The US as Superintendent of Global Capitalism: A Response by Leo Panitch, Sam Gindin

12 June 2013 — New Left Project

We very much appreciate these generous, perceptive and comradely comments on our book and we hope our response will contribute to continued discussions and further research.

It is useful to begin with the difficult question of how to define and date ‘global capitalism’.  As we tried to make clear in the opening pages of the book, we see capitalist globalization as a long historical process, the product of an intrinsic tendency within capitalism.  This process, however, came across many barriers and was subject to severe interruptions.  Insofar as the Communist Manifesto already spoke in terms of capitalist ‘intercourse in every direction’ and especially ‘universal inter-dependence’ among capitalist nations, this tendency was only realised in the final decades of the 20th century.  The problem with world systems theory’s 500 year sweep is that it suffers from what in an earlier critique of Giovanni Arrighi we referred to as the ‘myopia of the macro’.[1]  The studies that Göran Therborn cites on the world economy since the sixteenth century are indeed very rich.  But insofar as we are looking at the broad instantiation of capitalist social relations this was not very far advanced, apart from the British case, even within most Europe states until the second half of the 19th century.[2]

This also relates to why, in Chapter One, we quote so extensively Paul Reinsch’s perception at the beginning of the 20th century that foreign direct investment in everything from mines to manufacturing was leading to ‘a far more intimate connection with the territory and the population than… purely commercial dealings.’  In contrast with the earlier eras of colonial plunder and maritime trade among commercial entrepôts, the type of colonial relations established in the late 19th century increasingly involved trying to ensure not only that ‘title in property and land must be secure’ but also that ‘orderly methods of administration, a sound system of banking and currency’ would be established as ‘the perquisites to a safe and paying investment in foreign or colonial regions.’[3]  What Reinsch called ‘the pressure for extended political control’ is what we identify as involving a new type of imperialism, one we conceptualise in terms of the internationalisation of the state, the process through which new imperial states (and later other capitalist states) ‘came to accept a certain responsibility for reproducing capitalism internationally.’[4]

Nevertheless, our concern is to show the difference between the era of the Open Door, in which inter-imperial rivalries were marked by exclusive capitalist ‘spheres of influence’ (to which the US mainly wanted access), and the postwar era where the American imperial project was defined above all by ending such demarcations and making the world open to foreign capital investment in general.  The question of how it came to be that the American state in particular came to bear so much responsibility for capital in general is indeed the central concern of our book.  But while this did lead us to examine the importance of capitalism’s globalising tendencies as they developed ‘in and from’ the US (as Therborn puts it), this did not mean ignoring other states or capitalist classes.  On the contrary, we were concerned with how and why other sovereign states became imbricated with the informal American empire through their own sponsorship of capitalist accumulation and social relations.  And this applies not just to Europe and Japan in the postwar era, but, as we show at length in Chapter 11, to China as well as other states of the ‘developing world’ in the contemporary era.

The initiative for this, we repeatedly emphasise, did not necessarily come from the US, but also from state elites and capitalist classes who facilitated the making of global capitalism within their own societies via integration with the informal American empire (‘imperialism by invitation’).  Of course, the degree of integration has been much greater in some states than others, but as Jeremy Green’s piece shows in the case of the UK, this has as at least as much to do with domestic actors as US pressures—such as in this case certain merchant bankers in the City of London taking the initiative to overcome barriers to further integration by switching their allegiance from Sterling to the dollar through the creation of the Eurodollar market in the 1950s. 

This brings us to the question of how to theorise the relationship between state elites and capitalist classes.  We insist on the importance of speaking in terms of the differentiation rather than theseparation between the political and economic under capitalism precisely because we define the relative autonomy of capitalist states as

not being unconnected to capitalist classes, but rather as having autonomous capacities to act on behalf of the system as a whole… But what these states can autonomously do, or do in response to societal pressures, is ultimately limited by their dependence on the success of capital accumulation.  It is above all in this sense that their autonomy is only relative.[5]

The reason we do not offer a more elaborated purely theoretical definition is that the extent of the development of such capacities and their institutionalisation is not abstractly given but is historically contingent.  And the societal pressures, while structurally identifiable in class terms, vary over time.  As Poulantzas properly put it, when asked by Miliband how relative was this autonomy: ‘the degree, the extent, the forms, etc….  of the relative autonomy of the state can only be examined …with reference to a given capitalist state, and to the precise conjuncture of the class struggle.’[6] It is precisely the operationalisation of such an approach to the relative autonomy of the state that defines our book, as we try to trace and explain the historical development of American state capacities and account for their exercise in specific conjunctures.

