Endgame? (2024)

Book Review from the September 2024 issue of the Socialist Standard

Endgame. Economic Nationalism and Global Decline. By Jamie Merchant. Reaktion Books. 2004.

Is globalisation coming to an end and capitalism returning to a period like that between the two world wars of the last century when economic nationalism and beggar-thy-neighbour policies were the norm? Merchant makes out a case for this, starting from basically Marxian premises.

He describes how, from the point of view of actual production, the world is one system involving workers everywhere:

‘Pick a typical product of contemporary globalization — say a laptop computer. The laptop is sold for money by the company that owns it only as the end result of a transnational sequence of extraction, processing, manufacturing, assembly, transportation, and distribution, involving thousands of laborers doing different kinds of work for a range of contractors across dozens of countries’ (pp. 125-6).

In the course of such ‘planetary assemblages’ the world working class, as a class, produce a pool of surplus value from which firms and states compete to draw a share as profits. The profits of capitalist firms do not depend on how much surplus value its workers might be said to produce; in fact some firms, as those in the inflated financial sector, don’t produce any but are very successful in capturing some. The profits a firm makes depends on how well it is organised to draw profits from the world pool of surplus. In this, firms are helped by states.

‘National competition,’ Merchant writes, ‘is competition over the global surplus product. Monetary policies, tax laws, corporate subsidies and trade agreements are some of the measures states take to assist their national corporations in raising profitability, that is, in capturing more of this global surplus’ (p. 98).

He defines ‘globalisation’ as the period when global production, and so the pool of global surplus value, was expanding. The governments of the leading capitalist states favoured the liberalisation of world trade by abolishing or lowering tariff barriers as they believed that this would lead to world trade expanding even more.

Merchant’s basic thesis is that this period is coming to an end because the continuing mechanisation imposed by competition has led to a fall in the rate of profit, resulting in ‘the global pool of surplus value available for redistribution as profits shrink[ing] relative to total capital invested worldwide’ (pp. 153-4).

Competition to capture profits has become more intense — more of a zero-sum game — and states are being compelled to intervene more actively to try to steer profits to enterprises within their boundaries. ‘Global productivity growth’, he writes, ‘appears to be over for the foreseeable future. The result is likely to be a kind of stasis state in which national governments must take ever more extreme measures to compensate for the paralysis of private capitalism’ (p.134). Hence the rise of economic nationalism and of parties advocating ‘national sovereignty’.

Slow productivity growth and slower expansion of world production are plausible explanations for the observable move away from globalisation, as so-called ‘neo-liberalism’ on a world scale, and towards economic nationalism (from governments subsidising selected enterprises as supposed engines of growth to the rise of nationalist and nativist political parties). Whether this is the endgame for capitalism is another matter.

In the final chapter Merchant seems to envisage capitalism being overthrown and the wages system abolished by spontaneous mass rioting. That’s another matter too.

Adam Buick

Germany, the Danube and Rumania (1939)

From the October 1939 issue of the Socialist Standard 

Rumania is in the picture just now and we have been informed that she would like to be our ally, in spite of the pressure Germany is exerting to induce King Carol to link up with the Axis

On January 16th last, according to the Economist (April 29th), M. Gafencu, Rumanian Minister for Foreign Affairs, was present at a meeting held in Galatz by the National Re-generation Society. In his speech he referred to Rumania’s interest in the Danube, for recently this time-honoured river and artery of Europe had attracted the attention of politicians and economists in all the countries through which it flows, and not least Rumania. M. Gafencu said that the Rumanian Danube must serve as a show-window turned towards the East and the Black Sea, and that this fact placed certain duties upon the shoulders of Rumania.

The importance of the Danube has been increased lately by various plans for canals connected with its upper and lower reaches. On May 11th, 1931, the German Government promulgated a law for the construction of the Rhine-Main-Kelheim (Danube) canal. This canal, which is to be finished in 1945, forms a part of the German economic campaign, and the Rumanian Press talks of Baghdad as the goal towards which it is aimed. It will carry vessels up to 1,200 tons.

