Planlessness (2026)

Book Review from the January 2026 issue of the Socialist Standard

The Economic Consequences of Mr Trump: What the Trade War Means for the World. By Philip Coggan. Profile £7.99.

A first reaction to this book is that it was likely to be out of date by the time it was published. Given Trump’s tendency to change his mind, anything said would probably no longer apply after a month or two. The author does indeed record Trump’s decisions about tariffs and his repeated revisions of them, describing him as ‘a man without a plan’ who based the calculation of tariff rates on an absurd formula. But he also notes some ideas that underlie Trump’s policies.

The main reason seems to be the intention to return manufacturing industries (and jobs) to the US, but this is unlikely to be successful. In 2013, as an illustration, Motorola opened a smartphone factory in Texas, but it closed after a year because of high costs. Even when it does pay off, building new factories takes time and the US has a shortage of factory workers; they might come from abroad, but of course Trump is clamping down on immigration. The US will simply not re-enter ‘a golden age of manufacturing employment’.

On the whole Coggan adopts an orthodox economic perspective, arguing, for example, that tariffs interfere with market signals about the causes of rising and falling prices. Tariffs have varied over the centuries and protectionism was more widespread between the two world wars. But since the 1960s tariffs have generally been falling, from a global average of 14 percent then to 10.9 per cent in 2000 and 2.5 per cent in 2021. Free trade, he says, is good for an economy, though there has rarely been completely free trade.

One good point he makes is about the interconnectedness of global production, with long and complex supply chains. An iPhone is based on 187 suppliers across twenty-eight countries, while cars imported to the US from Mexico consist largely of components made in the US. Around eighty per cent of the toys sold in US shops are made in China, so the massive tariffs Trump wanted to impose on imports from China were a non-starter, and they have now been scaled back in a major way. American workers are already complaining about higher food prices as a result of the various tariffs, such as bread doubling in price (Guardian 19 October).

The whole world, Coggan suggests at the end of this short volume, ‘will suffer the adverse economic consequences of Mr Trump’. But really these are the consequences of the capitalist system, not the result of the idiosyncrasies of one man.

Paul Bennett

Editorial: New year, same shit . . . (2026)

Editorial from the January 2026 issue of the Socialist Standard

Last year, 2025, could only be considered a success story for capitalism in the sense that the world didn’t end in total destruction. For many though, it was a disaster. Think Gaza, where survivors starve among the ruins after a genocidal slaughter that will only cause further wars. No wonder states don’t want to pay to rebuild Gaza, just to see it levelled again. Think Darfur and South Sudan, with massacres committed by the Rapid Support Force using weapons purchased by the United Arab Emirates from western states including the UK, and allegedly donated as part of an arms-for-gold deal. The gold mines of Darfur have been a ghastly resource curse. The locals have paid with their lives so that capitalist deals get done.

Two corrupt power blocs on the European landmass continued putting human beings into the meat grinder of war, while the very people elected or appointed to serve the Ukrainian people instead trousered over a hundred million dollars intended to protect energy infrastructure and keep the winter lights on. This is what nationalism gets you. Workers die in trenches while the bosses find ways to get rich out of it.

Many other wars got less media coverage, including the ongoing multi-sided slaughter in Myanmar, a real-world example of the Hobbesian ‘war of all against all’. When a big earthquake struck the country in March, killing around 5,000 people, some rebel groups called for a ceasefire as they sent aid workers into affected areas. The military junta, according to reports, had no such humanitarian concerns and instead bombed and strafed the aid workers.

Despite glimmers of hopeful news as Generation Z protesters overthrew a brutal regime in Nepal, world politics in 2025 seemed to be all about tearing up of the rules-based order, led with orgiastic zeal by Donald Trump and his coterie of talentless sycophants. Seeing the world’s politicians cravenly kissing this man’s feet in the hope of favours was stomach-turning, and it didn’t work anyway. The far-right in almost every country has been given a huge boost as this deluded Caligula lays waste to every human principle of fairness and decency, merit and reason, equality and environmental safety. No capitalist politician is ever going to ‘fix’ capitalism, but some seem determined to make it worse. The name of Trump may come to be spat on by posterity as a loathsome icon of narcissism, ‘grab ’em by the pussy’ sexism, and kleptocratic greed. He’s already being sued over his stupid ballroom, so maybe that will be demolished too.

But in a way Trump has done the world a favour, by ripping off the civilised veneer and showing everyone what capitalism really is, instead of what it pretends to be. It was never a rules-based order. It’s always been ‘might equals right’ and screw the little guy.

Meanwhile over in the UK, the fractured left try once again to unite around a vague wish-list of reforms aimed at making capitalism just a tiny bit less awful. What they should be doing is calling for the end of capitalism, because that’s the only thing that will work. Instead they clamber back on the carousel horse of reformism to go round one more time, learning nothing, changing nothing, in a perpetual triumph of hope over experience. This year, if you can find a way, help us get the message across: end capitalism, before it ends us.

Finance and Industry: Who goes bust? (1966)

The Finance and Industry Column from the November 1966 issue of the Socialist Standard

Who goes bust?

Many workers refuse to accept the hard fact that they have been condemned for life to work for a wage or salary for those who own the means of wealth production. Spurred on by stories of how ordinary workers have risen to be wealthy capitalists, they imagine that they, too, can do this. Such people long for their own shop or snack-bar or garage to escape from wage-slavery, Unfortunately for them they often find they have to work harder for themselves (or their creditors) than they had to when working for wages. For some it’s even worse—they go under and are cast back into the working class, less their savings.

The latest annual report of the Board of Trade on bankruptcy gives as the top lines among the 3,404 who went bust in 1965:

The list continues with hardware and electrical goods retailers, confectioners, tobacconists and newsagents, meat retailers, plumbers, fruit and vegetable retailers, general stores, electrical contractors, commercial travellers and so on. In other words the small shopkeepers and businessmen that workers often wish to be.

Next time you hear the story about how good capitalism must be because so-and-so rose to be a capitalist, remember the other side of the story: for every one who succeeds hundreds fail completely and thousands more are condemned to a life of drudgery and worry not unlike the rest of us. Besides capitalism can’t work without a working class, which means that most of us don't even get a chance of becoming a petty capitalist.

World Capitalism

Socialism can only be world-wide because capitalism, the system it will replace, is already so. Modern industry has a world-wide character which ignores frontiers. But although millions co-operate to produce wealth this wealth does not belong to society as a whole; it belongs to just a part of society. Today wealth is produced socially but owned privately. This is the basic contradiction of capitalism. Private ownership of the means of wealth production in fact conflicts with modern technology. One aspect of this is the division of the world into competing, and often warring, states.

Many people don’t realise that the typical firm today is not the small builder or motor repair man mentioned in the previous section. Production, in many lines, is dominated by a few giant, international firms such as Shell, ICI, Unilever and Philips. Sir Paul Chambers, head of ICI, made an interesting speech at the International Management Congress in Rotterdam on September 20. He doubted whether the creation of a Western European economic bloc could be more than a short-term solution to the problems created by the vast size and international character of some modern industries. Modern technology, he said, could be a source of “strife" if its international character were not taken into account. Chambers went on:

I have pointed to the aircraft industry and the inevitability of the growing integration of aircraft firms on an international basis. Almost every emergent country wants its own airline, but it has to rely upon the major makers—mainly British and American—for its needs. A similar trend can be seen in computers and in photographic materials and equipment. In car manufacture the integration of firms is beginning to take on a similar international character. The complete sovereign independence of small states is becoming inconsistent with the growing economic dependence upon large international industrial groups domiciled elsewhere. (Financial Times Sept. 21, 1966).

