A Maoist View

What It Is and What It Isn't

Revolutionary Worker #1050, April 16, 2000

The following excerpt is taken from "NOTES ON POLITICAL ECONOMY: Our Analysis of the 1980s, Issues of Methodology, and The Current World Situation"--a new document from the Revolutionary Communist Party, USA.

On the meaning and significance of globalization. With the rise of imperialism, the circuits of money, commodity, and productive capital became internationalized under the dominance of finance capital. But during the last 20 to 25 years there has been a substantial increase in the degree of integration of the world economy, in particular in the integration of internationally dispersed production activities.

This "functional integration" turns on tightly woven production and trade networks and is facilitated by global financial markets, new production and transport technologies, and leaps in "real-time communications" capabilities. This greater ability to break down, scatter, and link production processes and serve different markets, to diversify production worldwide, and to seek out "least-cost" locations for specific products and exploit comparative regional advantages--this ability to undertake a kind of "global scan" in pursuit of the most profitable deployment and redeployment of capital--is a trend of qualitative significance.

More so than ever, the capitalist labor process is being integrated, cheapened, and transformed on a global scale.

One measure of what is happening is that changes in the international division of labor are resulting in a shift of the center of gravity for production activities of some global industries toward the oppressed nations. (It has been said that Sao Paolo is Germany's second biggest industrial city.) Only a generation ago, most of the global shifting of manufacturing activity was in apparel and consumer electronics. Now a much wider spectrum of manufacturing, agricultural, and service activities is globalized. U.S. car companies, for example, can attain the same levels of productivity and quality at their Mexican plants today as in their U.S. operations (while paying Mexican auto workers one-seventh of what workers are paid in the U.S.).

Globalization has accelerated in the wake of the Soviet collapse and has been promoted through imperialist treaties, agreements, and policies. There is a global push toward deregulation and liberalization. There is the "intellectual property rights" juggernaut, with monopoly making its "proprietary" claims over everything in sight--technology, agricultural inputs and seed varieties, pharmaceuticals, and now genetic material.

There are three elements of the globalization process: intensified globalization of production, which is the key element; intensified globalization of finance; and globalization of "macroeconomic policy" in the oppressed nations (the virtual takeover of the national management of Third World economies by the IMF and the World Bank and the imposition of neoliberal policies and restructuring).

Globalization is a more recent development than internationalization. But it does not represent a new stage of capitalist development (as imperialism did for capitalism). It is not obliterating rivalry between monopolistic firms or between national-imperialist states, or the division of the world into oppressor and oppressed nations. Rather, globalization represents the heightening of some of the most essential features of imperialism.

Many theorists of globalization suggest that the "new global economy" is subject to the conscious control of the transnational corporations. We, however, see a world economy in which the contradiction between the organization of production at the private ownership level and the anarchy of social production overall is intensifying on a world scale.

Globalization, the Nationality of Capital,
and the Imperialist Nation-State

In the imperialist era, the circuits of capital become internationalized--and accumulation grows ever more global in reach and process. But imperialist capital remains anchored to national markets and national state formations... This is a profound contradiction of the epoch. But do the leaps in and new forms of globalization call this thesis into question?

Many theorists of "globalization" argue that the territorial-national foundation of capital has lost much of its relevance ("capital has no country"). Their argument is that vast flows of capital across national borders, the emergence of the "global assembly line," and the "transnationalization" of financial markets have led to a "footloose" capital whose structures operate outside the grip or authority of nation-states.

In seeking to maximize profits, capital, according to these theorists, has no loyalty to any state. And in globalizing its operations, capital has gained leverage over national states and undermined the ability of the national imperialist state to regulate and manage economic affairs. In short, capital mobility and the globalization of financial markets are eroding national state formations as basic units of the imperialist world economy and rendering the nationality of capital less meaningful.

There is no question that globalization is accelerating. On an average day, the volume of foreign exchange transactions is about $1.5 trillion; flows of new foreign direct investment in 1990 were ten times what they were in 1975, and increased by more than two-and-a-half times between 1990 and 1995; 40 percent of the total assets of the 20 largest U.S. transnational corporations are foreign assets. So how would we answer "end of nation-state" arguments?

For all its mobility, capital has neither detached itself from its moorings in a (home) national market, nor detached itself from the superstructural and institutional expression of these moorings--the imperialist national state. Why?

