economics and politics within the capitalist core and the debate on the new imperialism

8/12/2019 Economics and Politics Within the Capitalist Core and the Debate on the New Imperialism

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Economics and Politics within the Capitalist

Core and the Debate on the New Imperialism.

By Peter Gowan

[NB: This paper is work in progress: still at a preliminarystage. So please contact me if you want to quote from it]

Introductionn the li!ely new "e#ate on what has come to #e calle" the New mperialism onefocal point is the e$tent to which there are structural sources of conflict #etween themain centres in the capitalist core an" if there are% whether these currently take the

form of inter&state ri!alry.

'erhaps the two strongest poles in this "e#ate amongst authors with a connection to(ar$ism are )eo 'anitch an" Sam *in"in on one si"e an" *io!anni +rrighi on theother. The first two authors "eny that there is structural conflict an" ri!alry #etweenthe main core centres an" see the lines of conflict as lying principally #etween la#ouran" glo#al capitalism with the latter #eing structure" #y a hegemonic +mericanmperialism. They !iew its most !ulnera#le flanks at the present time as lying in thefiel" of political legitimation #oth of the +merican ,mpire itself an" of in"i!i"ualstates as they transform themsel!es into the receptacles of a Neo&)i#eral *lo#al-apitalist or"er. *io!anni +rrighi% on the other han"% !iews the current perio" as

marke" a#o!e all #y a chronic an" acute crisis of +merican hegemony o!er the corean" thus as a perio" of rather intense struggle o!er hegemonic succession.

will argue for elements of thir" position on these issues. will argue that there arestructural sources of conflict #etween core capitalisms in the fiel"s #oth of economicsan" politics. These sources of conflict are% will argue% generating tensions an"ri!alries to"ay. But my argument will not "o so far as *io!anni +rrighis claim of aterminal hegemonic "ecline of the S. t may still ha!e the capacity to re#uil" its"ominance.

first want to clarify some terms. want to contrast structural sources of conflict from

contingent sources of conflict. There are e!i"ently all kin"s of political conflictoccurring all the time #etween capitalist states. Some of these can #e quite intense% fore$ample% a conflict #etween celan" an" Britain o!er fishing rights in the North Sea inthe /012s came !ery close to military clashes #etween Na!ies. But this was acontingent conflict% not one that relate" to structural issues. -onflicts can #econsi"ere" structural in two "ifferent senses: first #ecause they ha!e their source insystemic features of capitalism3 #ut secon" #ecause they ha!e their source in what wecan call the structural configuration in the present con4ucture.

also want to "istinguish #etween structural sources of conflict #etween corecapitalisms an" actual inter&state ri!alries. 5i!alries in!ol!e a concerte" effort #ystates to gain a"!antage for itself an"6or its capitalism against other capitalist statesthrough a politicise" conflict. There can #e structural sources of conflict #etween

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capitalist states which are ne!ertheless 4ointly manage" to a!oi" inter&state ri!alry onthe issue. +n e$ample of such a structural source of conflict that was 4ointly manage"was the +merican&British relationship an" the conflict in Northern relan". The+merican state for many "eca"es allowe" the rish 5epu#lican mo!ement to raisefun"s an" campaign for support in the nite" States while the British state was

acti!ely engage" in a military struggle to crush the 5epu#lican mo!ement. 7or theBritish state this was a structural issue in that it touche" on the territorial integrity ofthe so&calle" nite" 8ing"om. But this structural source of conflict was manage"

#etween the British an" +merican state so that it "i" not poison the alliance #etweenthe two 9#y the British putting up 5+ fun"&raising in the S.

also want to "istinguish political ri!alry #etween core capitalist centres from fullloo"e" military&political ri!alries in!ol!ing arms races an" political confrontationsthat coul" generate war. There are le!els an" forms of political ri!alry an" conflictwell&short of war% which are nonetheless real conflicts.

The #ulk of this paper e$plores the e$tent to which there are structural sources ofconflict in economic relations #etween the main core capitalist centres. i"entify twosuch sources: first% in"ustrial competition on which the great #ulk of the paper isfocuse"3 an" secon"ly% structural tensions in the fiel" of monetary relations an"macro&economic management. But will also e$plore the e$tent to which there arestructural political sources of conflict within the core at the present time.

But first% will make some preliminary points a#out the general relationship #etweeninternational economics an" politics in the capitalist worl".

PART ! T"E RE#ATI$N%"IP BET&EEN INTERNATI$NA#EC$N$'IC% AND INTERNATI$NA# P$#ITIC% IN T"E CAPITA#I%T

&$R#D;hile there are strong ten"encies in mainstream international relations theory to treatinternational politics an" economics as largely autonomous of each other an" asgo!erne" #y entirely "ifferent logics% there remains on the left a strong ten"ency toa"opt an analytical perspecti!e #ase" on economic #ase&political superstructuremo"els. Such mo"els lea" us to seek e$planations for "ramatic political e!ents% likethe recent +nglo&+merican aggression against raq in tensions within the economicfiel". This is a metho"ological error.

take capitalism to #e a particular historical form ofsocial organisation of economicacti!ity. The #asis is this form of social organisation into "istincti!e types of classrelations #etween people. t is constituti!e of #oth "istincti!e kin"s of marketrelations an" of "istincti!e forms of state an" "istincti!e kin"s of political conflict.So we can say that the capitalist socio&economic #ase is constituti!e of a "istincti!elycapitalist type of politics an" culture. t is also constituti!e of "istincti!e types ofinternational economic an" political relations.

But this type of systemic% constitutional causation shoul" not #e translate" into ananalytical mo"el for trying to un"erstan" the causes of international politics in

economic e!ents. The capitalist socio&economic system causes a certain type of


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capitalist politics. But capitalist economic e!ents "o not necessarily cause particularpolitical e!ents.

