Chapter 4: 'Globalisation' and the Left [ The Multidimensional Crisis and Inclusive Democracy, Takis Fotopoulos ]

As I hinted in the last section most analysts in the Left today adopt a different stand to the one expressed above both with respect to neoliberalism and globalisation. But, first, we should better define our terms and particularly globalisation over which a lot of confusion exists at the moment even among analysts.

A basic point that should be stressed is that although usually it is economic globalisation that many people have in mind when they talk about globalisation, economic globalisation is only one aspect, (or one component) though the main one, of globalisation. In other words, one may also talk about technological, political, cultural and social globalisation. To my mind, however, globalisation is not a valid term to discuss the present form of the market economy. Thus:

Globalisation refers to the case of a borderless global economy in which economic nationalism has been eradicated and production itself has been internationalised in the sense that the big corporations have become stateless bodies involved in an integrated internal division of labour which spans many countries. On the other hand, Internationalisation refers to the case where markets have been internationalised, in the sense of open borders for the free movement of capital and commodities (and, within economic blocks like the European Union, of labour as well) but nation-states still exist and share power with the transnational corporations (TNCs), in a system in which the role of the state is being progressively reduced to that of securing a stable framework for the economically efficient functioning of the market. It is obvious that the present form of market economy cannot be described as a “global” economy, since globalisation, in the above sense, is still limited.[1]

Next, I will call “reformist Left” all those intellectuals, movements and political parties in the Left which adopt a “non-systemic” approach to globalisation according to which globalisation is due to exogenous changes in economic policy and, as such, is reversible even within the system of the market economy. Therefore, the reformist Left includes all those who either suggest various reforms to improve the functioning of the internationalised market economy (e.g. eliminating its “corporate” character, abolishing the neoliberal deregulation of markets and so on), or simply raise a variety of criticisms against it without proposing any alternative form of social organisation, adopting instead a postmodern rejection of universalism,[2] taking implicitly for granted the present system of the market economy and representative “democracy”. In this sense, the reformist Left on globalisation includes post-Marxists, social democrats and others in the broad Left (Pierre Bourdieu, Immanuel Wallerstein, Noam Chomsky, Samir Amin, John Gray, Leo Panitch among them) who take a negative, but a reformist, stand towards globalisation.

There are several approaches which may be classified under the “reformist Left” heading. They all share a common element: unlike the much more realistic social-liberals, they all adopt the thesis that globalisation is not a new phenomenon but something already existing at the beginning of last century and then go on to explore ways of resisting it (without raising any anti-systemic challenge) usually on the grounds that globalisation, apart from its adverse effects on labour and the environment, is also incompatible with the present “democracy”. The explicit (or sometimes implicit) assumption shared by supporters of the reformist Left is that a return to some kind of statism is still possible —an assumption based on their view of globalisation as simply the product of neoliberal policies, (if not merely an ideology to justify neoliberalism), and not as the outcome of a fundamental structural change.

Thus, Bourdieu, starting with the assumption that neoliberalism is a utopia, which was imposed mainly by the American elite, concludes that we have to turn to “the nation-state, or better yet the supranational state ―a European state on the way toward a world state― capable of effectively controlling and taxing the profits earned in the financial markets and, above all, of counteracting the destructive impact that the latter have on the labour market”.[3] In this problematique, “globalisation is more of a political imperative than an economic fact”,[4] a policy aiming to extend to the world as a whole the American economic model:[5]

Similarly, Immanuel Wallerstein,[6] who adopts a line similar to those of Hirst & Thompson below, explicitly adopts the exogenous (if not ideological) nature of present globalisation when he stresses that:

Analogous is the position adopted by other writers in the reformist Left, like Leo Panitch,[7] Noam Chomsky,[8] and others, who also maintain that globalisation is nothing new, representing a kind of neoliberal conspiracy of US origin, whose aim is to promote the interests of US corporate capitalism. Their advice to the anti-globalisation movement is to exert maximum pressure on the elites, so that the nation-state is forced to resist the neoliberal globalisation. Finally, yet another version, supported by social democrats like the LSE professor John Gray,[9] declares, following the example of Eric Hobsbawm, “the end of neoliberalism”![10] This time, the argument supporting the case for the supposed end of globalisation is based on the slowdown in the US economy after the election of George Bush as US president.