On November 19th, 1938, a Convention was signed between Germany and Czecho-Slovakia for the construction of another canal from Kosel, on the Oder, through Moravska Ostrana to the Danube above Bratislava. For several years the Rumanian Government has had in its archives plans for the construction of a canal to unite, by a straight line, the Danubian port of Cernavoda with Constantza.

The voyage of cargo steamers would be reduced by nearly 200 miles by loading at Constanza instead of at Braila or Galatz. Below Braila the average depth of the river is about 24 feet, so that it is navigable for sea-going vessels. Higher up the depth decreases.

The Government is at present studying this proposal.

The most far-reaching proposal which, if it were ever carried out, would radically affect the Balkan countries, is for a waterway running from the Timok river, a Danubian tributary below Belgrade, and by the Nishava to Nish, thence down the River Morava to the River Vardar and finally to the Mediterranean at Salonika. This canal would shorten the goods route from Central Europe to Salonika by 900 miles. It would, of course, kill the lower Danube ports of Braila, Galatz and Sulind. It is interesting to recall that when the Czecho-Slovakian business was agitating the public mind, Mr. Walter Runciman was sent by the Government to make certain representations—he is in the shipping business.

Germany is aiming at connecting the Rhine and the Danube by means of a large waterway; this, she calculates, would enable her to tap all the resources of Central Europe, and if she could also succeed in getting control of the proposed canal to Salonika she would, in addition, be in a position to play a strong hand politically in the Mediterranean.

Dr. Schacht, the German Finance Minister, advocated intensive industrialisation as the best means of solving Germany’s post-war economic problems, and this immediately brought him up against Germany’s shortage of raw materials and the question of currency.

A nation faces a difficulty if it launches into intensive industrialisation without sufficient raw materials in its own territory and without adequate reserves of capital. Raw materials must be imported and paid for—in foreign currency. Barbara Ward, in “The International Share-out,” states in this connection, “This is not a difficult transaction if the industrialised country is able to sell goods abroad in large enough quantities to create a favourable balance of trade, or if it has enough capital to invest overseas and receive interest in the shape of raw materials or currency.” The situation for the German capitalists was doubly difficult. The post-war years were years of growing economic nationalism, when every nation was engaged in a bitter struggle to produce and sell goods rather than to buy them, and Germany found it more and more difficult to place her manufactures. And the war of 1914-1918 and the inflation had wiped out Germany’s capital reserves. She was herself a debtor country in a world which refused to take her goods as service on her debt, and demanded that the transaction be carried out in gold. Behind the high tariff barriers of America and France the gold silted up, and Dr. Schacht felt that Germany’s position was extremely precarious. Therefore, in 1926, he began to advocate a colonial policy, not because he believed colonial raw materials to be a solution of Germany’s industrial problems, but because he argued that the return of the Colonies might ease the strain on Germany’s currency. Germany’s difficulty, so his argument might have run, is to find enough foreign currency to buy the essentials, such as iron and tin and zinc, or any other important metal which at present was being bought from foreign countries with foreign currency. If Colonies were returned to us we could buy these primary products with our own money and set free a corresponding amount of our scanty supplies of foreign currency to buy more of the essential raw materials, which are only to be found in the territories of foreign sovereign States.

Germany’s revival of the Colonial question was not due to the traditional policy of supplies and markets, but to Dr. Schacht’s thesis of underpinning the German mark. Germany’s exchange position was rendered much worse by the international slump. 1929 brought an end to American lending and the retreat of panic-stricken nations behind tariff walls. Germany’s export trade was damaged catastrophically. When Hitler came to power in 1933 he was faced with the problem of some eight million unemployed. He sought a way out in a policy of controlled inflation and internal recovery. The men were brought back to work, but the position in regard to foreign currency grew worse. Germany’s internal boom, coming at a time when the rest of the world was still wallowing in the trough of economic depression, cut German industry off still further from the general flow of world trade. Her export trade, nevertheless, was a vital necessity, for without it she could not secure foreign currency, and without foreign currency she could not purchase essential materials.