  • The most significant portion of assets and operations of individual, internationalized capitals tend to be based in, and their profits generated in or repatriated to, their "home base," their respective national markets.
  • Huge concentrations of fixed capital (factories, energy and power facilities, etc.) are "sunk" in national markets. This is not a post-industrial world, or a post-physical-asset society. Capital cannot so easily pull up its stakes and dart from country to country. The "home market" is where research and development and corporate command and control operations of globalized capital are strategically based.

  • The "home base" remains vital to the activity of internationalized capital--more so, in fact, in an era of heightened global competition. This is true even though there is a growing trend toward large transnational corporations entering into various cross-country alliances.
  • A growing domestic market is a source of strength and international competitive advantage. Key firms based in the home market can exploit economies of scale (lowering costs by producing on a larger scale for a large market). They develop strategic networks of customers, suppliers, and subcontractors. They gain cost savings from complementary clusters of industries that provide inputs and supplies and raise the overall technological capabilities of the national capital. Japanese capital has institutionalized interindustrial networks in what are called keiretsu.

    There is both alliance and rivalry among the different units of national capital and within these arrangements, but the material existence of an integrated "home base" lends coherence and competitiveness to a national capital.

    Global companies are still strongly attached to their home markets. When total sales decline, home markets tend to be protected at the expense of foreign ones; when firms expand abroad, they continue to rely heavily on home-country suppliers; foreign firm takeovers of key industries and sectors of the economies of particular imperialist countries tend to be challenged. It is hard to find an example of a global company in which the majority of shares are held outside the home country.

  • Capital requires that the national-imperialist state act economically and superstructurally to guarantee the general conditions under which production and exchange can occur. These general conditions include physical infrastructure (harbors, communications systems, etc.) and basic inputs (like energy); education, job training, and skills upgrading for the labor force; management of the economy (through budgetary expenditures, deficit policy, etc.); central banking systems; and so forth.
  • Capital could not function as internationalized capital without these props and supports. For instance, the postwar expansion of Japanese and German capital was inseparable from the roles played by the Japanese Ministry of Trade and Industry and the German Bundesbank.

  • The imperialist state remains the indispensable guarantor of capitalist production and social relations--through coercion, suppression, and cooptation. Capital must maintain and fortify itself in its home base. Indeed, stability in the national market is a necessary condition for internationalized activity, which normally entails greater risk--and national capitals tend to pay more attention to stability in their home market than elsewhere.
  • At the same time, capital requires an apparatus (the imperialist state) and the military wherewithal (which means a military industry) to secure the international environment within which it can globally thrive. Individual capitals by themselves cannot generally obtain these conditions of domination--whether they involve austerity programs, counterrevolutionary terror, or both (as in Peru), or direct engagement in war, as in the Persian Gulf.

  • The imperialist state is the guardian of the interests of capital as a whole: arranging bail-outs from bankruptcy, negotiating treaties like NAFTA, seeking to resolve dispute between capitals, and forging class consensus above individual interest.
  • Imperialist states develop "strategic" trade, industrial, and technology policies to enhance or protect the international competitiveness of national capitals. Key industries, like aerospace and high tech, are promoted and safeguarded. Modern financial institutions, for all their rapid, cross-border, electronic money transfers, remain tied to particular national states and their central banking systems (like the Federal Reserve Bank) as "lenders of last resort."

    The material reality of distinct national markets to which individual capitals are anchored has another important consequence. National capitalists will seek directly and indirectly to influence policy direction, issues of governance, and so forth within their home national state in a qualitatively different way than they do in other countries (although there are certainly famous cases of companies, like United Fruit or the oil giants, dominating the state in oppressed nations).

    For the above reasons, national capital formations and states will tend to be reproduced. It is possible for individual capitals to detach themselves from a base in a particular country and national market. But: (a) other capitals (newly generated or migrating inward to the national market) will take their place; and (b) those detaching themselves from one base and state will, for all the reasons cited above, have to seek the umbrella of another national state (rooted in another national market).

    Now if the process of individual capitals detaching themselves from a national base were to continue on a massive scale, then a particular capital formation might well disintegrate--but globalization as such is not dissolving national capitals and national states.

