The Politics of Empire: Globalisation in Crisis (Transnational Institute) - Softcover

Softcover

ISBN 10: 0745321836 ISBN 13: 9780745321837

Publisher: Pluto Press, 2004

Synopsis

"One of neo-liberalism's greatest crimes is to downgrade the history of ideas. This book digs deep into history and, in a timely way, celebrates an intellectual but practical approach to the social, economic and environmental threats posed by globalisation." Ann Pettifor, Senior Associate, New Economics Foundation and Editor, Real World Economic Outlook "A book that isn't afraid to call today's specific 'globalization' process by its proper name - another phase of imperialism! . . . Strongly recommended for those wishing to understand the damage that is being wreaked in the name of promoting global prosperity and democracy." Achin Vanaik Bringing together nine leading writers and activists from around the world, this book explores the origins of a new age of Empire. The contributors show globalisation is the driving force behind the new and warlike period that began with the invasion of Afghanistan and Iraq. Writers including Walden Bello, Jayati Ghosh, Kate Hudson, Boris Kagarlitsky and Alan Freeman offer a wealth of factual evidence showing that globalisation has driven apart peoples, classes and nations, shaping and reshaping key regions of the world. Challenging the idea that it is inevitable, they argue that its economic contradictions have thrown the world order that sustained it into crisis. Globalisation's opponents are shaping a new intellectual tradition. For the first time, the book brings together the critiques thrown up by resistance to globalisation, to war, and to imperialism. Free from ideology and dogma, the book shows how the peace and anti-globalisation movements can join forces and face the coming period of world history. Essential reading for anyone involved in the peace and anti-globalisation movements, this book is also ideal for students of politics, economics and international relations.

About this title

About the Author

Boris Kagarlitsky is director of the Institute of Globalisation Studies, Moscow. He was a political prisoner under Brezhnev and is the author of New Realism, New Barbarism, The Twilight of Globalisation and Russia under Yeltsin and Putin (all Pluto Press). / Alan Freeman is economist at the Greater London Authority and visiting fellow of the University of Greenwich. He wrote The Benn Heresy, a biography of Tony Benn, and has co-edited 3 books with E. Mandel, G. Carchedi and A. Kliman.

Excerpt. © Reprinted by permission. All rights reserved.

The Politics of Empire

Globalisation in Crisis

By Alan Freeman, Boris Kagarlitsky

Pluto Press

Copyright © 2004 Alan Freeman and Boris Kagarlitsky
All rights reserved.

ISBN: 978-0-7453-2183-7

Contents

Introduction: World Empire – or a World of Empires? Alan Freeman and Boris Kargalitsky, 1, 
2 The Inequality of Nations Alan Freeman, 46, 
3 The Crisis of the Globalist Project and the New Economics of George W. Bush Walden Bello and Marylou Malig, 84, 
4 Imperialist Globalisation and the Political Economy of South Asia Jayati Ghosh, 97, 
5 Globalisation and the New World Order: The New Dynamics of Imperialism and War Sungur Savran, 117, 
6 The Crisis of Global Capitalism: How it Looks from Latin America Bill Robinson, 154, 
7 Facing Global Apartheid Patrick Bond, 189, 
8 Unity, Diversity and International Co-operation: The US War Drive and the Anti-war Movement Kate Hudson, 231, 
9 From Global Crisis to Neo-imperialism: The Case for a Radical Alternative Boris Kargalitsky, 241, 
Notes on Contributors, 275, 
Index, 277, 

CHAPTER 1

The Inequality of Nations

Alan Freeman

ABSOLUTE DIVERGENCE

The rich and the rest: The two great blocs of the world economy

Figure 2.1 shows how the income of the world was shared between the countries that the IMF classifies as 'advanced' and all the rest for the period 1970–2000. Figure 2.2 shows the proportions of world population living in these two parts of the world. Between 1970 and 2000 the rest of the world's share shrank from just over 30 per cent of the whole world's income to just under 20 per cent. At the same time, the proportion of people living there rose from 80 per cent to 84 per cent.