Men like Sir Paul Chambers do not think in national terms. They know that capitalism is international and act on it. The workers, those who run these industries from top to bottom , in all countries, might well learn from this.

The right to be lazy

Are you tired even before you start work? Do you dislike having to work hard for eight or more hours a day?

Peter Lennon, in the Guardian of September 22, wrote up some of the views put forward on these and other questions at a recent international conference on psychosomatic medicine in Paris:

Many citizens manage to reach a condition of distressed exhaustion before doing anything at all. They wake up tired, grouse through the day, and at night mourn departed sleep. A scrabble and tangle of humanity, they stew in bad air and petty psychological turmoil, buffeted by noise and needled by a multiplicity of unrewarding duties. In eternal competition with shadowy colleagues and goaded by social obligations beyond their capabilities they experience a feeling of impotence and inadaptability. Neurotic fatigue is the result.

Professor Chombart de Lauwe claims that fatigue, other than muscular fatigue, has its origins in the discrepancy between our means and our needs: between aspirations and social pressures—the eternal discrepancy between a possible life and the life we are forced to live.

At least one concrete conclusion to rejoice the civilised emerged from the conference: laziness, far from being the shameful attribute of the social renegade is the man of sensibility’s criticism of an unnatural activity: hard work. It is also his defence against a barbaric way of life.

A hard look at the conclusions of these eminent specialists leaves us with these convictions: the prestige attached to daily strenuous toil is a myth and a shabby modern one, and it is seriously probable that, in spite of generations of domesticity, intense, sustained daily work is incompatible with the realities of human physiology.

Lennon writes in an amusing way. But, when you come to think of it, it is a serious matter that most of us should be condemned to a lifetime of boring, toil. The least we should do is ask: Does this have to be?

Work, of course, is necessary in any human society. But it does not have to take the form of “intensive, sustained daily work”. If such boring, unsatisfying toil is “incompatible with the realities of human physiology” (as most of us must suspect anyway) then socialist society can abolish it. Indeed it should abolish it. Work itself cannot be abolished. However it is up to the defenders of capitalism to show that wealth can only be produced by people, working under unhealthy conditions, doing jobs they find dull and uninteresting.

Adam Buick

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

Compulsion (2024)

Book Review from the March 2024 issue of the Socialist Standard

Mute Compulsion: A Theory of the Economic Power of Capital. By Søren Mau. University of Southern Denmark. 2019

Mau was interviewed by Jacobin in February 2023. In it he confirms the summary of his argument in the introduction to the interview, headlined ‘Capitalism Makes Everyone Bend to Its Will, Rich and Poor Alike’:

‘In his new book Mute Compulsion, Søren Mau argues that to understand and end capitalism, we need to analyze how it not only subordinates the poor to the rich but in fact exerts economic power over everyone — including capitalists themselves’ (tinyurl.com/et7m8vp8).

Mau argues that what maintains capitalist rule is not just physical force (threatened or actual) and ideology (brainwashing) but also ‘economic power’. He sees this as an impersonal form of power, an expression of the logic of capital that every market agent (not just workers but capitalists too) in capitalism is subjected to through the impersonal operation of market forces.

This of course is something we have long said and is in fact the basis of our case that capitalism cannot be reformed to work in the interest of the majority class of wage workers. Not only capitalist firms but governments too are subject to the ‘logic of capital’ enforced through market competition which dictates that priority must be given to profits and the conditions for profit-making. That reformist governments can’t escape this ‘mute compulsion’ has been confirmed time and time again.

Despite the jargon (it’s based on his PhD thesis) it’s actually quite a good read (tinyurl.com/6h2xw5y6).

Who’s afraid of the WTO? (2001)

From the December 2001 issue of the Socialist Standard

The World Trade Organisation represents the interests of the capitalist class and is a product of the lessons they have learned for protecting their system

The World Trade Organisation is not to blame. Capitalism is. Although the WTO has emblazoned itself in everyone’s consciousness as the unacceptable face of globalisation – indeed as the secretive cabal directing the insidious movements of world finance – what it really represents is a trend as old as capitalism itself, and the continuation of old policies under a new name.

Capitalists are not oblivious to their own interest in preventing their system crumbling. The WTO and its associated world infrastructure is directly related to lessons they have learnt throughout the history of wars and disasters that the market has inflicted on the human race in the past century.

In the 1930s, national governments relied on the free trade in gold to regulate the relative value of their currencies, and structure international transactions. Capitalism’s tendency towards disharmonious movement and uneven economic growth meant that gold tended to concentrate into the hands of a handful of states (America possessed up to 60 percent of the world’s monetary gold at one point), leaving others (such as Germany) desperately short of the means of international trade. This imbalance in trading power led directly to the conditions which prompted the second world war, and devastated almost the entire continent of Europe.

Determined to avoid this situation happening again, the dominant capitalist powers met after the war, to construct an effective international machinery to enable trade to progress between states smoothly. The Bretton-Woods agreement, as devised largely by J M Keynes, sought to regulate international capital movements.

Likewise, the International Monetary Fund and the World Bank were created to ensure nations avoided suffering the same bankruptcy as Germany effectively endured in the 1920s. It was envisaged that these institutions would be joined by an International Trade Organisation, to lay-down the rules by which trade would be governed. This institution was, however, vetoed by the US at the Havana conference in 1947.

Unworkable system 

What stood in place of the ITO was the General Agreement on Tariffs and Trade, which came into force in 1948, and was based on the unobjectionable sections of the Havana Charter. Over time, GATT proved to be unworkable, with inadequate enforcement procedures, unclear rules and the rigidities of consensual agreement systems.

Thus, at the Uruguay round of GATT negotiations which ended in 1993, the World Trade Organisation was agreed upon, as a “superior” successor. The Uruguay round significantly expanded the scope of the international agreement’s remits, bringing agriculture, services and intellectual property within its field of competence, as well as seriously reducing tariffs and other protective measures allowed. This lead to an almost immediate increase in the volume of international transactions: according to the Eurostat Yearbook 2000 external investment by European Union states increased by almost 500 percent from 1995 -1999.

This is simply part of an on-going trend within the development of the market system. As trade progresses, so too does standardisation of the rules and groundwork. In the early nineteenth century England, for example, a merchant would have had to know how to reconcile his Durham pecks with his Dorset grains and his Norfolk drams, when selling goods by weight. Likewise, each town would have its own time (relative to its distance in minutes from Greenwich). These times and weights formed the legal framework for trade in each of these districts, and formed a burdensome cost to any business trying to operate across them.

In time, the need to concentrate capital, and increase the area and scope of the circulation of commodities meant that such discrepancies between local authorities were overcome. Usually, this meant over-ruling them through the authority of the centralised state, and enforcing a uniform set of rules across the whole economic zone. This tendency for the concentration of capital continues, and the same problem manifests itself in differences of trade regulations between nation-states, although this time there is no central authority powerful enough to completely over-rule them and impose its standards.

The reasons for the increasing concentration of capital lie, essentially, in the methods by which labour is exploited by capital. When a commodity is produced the capitalist calculates its cost of production (the cost of goods that went into it, plus labour), and then adds a profit mark up roughly in line with the expected rate of profit of their rivals. This average rate of profit applies regardless of the amount of value added by the specific production process involved, but, rather, the total value added across the whole economy.

