Capitalism: 10 years after
the ‘fall of Communism’
No. 4 — Winter-Spring 2000
The following is a transcript of a presentation given at the MWG’s Summer Educational in August 1999. It is intended as a contribution to an ongoing discussion on the capitalist economy today.
This presentation does not even begin to do this subject justice. It is an attempt to make a contribution, a discussion piece on some of the most politically important subjects of our time.
What is the balance sheet on the predicted consequences of the fall of the USSR and the Berlin Wall? If our program of a decade ago is compared to conditions today, how do our positions and those of the rest of the left stand the test of time? Do our politics and the positions of the left show Marxist foresight, or do they show a bad method, irrelevance or worse?
Logically, anyone calling himself or herself a communist would defend a “communist” nation against capitalism or imperialism. Which, I guess, excludes the International Socialists from the ranks of communists and from the world of logic. Most of us agreed — even the I.S. in some twisted illogical way — that the imperialists winning the Cold War over the Stalinists was not a good thing.
Speaking broadly, we were correct in recognizing the importance of these events, but were only partially correct on the consequences. We recognized it as a new period of imperialist exploitation but I think we underestimated the degree of the change. The last barriers to U.S. imperialism were coming down. It was the New World Order.
We were correct on the opportunities for imperialism, but we anticipated (not only the left, but the bourgeoisie as well) increased inter-imperialist rivalry. At the U.S. imperialists’ bidding in part, the Japanese government has engaged in an unprecedented — in world history — scale of Keynesian intervention in the economy.
For example, the unprecedented public works programs, corporate welfare, and making loans free. Despite this, the U.S. still constantly scolds Japan like a schoolchild, and the Japanese bourgeoisie barely whimpers a few complaints.
Who would have thought 10 years ago that the Japanese Prime Minister would say on April 28, 1999 “Our relations with the United States are the very foundation of Japanese foreign policy”? And. “My own perception of Japan-U.S. relations is that they are at their best and most stable since Japan opened its doors to the outside world.”
Ultimately there will, of course, be increased inter-imperialist rivalry leading to big crisis. There have been symptoms of it boiling for years. There are ongoing trade skirmishes. There are banana and marijuana wars involving the Caribbean and Europe, and increased trade sanctions against Europe for restrictions of hormone treated meat and other issues. Washington has been increasing its protectionist measures affecting many countries, such as restrictions on cheap steel from Russia and Brazil and cheap lamb from Australia and New Zealand.
But right now the overall character of inter-imperialist relations is more a formula of close, working relations rather than one of rivalry. This cooperation under U.S. leadership makes the analogy of comparing the current period to the one immediately preceding WWI, although in many ways correct, problematic at best. Following World War I, World War II, and the Cold War, the U.S. not only beat the workers’ states, they beat the world. They are for now completely dominant, with the acquiescence of the international bourgeoisie.
This is a period of U.S. imperialist hegemony. Even with the inevitable conflicts, busts and crisis of the near future, we must recognize U.S. military and economic hegemony. Most likely, no crises will challenge this position for the next few business cycles, with all of its ups and downs. U.S. dominance is here to stay even after the current economic bubble bursts.
The U.S. is so dominant it’s a problem for them. Kosovo showed that the U.S. is far to dominant for it’s own good, a problem for the U.S./world bourgeoisie. David Sanger, writing for the New York Times, puts it this way:
[Internationally] it becomes clear that America’s triple threat — the dollar, the Pentium III chip and the B-2 [particularly in the wake of Kosovo] — is now also its biggest diplomatic challenge. It may be a case of being too powerful for one’s own good….
[Government officials seem to agree that] fear of America’s widening lead has become the subtext of nearly every major conversation they hold around the world.
… [Washington’s] push for more open markets around the world is often viewed as nice ideological justification for speeding the pace at which more efficient American companies can drive their foreign competition into the ground. Meanwhile, the White House jumps when American companies complain that low-cost imports are hurting American workers…. No matter how it defends [its trade restrictions] as legal responses to “dumping,” from overseas it looks more like protectionism.
On top of that is puzzlement over the deliberately vague “Clinton Doctrine.” It doesn’t get much press in the United States, but everywhere else there is speculation over how far the Americans might extent the principles of Kosovo, intervening inside other nations’ borders to enforce “international values” of humanitarian treatment or human rights. (“America Finds It’s Lonely At the Top,” David E. Sanger, New York Times, July 18, 1999)
And in an article titled “On Globalization” Victor Perlo notes:
Business Week’s listing of the world’s 1,000 largest corporations shows the ascendance of U.S. imperialism over its allies — which are also rivals. Half of the 1,000 megacorps are American.
The market value of the U.S. corporations on the list, totaling $11.3 trillion, is more than double the total value of the next four countries’ corporations combined: Britain, Germany, Japan and France. In value, even of the top 20 corporations are American, as are nine of the top 10 profit makers. And most of the profits of the tenth, DaimlerChrysler, were made by Chrysler before it was taken over by the German company.
But five of the top 10 in companies’ sales are from the four other countries mentioned, and their total sales are virtually equal to those of the top five U.S. firms’ total. Taken together with the data on profits, this signifies that U.S. corporations have the highest rate of profit.
What does all this prove? First, that the widely accepted theory about the meaning of globalization of the world economy is nonsense: the idea that these corporations operate as world monsters without their countries of origin having any significance. Obviously, having a U.S. base provides a transnational with huge advantages.
Which doesn’t mean that U.S. corporations operate only in the United States. They are second to none in having foreign properties from which they gobble profits. Decisive is the connection between the transnational company and the U.S. military domination. Where U.S. armed forces penetrate and establish bases, American corporations, protected by the military, follow.