The conclusion shared by everybody in the reformist Left (and also by the main body of the anti-globalisation “movement”), is that pressure “from below” could reverse “neoliberal globalisation”, or at least force the social-liberal governments to “renegotiate” its rules, and, in particular, the rules governing the operation of international organisations like the World Trade Organisation —as, for instance, Pierre Bourdieu,[11] Samir Amin[12] and others suggest.

But, let us see in a bit more detail the arguments of the reformist Left that globalisation is a “myth”, or an ideology, with specific reference to probably the most systematic exposition of these arguments to date, the study by Paul Hirst and Grahame Thompson,[13] who competently put the case for the continuing significance of the nation-state in the framework of the neoliberal internationalised market economy. Their argument can be summarised as follows:

1. The present highly internationalised economy is not unprecedented and the degree of openness in 1913 was in fact higher than in the post world war II period.[14]

This argument is simply not supported by the evidence. Although a significant degree of internationalisation of the market economy was already evident at the beginning of the twentieth century, still, the present internationalisation is both quantitatively and qualitatively different from that earlier internationalisation.

It is quantitatively different because, despite the unsubstantiated claims to the contrary, there has never been a similar degree of market openness in the past ―something not surprising as TNCS is a new phenomenon indeed! The main indicators used by Hirst and Thompson to support their case of less openness today is the degree of trade and financial openness to the rest of the world. However, as regards financial openness first, the studies they quote to show greater openness in the period before the first world war compared to today use a statistical indicator which is not universally valid, as it yields nonsensical results in the case of the country with the major reserve currency, the USA.[15] On the other hand, the use of alternative indicators points to a dramatic increase in financial openness. Thus, although foreign direct investment, as a proportion of the advanced capitalist countries’ GDP, has nearly doubled within the first 20 years of the present internationalisation,[16] still, the main component of the present huge rise in the movement of capital refers to speculative movements. The speculative flows/currency transactions have increased 14 times within 15 years of globalisation (from approx $25,000 bn annual total in 1983 to more than $350,000 bn in 1998) whereas the capital movements on account of world trade and foreign direct investment have just doubled in the same period (from less than $3, 000 bn in 1983 to about $7,000 bn in 1998).[17] As a result, at present, something like one trillion dollars change hands every day.

Coming next to trade openness, contrary to the evidence produced by Hirst and Thompson, this openness, far from being lower today than in the pre-world war I period, has increased significantly in the last quarter of the twentieth century (i.e. the period of neoliberal globalisation). Thus, trade openness has increased in all major trading countries listed in the following table (apart from Japan) throughout the post-war period. As a result, the average index of openness increased from 43.6 percent in 1913 to 48.3 percent in 1996. Furthermore, according to more recent data, the average index of trade openness has increased very significantly in the last few years reaching 53.4 in 1998.[18] It is therefore obvious that the claim by Hirst and Thompson that there was a greater international openness in 1913 than today (a claim which, curiously, is based on data up to 1973, i.e. before the beginning of present globalisation!) is hardly supported by the facts.

	1913	1950	1973	1980	1996
France	35.4	21.2	29.0	44.0	45.0
Germany	35.1	20.1	35.2		46.0
Japan	31.4	16.9	18.3	28.0	17.0
Holland	103.6	70.2	80.1	103.0	100.0
UK	44.7	36.0	39.3	52.0	58.0
USA	11.2	7.0	10.5	21.0	24.0

*Trade openness is measured by the ratio of merchandise trade, (i.e. exports and imports combined) to GDP at current prices.

Source: Paul Hirst and Grahame Thompson, Globalisation in Question, Table 2.5 (for the years 1913, 1950 and 1973) and estimates based on the World Bank’s World Development Report 1998/99, Table 20.