During the first two years the problem was simplified by conditions in the world market of primary products. There had been a general fall in prices, and for a considerable period the prices of most raw materials were ludicrously low. Germany could obtain supplies at this low rate, and she did not feel the pinch of her currency shortage too severely. In 1935 the position changed. Slowly the markets of the world recovered. Great Britain, France, and the United States had all embarked on vast armament programmes. Their needs came into direct collision with Germany’s, and as the prices of the primary products rose and the scramble for them increased, Germany’s position grew more and more unfavourable. She found it difficult to compete in the open market, and other Powers were not so ready to conclude “clearing” agreements with her. They preferred free multilateral trade.

Germany might at this juncture have inflated her currency. Such a step would have lowered costs and helped the export trade to compete in foreign markets. Or she might have made a determined effort to secure a foreign loan. She did neither. Memories of the 1923 inflation were too vivid for the first step. As for the second, the Nazis claimed to have come to power in order to redeem Germany from “the slavery of foreign Jewish finance capital.”

Their solution of the problem was the “Four Years’ Plan” and the drive for self-sufficiency. The aim of this total mobilization of the country’s resources was said to be to reduce its dependence upon foreign supplies, and it is significant that the Colonial question became a recurrent refrain in German propaganda about the same time as the Four Year Plan was launched.

“If critics protest,” says Miss Ward, “that the game is not worth the candle, because the Colonies do not produce Germany’s basic needs, the Germans reply that, although the Colonies do not produce iron or copper bauxite, or cotton or wool, they do produce, and could be made to produce, more of certain other materials, which Germany must at present buy with foreign exchange. The recovery of the Colonies would thus set free a certain amount of foreign currency, which could be used to buy the really essential metals elsewhere. If after this critics still protest that the sum saved is too small to be weighed against the risks of the transaction, the Germans can reply that if they find it worth while to legislate about waste tooth-paste containers, colonies are not too insignificant to be of interest to them.”

Germany’s moves in Spain can be understood if we take the above into consideration. She was searching for raw materials she could not afford to buy. Every time a crisis has developed she has taken advantage of the stagnation in trade that resulted to bring off a barter agreement. When the Germans were marching into Czecho-Slovakia, Hitler was making a deal with the Argentine, bartering railway material for wheat. Airplanes obtained as a result of the seizure of Czechoslovakia were offered to France in exchange for badly-needed foreign currency.

Enough has been said to show something of what is involved in the struggle.

Charles Lestor

Victory for what? (1985)

From the May 1985 issue of the Socialist Standard

  It is now fairly commonplace to read that the First World War was a useless massacre in which millions died for nothing. This is much less commonly admitted in the case of the Second World War, perhaps because the war time propaganda which billed it as a "war to defend democracy" has not yet worn off. Yet the Second World War was just as much a business war as the First World War. in that its primary cause too is to be sought in a clash of economic interest over markets, raw materials, trade routes and investment outlets between two rival blocs of imperialist powers.

  This was well brought out in a carefully-researched book written in France during the war, but not published until 1945. by Henri Claude entitled De la crise économique à la guerre mondiale (From the Economic Crisis to the World War) After showing how the 1930s crisis had led to the division of capitalist countries into two groups pursuing different economic and trading policies ("liberalism" and "autarky") depending on whether or not they had access to gold (as a means of international payment) and raw materials. Claude goes on:

The economic crisis thus led to an opposition between two antagonistic forms of capitalism: liberal capitalism and authoritarian capitalism. This antagonism has been too often seen as "ideological" for us not to show that in reality it was solely a conflict of material interests.

What, in fact, was the real meaning of this world liberalism?