Dating the present stage of globalisation as beginning in 1980, the income of the advanced countries was 11 times larger, in proportion to their population, than the rest of the world. By 2000 this ratio had risen to 23.

Globalisation thus doubled the inequality between the advanced countries and the rest of the world in twenty years. This inequality, measured as the ratio between average income in the two parts of the world, grew at an annual rate of 2.4 per cent in the ten years before globalisation, and an annual rate of 3.9 per cent in the 22 years thereafter.

Globalisation, in a nutshell, equals divergence.

We can express the average incomes in constant 1995 dollars. This is shown in Table 2.1. While output per person in the advanced countries rose from $18,088 in 1980 to $26,201 in 2000, in the rest of the world it fell from $1,690 to $1,160.

Globalisation has thus reasserted, and sharpened to its greatest extent ever, a phenomenon that has dominated world economics and politics for 150 years – the division of the world's nations into two fundamentally unequal blocs.

The rich fall out: Behind the US miracle

Over the same period there has been a complete reversal in the relation between the USA and the other advanced parts of the world. Table 2.2 compares growth rates over each of the three decades up to 2000, and Figure 2.3 shows the results in detail.

It is well known that the USA led world growth during the 1990s. It is less well known that this was not because it performed any better than at any time in the last half-century, but because everyone else performed considerably worse. A prolonged phase of high growth rates among the USA's principal competitors, lasting from the early 1950s, ended. Their growth rates fell to the level that the USA has suffered since the late 1960s.

This reverses the relation between the US and those wealthy countries that previously functioned as its unquestioning partners. Until 1980 North America was growing slower, in terms of real dollars, than all other parts of the world. Thus, the economic interests of the advanced countries lay in accepting US leadership, not only in the direction of the world economy but in much of world politics as well. German and Japanese strategy was, in essence, to fall in behind the USA politically as a means of outdoing it economically.

Globalisation has undone the material basis for this coalition. The last vestiges of the postwar expansion were crushed out of the USA's rivals in two waves, one in each decade of globalisation.

The second of these two waves was far more decisive. After an initial fall during 1980–85, both Europe and South-East Asia regained ground, and by 1990 Europe had caught up its losses while South-East Asia had resumed its high growth trend, pulling away still further from North America. Thus the opening years of globalisation did much to drive the advanced countries away from the rest, but little to drive the advanced countries apart. The 1990s marked a historical rupture. From around 1995 all parts of the world slowed down relative to North America – including the other parts of the 'advanced' world. By 2002 the USA had made good all its previous losses relative to South-East Asia, and, in terms of cumulative GDP per capita growth, had clawed back the historical lead of the European Union.

ABSOLUTE STAGNATION

In the 1990s, accelerated divergence was joined by a further process: stagnation. This was brought about by the US's own failure to raise its growth rate and by sharp declines in the growth rates of the other major advanced countries. Divergence, combined with stagnation, has produced the present political crisis of world governance.

Stagnation is particularly striking because it has gone almost unnoticed. In a nutshell, as Figure 2.4 shows, world GDP per capita has started going down.

In 1988, the GDP per capita of the world in constant 1995 dollars was $4,885. By 2002, it was $4,778. That is, over the intervening 14 years, in real dollar terms, it fell absolutely. As Table 2.3 shows, prior to the present stage of globalisation world GDP per capita was rising at 3–4 per cent a year. In the first decade of globalisation this fell to less than 1 per cent, and throughout the 1990s was negative. Globalisation has not increased the rate of world growth: it has diminished it absolutely.

DIVERGENCE, STAGNATION AND THE END OF GLOBALISATION

Conventional economic wisdom holds that globalisation was an economic success but a political failure. In fact, it has been a political triumph and an economic catastrophe.

Its success lay in creating a governing bloc that regulated the way in which almost all nations participated in the world market, so that despite exceptions – most notably China – a more or less uniform economic order, with a single integrated economic policy, was implemented worldwide. This bloc was dominated by the rich nations and hegemonised by the USA. Its social base included the bulk of the population of the wealthy countries, a majority in their more successful clients, and a minority but governing class in the poorest countries.