Finally, the present internationalisation is qualitatively different from the earlier internationalisation. This is because the earlier internationalisation was based on nation-states rather than on transnational corporations as today. The degree of (formal or informal) openness of commodity and financial markets, which was much smaller in the past than today, has played a crucial role in determining the “agent” of internationalisation in each period. It has also played a critical role in determining the degree of the state’s economic sovereignty. When the degree of market openness was relatively small (up to the mid 1970s) states could exercise a significant degree of control over the level of economic activity through monetary, exchange rate and fiscal policies. On the other hand, as soon as (and as a result of the expansion of TNCs) the degree of market openness began increasing, nation-states have lost a significant part of their economic sovereignty. Thus, aggressive fiscal policies to control economic activity are no longer possible in a framework of open commodity and capital markets, whereas the present degree of integration of market economies makes equally impossible any really divergent monetary policies.

2. Genuinely trans-national corporations appear to be relatively rare since most companies are nationally based.[19]

As regards this argument, the real issue is not the proportion of TNCs to the total number of companies but the power they exercise. And the statistical data on this are conclusive. In the 1990s, the top 500 trans-national corporations controlled 70 percent of world trade), 80 percent of foreign investment and 30 percent of world GDP [Gross Domestic Product].[20] Furthermore, what is at issue is not whether TNCs possess a national base or whether, instead, they are stateless bodies, but whether their activities and particularly trade, investment and production are extended well beyond their national boundaries. In this problematique, a national base is still very useful to the trans-national corporations in gaining advantages against competitors and this fact is perfectly compatible with today’s accelerating marketisation of the economy

3. The world economy today is not genuinely global since trade, foreign direct investment and financial flows are concentrated in the “Triad Countries”, i.e. the countries in the three main economic regions (North America, European Union and Japan).[21]

It is true that the bulk of the advanced market economies’ manufacturing trade takes place between them and only a small fraction (about 1,5% excluding China) is between them and the South.[22] However, this is not an argument against the fact of globalisation but an argument against the type of globalisation going on. The expansion of the market economy, as well as its internationalisation, has always been uneven, exactly because of its essentially self-regulating nature. Therefore, it does not make sense to expect today’s internationalisation, which is founded on the highest degree of marketisation in History, to be anything different. Any kind of internationalisation of the market economy is bound to be concentrated in the North, which has already created, within the marketisation process, built-in comparative advantages in productivity, efficiency, technology and competitiveness.[23]

4. The major economic powers “have the capacity to exert powerful governance pressures over financial markets and other economic tendencies. Global markets are by no means beyond regulation and control.”[24]

The issue here is what sort of regulations and controls are feasible in an economy with open markets. Particularly so, when the authors themselves implicitly admit the non-feasibility of effective controls to secure full employment when they christen as “radical” even the objective of full employment[25] —i.e. the main objective of social democracy throughout the period of the social-democratic consensus! It is also noteworthy that even when the authors refer to the possibility of a “new polycentric version of the mixed economy” aiming to achieve “ambitious” goals, the only condition they mention for this is “a highly co-ordinated policy on the part of the members of the Triad”.[26] However, what the authors do not explain is why the elites controlling the Triad will embark on policies to create a new global mixed economy. In fact, the only argument they produce to support this case is the old underconsumptionist thesis, namely, that the reproduction of the growth economy is not viable in the framework of high inequality, which inevitably leads to low demand.[27] But, this argument ignores the fact that the growth economy has shown no difficulty in reproducing itself in the past ―as long as the “two-thirds society” keeps expanding its consumption

The reason why the reformist Left ends up with this sort of nonsensical conclusions is that their starting point is either a crude Marxist analysis, which assumes that the present internationalisation is no different from the early internationalisation at the end of 19th century/beginning of 20th (if not before, as Wallerstein suggests) or, alternatively ―as in the case of Hirst and Thompson― an a-historical analysis of the present world economy, which assumes that the present internationalisation is simply a conjunctural phenomenon rather than a structural change.[28] The conclusion drawn by both types of analysis is that the present “globalised” economy is still “governable” and that therefore all that is needed for the initiation of a system of effective governance over it is an effective pressure from the anti-globalisation movement.