It had a very precise meaning at the beginning of the industrial era when England began to export its manufactured products. As England was at this time the only industrial nation all that was required for it to find external outlets was that no customs barrier should "artificially" stop at frontiers its products whose costs of production were lower than those of the rest of the world. Originally liberalism meant, crudely: "The world for English products". "Economic liberalism" thus expressed perfectly the interest of British industry. Later, when England was forced to struggle against the industries which came into being nearly everywhere, it partly gave up this "liberalism", but did not however cease to demand its application by the others; for the fate of its industry, trade and banks depended on the freedom which the other nations granted it. The wealth of the City remained linked to the free play of supply and demand, to the open market, to world trade. Everything that restricted the freedom of exports and the commercial and financial operations of the City caused it a serious prejudice. The policy of autarky which banned its commercial and financial expansion into certain zones and which fixed prices without paying attention to “world” prices was thus its most redoubtable enemy.

What would become of the London market if the appetite for autarky was to gobble up the major part of the planet? Thus one of the members of the Stock Exchange. Mr Maguire, rightly insisted, in a speech at the Bankers’ Institute, on the necessity, for England's interests, of maintaining as far as possible the freedom of the market in other countries. "The whole history of the Stock Exchange", he declared, “is tied to the principle of the maintenance of the free and open market where the law of supply and demand operates without hindrance".

The United States also felt the same need for liberalism amongst others. The mass production of manufactured goods and the extremely developed industrialisation of its agriculture allowed it to beat all its competitors on the world market, provided that this market was free. It therefore considered all measures of economic nationalism taken by the other nations, and in particular autarkic measures, as an obstacle which hindered it from selling to the extent of its productive capacity and of its low production costs. "Freedom of trade", President Roosevelt was to say. "is essential to our economic life. With the victory of totalitarian conceptions the system on which American society is based would be compromised" (speech of 28 May 1941, Le Temps, 29 May 1941). This did not prevent it practising a rigorous protectionist policy to defend its own market, but “this contradiction" in no way goes against the logic of imperialism which seeks to push aside all that obstructs it externally, without ever making any self-criticism.

Neither could the US accept the system of bi-lateral agreements for, unlike Germany, it was an exporter of both raw materials and manufactured products, which ruled out it concluding compensation agreements with the agricultural countries. It had to be able to sell manufactured goods to the agricultural countries and agricultural products to the industrial countries. It is thus that is to be explained the policy of Cordell Hull (US Secretary of State) in favour of commercial treaties signed on the basis of "economic liberalism" and of what is called "the most favoured nation clause", a policy which was the exact opposite of Germany’s and which openly worked against it. In fact the American leaders did not fail to underline the opposition and permanent conflict between their commercial methods and interests and those of Germany. In January 1939 Mr Landon. former Republican presidential candidate, noted that an intense struggle "to the death" was going on between the democracies and the totalitarian countries. "It is", he said, "an economic war based on new methods of economic penetration" (Information, 24 January 1939). On 10 April 1939 a Havas News agency wire from Washington was even more explicit:

  The disastrous economic and social consequences of the extension of the zone of influence of autarkic commercial methods are insisted upon here. According to the White House and the State Department, the whole world is rapidly heading towards a conflict between two irreconcilable economic systems. In presenting the problem from its economic angle, the White House spokesmen wish to make American public opinion aware that the menace, pointed out many times by Mr Roosevelt and again on Saturday evening by Mr Cordell Hull, is ceasing to be remote and that the time could rapidly come when the whole economic and social system of the United States would be endangered

England and the United States thus temporarily had the same industrial, commercial and financial interest to fight autarkic imperialism.

All the other countries whose financial power was based on gold necessarily found themselves on the same side of the barricade. Common financial interests were the real cement that bound the democracies together and not. as some would have us believe, the fact that they had the same political regimes.

