From Spartacist Pamphlet: Imperialism, the “Global Economy” and Labor Reformism (September 1999)How David North Embraces Karl Kautsky
The “Global Economy” and Labor Reformism
Economic “Globalization”: Myths and Realities
An article in the recent special issue of the Nation (15 July 1996) devoted to the question of “globalization” begins with the portentous statement “Economic globalization involves arguably the most fundamental redesign and centralization of the planet's political and economic arrangements since the Industrial Revolution.” Similarly, Australian Northite leader Nick Beams asserts that “globalization refers to the internationalization of the circuit of productive capital” and that this constitutes a “qualitative transformation” of the world capitalist system (International Workers Bulletin, 15 July 1996).
In fact, the history of industrial capitalism was marked by a previous shift, far more profound than the present one, in the geographical distribution of production. The Industrial Revolution began in England and Scotland in the early 19th century and then spread by mid-century to France and the Low Countries (Belgium and Holland). In the late 19th century, the “New Industrializing Countries” of the day were Germany, the United States and Japan.
Writing in the 1890s, Friedrich Engels noted that Germany, which at the time of the 1848 Revolution was economically dominated by peasant agriculture and small-scale artisan manufacturing, had become “an industrial country of the first rank.” During the same period the United States, too, became an industrial country of the first rank. American industrial development was heavily dependent on investment by British capital, especially in the key sector of railway construction. Following the overthrow of the feudal order with the Meiji Restoration of the 1860s, Japan deliberately emulated the advanced capitalist countries of the West, beginning by exporting light manufactures produced by cheap unskilled labor. Tsarist Russia also experienced rapid industrial growth between the 1890s and World War I, largely financed by West European, especially French, capital.
By the beginning of the 20th century, however, the existing advanced capitalist (i.e., imperialist) countries had achieved such dominance over more backward regions that they were able to arrest the development of new rival industrial powers. Hence the present global division between the so-called First World and the Third World.
Since the Northite International Committee maintains that world capitalism has recently undergone a “qualitative transformation,” one would expect this ostensibly Marxist organization to substantiate their analysis with a comprehensive study of the relevant economic data. For example, Lenin’s 1916 work, Imperialism, the Highest Stage of Capitalism, contains pages of statistical tables illuminating and substantiating its analysis on all aspects. By contrast, the writings and speeches on “globalization” by North and his henchmen are devoid of even cursory data on trends in global production, investment and trade. Their 1993 pamphlet, The Globalization of Capitalist Production & the International Tasks of the Working Class, contains not a single statistical table or graph.
A few basic and easily accessible statistics debunk the notion of a qualitative transformation of world capitalism. Western/Japanese investment in the so-called Newly Industrializing Countries totaled some $100 billion in 1993, a peak year. Yet this record amount was only 3 percent of total capital investment in North America, West Europe and Japan. In other words, the imperialist bourgeoisies still invest more that 30 times as much in their own “First World” as in the Third World. American capitalists invest 9 cents in Canada and West Europe and just 5 cents in the entire rest of the world for every dollar they expend on productive assets in the United States.
Why, then, all the hullabaloo about economic “globalization”? For the past few decades, and especially since the destruction of the Soviet Union, the world capitalist economy has in certain respects been returning to the norms of the pre1914 imperialist order. To maintain a sense of perspective, one should understand that only in the early 1970s did the ratio of world trade to global production once again reach the level it had attained in 1914, on the eve of the first imperialist world war. Yet the current theoreticians of “globalization” rarely if ever mention Lenin’s seminal study of the rise of the imperialist system, to which they add little or nothing, save confusion. As we noted in an earlier article (“David North ‘Abolishes’ the Right to Self-Determination,” Part One, WV No. 626, 28 July 1995):
“The idea of an ‘era of global economic integration’ which North presents as if it were yet another of his unique ‘theoretical breakthroughs’ has been known to the Marxist movement for over a century now. It’s otherwise known as imperialism!”The term “globalization” refers to certain significant quantitative changes in the contemporary structure of world production and trade. In 1970, 85 percent of all exports (in value terms) from Africa, Latin America and Asian countries other than Japan consisted of agricultural produce, oil, mineral ores and other primary products. Since then exports of manufactured goods from Third World countries have increased by an average rate of 15 percent a year in real terms and now make up well over half the value of their total exports. Much of this industrial , output is financed and organized by Western/Japanese corporations either directly or through local subcontractors, licensees, etc. However, the growth of internationally competitive manufactures in East Asia and Latin America is reversible and cannot continue at anything close to the rate of increase of the past few decades. That is a political, economic and, indeed, mathematical certainty.
