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Historical Materialism Journal PDF

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Tony Smith Globalisation and Capitalist Property Relations: A Critical Assessment of David Held’s Cosmopolitan Theory The debate that raged between social democrats and revolutionary Marxists for much of the twentieth century was long and bitter.1 Social democrats defended national reforms, supposedly capable of instituting a just capitalist order. Adherents of revol- utionary Marxism, in contrast, insisted that that the property relations de(cid:142)ning capitalism necessarily involve exploitative production relations on a world scale. In my view, Marxists had the far stronger arguments. But, in the countries of the industrialised West, at least, social democracy won the debate politically, attaining a hegemonic position on the Left and Centre-Left. Today, this debate is a distant memory. It has become increasingly dif(cid:142)cult to distinguish social- democratic parties from their traditional rivals on the Right and Centre-Right. Whatever their rhetoric outside of of(cid:142)ce, once elected, social-democratic 1 I would like to thank Chris Arthur, Riccardo Bello(cid:142)ore, Sebastian Budgen, Martha Campbell, Alejandro Colás, Fred Evans, John Exdel, Matthias Kaelberer, Fred Moseley, Patrick Murray, Nicola Taylor, and Alex Tuckness for their helpful feedback on earlier versions of this paper. All the usual disclaimers apply. Historical Materialism, volume 11:2 (3–35) © Koninklijke Brill NV, Leiden, 2003 Also available online – www.brill.nl 4 (cid:149) Tony Smith parties have consistently attempted to cut social welfare programmes, increase the so-called ‘(cid:143)exibility’ of labour markets, and serve the interests of (cid:142)nancial capital. Theorists associated with the social-democratic tradition have responded to this development in three main ways. One group echoes Thatcher’s ‘there is no alternative’ war cry. On their view, globalisation makes the above policies all but inevitable. Any divergence from ‘(cid:142)scal responsibility’ will invariably and almost instantly be punished by global capital markets.2 On this view, social democrats must be content to lessen somewhat the social costs associated with neoliberal policies. A second group of theorists, horri(cid:142)ed by the accommodations to neo- liberalism made by social-democratic parties, holds that ‘globalisation’ is an ideological category, not an irresistible force. For these thinkers, the extent of global economic integration has been wildly overestimated. Most economic activities continue to be contained within national borders, and states continue to have the power to regulate economic life and further social-democratic values. The turn away from traditional social-democratic policies is thus not due to the lack of feasible alternatives, but to a political balance of forces in which (cid:142)nancial capital predominates. With a different political balance of forces, neoliberalism could be reversed and authentic social democracy revived.3 Adherents of a third viewpoint agree with the (cid:142)rst set of theorists on one essential matter: the rise of globalisation has indeed undermined the pursuit of traditional social-democratic policies on the national level. But they share the misgivings of the second group regarding the accommodations to neoliberalism made in the name of globalisation. Refusing to abandon the values of social democracy, they argue that the proper response to globalisation is the institutionalisation of those values on a global level. I believe that the most powerful defence of this third perspective is found in David Held’s Democracy and the Global Order. The present article is devoted to a critical examination of the transformations in the global economy called for by Held and other defenders of what he terms ‘cosmopolitan-democratic law’.4 2 Giddens inclines to this position in his contributions to Hutton and Giddens (eds.) 2000. 3 See Hirst and Thompson 1996 and the articles collected in Boyer and Drache (eds.) 1996. 4 Other defenders of cosmopolitan ethics are surveyed in Jones 1999. Globalisation and Capitalist Property Relations (cid:149) 5 I shall simply assume here, for the sake of the argument, that globalisation has undermined the traditional social-democratic project of establishing ‘capitalism with a human face’ on the national level. I shall also grant the equally contentious thesis that the values of social democracy as interpreted by Held are indeed the normative standards that ought to govern social life.5 Finally, I shall not investigate the question of social agency, that is, the question of whether there are (or could be) social movements with the potential to institute cosmopolitan law in the face of the undoubtedly bitter opposition of neoliberals and their allies.6 Four proposals for the ‘global governance’ of capitalism Decisions by agents operating outside a given set of national borders can profoundly affect the lives of those within these borders. In Held’s view, for a political order to be democratic, those exercising decision-making power must be accountable to those over whom the power is exercised. The democ- ratisation process, therefore, must expand beyond the ongoing democratisation of the nation-state (and more local forms of government) to include a new 5 The principle of autonomy that provides the foundation of Held’s cosmopoli- tanism has an unmistakably Kantian provenance: ‘persons should enjoy equal rights and, accordingly, equal obligations in the speci(cid:142)cation of the political framework which generates and limits the opportunities available to them; that is, they should be free and equal in the determination of the conditions of their own lives, so long as they do not deploy this framework to negate the rights of others’ (Held 1995, p. 147). 