THE DECLINING LEGITIMACY OF GLOBAL CAPITALISM

Kees van der Pijl’s Transnational Classes and International Relations (pp. 55-57) splits the history of capitalism into four stages of development:

A. “Extensive accumulation,” corresponding to the first, agrarian, stage of capitalism and to the food and textile industries

B. “Intensive accumulation,” corresponding to the metals, oil, and engineering industries, and the industrial era of the late 19th/ early 20th centuries up to the depression of 1929-1932.

C. “Progressive accumulation,” corresponding to the automobile, chemicals, and electrical engineering industries and the post-World-War-II consumer society up until the 1970s.

D. Neoliberalism, corresponding to the telecommunications/microelectronics and biotechnology/ pharmaceutical industries and the current age of finance capital.

We can see in this explanatory schema how specific, nameable historical events provided transitions between each period, in which a form of accumulation was dominant, and a succeeding period with a new form of dominance.

Extensive accumulation was ushered into being by the triumph of capitalist classes over aristocracies and the various enclosures of the commons by private interests. Spectacular triumphs over aristocracy peppered this evolution; the English Civil War, the American and French Revolutions.

Intensive accumulation came about wherever there was industrialization. The American Civil War disposed a Southern plantation aristocracy based on Stage A in favor of an economy of robber barons and monopolies.

Progressive accumulation created the consumer society of today. The catastrophes of the Great Depression and of World War II cleared away the old capitalist frameworks for the sake of social democracies and welfare states.

Neoliberalism can be dated to the 1970s, with the dissolution of the Bretton Woods framework, the delinking of the US Dollar from the gold standard, the oil embargo of 1973, and the founding of the Trilateral Commission.

Now, not only can we identify each phase of capitalist development with an industry and a historical period, but also with ideologies which legitimize the rule of capital through promises made to labor.

Stage A., agrarian capitalism, was legitimized in the US by the ideology of Manifest Destiny, Stage B., industrial capitalism, was legitimized by Progressivism and by American nationalism. Stage C. was legitimized by consumerism, and Stage D. has, so far, been legitimized by neoliberalism. America saw this, initially and principally, in the Reagan Administration’s endorsement of ideologies of libertarian “free trade” and “less government.” Life was supposed to be better under a regime in which we were all free to be capitalists engaging in “free trade,” and in which there were fewer taxes.

In this light, Vincent Navarro’s article in the Monthly Review (58:4, September 2006) titled “The Worldwide Class Struggle” counts as a landmark. Navarro starts by separating the ideology of neoliberalism from what actually has happened under the neoliberals:

Let’s be clear right away that neoliberal theory is one thing and neoliberal practice is another thing entirely. Most members of the Organisation for Economic Co-operation and Development (OECD) —including the U.S. federal government—have seen state intervention and state public expenditures increase during the last thirty years.

Thus, from Carter to Reagan to Bush I to Clinton to Bush II, the role of the state has increased, whereas commentators of all political stripes have been deceived into believing otherwise. The difference, of course, is in how the state has been used by the last five Presidents. As Navarro summarizes, neoliberalism transforms the state into an instrument of class warfare:

Neoliberal ideology was the dominant classes’ response to the considerable gains achieved by the working and peasant classes between the end of the Second World War and the mid-1970s. The huge increase in inequality that has occurred since then is the direct result of the growth in income of the dominant classes, which is a consequence of class-determined public policies such as: (a) deregulation of labor markets, an anti-working-class move; (b) deregulation of financial markets, which has greatly benefited financial capital, the hegemonic branch of capital in the period 1980–2005; (c) deregulation of commerce in goods and services, which has benefited the high-consumption population at the cost of laborers; (d) reduction of social public expenditures, which has hurt the working class; (e) privatization of services, which has benefited the richest 20 percent of the population at the expense of the well-being of the working classes that depend on public services; (f) promotion of individualism and consumerism, hurting the culture of solidarity; (g) development of a theoretical narrative and discourse that pays rhetorical homage to the markets, but masks a clear alliance between transnationals and the state in which they are based; and (h) promotion of an anti-interventionist discourse in clear conflict with the actual increased state interventionism to promote the interests of the dominant classes and the economic units—the transnationals—that foster their interests.

Thus neoliberal ideology is a mere cover for the state’s use of all the levers at its disposal (especially its underwriting of the capitalist economy) to promote the interests of the owning class at the expense of the working class. In short, neoliberalism makes the state a tool of class warfare.

A more sophisticated narrative than Navarro’s, that of Harry Shutt in The Trouble With Capitalism, in which “the weight of official opinion is still clearly convinced that the primary duty of government in the global economy is to prop up corporate profits at all costs despite the demonstrable reality of a surplus supply of capital.” (87) Thus all of the symptoms Shutt describes, the increasing prevalence of stock fraud (the primary example being Enron), the various savings and loan scandals, the asset bubbles, the raiding of government assets under the aegis of “privatization,” and the increased productivity and declining wages of labor (a phenomenon recently noted by the New York Times), are all a byproduct of the increasing voracity of capital in a world with a declining global growth rate (outside, of course, of China).

So when we read articles like Navarro's, in the context provided by van der Pijl and by Shutt, we should reflect upon the declining legitimacy of global capitalism. Behind its decreasing ability to make good on its promises (and Navarro, in this regard, wishes to make a major dent in the "small government" promise), lies a hidden proclamation of class warfare. If the corporations were honest, they would say: we control the economy and the government, and so you lose, and you must continue losing in order to maintain our profits indefinitely. Of course, the question of how indefinitely is an open one.