MARTIN THOMAS is an organizer for the Alliance for Workers' Liberty in Britain and a member of the editorial board of Workers' Liberty.
CAPITALIST GLOBALIZATION EMERGES FROM LONG-TERM TRENDS. It is not, or at least not primarily, a sudden about-turn in economic life with a precise watershed somewhere between 1979 and 1992. Technology has made it a lot less expensive to transport commodities from country to country. More of trade is in manufactured commodities, and less, proportionately, in bulk materials. The greater average value-per-kilogram makes longer-distance trade more economical. The communications necessary for global networks of production and marketing are very much cheaper and easier. In more and more industries, a nationally-limited network of production is now unviably small-scale.
Without those long-term technical developments -- and some political and social developments, too -- the financial globalization of the last two decades, the giddy whirl of short-term international trading in currencies, shares and bonds, would not have acquired such momentum and importance. Financial globalization has played a big role in shaping the depressive slant of capitalist development since the early 1980s -- the relentless bias of capitalist state policy towards low inflation, relatively high interest rates, and short-term profits. It took off very rapidly indeed in the early 1980s, with the abolition of exchange controls. But financial globalization is not the fundamental driving force of the broader "globalist" processes, the increasing organization of production, trade, and communications in international networks.
The European Monetary Union has seriously suppressed the whirl of the international financial markets in Europe, yet cross-border trade and investment there continue to expand. The 1980s, the period of the first dramatic expansion of the international financial markets, were also a time of relatively slack international flows of direct investment. So financial globalization is a particular aspect of broader processes. It is not their driving force. Dealing with capitalist globalization is not just a matter of beating down cliques of finance-traders.
When Sweden dramatically abandoned full employment and embraced welfare cuts in late 1990, The Financial Times commented: "the international money markets have become the arbiters of Sweden's future, not the Social Democratic ideologues" (October 27, 1990). But in general it is not true that capitalist globalization means states losing power to markets, or to private corporations. Countries are integrated into the global markets by deliberate decisions of their states. Those decisions are made in the perceived interests of the capitalist classes which sustain those states (or, at least, of the weightiest and most powerful sections of those capitalist classes). They are not forced on them by other states or by particular private corporations. States line up to join the International Monetary Fund and the World Trade Organization. They do that because they are stronger -- more able to define a sharp-edged concept of the general interest of profit-making and to enforce it -- not because they are weaker.
Technical: improved transport and communications, increasing industrial complexity. Social and political: for the first time, almost every country in the world is now capitalist, with wage-labor as the basis of decisive sectors of production, some industrial infrastructure, and a functioning bourgeois state.* Result: globalization.
The "import-substitution-industrialization" strategy, pursued with some success by some Latin American states in the mid 20th century, has reached the end of its historical rope. It depended on taxing landed oligarchies or primary-product-export oligarchies to raise resources to build manufacturing industries (replacing imported manufactures) under cover of import controls. Today, manufactured commodities dominate world trade, and dominate exports for a very wide range of countries. Outside of the oil-exporters and maybe a few others, there are no countries offering obvious openings for a populist policy of financing aid to an up-and-coming class of manufacturing capitalists, producing replacements for goods previously imported as luxuries, and concessions to the working class, from taxes on a lucrative primary- product export industry run by an old oligarchy.
TO RESPOND TO CAPITALIST GLOBALIZATION BY SEEKING TO RESTORE OR REINVIGORATE the national states is thus to misunderstand it. It is also false, I think, to see capitalist globalization as a process of the overwhelming of all other states by one particular state, the United States, and the big corporations based in the U.S. Since the collapse of the USSR, the U.S. has certainly become the world's only military superpower. In recent years, capitalism in the United States has done somewhat better economically than capitalism in the European Union and Japan. But that is partly thanks to capitalists based in the EU and Japan buying up chunks of capital in the U.S. The balance of the evidence is that the long- term trend of the last half-a-century for a decline in the United States' relative economic dominance continues.