What this means is that industries which involve a large input by labour (i.e. which add a lot of value) lose out because the average profit mark-up is less than the value they add. This means that this added value is transferred into the profits of industries which are less labour intensive. It is, therefore a competitive advantage for capitalists to increase the ratio of productive capital to labour (known as the organic composition of capital). With this increase comes an extension of the productive capacity in an industry, with capacity being taken up by fewer and fewer production units.

Alongside this concentration of capital is the increase in the transportation capacity of society. Technological advances in transport continue apace with productive capacity, meaning that, in general, the circulation of commodities and trade can increase faster than the productivity of society (more goods to transport multiplied by a faster rate of moving them). This is born out by the chart below from the WTO

In each period the rate of increase in trade is greater than the rate of increase in output of merchandise. One of the most significant details, however, if the massive increase in trade in 1990-2000, in a period in which merchandise output actually fell compared to the previous period. The effects of the inauguration of the WTO can be seen in this increase. It is an increase in excess of the usual growth in trade, and thus represents an exceptional occurrence.

The motivation for this spurt in trade may well lie in the observable decline in productive output across the whole chart. The rate of output growth is under half that of 1963-1973. Capitalists, misled by theories which see value as being created rather than realised by trade, treat trade as a good in itself, and think that by increasing the circulation of goods they will be able to dig themselves out of the profitability hole indicated by the drop in output growth. Alongside this is the temptation to exploit the differences in national and regional rates of profit to try and realise an exceptionally high profit.

What this means is, effectively, that through increased trade capitalists are attempting to rip each other off, as a result of their incapacity to exploit the workers enough. Through increasing trade competition, they are effectively increasing the scramble for a share of the total global production of surplus value. This can also be seen in the increase in currency speculation and finance capital movements around the world. Since these forms of activities are entirely unproductive they represent a mere redistribution of booty among the thieves.

This tendency can also be observed in the decision to open up services to international competition. Although British ministers maintain fervently that this does not mean the WTO will force privatisations upon countries, the fact is that International Monetary Fund (IMF) structural adjustment programmes usually force countries to attempt to decrease the size of their state sector, paving the way for firms from advanced capitalist countries to take over these services and sweat profits out of the workers there. It represents another way of opening up otherwise marginalised sources of surplus value to be taken back to the industrialised core.

Backwardness 

Vast areas of the world, the “post-colonial” zones are still dedicated to low value yielding primary products such as mono-crop agriculture and mining. Most of the increased trade remains between the industrialised manufacturing centres. The top five exporting states (EU, US, Japan, Canada, China) represent 53.2 percent of the world export market (according to WTO figures), whereas the top four importers take a 54 percent share between each other. The EU and the US both import considerably more than they export, and represent a substantial lucrative market to access.

This imbalance of trade between the core and the periphery indicates the way in which the idea that opening up free trade will benefit poor nations and assist in their development is flawed. The sheer economic clout of the big capitalist states means they can bully and force other states into letting them have their way. As George Monbiot noted in his Guardian column (6 November) one WTO delegate from a poor state saying “If I speak out too strongly, the U.S. will phone my minister. They will twist the story and say that I am embarrassing the United States. My Government will not even ask, ‘What did he say?’ they would just send me a ticket tomorrow”.

Such raw power means that whatever formal equality of the rules, they will still be used to serve the ends of the dominant states. Each national capitalist class seeks to protect its position and its investments, and is exceedingly unwilling to relinquish control of the state force which props up its power. The dominant policy is currently to pursue mutual capital interpenetration, and thus prevent losing control of their national economy at home, whilst having sufficient hostage capital to deter expropriation abroad. Whilst the times are good this policy is tolerable, but come a time of crisis each group will seek to save their own skins first and foremost. Should America sink into deep recession, it may decide to put a stop to the raiders taking a share of its profits, and throw the barriers back up.

Certainly, so long as world society depends first and foremost upon competing capitalist groups vying for profits, it will be subject to the anarchy of capitalist self-interest, and any world body will be subordinated to the Machiavellian manoeuvrings of these groups. So long as capitalism remains any world body will be used as a potential tool for exploitation and robbery. The only genuine way to move forward to a world human community is by the abolition of sectional national élite interest, and the creation of a world human interest of common ownership of the worlds wealth, so that we can end the horrendous divisions the property system has created.

Pik Smeet

Globalization (2009)

Book Review from the September 2009 issue of the Socialist Standard

Globalization in Question. By Paul Hirst, Grahame Thompson and Simon Bromley. Polity Press, 2009

Globalization is one of the key concepts of our time, accepted by both the right and left as the cornerstone of their analysis of the international economy. In both political and academic discussions, the assumption is often made that globalization of the past few decades is a qualitatively new stage in the development of international capitalism; that integration of national economies into the international economy is an inevitable process to which national governments are largely powerless. This book challenges these notions.

The authors, using detailed evidence, argue for the following conclusions. The present highly internationalised economy is not unprecedented. In some respects, the current globalized economy has only recently become as open and integrated as the regime that prevailed from 1870 to 1914. Genuinely transnational companies are relatively rare. Most companies are based nationally and trade regionally or multinationally on the strength of a major national location. There is no major trend towards the growth of truly global companies. Foreign direct investment is still highly concentrated among the advanced industrial economies, and the Third World remains marginal in both investment and trade. The emergence of India and particularly China has disrupted this picture, though it has not significantly shifted the centre of gravity from the already advanced countries. Investment, trade and financial flows are concentrated in the Triad of Europe, Japan/East Asia and North America, and this dominance seems set to continue. Supranational regionalization (e.g. European Union, North American Free Trade Agreement, Asia-Pacific Economic Cooperation) is a trend that is possibly stronger than that of globalization. The major economic powers, centred on the G8 with China and India, have the capacity, especially if they coordinate policy, to exert powerful governance pressures over financial markets and other economic tendencies. Global markets are therefore by no means beyond regulation and control, though this will be limited by the divergent interests of states and their ruling elites.

The authors show some awareness of the historical development of capitalism, though they view this largely as the history of technological innovation. As the above shows, the emphasis in this book is on the institutional arrangements (social, economic and political) and their interrelationships within capitalism, with no real comprehension of the underlying dynamic of capitalism. As a result they do not explain that it is the competitive accumulation of profits which is the driving force of capitalism’s inherent tendency towards globalization.

Lew Higgins

World View: U.N. Report – No challenge to capitalism (2002)

From the September 2002 issue of the Socialist Standard

But for the damning up-to-date statistics it provides, the recently published 2002 United Nations Human Development report could have been written by any reform-minded political analyst with a knowledge of current and global affairs, for as could be expected there is little here that challenges the functioning of capitalist society and class-based antagonisms. The system itself is not seen as being at fault, but the distribution of political power and the workings of the myriad national and international institutions that operate within capitalism.

United Nations: head in the clouds?

The report tells us that whilst globalisation creates greater interdependence between countries and organisations, the world is far more fragmented, both between the rich and the poor, and between the powerful and the powerless. It informs us that whilst many developing countries are making progress on several fronts, for instance with regard to universal primary education, for much of the world the prospects are bleak, with progress continuing at such a small pace that it will take an estimated 130 years to rid the world of hunger.

Whilst economists hail the growth in new technologies, economic integration and new “economic opportunities”, certain perennial facts are hard to ignore, with 2.8 billion people existing on less that $2 per day and one percent of the world’s population receiving as much income as the poorest 57 percent. And although the proportion of the global population living in “extreme poverty” is said to have fallen from 29 percent to 23 percent – this being accounted for by economic growth in East Asia – the number of people living in extreme poverty has risen in sub-Saharan Africa from 242 million to 300 million, with 20 of these African countries poorer than they were 20 years ago.