;e are intereste" here in the "istincti!e types of international economics an"

international politics that take place in capitalist inter&state systems. +s ,llen(eiksins ;oo" has recently remin"e" us% one crucial "istincti!e feature of capitalismis the separation of state coerci!e authority an" the "irect owners of economic

property. +nother "istincti!e feature is that capitalist property =capital = ispolymorhic% it can take a multitu"e of forms = money% plant% raw materials an"la#our% commo"ities an" a !ariety of types of paper 9loan agreements% #on"s% stocks%etc. = all ma"e possi#le #y the acti!ity of the states legal% a"ministrati!e an" coerci!eapparatuses. n all its forms capitals mission is e$pansion through a !ariety of markete$changes. But the polymorphic forms of capital an" the capacity of law to protect itscharacter as property in all its forms makes it possi#le for capital to #e spatiallymo#ile = to profit from relationships #etween people far "istant from each other.

These features of capitalism make it possi#le for capitalists to e$pan" their propertyrights an" property claims #y entering into contractual relationships with social groupswithin the 4uris"iction of other states. Thus un"er capitalism the possi#ility oftransnational economic linkages #etween social groups in "ifferent states e$pan"senormously% #y permission of the go!ernments of the states concerne" 9since allinternational economics takes place within the 4uris"ictions of states = offshore is the

pro"uct of some states 4uris"iction .

Therefore the nature of the internal socio&economic% legal an" political regimes withinstateslies at the !ery heart of capitalist international economics. The profita#ility of

international economic operations in a capitalist worl" can always #e enhance" #y orweakene" #y a !ast range of "ifferent changes in the internal regime of any state.Therefore% capitalist classes ha!e powerful economic reasons for seeking to ma$imisethe influence of their state o!er the shape of the internal regimes of other states. Thuscapitalist economic e$pansion a#roa" is always "eeply connecte" to efforts to reshapethe internal social an" political regimes of other states an" is always pre&occupie"with ensuring that these internal regimes continue to protect an" facilitate the propertye$pansion of the source capitalisms capital. These are always more or less politicalquestions% questions of power.

-apitalist economic repro"uction requires a !ery high "egree of political security%especially #ecause of the time&lag #etween throwing forwar" capital an" garneringlater profits. +n" state coerci!e policy is "esigne" to shape the en!ironment of theworking class to ensure that it faces market compulsion to sell its la#our an" work ina "iscipline" way. +t the same time% market compulsion plus the meat&grin"er of thelegal system for criminali>ing the un"iscipline" poor is far from enough to ensuresocial sta#ility an" security for capital. -apitalist states must fin" ways of gainingloyalty to its authority on the part of #oth the capitalist classes an" the su#or"inate%e$ploite" classes. -apitalist states characteristically "o this #y seeking to instill thei"ea of a political i"entity #etween itself an" the population un"er its control: ara"ical contrast with many pre&capitalist political authorities which sought to esta#lish

a "iffernce in kin" #etween rulers an" rule". This is ai"e" #y the fact that the statestan"s a#o!e the "irect conflicts #etween la#our an" capital at the workplace. But

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capitalist states ha!e foun" the nee" to generate stronger% positi!e i"entities: throughcommon ethnicities% common religions% common history stories% national i"entitiesan" also through esta#lishing i"entities of lea"ers an" le" through elections. -ommoni"entities are also esta#lishe" negati!ely% through frien"&enemy polarisations. +s*io!anni +rrighi has recently remin"e" us% "rawing in the work of -harles Tilly%

capitalist states characteristically consoli"ate these political i"entity #ases of theirauthority #y actually "emonstrating a rea"iness an" capacity to "efen" an" protect theimagine" community.

This peculiarly capitalist type of political "omination is e$ten"e" on an internationalle!el. ;hile the ,uropean ,mpires o!er pre&capitalist societies generally trie" tostress the ra"ical "ifference an" superiority of the colonial rulers% powerful capitaliststates asserting their political ascen"ancy o!er other capitalist societies ten" to "o so

#y #oth controlling their internal regimes in non&colonial ways 9gi!ing them formal4uri"ical so!ereignty% for e$ample while simultaneously presenting their political"omination in the form of their lea"ership of a single community with a share"

political i"entity% pitte" against other alien 9an" typically hostile politicalcommunities. Thus% *ermany in the Secon" ;orl" ;ar was the lea"er of ,urope an"the protector of ,urope against +siatic Bolshe!ism an" +merican 'lutocracy. @apanwas the lea"er of a *reater +sian -o&'rosperity sphere. +n" the nite" States in the-ol" ;ar was the lea"er an" protector of a 7ree ;orl".

The "egree to which the esta#lishment of these capitalist *rossraums ha!e require"imperial coercion to maintain "epen"s crucially upon the e$tent to which the"ominant power can gain the support of the capitalist classes an" linke" internalelites of the su#or"inate states. This is not "etermine" simply #y the short&termeconomic interests of these classes an" elites #ut #y their collecti!e conceptions of

their pre"icament as ruling classes. *erman lea"ership was wi"ely supporte" #y thecapitalist classes of ,urope #ecause they saw a real threat from Bolshe!ism an"la#our% while the *erman state remaine" #roa"ly supporti!e of their ,mpires 9inreturn for loyalty. The -ommunist threat an" the priority of restoring their ,mpiresafter /0A similarly helpe" throw the ,uropean ruling classes to the feet of the+mericans% while the ruling classes of "efeate" *ermany an" @apan manage" tonegotiate the re#uil"ing of their in"ustrial strength an" the relegitimation of theirstates in return for accepting the status of military&political protectorates with the Scontrolling their geopolitical orientations.

n each case these grossraums offere" su#stantial prospects for a large geographicale$pansion of the capitalism of the "ominant power. Thus the connection #etweencapitalist international politics an" international economics was o#!ious: *ermany%@apan an" the S coul" reorganise the internal legal socio&economic an" politicalregimes of their satellites in ways that coul" set the framework for greatly e$pan"e"capital accumulation with the lea" centre as the hu#. But equally% the internationaleconomic "ominance of a gi!en capitalism can act as a powerful le!er for e$pan"ingits political sway an" its political sphere of influence. Ne!etheless% to consoli"ate that

political sphere of influence% the gi!en lea"ing capitalist state 9or coalition of statesmust #e a#le to offer security an" protection to the regimes of other capitalist statesan" must also #e a#le to generate the political !alue system that will "raw that state

into some kin" of international political community% "istinct from other suchcommunities.