Statements by statesmen and economists on the "war aims" of the Allies afterwards provided a brilliant proof of this. The British Prime Minister, Chamberlain, declared at the beginning of the hostilities in a speech on the economic reconstruction of the world after the war that full freedom of trade must be restored and that autarky and the methods arising from it must disappear from old Europe. A few hours after this speech. Mr Cordell Hull declared on behalf of America that he was in full agreement with Mr Chamberlain (L'Oeuvre, 2 February 1940). Commenting on this speech the Tribune de Lausanne wrote: "One can thus reasonably hope that autarky, which is an instrument of combat, will be cast aside along with the canons, the tanks and the machine-guns when the war economy gives way to the peace economy” (quoted in Le Temps, 4 February 1940). At the same moment, Paul Reynaud (French Prime Minister) declared at the opening session of the Société d'Economie Politique that the ultimate war aim of France and Great Britain was a return to liberalism, particularly economic liberalism (Le Temps, 7 February 1940).

The great financial expert. Mr T. Jenny, wrote a few days later:

   In practice only one thing could threaten — temporarily — the value of gold. That would be a development leading all countries to retreat behind insurmountable barriers, reducing exchanges between nations to the rudimentary system of barter, where there would no longer be any need for an international means of payment because there would no longer be international payments properly so-called. But are not the Allies fighting precisely to spare the world this return to barbarism, to allow peaceful exchanges between the various countries to resume their growth tomorrow? (Le Temps, 12 February 1940).

  If France and England were thus making war to maintain their financial power, it is quite obvious that the United States, whose stock of gold had been increasing unceasingly since the outbreak of the war, would be led to line up beside them. Commenting on the growth of this stock of gold in May 1940 the New York Times wrote: "Many American bankers and economists have already announced that this enormous metal holding will become useless if the totalitarian dictators are victorious" (quoted in Le Petit Purisien, 24 May 1940).

During the war the financial and price stabilisation methods, similar to the totalitarian ones, proposed by the economist Keynes and Major Attlee were rejected as "contrary to the very principles for which the Allies are fighting" (statement by Sir Robert Kinderley. Governor of the Bank of England, Le Temps, 15 January 1940) and as "not only alienating from the war those who were supporting His Majesty's Government by their loyal effort" but also as "tending to exclude any possibility of US intervention" (statement by the Chancellor of the Exchequer. Sir J. Simon. 25 August 1940).

The nature of the links which united the Western democracies against the totalitarian States can thus be clearly seen.

On the other hand, Germany, Italy and Japan were in the same camp because these countries found themselves facing the same economic obstacles. The creation of the Asiatic Bloc and of the European Autarkic Bloc had the same irreductable opponents: England and the United States.

Also, Germany, Japan and Italy were linked by common methods. The mark, the yen and the lira had the same common enemy in currencies based on gold and not subject to exchange control. Germany, Italy and Japan had the same commercial and financial interest to reduce, by extending the autarkic areas, the zones where the pound and the dollar reigned; for the capital which had accumulated in the hands of German. Italian and Japanese industrialists from public works, rearmament and the production of substitutes had no value and could only be invested within the limits of the autarkic areas. Hence the necessity for capital called "national" to extend the space where it kept its value to the detriment, evidently, of capital called "international", i.e.. foreign capital based on currencies and gold.

The capitalist world thus found itself divided into two blocs whose commercial and financial interests and whose methods of expansion were constantly coming into opposition on the world's markets. As a report by the Economic Committee of the League of Nations noted in 1938:

  Efforts to penetrate export markets have contributed to accentuating the contrast between the commercial system based on a free currency and the commercial system based on a controlled currency By the former is to be understood the system in which the money received in payment for exports can be freely employed and in particular can be used for purchases in third countries. By the second, on the other hand, is to be understood the system in which the foreign currencies received by traders are blocked and can only be employed for purchases in the countries to which the exports went. The Committee is of the view that everything should be done to reduce the clashes between the countries with a free currency and those with a managed economy.