This is obviously highly relevant to the concern that Bastian van Apeldoorn and Naná de Graffhave with explaining state agency in terms of the ‘social backgrounds, biographies and career patterns’ of the individuals in command of state apparatuses.  This is a narrower conception than the ‘social power relations’ in which ‘the state apparatuses themselves are embedded’—and a poorer one, in our view.  That there is a common ‘worldview’ shared by leading state and corporate officials almost goes without saying, and that US policy makers ‘share an outlook’ broadly ‘in line’ with capitalists is obviously true.  But common capitalist interests cannot be reduced to the demands of certain business associations; how common capitalist class interests get formed, and the state’s role in forming them, is much more complex than this.  To say policy reflects the ‘general interests of transnationally oriented capital’ does not take us much further, and has the additional problem, an old one in radical writing on the US, of drawing too firmly the boundaries between class fractions.  The need to respond to the specific problems as they arise cannot depend on the central agency of a ‘class conscious corporate elite’, especially in light of ‘the diversity of capitalist forces’, which van Apeldoorn and de Graff also are right to mention. 

Our account of the Gramm-Leach-Bliley Act of 1999, which Bob Jessop takes as his case in point, shows that this piece of legislation was the culmination of a long regulatory process to facilitate the development of derivative markets.  In the framing of the 1999 legislation, Senator Gramm may have been acting at the behest of specific capitalists; and Brooksley Born, head of the FDIC, evinced a high degree of autonomy by calling for derivative controls that these capitalists vehemently opposed.  But what was paramount was the concern of the Treasury’s Larry Summers and of the Fed’s Alan Greenspan that new regulations would create enormous ‘legal uncertainty’ with the regard to trillions of dollars in existing derivative contracts.  It would be difficult to explain the different positions taken by Summers and Born in the above example in terms of their social backgrounds and personal biographies, and their career patterns were more determined by their actions inside than outside the state.  Summers certainly had more lucrative speaking engagements while he was out of office, but this was not due to the ‘corporate elite networks’ in which he was embedded (or even, in his case, academic elite networks).  It was rather due to the way he played the role of managing global capitalism inside the powerful agency of the US Treasury, which is itself institutionally organised in such a way as to facilitate capital accumulation, and to express this as being in the general interest by virtue of the whole social order’s dependence on successful accumulation.

It was on this complex terrain of varying relative autonomies on the field of the American state that the compromises represented by the 1999 legislation were struck.  Even if this led to greater financial volatility, it was explicitly recognised by the Treasury at the time that engaging in ‘failure prevention’ in financial markets could have serious disruptive effects which might undermine the making of global capitalism in the interests of capital in general.  Given the structural importance of derivative contracts, especially in currency markets and the networks of integrated global production, there is understandable concern inside capitalist states themselves about the effect of new regulatory rules for them on capital in general.  (This is also seen today when US MNCs like Caterpillar and Apple, joined by German exporters, complain as loudly as financial institutions of the costs and dysfunctionality of new taxes on international finance and new rules for derivative regulation).[7]  Bob Jessop’s excellent point on the ‘changing forms of money’ (which already at the time of the Volcker shock made the simplistic measures of ‘money supply’ in monetarist theories irrelevant to the practice of the Fed) also need to be put in this context.  Speculation and risk taking have a function in the circuits of capital that link global finance and production in ways that are almost impossible to disentangle.  That this produces dysfunctions which lead to crises is what Marxists call a contradiction.  Of course, as the final point in Jeremy Green’s piece makes clear, we also stress the contradictions produced by the role that credit increasingly has come to play in working class consumption.

This relates to the concern that placing states at the center of the making of global capitalism ‘leaves out the dynamics of capital and its interaction with states’, as Therborn puts it; while Jessop thinks we may give ‘the impression that failure is a problem of institutional design or poor strategy rather than more basic aspects of a multi-faceted capital relation’.  This concern is put less abstractly by van Apeldoorn and de Graff who deploy the notion of ‘over-accumulation’ to explain American capital’s ‘need to invest its surpluses abroad’.  If this is the kind of explanation of the basic facets of capitalism’s dynamic that are being looked for, we are unrepentant.  The Open Door’s over-accumulation explanation for American investment abroad was as misleading in its own time as it is today.  We cannot repeat our evidence here, but we can at least quote again the judgments of Bruce Cumings and Gabriel Kolko on the disproportionate significance the over-accumulation thesis gave to US expansion in Central America at a time when California was barely yet a site of capital accumulation.  As Cumings put it, from 1890 to 1940 ‘Americans peopled and filled in the national territory.  At the same time the US became the leading industrial power in the world… the dominant tendency was expansion to the coast and exploitation of a vast and relatively new market.’  In this context, as Kolko pointed out long ago, the Open Door interpretation implied ‘a transcendental false consciousness’ whereby capital and the state ‘failed to perceive where it was their main gains were to be made.’[8]