There’s a saying in American business circles: there are liars, damn liars and statisticians. One can always select and present statistics to be deliberately misleading. One of the most common ways of doing this is to show dramatic percentage increases from a low initial base and then to project similar percentage increases into the future. For example, a worker making $5 an hour who gets a dollar raise has received a 20 percent increase while a worker making $13 an hour who gets a dollar raise has received an 8 percent increase. But the second worker is still vastly better off than the first. And the low-wage worker well knows he is not going to keep getting a 20 percent raise every year for the next ten years.
However, much writing and discussion on the world economy – by both bourgeois ideologues and leftist intellectuals – is based on this kind of fallacious methodology. For example, between 1950 and the mid-1970s Japan’s national output grew at an average annual rate two to three times greater than that of the U.S. In the 1970s, big-name American intellectuals wrote well-publicized books – e.g., Herman Kahn’s The Emerging Japanese Superstate, Ezra Vogel’s Japan as Number One – predicting that Japan would overtake the United States as the world’s leading capitalist economic power by the end of the century. Not long after these books. came out, the Japanese growth rate sharply decelerated and during the past decade Japan’s economy has been stagnant. Today, Japan’s national output is still less than half that of the U.S.
The current apocalyptic vision of economic “globalization” is based on the same faulty premises as the “Japan will be number one” literature of the 1970s. For example, between 1985 and 1994 China’s share of world exports of footwear went from 1.5 percent to 15.5 percent, an increase of 1,000 percent. If one projects the same increase for the next ten years, China will account for 150 percent of world trade in footwear, a mathematical impossibility. In another example, investment in plant and equipment by Western/Japanese corporations in backward countries, now including East Europe and the ex-USSR, increased last year by 13 percent. But it is wrong to assume this trend will continue indefinitely into the future.
The Development of Modern Imperialism
To understand the actual significance and limits of the recent changes in the world economy, it is necessary to view these changes In a broad historical perspective. In his 1916 pamphlet, Imperialism, the Highest Stage of Capitalism, Lenin described modern imperialism as that epoch of capitalism marked by the export of capital and the division of the world into “spheres of influence” by a few major advanced capitalist states. The two key institutions of the pre-1914 imperialist order were colonialism and the gold standard.
Particularly Britain and France, but also other West European countries, the United States and Japan exercised direct state power over hundreds of millions of toilers throughout the world. British plantation owners in India did not have to worry that the Indian government would impose high taxes on their property or enact laws favorable to labor since the government in India was their government. Compared to British India, foreign investment in China in the pre-1914 era was relatively slight, because the country was beset by political disorder and was an arena of conflict among a number of rival imperialist powers.
At the same time, the gold standard assured a degree of financial integration among the advanced capitalist countries which has never been matched since. Exchange rates between currencies were fixed, there were few or no restrictions on the international movement of capital, and real interest rates were stable and closely linked in the major financial capitals –London, Paris, New York. British holders of American railway bonds did not have to worry, that their assets would be devalued by hyperinflation or by the depreciation of the dollar against the pound.
Under these conditions the globalization of capital flourished as never before or since, as can be shown with the following few statistics for Britain and France (taken from Herbert Feis, Europe – The World’s Banker 1870-1914 ). The income derived by British capitalists from their foreign assets increased from 4 percent of total British national income in the 1880s to 7 percent by 1903 to almost 10 percent on the eve of World War I in 1914. Foreign investments were concentrated in Britain’s own colonies (especially India, South Africa, Canada and Australia) as well as in the United States and, to a lesser extent; Argentina. By 1914, total productive assets held by British capitalists outside Britain amounted to well over one quarter of the capital stock within Britain itself!
