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«Working Paper Comments Welcome (Since I have now presented the paper publically feel free to quote) This paper is prepared for presentation at the ...»

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Capital, Class and the State in the Global Political Economy

William K. Tabb

Working Paper

Comments Welcome

(Since I have now presented the paper publically feel free to quote)

This paper is prepared for presentation at the plenary session of the Global Studies

association, Brandeis University April 24, 2004 in which Leslie Sklair and Leo Panitch are

the other speakers. Sklair is a sociologist whose work on the transnational capitalist class

has been formative. Leo Panitch, a political scientist, along with his long time collaborator Sam Gindin has made major contributions to our understanding of the capitalist state. I am an economist. So while my focus is different it is made in the hope of contributing to a larger dialogue on ways of seeing the elephant that is capitalist globalization.

It is as true for Marxists as it is for everyone else that making sense of globalization is the great Rhorshak test of our time. Matters of the relation of state theory and capital logic need to be interpreted in terms of the governance of the contemporary imperialist system, its contradictions and oppositional potentialities. Issues of accumulation and class must be retheorized in the historical conjuncture in which we live. While mainstream discourse stresses the inevitability and desirability of globalization variously defined, Marxism invites us to see such phenomena in historical perspective, to examine institutions and social relations whether changing legal definitions of property or financial contracts and more broadly rights claims of capital and labor.

This hardly means that Marxists are in agreement on the meaning for our time of such basic constructs as class, the theory of the state, imperialism or tendencies and contradictions of accumulation on a world scale. I think however that this is a particularly fertile time for such theorizing and a great deal of fruitful work is being produced by marxists and others.

In this paper I discuss the relation of state logic and capital logic in the contemporary global political economy, a period in which the use of the term imperialism has come back into fashion and we have seen all sort of discussion of the merits of a presumed benign American Empire. I use the term imperialism in its broadest sense to describe the process whereby leading fractions of the ruling class or in a more sanitized framing, policy makers of more powerful countries use economic and military capacities to appropriate the land, labor, natural resources and markets of other countries to foster capital accumulation under the control of wealthy interests at home and abroad. I am surely not alone in seeing imperialism as always about the process of expropriation/appropriation by metropolitan capital of the resources, assets, and wealth of other countries all over the planet. The different phases of imperialism are to be distinguished by the precise manner in which this process takes place, the degree of success it has, the resistence it encounters, and the alternative visions of transnational social relations which are generated (Parenti, 2002 and Patnaik, 2004). It is this need for historical specificity in

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Concretely theorizing imperialism involves choosing both an approach to the theory of the state and the logic of the accumulation process specific to the conjuncture under study. In looking at American imperialism today I find it useful to think in terms of two wings of the imperial eagle, two logics in capitalist exploitation not totally separate of course for they together impel the bird of prey, but in the emphases on one or the other logics as part of a larger division of labor between, as Ellen Wood (2002:30) has put the matter, “the economic moment of appropriation and the extra-economic or political moment of coercion,” qualifying her formulation to underline that the political moment of coercion is never absent from the economic moment of appropriation. I would stress the moments analytically separable are always connected. The economic moment of appropriation requires coercion to impose not simply something called “the rule of the free market,” but the specific ways in which particular exchange norms and regulations are established and enforced. None the less, the dynamic of the market and the political use of threat and of military coercion represent a range of policy alternatives certainly for the more powerful capitalist state of our day.

Global state economic governance institutions represent one wing of the imperial eagle, that of the liberal internationalists who favor multilateral negotiation as a method of regulation and expansion of the territorial basis and the spheres of exchange in which norms and rules favoring the interests of transnational capital are applied and enforced. The other wing, to mix metaphors a bit is the iron fist ready to crush resistence and bring back the disobedient into the fold. That the propaganda machine defining rogue states as enemies posing threats to the legal order and to the global hegemon’s own security may seem laughable, but invasion, of tiny Grenada or the overthrow of Sandinista Nicaragua proceed on such a basis no less than regime change in Iraq.

George W. Bush White House’s muscular assertiveness of the right to preemptively attack any it chooses is an extreme version. The previous administration of Bill Clinton in which the key cabinet player was Robert Rubin as Secretary of the Treasury rather than as under Bush Donald Rumsfeld the Secretary of Defense, signaled its preference for exercise of power through mediating multilateral institutions. All presidencies reflect some balance of these two strategic orientations produced by the unique interest coalition in power, in the case of Bush above all the oil and military contractor sectors and driven as well by the ideological leanings of its key operatives which influence ways of seeing conjunctural risks and opportunities a particular administration faces.

The set of relationships which frame policy making involve class and the way state power and accumulation strategies interact. These are conjunctural – military intervention and regime change are much more likely when more is at stake – recalcitrant leaders in oil producing states who cannot be effectively controlled through economic coercion and states where rent seeking is the road to quick wealth and so local elites are uncongenial to the priorities of foreign investors, so-called rogue states and failed states which harbor terrorists or drug dealers are more likely to face military invasions. The likelihood of such regime change initiative and the type and extent of guided state building will depend on the character of the administration in power in Washington. Further the success or failure in recent outings will influence willingness to engage in what may turn out to be ill conceived adventurist undertaking. There is inevitable tension between the innate tendencies to seek out foreign investment by corporate interests, by states in imperialism, and hegemons in empire and the chances of success at acceptable cost which are always contingent.

