The US as Superintendent of Global Capitalism: a Response

Published on New Left, by Leo Panitch, Sam Gindin, June 12, 2013.

We very much appreciate these generous, perceptive and comradely comments on our book and we hope our response will contribute to continued discussions and further research.

It is useful to begin with the difficult question of how to define and date ‘global capitalism’.  As we tried to make clear in the opening pages of the book, we see capitalist globalization as a long historical process, the product of an intrinsic tendency within capitalism.  

This process, however, came across many barriers and was subject to severe interruptions.  Insofar as the Communist Manifesto already spoke in terms of capitalist ‘intercourse in every direction’ and especially ‘universal inter-dependence’ among capitalist nations, this tendency was only realised in the final decades of the 20th century.  The problem with world systems theory’s 500 year sweep is that it suffers from what in an earlier critique of Giovanni Arrighi we referred to as the ‘myopia of the macro’.[1]  The studies that Göran Therborn cites on the world economy since the sixteenth century are indeed very rich.  But insofar as we are looking at the broad instantiation of capitalist social relations this was not very far advanced, apart from the British case, even within most Europe states until the second half of the 19th century[2] … //

… Our account of the Gramm-Leach-Bliley Act of 1999, which Bob Jessop takes as his case in point, shows that this piece of legislation was the culmination of a long regulatory process to facilitate the development of derivative markets.  In the framing of the 1999 legislation, Senator Gramm may have been acting at the behest of specific capitalists; and Brooksley Born, head of the FDIC, evinced a high degree of autonomy by calling for derivative controls that these capitalists vehemently opposed.  But what was paramount was the concern of the Treasury’s Larry Summers and of the Fed’s Alan Greenspan that new regulations would create enormous ‘legal uncertainty’ with the regard to trillions of dollars in existing derivative contracts.  It would be difficult to explain the different positions taken by Summers and Born in the above example in terms of their social backgrounds and personal biographies, and their career patterns were more determined by their actions inside than outside the state.  Summers certainly had more lucrative speaking engagements while he was out of office, but this was not due to the ‘corporate elite networks’ in which he was embedded (or even, in his case, academic elite networks).  It was rather due to the way he played the role of managing global capitalism inside the powerful agency of the US Treasury, which is itself institutionally organised in such a way as to facilitate capital accumulation, and to express this as being in the general interest by virtue of the whole social order’s dependence on successful accumulation.

It was on this complex terrain of varying relative autonomies on the field of the American state that the compromises represented by the 1999 legislation were struck.  Even if this led to greater financial volatility, it was explicitly recognised by the Treasury at the time that engaging in ‘failure prevention’ in financial markets could have serious disruptive effects which might undermine the making of global capitalism in the interests of capital in general.  Given the structural importance of derivative contracts, especially in currency markets and the networks of integrated global production, there is understandable concern inside capitalist states themselves about the effect of new regulatory rules for them on capital in general.  (This is also seen today when US MNCs like Caterpillar and Apple, joined by German exporters, complain as loudly as financial institutions of the costs and dysfunctionality of new taxes on international finance and new rules for derivative regulation).[7]  Bob Jessop’s excellent point on the ‘changing forms of money’ (which already at the time of the Volcker shock made the simplistic measures of ‘money supply’ in monetarist theories irrelevant to the practice of the Fed) also need to be put in this context.  Speculation and risk taking have a function in the circuits of capital that link global finance and production in ways that are almost impossible to disentangle.  That this produces dysfunctions which lead to crises is what Marxists call a contradiction.  Of course, as the final point in Jeremy Green’s piece makes clear, we also stress the contradictions produced by the role that credit increasingly has come to play in working class consumption.

