Leo Panitch and Sam Gindin have just released their latest book, The Making of Global Capitalism. This is the final installment of an in-depth three-part interview of the authors by Aaron Leonard in New York City.
Gindin is the former Research Director of the Canadian Autoworkers Union and Packer Visiting Chair in Social Justice at York University, and Panitch is Canada Research Chair in Comparative Political Economy and Distinguished Research Professor of Political Science at York University. The two have worked together on many books and publications.
Aaron Leonard: You make a convincing argument for how this has been the United States’ world since the end of World War II, and as a result there has been a certain submission of national power to that. Yet isn’t the diminishment of U.S. power — or at least the indications of decline — we are seeing now suggest a reassertion of national power, regional alliances, if not the re-emergence of outright blocs? Doesn’t capitalism and the capitalist enterprises that are tethered to various national economies, go hand and hand with a rapacious nationalism? As something of an addendum Zbigniew Brzezinski, in his recent book Strategic Vision, makes the point, to paraphrase, don’t worry about China as a superpower, worry about it moving toward being a regional power, and similarly countries like India etc. How do you see this?
Leo Panitch: Historically we would say that the exact opposite is true. That the post-war period in which the American empire establishes itself as the state of global capital, taking into account global capital’s interest, not only American capital’s interest, is a world in which America itself is sponsoring decolonization and the development of states.
The break-up of the Soviet Union produces states like firecrackers. This is not something that gets in the way of the making of globalization — on the contrary. It becomes a very important aspect of its management and extension. Those states are encouraged to develop legal systems, sometimes pressured to develop legal systems, of the kind that guarantee the rights of property, the rights of contract etc. That is done usually in conjunction with their bourgeoisies. In the case of the anti-colonial movements of the 1950s, you do tend to get nationalist elites turning themselves into bourgeoisies — the most horrific example is South Africa. In the case of the post-communist regimes you get communist elites turning into bourgeoisies and we’re seeing the Chinese Communist elites retaining a communist identity politically, while turning themselves and their children into capitalists, and while China is being made a capitalist society, with a legal system where contract is protected, where property is protected, where capital flows are allowed for, etc.
The book in many ways traces how that happens, it’s not an automatic thing. It is often the case that the local capitalist, who given the balance of forces inside their countries can’t do these things on their own, will blame the IMF for making them do it, but will have had these policies on the agenda long before the crisis leads.
I don’t like the phrase so much, ‘American dominated.’ I think the American state has a responsibility, almost a burden that other states don’t. Therefore this world has an American colouring. The United States knows American law, so the type of law that it encourages are those that it is familiar with and has expertise with. Finally, what Sam shows, is the role of American accounting firms, financial services, legal firms and their role — their services are constantly bought by other states — in teaching them how to get into the global system. They are making a profit out of showing Third World states, even as they still occasionally make nationalist noises, how to adopt the kinds of laws that will integrate them better into global capitalism. And often these are laws that resemble those first developed in the American legal system.
Sam Gindin: We would use the concept of asymmetry. The American state has a certain ability to do things that others don’t have. You don’t see Germany deciding we should invade Iraq because of the oil situation. Were not saying that the national capitalist class has disappeared, they’re still there. We’re not going to the other extreme that people have argued that there is an international capitalist class. Our argument is that there are national capitalist classes but they’ve been integrated into a global system and that the American state has played a special role in that. That includes a lot of — as someone coined the phrase — imperialism by invitation. It makes a lot of sense. When you look at China, no one imposed free trade on China — they wanted to get into the WTO. Nobody was fighting with China about opening its borders to foreign technology and capital. China invited it in. Nobody is telling China that you have to hang on to the U.S. dollar. There’s just nothing else you can do with it. There are structurally integrated and interdependent.
You have to have the concept of empire itself, it sounds academic, but it so important because once you start thinking about empire you can begin to see that the spread of capitalism is something that the American state wants to do. But the questions always is, can the U.S. reproduce itself to play the dominant and crucial role in the making of global capitalism? This is actually an empirical question. There’s nothing that says it will forever be able to do this. You actually have to look at, does this have the dynamic capacity to keep changing because every time it opens up the world there are new competitors. So far, we are arguing, the U.S. has shown that capacity.
