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Globalisation: a new stage of world economy?

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Have recent developments fundamentally changed the relationship between the economy and the nation state? Lesley Day surveys the debate.

Scouts from rich European clubs visit the dusty pitches of Brazilian townships. In turn Latin American talent spotters assemble in force for the African Nations cup. The explosion of the international trade in soccer players is just one high profile example of the way that national boundaries seem of less account and the world seems to be shrinking.

Other signs of a growing cultural homogeneity abound. For some commentators, the late 20th century is a period where the global reach of Pepsi or McDonalds is dissolving established, nationally-specific relationships. For some, a culture of consumerism is all pervasive1, while for others, the revolution in information technology makes the “global village” a reality.

Such globalisation theories are easily challenged. You may be able to watch or listen to the World Cup in tens of thousands of villages and housing estates worldwide, but the world is really no smaller if you have no resources or access to transport to take you beyond the nearest town. As long as two-thirds of the world’s population live more than two hours walk away from the nearest phone then the material means for being a citizen of the global village are non-existent.

The shallow ephemera of global culture, however, should not lead us to dismiss the serious shifts in global economic and political relationships over the last 20 years.

The ruling class is certainly taking these developments seriously. “Globalisation” is a buzzword in the headquarters of the giant multinational corporations and on the financial markets as well as in university sociology departments.

But what does it mean? If it is meant to define a century-long trend of growing international trade and investment, then this is hardly a new phenomenon. The various advocates of the “globalisation thesis” use it to describe a qualitative change in capitalism – usually with dramatic implications for existing political strategies.

Hirst and Thompson, in a recent book, usefully summarise the “strong” globalisation view of the world economy in this way:

“Globalisation in its radical sense should be taken to mean the development of new economic structures and not just conjunctural changes toward greater international trade and investment within the existing set of economic relations.”2

In this scenario of the global economy the system “becomes autonomized and socially disembedded, as markets and production become truly global”. The “national level is permeated by and transformed by the international”3

According to Hirst and Thompson this system presumes:

“ . . . the transformation of multi-national capital into transnational capital (TNCs) as the major players in the world economy. The TNCs would be genuine footloose capital, without specific national identification and with an internationalised management . .”4.

In the words of one advocate of the “extreme” globalisation thesis:

“The agent of the global economy is transnational capital, organised institutionally in global corporations and in supranational economic planning agencies and political forums such as the International Monetary Fund (IMF), the Trilateral Commission and the G7 Forum, and managed by a class-conscious transnational elite based in the centres of world capitalism. This transnational elite has an integrated global agenda of mutually reinforcing economic, political and cultural components, that taken together, comprise a new global social structure of accumulation.”5

Transnational corporations (TNCs) or Multinational enterprises (MNEs) have – according to prophets of globalisation such as Japanese commentator Kenichi Ohmae – reached the status of “stateless corporations”6. They are able to move production round the globe, make mergers and acquisitions and foreign investments where they please. The combination of changes in communication and the inexorable rise of MNEs means, for the globalisers, that there are no effective controls on the movement of capital – there is a truly globalised economy.

The implications for the ability of nation-states to exercise political and economic control over this transnational economy are clear. In Hirst and Thompson’s words national states:

“ . . . would be at the mercy of autonomised and uncontrollable, because global, market forces.”7

As Robinson puts it forcefully:

“The ‘commanding heights’ of state decision-making are shifting to supra-national institutions.”8

However, Hirst and Thompson have insisted, that, on the contrary, “globalisation, as conceived by the more extreme globalisers, is largely a myth.”9

What should Marxists make of this debate?

Imperialism as world economy

The increasing internationalisation of the world economy has informed the Marxist theory of imperialism since before the First World War.

Marx himself well understood that it was in the very nature of capital itself to reach out without limit in its search for new raw materials, new markets, new sources of labour. It “batters down Chinese Walls” in Marx’s famous words. Capitalism breaks down barriers to its rule, gobbles up old modes of production or subordinates them to itself. Its class structures are superimposed upon the old relations, as is its culture.