To halve the proportion of people living on $1 per day would take an annual 3.7 percent increase in per capita income in developing countries. However, 127 countries with just over a third of the world’s population have not grown at this pace, with their share of the number living in poverty actually increasing.

Formal political equality

In a more interdependent world, argues the report “good governance”, “democracy” and “fair and accountable institutions” are essential for development. It further argues that “democracy helps protect people from economic and political catastrophes such as famines and decent into chaos” . In support of this theory, India is cited where, claims the report, there has been no famine since independence in 1947, in spite of chronic food shortages.

Democracies, it states, also contribute to political stability and wars are more frequent in non-democratic countries. These benefits of democracy are attributable to “a virtuous cycle of development”, with political freedom allowing people to campaign for policies [reforms] that expand social and economic opportunities and, all in all, allowing more people to partake in policy decisions and debates. This said, the report does then point out recent and poignant instances of people fighting for political democracy in the hope of gaining enhanced social and economic opportunities, only to have those hopes dashed. After the collapse of Soviet style capitalism in the 90s for instance, “income inequality and poverty rose sharply in Central and Eastern Europe and the Commonwealth of Independent States. And despite more widespread democracy, the number of people in Sub-Saharan Africa continued to increase”.

To its credit, the report does state that “neither authoritarianism or democracy is a factor in determining either the rate of economic growth or how it is distributed”. It further informs us that “granting all people formal political equality does not create an equal desire or capacity to participate in political processes – or an equal capacity to influence them”. And here the report is critical of the power money plays in politics with the USA in particular, singled out. In the 2000 US election, presidential candidates spent $343 million on their campaigns. Inclusive of spending by their respective parties, an estimated $1 billion was spent on the 2000 US election. A year later, Michael Bloomberg would spend a staggering $74 million just to become New York City mayor, $47 million more than his nearest opponent and close on $99 per vote.

The report is also mindful that politicians are “disproportionately influenced by business interests”. In the 2000 US election, corporations made $1.2 billion worth of political contributions and in India, big business provides major political parties with 80 percent of their funding – perhaps one reason why voter turn out is decreasing across the world with similar decline in political party membership in many countries.

Whilst the world is arguably a more “democratic” place than it was a decade ago, with 140 countries holding multi-party elections (the greatest number in history) only 80 of these, accounting for 55 percent of the world’s people, are “fully democratic by one measure”. Moreover, there are still 106 countries that impose significant restrictions on civic and political freedoms, and in 61 countries there is no free press. Although the number of countries ratifying the six main human rights conventions and covenants has increased notably in the past decade, there still remains 41 countries who are yet to ratify the International Convention on Civil and Political Rights, with 51 countries refusing to ratify the ILO’s Convention on Freedom of Association

The media also comes in for scrutiny in the report, which points out that “commercial and political pressures will always skew the playing field in the marketplace of ideas”. Even so, a free and independent media is seen as an “essential pillar of democracy”. But whilst globalisation has tended to reduce state ownership of the press, it has had the effect of intensifying concentration in private ownership. In Britain, just four media groups control 85 percent of daily newspapers. In the US, some six companies control virtually all the media

Rich and powerful

In the field of health and education, some 800 million have gained access to improved water supplies and almost 60 countries, accounting for half the world’s people have halved hunger or aim to do so by 2015. In the last 30 years infant mortality rate has fallen from 96 per thousand births to 56 per thousand births. On the downside, however, 30,000 children die each day of curable diseases (one every three seconds) and 500,000 women die as a result of pregnancy of childbirth every year (almost one per minute).

When it comes to international trade, the report states: “On average, industrial country tariffs on imports from developing countries are four times those on imports from other industrial countries. In addition, countries that belong to the …OECD provide about $1 billion a day in domestic agricultural subsidies – more than six times what they spend on official development assistance for developing countries.”

This imbalance is further reflected at the WTO. Whilst a lustre of democracy is afforded the running of the organisation, in truth “decision-making occurs by consensus, heavily influenced by the largest and richest countries”. And of almost 740 NGOs certified by the WTO’s 1999 ministerial conference in Seattle, 87 percent of these were from industrialised countries.

Ironically, the more representative global institutions, i.e. the UN General Assembly and the UN Social and Economic Council, are similarly the least potent. “The reality,” observes the UNHDR, “is that powerful countries…tend to gravitate towards institutions that give them the most influence . . . they take their power with them: whether it be to the WTO’s ‘Green Room’ meetings or the meetings on the IMF executive board.” Representatives from the UK, USA, Germany, France, Japan, the Russian Federation and Saudi Arabia account for 46 percent of the voting rights in the World Bank and 48 percent in the IMF.

Although this aims to be an impartial report, about political power and institutions, on the national and global level, and how they shape human progress, and whilst it is often critical of the status quo and postulates how advances in human development lie in improved democratic governance systems, it remains a report that is never going to contribute to the solving of the problems that it identifies for the simple reason that it was never going to query he premises and basic contradictions of capitalist society. The UN, as a capitalist institution itself, was never going to criticise the profit system and how it prioritises profits over real human needs and how, even in the most advanced democracies of the day, the drive to make profit impinges upon every aspect of our lives.

Whilst we would certainly not sniff at such improvements in global democracy – they would, after all, give countless millions the chance to at last determine their own future and further smooth the way for socialism – we are not to be found advocating reform of the present system. If the history of reforms teaches us anything, it is that they can easily be accommodated by the capitalist system. Democracy would thus be used by the master class to their own advantage, giving them the mandate to carry on their injustices, but in a democratic manner, and elected governments would remain as they are at present – the executives of the capitalist class.

In March of this year, at the UN Conference for the Financing of Development in Mexico, the world’s leaders and policy makers assessed moves towards development and poverty eradication goals which were laid down at the UN Millennium summit of 2000, pledging a global effort to realize these goals by the year 2015. The indicators considered, the UNHD report suggests that “without a dramatic turnaround there is a real possibility that a generation from now, world leaders will be setting the same targets again”. We can only comment that even with a “dramatic turnaround” in world-wide democratic procedures, the injustices of capitalism would still prevail and the maxim of capitalism would still apply: “can’t pay – can’t have”.

John Bissett

A World To Win (1958)

From the September 1958 issue of the Socialist Standard

“The proletarians have nothing to lose but their chains.

They have a world to win.

Working men of all countries Unite!”

These are the words of Marx and Engels in their famous Manifesto of 1848, and although that is now 110 years ago, there is a message contained in those words which is of the greatest importance to the working men of all countries in 1958.

In 1848 our present system, capitalism, was just beginning. Although it had existed in England for a considerable time, the last remnants of an earlier system, Feudalism still existed in Europe, and Russia. Most of the rest of the world was still completely undeveloped industrially and was operating under the old feudal order of things. This meant that the working class, a class of wage earners or proletarians, as Marx and Engels called them, had yet to emerge. By far the great majority of people were peasants.

The idea of an international system, the whole world as one community, could not have had any significance under feudalism. The village and farm life of people working on the land and rarely leaving these confines, the scanty means of communication, the general isolation of one part of the world from another, and the inability of most people to read and write, all this would go against any world-wide concept of things.

With the development of trade, once England, the pioneer of capitalism, had broken trail, others began to follow suit. The appearance of capitalism has been sometimes gradual, sometimes more rapid, in various parts of the world. There are a number of reasons for this uneven growth but the important thing is that those countries which have been slow to start, China, India, etc., make rapid strides once they embark on the building up of capitalism.