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To capture these "ynamics% we shoul" not speak of separate logics in internationaleconomics an" politics. t woul" #e #etter to speak of separate languages which sharea common "ialectical logic. The international market power of a states capitalsenhances the international political power of a state. The greater the political power

of a state within the inter&state system% the greater its capacity to open or closemarkets in appropriate ways fa!oura#le to the e$pansion of its capitals. The way inwhich the e$ecuti!es of capitalist states themsel!es conceptualise their e$ternalstrategies reflects the fact that they "o not think it terms of separate logics. They"e!elop national strategies 9or more euphemistically% national security strategies asif they were concerne" with "efensi!e matters rather than e$pansi!e matters. Thesenational strategies seek to integrate the "omestic an" the e$ternal an" the political an"economic. +n" it woul" #e quite wrong to assume in a"!ance that in the constructionof such national strategies economics pulls rank on politics. They are a#outstrengthening #oth the authority an" influence of their capitalist state an" the swayan" growth of their capitalism% "omestically an" e$ternally.

This effort #y capitalist states to integrate politics an" economics into a singlestrategic logic "oes not% of course% mean that they are successful in maintaining suchintegration. The gi!en social formations interaction with its e$ternal en!ironmentwill take unforeseen forms an" acute tensions an" contra"ictions can pull nationalstrategies apart. But it woul" #e quite wrong to suppose that the main form of thesetensions an" contra"ictions is one #etween economics an" politics. The purely

political "imension may enter "eep crises of e$plosi!e internal contra"ictions. twoul" also #e wrong to assume that national strategies are strictly rational. They arethe pro"uct of the particular weltanshaungs an" social cultures of the gi!en rulingclasses of the gi!en states an" of their lea"ing elites.

;e ha!e stresse" that there is no international economy outsi"e the 4uris"iction ofstates. But there are international regimes in the nternational 'olitical ,conomy.These are necessary to the functioning of the international capitalist economy. Themost important of these regimes is that which pro!i"es arrangements for internationalmonetary arrangements for without these arrangements transnational economiclinkages will #e 4eopar"ise". But international legal regimes are also necessary for

pro!i"ing security for international tra"e an" in!estment% an" for cre"itor&"e#torrelations as well as for a host of other kin"s of international transactions.

Ne!ertheless% the effecti!eness of all such ', regimes "epen"s upon the rea"iness ofthe internal regimes of states to respect an" a#i"e #y them. +n" ensuring suchcompliance is ultimately the task of politics. Thus the most powerful states within thecapitalist system ha!e historically #een the ones which esta#lish the ', regimes ofinternational capitalism an" they will esta#lish rules which fa!our the e$pansion oftheir own capitalism.

This% of course% raises the question as to which is the most powerful centre. 'ower ascapacity to lea" in the ', can #e #ase" upon !ery "ifferent kin"s of resources from

power as the capacity to coerci!ely impose. +n" power in a #asically co&operati!eframework amongst main capitalist centres can #e #ase" upon "ifferent foun"ationsfrom power in con"itions of political ri!alry an" confrontation. Thus the "istri#ution

of power as capacity in the international capitalist system is a function of thecon4unctural configuration at the worl" or"er le!el.


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But one fun"amental question arises to"ay a#out the relationship at a systemic le!el#etween power politics in the inter&state system an" international economics. Thisquestion can #e pose" in a num#er of ways. Cne% li#eral% way of posing the questionis whether international e$changes #etween capitalist economies can #e a positi!e&

sum game. n other wor"s% can international capitalism #e organise" in such a waythat all capitalist societies will #enefit equally from the ma$imum e$pansion ofinternational e$changeD The li#eral answer to this question is affirmati!e. They claimthat if the nostrums of li#eral economic theory are applie"% all societies can gainoptimal outcomes in terms of welfare economics. This therefore implies that insofaras there are tensions an" conflicts in international relations un"er capitalism% these"eri!e either from rent&seeking acti!ity #y some states in the ', of from theintrusion of power politics into international economics.

Eowe!er% this question has also #een pose" in another way #y left critics ofli#eralism who re4ect the li#eral linkage #etween capitalism an" human welfare. They

ask the question: has there #een the emergence of a glo#al capitalism in which (N,sfrom "ifferent states co&operate to impose a neo&li#eral international regime in why(N,s prosper at the e$pense of the su#or"inate classes of the worl"D

Both the )i#eral an" the alter&glo#alisation arguments imply that capitalism as aninternational system has a systemic capacity to o!ercome the fragmentation of theworl" into a set of antagonistic states an" political economies. They also imply thatthis systemic ten"ency is manifesting itself to"ay an" that states are #ecoming thehan"&mai"ens of a glo#al capitalism whose functions are re"uce" to la#our controlan" to the maintenance of an international economy in which a glo#al capitalism%transcen"ing the nation state can flourish. f this were in"ee" the case% we coul" not

speak of structural sources of conflict #etween core capitalisms at all. Structuralsources of conflict woul" lie% instea" #etween glo#al capital an" la#our.

PART (! T&$ %TR)CT)RA# %$)RCE% $* C$N*#ICT IN T"E

INTERNATI$NA# EC$N$'IC% $* C$RE CAPITA#I%'n this section will argue that there are two structural sources of conflict amongstcore capitalisms in the economic fiel". Cne has systemic sources in the "ynamics ofin"ustrial competition% particularly in high tech sectors. The other also has systemicsources in the pro#lem of com#ining a fiat international money% necessarilyconstructe" politically% #ut in an inter&state system without a supranational politicalauthority.