Amongst the contradictions built into the heart of this process is the relationship between capital and the nation state.

The nation state is both an expression of capitalist social relations and their guarantor. It arose in response to the need for the rising bourgeois class to unify the fragmented internal market and create uniform legal and political conditions for all capitalists.

But at the same time, capital is driven by its own inexorable competitive logic to go in constant search of new markets and sites for investment beyond the boundaries of its “home” nation state. With this expansion comes the need for legal and even military protection of the conditions of profitable exploitation in foreign countries.

Between 1870 and 1914, and especially from 1895 to the eve of the First World War, this international expansion of capitalist trade and investment was especially rapid. The result was that the world became completely divided up between a handful of “Great Powers”. Every country excluded from this club became formal colonies and informal “spheres of influence”.

For the dominant industrial and financial monopolies within the major powers all these countries were little more than sources of raw material and cheap labour, and in some cases they provided a captive market for their goods and services.

To secure these monopolies they relied upon semi-private, and later state, forces of repression and containment.

Hence the nation-state inevitably clashed with other nation-states. This contradiction, while not absent from the period of free-competition capital, particularly characterises the imperialist epoch. In part this is due to the fact that capital expansion can only be a process of re-dividing a world that has already been grabbed by rival powers. But it is also due to the fact that in capital expansion in the imperialist epoch the export of capital (whether portfolio or fixed direct investment) predominates over the export of commodities.

Hence, armed supervision of global trading routes was typical of the pre-imperialist epoch together with the use of force to open up the closed markets to the goods of monopolies. The imperialist epoch added the need for the state to supervise the site of extensive investments themselves.

In turn this led to the systematic outbreak of wars and revolutions within this imperialist epoch: wars for the forcible re-division of the world into protected “spheres of influence” and “backyards”; revolutions prompted by wartime privations, the collapse of defeated ruling classes and by the injustice of national oppression.

Throughout the 20th century the major shifts in trade and investment have been a result of competitive accumulation between blocs of monopoly capital, largely backed by distinct nation-states in which these monopolies have their origin.

The central argument of the “globalisation thesis” is that over the last 20 years or so this process of development of monopoly capital has led the monopolies to outgrow the nation-state, to loosen their ties of dependency and loyalty to these states irrevocably. As a result the process of capital accumulation has developed to a point where it is no longer controllable by the traditional political and economic mechanisms available to national governments.

What factors are supposed to prove this thesis?

The end of the USA’s absolute and unconditional hegemony – marked by the collapse of Bretton Woods fixed rate exchange system in 1971, the independence of the Arab state oil producers after 1973 and the enforced military retreat from South East Asia by 1975 – is said to have fatally weakened the over-arching control of the pre-eminent nation-state in the capitalist world.

The end of the post-war order after 1989, with the collapse of Stalinism, has unfrozen the established relations of dominance and subordination within the capitalist world and further weakened the ability of nation states to co-ordinate and co-operate in the regulation of trade, international finance and investment flows.

In addition, in the early 1980s the domestic economic policy of the major industrial countries shifted dramatically away from the traditional expansionist, deficit spending policies associated with Keynesianism. The new watchwords were efficiency, debt reduction, risk spread and financial discipline. Economic policy was set by corporations and politicians that stressed the benefits of open trade, deregulation and an end to protected markets for trade and investment which would “shield economies from powerful sources for growth”, in the words of the Economist.

It is argued that these trends are, in turn, reinforced by developments in communication and finance. Currency markets are no longer bounded by time zones or borders. Money moves in the blinking of an eye.

Meanwhile changes in the organisation of production mean a shift away from mass production in huge plants to the various techniques and methods of lean production, “Just In Time” (JIT), flexible working, Total Quality Management (TQM) and so forth. These methods lend themselves to the localisation of production to be nearer markets or to seek out cheaper labour.