Our book also demonstrates that it was above all US capital accumulation at home that was crucially significant in terms of laying the material foundations of capitalist globalisation in the immediate post-World War Two era, and that as US capital expanded abroad through the following decades it did so alongside unprecedented accumulation at home.  We similarly demonstrate that the crisis of the 1970s was not one of over-accumulation, but was rather due to a profit squeeze and fiscal crisis produced by class struggles from below as registered in rising wages, social expenditures and inflation.  To ascribe the vast expansion of US FDI in the decades after the 1970s to over-accumulation at home, at a time when there were even larger flows of FDI into the US, simply doesn’t make sense to us.

Although Apeldoorn and de Graff do not do this, it is commonplace among many Marxists economists to explain all capitalist crises in terms of over-accumulation.  We explicitly reject any singular trans-historical theory of capitalist crises; and we show that their severity cannot be understood apart from what states are able (or not able) to do to contain them.[9]

Göran Therborn chides us for our lament that the weakness of alternatives to capitalism, even in the face of severe policies of austerity, has much to do with the fact that consumerism became the ‘main legacy of working-class struggles in the twentieth century’.  It should be noted that we say this against the backdrop of the extensive analysis in the book that shows that worker’s envelopment in increasing commodification—not primarily ‘decommodification’ as misleading theories of the welfare state suggest—were achieved in good part through their own class struggles, alongside the achievement of full employment and collective social services; and at the same time how the contradictions of ‘full employment capitalism’ and the Keynesian welfare state laid the foundations for neoliberalism.  How to take up again the expansion of collective services in ways that build capacities to transcend capitalism is, as we suggest in our conclusion, the key strategic question of the early twenty-first century.

To be sure, as all these insightful comments rightly note, much further research is needed, not least on the role of state coercive apparatuses, and especially American imperial ones, which would certainly come into play in face of the development of renewed socialist capacities, just they repeatedly did in the twentieth century.  Our focus on the state economic apparatuses reflected the extensive research already done in respect to the military and security apparatuses of US Empire.  We hope that our book will help focus future research towards inquiring into how these apparatuses do not merely serve ‘to force and keep markets open to American capital’ but play a much broader role of trying to ‘keep order’ in a chaotic and exploitative capitalist world.  The way the old inter-imperial rivalries were transcended through the integration of military and security apparatuses, as well as economic ones, under the rubric of the American empire is certainly an important part of any historical materialist account of the making of global capitalism.  One of the most significant questions today is how much more difficult it may prove for the American empire to secure the integration of the leading developing capitalist states of the G20—economically, politically, militarily, and culturally—than proved to be the case with the advanced capitalist states of the G7.  We hope our book will be of use to those pursuing further historical materialist research into this, as well as those thinking through its strategic implications.

This article concludes our series, Global Capitalism and the State.

Leo Panitch is editor of the Socialist Register and distinguished research professor at York University, Canada.

Sam Gindin is the former Research Director of the Canadian Autoworkers Union and Packer Visiting Chair in Social Justice at York University.


[1] Leo Panitch, ‘Giovanni Arrighi in Beijing: An Alternative to Capitalism?,’ Historical Materialism18:1, 2010.

[2] This was of course Robert Brenner’s point in his critique of world systems theory almost four decades ago (‘The Origins of Capitalist Development: A Critique of Neo-Smithian Marxism,’ New Left Review I, 104, 1977).  We also credit Hannes Lacher for showing that most European states really only actively fostered capitalist development within their own societies in the latter half of the 19th century (Beyond Globalization: Capitalism, Territoriality and the International Relations of Modernity, London: Routledge, 2006). 

[3] For the quotes from Reinsch see The Making of Global Capitalism, pp. 37-38.

[4] The Making of Global Capitalism, p. 4.

[5] Ibid.

[6] ‘The Capitalist State: A Reply to Laclau and Mouffe,’ New Left Review I, 95, 1976, p. 72.

[7] See James Wilson, ‘German exporters attack plans for Tobin tax,’ Financial Times, 9 May, 2013, as well as Dawn Kopecki and Asjylyn Loder, ‘Caterpillar, Duke, Apple Are Winners in Frank Derivatives Plan,’ Bloomberg, 6 October, 2009.

[8] These quotes are to be found in The Making of Global Capitalism, p. 349, n. 17, and p. 344, n. 16.

[9] See Leo Panitch and Sam Gindin, ‘Capitalist crises and the crisis this time,’ in the Socialist Register 2011.

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