While the globalization of pre-1914 British capitalism was historically unique, the role of foreign investment for French capitalism in this period likewise greatly exceeded that of any present-day imperialist country. Between 1909 and 1913, almost 5 percent of French national income was derived from French investments abroad (mainly in Russia, Turkey; the Balkans and France’s own African and Asian colonies). By 1914, the total value of French long-term foreign investment (45 billion francs) amounted to 15 percent of the productive wealth within France (295 billion francs).
Now let us look at comparable figures for the United States at present. In 1994, total income derived from the foreign assets of American capitalists, both direct investment and stock and bond holdings, was $167 billion. That amounted to slightly less than 2percent of the U.S. gross domestic product of $6.7 trillion. The current total value of American direct foreign investment is about one trillion dollars, slightly less than 10 percent of the $10.5 trillion in privately owned industrial assets (plant and equipment) within the United States. In the case of Japan, the relative weight of foreign investment is even less than it is in the U.S., and in the case of Germany it is substantially less.
World War I and the Russian Revolution
As the above figures indicate, World War I and the 1917 Bolshevik Revolution in Russia brought about a profound and long-lasting disruption of the world capitalist economy. To begin with, the war killed off the gold standard. All combatants financed their huge, unprecedented military expenditures by printing money while imposing tight controls over all international transactions. When the war ended in 1918, price levels in the major capitalist countries bore no relation whatsoever to either prewar foreign-exchange parities or real purchasing power.
An attempt to resurrect the gold standard in the mid-1920s was buried under the wreckage of the Great Depression of the 1930s. That decade saw the collapse of world trade, the rise of “beggar thy neighbor” trade protectionism, the widespread use of foreign-exchange controls (especially in Nazi Germany) and the establishment of regional economic blocs dominated by a single imperialist power (e.g., Japan’s “Greater East Asian Co-Prosperity Sphere”).
Added to the effects of the Great Depression and intensifying interimperialist conflict were the consequences of the Russian Revolution. Not only had a major country been ripped out of the sphere of capitalist exploitation, but the imperialist bourgeoisies were now imbued with a fear of “red revolution” elsewhere; especially in backward countries where social and political conditions were manifestly unstable. The huge losses suffered by French financiers and other holders of Russian tsarist bonds cast a long shadow over world capital markets in the 1920s and ‘30s. Lending to semicolonial countries like China and Mexico was inhibited by the perceived danger of revolutionary turmoil and left-wing governments which would repudiate the country’s foreign debt. The only significant foreign investment in China during the interwar period was undertaken by the Japanese in Manchuria – after they had conquered and occupied this region in 1931.
From World War II to the Cold War
The struggle of the major capitalist powers to redivide markets and spheres of exploitation led in 1939-41, as it had in 1914, to an interimperialist world war, though this time one in which a chief combatant was a (degenerated) workers state, the Soviet Union. (Thus, while taking a defeatist position toward all the imperialist powers in World War II, as in the previous world war, revolutionary Marxists called for unconditional military defense of the USSR.) The outcome of the Second World War perpetuated and deepened the disruption and segmentation of the world economy. By defeating its main imperialist rivals, Germany and Japan, the United States became the hegemonic capitalist power. But the global hegemony of American imperialism was blocked by the Soviet Union, which had emerged from the war as the second-strongest state in the world: From East Asia to West Europe to South America, the course of economic developments between 1945 and 1991 was integrally connected with the Cold War.
In West Europe and also Japan, the devastation of the war combined with the leftward radicalization of the working class militated against a return to the “free trade” and “free market” policies of the pre-1914 era. Except for the U.S., all major advanced capitalist countries engaged in a high degree of state intervention in economic activity during the first phase of the postwar period. Almost all foreign-exchange transactions in West Europe were subject to strict government regulation and bureaucratic approval The pound, franc and deutschmark did not become “freely” convertible until the late 1950s.
Currency convertibility is a basic economic precondition for large-scale foreign investment in manufacturing and services, since the revenue generated from these activities is usually denominated in the currency of the country in which the investments take place. The oil extracted by Exxon in Saudi Arabia is sold on the world market for dollars. But the automobiles produced by General Motors in Germany are sold to Germans for deutschmarks. Thus, it was only in the 1960s – after the introduction of convertibility gave them the option of repatriating their profits – that American corporations bought out or built industrial plants in West Europe on a significant scale. The total value of U.S. direct investment in manufacturing in West Europe went from $3.8 billion in 1960 to $12.3 billion (discounting for inflation) by the end of the decade.