Thus globalisation can go alongside localisation. In either case the ability of states to regulate the movement of production is limited.

Against the view of a world economy heading pell-mell towards total globalisation and integration, Hirst and Thompson provide a useful historical account of the development of the international economy this century which puts into perspective the scope of the changes set in motion in the 1970s.

First, Hirst and Thompson argue that the level of internationalisation and openness of the world economy is not unprecedented. They point out that the period of expansion in the late 19th century involved not simply a growth of investment related to primary production but also to manufacturing. International trade, too, has not followed a simple pattern of growth: it has expanded and contracted according to various political and economic developments.

They point out that the volume of total international trade grew 3.4% p.a. in the period 1870-1913, less than 1% per annum 1913-1950, and then boomed again at an annual rate of 9% between 1950 and 1973. Furthermore, trade as a proportion of domestic output was higher in 1913 than in 1973.

Similarly, international movement of labour was proportionately higher in the mid-19th century, the historic high point for voluntary family migration. Indeed, the generalised imposition of controls on the movement of labour by most states is hardly evidence of a fluid international economy.

Beyond multi-national capital?

One supporter of globalisation writes:

“The emerging global order is spearheaded by a few hundred corporate giants, many of them bigger than most sovereign nations. Ford’s economy is larger than Saudi Arabia and Norway. Philip Morris’s annual sales exceed New Zealand’s GDP”.10

For the globalisers, the TNCs are seen as an alternative institution to the nation state as organisers of production. The sheer size of their operation is increasing the weight of these corporations in relation to other institutions. In 1990-1, 135 TNCs had sales in excess of $10 billion while 60 countries had a GNP of less than $10 million.11 The number of multinational corporations has increased but so too has the concentration of assets. Seventy per cent of all foreign direct investment (FDI) is made by the top 300 TNCs and 25% of all capital is held by them.12 While MNCs have long existed globalisers insist that a qualitative shift has occurred (or is occurring), in turn partly related to the size of the giant corporations.

But the size of the monopolies is less important than the “global reach” of the TNCs. A number of the biggest players, such as IBM and ICI, rely for over half of their revenue on foreign sales. Nestlé provides the most extreme example; over 98% of its sales are outside Switzerland.13

The power of the multinationals means that even rich nation states are unable to withstand the pressure. For instance, Canada’s policy of allowing generic copies and encouraging the provision of cheap medical drugs fell victim to pressure from the pharmaceutical industry.14

This extended global reach is not confined to trading. Global restructuring has occurred on a huge scale through acquisition and merger and the increasing use of joint ventures (especially in the developing capitalist economies). A feature of the 1980s and 1990s is the way in which TNCs move production to take advantage of cheap labour or inducements such as those provided by the maquiladoras factories on the US-Mexico border.

Production does not necessarily move to less developed countries. But increasingly it moves within the developing trade and investment blocs or between them. Examples abound: Grand Metropolitan moved Green Giant food production from Canada to Mexico; Bendix moved from Canada to South Carolina; Japanese and South Korean components’ manufacture has moved to the low wage, subsidised, South Wales corridor in the UK.

By 1991 over half of all US exports and imports were transfers of components and services within the same company, most of these being US based TNCs. This state of affairs led the company president of Bulova watches to comment:

“We are able to beat the foreign competition because we are the competition”. 15

The combination of this global reach and new technology is what leads some of the corporations to positively embrace the idea of being transnationals who pursue the goal of a stateless corporation. “IBM, to some extent, has successfully lost its American identity”, said one of its senior vice-presidents.

This picture of the stateless transnational has been challenged by Hirst and Thompson. In their view only a few multinationals have reached the status of “transnationals” and they qualify the extent to which the giant multinationals have broken out of the boundaries and protection of the nation state.

