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Book Review

Globalisation: the left on the coat-tails of liberalism

Two recent books, Globalization: Neoliberal Challenge, Radical Responses by Robert Went and The Twilight of Globalization: Property, State and Capitalism by Boris Kagarlitsky highlight the long-standing history of globalisation of trade, changing imperial relations and the failure of the modern left to come to any effective strategy to combat its renewed assertive neo-liberal ideology. In the late-nineteenth and early-twentieth century the left was able to delineate a clear position between its own anti-imperialist stance and the pro-imperialist and apologist liberal positions. By the second half of the twentieth-century, however, after the experience of running capitalism (with its consequent disillusioning impact on principles) and the disorientating policies of supporting “progressive” struggles over “reactionary” ones, the left is in a muddle. For example, a significant section of the British left backed the NATO bombing of Serbia and the support of the Labour Party for the hegemonic ambitions of the US shows how much politics has seemingly changed in the course of a century.

Or does it? The tradition of leftism in Britain, rather than being an alternative to capitalism has, when negotiating for political power been liberal rather than anything approaching socialist. The 1945 “settlement” was not based on the ideas of the Labour movement but on a programme of social-security and nationalisation that had long been part of the liberal agenda, being synthesised in the 1942 Beveridge Report (which was also incidentally supported by the Communist Party). During the twenty years following the second world war the “social-compromise” of the welfare-state and Keynesianism become the accepted centre ground of British politics.

However, following the long-term decline in economic growth liberal opinion swung away from the Keynesian orthodoxy to a new one based in classical economic theory. The left, increasingly isolated from mainstream economics, first led a failed counter-attack in the early 1980s and then slowly surrendered on all fronts under Neil Kinnock and finally the right-wing bully Tony Blair. There is and always has been, it is true, a radical left aiming at arriving at state-capitalism through the Labour Party but the “socialising” impact of the post-war nationalisations was virtually non-existent. Such measures were not accepted by the political centre as necessary on the grounds of radical social and economic ambition but because it could be defended – to an extent – in terms of the overall efficiency of capitalism.

Privatisations, pursued ideologically against perceived excess government economic activity, have generally failed and sometimes cost business more than the old nationalised equivalents. The state remains, despite globalisation, a strong social, economic and political force, which is no doubt why transnational corporations spend billions of pounds globally in influencing their decisions. This despite the continuing ideological attack on the state even to the point of damaging the stability of the capitalist state itself. Privatisation has seen the domination of ideology over pragmatism for capitalist government. A European Commission report of 1992 (quoted by Kagarlitsky) failed to find any advantage and in fact an additional cost to be borne for capitalism. The reason given, to reduce the economic role of the state and thus to reduce state expenditure has singularly failed to occur; in Russia, for example, it was said that a reduction in the state economic sector of one-tenth required an increase of the state apparatus by one-third. States are not reducing in size or reducing their role but are merely changing with an increase of unaccountable quangos and so on. Similarly the increasing role of international organisations have not been met by a reduction in the role of national governments. The situation may be summed up with the phrase “freer markets and more rules”. Thus the use of the state is open to a different approach and is open to the left, which is currently unwilling to use it.

Further, the social inequalities engendered by neo-liberal capitalism can threaten to undermine the basis of capitalist government itself. A strong state involvement in the economy has historically been a boon for, rather than the bain of, capitalism. It is essential for the creation of a social consensus for capitalist relations:

“Because the capitalist market cannot get by without non-market institutions, the state as a non-commercial entity plays a key role, not only financing public bodies but also overseeing the interaction between the development of the economy and that of the various structures of the social sphere… Without a certain consent by the governed, the state could hardly perform its class function. But this means that the state system, as an instrument of the ruling class, cannot fail to take account of the interests of other social layers as well. When the institutions of power prove incapable of this, the state system enters into crisis” (Kagarlitsky, The Twilight, p.8).