The technological superiority of the U.S. megacorps is also related to the vast resources devoted to the development of new U.S. weapons, and the exclusive availability of the relevant discoveries to U.S. corporations.
Equally important, U.S. megacorps realize a much higher rate of exploitation of labor than the domestic British, German, Japanese and French companies. American workers toil longer hours, have shorter vacations, lower pensions, less unemployment insurance and other social benefits of all kinds. The decisive factor here is the much smaller proportion of U.S. workers organized into trade unions, and the relative weakness of U.S. trade unions. This disadvantage is also reflected in the inadequate influence of the American working class on government policies.
Racism in the United States is acute and widespread. This enables the ruling class to enforce differentials to income in the workplace and in all other conditions of life, especially within the working class. Oppressed Blacks, Hispanics, etc., receive much lower wages than whites; poorer and segregated housing; low-grade education; inadequate health care; and terrible persecution by the police and the entire “justice” system…. (Victor Perlo, “On Globalization,” Political Affairs, July 1999)
The U.S. Economic “Miracle”
How could this decade-long expansion happen? Why was no one (including Marxists and bourgeois economists) able to anticipate it, especially since this would seem extremely unlikely given Marxist theory and the current historical era? How come the left in particular did not anticipate the U.S. economic boom? To the contrary Marxists in the U.S. were proclaiming crisis or collapse by long rehearsed rote.
Even the MWG recently said that the U.S. economy would fall victim to the Asian economic crisis, although we said maybe it could be postponed for a while (and it is indeed a possibility). But at least we recognize, unlike the rest of the left, for the need of serious economic study. And indeed, to be honest, we need to do more in-depth study of economic issues, including more detailed research on the rate of profit and its decline — or its the lack of decline, perhaps, where at times the advantages of U.S. dominance delays or reverse the decline.
The fact of a decade-long expansion a stubborn thing. What did everyone miss? Perhaps, first, the economic importance of the fall of the Soviet Bloc and the Berlin Wall was underestimated. It is certainly one of the rather exceptional factors that can explain the continued expansion.
Perhaps, next, we missed the importance — or the existence — of the hegemony of U.S. imperialism. It is one cause and effect of the turbo-driven economy, which then helps to further U.S. dominance.
A favorable convergence of other factors contributes as well.
Overproduction and a glut of imports is compensated for by high demand and “consumer confidence.” Businesses face underproduction, understaffing, and an inability to stock hot items. The following is from an article in the New York Times (Feb. 24, 1999):
Among the temporary factors [contributing to the economic boom, Greenspan] said, are the steep decline in oil prices and commodity prices generally. But even if those prices begin rising, the economy may prove less susceptible to inflation than it has been in the past, largely because companies are investing heavily in technology and cost-saving equipment, he said.
Unable to raise prices, and unwilling to pay higher wages, companies have had to cope by improving their productivity, or output per worker, he said. Several factions within the Fed have been debating for the last several years whether the United States is seeing a resurgence in productivity growth after nearly three decades of stagnation, and in his comments today Mr. Greenspan again weighed in on the side of those who think the improvement in productivity is part of a basic improvement in the country’s economic outlook.
“According to rough estimates, labor and capital productivity has risen significantly in the past five years,” Mr. Greenspan said. “It seems likely that the synergies of advances in laser, fiber optic, satellite and computer technologies have enlarged the pool of opportunities to achieve a rate of return above the cost of capital.”
Technology, he said, allows companies to be more nimble, ordering parts or raw materials only as needed, restraining costs and increasing production capacity faster than actual output has risen. The process of holding down costs and prices has become self-reinforcing, he said with workers no longer expecting big wage increases to make up for inflation.
But lest he be seen as taking his eye off the potential for inflation, Mr. Greenspan added that improved productivity would not keep the country from running short of workers if the economy continued to race along.
These economic conditions in the U.S. are completely impossible by all standards. Many exceptional factors have led to this historical junction, but to discount the results because of “lucky,” disparate causes misses the point. Keep in mind it was thought impossible that such a tight job market and massive consumer spending would be impossible without inflation a couple years ago.
Defining the current period
The U.S. economy is not in a new paradigm. All of the rules have not changed. Winter is coming. However, even if the 10 years of growth is the result of many, many exceptional factors and a very anomalous situation, that does not address the situation at all adequately. We are truly in the era of U.S. economic and military (imperialist) hegemony, and maybe therefore, some of our positions must change, starting with some economic positions. The U.S. is currently in economic and military leadership overall for world imperialism.
This is period of accumulation for the capitalists. It is therefore first and foremost a period of accumulation for U.S. imperialism.
U.S. imperialism has weathered the Asian crises very well so far. It of course basically caused the crisis in the first place with the Clinton/Rubin plan of free (to U.S. imperialism) trade, open (to the U.S.) markets and rapid “globalization.” There was a huge explosion of huge investments in so called developing and emerging markets.
Then after the start of the crises, the Clinton/Rubin team demands high interest rates and major cuts in Government spending as prerequisites for American-backed aid from the IMF and helped lead affected nations into high unemployment and severe recession.
More foreign policymaking has, under Clinton, shifted away from the State Department and to the Treasury.
The resurgent working class — the American working class in particular — has many lessons to learn before it can overthrow this beast. Many troubles lie on the horizon for the bourgeoisie, even potential disasters for them, but nothing immediate that will challenge their rule. I would go so far as to say that we should only use the term “death agony of capitalism” in a broad sense, not casually.