They argue that, while there has been a substantial increase in FDI in the 1980s, in terms of sales, assets, the possession of subsidiaries and affiliates, multinationals still rely heavily on their home base. There are variations of course: the Japanese based multinationals had a massive 92% of manufacturing assets and 97% of service assets based at home in 1993. For the US the figures were 70% and 74% respectively. Most European countries were less nationally based but their assets and sales outside their own borders are predominantly in Europe. Their analysis of this data leads Hirst and Thompson to conclude:

“International businesses are still largely confined to their home territory in terms of their overall business activity; they remain heavily ‘nationally embedded’ and continue to be multinational corporations rather than TNCs”.16

Hirst and Thompson conclude that “genuinely ‘transnational’ companies appear to be relatively rare”17, and that increased capital mobility has not produced a shift of production to developing countries.

On the contrary, they argue, FDI primarily moves between the major economies. The “global” economy is a very concentrated one. Some 90% of FDI is sourced in 10 developed countries and two thirds of this in four: the USA, UK, Japan and Germany. Furthermore three-quarters of FDI goes to North America, Europe and Japan. The largest 100 MNCs account for 33% of FDI stock.

These figures reflect the fact that what is developing is not a global economy but one concentrated in a “Triad” of blocs – Europe, Japan and the US. In this sense it is more accurate to speak of the “regionalisation” of the world economy rather than its globalisation.

Moreover, far from breaking free of the constraints of the nation-state even supporters of the “global reach” idea have to acknowledge that a giant TNC, such a Philip Morris, relies heavily on the backing of the US government and US dominated institutions. The massive subsidy to US grain production, for instance, has encouraged the undermining of self-sufficiency in less developed countries, including Mexico, locked into a trading bloc with the US.

So too as Philip Morris expands out of tobacco products into food it seeks government help in gaining access to these markets.

Most TNCs secure this assistance by deploying their vast budgets for lobbying governments and legislatures, as well as international agencies:

“Global companies still look to home governments to protect their existing markets and to provide muscle for penetrating markets, to keep labour and environmental costs down and to subsidise their operations in various ways.”18

The most obvious way in which the state acts for capital and the nation-state acts for national capital is in the control of labour. This includes the laws governing contractual arrangements as well as legislation affecting the operation of trade unions. Whether in brutal attacks on strikers, in the imprisonment of union leaders such as in Nigeria, or the draconian anti-union laws in Britain, the state is still a vital institution for capital.

States also control the movement of labour. Supporters of the globalising thesis argue – depending on their perspective – either that labour is mobile or that capital is increasingly moving to find cheap labour. According to some estimates, 75 million people leave poor countries every year. Labour migration is, however, subject to strict controls. While movement of labour has been freed within the EU, the borders have simply shifted to create “Fortress Europe”, with the seven nation “Schengen area” at its heart.

While they are a useful corrective to those globalisers who overstate the trend to TNCs and their rupture with the nation-state a number of points need be registered against Hirst and Thompson’s figures and their reading of them.

In particular they do not give much weight to the increasing tendency to establish joint ventures between MNCs and smaller domestic capital or state-owned capital; their figures also appear to ignore subcontracting out by MNCs which also leads to an undervaluation of the real power and reach of international monopoly capital.

Further, if one looks to the British experience at the other end of the spectrum from the nationally-rooted Japanese and US MNCs, then a dramatically different picture emerges. British manufacturing firms make only 36% sales and hold only 39% of their assets in the UK.

Additionally, Hirst and Thompson do not account for the relative weight of the seriously global firms whose interests are less and less based in any one country.

Trade and finance

Over the last decade, trade has been growing twice as fast as output.19 Even the United States, which has a huge home market, has experienced a relative rise in trade over several decades. The sum of all imports and exports in the US was equivalent to 10% of GNP in 1965. By 1990, this had risen to 25%.20

The globalisers emphasise these developments. Even Hirst and Thompson note the rise in both trade and, since the early 1980s in FDI relative to the export of goods. They note that between 1983-1990 FDI flows expanded at an annual rate averaging 34%. However, they question whether the experience of the 1980s represented a “robust structural change” or a cyclical upturn. Their conclusion is that there will be no return to the pre-1980s position but that equally the early 1990s surge is unlikely to be repeated unless there is another synchronised upturn in growth rates.