These rapid strides are sometimes quite misunderstood, and taken to be something entirely different. Many people, including adherents of the so-called Communist Party, believe they can see Socialism in Russia chiefly because of the vast and speedy development of modern industrial techniques.

The fact that Russian industry is run by the State makes the confusion more persistent, but when one realises, as Marx and Engels did, that the State is necessarily a CLASS instrument it is then easy to understand that with wages, buying and selling and profits, not to mention war machines, Russia has all the fundamental features of capitalism and in fact is a capitalist country.

To Marxists it is elementary that the existence of wage-labour means that a class exists which owns nothing but the ability to work.

It is not at all the concern of Socialists to deny the tremendous technical and scientific advances since Marx’s time. It is in fact this very development which provides the material basis for the class-less world of abundance— Socialism. What makes Marx so important is the fact that, with all these technical advances, the workers of all lands are still cut off from ownership in the means of wealth production which they operate for the profit of a privileged minority of owners.

Because of this ownership by a few, and for no other reason, the world, which no longer needs to be a number of isolated parts, is still marked off into absurd frontiers involving ridiculous passports and Customs barriers, with each national ruling class jealously guarding their loot against the others.

So in 1958 the world is a seething mass of tension and anxiety. Vast armaments are poised at bases all over the world, including “H” bombs, in case one ruling class group should attempt to grab the oil, rubber or other economic assets of another. The Hydrogen bomb itself cannot be separated from scientific development under capitalism.

In 1958 it is as true as ever that housing problems, hire purchase, tally-men, and the general struggle to get by are the lot of the productive working class, while their non-productive masters enjoy the best, and follow the sun.

For a world of plenty and happiness without wars and poverty, it remains for the workers of the world to see that they are in the same predicament and that flags and nations do not matter. Then this great potential which capitalism has built, only to stifle for profits, will be a reality and. free from our chains, the world will belong to all mankind.

Harry Baldwin

Cloudy View From the Summit (2008)

From the August 2008 issue of the Socialist Standard

Last month’s G8 Summit in the far north of Japan was typical of meetings of the heads of state these days. Held in a remote location, well out of sight and sound of protest marches, and protected by an army of police, the meeting was carefully choreographed to convey an impression of competence and confidence—but in the end only exposed the impotence of government leaders in the face of grave problems arising from their beloved social system.

The two problems that were the focus of attention at this year’s summit were climate change and price rises. Newspaper headlines quoted the vow of the heads of state to tackle both of these problems, yet the articles underneath admitted that this is much easier said than done.

One obvious reason why the various leaders are finding it difficult to solve such problems is that there is no clear consensus among them regarding the actions to take, which reflects the different and often directly opposed interests and standpoints of their respective nations.

For instance, not only are there differences between “rich” and “poor” nations regarding how to counter global warming, and the role that each nation must play, there are stark differences in the standpoints of the G8 nations regarding this issue, not to mention the political divisions within each nation.

Those same sorts of national and domestic differences came to the surface with regards to the rising food and fuel prices. Not surprisingly, each government has sought to frame the problem in a manner that lays the maximum blame on others. The root cause of the price rise has thus been identified, respectively, as the result of rising consumption in China and India, insufficient production by OPEC nations, or the flood of speculation on the commodities markets and declining dollar.

That is not to suggest, however, that such problems could be solved if only there was a clear consensus among the leaders and sufficient political will. The deeper issue is that the heads of state (with the backing, however tepid, of their electorate) have set out to solve problems that stem directly from the social system (= capitalism) that they are paid to serve and protect. (And it is worth emphasizing that their role is indeed as servants, rather than masters, of this system.) In other words, the reason that our self-styled “leaders” are unable to arrive at solutions is not that they are shortsighted, selfish and stupid—although more than a few fit that description—but that they are naturally reluctant to pursue the root causes of problems if it calls into question the capitalist system.

It does not take much digging, incidentally, to unearth the direct relation between a system of production for profit and a whole range of problems. This is particularly clear in the case of environmental problems. Capitalism is all about capital accumulation and the insatiable pursuit of profit is naturally accompanied by tremendous waste and destruction. If there are profits to be gained, capitalists are not too bothered by the long-term, or even short-term, consequences for other people or future generations. Political leaders lecture about the need to address environmental problems, while turning a blind eye to the role played by this rapacious system of profit chasing.

In the case of rising prices as well, it is rather absurd for politicians to bemoan the problem without fundamentally calling into question a system that revolves around prices and money. Granted, as long as the prices are “reasonable,” many people find this social system unobjectionable, or even natural. But a quick look at economic history reveals that inflation is a not uncommon side-effect of the money-centred capitalist system and that governments have had little success in bringing inflation under control once it picks up speed.

It is not surprising that inflation can be impossible to control, because commodity prices are not under our conscious human control to begin with. Simply put, prices are determined by the market. It is true that a business can set prices at whatever level it wants, but if that level is too far above or below that of their competitors the business runs the risk of losing sales or profit. Ultimately, therefore, businesses will tend to set the prices of their products according to the cost of production plus the average rate of profit. And, on a more essential level, these “production prices” are themselves ultimately determined by the amount of labour (or “socially necessary abstract human labour”) expended to produce the commodities.

In short, the very existence of prices reflects the fact, pointed out by Marx, that we live in “a state of society, in which the process of production has the mastery over man, instead of being controlled by him” (Capital vol. 1). When prices are high, the absurdity of this anarchic social system comes into clearer view, but even in “normal” times our lives remain prey to forces outside of our control. The “solution” to the problem, at least as far as workers are concerned, is not to bring prices back to some acceptable level (assuming that were indeed possible), but to progress beyond this social system where production is just a means of generating profit and distribution is mediated by money.

If the businesses that carry out production are not free to ignore “market forces” and arbitrarily set prices, then it is foolish to imagine that national governments somehow possess the magical power to bring prices under control. To remain in power, heads of state need to convince the public that they are in control of the economic situation, or can at least curb the worst excesses of capitalism. In fact, their “control” over the direction of the capitalist economy resembles that exercised by a rodeo rider over an angry bull during those four seconds before he is tossed from the saddle into the dirt.

The powerlessness of world leaders was highlighted by a comment made during the G8 Summit by a Japanese government source who told Reuters that “there is a limit to what governments can do now” to stem the rising prices. The fact that this bland and exceedingly obvious statement was made on “condition of anonymity” speaks to the insecurity of world leaders who are desperate to pass themselves off as superheroes.

Michael Schauerte

Why “World” Socialists? (1974)

From the Special 300th issue of The Western Socialist

A correspondent asks us: “Why do you call yourselves World Socialists?” A good question and one deserving of a serious answer. To begin with, the pioneers of scientific socialism, Marx and Engels, called upon the workers of the world to unite, rather than just the workers of England or France or Germany or America. And there was a sound reason for this, a reason based upon an understanding of capitalism both from an historical perspective and the economics of the system.

For the first time in history a social system was making possible a world that would sweep away existing national. religious and ethnic differences; making the antagonisms among mankind, the wars and the poverty, all things of the past. Making all this possible, yes, but only after working people everywhere organized to abolish the existing relationships between capital and labor, the relationships that were stymying the very thing that was becoming possible. On the one hand, capitalism had introduced a mode of production that was social in scope while, on the other hand, ownership was vested in private, corporate or state institutions—a serious contradiction, indeed.