But why effective social controls on the internationalised market economy are non-feasible? Let us take the state first. If we take into account the significant increase in foreign penetration of stock exchange and bond markets that has taken place in the last quarter of a century or so, it becomes obvious that no national government today may follow economic policies that are disapproved of by the capital markets, which have the power to create an intolerable economic pressure on the respective country’s borrowing ability, currency value and investment flows. If we assume, for instance, that a social-democratic party adopts, against the trend, policies to reverse the flexibility of labour markets or, alternatively, more aggressive policies to slow down the greenhouse effect, it may easily be shown that under conditions of free capital mobility, this would lead to a capital flight and a pressure on the respective currency and stock exchange prices, i.e. to developments which could easily lead to a recessionary situation, if not to a full blown economic crisis. It is for these reasons that Mitteran and Jospin had to abandon any idea of resorting to the old social democratic policies, while Lafontaine had to be ousted from the German government when he attempted to raise the tax burden on German firms.[29]

The situation is not much different with respect to economic blocks. If a block, like the EU, attempts to introduce the kind of policies that were dominant during the social democratic consensus, (e.g. policies to expand the welfare state irrespective of the impact of such policies on inflation) or, alternatively, if it attempts to introduce strict environmental controls irrespective of their impact on profitability, then, this block faces the immediate risk of a serious capital flight towards the other blocks with severe repercussions on its currency, the Euro, versus the other block currencies ―particularly so when the chronic weakness of Euro versus the dollar seems to reflect the fact that the remnants of the welfare state in Europe are, still, more significant than in the USA. The process of internationalisation and the present degree of openness implies that social controls in the major market economies have to be homogenised. Since this homogenisation, in a competitive framework, is based on the principle of the “least common denominator” and given the present disparity of social controls in the Triad countries, any idea that the introduction of effective social controls (initiated by the state or the “civil society”) is still feasible becomes nonsensical. Therefore, the ideas currently adopted by some in the reformist Left that globalisation could be seen as a US attempt to impose its own version of free-market capitalism, which could be resisted by a EU based on a social market,[30] or, even worse by a new kind of “good” nationalism,[31] simply reflect the present demoralisation of the Left and its inclination to believe utopian myths.

One may ask at this point, what about the possibility of an international agreement by the Triad countries (the G7+1 for instance) to impose such effective controls? However, as anyone with a rudimentary knowledge of the historical dynamic of the market economy and the political and economic power structures which resulted from this dynamic can assure, this is just a theoretical possibility. This is because such controls would violently contravene the logic and dynamic of the internationalised market economy and as such would come under the direct and indirect attack of the huge transnational corporations, which control not only the market economies but also the mass media, (on which the promotion of professional politicians crucially depends), and, of course, the sources of financing of their hugely expensive electoral campaigns. Therefore, to demand today the imposition of social controls on the economic elites in order to protect effectively labour and the environment (beyond regulatory or relatively painless controls on their activities) amounts to demanding to restrict the very dynamic of the system of the market economy itself ―a dynamic which crucially depends on the economic health of the economic elites and particularly that of the transnational corporations. On this, liberal, neoliberal and social-liberal economists have always been right: any effective social controls on markets to protect labour and the environment would necessarily encroach upon economic efficiency (as presently defined) and therefore on the profitability and the incomes and wealth of the economic elites.

In this problematique, the reformist Left’s explanation of the rise of neoliberal globalisation in terms of the “conversion” of the old socialdemocratic parties and their betrayal of the socialist ideals, or in terms of the “historic defeat of the Left” after the collapse of “actually existing socialism”, gives a distorted picture of reality. In fact, the conversion of the old socialdemocratic parties could be adequately explained in terms of the change in the structure of the electorate we have seen above, and/or the increased market openness which made statism incompatible with internationalisation.