In fact, current indicators are that this “surge” continues for the moment. Not only has trade been outstripping output but FDI has been growing three times as fast.21 The latest UNCTAD report on World Investment shows a continuing surge in FDI, mergers and acquisitions and in global localisation. Global investment inflows rose by 40% in 1995 to $315 billion. Most of this was to the already industrialised countries but there was also a record rise in funds flowing to the Less Developed Countries (LDCs).22

Hirst and Thompson argue that, in general, openness to capital flows was greater in the period 1900-1914 than in the late 1980s. But they do recognise the “admittedly phenomenal” growth in international financial flows of late. They attribute this to the end of fixed exchange rates in the 1970s which in turn prompted an end to capital controls and the integration of trading on currency and equity markets. This development, they argue, is indeed “unique” to this period of international capitalism.

It was the combination of the neo-liberal policies of the 1980s, the “openness” of the financial markets and the new technology that led to the extraordinary growth of “hot money”. Typical daily foreign exchange dealing has now soared to £1.3 trillion.23 Cross border transactions in bonds and equities have surged from 3% of America’s GDP in 1970 to 136% in 1995.

But does this transformation of the international financial markets in the 1980s bear testimony to the “liberation” of capital from the constraints of state or international control?

This returns us to the heart of the globalisation debate. Can states exert any control over international capital? Are there other institutions which can rule for the bourgeoisie? Can capitalist competition flow through alternative channels?

For supporters of the globalisation thesis, capital has broken the bounds of the nation states. For Barnet and Cavanagh for example, the modern nation state “looks more and more like an institution of a bygone age”.

For Ohmae:

“ . . . nation states have already lost their role as meaningful units of participation in the global economy of today’s borderless world”.24

Waters argues that the various explanations of an international, rather than a global economy fail to recognise:

“ . . . the extent to which states are now surrendering sovereignty to international and supra-national organisations as well as to more localised units”.25

This view is wrong for two reasons. First, it mistakenly sees the nation state as the passive victim of the process of economic globalisation of MNC capital. Secondly it refuses to recognise the scale of intervention by governments over the last ten years to try and constrain the negative effects of off-the-leash capital movements.

The globalisation argument fails to appreciate the degree to which the impetus to deregulation and openness in the world economy was the one-sided and particular interest of the major imperialist countries in the 1970s.

Back in the 1970s the USA and UK governments, in alliance with the major sectors of finance and industry, were of one mind: their national interests would be best served by forcing the other countries of the world to open up their financial markets to them. They were “market leaders” in most financial products and stood to gain enormously from their competitive advantage. The UK and US blazed the trail and forced all the other markets to follow suit or lose even more market share for these financial products.

Secondly, national governments do intervene to direct and limit the negative consequences of the movements of capital. When the ERM broke down in 1992 Portugal, Spain and Ireland briefly imposed some capital exchange controls to defend their currencies. The US government intervened massively in 1994 to rescue mainly US bond holders who stood to lose $50 billion as a result of the collapse of the Mexican peso. In the early 1990s the US government did a similar thing when faced with the Savings and Loans crisis after the post-1989 recession hit home. In response to the $500 billion worth of bank losses in Japan after the 1989 property market crash the Japanese government abruptly reversed or slowed down its deregulation of its own financial markets.

In this sense Joyce Kolko puts a more realistic view than the globalisers when she notes:

“States are both withdrawing from their direct participation in the economy and becoming more engaged. They remain ready to rescue the largest corporations that face financial crisis. The IMF restructuring packages, policies of massive interference in the economies of the LDCs, have only increased the chaos and misery in these countries.”26

The very real moves to a single European currency by 1999 are also a function of the combined efforts of smaller EU states to offset the spontaneous economic effect of the single market in financial products, a move which has overwhelmingly benefited UK and German finance capital as it was intended to do. Such openness was accepted only on condition that the smaller states would receive a measure of control over monetary and financial policy that a single federal European Bank would bring.