It was, however, in the economically backward regions of the world that the postwar period saw the most radical political changes affecting the international movement of capital. In the course of defeating the Nazi Wehrmacht, the Soviet Red Army occupied East Europe. Over the next few years, under the hostile pressure of American imperialism, these countries were transformed, bureaucratically from above, into “people’s democracies” – i.e., deformed workers states structurally similar to the Stalinized Soviet Union, based on planned, collectivized economies, the state monopoly of foreign trade, etc.
Bureaucratically deformed workers states also emerged in China, North Korea and Vietnam, as a result of indigenous, peasant-based social revolutions led by Stalinists. It was above all fear of war with the Soviet Union which prevented Washington from using its nuclear weapons against Mao’s China during the Korean War in the early 1950s and a few years later against the Viet Minh forces which were defeating the French colonial army in Indochina. A large part of the world was thus removed from the sphere of capitalist exploitation, although still subject to the powerful political, economic and military pressures of imperialism.
At the same time, radical political changes also took place in those economically backward countries which remained within the sphere of capitalist exploitation. The weakening of the West European imperialist, states caused by World War II combined with the radicalization of the colonial masses led to the “decolonization” of much of Asia, the Near East and Africa. State power in these regions now passed into the hands of indigenous bourgeoisies, who sought to pursue their own national interests within a global context dominated by international finance capital.
Despite some CIA-organized coups (e.g., against Mossadeq in Iran in 1953), the ability of U.S. imperialism to control the governments of the former colonial and semicolonial countries was. limited by the countervailing power of the. Soviet Union. Moscow’s backing allowed bourgeois-nationalist regimes like Nasser's Egypt, Nehru and Indira Gandhi’s India and Saddam Hussein's Iraq to exercise a degree of political and economic independence of the imperialist powers which they could not have attained on the basis of their own national economic. resources.
During the 1960s, Soviet funds and engineers helped build the Aswan High Dam – one of the largest in the world – in Nasser’s Egypt. By the early ‘70s, the USSR had become the largest market for India's exports, while Moscow provided the New Delhi regime with over 60 percent of its imports of military hardware. At the same time, Western and Japanese corporations were discouraged from investing in countries like Egypt and India for fear of punitive taxation, restrictions on the repatriation of profits and the possibility of nationalization without adequate compensation. The 1960s and ‘70s thus marked the heyday of economic nationalism and statified capitalism in what was then called the “Afro-Asian bloc.” But with the collapse of the Soviet Union, there was no longer even a partial counterweight to Western/Japanese imperialist domination in the Third World. The 1991 Gulf War signaled that, without the protection of the USSR, those bourgeois-nationalist regimes which flouted the dictates of Washington would be subjected to the devastating power of the Pentagon war machine.
However, even with the relatively greater room for maneuver they had when the Soviet Union still existed, the bourgeois-nationalist regimes in the Third World did not and could not chart a course truly independent of imperialism, nor could they bring about the economic and social modernization of their countries. Despite their “non-aligned” posture and even “socialist” rhetoric, the semicolonial bourgeoisies remained tied to the imperialist bourgeoisies by a thousand strings, subordinated and subservient to the power of the imperialist world market. Thus, India’s exports remained concentrated, as in the colonial era, in light manufactures produced by unskilled labor. Egypt remained economically dependent on the export of cotton (as well as tolls from the Suez Canal), Ba'athist Iraq and Qaddafi’s Libya on the vicissitudes of the world oil market controlled by the “Seven Sisters” monopolies. And Algeria under the radical-nationalist FLN regime relied heavily on money sent back by Algerians working in France. Only through the revolutionary overthrow of the local bourgeoisies, as part of a perspective of world socialist revolution reaching into the imperialist centers, can these countries achieve true independence from imperialism.