Capitalist globalization is not a world conquered by the U.S., or a world of states overwhelmed by markets and corporations, or a world of production being overwhelmed by financial markets. It is not capital turned American, or capital turned stateless, or capital turned financial. It is capital writ large. The actual process is not the only way capital could have written itself large. The particular evolution of the regimes of international finance has shaped it. So, perhaps more importantly, have the missed opportunities of the working class in the 1970s, and the outright defeats of the 1980s. It is not a benign process. It writes large the vices of capitalism -- inequality, pauperization, uneven development. It must be combated by global solidarity -- not by seeking to turn back the clock, or by appealing to illusory allies (other states against the United States, states in general against the markets, industrial capitalists against financial capitalists).
Capitalists have long used migrant workers and the unemployed to beat down employed workers. Work harder, longer, and cheaper, or the capitalist will find someone else, cheaper and more pliant, to replace you -- on the streets or off the boats! Or, now, with globalization -- in another country.
In labor history, one answer to the capitalists' use of the unemployed and migrants has been crony-unionism (reserving jobs for a chosen section of the working class). Another has been support for anti-immigrant legislation. Both were self- defeating in any but the short term and destructive of socialist politics in any term at all. The solid answer always was and is united organization of the employed and unemployed, and of native workers and migrants, to demand improvements for both sections. The battles in France since 1995, where unions and unemployed organizations have combined -- sometimes by staging "invasions" of the unemployed into workplaces -- to demand shorter hours with a guarantee of new hirings, are a recent example of the feasibility of that socialist response.
The same goes for the capitalists' use of other countries. The answer is internationalism, united organization of workers in different countries. One of the best things about the tremendous Seattle and Washington demonstrations was that their dominant mood was not "America First," but for global solidarity and a new internationalism. Of course it will take much discussion and debate to work out exactly what this global solidarity and new internationalism mean, and how they can be organized. Organizing that global solidarity is not a task of a few minutes, any more than uniting the employed and unemployed or natives and migrants ever has been. Yet some preconditions have been laid down. More countries world-wide have real independent trade-union movements than ever before (though some are very weak). The technical revolutions in communications are potentially of much greater import to workers' movements than to the rich, who could always afford air fares, telexes, international phone calls, and so on. Some trade union movements, especially the Korean, have started using them systematically for international solidarity. Web sites, notably Eric Lee's http://www.labourstart.org, provide world-wide information on workers' struggles in a way never possible before.
"Internationalism" is not the whole answer to every particular struggle. If capitalists threaten to move jobs to another country -- or to fire the whole workforce and replace it with recruits from the unemployed -- the appropriate immediate answer may be to call their bluff, or to seize the workplace and the machinery and use them as bargaining chips. The long-term program of uniting workers, employed and unemployed, native and migrant, and across national borders, is not dispensable, but it is not to be counterposed to immediate struggles either.
Governments in countries with lower wages, restricted trade-union rights, and fewer social guarantees use those as selling points to attract multinational investment. Not only Third World governments do that, but also, for example, Ireland and Britain, "selling" themselves as lower-cost production sites in Europe. How can labor be internationalist if we do not demand leveling-up of standards, and as much legislative force as can be achieved for that leveling-up? Maybe rich-country labor movements demanding international guarantees of labor standards will seem to be, or actually be, "covering for" rich-country protectionism. The antidote is to ensure that trade unions in the poorer countries are seen to take the lead in the demands for "leveling-up," and to link the demands with calls for a transfer of funds from the richer countries to the poorer ones to reduce the "comparative disadvantage" of the latter in infrastructure, education, and so on.
Such a transfer actually exists -- in a very corrupt, bureaucratic form -- in the European Union. In fact, over the decades of European integration, labor movements in Europe, on the whole, have proved strong enough, despite lamentably feeble international coordination, to make the "leveling-up" of wages consequent on that integration more a leveling-up than a leveling-down. Spanish wages have risen much closer to German wages, and not by German wages being beaten down in the same way as U.S. wages.
Those U.S. wages have been beaten down by U.S. capitalists, not by Korean or Chinese workers, and mainly by the employers' offensive within the U.S., where wage rates for jobs which cannot be moved to Third World countries -- janitors, retail workers, etc. -- have been pushed down just as much as those for those which can. World-wide, there has not been a down-down of wages. There has not been a down at all. Workers in some previously low-wage countries have won big improvements thanks to strong and courageous union organization (South Korea being the prime example), but overall, averages of income have become more unequal between countries, rather than more equal.