Here the “nation-state” has taken the form of a pan-European “state” but the mechanism of supranational control is not free from the decisive influence of individual nation states: it is a tool for them.

This real blind spot in the globalisers’ argument once more stems from their leaping over the fact that the real contradiction between national state and global capital is now, and in the immediate period ahead, producing the regionalisation of the international economy and pan-national political developments.

Hirst and Thompson make an opposite error. They see the scope for nation-state intervention and even regulation by supra-national bodies and regional organisations. Hirst and Thompson believe that nation-states are still active in the control of international finance and could be more so. They fail to see that the form this intervention takes is not the harmonious outcome of “rational” dialogue between international partners, but rather the function of unilateral pressure, bullying and intimidation by the major imperialist nations.

So for example, in 1987/88 the UK and US governments forced all G10 governments to impose their own “capital adequacy ratios” on all the G10 banks in order to forestall an international banking crisis. Both countries threatened any bank that refused with exclusion from both New York and London.27

Similarly in 1988 the “national interest” of the US was deemed to be served by an attack on drug money laundering through the international banking system. The US gained compliance by threats aimed at reluctant banks and a new regulatory system emerged.

Hirst and Thompson make a second error in this regard. They exaggerate the ability of the international regulatory agencies to deal effectively with the consequences of the international financial system. They clasp a telescope to their blind eye when they argue that “volatility could diminish” . . . “more or less automatically” and that the “trend is now for re-regulation” by international bodies.

It is hard to share this view of recent trends. Daily market turnover in the financial markets has increased threefold between 1986-92. The ratio of government bank reserves to market turnover has gone from 3.5: 1 in 1983 to 0.5:1 in 1995. The total of $1.3 trillion is double the combined reserves of the G5 governments.

It may well be true – as US Treasury Secretary, Robert Rubin, said at the June 1995 G7 summit – that the key challenge is:

“ . . . to develop effective multi-lateral mechanisms to deal with the problem that may arise from the vast increases in the speed and size of the international financial markets . . . ”28

But the fact remains that the General Agreement on Borrowing (GAB) set up at that summit has a facility of $29 billion, climbing to $60 billion in time. This is worth a mere 85 minutes of international foreign exchange trade!

As to the IMF and World Bank acting to direct the markets, the whole trend of liberalisation over the last 20 years has meant that private finance, not public or inter-governmental money has grown in importance. The sums distributed by the IMF and WB account for little today and thus give these institutions little leverage over the markets.

Crisis or reform of the system?

Because the supporters of the globalisation thesis downplay the significance of states, they also tend to discount the possibility of inter-state conflict including the possibility of international war. For instance, Barnet and Cavanagh argue that:

“The fundamental political conflict in the opening decades of the new century, we believe, will not be between nations or even between trading blocs but between the forces of globalisation and the territorially based forces of local survival”.29

Ironically, however, Hirst and Thompson also end up with a utopian view of the prospects for world peace and security. This is derived from their reformist perspective. Although for them there is no globalised economy or one likely to emerge, what we have is:

“ . . . an open world economy based on trading nations and regulated to a greater or lesser degree both by the public policies of nation-states and by supra-national agencies.”30

For them the growth of trade and investment blocs rather than being a harbinger of future conflict, is evidence of the continued influence of (reformable) states and governments. It is also seen as underpinning the willingness of multinationals to operate within certain constraints in exchange for certain guarantees. Where globalisers see a “new world chaos”, the reformist “anti-globalisers” postulate a benign regime where, through the medium of Europe, Japan, the USA and international agencies, a form of regulation prevents the worst instabilities of the financial markets and ameliorates inequalities.