The End of the “American Century”
What is now termed economic “globalization” was rooted in the recovery of Germany and Japanese capitalism from their devastation and defeat in World War II. By the 1960s, German and Japanese manufactured goods were making huge inroads into world markets, including the American market. The competitive position of U.S. imperialism was further weakened in this period by the inflationary pressures generated by its long, losing colonial war in Vietnam. America's large, permanent balance-of-trade deficits, especially with Japan, fatally undermined the use of the dollar as the global medium of exchange and store of value – the international monetary system, originally set up at the 1944 conference in Bretton Woods, New Hampshire. Nixon's August 1971 devaluation of the dollar in terms of gold, and the subsequent recourse to fluctuating exchange rates, signaled the end of the short-lived “American Century” of U.S. imperialist hegemony in the capitalist world.
The weakened competitive position of U.S. capitalism was further exposed by the large losses experienced by corporate. America during the 1974-75 world economic downturn. The American bourgeoisie responded with a concerted drive to increase the rate of exploitation. An anti-labor offensive was marked by “giveback” contracts, two-tier wage systems for younger workers and outright, union-busting. Unionized plants in the Midwest and North, which paid relatively high wages, were shut down as production was shifted to the “open shop” South and Southwest.
At the same time, American industrial capital undertook a major expansion in East Asia and Latin America. Between 1977 and 1994, there was a five-fold increase in manufacturing plant and equipment owned directly by U.S. corporations in Third World countries, from $11 billion to $52 billion (in real terms, discounted for inflation). Japanese industrialists soon followed their American competitors in going offshore. By the mid-1980s, Matsushita was producing many of its TV sets and air conditioners in Malaysia, Yamaha its sporting goods in Taiwan, Minebea its miniature ball bearings in Singapore and Thailand, TDK its magnetic tapes in Taiwan and South Korea, etc.
Nonetheless, investment by Western and Japanese corporations in neocolonial countries was still inhibited by the uncertainties of the Cold War. A popular uprising or even an election or military coup could suddenly bring about a left nationalist regime backed by Moscow. For example, in 1979 a revolution in Nicaragua toppled Washington's puppet dictator Somoza and brought to power the radical petty-bourgeois nationalist Sandinistas. At the same time, a major leftist insurgency was raging in neighboring El Salvador. Thus, even Yankee imperialism's own “backyard” was not secure for Wall Street banks and the Fortune 500 corporations.
Economic “Globalization” and Capitalist Counterrevolution
A fundamental political condition for the present triumph of capitalist “globalization” was the retreat of Soviet global power under Gorbachev, the disintegration of the Moscow Stalinist bureaucracy and the counterrevolutionary destruction of the Soviet Union in 1991-92. It was no accident that the electoral overthrow of the Sandinista regime in 1990, capping a contra war armed and organized by Washington, coincided with the beginning of a massive investment boom by U.S. banks and corporations in Mexico. At the same time, capitalist counterrevolution in the former Soviet sphere has opened up a new, huge sphere for exploitation, especially for German imperialism. A few' years ago, a spokesman for German industry exulted: “Right on our own doorstep in Eastern Europe, we have for the first time a vast pool of cheap and highly trained labor.”
During Cold War II in the 1980s North’s IC joined in the imperialist anti-Soviet chorus along with other pseudo-Trotskyists like the United Secretariat of the late Ernest Mandel, as well as mainstream social democrats and Eurocommunists. Having done all within their means to promote counterrevolution in the Soviet Union and East Europe, the Northites now proclaim that the restoration of capitalism there – a historic defeat for the international proletariat – was objectively determined. Their 1993 pamphlet, The Globalization of Capitalist Production & the International Tasks of the Working Class, informs us: “The collapse of the Soviet Union was only the first major political convulsion produced by the transformation of the forms of production. The qualitative advances ,in the integration of world economy dealt the final blow to the autarchic national policies of the Stalinist regime.”
By their own terms, for the Northites the Soviet working class simply did not exist as even a potential factor in deciding the fate of the Soviet Union. The IC has effectively repudiated the Trotskyist program of proletarian political revolution against the Stalinist bureaucracy as even a historical possibility in this supposedly new era of “globalized” capitalism. The 1938 Transitional Program, written when the Soviet Union was relatively far more economically backward and geographically, isolated than in the 1980s, stated, “either the bureaucracy, becoming ever more the organ of the world bourgeoisie in the workers' state, will overthrow the new form of property and plunge the country back into capitalism; or the working class will crush the bureaucracy and open the way to socialism.”