Let us look at production under capitalism. In the first place just about everything — whether goods or services — are produced for the purpose of sale on the market. There was this sort of thing during the times of feudalism and chattel slavery, too, but to a limited degree. The systems in those times were based, primarily, on agrarianism and on production for use — plenty for the use of the feudal aristocracy and Church or the various ruling classes within chattel slave society; scarcity for the serfs and the slaves. Commodity production, to the extent it existed prior to capitalism, was by no means social in the sense it is today. A cobbler made a pair of shoes largely by his own efforts. The same was true of the suit of clothes made by the tailor. And so on. Industry was. to a considerable extent a family affair even in the Infancy of capitalism.

Developing capitalism transformed the primitive handicraft methods of feudalism into a system of production In which thousands — and tens and hundreds of thousands of workers in our times — in many parts of the world, contribute their labor power to the production and distribution of commodities.

Think of a common needle. It requires steel. Steel is made in the United States but one of its essential ingredients, ferro-manganese, is not obtainable here. Furthermore, the machinery, the transportation, the electrification, the plant erection, that is required to produce needles in the era of capitalism requires the cooperative labor of a multitude of workers. The same is true of all other commodities, from the smallest to the largest. All of production, under capitalism, is socialized production. The rub is that ownership is vested in a class, a small percentage of the population, and the rest of us work for them.

So what does the World Socialist Party plan on doing about this? Expropriate the capitalists? Just take their property away from them? We hear you and we would remind you that class ownership of the means of production is based, historically, upon expropriation There isn’t a country in the world where land and resources were not usurped from the original occupiers or users, violently expropriated in many cases. As Marx so eloquently put It: "Capital came into the world with blood dripping from every pore.” And how do we suppose that capital will go out of the world? We are convinced that the revolution that will transform the means of production and distribution into the common property of all mankind will be relatively peaceful. When compared with the blood-letting that has punctuated the history of capitalism to this day it will be serene. Why not investigate?

What Rationalisation Means to the Workers. (1930)

From the July 1930 issue of the Socialist Standard

“The Times” for May 12th and the six following days published a series of articles on “Rationalisation.” The reason put forward for the articles was the failure of English industries to adapt themselves to post-war conditions by increased combination, cutting out the middleman and adopting massed production.

For ten years industries in this country have been faced with a depression that threatens to become permanent. The writers of “The Times” articles have no remedy to offer apart from capturing a larger share in the world market by becoming more efficient than foreign competitors. They instance Germany and America in particular, as countries that have forged ahead of England through adopting rationalisation The four to six million unemployed in America and the growing tide of unemployment in Germany is an immediate reply to them, and also a prophecy of what the future promises to the English worker.

“The Times” editorial defines rationalisation as follows :—

“Brought down to its simplest terms, Rationalisation is nothing more or less than the technique of reducing costs. The first stage of this process consists in the elimination of unnecessary and wasteful competition by the formation of cartels to regulate production and to equate supply with demand, and the combination of producing units in “horizontal” amalgamations. Once this has been successfully accomplished, the way is open for a very large number of economies. Among the more obvious of these sources of saving are the suppression of redundant staffs and middlemen, through centralised buying and selling, the reduction of unnecessary specifications through more adequate standardisation, the closing down of obsolete plant, and the concentration of production on the best-equipped units, which can be kept working continuously on a single type of product, thus avoiding a great deal of wasteful duplication. In the sphere of labour costs tho economies made possible by amalgamation are in some respects even more important. The credit resources of big combines render possible large and frequent renewals of fixed capital and consequently enable the most modern labour-saving devices to be adopted on a scale which is impracticable for smaller units.”

A careful examination of the above quotation will make the fact evident that the essence of rationalisation is the production and distribution of a given quantity of goods by the employment of less labour than is required at present. A proof of this is given in the fourth article, where the writers point out that in the United States, by mass production, the output per man employed is much higher than in this country.

The claim made on behalf of rationalisation is that it will bring back “prosperity” to this country. The hollowness of the claim is exposed by the following quotation, taken from the first article :—

“Taking the world in general, the increase in productive capacity of the basic industries since 1913 has been far greater than growth in the volume of international trade. The various nations of Europe and Asia, to say nothing of the United States, have striven hard to attain a far greater degree of economic self-sufficiency. India, China, and Japan, for instance, have vastly increased their production of cotton goods; Germany has gone far towards replacing the plant which she lost owing to the transfer of Alsace and Lorraine to France; Spain and the countries of Central and Eastern Europe; Brazil and Argentina, not to mention India and Australia, have all been building up manufacturing industries of their own behind tariff barriers. The competition in the export of manufactured goods has consequently grown keener.”

The irony of the situation is that the real cause of the depression, which is now international and promises to be permanent, is the fact that international production has far outgrown the world’s demands. The growth of rationalisation tends to make matters worse. The obvious trend of industrial affairs to-day is towards international combinations and the splitting up of the world’s markets among a few immense combines, which would restrict and accelerate production to meet the demands of the market. This will bring in its train a huge body of permanently unemployed that will become more and more menacing to each capitalist nation, and it will tax the ingenuity of future statesmen pretty heavily to find means to keep this huge body quiet and amused.

That any one nation can secure a large part of the international market for any appreciable length of time against competing nations is now practically impossible. The vast strides made in the rapid gathering and diffusion of technical knowledge puts the leading nations on a level basis and prevents one nation from forging ahead of another. In the earlier days of modern industry, England, for various reasons, obtained a flying start and was for a while the manufacturing nation of the world. But the time has passed by when any nation could emulate England. In the heyday of England’s commercial prosperity, British manufacturers supplied foreign countries with the plant, machinery and technical education which are now being used by them to meet their own productive demands and secure a share of other markets.

The present trouble in India, which the Labour Government are handling in true accord with “the imperishable ideals of British statesmanship,” has its root in the fact that Indian industrialists have become conscious of the commercial importance of their steel, cotton and other industries and want a place in the sun-—or, in other words, a fair share of the plums !

At bottom, then, rationalisation is a move to bring the control of industry internationally into the hands of fewer and fewer people and thereby to tighten the bonds of slavery more closely upon the world’s workers. While on the one hand it aims at easing the present anarchy in production by adjusting supply to effective demand, and also tends to make production more efficient by technical and organisational improvement; on the other hand, it aims at making the worker produce more wealth for less wages and increasing the already huge unemployed army. The chasm between the working class and the capitalist class grows ever greater and greater, and can only be bridged by the abolition of the capitalist order of society—as Karl Marx so clearly pointed out many years ago.

There is an illuminating side to the wholesale movement for rationalisation. For decades the standing reproach flung at the Socialist was the charge that he proposed to abolish the small capitalist—that mythical being who is supposed to have raised himself from the ranks by personal effort and was alleged to be a steadily growing: fraction of the community. He has no place, however, in the rationalised scheme of things, he is to be crushed out—the rationalisers make no bones about it ! And he is to be crushed out because he is a hindrance in modern production. Ethical views do not count where economic interests are at stake. It remains now for the working class to point out to the capitalists that they also have become a hindrance to production, as they cannot organise their system to provide adequately for all members of society.

Gilmac.

The 'Observer' Atlas of World Affairs (1971)

Book Review from the August 1971 issue of the Socialist Standard

The 'Observer' Atlas of World Affairs: A Guide to Major Tensions and Conflicts by Andrew Wilson. £2.50.

This is an entirely new work, and besides being an atlas it is also a geography book of a special kind with table of economic resources, raw materials, and the war strengths of the various powers.