  • There are no global institutions that are the functional equivalents of "international" states--with corresponding authority, resources, and power. There are no global institutions that are "supranational" (above imperialist nations). The International Monetary Fund, for instance, does not assume or take over the overall functions of the imperialist state. It performs more limited and specialized functions (although as instruments of imperialism, the IMF and World Bank do become what amounts to economic governing boards in many oppressed nations, especially in their capacity to impose sweeping conditions when they grant loans to Third World countries).
  • The IMF is not in its essence an institution "above nations," or one in which imperialist capitals have become effectively blended together. Rather, it represents an "operating fraternity of imperialists," in which one national capital, U.S. imperialism, is dominant. The World Trade Organization (WTO) is a vehicle for forging and regulating imperialist trade and investment rules. But the WTO is also an arena of interimperialist rivalry.

    The argument being made here is not that globalization is without significance vis-a-vis national capital formations and states. Production, trade, and finance are more footloose. There is a contradiction between national "regulation" by the imperialist state and the global economic organization of transnational corporations.

    In a world economy that has grown more "globalized," and that compels national economies to adjust and reorganize to maintain fitness and competitiveness, imperialist-state economic policy is subject to various global pressures and constraints. Its scope of effectiveness may be reduced. (Of course, the institutional control exercised by the imperialist state over the national economy is only relative; social production is not truly regulated.)

    On the other hand, the world imperialist economy does not possess regulatory institutions commensurate with and adequate to its scope and complexity.

    In short, the anarchy bound up with global processes of capitalist development creates new problems of "control." The contradiction between internationalized accumulation and the national character of capital, far from being transcended, is intensified.

    The imperialist world economy is a "differentiated unity"; it is not a homogeneous world capitalist economy. Capitalist accumulation is internationalized. Capital export is the leading edge of the search for profitability. Capital competes on a global plane: through the competitive introduction of new technologies in internationalized branches of production, through the competitive movement of capital from one country to another within the same branch of production, through the competitive movement of capital from one branch of production to another branch across national boundaries.

    As a result, there are tendencies toward global norms of production (to stay competitive, capital has to produce at a certain level of efficiency) and toward the formation of average world values and international prices of production, that is, toward the "universalization" of social labor (value), the establishment of socially necessary labor time on a global scale. But these tendencies are not fully realized. They have not led to the creation of a single, global capital formation, in which national markets have no significant particularities, or to a single value/price system--although there are complex global processes by which value formation takes place on a world scale.

    Why is this so? Because of qualitative differentiation within the world imperialist economy, because of barriers and divisions that are reproduced, because of the very "modes of existence" of internationalized capital.

    Accumulation proceeds through monopoly, specifically the leading and activating role of finance capital and the existence of global monopolistic power relations in technology, finance, control of natural resources, communications, and armaments. It proceeds through rivalry, among corporations, banks, etc., and among national imperialist states. And accumulation proceeds through the division of the world into oppressor and oppressed nations.

    These three "proceeds throughs" are not historical leftovers of imperialism's or capitalism's beginnings. They are integral to the structure and functioning of internationalized capital--even as capitalist production grows more globalized. World accumulation is inseparable from power relations.

    The world imperialist economy is far from being homogeneous through and through. There is significant diversity in national and local conditions. The world economy's production relations are differentiated--semifeudalism and precapitalist relations still exist within the world economy, labor power is reproduced under different conditions, and imperialism utilizes all this. In the capitalist sector globally, production conditions and productivity, labor conditions and wage payments, and so on, vary, especially as between the economies of the oppressor and oppressed nations.

    These are all reasons why, despite the existence of a world market, national imperialist economies have relative cohesion and exhibit significant variations. This is why, despite the circulation of capital goods and labor itself across the globe, there is no equalization of wages and rates of exploitation. The minimum wage in Manila in the Philippines is about $5 per day; in the U.S., it is over $5 per hour. There is no way to explain the phenomenon of superexploitation in the Third World if globalization, the movement of capital and labor, etc., have flattened differences.

    Globalization has obviously not eradicated these differences. Moreover, the differentiation of national circuits of capital is superstructurally reinforced. For instance, privileges are granted to sections of the labor force in the imperialist countries, while there is IMF-mandated wage cutting in the oppressed countries.

    The global expansion of capitalism is not a simple process of homogenization. It involves equalization and differentiation (of production processes, etc.) and disintegration and preservation (of precapitalist modes of production and so forth). Capital constantly seeks to exploit, while it also engenders new differentials--this is part of its dynamism, its flux, and its violence.

    This article is posted in English and Spanish on Revolutionary Worker Online
    Write: Box 3486, Merchandise Mart, Chicago, IL 60654
    Phone: 773-227-4066 Fax: 773-227-4497
    (The RW Online does not currently communicate via email.)