This relates to the concern that placing states at the center of the making of global capitalism ‘leaves out the dynamics of capital and its interaction with states’, as Therborn puts it; while Jessop thinks we may give ‘the impression that failure is a problem of institutional design or poor strategy rather than more basic aspects of a multi-faceted capital relation’.  This concern is put less abstractly by van Apeldoorn and de Graff who deploy the notion of ‘over-accumulation’ to explain American capital’s ‘need to invest its surpluses abroad’.  If this is the kind of explanation of the basic facets of capitalism’s dynamic that are being looked for, we are unrepentant.  The Open Door’s over-accumulation explanation for American investment abroad was as misleading in its own time as it is today.  We cannot repeat our evidence here, but we can at least quote again the judgments of Bruce Cumings and Gabriel Kolko on the disproportionate significance the over-accumulation thesis gave to US expansion in Central America at a time when California was barely yet a site of capital accumulation.  As Cumings put it, from 1890 to 1940 ‘Americans peopled and filled in the national territory.  At the same time the US became the leading industrial power in the world… the dominant tendency was expansion to the coast and exploitation of a vast and relatively new market.’  In this context, as Kolko pointed out long ago, the Open Door interpretation implied ‘a transcendental false consciousness’ whereby capital and the state ‘failed to perceive where it was their main gains were to be made.’[8]

Our book also demonstrates that it was above all US capital accumulation at home that was crucially significant in terms of laying the material foundations of capitalist globalisation in the immediate post-World War Two era, and that as US capital expanded abroad through the following decades it did so alongside unprecedented accumulation at home.  We similarly demonstrate that the crisis of the 1970s was not one of over-accumulation, but was rather due to a profit squeeze and fiscal crisis produced by class struggles from below as registered in rising wages, social expenditures and inflation.  To ascribe the vast expansion of US FDI in the decades after the 1970s to over-accumulation at home, at a time when there were even larger flows of FDI into the US, simply doesn’t make sense to us.

Although Apeldoorn and de Graff do not do this, it is commonplace among many Marxists economists to explain all capitalist crises in terms of over-accumulation.  We explicitly reject any singular trans-historical theory of capitalist crises; and we show that their severity cannot be understood apart from what states are able (or not able) to do to contain them.[9]

Göran Therborn chides us for our lament that the weakness of alternatives to capitalism, even in the face of severe policies of austerity, has much to do with the fact that consumerism became the ‘main legacy of working-class struggles in the twentieth century’.  It should be noted that we say this against the backdrop of the extensive analysis in the book that shows that worker’s envelopment in increasing commodification—not primarily ‘decommodification’ as misleading theories of the welfare state suggest—were achieved in good part through their own class struggles, alongside the achievement of full employment and collective social services; and at the same time how the contradictions of ‘full employment capitalism’ and the Keynesian welfare state laid the foundations for neoliberalism.  How to take up again the expansion of collective services in ways that build capacities to transcend capitalism is, as we suggest in our conclusion, the key strategic question of the early twenty-first century.

To be sure, as all these insightful comments rightly note, much further research is needed, not least on the role of state coercive apparatuses, and especially American imperial ones, which would certainly come into play in face of the development of renewed socialist capacities, just they repeatedly did in the twentieth century.  Our focus on the state economic apparatuses reflected the extensive research already done in respect to the military and security apparatuses of US Empire.  We hope that our book will help focus future research towards inquiring into how these apparatuses do not merely serve ‘to force and keep markets open to American capital’ but play a much broader role of trying to ‘keep order’ in a chaotic and exploitative capitalist world.  The way the old inter-imperial rivalries were transcended through the integration of military and security apparatuses, as well as economic ones, under the rubric of the American empire is certainly an important part of any historical materialist account of the making of global capitalism.  One of the most significant questions today is how much more difficult it may prove for the American empire to secure the integration of the leading developing capitalist states of the G20—economically, politically, militarily, and culturally—than proved to be the case with the advanced capitalist states of the G7.  We hope our book will be of use to those pursuing further historical materialist research into this, as well as those thinking through its strategic implications.
(full text and notes).

(Leo Panitch is editor of the Socialist Register and distinguished research professor at York University, Canada.
Sam Gindin is the former Research Director of the Canadian Autoworkers Union and Packer Visiting Chair in Social Justice at York University


Global Capitalism and the State, a serie of articles on New Left Project: How the state makes global capitalism, and how global capitalism makes the state. Leading political economists debate the arguments in Leo Panitch and Sam Gindin’s major new book, The Making of Global Capitalism.

The Making of Global Capitalism on amazon;

Syrians want to go on living in secular, tolerant state, on Russia Today RT, June 12, 2013.

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