What did Trotsky mean here about opening “the way to socialism”? Wouldn't a Russian-centered Soviet workers state, even if administered on the basis of proletarian democracy and governed by a genuinely communist vanguard party, still be surrounded by hostile and economically more advanced capitalist states? Yes, of course. However, the overthrow of the Stalinist bureaucracy by the Soviet working class, under the banner of proletarian internationalism, would have reawakened and inspired revolutionary fervor among the workers, rural toilers and oppressed peoples throughout the capitalist world. And a communist government of the USSR would have provided invaluable political, economic and, if necessary, military support for proletarian revolutions in capitalist states, including the imperialist powers.
For Proletarian Political Revolution In China!
As against all the various pretenders to Trotskyism, not least North’s IC, our tendency unambiguously and consistently called for unconditional military defense of the Soviet Union and the deformed workers states against imperialism and internal counterrevolution, as we do today in regard to the remaining deformed workers states – Cuba, China, North Korea and Vietnam. The International Communist League mobilized all the limited resources at our command during the political turmoil in the East German (DDR) deformed workers state in 1989-90, fighting for proletarian political revolution to oust the Stalinist bureaucracy which, in league with West German imperialism and its Social Democratic lackeys, pushed for a capitalist reunification of Germany. Uniquely, the ICL opposed capitalist Anschluss (annexation) down the line, calling instead for a “Red Germany of Workers Councils” as part of a Socialist United States of Europe.
And during the terminal crisis of Stalinist rule in the USSR, our tendency actively intervened in the Soviet Union with the program and perspective of proletarian political revolution to “open the way to socialism.” The counterrevolutionary destruction of the Soviet Union was no more objectively inevitable in 1991-92 than in 1941, when the USSR was invaded by Nazi Germany. The direction taken by Russia, the Ukraine and other Soviet republics when the Kremlin bureaucracy disintegrated under Gorbachev, while conditioned by the pressures of the world capitalist market, was determined by the struggle of living social and political forces. A decisive factor in the outcome was a retrogression in the political consciousness of the Soviet working class brought about by three generations of Stalinism in power. Widespread apathy and cynicism as well as, to a certain degree, illusions in Western-type bourgeois democracy among the masses allowed the ascendancy of the counterrevolutionary forces centered around Boris Yeltsin in Russia and around anti-Soviet nationalists in the non-Russian republics.
In the case of the USSR, the Northites maintain that the capitalist counterrevolution which actually did take place was inevitable. In the case of China, they maintain that a capitalist counterrevolution has already taken place when it has not yet occurred. A major article in their Fourth International (Winter-Spring 1994), titled "The Political Background of the Restoration of Capitalism in China," asserts:
“The state which issued from the Chinese Revolution no longer defends or maintains the limited gains won by the workers and peasants in 1949....Despite the significant inroads made by capital, both domestic and foreign, over the past several years, the People's Republic of China remains a bureaucratically deformed workers state. The author of the article quoted above, one Martin McLaughlin, is here plagiarizing without attribution the Maoist doctrine of “capitalist roadism" and applying it to Mao's one-time chief rival within the Beijing Stalinist regime, Deng Xiaoping. Significantly but predictably, not once is the Trotskyist program of proletarian political revolution mentioned in this lengthy article, which purports to cover the entire history of China in the 20th century.
“The Chinese state is not, even in the most distorted sense, an instrument for the defense of the working class.... The state defends the interests of the bureaucracy as a privileged social layer: increasingly linked to the rising capitalist class and, through them, the interests of imperialism itself.”
In contrast, a “Perspectives and Tasks Memorandum” adopted by our international tendency in January 1996 states:
“Transnational” Corporations and Imperialist States: Antagonists or Partners?
“The next period is likely to see the breakdown and terminal crisis of Stalinist rule in China as powerful elements in the bureaucracy, directly tied to offshore Chinese capital and actively supported by Western and Japanese imperialism, continue to drive toward capitalist restoration. The Chinese working class, although heretofore limited by police repression to actions at individual workplaces, has in recent years exhibited massive discontent with the social degradation, insecurities and blatant inequalities generated by Deng’s ‘market socialist’ program. The rural economy has experienced the rise of a class of relatively wealthy peasant smallholders while an estimated 100 million landless peasants have flooded into the cities. We can thus foresee monumental class battles leading either to proletarian political revolution or capitalist counterrevolution in the most populous nation on earth.”