To quote from the dust cover “it brings together in readily appreciable form the chief factors affecting the world of the 1970’s. All the material has been chosen for its relevance to present day political, military, economic and social issues. An unusual aspect of this profusedly illustrated book is the emphasis given to military matters, underlying the grim reality that supports the present structures of international affairs. Military technology is rarely encountered by the average citizen, but it both threatens and defends him, and cannot be ignored.” We might have doubts about defending citizens, but the threats from war are clearly evident.

In the section on “rich and poor countries” the author does not tell us (as indeed is not his purpose) why some people are rich and others, poor, but he does point out that in many poor countries, there are a few who are fabulously rich while the masses are very poor. He further shows how investments in these “poor countries” does not tend to make them rich, but only perpetuates the already big difference between rich and poor. Incomes per capita are given for comparisons, and are very revealing.

He also shows how the poor exporting countries in their efforts to export in order to be able to import manufactured products, have to pay more and more of their raw material for less and less manufactured products, and that it is the larger manufacturing or capitalist giants that have the whip hand in the bargaining.

For example 

“Two-thirds of Ghana's exports are cocoa. Between 1953 and 1961, cocoa exports increased by 71 per cent, but the revenue rose by only 23 per cent. In the same period European goods shipped to West Africa went up 25 per cent in cost. So a piece of machinery that cost Ghana the equivalent of ten tons of cocoa in 1953 cost 25 tons of cocoa in 1961.”

“Half Brazil’s exports consist of coffee. Between 1953 and 1961 coffee exports increased by 90 per cent in volume, but the revenue dropped by 35 per cent."

“Half the exports of the Malay peninsula are rubber. Between 1950 and 1961 rubber exports increased by 4 per cent in volume, but the revenue fell by 35 per cent.”

These are examples of the unequal development of capitalism which politicians and their parties often use for their own propaganda. Another example of this from a different field is illustrated in the atlas by quoting from the last decade of figures from Japan. During the 1960’s Japan increased her gross national production by an average of 10 per cent per year; in 1969 the rate was over 14 per cent; yet in terms of per capita income Japan lies 20th in the world league. Such facts point to inevitable wage struggles ahead in Japan, and which have actually begun.

The sections dealing with the U.S.A. and the U.S.S.R. examine the economic and military aspects of these countries with tables of their resources and their nuclear striking power—which is frightening. He acknowledges that both powers have long reached the point when they could withstand a nuclear “first strike” and be able to hit back. At the same time, either power has sufficient striking potential to blot out the other many times over. The author states his own opinion (for what it is worth), that it is very unlikely that either power will attempt such knock out measures, but rely on conventional apparatus for its war adventures. But theory and practice in such drastic circumstances sometimes depart from scheduled plans.

In the chapter on space exploration, he enumerates the various advances made, and adds “Although neither the Moon nor orbiting space stations appear at present to lend themselves to aggressive military purposes, a space confrontation’ could theoretically develop if one country were to intervene with another’s satellites. In addition to scientific and communications purposes, Russian and American ‘spy’ satellites provide a continuous picture of military developments in each territory, using optical, radar, and infrared cameras. This at least makes sense on why both Russia and America has been prepared to spend millions of pounds on these satellites. Spying has always been an expensive although necessary part of capitalism’s activity.

The list of world conflicts given during the 20th century is very formidable. From the Spanish-American war of 1898 to the first Arab-Israeli war of 1948 there is a list of 59 wars, insurrections, revolts or military skirmishes; and from the Korean war of 1950 until last year a Jordan-Palestine conflict, another 72 are listed.

The Common Market is also dealt with and the author states categorically that the E.E.C. is both political and economic as we know only too well.

Population is a question not ignored, and although there is nothing new in this section, except that it is up to date, some useful figures are given.

Horace Jarvis

Globalisation – what does it mean? (2006)

From the August 2006 issue of the Socialist Standard

We begin a two-part article on the continuing surge in capitalist globalisation. This month we deal with the globalisation of capital.

Following the downfall of state capitalism in Eastern Europe the idea of one global market soon found common cause in neo-conservative and neo-liberal circles. Indeed, for these ideologists of capitalism the world market  only became truly global once the former state capitalist regimes threw open their doors to private finance and capital investment from the G7 nations. Obviously, for such thinking to take hold it had to ignore a multitude of historical facts concerning the economic development of capitalism and its eventual transformation into a world system.

In 1865, for example the first global regulatory agency was formed with the creation of the International Telegraph Union, along with the first global medical resource, which we know as the Red Cross. Also, if globalisation only took place when the G7 nations became G8 (with Russia joining) then the new ‘thinkers’ need to explain how two wars commonly referred to as world wars were fought over who was to dominate access to global raw materials and a market that was already global. Another historical fact that is largely ignored is that despite supposed ideological differences the trade between the state capitalist regimes and the rest of the world increased throughout the Cold War.

This is how the economist Keynes confirmed – rather belatedly – in the aftermath of World War One, the process of globalisation that had gone on until then: 

“What an extraordinary episode in the economic progress of man that age which came to end in August 1914! . . .  The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep; he could at the same moment and by the same means adventure his wealth in the natural sources and new enterprises of any quarter of the world, and share, without exertion or even trouble, in their prospective fruits and advantages; or he could decide to couple the security of his fortunes with the good faith of the townspeople of any substantial municipality in any continent that fancy or information might recommend.” (The Economic Consequences of the Peace, 1919)

Coming from Keynes it would be rather naive to expect him to describe the wave of globalisation that had taken place around the turn of the twentieth century in terms other than pro-capitalist ones. For unlike Marx, who saw the main instrument for social change originating with the class conscious workers, Keynes was convinced throughout his life that the capitalist class held the centre stage, albeit with the need of some interventionist help from the state.

Marx had also predicted the potential for capitalism to become a global system, with its attendant economic, political and social consequences, when he and Engels drew up the Communist Manifesto in 1848. And he confirmed, far earlier than anyone else, the trend for capitalism to evolve towards economic interdependency and globalisation when Das Capital was published in 1867.

Spoils of war

The arguments over the benefits of ‘protectionism’ versus free trade that existed during the nineteenth century, and then in the periods just before and then after the First World War, were never entirely resolved within the capitalist class one way or another. Fierce arguments raged with various policy initiatives and reversals, though for most of the dominant states of the time (such as Britain) what passed for ‘free trade’ gained something of an ascendancy by stealth.

But in terms of the globalisation of the system, the most crucial event took place rather later, towards the end of another war caused by competition over economic power and military interests — World War Two. Significantly, in the summer of 1944 at Bretton Woods, New Hampshire the gangster representatives of 44 countries held a meeting to hammer out a deal on global trade and sharing the spoils of (the latest) war. This included the creation of the World Bank and the IMF and the initial setting up of a General Agreement on Tariffs and Trade (GATT),with the latter coming into force in 1948.

Although these new institutions eased the existing rules on tariffs and the movement of currency, by seeking common ground on exports and imports and Foreign Direct Investment (FDI), they had no powers to control new forms of protectionism that had been instigated by the major powers in order to maintain their market share and economic dominance. And this was reflected in what happened shortly after the Second World War ended, when the US introduced the Marshall Plan in 1949 involving $13.5 billion of loans by the US government to near-bankrupt European economies. All told $90 billion was steered towards 16 countries that agreed to move towards currency convertibility, lowered trade tariffs, who promoted exports to the US and who were ‘tough on communism’. This not only meant that the US export market was protected in Western Europe but was also, in retrospect the first economic warning shots in the start of the Cold War.