A The Dynamics o+ Industrial Competition1.Increasing Returns to ScaleThe entire notion that the competition of capitals has #een or can #e "isconnecte"from political ri!alry in an inter&state system rests upon an acceptance of certain keyassumptions in neo&classical economics. +t its core% this theory assumes that so longas there is full factor mo#ility an" so long as markets set prices while all firms are

price takers% economic efficiency #oth in an allocati!e an" in a pro"ucti!e sense will#e achie!e". f these con"itions apply internationally efficiency will #e ma$imise" forthe #enefit of all. Neo&classical economists thus argue that insofar as states are"e"icate" to promoting the aggregate wealth of their societies they shoul" welcome

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the esta#lishment of institutions of glo#al go!ernance "e"icate" to implementing neo&classical principles: freeing markets in the factors of pro"uction an" pre!enting rent&seeking monopolistic practices amongst their own firms.

The key pro#lem with this theory is that it rests entirely on the assumption that firms

face "ecreasing returns to scale% rather than increasing returns. This is the cogniti!e#asis for its normati!e claims a#out the economic efficiency of free markets. ;ith"ecreasing returns to scale a firm "e"icate" to ma$imising output an" sales woul" go

#ust #ecause its costs woul" rise while other firms coul" sell more cheaply#ankrupting the output ma$imiser.

Get in most in"ustries an" especially in high tech in"ustries% this core assumption ofthe foun"ers of neo&classical economics such as ;alras an" 'areto an" their+merican successors ha!e #een foun" to #e wrong: in"ustry after in"ustry turns out to

#e marke" #y increasing returns to scale/. +n" where this applies the most efficientfirm structure in a gi!en in"ustry is not actually competition #etween a multitu"e of

firms #ut the "ominance in the in"ustry of the most efficient firm: the one that cane$ploit to the ma$imum the logic of increasing returns to scale. Thus% let us assumethat we ha!e two firms in the market in con"itions of increasing returns to scale. )etus assume that they #oth employ i"entical types of fi$e" capital% inputs an" la#our an"

pro"uce i"entical pro"ucts. But one has a far larger pro"uction run that the other. Themarginal costs of the smaller pro"ucer will then #e far larger than the marginal costsof the larger. n such circumstances% the most efficient solution is for the first firm to"ri!e out the secon" firm an" "ominate international pro"uction in the gi!en in"ustry:one in"ustry% one firm woul" #e the #est outcome from an efficiency point of !iew.

(ar$ was not the first to un"erline the ten"ency for increasing returns to scale in

manufacturing.


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-entralisation% on the other han"% operates at the le!el of the firm% rather than theplant. t means one firm go##les up other firms% com#ining capitals that are alrea"y ine$istence. +s (ar$ says Jit only presupposes a change in the "istri#ution of capitalalrea"y to han" an" functioningK.capital grows in one place to a huge mass in a

single han" #ecause it has in another place #een lost #y many. This is centralisationproper% as "istinct from accumulation an" concentration.J 9-apital /% page FIF

7or neo&classical economists the tren" towar"s monopoly is e$plica#le #asically as thesu#!ersion of the free market #y rent&seekers using politics. But in in"ustrial marketsmarke" #y increasing returns to scale% monopoly is the pro"ucti!e&efficiency telos ofthe market. (ar$ also graspe" this. +fter e$plaining how the logic of increasingreturns generates concentration an" centralisation of capital (ar$ writes that forsociety as a whole% the ultimate goal woul" not #e reache" Juntil the entire socialcapital woul" #e unite" either in the han"s of one single capitalist% or in those of onesingle corporation.J 9-apital % p.FII Eere is the "ri!es ultimate monopolistic logic.A

(ar$ was not alone in his grasp of the centrality of increasing returns to scale an" ofresultant efficiency telos of monopoly. The foun"er of mo"ern (arginalism% +lfre"(arshall% also graspe". +s he e$plaine" in his&rinciples of 'conomics;e say #roa"ly that while the art which nature plays in pro"uction shows a ten"encyto "iminishing return% the art which man lays shows a ten"ency to increasing return.The law of increasing ret)rnmay #e wor"e" thus:& +n increase of la#our an" capitallea"s generally to impro!e" organi>ation% which increases the efficiency of the workof la#our an" capital. Therefore in those in"ustries which are not engage" in raisingraw pro"uce an increase of la#our an" capital generally gi!es a return increase" morethan proportion3 an" further this impro!e" organi>ation ten"s to "iminish or e!en

o!erri"e any increase" resistance which nature may offer to raising increase" amountsof raw pro"uceK.n most of the more "elicate #ranches of manufacturing% where thecost of raw material counts for little% an" in most of the mo"ern transport in"ustriesthe law of increasing return acts almost unoppose".

+n"% as Schumpeter = who also graspe" this && points out% (arshall was thus le" tostress the centrality of the tren" towar"s monopoly an" imperfect competition whose

patron saint (arshall may in"ee" #e sai" to ha!e #een.F

The Neo&-lassicals from ;alras onwar"s #urie" this reality of the central "ynamic ofmo"ern in"ustrialism.1+n" in"ee"% Eicks in the /0?2s acknowle"ge" thata#an"onment of the i"ea of constant returns an" thus of the assumption of perfectcompetition threatens the wreckageK.of the greater part of [ortho"o$] economictheory.I

A+gain% "ont think that (ar$ himself was necessarily hostile to a monopolistic form of organisationof mo"ern in"ustry. ;hat he oppose" was monopoly un"erpri*ate capitalist control. n"ee"% part ofthe argument for a socialist organisation of pro"uctions greater efficiency surely lies here.+lfre" (arshall% 'rinciples of ,conomics% (acmillan% /0


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;e can illustrate these "ynamics of increasing returns to scale with e$amples fromhigh tech in"ustries where they are especially pronounce". n semi&con"uctors% sincethe in!ention of integrate" circuits% memory chip prices ha!e "roppe" at a rate ofa#out ?L a year. +n" in mainframe computers the quality a"4uste" annual price"ecline has #een roughly


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they can of course easily attain an" surpass the +merican #enchmark #ut that will taketime.

t is important to note the market power "ynamics of in"ustrial acti!ity when thereare powerful monopolistic "ynamics in high tech Branch / 9pro"ucer goo"s

in"ustries. (ay other sectors lower "own the in"ustrial foo" chain #ecome "epen"entupon supplies from the monopolistic pro"ucer.