It is therefore obvious that the general shift to the Right, which has marked the neoliberal form of modernity, had induced many in the Left to move towards the position once occupied by the old social democrats ―who have moved in turn to social-liberalism and realistically accepted the non-reversibility of present globalisation. This is not surprising if one takes into account the fact that an adoption of the systemic nature of present globalisation would have serious political implications. In other words, recognition by the Left of the systemic character of globalisation would put it in a serious dilemma: either to adopt the present globalisation with some qualifications (as social-liberals do) or reject it altogether and challenge the fundamental institution that led to it in the first place: the system of the market economy itself. It is obvious that today’s demoralised and generally conformist (frequently by way of postmodernism) Left has chosen an intermediate way between these two “extremes” that involves significant reforms of the globalised economy ―which, however, are improbable within the system of the market economy.

Very recently, apart from the transnational capitalist class approach I mentioned above, another Marxist approach on globalisation emerged, which sees it as an “empire”.[32] This approach adopts a more sophisticated version of the capitalist plot theory according to which capital, faced with a crisis of its ability “to master its conflictual relationship with labour through a social and political dialectic”, resorted to a double attack against labour: “first, a direct campaign against corporatism and collective bargaining and second a reorganisation of the workplace through automation and computerisation, thereby actually excluding labour itself from the side of production”.[33] The hypothesis that Hardt and Negri make is that “the neoliberalism of the 1980s constituted «a revolution from above»”. This “revolution”, as they stress in their latest book,[34] was motivated by the accumulation of the proletarian struggles that functioned as the “motor for the crisis” of the 1970s, which in turn was part of the objective and inevitable cycles of capitalist accumulation. The conclusion that Hardt and Negri draw, which is also the main point of the Empire, is that contemporary globalisation establishes no territorial centre of power and does not rely on fixed boundaries and barriers. It is a decentred and deterritorializing apparatus of rule that progressively incorporates the entire global realm within its open, expanding frontiers. As such, it should be welcomed because it is capital’s latest concession to the force of insurgent subjectivity and it contains the seeds of an alternative (communist) globalisation. Our political task, they argue, is not simply to resist these processes but to reorganize them and redirect them toward new ends.

The interesting aspect of this analysis ―that is mainly based on unfounded assertions about the nature of the welfare state (which they assume still exists in neoliberal modernity ignoring the fact that it is being replaced everywhere by a “safety net”) and a confused as well as contradictory analysis of neoliberal globalisation― is that, as I mentioned above, it also ends up (like the reformist Left approaches) with reformist demands and no clear vision for a future society.

This observation notwithstanding, the fact that neoliberal globalisation is neither a plot nor irreversible within the market economy system does not of course mean that it should be welcome, as Hardt and Negri do, because it supposedly provides an “objective” basis on which an alternative globalisation could be built —reminding one of the usual “objectivist” type of analysis about the “necessary evils” supposedly created by Progress. As I pointed out elsewhere,[35] the adoption of the idea of Progress (shared by very few nowadays) implies also the endorsement of such “progressive” conclusions as the Marxist one about the “progressive” role of colonialism,[36] or the corresponding anarchist one that the state is a “socially necessary evil”.[37] On the other hand, if we adopt the view that there is no unilinear or dialectical process of Progress and a corresponding evolutionary process towards forms of social organisation grounded on autonomy and we assume, instead, that the historical attempts for autonomy/democracy represent a break with the past, then, forms of social change like colonialism and the institution of the state can be seen as just “social evils”, with nothing “necessary” about them, either as regards their emergence in the past, or the form that social change has taken since, or will take in the future.

The same applies to neoliberal globalisation which has nothing “necessary” about it, as it is simply the inevitable outcome of an initial choice imposed on society by economic and political elites: the choice for a market economy and representative “democracy”.[38] Furthermore, neoliberal globalisation on no account can be the “objective basis” for a new democratic society. Such a society should, instead, unravel what passes for political and economic democracy today and create genuine democratic institutions that will hardly have any relationship to the present supposedly democratic institutions. In other words, if by a democratic society we mean a new society based on the equal distribution of power (and it can have no other meaning!), like the type of society envisaged by the ID project, then, the move towards such a society could only represent a break with the past and not an evolutionary process. In this sense, the present neoliberal globalisation is far from the objective basis for such a society!