LP: People like Brzezinski have been saying since the sixties that there is a threat to this from a new emerging regional power … but the rise of Germany and Japan as economic powers was expected and even welcomed, as we could see in the ‘An American Proposal’ during World War II, which explicitly said that unlike the previous empires we aren’t afraid to build up industrial competitors for ourselves. So you get a flow of Japanese and German goods coming into the United States and Japanese and German investment coming into the United States, but it doesn’t have the same kind of effect inside the U.S. that American capital going abroad has. The largest investor inside the United States is Canadian capital, but who says this amounts to Canadian imperialism?! Whether Chinese or Japanese capital operating inside the United States will amount to a new inter-imperial rivalry, as opposed to trying to get the American state on their side and to find arenas of accumulation there, is not something that is given theoretically. You need to look at the balance of forces in each society.
What’s happening today in China — although who knows what will happen in 50 years — reveals a deep dependence on its integration into a global capitalism operating under the U.S. aegis. China has the greatest foreign direct investment and greatest dependence on trade in history. And foreign capital is also operating as a class force inside China. It’s not the dominant class force, I am not saying that at all, but it’s a player in the determination of what the Chinese state now does.
How do you interpret a Chinese nationalism with all this foreign direct investment inside? When people like Brzezinski warn about the regional dominance of China they really want to ensure that Japan doesn’t have a rapprochement with China. But if you look at the actuality of the regional divisions in Asia there is no love lost between Japan and China, India and China, the list is long. It’s not to say it couldn’t happen, but that’s going to take a long time and we should not take seriously superficial warnings about China of the kind that were heard in the eighties about Japan as the new Asian empire. We hope our book will help undermine that type of superficiality in the media and much of academe.
SG: It is not just that it would be so difficult to meld them into a coherent unit — which is even difficult in Europe — the different parts of Asia do look to the U.S. as a counterbalance to China. And China and Japan look to the U.S. as a counterbalance to each other as well.
AL: Brzezinski actually does make the case that the U.S. is needed, that if you removed that level of power and influence from the world scene, it would be greatly destabilizing and problematic.
SG: What Madeline Albright as U.S. secretary of state in the 1990s called ‘the indispensable state.’
AL: You write: “The major shift across so many developing countries to export-led manufacturing production meant that their place in global capitalism was no longer that of merely supplier of raw materials to the advanced capitalist states. In fact, this transformation in the international division of labor involved a reconfiguration of social relations in one country after another yielding not only new capitalist classes which became ever more linked to international capital accumulation, but also a massive expansion of the global proletariat.”  Could you talk about the potential implications of that both in immediate terms and in terms the future, including the potential of a future beyond capitalism?
SG: It’s useful to start with the argument that was often made on the left that development was just impossible in the Third World, that it was just condemned to be a resource base. What the making of global capitalism has shown is that it can actually spread — it has been difficult, it has been uneven, it hasn’t spread everywhere — but that capitalism can be developed in the countries of the global south and the U.S. has been fundamental to that process. Now you have a lot of ex-‘Third World’ countries whose share of exports and manufacturing is very high, though the developed countries still dominate, those areas of the world are substantial and growing very fast.
One implication of this is that you are seeing the making of a global proletariat, which impacts on wages everywhere as this also means that — there is a global reserve army of labor. But where is global demand going to come from if we are seeing wages being depressed in the developed countries? Can it come from a growing Third World — China, India, Brazil etc — and how long will that take?
I think what we would caution against is the notion that the only sensible response to this is to form international unions to engage in international collective bargaining with MNCs., that it’s only that kind of formal international solidarity that will now work. Yet as Marx said the class struggle is always international in substance because whatever you do in one country shapes the options and parameters in another country, but in form it’s national, and the working class first needs to come to terms with its own bourgeoisie.
We’ve actually seen, going back to the seventies, unions saying ‘we need more international unions,’ but what they really meant was international business unionism, rather than saying what we need is international class solidarity, which is hardly the same thing. The real question is how do actually engage in struggles in our own country in ways that creates spaces for struggle in other places? There’s no way to coordinate this easily internationally, but what you can do is fight where you are with the awareness that this creates spaces for other struggles. This also means always learning from new experiments in carrying forward class struggles that may emerge elsewhere — that is a critical part of international solidarity. That means not just looking at the latest development in Venezuela or Brazil as a model for us to follow, but rather as involving certain practices we should view critically as well as sympathetically, as we look to them to learn things from.