$. Capitalism and eadership in the International Ind)strial Di*ision of abo)rt is not the case that capitalism is necessarily articulate" to ma$imise technologicalinno!ation an" the struggle for technological lea"ership in a"!ance" in"ustries.7urthermore% the phenomenon of increasing returns to scale in in"ustry "oes not"eri!e from the nature of capitalism as a social system: it woul" operate equally in asocialist in"ustrial or"er. The economic moti!e of in"i!i"ual capitals is profits an"these can #e ma"e in a host of "ifferent ways% not least through efforts to e$pan"

a#solute surplus !alue. //There are plenty of e$amples of capitalist classes which ha!esought to #uil" their capitalism without concentrating on stri!ing for in"ustriallea"ership in the worl" market. +fter all% such a strategy entails creating a !ery

powerful in"ustrial working class an" many capitalists ha!e historically #een familiarwith the main outlines of (ar$ist thought a#out such mattersQ

The stress on technological "e!elopment an" technological competition "uring theperio" of ,uropean ascen"ancy was "ri!en much more #y state acti!ity in themilitary&in"ustrial fiel"% with little or no stress gi!en to state support for ci!ilian hightech #efore /0A. This non&in!ol!ement of the state in policies for "e!eloping hightech lea"ership outsi"e the military sector also applie" in the nite" States. But there%

the sheer scale of the "omestic market pushe" in"ustrial capitalists to "e!elop a scaleof pro"uction far greater than in ,urope. +n" 7or" "isco!ere" the secret of turning theworking class into consumers as well as pro"ucers. ThusAmerican capitalism "i"

#ecome oriente" towar"s technological inno!ation to e$ploit economies of scale in theci!ilian sector. So #y /0A S in"ustry was in"isputa#ly hegemonic in theinternational in"ustrial "i!ision of la#our. +n" its ascen"ancy was not the pro"uct ofa state mercantilist "ri!e to achie!e technological ascen"ancy on a glo#al scale.+merican state policy on technological security was o!erwhelmingly focuse" onmilitary technology.

But in the post&war perio"% +mericas o!erwhelming military "ominance within thecapitalist core transforme" the military&political conte$t of intra&core relations. +n"+merican policy quite consciously came to in!ol!e supporting efforts in ;est*ermany an" @apan to #ecome the in"ustrial hu#s of their respecti!e regions whilesimultaneously re"ucing #oth to the state of protectorates in the military&politicalfiel". n this conte$t #oth ;est *ermany an" @apan 9as well as 7rance "e!elope"national strategies focuse" on struggling for in"ustrial lea"ership in some key sectorswithin the core. This turn was thus not simply the spontaneous outcome of market"ecisions #y capitalists. They were concerte" efforts in the fiel" of state strategy.

//

San"ra Ealperin "emonstrates this "eli#erate ten"ency in the case of /0th

century an" early


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Such strategies in con"itions of S military&political "ominance hol" out thepossi#ility of achie!ing real political le!erage in international relations. +s 5o#ert-ooper points out% @apanese military security is pro#a#ly a !ital interest of the nite"States #ecause @apanese in"ustry is an integrate" component of the glo#al market%!ital for many ;estern manufacturers an" retailersK. /


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economic glo#alisation often lay great stress on the importance of 7P rather thantra"e. This is certainly important in one area: S 7P in ,urope an" % to a lessere$tent% , 7P in the S. But a great "eal of the inter&regional 7P is in the fiel" ofdistrib)tion systems, not prod)ction.Thus @apanese 7P in the S is o!erwhelminglyin wholesaling% not pro"uction: its 7P in the former is fi!e times larger than its 7P

in the latter./F

5egionalism is also !ery pronounce" when we look at the "ata from the angle of(N, sales rather than 4ust at the aggregate tra"e an" foreign affiliate sales figures in"ifferent countries an" regions. +lan 5ugmans work has #een particularly importanthere. Ee an" +lain er#eke ha!e stu"ie" the "istri#ution of acti!ities of the 7ortune22 largest (N,s in the worl". They account for o!er 02L of the worl"s stock of7P an" for a#out 2L of total worl" tra"e. Their ERs are gi!en in Ta#le /.

Table ! Distribution o+ &orld-s #arest /,, 'NEs/0I/ /00/ /00F


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Table (! Classi+ication o+ top /,, 'NEs in (,,Type of (N, No. of

(N,sL of22

Lof ?I2 ;eighte" a!. L ofintra&regional Tra"e

*lo#al /2


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;e will return to the question of tria"ic protectionism later. But first we will #rieflytouch upon the other "imension of the outwar" e$pansionism of tria"ic in"ustrialcapitals: their international la#our&seeking acti!ities

9ones an" then re&import the interme"iate goo"s for finishing an" sales.

But this tren" towar"s pro"uction fragmentation an" input tra"e also has a stronglyregional character. ,ach tria"ic centre has% since the /0I2s% #een #uil"ing regionalhinterlan"s of cheap la#our in or"er to gain ma$imum a"!antage from these kin"s ofeconomies: @apan 9an" increasingly South 8orea has #een using South ,ast +sia an"-hina3 the nite" States% (e$ico an" -entral +merica3 the ;est ,uropeans% ,ast-entral an" ,astern ,urope. These operations also require the (N,s to shift their

#usiness% #anking% communications an" transport ser!ices into these hinterlan"s toser!ice such (N, operations. The classic form of these tactics is the (aquilla"oraoperations along the (e$ican #or"er with the S.

+n" in seeking la#our from these hinterlan"s% (N,s generally fin" eager% not to say"esperate welcomes. +s 5ugman an" er#eke put it% in this fiel" all rele!ant parties%such as foreign suppliers% workers% an" acquire" companies themsel!es engage inreciprocal commitments to make these in!estments worthwhile.