A central element in the theory of a new “globalized” capitalist economy is that transnational corporations have supplanted nation-states as the dominant institutions in world power politics. In his latest book, Global Dreams: Imperial Corporations and the New World Order (1994), leading American left-liberal intellectual Richard J. Barnet maintains:
“The architects and managers of these space-age business enterprises understand that the balance of power in world politics has shifted in recent years from territorially bound governments to companies that can roam the world. As the hopes and pretensions of government shrink almost everywhere, these imperial corporations are occupying public space and exerting a more profound influence over the lives of ever larger numbers of people.”A more extreme version of the same thesis is presented by another American rad-lib intellectual, David Korten, in his 1995 book, When Corporations Rule the World. The current view of the International Committee is essentially similar, as North stated in a 1992 speech:
“Under the aegis of imperialism, the globalization of production collides against the nation-state form within which capitalist rule is rooted.... “The web of alliances being formed by various transnational corporations, such as Toshiba, IBM and Siemens, expresses the organic drive of the productive forces to organize themselves on a world scale. But the other side of the same process is the growing antagonism among nation-states and the eruption of various forms of national and communal conflict.”Transnational corporations are here counterposed to imperialist nation-states. Moreover, the former are presented as (relatively) progressive, since they serve as agents of global economic integration, while the latter are viewed as reactionary and obsolete. North’s statement is diametrically counterposed to what Lenin argues in his Imperialism. In particular, North’s view of the capitalists as an international class flies in the face of the Marxist understanding that the bourgeoisie cannot transcend national interests (for further discussion, see “On Bourgeois Class Consciousness,” Spartacist No. 24, Autumn 1977).
– Capital, Labor and the Nation-State (1992)
In the Barnet/Korten/North view, corporations like IBM, Siemens and Toshiba are devoted solely to maximizing their profits on a global scale; their directors and stockholders supposedly don't care whether their actions strengthen or weaken the American; German and Japanese bourgeois states. This view expresses a liberal idealist outlook since it implicitly assumes that capitalists do not need state power – i.e., armed bodies of men – to protect their property against challenges from both the exploited classes and rival capitalists. in other countries. Wall Street bankers and the CEOs of the Fortune 500 corporations understand (as Richard Barnet and David North apparently do not) that Mexican and South Korean workers are not devout believers in the sanctity of private property. Replying to similar arguments at the time, notably by German Social Democrat Karl Kautsky, Lenin in his 1916 study of imperialism quoted the German economist Schulze-Gaevemitz:
“Great Britain grants loans to Egypt, Japan, China and South America. Her navy plays here the part of bailiff in case of necessity. Great Britain’s political power protects her from the indignation of her debtors.”The same applies to the U.S., Germany and Japan, whose armed forces are prepared to act as “bailiff in case of necessity.” Whether undertaken by corporations, banks or other financial institutions, foreign investment depends on the political, economic and military power of the states controlled by the owners of these capitalist enterprises.
North & Co. have not yet revised or repudiated the position that the Republican and Democratic parties represent the interests of the American bourgeoisie. Why then do the political leaders of these parties continue to expend hundreds of billions of dollars a year on the U.S. armed forces? Even an old-fashioned liberal like Russell Baker has observed: “The era of big government is over except for the Pentagon” (New York Times, 24 September 1996). That’s because the Pentagon provides and organizes the security guards, so to speak, to protect the property of American capitalists in other countries. Citibank and Exxon are no more independent of, much less antagonistic to, the American imperialist state than Barings Bank and Royal Dutch Shell were independent of the British imperialist state in the pre-1914 era.
Indeed, if the recent merger announcement by Boeing and McDonnell Douglas demonstrates anything, it is that “multinational” corporations – especially so in strategic industries like electronics and aerospace – are very much rooted in their own nation-states. This monopolistic merger is aimed not only at reinforcing the U.S. aerospace and weapons industry but at increasing its competitive edge against rivals like the West European Airbus conglomerate.