LP: You could say that with globalization there are that many more proletarians for capital to land on. This is different than the [old] Leninist theory, imperialism — the term was adopted to refer to relations between capitalist core and the periphery, the Third World etc. Part of that was the theory of the development of underdevelopment, if you had foreign direct investment you were then going to be doomed within capitalism to being exporters of resources and you would not get economic development at all. Well this was disproven two ways. It was disproven by countries that came to be known as the Newly Industrializing Countries (NICS) of Asia, which followed Japan’s model and usually because Japan used them as staging posts for exports to the United States and Europe.
How did that happen? American aid policy in the sixties shifts from the granting of aid to the granting of loans. This is done very explicitly. If you have to pay back the loans in dollars, you need to export in order to get dollars to pay them back. This begins the turn toward countries looking more and more to export-led development. If you don’t have enough resources to do that you start looking to using cheap labor to do it. And being open to capital inflows you offer multinational corporations that you can produce women working a dollar a day producing for you here.
Increasingly though, those corporations also are looking to have the kind of proletariat they can sell to. Canada’s been a rich dependency because it’s had a high wage proletariat. The multinational corporations haven’t only wanted to come for resources, they wanted that sure, but they wanted to sell to the Canadian proletariat. Now they’re hoping they’ll be able to sell to the Chinese proletariat.
The big question about the strikes in China today is whether or not they will be oriented to regaining a sense of collective purpose, trying to win collective goods or whether they will emulate the Western working class whose tragedy after two centuries of organization both at the union and party level is that they ended up being individualist consumers. If that is where Chinese class struggle is going to take us we’re in for a very ugly world in the future.
If they don’t take that path it will have big affects on the rest of the world. Not because they’ll create international unions that will bargain collectively but because this will have a dynamic impact on what Western workers do, how they respond to a fall in the standard of living, which is inevitable once you get that large a proletariat from the global South coming into integrated production, it’s bound to pull down wages in the rich capitalist North, no matter what you do in collective bargaining. What will happen in the future depends on what kinds of class struggles you engage in today. Whether you can shift particular countries off the path determined by private capital accumulation, depends on the kinds of more profound working class solidarities you develop inside as well as between labour movements in the more immediate term.
SG: I think when we stress what’s happening with the international proletariat, it is restraining wages globally, we don’t just mean it in a mechanistic way. A lot of what is also restraining wages is the role of the state, which isn’t inseparable from what’s happening globally, but it also gets back to our argument about the importance of domestic forces.
LP: Today the U.S. Empire still has the upper hand in the making of global capitalism. But this doesn’t mean it is all hunky dory. We now can see that when there’s an American crisis it’s a global crisis. And this also means that when there is a major crisis elsewhere it can result in an American crisis. But it is wrong to think that this amounts to the decline of the American Empire.
With the crisis of global capitalism today, the G20 states are trying to work this out together. This is unlike what led to World War I, and unlike the 1930s. What is remarkable about this crisis is that it hasn’t led to interstate conflicts — there have been tensions — but the leading capitalist states are coordinating their attempts to contain this crisis. We tend to focus far too much on the tensions and far too little on the degree of coordination that is going on.
AL: But can they actually solve this?
LP: No. At the moment they can’t. The hope that the South would pick up on effective demand has proved to be impossible in the short run. And it would lead to a destabilization of those societies if the working class were strong enough to become the mass consumers of the world. What impact would that have on Brazilian or Chinese social relations?
There’s no easy solution to this. This is the fourth great crisis of capitalism. Which is not to say they are not going to get out of it. Increasing the level of exploitation everywhere is one way they can get out of it. Provided that states start doing not just monetary easing but infrastructure spending, some of which the left is calling for. Probably, unless we rebuild revolutionary organization, what the left is calling for today is probably going to have the affect of reproducing capitalism and renewing the possibilities of capital accumulation for another period. Maybe that’s the best that we can hope for, however, especially since we need a lot of time to rebuild anew working class identity and organization.
Aaron Leonard is a writer and freelance journalist. He is a contributor to truthout.org, History News Network, rabble.ca and other publications. He is based in New York City. His writings can be found by clicking here.