IT IS NOT TRUE THAT INDUSTRIALIZATION MUST FOLLOW LOW WAGES. The Australian Financial Review Magazine (April 2000) reports on how over the last 25 years hundreds of thousands of textile, clothing and footwear jobs have been moved from Australia to China and other south-east Asian countries. "Chinese factories pay workers at 69 cents an hour when the hourly rate in Australia is $11.50." But the calculation is not as simple as it seems. Most capitalists do not go where the wages are lowest. Most industry is still in relatively high-wage countries. Very little multinational industrial investment goes to the lowest-wage countries. Taiwan, Korea, Mexico and Brazil, with their relatively higher wages and stronger unions, have faster-growing industry than Africa. Availability of skilled labor and nearby markets, and networks of transport, communication, supply, services and distribution, are generally much more important for capitalists in choosing production sites than wage levels alone.
Naturally, multinational capitalists would not like it if Chinese workers' wages doubled, their hours were shortened and their factories made safe, and they gained legal freedom to organize trade unions. It does not follow that the multinationals would cease to invest there. If the improvements for workers went together with a clear-out of bureaucratic corruption, a cutback in China's huge military establishment, and the establishment of a more-or-less clear and reliable rule of law, then investment might well even increase. And if it didn't? The resources currently siphoned off by China's bureaucratic and military establishment are ample to generate a continuing rapid expansion of Chinese industry.
THERE IS NO WAY TO PURSUE WORKING-CLASS STRUGGLE WITHOUT ANNOYING or disturbing capital, or risking reprisals. Improvements in one workplace -- or in one country -- may be met by "strikes of capital." But by fighting for improvements, workers increase their confidence, organization and solidarity, increase their chances of making general political and social gains, and push the capitalists into technical and social investments they would not otherwise make. This argument -- necessary against "give-backs" in every workplace -- is surely even more true for improvements won or defended in whole countries than for those won or defended in particular workplaces. A large general rise in wages in Brazil, for example, could not conceivably happen without a great strengthening of the labor movement in Brazil which in turn would have a great range of further effects, and not just in Brazil. It would create conditions for a more successful international resistance to the rules of profit, even if it did trigger a "strike of capital." And it is not at all certain that capital would find it feasible or advisable to respond by a "strike."
Trade-union militancy has won huge increases in wages in South Korea -- it must have been one of the fastest wage-upswings in any country at any time in world history -- and capital has not stopped investing there.
Aid and debt relief are not sufficient for the industrialization of poorer countries. By themselves they can well lead to nothing much but the enrichment of a government and crony-capitalist elite, and the expansion of military establishments and prestige construction projects. Wider benefits in those poorer countries depend on the development of labor and popular movements strong enough to shift government policies. At best, the benefits from aid and debt relief are by-products of a process driven fundamentally by the self-interest of capitalist states (military alliances, construction and supply contracts, straightening out international banks' balance- sheets, etc.). The details are decided at so great a distance from any democratic processes that it is foolish to imagine that lobbying and petitioning from below can change that fundamentally within a stable capitalist regime. Even the meager by- products, however, may be very important for some of the poorest countries. Korea and Taiwan owe their dramatic economic lift-off in large part to "aid" militarily-motivated from the United States. And any socialist world policy must include massive, democratically-controlled aid from the richer countries to the poorer. The fundamental socialist answer remains not to petition the billionaires to please invest some of their wealth in this place rather than that one, or to dispense a little more in philanthropy, but to take the billions from them and put them under democratic social control.
Transitional demands along those lines might include: opening the books of the multinationals; information and veto powers for international shop stewards' committees over multinationals' investment plans; action by international shop stewards' committees to demand "leveling-up" of wages and conditions; aid from rich countries to poor ones under the control of workers' and community organizations in those countries, and along the lines of workers' reconstruction plans worked out by those organizations; taxing the rich to finance workers' reconversion and reconstruction plans in countries where industry is shutting down, and so on. All these, and others, flow from a general approach of working for workers' control over social wealth, rather than petitioning the World Bank, IMF, WTO or whomever to act more charitably.
To oppose globalization flat-out is, I think, a dead-end. Obviously socialists should support and promote protests like the Seattle and Washington demonstrations against today's capitalist globalization. I think the message we should advocate within those protests is not "stop globalization," or "halt globalization at all costs until labor is strong enough to impose its own global alternatives," but rather "fight capitalism within its process of globalization by building global solidarity to work toward socialist globalization."