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a"!ance towar"s completely open markets an" free tra"e% culminating in the ruguay5oun" an" the foun"ing of the ;TC. The impression is thus gi!en that in /0A weha" a gi!en quantum of #arriers an" with each roun" that quantum has #een re"uce".This is propagan"istic. Tra"e negotiations% le" #y the S an" the ,% focus onopening markets for new growth sectorsthat they want to "ri!e into international

markets. +n" while new openings are ma"e% new closures are simultaneously oftentaking place. The *+TT tra"e roun"s ten"e" o!er the "eca"es to open more an" moreof less an" less: #y the start of the /002s% *+TT co!ere" only a#out L of worl"tra"e.

;e will not attempt to pro!i"e here an o!er!iew of the current international tra"eregime. ;e will focus instea" on aspects of the current tra"e regime most rele!ant toeconomic relations #etween the core centres. ;e will 4ust take A e$amples of thenew mercantilism in the tria"% focusing particularly on the S an" the ,. 7irst% anti&"umping policy3 then anti&trust% then 7ree Tra"e +greements an" then two e$amplesof core mercantilism in high tech sectors: the e$amples of semi&con"uctors an"

commercial aircraft.

+nti&Pumping 'olicyPumping use" to #e "efine" as selling goo"s a#roa" more cheaply than in your homemarket. But since the /012s% S tra"e law has re"efine" "umping as selling pro"ucts

#elow fair !alue. Since /0I2 a#out F2L of all S anti&"umping cases ha!e #een#ase" on this fair !alue concept


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#ecome the principal groun"s for applying the S "umping laws to S imports ofsome foreign pro"ucts.


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returns to scale% monopoly coul" #e goo" 9for +merican capitalism if it was 4u"ge" toenhance increasing returns an" glo#al market "ominance.

The same pattern is !isi#le at the ;est ,uropean le!el: the ,- esta#lishe" a mergerregulation in /0I0. This was suppose"ly to implement article I< of the Treaty of

5ome against the a#use of a "ominant firm position. But the regulation specificallyallows P* 9the -ommission authority on mergers an" acquisitions to take accountof efficiency consi"erations in its 4u"gement on mergers. Since in in"ustriescharacterise" #y increasing returns to scale efficiency can #e enhance" #y ma$imumconcentration of capital to the point of complete market "ominance for one firm% theregulation suppose"ly against market "ominance can assure market "ominance in thename of efficiency. +n" the regulation has the great !irtue = from the angle of,uropean #ig #usiness = of gi!ing no e$planation of how the efficiency criterion willrelate to other factors: in other wor"s% P* has more or less complete "iscretion asto what policy to a"opt on monopolisation.

*raham goes on to e$plain that efficiencies shoul" #e un"erstoo" "ynamically an" notin a static way. So the authorities can #e tolerant of mergers that create "ynamicefficiencies e!en if these create some static welfare losses "ue to increase" market

power.?/ This interesting remark then softens us up for the ne$t. 7or *rahame$plains: in recent years in the nite" States an" implicitly in the ,% merger an"acquisition re!iew has operate" largely un"er the premise that market concentration isin most circumstances a self&correcting "istortion. n other wor"s% it is largely hel"that% if monopoly rents are create" #y merger or acquisition% in the a#sence of greaterefficiency of the merge" enterprise% these rents will in most instances "raw new entryinto the market. This entry% in turn% will correct the inefficiencies create" #y market

power hel" at the outset #y the merge" firm.?


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to e$ert powerful e$traterritorial 4uris"iction% with the capacity to 4u"ge% say% mergersof two foreign firms with some presence in their market #ut with the #ulk of theiracti!ities outsi"e it monopolistic.

To put matters more #luntly we are in a normless an" politicise" >one. Some e$perts

in transatlantic anti&trust openly acknowle"ge this. ,!enett% )ehman an" Steil% fore$ample% e$plain that antitrust is a political phenomenon an" is therefore su#4ect toall the normal interest group pressures that affect policy across the spectrumK.thelarger firms that will #e the actual targets of anti&trust inter!ention are far more likelyto #e foreign than "omestic% as the former will ha!e consi"era#ly less "omesticlo##ying power.??

Thus% since the late /0I2s in #oth the S an" the , anti&trust policy has #ecome apolitical phenomenon in the sense that it targets foreign companies entering themarket much more than "omestic firms. ;e will consi"er later on whether thismercantilist politicisation is 4ust a rent&seeking flouting of li#eral norms of efficient

markets or whether these li#eral norms themsel!es are groun"less.

7ree Tra"e +greements97T+s+nother striking e$ample of how li#eral language is turne" insi"e out is the

proliferation of 7T+s. These are% in reality% key instruments for the mercantiliste$pansion of accumulation from the main tria"ic centres. The key feature of them isthe fact that they allow free tra"e only in the specifie" pro"ucts of national originamongst the contracting states. Thus an 7T+ #etween% say the , an" State V willallow the specifie" pro"ucts from State V into the , if the pro"ucts are pro"uce"either #y , companies in State V or #y State Vs own territoryase" pro"ucti!eacti!ities a#o!e !arious specifie" threshol"s. These threshol"s are "esigne" to ensure

that no S or @apanese (N, coul" enter State V to assem#le pro"ucts for sale in the,. They also gi!e state V e$tremely powerful incenti!es to pri!ilege 7P from the, in its territory since only , companies will #e sure not to face #arriers to entryinto , markets.

+t the present time #ilateral 7T+s centre" on each of the tria"ic centres areproliferating% un"ercutting the multi&lateral principles of the ;TC. They are ane!i"ent sign of attempts #y each centre to "raw national economies lower "own theinternational "i!ision of la#our into "epen"ence on one tria"ic centre as against theothers.

Eigh Tech (ercantilismPespite all the neo&li#eral i"eology a#out the efficiency of free markets% a#out thetriumph of free markets o!er states an" a#out the efficiency&necessity for remo!ingthe state from any role other than policing competition% tria"ic state policy instrategic in"ustrial sectors has #een marke" #y ruthless mercantilism% not least on the

part of the nite" States. By strategic sectors we "o not mean those with militarysignificance. ;e mean those which generate chain&reaction effects across manyin"ustrial sectors.

