a counter-hegemony to unilateralism, domination and inequality.
High Road Strategy
Because of the tremendous structural shifts in the world, social and political tensions are becoming very sharp. How can countries correctly handle these contradictions and create a developmental model that makes globalization work for the entire society?
Let me suggest the High Road strategy that calls for the building of a social economy. The High Road economic strategy is technologically advanced, democratic, transparent and participatory as well as competitive and profitable. It seeks to create an environmentally sustainable society, not only at the point of production and energy use, but in the manner that commodities effect the environment once they are in the market. It not only treats labor fairly, but also recognizes that labor should have its fair share of political empowerment. This not only means at work but the working class in the broadest sense, in the community, as a stakeholder in the economy. The High Road strategy understand that education, health, housing, family well-being and a clean environment are not only questions of morality and social justice, but also of economic competitiveness. That land redistribution and the development of a broad rural middle class is essential for modernization. And lastly that a combination of private, state and co-operative forms of ownership at every level are essential parts of a healthy and fully developed economy.
Let us counterpoise the low road strategy that has been the dominant model for the past 20 or so years of the Washington Consensus. Here we have the low wage strategy of cheap labor that is no strategy at all. Why? Because there are so many poor in the world someone, somewhere will always be willing to work for less. Therefore no long-term strategy can be built on this model. The lack of capital controls and speculative manipulation, privatization of basic human resources and the prioritizing of efficiency over human development have all lead to growing poverty for the majority and growing wealth for the few. Viewing the environment as an instrument of economics rather than understanding economics as a subset of the biosphere has led to the destruction rather than the preservation of resources. The privatization of knowledge and denying access to technology has the effect of curtailing economic development because it deprives millions of people the necessary tools for entrepreneurship and advancement. Afterall, Albert Einstein didn’t patent E=MC2. If only a handful of people know 2+2 equals 4 the concept it almost useless, but if millions understand the basics of mathematics then it becomes operable, useful and dynamic. Knowledge must be shared. So we can say with certainty that cuts in the social economy that create an insecure, less educated, less healthy and political angry population is a society that is less competitive.
Lastly let me underline the need for worker and community participation and empowerment as a question of real democracy. We must avoid the technocratic, bureaucratic and managerial solutions that come so easy to those of us in government, business and academia. Building participatory democracy that gives people the power to make decisions that affect the key areas of their life can unleash the tremendous strength, initiative and creativity that will drive a social economy. In fact, I believe popular socialist democracy is the competitive edge for the 21st century.
Thank you
to Read Now:
Organizing in
the Present for the Sake of
the Future
Loyola Philosphy
Professor David Schweickart's views on the Market, Economic Democracy & Events in China.
Delivered in July 2005 at Renmin University, China
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