European and Japanese support was secure, as was that of the NIACs, as long as the advanced or advancing countries grew at the expense of the rest. Elsewhere, pro-globalisation governments formed wherever substantial elites could reap private benefits, enjoying living standards rising above the general level in their countries – particularly where they were integrated into circuits of world financial capital. In those many countries where the beneficiaries of globalisation were thin on the ground, the bloc governed quite simply through fear: the twin threats posed by debt and capital flight.

Because of this basic consensus, much of the economic regulation of the world could safely be delegated to transnational bodies such as the IMF, the World Bank and the WTO. Enforcement was not a substantive problem because, in each individual state, a politically functional government could be formed that was committed to implementing the global world economic consensus.

But this political pyramid rested on an unsustainable economic base. Political cohesion is incompatible with economic divergence. Generally speaking, the deeper the economic differences between people, the deeper their political antagonisms. Thus the only form of globalisation that can ultimately succeed politically is one based on the reduction of economic difference, not on its increase.

Such political antagonisms can be suspended or offset in a situation where world output is generally increasing, because in that case divergence is only relative. If most of those that are falling behind nevertheless enjoy a rising standard of living, and if growth in the richer parts of the world generates a politically accessible surplus sufficient to head off political conflict, then open national and political conflict can be contained or avoided.

This was the case in the golden age of the 1950s and 1960s when there was a general and prolonged Kondratieff upswing. Although nations continued to move apart from one another, this meant only that some were growing faster than others, so that the number of absolutely poor people was falling. Divergence now, however, combines with stagnation. Conflict ceases to be one of many possible recourses: for more and more people, it becomes the only recourse. This, in effect, removes the entire basis for liberal democracy, since if people have no option but to fight each other in order to survive, no amount of wise regulation is going to stop them.

Through stagnation combined with divergence, globalisation itself is dissolving the pro-globalisation bloc, literally tearing it apart. Large tracts of the world have been rendered ungovernable. At best it is increasingly difficult to form stable governments that can survive politically while carrying out IMF policies, as the case of Argentina dramatically demonstrates. At worst, in cases such as Afghanistan, the Middle East, and increasingly in Africa, political instability dominates an entire region.

The political institutions that have made globalisation possible have thus eroded the economic circumstances that made their own existence possible. This has exposed the absolute limits within which they functioned as world institutions. The basic weakness of the IMF is that it has no means of enforcement. This is particularly important for the market in capital – which is what really distinguishes the period of 'globalisation' from the general expansion of the world market. Without enforcement, a debtor can simply renege, unless legally sanctioned force compels her or him to conform. Hence when the governments of Russia or Argentina simply refused to honour their internationally contracted debts, there was actually nothing the IMF could do except complain.

A nation-state can use internal force, within its boundaries, to distrain any individual or corporate body that fails to comply with its laws. No such sanction exists on the international level. The IMF does not have an army or a police force. Therefore no matter how draconian, its policies, imposed through 'structural adjustment' plans, have always required the consent of the government concerned, in turn coerced by the threat of debt, and it is the national government that has been allocated the awkward job of suppressing domestic opposition. As countries gradually realise that there is indeed a fate worth than debt, it becomes harder and harder to secure this governmental consent; governments that do so consent have simply become politically unsustainable.

This leaves only one recourse if an advanced country wishes to impose policies on countries that cannot sustain governments that consent to them – conquest. If a country's governing institutions refuse to implement measures that are likely to lead to it losing office, there is no alternative but to set up alternative institutions by external intervention. There is no other means of compelling a country to adopt policies, or pay debts, that its government refuses to accept.

The problem with force, and conquest, is that it is basically impossible to secure multilateral consent; conquering force is therefore the ultimate prerogative of the national state. On this terrain, there has been no erosion of sovereign national powers whatsoever. Conquest is therefore organised by national states.

This fact ultimately renders a multinational capitalist government impossible. There is a solid material reason; the conquerors are themselves not bound by the laws of contract. They can simply impose economic terms – as is the case, for example, with the disposition of Iraqi oil. To the conquerors belong the spoils. Conquest and war are, therefore, the ultimate and logical form of economic competition.