I will focus here on policies of the key global state economic governance institutions, the International Monetary Fund and the World Trade Organization in relation to the power of the American state and how we are to understand financialization. I will conclude with some comments concerning challenges to the U.S. state and its international economic policies. I do not think a cohesive transnational capitalist class is now the dominant reality in the world political economy eclipsing nation-state based interests and the centrality of the state for organizing politics and containing class contradictions I certainly see evidence of increased cross border cooperation among leading elements of the capitalist class. I would insist on the continued centrality of the tension among the interests of capitalists based in different states as we trace out the manner in which global state governance institutions are in fact emerging and gaining purchase over nation state level decision making. States because of the pressures of local elite governing coalition members and also because they must meet revenue needs essential to their legitimation preferentially favor national economic interests to the maximal extent they safely can given the pressures of global market forces and the demands of governments more powerful than their own. Not only in the core but when we look at the local coalitions which influence state policies in peripheral social formations we see the way their unique interests influence the kind of liberalization which occurs. It is also the case that there are very few if any truly transnational corporations in the sense of firms which are not primarily associated with particular nation state locations and politics.

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Such considerations bring us back to the relation of state logic, capital logic and the larger moment of imperialism in the global political economy because for all the talk of an interstate system, the heritage of Westphalia and all that, few of the 200 or so governments which exist today now, or in their previous incarnations as colonies and vassals, were ever sovereign in the idealist international relations model sense. Territorially based states are always part of a system which rests on economic exploitation and it is this structured inequality which should frame contemporary discussion of global neoliberalism. “Policy failure” needs to be theorized in the context of the goals of policy makers, what class interests they represent, and so how ‘bad” policies may be the best possible policies understood to be available given the contradictions of capitalism as an economic and political system and especially in the case of North-South relations by structures put in place by colonial and neocolonial power asymmetries. What is less commented upon is the interrelation between debt and the single minded export orientation pushed by the global state economic governance institutions for it is the stranglehold debt repayment has over economic policy making which forces and enforces the need to increase exports to earn foreign exchange to meet debt obligations. It is because of immense debt burdens that economies must be reoriented away from even modest focus on domestic needs and balanced growth. What was achieved directly by colonial administrators and direct appropriation of land and labor is now achieved indirectly by constraining development possibilities. Financialization generalizes this form of extraction and appropriation.

Contrary to official assertions and much mainstream social science based on the premise of efficient markets and public choice theory, the policy initiatives of the global state economic governance institutions, collectively labeled neoliberalism have been failures in terms of their announced goals. Even the IMF accepts in the findings of a technical report co-authored by its U.S.-appointed chief economist Kenneth Rogoff, that “The empirical evidence has not established a definitive proof that financial integration has enhanced growth for developing countries. Furthermore, it may be associated with higher consumption volatility” (Prasad, Rogoff, Wei and Kose, 2003:58). That is to say financial bubbles collapsing leaving economies in depression with rising unemployment, falling incomes, and extensive social suffering, are the logical outcome or at least their impacts correlate closely with financial liberalization. It is now widely recognized that overall economic performance and social development in the world economy has been substantially inferior in the last two decades of what we might call “High Globalization” compared to the two decades before that in which the dominant social structure of accumulation under national Keynesianism in the core and state-led development regimes in the periphery (Weisbrot, Naiman, and Kim, 2001). Political economists have detailed the harm done by neoliberal policies to the point where the Washington “Consensus” had lost credibility. Work now focuses on why since the medicine has had iatronic results the debt doctors continue to force it down the throats of unwilling patients. Seen as a tool bag of imperialism the assurance that more pain is good for these devastated economies victimized by the normal working of the world capitalist system and the insistence that these countries stay the unsound course is more understandable.

Attention has specifically focused on the rise of financialization as a dominant force in transnational capitalism as an explanation of why despite poor performance state intervention in demand management has been forbidden to address demand constraints to global growth and issues of redistribution have been out of bounds although as the incredible costs of these policies have brought forth resistence there is much talk in official circles about the need for safety nets even as the policies imposed do not allow for other than rhetorical endorsement of such a necessity. The competitiveness discourse and accompanying framings of New Classical Economics, supply side economics, monetarism, real business cycle theory and the more overtly right wing political theorization of the state in public choice, rent seeking, crony capitalism, and so on, support deflationary tendencies as well. All of these approaches by conservative economists and political scientists favor overt class-based redistributive growth as scientifically self evident despite evidence to their extreme social cost and lack of success compared to the earlier demand side regimes and state-led industrial policy approaches of the National Keynesian social structure of accumulation. Without alleging planned conspiracies, in any obvious sense it remains the case that each financial crisis is an opportunity for the more powerful market participants with deeper pockets to appropriate the resources of debtors. Debt is the modern day cannon breaking down the walls put up by the developing countries during the period of nationalist development strategies. Debt peonage allows imposition of conditionalities and structural adjustment programs transferring ownership and often dramatically redefining property rights. The fables of neoclassical economics, perfect competition and the rest obscure the transference of wealth accomplished by financial crises and the manner in which they are resolved.

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