6 Held’s account of social agency focuses on a ‘global civil society’ arising in response to moral appeals and enlightened self interest, that is, ‘transnational, grass-roots movements with clear regional or global objectives, such as the protection of natural resources and the environment, and the alleviation of disease and ill-health; the elaboration of new legal rights and duties affecting states and individuals in connection with the “common heritage of humankind”, the protection of the “global commons”, the defence of human rights and the deployment of force; and the emergence and proliferation in the twentieth century of international institutions to coordinate transnational forces and problems, from the UN and its agencies to regional political networks and organizations.’ Held concludes, ‘accordingly, it can be argued, a political basis exists upon which to build a more systematic democratic future’ (Held 1995, p. 237). For a general assessment of ‘new social movement’ theories of this sort, see Wood 1986. Acritical assessment of the concept of ‘global civil society’ in particular is found in Colás 2001, Chapter 5. Colás argues that international civil society long predates contemporary globalisation, that many agents of international civil society are neither accountable nor democratic, and that democratic politics remains essentially connected to the sovereign state. Held, I think, would grant all three points. But he fails to acknowledge fully the dif(cid:142)culties they raise for his account of the agency underlying the future institutionalisation of cosmopolitan-democratic law. 6 (cid:149) Tony Smith political régime on the global level.7 Held advocates a global ‘Charter of Rights and Obligations’ articulating the basic precepts of cosmopolitan- democratic law. Asystem of international courts is required to which appeal can be made when particular agents – including state of(cid:142)cials – fail to adhere to these precepts.8 He also calls for regional parliaments on the continental level, general referenda cutting across nation-states, elected supervisory boards for international organisations, and an ‘authoritarian assembly of all democratic states and agencies’. Finally, Held does not shrink from demanding a permanent independent military force under the control of this global assembly. It is needed both to enforce laws on the regional and global levels and to provide a ‘general check on the right of states to go to war’.9 Most debates regarding the institutional implications of cosmopolitanism have concerned the feasibility and normative attractiveness (or lack thereof) of these proposed political institutions.10In the present context, however, our focus will be on Held’s call for reforms of the global economy. There are two main reasons for this. First, Held himself unequivocally recognises that ‘if the rule of law does not involve a central concern with distributional questions and matters of social justice, it cannot be satisfactorily entrenched, and the principle of democratic accountability cannot be realized adequately’.11 In other words, no economic justice on the global level, no global political democracy. Second, an examination of Held’s economic proposals brings us to the heart of the debate between cosmopolitanism and a Marxian perspective. Held insists that the global ‘Charter of Rights and Obligations’ include constitutional guarantees of two fundamental economic rights, along with constitutional commitments to two forms of economic policy. Each of these four proposals is designed to provide a necessary condition of the possibility of substantive (as opposed to merely formal) autonomy throughout the global economy. They are: i) the right to a basic income; ii) the right to ‘“access avenues” to the decision-making apparatus of productive and (cid:142)nancial property; that is, to the creation of participative opportunities in (cid:142)rms and 7 ‘Democratic law can prevail only if it is established both within the power domains of particular political communities and within those which cut across them. Sites of power can be national, transnational and international. Accordingly, democratic public law within a political community requires democratic law in the international sphere’ (Held 1995, pp. 226–7). 8 Held 1995, p. 272. 9 Held 1995, pp. 272–6. 10 See, for example, the texts collected in Archibugi, Held and Koehler (eds.) 1998. 