“ . . . forms of control and social improvement could be achieved relatively rapidly with a modest change on the part of the key elites”.31

In fact this social improvement would really be a question of the rich men’s club managing its affairs in a more friendly and successful manner – at the expense of the poor. That has been the outcome of every “successful” round of negotiations at GATT/WTO. The most powerful countries can succeed for a while in keeping a relatively “open” world economy. The result is that poor African countries end up dependent on the grain prairies of the US and protection for new industries in the LDCs becomes harder and harder to achieve. At the same time the growth of the trade and investment blocs shows that the barriers against each other are ready to be developed.

Just like the “extreme globalisers”, Hirst and Thompson are also blind to the possibility of inter-imperialist war. They are convinced that the nature of modern warfare precludes global war:

“Armed forces are thus virtually an irrelevance for the major advanced states in their dealings with one another.”32

Sharper eyes should be able to detect – both in the Balkans, and in Central Africa – an emerging imperialist rivalry. These are not simply limited wars on the “periphery”. They are harbingers of the conflicts to come unless the international working class can “globalise” and challenge the anarchy of the capitalist system.

Marxists approach the whole “globalisation” question from a different angle.

We first seek to grasp the nature and limits of the present phase of international capitalism. Hirst and Thompson stress the points of continuity with earlier phases of the imperialist epoch and rightly underline the fundamentally national base and limit of the capitalist class, their dependence and ties with nation-states. What they underestimate is the scale of the recent developments and their potential to overwhelm collective co-operative efforts of national governments.

The extreme proponents of the globalisation thesis, on the other hand, quite simply mistake a process for a finished fact – ignoring the countervailing tendencies within the system: continued state intervention, inter-imperialist rivalry between the major trading blocs and within the blocs.

So how will change come? It was the national interest of the UK and US MNCs in industry and finance that led to the far-reaching changes in movement of investment that some have come to call globalisation. This development corresponded completely to their national interest since they had the most to gain from such an opening up of the world.

It was not some disembodied process of capital accumulation at work here but a policy of nation-states and real nationally based capitalists working in tandem to break down obstacles to their further growth.

At the same time, this development once it reaches a certain point escapes the control of one or any combination of nation states.

The very process unleashed by the US and UK in the 1970s and 1980s, which has led to the situation of instability, openness etc. have in turn undermined their own competitive advantage. Already the OECD and Bank for International Settlements have noted this.

To this extent abrupt reverses in the direction and scale of capital movements, as well as the openness of the world economy, will not emerge as a result of the wisdom of international agencies but from the eruption of crises and the unilateral attempts by the major imperialist powers to solve them according to their national interests at the expense of their rivals.

It is into this process that the working class, and especially the organised labour movements, can intervene. But how?

Globalising the class struggle

The most radical of “globalisers”, who stress the extent and power of the new transnational capitalist class, are in essence deeply pessimistic.

The collapse of Stalinism leads them to see global capital as unchallengeable: if the nation-state has surrendered its regulatory powers over capital then what is the use of reformist parties taking over government?

If the financial tide is too strong to be held back by the concerted efforts of several nations then what hope social transformation? The labour movements are weak and isolated from each other while the capitalist class is unified at an international level.

All they can propose is an incremental process of “globalisation from below”33, whereby solidarity networks are built – as with the Zapatistas in Mexico – via the use of the internet to break down national barriers.

Revolutionary socialists do not despair at the further internationalisation of the world economy. The traditional reformist mechanisms of limiting the movement of capital failed because they left ownership of the main wealth and productive power in the hands of a few major companies and banks. Using taxation and monetary policy to influence the direction of capital failed utterly in these circumstances.

The latest prescriptions of the new regulators, such as a spot tax on currency exchange transactions to deter speculative dealings, will likewise fail to tame the anarchic markets. The working class needs to expropriate the banks and major MNCs as a precondition for socialist change.

Revolutions rarely occur simultaneously in several countries. Revolutionary states will find their international assets frozen; they will find their currencies marked down or deemed non-convertible. The established patterns of trade will possibly be severely disrupted; access to the international capital markets for investment in plant and industry will be more difficult.