??

+ntitrust 'olicy in an ,!ol!ing *lo#al (arketplace in Simon @. ,!enett% +le$an"er )ehmann an"Benn Steil 9e"s.Antitr)st Goes Global. /hat f)t)re for Transatlantic Cooperation (5roo6ings, IIA,+222%pp./A&/

/0


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;e will take two e$amples in or"er to illustrate this theme: semi&con"uctors an"ci!ilian aircraft. Semi&con"uctors stan" at the top of the in"ustrial foo" chain of thecomputer an" electronics in"ustries. -i!ilian aircraft pro"uction is the motor of awhole range of high tech components sectors which can ha!e economies of scopelea"ing into other in"ustrial sectors.

emi-Cond)ctors

n the mi"&/0I2s% @apan achie!e" glo#al "ominance in a"!ance" semi&con"uctorpro"uction. t ha" achie!e" this "ominance through strongly mercantilist statein"ustrial support #ut the fact remaine" that it was pro"ucing the highest quality semi&con"uctors at the cheapest price.

The 5eagan a"ministration complaine" a#out @apanese mercantilism in this fiel". Butit is worth e$amining S in"ustrial policy in semi&con"uctors as well. The 7e"eral*o!ernment #etween /0I an" early /012s "irectly or in"irectly fun"e" #etween A2an" AL of all in"ustrial semi&con"uctor 5OP.?ABy the late /0I2s% 7e"eral fun"ing

of semi&con"uctor&relate" research was running at a#out half a #illion "ollars a year.+t the same time% o!er one quarter of all semi&con"uctors pro"uce" in the S "uringthe late /0I2s ha" a capti!e state market in S "efence agencies alone. +long withsuch assistance woul" come a whole range of ta$ #reaks an" ta$ cre"its an" otherkin"s of su#si"ies to #oost the profita#ility an" lower the costs of pro"uction insemi&con"uctors an" other sectors. Thus in /0I/ the S -ongress passe" a


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"rastic action in the form of manage" tra"e. ;e will #riefly mention the main featuresof this pro4ect.

W7rom late /0IF% the S -ommerce Pept worke" out the prices which each @apanesechip maker ha" to charge for each of its pro"ucts in the fiel" of P5+(s an"

,'5C(s 9a"!ance" semi&con"uctors. 7rom (arch /0I1% the -ommerce Pept wasfi$ing price floors for these sales for only in the S #ut also in /0 other markets9inclu"ing F ,uropean markets.WThe @apanese go!ernment ha" to accept that #y /00< foreign companies woul" ha!ea


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illegal #y the ;TC. +n" Boeing also recei!es large su#si"ies from +merican statego!ernments. 'lanne" su#si"ies for Boeings new 1,1 aircraft pro"uction amount toM?.< Bn from ;ashington State % M2.#n from 8ansas% an" M2.?#n from Cklahoma.Aone. The huge swings an" !olatilities in the fore$markets ha!e generate" an enormous set of "eri!ati!es markets #ut these "o nottackle the pro#lem since he"ging contracts last no more than F months.

n #oom phases of the S economy% the S authorities encourage the "ollar to rise%sucking in capital from a#roa"% keeping interest rates an" pro"uct market inflationlow3 in recessionary phases% the S authorities seek to swing the "ollar "own%re"ucing their "ollar&"enominate" international "e#t o#ligations while seeking togenerate a "e!aluation&"ri!en mercantilist e$port "ri!e. These swings ra"icallytransform the macroeconomic con"itions of the rest of the worl"% #ut in the a#sence ofan alternati!e international monetary unit% the S can hope to maintain "ollar"ominance.

+t the same time% the S authorities ha!e e$ploite" "ollar "ominance to allow a largegap to arise #etween its state resource commitments to "omestic S constituenciesan" its state fiscal capacity to pay for these commitments. Successi!e S

a"ministrations ha!e felt a#le to "o this on the #asis of an assume" permanent"ominance of the "ollar. They can thus hope to #orrow en"lessly from a#roa" in the


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knowle"ge that the "e#ts can #e ser!ice" in "ollars% which the +merica state itselfpro"uces.

+n" the "ollars "ominance has also le" successi!e S a"ministrations to ignore theS current account constraint% allowing huge "eficits in that fiel"% "eficits which tie

foreign pro"ucers into "epen"ence on market access to the S an" thus gi!e the Sle!erage o!er the shaping of these e$porters internal political economy regimes forthe #enefit of the e$pansion of S capitals.

This kin" of imperial "ollar policy then generates precautionary mercantilist policieson the part of the other core centres% policies geare" to maintaining permanent currentaccount surpluses% strengthening their cre"it power% generating lower interest rates an"a"opting a "eflationary macroeconomic policy #ias.

;hile the @apanese sought to protect their capacity to generate current accountsurpluses #y "eli#erately pre!enting the emergence of the Gen as a reser!e currency

9thus hoping to pre!ent steeper yen re!aluations the *erman authorities ha!e #eenprepare" to allow the Pmark to "e!elop a reser!e role% forming first the Pmark >one9the ,(S an" later ,urolan". This then poses a significant potential alternati!ereser!e currency to the "ollar.

These strains in the international monetary fiel" ha!e% of course% ha" e$tremelynegati!e impacts on countries outsi"e the core. +n" while all monetary authoritiesha!e a strong interest in maintaining an open worl" economy an" the monetarycon"itions for continue" e$pansion of the worl" economy% the contra"ictions of thissystem coul" e$plo"e in either the international economic fiel" or the international

political fiel" or #oth.

;e can spell out some possi#le scenarios:/. The increasing e!olution of the international economy into three regional #locs

#ase" on regional moneys 9with the emergence of an ,ast +sian monetary>one = something which the @apanese state is clearly now seeking to esta#lish.This woul" ine!ita#ly threaten "ollar "ominance.