Increasing inequalities are likely to lead, if not to outright conflict, then to tensions and an increasing political demand and therefore political will, where representative democracies exist, to a likely challenge to the unapologetic inegalitarian capitalism of recent decades. Robert Went reveals that the ratio of income between the top 20 per cent and the bottom 20 per cent of the world population was 60:1 in the early 1990s and predicted to decline to 50:1 by 2010 if all went well with the world economy; given the crises of the 1990s the ratio is far likely to increase rather than decrease. Went argues that the prospects for workers globally of the continuation of current trends is bleak indeed:

“there will be a greater and more dominant dictatorship of the markets, particularly over countries that wish to attract capital; greater social inequality as a result of a dual process of polarisation, within countries and on a world scale, among countries; progressive levelling down of wages, working conditions and social security; ecological destruction and deterioration; a greater role for unaccountable international institutions and blocs; and a further undermining of democracy” (Went, p.108).

The state has also tended to be a great source of innovation in the field of technology, which is not, as widely reported, the cause of globalisation but merely facilitates it. Not least of these developments was the internet, which originated in the 1960s in the US Defence Department but also includes space technology, infrastructure and education.

The confidence of global finance capital was somewhat shaken by the capital-flow and currency crises in Mexico in 1994 and Asia in 1997, which produced several calls for international regulation of global capital flows. Further crises are likely to induce regulation if severe enough. Current actions to solve financial crises are tied to austerity packages, which avoid the global impact of such incidences but create problems of development for those countries which are subject to them. While the share of world trade of developing countries has increased from 20 per cent to 30 per cent in the post-war period, economic growth has in the main been restricted to the EU, US and Japan. The imposition of export-led growth on the resource rich developing countries means that to develop a break with neo-liberalism is needed. A degree of protectionism is needed for national capitalist economies to prioritise industrial development. Such a growth, of course, could well be a stimulus for the global economy were it not geared to the interests of finance capital in the developed world.

Successful development has generally taken place in countries or regions where the interventionist state is the norm and not under conditions of anything approaching free-trade. Selective intervention in the world economy has been the basis of most industrial growth, from the British cotton-trade to South Korea and Taiwan in the 1960s who, without government protection of the domestic market tied to export performances of amongst others the clothing industry, would still be exporting rice as its export mainstay. Protectionism then most probably must play a prominent part in any meaningful economic growth in the non-western world – the west of course being still well acquainted with it, despite its rhetoric.

In the light of the utter failure of the Kyoto agreement to result in meaningful regulation it is also clear that for any serious recognition of environmental sustainability there must be a proliferation of regulation and state-led implementation of clean-technologies and the innovation of new ones. If humans are to survive on the earth then this must be done. If ecological disaster is not to be averted by socialism then capitalism must clearly adopt such an approach.

What then is to be done? Went is clear that capitalist relations are flawed:

“It is not possible within the existing economic logic, in which profit maximization comes first, to solve the most important problems that humanity faces. Under capitalism, the individual interests of speculators, employers or investors determine what they do. The partial rationality of their actions clashes with the general social interest of present and future generations.
In fact, capitalism is becoming more and more irrational. The discrepancy between what is economically and socially possible and what is actually happening has never been greater than it is today” (Robert Went, Globalization, p.121).

Kagarlitsky is also clear that the old state driven approaches to the problems of capitalism are also little hope for the future:

“The old Big Brother is dead, meet the New Big Brother. Now Big Brother is global or multinational, but even more faceless and even less accountable than before. It is no surprise that after experiencing what globalization has in store, so many people world-wide are becoming nostalgic for the old Big Brother” (Boris Kagarlitsky, The Twilight, p.2).

It seems strange then that despite the attention that both Went and Kagarlitsky pay to the need for an adequate response to capitalism and its current ideology that both see the answer in progressive reforms, or what Kagarlitsky calls “revolutionary reforms”. Following the massive defeat of leftism across the world, it is clear that socialist revolution can well do without the pursuit of reforms. Such an attitude also ignores the extent to which any challenge to neo-liberalism will most likely be led by an ideological shift back to liberal social-pragmatism – in other words, a shift motivated not in the interests of labour but of capital.