Globalization may possibly go into reverse, with a new era of heightened economic barriers between nations, in the event of a catastrophic crisis of the world financial system, but that would be no boon for workers or for socialist politics. Short of that, so long as the capitalist classes and their states are strong enough to rule, they will for the foreseeable future maintain globalization. To attempt to roll back globalization would be as futile as attempting to impose a general ban on cost-cutting technology. It would only strengthen nationalist prejudices in the world's labor movements, and thus make us less able to deal with global capital now. In a socialist future, we would not want to roll back globalization. "Anti-globalization" is as much a dead-end as the stance of voting "no to Europe," or favoring withdrawal from the European Union, taken by most of the British and Irish left in the 1970s, or the opposition to a single European currency on principle by much of the European left today.
What can be done, instead, is to fight against capitalism within its process of globalization, and for working-class globalization. Our anti-capitalist efforts may hinder the actual capitalist process of globalization, but that is a different matter from setting out to halt or roll back globalization as such. A workers' government in any country would need "protectionist" controls on foreign trade and money movements. In some poorer countries "import-substitution industrialization" may not be as obsolete as it is generally. And there are circumstances, in many countries, where a very sudden and brutal abolition of "protectionism" would mean sudden ruin or even starvation for workers in a particular industry, or small farmers, with very little chance to organize for alternatives.
IN THOSE CIRCUMSTANCES, CONTINUED "PROTECTIONISM," or a gradual reduction instead of a sudden abolition, will be demanded by the capitalist interests tied up with the sector too, to give them a chance to reconvert without ruin. It is not our business to come out against them by being free-trade fanatics. It is our business to explain to the workers and small farmers that tariffs and import controls are no long-term solution. Clinging to such controls cuts against the necessary alliances with the workers and small farmers of other countries. Their best answer is a workers' reconstruction or reconversion plan. Workers' reconstruction plans were proposed by revolutionary socialists in Europe after World War II, and the capitalist governments there actually carried out capitalist reconstruction plans, rather than leaving reconversion for peacetime to the free play of the markets. In the 1970s in the UK, there was a small spate of workers' reconversion plans for particular enterprises -- Lucas Aerospace and Vickers.
Should we seek to reform the WTO, IMF, and so on, or abolish them? On one side it can be argued that the process of capitalist globalization is ineluctable (short of socialist revolution). It is progressive, in the sense used by Marxists to describe capitalist development as progressive, i.e. not that it is a good thing, to be applauded and supported, but that it pushes along the contradictions in society and increases the potentialities for working-class socialist transformation. It is less destructive than the only real capitalist alternative, a world of higher barriers and sharper conflicts between nations.
On the other hand, it can be argued that the WTO and IMF actually function as shock-troops to open up the whole world as a free-fire zone for the multinationals and the international banks, with the consequent destruction of livelihoods and state- welfare protection for many millions of workers and small farmers and the razing of environmental and safety regulations. They are not public institutions of the sort which, susceptible to more or less direct elected control, can be reformed in the various functioning national bourgeois-democratic polities. They are the peaks of a structure whose foundations are chiefly in the permanent unelected state bureaucracies of the strongest nations. They can be blocked or deflected on this or that particular issue, but no amount of lobbying can positively transform them in a major way.
Both arguments are true, I think. The alternatives are false. We cannot choose between reforming or abolishing the WTO and IMF any more than we can choose between reforming or abolishing the Federal Reserve. Instead, our job is to build an alternative, socialist, framework for international economic coordination, and in the first place to build the international working-class links necessary to underpin the battle against the existing frameworks and for a new one.
What we need to abolish is not just the IMF, the WTO, and the World Bank, or globalization -- but capitalism. We must build up the global workers' solidarity which can win battles against global capital now and establish socialist globalization in the future.
* In my view, the Stalinist states were a form of state- capitalism even in their heyday. But -- contrary to the conclusion of most theorists of Stalinism-as-state-capitalism in the 1940s -- they represented not the highest form of capitalism, not a forward extrapolation of the trends of advanced capitalism, but an aberrant form of vapitalism tied to crude intial industrialization. hence their states were, though capitalist, not quite bourgeois in the sense of bourgeois rule-of-law. See my article, "Globalization and its discontents," Workers' Liberty 50-51, October 1998. return
Contents of No. 29