11 Held 1995, p. 248. Globalisation and Capitalist Property Relations (cid:149) 7 in other types of economic organization’;12iii) increased social control of global investment through ‘management of interest rates to induce capital to invest in certain areas’ and through the pooling and allocation of democratically- controlled social investment funds;13 and iv) controls on short-term capital (cid:143)ows. These proposals form the core of a new ‘Bretton Woods’ agreement – an agreement which would tie investment, production and trade to the conditions and processes of democracy. Corporations and states would then be subjected to ‘democratic audits’ of their compliance with cosmopolitan law. If an audit reveals that they have disregarded the precepts of the global social charter, sanctions would follow. Restrictions could be imposed on the provision of capital for investment; for instance, the release of funds – whether public or private – to companies or governments could be linked directly to the latter respecting and satisfying the conditions of democratic autonomy.14 These bans would be ‘enforced by agencies which would monitor not just the rules of sound (cid:142)nance and market transaction, but also the rules which speci(cid:142)ed the possibility of mutual respect for autonomy and self- determination’.15 The goal of cosmopolitan law is to ensure that the material preconditions for effective exercises of autonomy are provided throughout the global economy. It should be clear that this project is nothing less than the institutionalisation of social-democratic values on the global level. Does Held accept the thesis that these social-democratic values are compatible in principle with capitalist property (and production) relations? The answer is complicated by the fact that Held calls for the ‘enhancement of non-state, non-market solutions in the organization of civil society’. He also advocates ‘systematic experimentation with different democratic organizational forms in the economy’, leading to a ‘pluralization of patterns of ownership and possession’ including ‘strict limits to private ownership of key ‘public-shaping’ institutions: media, information, and so on’.16 Nonetheless, the general thrust of his position points in a quite different direction: 12 Held 1995, p. 253. 13 Held 1995, p. 259. 14 Held 1995, p. 255. 15 Held 1995, p. 256. 16 Held 1995, p. 280. 8 (cid:149) Tony Smith Capitalism, in the context of democratic constitutional societies, has strengths as well as weaknesses – strengths that need to be recognized and defended as well as extended and developed. Accordingly, if the implications of the arguments about the tensions between democracy and capitalism are to be pursued, it needs to be on terms which break from the simple and crude juxtaposition of capitalism with planning, or capitalism with systems of collective ownership and control, and in terms which are more cautious and experimental.17 In light of the italicised portion of this passage, Held’s ‘cautious and expe- rimental’ project appears designed to reform capitalism in light of the normative imperatives of cosmopolitan democracy. This supposition is con(cid:142)rmed in the following passage: ‘The corporate capitalist system requires constraint and regulation to compensate for the biases generated by the pursuit of the “private good”’.18Providing ‘compensation’ is obviously very different from rejecting the corporate capitalist system. Or consider Held’s comment regarding rights to participation in workplace decision-making: Such opportunities do not translate straightforwardly into a right to social or collective ownership. For what is centrally at issue is an opportunity for involvement in the determination of the regulative rules of work organizations, the broad allocation of resources within them, and the relations of economic enterprises to other sites of power....At stake is a balance between the requirements of participation in management and those of economic effectiveness, that is, a balance between the discipline of democracy and the discipline of the market. The question of the particular forms of property right is not itself the primary consideration.19 From a Marxian perspective, there is no question that Held’s position is vastly superior to both the neoliberalism of the Right and the staggering political degeneration of social democracy represented by the so-called ‘third way’ of Blair and his cohorts.20Nonetheless, for Marxists, ‘the question of the particular forms of property right’ cannot be dismissed so quickly. In this paper, I shall argue that capitalist property and production relations are of overwhelming signi(cid:142)cance. They ultimately prove incompatible with the democratic values Held seeks to advance with his four proposals. 17 Held 1995, p. 249 (italics added). 18 Held 1995, p. 251. 19 Held 1995, pp. 253–4; italics added. 20 Callinicos 2001. Globalisation and Capitalist Property Relations (cid:149) 9 The basic income proposal Those who enjoy basic income guarantees have a greater ability to make choices in consumer markets than they would otherwise have. This enhances a form of economic autonomy that separates capitalism from earlier social systems.21 A basic income, if set at a suf(cid:142)ciently high level, could also signi(cid:142)cantly lessen the economic coercion forcing workers to take low-pay, low-status, and dangerous jobs. But is the provision of a reasonably high basic income consistent with capitalist property relations? For social-democratic theorists, the historical periods in which social-democratic régimes provided relatively generous basic incomes guarantees appears to offer conclusive empirical proof for an af(cid:142)rmative answer. This is not the place to examine the history and limits of social democracy in different national contexts, for Held’s project is the extension of social democracy to the global plane.22In the present context, the key