But all these things will signify that a revolutionary process is underway: a crisis of dislocation the effects of which will be felt in many countries, giving rise to the conditions for solidarity and revolution elsewhere.

Reformism rightly fears globalisation. The internationalisation of capital means that all attempts to limit its movement and power from a national economic standpoint will prove partial and temporary.

Revolutionary socialism has no reason to fear the internationalisation of capital. It creates an Achilles heel for the profit system wherever serious workers’ resistance obstructs the implementation of internationally decreed austerity measures. It also means that far right populist protectionism – stirred up by the effects of globalisation – will remain utterly dysfunctional for the imperialist bourgeoisies. It means too that imperialist war – which is driven not just by the logic of competition but also by internal crisis, and which is immanent in the system – has an amplified power to disrupt the system.

The workers’ movement has to cope with the globalisation process by refocusing its programmatic goals. Even minimal anti-capitalist measures would bring a workers’ government inside the EU right up against the pan-European economic mechanisms and treaties. And yet, both at a political and economic level, co-operation within Europe would be vital to the survival and extension of a nationally started revolution.

In this light the new age motto: “think globally, act locally” appears doubly stupid. Those engaged in resistance have to think globally but also nationally. They should not be mesmerised by the mantra “globalisation” into believing that the national, governmental arena of struggle can be ignored.

At the same time we have to act globally. If there were no mass workers’ movements; if resistance really was the sole preserve of small, single issue groups, then the advice “act locally” might make sense. But the globalisation process has created and extended an international working class.

The Pepsi and Levi signboards that festoon Lagos, Seoul, Dhaka and Jakarta only extend the daily reminder to millions that the life of comfortable consumption they represent is only available to an elite.

Capitalism, as always, creates its own gravediggers. The working class is the only force on the planet that has the objective self interests to act globally.

The whole of revolutionary socialist politics in this century can be summed up in the imperative: act globally. After all – as the Irish revolutionary James Connolly wrote – we only want the earth!

1 “The juggernaut of exchange values is also invading the intimate private spheres of community,family and culture.” W I Robinson,” Globalisation: nine theses on our epoch“ in Race and Class London Vol38 No2 October/December 1996, p15
2Paul Hirst and Grahame Thompson, Globalisation in Question Cambridge 1996, p7
3 ibid p10
4 ibid p11
5 Robinson op cit p16
6 Kenichi Ohmae, The Borderless World London 1990
7 Hirst and Thompson op cit p10
8 Robinson op cit p18
9 ibid
10R Barnet and J Cavanagh, Global Dreams: Imperial Corporations and the New World Order New York 1994
11 See Leslie Sklair, Sociology of the Global System, Hemel Hempstead 1995
12 Malcolm Waters, Globalisation , London 1995
13 See L Skair op cit
14 See “The New Globalisation” New Internationalist 246, August 1993
15 R Barnet and J Cavanagh, op cit
16 Hirst and Thompson, op cit p22
17 Hirst and Thompson op cit p2
18 Barnet and Cavanagh, op cit
19 Economist 29 September 1996
20 Barnet and Cavanagh, op cit
21 Economist 28 September 1996
22 Economist 26 October 1996
23 Economist 28 September 1996. On average, three-quarters of this figure is foreign currency exchange transactions and the rest is turnover in equities and government bonds.
24 K Ohmae The End of the Nation State: the Rise of Regional Economies, New York 1995 p12
25 Water op cit
26 Joyce Kolko, Restructuring the World Economy New York 1988
27 State against Markets: the limits of globalisation, London 1996 p202
28 Quoted in Erik Peterson, “Surrendering to Markets” in New Forces in the World Economy, London 1996 p271
29 Barnet and Cavanagh, op cit
30 Hirst and Thompson op cit p16
31 ibid p53
32 ibid p63
33 Robinson op cit p20