This, and not terrorism, is what led the US to revert to a unilateralist agenda and bypass the international institutions. It substituted direct military and political intervention for the old 'hands-off' policy of leaving the IMF to get on with the job on behalf of Wall Street, because the IMF could no longer do the job.

John Williamson, who coined the term 'Washington Consensus', explains this process clearly:

[T]here is no longer any agreement on the main lines of economic policy between the current U.S. administration and the international financial institutions ... there is now a critical difference in attitudes toward capital account liberalization in the emerging market countries, with the IMF having beaten a well-advised retreat since the Asian crisis ... while the Bush administration is still using bilateral free trade agreements to bully countries like Chile and Singapore into emasculating even the most enlightened capital controls. And even on trade, the international financial institutions have expressed strong criticism of U.S. policy on agriculture and steel. So, in this sense, any Washington Consensus has simply ceased to exist – a reflection of the chasm that the Bush administration has opened up between the United States and the rest of the world.

A second process accompanied this, and sealed the fate of the international institutions. At the same time that it lost its capacity to create stable governing blocs in the Third World, the US has lost its political hegemony over its erstwhile partners. Multilateral conquest is bringing no multilateral benefits. A unilateral US agenda means not only that the US administration has abandoned the multilateral institutions, but that it has also made the conscious decision to advance its own interests over those of its erstwhile partners. The Iraq War made this finally clear to everyone. France and Germany opposed US policy in Iraq, not for humanitarian motives, but because their economic needs were too brutally counterposed to those of the USA.

Finally, and not least – since it is probably the reason that this book exists – as the multilateral benefits from globalisation erode away, the fragile support of the working class within the advanced countries, above all Europe, has fallen away. This is what really lies behind the startling growth of the 'Northern' component of the anti-globalisation movement and the peace movement alike.

Globalisation, as it has existed for the past 23 years, is self-destructing. It has given birth to a new age: of protectionism, rivalry and war.

THE NEW AGE OF COMPETITIVE REGIONALISM

What shape might politics take in this emerging brave new world? I will try to answer this question in more detail by looking at its economic underpinnings, examining the possible shape of twenty-first-century politics by looking at the structure of divergence within and between the world's major regions. First, however, some basic methodological questions have to be answered, the first of which is the relation between economics and politics. Most basic of these is: why is the state necessary at all?

A straightforward consequence of standard economic theory is that the 'natural' tendency of markets is convergence. Divergence, according to almost all orthodox theory and quite a lot of heterodoxy, is not produced by markets but happens in spite of them – it is either the result of misguided government, malign forces such as trade unions, terrorists and anti-globalists, or is just a residual effect of a backward past before markets came to the rescue. In technical language, convergence is endogenous to the market and divergence is exogenous.

This is difficult to square with the evidence, given that the world has been diverging more or less since the world market began by almost any measure that one cares to adopt, and has done so faster when obstacles to it have been weakest. Indeed, it is now harder than ever, since, perhaps for the first time in history, the whole world is basically capitalist. In a certain sense, the past period of globalisation has finally settled the case against all theories of development that seek to explain the world economy as an interaction between capitalism and 'pre-capitalist' obstacles – not least, that of Rosa Luxemburg. No serious pre-capitalist obstacles to the market remain. The jury is no longer out: capitalism is responsible for the course of capitalist development.

A number of more or less sophisticated economic theories – the new trade theory, endogenous growth theory, and so on – seek to explain divergence through the interaction of the market with non-market phenomena. But with the exception of Marx's work, no body of economic theory contains within it the natural conclusion that markets create divergence simply because they are markets. If divergence is explained at all, it is explained as an exception. More usually, it is claimed, with an almost religious blindness to basic facts, that divergence does not happen.

(Continues...)

Excerpted from The Politics of Empire by Alan Freeman, Boris Kagarlitsky. Copyright © 2004 Alan Freeman and Boris Kagarlitsky. Excerpted by permission of Pluto Press.
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Edition details

• Publisher: Pluto Press
• Publication date: 2004
• Language: English
• ISBN 10: 0745321836
• ISBN 13: 9780745321837
• Binding: Paperback
• Number of pages: 304
• Editor: Freeman Alan