The motivations behind capitalist globalisation

The driving force behind capitalism is its need to expand. To do otherwise is to court disaster. Marx and Engels (1977: 39) famously observed that for capital, not simply to survive, but to thrive, it was compelled to expand beyond the borders of the nation-state. They further noted that, “the bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. To the great chagrin of

Reactionists, it has drawn from under the feet of industry the national ground on which it stood” (1977: 39. Trotsky similarly described the growing tendency toward globalisation in terms of “the future development of world economy … a ceaseless struggle for new and ever new fields of capitalist exploitation” (1973: 22-23).

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Marx (1974: 539) also described how capital must not only eliminate spatial boundaries in order to develop a world market, but that it also must seek to reduce time as a factor in this development, thereby promoting the most expansive market possible. The underlying

motivation for this development of capitalism to become an increasingly global phenomenon is the expansion of capital accumulation, the quest for profit and the ever-growing need to at least maintain the level of profit. Scholte argues that this process of globalisation occurs because “transworld connectivity enhances opportunities of profit making and surplus accumulation” (2005: 129). The dynamism of such economic development across the globe has both positive and negative implications, at once polarising wealth and poverty, while still allowing for capital accumulation and the development of abundance (Dunn 2009: 158).

A key factor in the drive to globalisation lies in a fundamental argument of Marx; described as the law of the falling rate of profit (Capital Vol. 3 1986b: 211-231). Among a range of options that capital can employ to remove such an obstacle, or at least to postpone and forestall the worst outcomes, is to continually expand and to internationalise its relations. This means, in effect, a continual motion and an endless battle to survive. This inherent contradiction between the need to expand and the tendency for falling rates of profit has been and remains central to globalisation. Brenner (2006:14) directly addresses this issue when he speaks of the long downturn in the economic results of industrial nations. He links the effects of the oil crisis of the 1970s with the decline in ‘Fordism’ as an organisational principle. The consequence was a protracted decrease in productivity.

Two related propositions of Marx, pertaining to the development of capitalist globalisation, are worthy of note. The first is that merchant capital is inherently destructive to colonial

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economies while industrial capital constructs new economies (Marx 1969b: 107). The second, that capitalism as an inevitably expansionary process, must destroy older, pre- existing economic systems in order to create new ones (Marx 1975b: 200-201). These

arguments eloquently describe the effects of colonialism and imperialism in the 19th and early 20th _{centuries. Imperialism, in Marxist thought, was regarded as the “penetration and spread} of the capitalist system into non-capitalist or primitive capitalist areas of the world” (Warren 1980: 3). Imperialism, in this context, can be regarded as a step towards industrialisation and therefore the proletarianisation of the world. It is regarded as an inevitable feature of an expanding capitalism that is at once both destructive as well as progressive.

Such arguments, under conditions of 21st century capitalist globalisation, become a focus for dispute. Petras & Veltmeyer (2000) argue that globalisation is far from a progressive factor of economic reality, as it extends global power to imperialist states and subjugates less

developed economies. In contrast, Silver (2006: 3-23) describes the situation whereby global capital flows serve to actively build new industrial working class movements, as capitalism constructs new industrial bases across the world. Understanding the processes of capitalist globalisation and the motivations for such a rapid rate of development in recent decades is intimately connected to both Marx’s description of the unfolding of global capitalism and of imperialism as a means for that development.

Rosenberg (1996) outlines the general thrust of capitalist development as anticipated by Marx and Engels, whereby all societies would ultimately conform to the model of the then existing capitalist states. He then argues that the reality has proven to be somewhat different. He cites Trotsky (1965: 23-24) and his arguments surrounding the historical unevenness within social

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development among nations and that capitalism develops from very different starting points. Late developing capitalist states need not necessarily follow the same path of capital

accumulation of their more advanced counterparts. The theory of uneven development has been used to explain how newly developing capitalist states exhibit ‘different’ forms of capitalism. However, it needs to be remembered, that the rapidity of capitalist globalisation, even when operating under conditions of uneven development, essentially conform to Marx’s conception of capitalism “creating a world in its own image” (Marx 1977: 71). Lenin (1977e: 678-679) commented on the inevitably uneven rate of development of capitalism across the world but that the export of capital “influences and greatly accelerates the development of capitalism in those countries to which it is exported” (1977e: 681). Capitalism it is argued:

“aims at economic expansion, at the penetration of new territories, the surmounting of economic differences, the conversion of self-sufficient provincial and national

economies into a system of financial interrelationships. Thereby it brings about their rapprochement and equalizes the economic and cultural levels of the most progressive and the most backward countries” (Trotsky 1970: 19).

Capital flows, as described by Silver (2003), are elements of a constant drive to maintain a high degree of profitability. The period since the economic crisis years of the 1970s is portrayed as a period marked by stagnating profits, and a general decrease in wages across states (Postone 2007: 70). Smith (2006:10) similarly describes the dynamic of globalising capitalism, of the quest not simply for power but of the necessity to seek to maintain profitability as a means of survival. The very raison d’etre of capitalism as an economic formation is to expand.

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The rapid expansion of capitalist globalisation from the 1970s was accompanied by a dramatic shift in manufacturing from industrialised countries to the developing world. Western capitalism sought to ameliorate the growing crisis that had been presented by rapid economic downturn and a reduction in profit levels. Berberoglu (2003: 97) describes how US capital reacted to the crisis it was facing by transferring production overseas but that this had the obvious effect of producing mass unemployment along with a general reduction in wages. Martin and Schumann (1997: 7) similarly show how wages in the industrial world have tended to fall. Capitalism, in its quest to maintain its growth-centred sense of equilibrium, inevitably creates ‘winners’ and ‘losers’. This becomes apparent both in individual nation- states and when outcomes between states are considered. Sutcliffe, cited in Pieterse (2002: 1027), shows, as an example, that relative inequality in the USA and the UK is greater than in India.

As globalisation of the economic and political structures has quickened, so too has the role of the developing global institutions been scrutinised. The neo-liberal economic agenda has been facilitated, in the estimation of many writers, by the increased power of the International Monetary Fund, the World Bank and significantly with the inception of the World Trade Organisation (WTO). Chossudovsky (1998: 35) regards the WTO’s role as effectively supervising national trade policies in the interests of the transnational corporations. An even more strident accusation is that the WTO is “the archetypal transnational institution of the new epoch” (Robinson 2004: 117). In somewhat softer tones is the appraisal that

multinational corporations and states work in tandem to promote common objectives (Nash 2000: 264).

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The continuing globalisation of capital and the political ramifications that this represents has long been a feature of capitalist relations. Robinson (1998: 567) draws the conclusion that the development of an interstate capitalist system was an historical inevitability and that those relations are being superseded by a globalisation of capitalism. The changes in capitalist relations that are evident are revolutionary in character. It is in the financialisation of capital that changes in capitalism are best observed. Peet (2009: 245) describes the fundamental logic of financialisation, as capital operating with a greater degree of abstraction from its original productive base. Capital has increasingly been removed from production as well as from any confining link to the national state. This continuing separation of capitalism from the restrictions of state structures is but one indication of elemental changes in capitalist relations. These relational changes are inescapable for capitalism as it seeks to overcome the inherent contradictions and tendency toward crisis.