It is this split in the capitalist world, this antagonism between forms of expansion, methods of financing and monetary conceptions which, superimposed on the classic struggle for markets, distinguishes the Second from the First World War.

In 1914 German capitalism and English capitalism were not only of the same rank and nature; they wore the same clothes. Mr Bethman-Holweg dressed the same way as Lord Grey.

But while in 1938 Mr Eden's elegance was still very 1900ish, German imperialism wore a brown shirt and boots. This difference in dress revealed the break in the unity of the capitalist world brought about by the economic crisis of 1929. While the Second World War was, like the First, a consequence of the necessity for capitalism in general to find "external" markets and for each imperialism in particular to expand at the expense of its competitors, this fundamental struggle was doubled this time by secondary conflicts which gave to this war a particular face and features: struggles of gold against barter, of secured currencies against controlled currencies, of the free market against autarky, of "international" finance capital against "national" capital, the antagonism was everywhere, in the expansionism as well as in the forms of expansion.

The essence of the conflict was thus economic, and nothing but economic. It did not result at all from the difference of political institutions, any more than the alliances resulted from the similarity of regimes.

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  It only remains to add that, although the Allies' original "war aim" of restoring economic liberalism on the world market ceased to be so frankly proclaimed as the war dragged on as it had been by the British and French Prime Ministers in 1940 (after all, restoring world economic arrangements which benefited the capitalists of the Allied powers was hardly an issue on which to appeal to people to kill and get killed), it nevertheless remained the Allies' over-riding reason for wishing to see the defeat of Germany and Japan. Plans for the post-war reconstruction of liberal capitalist trading and financial arrangements were discussed from as early as 1941, even if out of the limelight. These discussions culminated in a Conference held in Bretton Woods, in New Hampshire. in July 1944 at which the IMF and the World Bank were set up as the main institutions of a post-war liberal international payments system to be based on currencies tied to gold at a fixed rate. The outlawing of the "autarkic" trading practices of pre-war German and Japanese imperialisms was confirmed in 1947 with the drawing up of the General Agreement on Tariffs and Trade (GATT).

  Thus was ensured the continued domination of the world by the capitalist powers which benefited from liberal world economic arrangements, and in particular American imperialism. However, in allying themselves with a power which practised the same economic and political methods as the German and Japanese enemy, American, British and French imperialism conjured up another challenger to their domination of the world: state capitalist Russia, which obtained as its war prize an Empire in Eastern Europe. So the struggle for world domination between "the old and fatter bandits". and their younger and more vigorous rivals continued as it will for as long as capitalism is allowed to last.

Letter: Alternative to market (1993)

Letter to the Editors from the August 1993 issue of the Socialist Standard

Dear Editors,

In your review of David Ramsay Steele's book From Marx to Mises (June issue), you mention his citation of a non-market, anti-centralist model of society, that is “anarcho-communism". You seem to accept his view that lack of central planning leads to local autarky and that anarchist communists advocate this. This is certainly not the case. We believe that much can be decided on a local level through a system of neighbourhood and workplace councils, but that there is a need for coordination of areas on a regional basis, right on up to a global level—to determine what is produced and how much, for example, to satisfy the needs of the population of the whole world.

In the same issue you ask if “anarcho-communists feel comfortable being grouped with these people” (that is people like Ayn Rand etc). Well, the answer is, we do not. We in the Anarchist Communist Federation have consistently argued that anarchism is based on class-struggle, and as a movement had its origins in the First International, a working class organisation. We have always dismissed descriptions of Ayn Rand. Tolstoy. Stirner and so on as “anarchist” (descriptions which they never used themselves) as inaccurate and misleading.

Ron Allen

London E1

Reply:

Glad to see you agree with us that the alternative to the market is not some impossible return to local self-sufficiency but common ownership with real democracy local to global. Not that we did any more than record, without discussing its accuracy, Steele's claim that Kropotkin stood for “local autarky”—Editors.