[1] See for evidence Hirst and Thompson, Globalisation in Question (Cambridge: Polity Press, 1996).

[2] See T. Fotopoulos, ‘The Myth of Postmodernity’, Democracy & Nature, Vol. 7, No. 1 (March 2001), pp. 27-76.

[3] Pierre Bourdieu, “The essence of neoliberalism: utopia of endless exploitation”, Le Monde Diplomatique (December 1998).

[4] See P. Bourdieu’s interview in Socialist Review, Issue 242, (June 2000).

[5] Pierre Bourdieu, Contre-Feux, tome 2 (Paris: Raison d'Agir, 2000).

[6] cf. Wallerstein, Immanuel, “Globalization or the age of transition? A long-term view of the trajectory of the world – system”, in the Internet site of the Fernand Braudel Center: http://fbc.binghamton.edu/

[7] L. Panich, “The New Imperial State”, New Left Review (March-April 2000).

[8] N. Chomsky, “Power in the Global Arena”, New Left Review (July-August 1998); See also his interview published in the Athens daily Eleftherotypia (25 Feb. 2001).

[9] John Gray, “Goodbye to globalisation”, The Guardian (27/2/2001).

[10] Perry Anderson, New Left Review (Jan/Feb 2000), p. 10.

[11] See e.g. P. Bourdieu’s interview published in Hangyoreh Shinmun (4 February 2000).

[12] Samir Amin in the Milan “World Forum of alternative solutions”, Il Manifesto/Epohi (16/4/2000).

[13] See Hirst and Thompson, Globalisation in Question.

[14] Ibid., p. 27.

[15] TID, p.50.

[16] UN-TCMD, World Investment Report, 1993.

[17] Charlotte Denny, The Guardian (August 31, 2001).

[18] In 1998 the index of trade openness was 51.1 for France, 58.2 for Germany, 19.6 for Japan, 110.8 for the Netherlands, 56.7 for the UK and 24.3 for the USA, giving an average index of trade openness for the major trading countries of 53.4. (World Bank World Development Report 2000/2001, Tables 1 & 15).

[19] Hirst & Thompson, Globalisation in Question, p. 3.

[20] See Tim Lang and Colin Hines, The New Protectionism (London: Earthscan, 1993), Chap. 3. See also The Ecologist, Vol. 22, No. 4 (July-Aug. 1992), p. 159.

[21] Hirst and Thompson, Globalisation in Question, p. 3.

[22] Larry Elliott, The Guardian (11 December 2000).

[23] TID, Ch. 3.

[24] Hirst and Thompson, Globalisation in Question, p. 4.

[25] Ibid., p. 6.

[26] Ibid., p. 152.

[27] Ibid., p. 163.

[28] Ibid., p. 15.

[29] Noreena Hertz, “Why we must stay silent no longer”, The Observer (April 8, 2001); see also N. Hertz's book, The Silent Takeover: Global Capitalism and the Death of Democracy (London:Heinemann, 2001).

[30] John Gray, False Dawn: the Delusions of Global Capitalism (London: Granta books, 1998).

[31] See Fredric Jameson, “Globalisation and strategy”, New Left Review (July-August 2000).

[32] Michael Hardt and Antonio Negri, Empire (Cambridge, Mass.: Harvard University Press, 2001).

[33] Ibid.

[34] Ibid., p. 239.

[35] TID, Ch. 8.

[36] See, e.g., Shlomo Avineri, ed., Karl Marx on Colonialism & Modernization (New York: Anchor Books, 1969), p. 13; and Anthony Brewer, Marxist Theories of Imperialism (London: Routledge and Kegan Paul, 1980), p. 18.

[37] See G.P. Maximoff, ed., The Political Philosophy of Bakunin p. 145.; See, also, M. Bookchin, The Philosophy of Social Ecology, (Montreal: Black Rose Press, 1995), p. xvi.

[38] Fotopoulos, “The Myth of Postmodernity”.