Cold War Economics

The Cold War itself proved to be a nice little earner for those countries in the “developing” world who allied themselves to either East or West, with most of the proceeds ending up in arms deals or directly into the pockets of corrupt politicians and bureaucrats. Not that this bothered the developed countries, for during this period of Cold War economics many developing and undeveloped countries found themselves accepting loan agreements whether they wanted them or not – and with very favourable terms of borrowing at very low rates of interest, plus longterm payback dates. They seemed at the time to have little to lose by becoming debtor nations. As for the creditor nations, both East and West, their aim during the cold war was to increase their hegemony and market share by making the client debtor nations militarily and financially dependent on them as creditor states and to gain the upper hand over their competitors.

The loans themselves came from a variety of sources: manufacturing and financial businesses, banks, donor states, the IMF and the World Bank being the main lenders. Much of this money was lent under a ‘no risk’ guarantee covered by Export Credit Agreements (ECA), where individual donor states with their export agencies would underwrite the loans through aid contracts — specifying that the capital investment could only be spent through named companies established in the donor state.

For instance, the Nigerian government could have decided to build a university, and could approach a donor state like the UK to finance the project, both seeking agreement as to the profitability of the aid. The UK government would then stipulate that the university could to be built by a UK developer and equipped by British manufacturers and key posts staffed with British-trained personnel. Should the Nigerian government default on their repayments of the loan what would usually happen is that the UK would agree to pay off the loan under ECA if the Nigerian government issued a bond tied to a percentage of Nigerian oil exports in order to cover the amount owed. This would ensure the capital invested stayed in circulation via petrodollars, despite the losses incurred. Obviously, deals like this could only continue whilst there was sufficient confidence in the strength of the US-driven Western economies.

Crisis of Over-Accumulation

During the early 1970s this changed dramatically when loss of confidence over escalating costs of the Vietnam War became evident with many countries selling off their dollar reserves in favour of gold. Unable to withstand this pressure the US came off the Gold Standard in 1971 and allowed the fixed exchange rate system that was pegged to the dollar to collapse. The price of gold increased and there followed a period of financial instability which, in essence, reflected the return of economic crisis in the sphere of production, with economic downturns in major western economies and growing unemployment. It was at this time that the main oil-producing cartel dominated by capitalists in the Middle East (OPEC) decided to quadruple their oil prices. These events eventually flooded the North American and European financial markets with vast amounts of accumulated petrodollars searching for profitable investment that was difficult to find in the more ‘traditional markets’ of the post-war period. Due to the European Economic Community (EEC) at the time being insufficiently organised or integrated to attract the massive amounts of capital in the OPEC countries, some of it filtered towards the Pacific Rim, commonly referred to as the ‘Asian Tigers’.

With the exception of the Multi-fibre Agreement drawn up by GATT, much of this investment for Asia hit a variety of protectionist barriers on the export of capital. Although GATT tried to get around monetary restrictions with the introduction of the SWIFT system for electronic interbank fund transfers worldwide and other measures, the pressure for change in currency regulations intensified throughout the 1980s as capitalism’s trade cycle returned with a vengeance with plummeting production and soaring unemployment.

Out of this emerged what came to be called the ‘Washington Consensus’ instigated by the neo-liberals within the US Treasury, IMF and World Bank who advocated a programme to free up capital assets by: privatising state owned monopolies; reducing personal and business taxation; deregulating financial institutions; removing restrictions on FDI; and reducing public spending, particularly on welfare benefits. Urged on by the collapse of the state capitalist regimes who could not compete economically or militarily any longer with the dominant Western economies, the pressure continued to intensify for deregulation of currency movement and the abandonment of GATT, and its replacement by the World Trade Organisation. This eventually took place in 1995 and under it trade and the movement of currency and capital assets has had a much more straightforward path to profitable markets.

Deregulation of currency movement and the removal of restrictions on FDI, however, proved to be just too late for the developing countries on the Pacific Rim. By 1997 these countries had found their credit was severely overextended, delivering a lower rate of profit than predicted by the pundits and speculators of the financial institutions. The unintended consequence of the crisis in South East Asia was the acceleration of the movement of currency into other areas still — like China and India — where there were better prospects of profits.

This is the nature of capitalism for the accumulation of capital is dependent on economic growth, regardless of the risk attached, and is essential to the workings of a system that puts competition and the pursuit of profit, at each link in the chain — from production to distribution and eventual sale to the consumer — above all else.

Risks

With the velocity facilitated by the internet, clearly the overall economic trend is towards short-term profits through FDI, currency speculation and by squeezing market share of competitors, particularly in manufacturing and services. But that does not mean that the developed countries are solely concentrating their investments in the developing countries — far from it. The greater volume of trade and investment is still between the G8 countries themselves who, forced by global market conditions, have taken into account the relative economic, political and social stability of the developed world, compared to what they would sometimes gain from relatively precarious investment in any of the developing, or even undeveloped countries.

Generally, what is most noticeable about this economic activity is that all the developing countries targeted by the World Bank, IMF and the WTO were selected because they have access to sufficient energy and water supplies to sustain a short-term industrialisation programme, rather than sustained long-term growth. For example, China is scouring the world for all the uranium ore available and every drop of oil necessary to accomplish its aim of overtaking Japan and becoming the main industrial nation in South East Asia and second to the US globally. And China is currently finding it very difficult to meet the increased demand for electricity and for bottled and industrial water, and consequently using 47 percent of the world’s cement to complete the damming of the Yangzi, and meet their targets on urbanisation and industrial capacity. In effect the Chinese have soon come to realise that without sufficient energy and water their plans for long-term growth are unachievable. Although this economic targeting over energy and water resources is undoubtedly a high-risk strategy, and has all the potential for military conflicts over essential resources, it is one explanation why the emphasis is on short-term profit and speculation.

What is also apparent is that the freeing up of the movement on capital has not entirely been accompanied by a corresponding deregulation in the movement of labour. Indeed, the restrictions on immigration have been tightened in some cases, and strictly enforced by some countries to hold back the flood of economic, and mostly illegal, immigrants chasing the movement of capital in the developed and developing countries. These phenomena have led to the growth in human trafficking — and the casualties are being found suffocated in the back of lorries at Dover harbour, or drowned on a beach in Morecambe Bay or even crushed by a train in the Eurotunnel.

There are also other risks associated with the pursuit of industrial growth in the developing world, the most obvious one being the spread of AIDS, particularly in Africa where it has been helped along by a tenfold increase in the transportation of commodities. And then there’s the risk that the increase in global pollution and the onset of global warming will put severe pressure on the relocation of coastal communities.

A less immediately obvious risk is of an increase in capitalist industrial growth in some countries facilitating and encouraging the manufacture of weapons of mass destruction and their eventual use in competitive power struggles between states. These and other risk factors can only accelerate as the demands for more energy and water increase in line with industrial growth.

The reasons why these patterns of risky economic activity are so pronounced are many and varied, but all are nonetheless based on capitalism’s inherent competitive drive to maximise profits regardless of the consequences. The actual growth in economic development in parts of the developing world attracting investment has been on a tremendous scale with developing countries like Brazil, China and India sucking in vast amounts of capital to increase their infrastructure and manufacturing base. In particular the annual percentage increase in GDP for China (9.8) and India (8.1) illustrates how these economies are being dramatically reshaped in the interests of capitalism.

Brian Johnson

Next month: the impact that the continuing surge in globalisation is having on people in the developing and undeveloped countries.