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o!er the state or its e$isting internal regime. t then in!ol!es constructing a politicali"entity for the new community of states #y generating common political !aluesshare" #y #oth the protector state an" the su#or"inate state. These common !aluesthen ha!e the effect of legitimating the lea"ership of the "ominant state o!er thesu#or"inate state. This was precisely the system employe" #y the S to turn the

entire capitalist worl" into a single political community un"er its lea"ership after thesecon" worl" war. But with the collapse of the So!iet Bloc this political empire has

#een "amage" in two ways. The protector mechanisms ha!e #een weakene". +n" thecommon political !alue system legitimating +merican lea"ership of the communityhas #een un"ermine".

The post1war political system in the Capitalist Core! a Community under

Primacy ha!e written a#out the political system of the core elsewhere an" will confine myselfhere to a few !ery #rief points.

The key concepts in +merican post&war gran" strategy were% in the political fiel"%those of what% in the 4argon of +merican gran" strategy is calle" primacy: thismeans the "irect S management of the security pro#lems of the other main centres3secon"ly% the concept of shaping the security en!ironment of the other main centresin such a way that they woul" fin" themsel!es wanting S protection an" primacy3thir"ly the concept of hu#&an"&spokes alliances in the military&political fiel"%ensuring that the other centres "i" not 4oin up with each other in regional caucusesthat coul" thus acquire autonomy an" mount their own 4oint efforts to #uil" their ownspheres of influence.

+ll these concepts match the S e$perience "uring the -ol" ;ar. The S !ictory in

;orl" ;ar Two ga!e the S primacy o!er *ermany an" @apan an" the militarise"confrontation with the SS5 then consoli"ate" that primacy for A2 years. The Sshape" the en!ironments of *ermany an" @apan through the militarise" confrontationwith the SS5 in such a way that their !ery sur!i!al "epen"e" on the protectionoffere" #y S strategic ser!ices. +n" the S organise" its security alliances at eachen" of ,urasia as hu#&an"&spokes systems. n N+TC for e$ample% there coul" #e no,uropean military&political caucus. ;est ,uropean states military&political relationswith each other ha" to pass through ;ashington. 7rench efforts to challenge thisfaile" repeate"ly.

These military&political arrangements forme" a crucial #ackgroun" to the lea"ershiprole which the S playe" in the ',. ,!en when the S was weakene" in relati!ein"ustrial power an" in international financial capacity% it coul" maintain its"ominance o!er the international political economy regimes% acting unilaterally in themonetary fiel"% engaging in what Baghwati has calle" aggressi!e unilateralism in thetra"e fiel"% etc. t coul" "o so% #ecause it knew that if political conflict within the coreescalate"% each rung of the escalation la""er le" towar"s the sphere in which the Sremaine" o!erwhelmingly "ominant: the military&political sphere.

t is important to note that S military power was fungi#le in "isputes with allies#ecause the allies knew that the S coul" make mo!es in their en!ironment which

coul" make them more !ulnera#le or coul" e$ert negati!e pressures upon them. Smilitary&political "ominance was ne!er use" to "irectly threaten its allies militarily.


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Cne crucial a#ility was the a#ility of the S to configure the political en!ironment oftheir allies in such a way that they woul" feel "epen"ent on the S to protect theirsecurity. The other crucial a#ility was then to "raw them into a political communityof share" political !alues legitimating S "ominance with the political community ofstates.

The Breaches created by the %o0iet Bloc Collapse and the Rise o+ ChinaThe So!iet Bloc collapse then pro"uce" a para"o$: on the one han" it ga!e the S amilitary "ominance o!er all other states in the worl" without historical parallel3 #ut onthe other han"% it cause" two serious pro#lems for the political "ominance of the S:

/. it greatly re"uce" the "epen"ence of the ;est ,uropeans on the S for theirsecurity an" it somewhat re"uce" = though to a lesser e$tent = such security"epen"ence on the part of the ,ast +sian centres of capitalism. This re"uctionof "epen"ence was a "ou#le one: the en" of the threat of a war with the So!ietBloc3 #ut also the en" of the threat from ra"ical leftist mo!ements to theircapitalist property aroun" the worl".


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+n" one of these #ases is surely the fact that all three core centres an" particularly thetwo +tlantic centres% can frequently fin" a large range of important ways in whichthey can ease tensions #etween them at the e$pense of countries in the South. Theycan also pursue mutually a"!antages strategies towar"s the South = an e!i"ent realityin their common efforts in the nternational 7inancial nstitutions an" in the ;TC.

f the arguments in this paper are more or less right% then think )eo&'anitchs an"Sam *in"ins argument && that we alrea"y ha!e an integrate" S empire across thecore in which the S lea"s a glo#al capitalism = is premature. +t the same time% theapproach of this paper "oes not point towar"s an irre!ersi#le hegemonic "ecline onthe part of the S.

Cn the other han"% this paper says nothing a#out the rise of -hina an" it is perfectlypossi#le within the logic of this paper that some "eca"es hence -hina might mount aformi"a#le challenger to S "ominance. But to "o so it woul" ha!e to turn its internalscale potentialities into a reality in the in"ustrial fiel" an" it woul" ha!e to fin" a way

of organising a hegemonic transition% perhaps #y #ecoming a generator of furtherantagonisms within the current core while a"opting a strictly pacific posture ininternational politics = the tactic which the S the S itself pursue" in the inter&war

perio".

Throughout this paper the term imperialism has not #een "iscusse". But we woul"argue that it shoul" #e un"erstoo" as effecti!e control of the internal political&economy regimes of other capitalist states an" effecti!e control of the political&economy an" military&political linkages of these other states with the rest ofinternational or"er. But if such a "efinition of imperialism was a"opte" it woul"make the concept a relati!e one% in!ol!ing more an" less "egrees of imperial control.

But some such concept is nee"e" in or"er to ena#le us to grasp the ways in whichpowerful capitalist states seek an" achie!e sta#le "ominance o!er other capitaliststates. Ctherwise we risk falling either for the foun"ationless claims for normase"solutions to inter&capitalist relations pushe" #y li#eral theorists or for what @ustin5osen#erg has rightly calle" the follies of glo#alisation theory.

?

economics and politics within the capitalist core and the debate on the new imperialism

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