point to stress is the danger of committing a fallacy of composition. From the fact that some regions with capitalist property relations have provided somewhat high levels of basic income in certainhistorical contexts, it does not follow that allregions with those property relations in place can do so in all contexts. The most basic social relation in capitalism is the capital/wage-labour relation. If cosmopolitan law is to systematically cohere with the capitalist world market, the provision of basic income must be compatible with the continued reproduction of this relation. This cannot occur unless those who do not have access to capital continue to see entering into wage contracts as their best available option. In circumstances where wage levels and workplace satisfaction are low, this implies that social assistance must be quite limited if capitalist property relations are to be reproduced.23 Few would choose to sell their labour-power in such conditions if acceptable alternatives were available. The limited level of basic income compatible with capitalist property relations in these circumstances is unlikely to provide the material conditions for effective exercises of autonomy to the extent required by the precepts of cosmopolitan-democratic theory. Acorollary of this point is also worth stressing. The lower the wages and the worse the work conditions in a particular region of the global economy, 21 See Marx 1973, p. 287. 22 See Therborn 1995. 23 See de Brunhoff 1978. 10 (cid:149) Tony Smith the lower the basic income must be if the reproduction of the capital/wage- labour relation is not to be undermined. The basic income proposal considered by itself thus would appear to reproduce, rather than transform, the profound unevenness that characterises the contemporary global order. Of course, it would be unfair to place too much weight on this (cid:142)rst proposal in isolation. It is but one of a set of reforms intended to function together. Other aspects of cosmopolitan law seek to ensure that levels of wages and work satisfaction are relatively high throughout the global economy. If these objectives were attained, Held might reply, the level of basic income could be set relatively high without undermining the capital/wage-labour relation. I shall offer some criticisms of Held’s other proposals below. For the moment, let us assume, for the sake of the argument, that they can in fact attain the goal of a global economy with low unemployment and high levels of real wages and work satisfaction. Let us assume further that, under these conditions, basic income guarantees could indeed be set at a level high enough to provide essential material conditions for the effective exercise of autonomy without undermining the attractiveness of wage contracts. If these (highly questionable!) points are granted, the question then becomes whether such a ‘golden age’ could persist inde(cid:142)nitely. This question brings us to the complex and contentious question of crisis tendencies within capitalism. If the basic form of crisis in capitalism were underconsumption crisis, it might be plausible to hold that the basic income guarantee could contribute to the inde(cid:142)nite avoidance of economic down- swings. For this guarantee provides higher levels of income to precisely those economic agents with the highest propensity to consume. But this element of cosmopolitan law looks rather different from the perspective of other, more convincing, theories of economic crisis. Developing themes discussed in the tenth chapter of Capital Volume 3,Geert Reuten and Robert Brenner have argued persuasively that a systematic tendency to overaccumulation crises can be derived from the property relations de(cid:142)ning capitalism.24 Their account begins by noting that the drive to appropriate surplus pro(cid:142)ts necessarily tends to lead more ef(cid:142)cient plants and (cid:142)rms to enter a given sector. But established (cid:142)rms and plants do not all automatically withdraw when this occurs. Their (cid:142)xed capital costs are already ‘sunk’, and so they may be happy to receive the average rate of pro(cid:142)t on 24 Reuten 1991; Brenner 1998, 2002. See also Smith 2000b. Globalisation and Capitalist Property Relations (cid:149) 11 their circulating capital. They also may have established relations with suppliers and customers impossible (or prohibitively expensive) to duplicate elsewhere in any relevant time frame. Further, their management and labour force may have industry-speci(cid:142)c skills. And governments may provide subsidies for training, infrastructure, or R&D that would not be available to them if they were to shift sectors. When a suf(cid:142)cient number of (cid:142)rms and plants do not withdraw as a result of these sorts of factors, the result is an overaccumulation of capital, manifested in excess capacity and declining rates of pro(cid:142)t. In more traditional Marxist terms, insuf(cid:142)cient surplus-value is produced to valorise the investments that have been made in (cid:142)xed capital. In certain circumstances, this dynamic may lead to an economy-wide fall in pro(cid:142)t rates for an extended historical period.25 When overaccumulation crises break out, previous investments in (cid:142)xed capital must be devalued. At this point, the entire system becomes convulsed in endeavours to shift the costs of devaluation elsewhere. Each unit, network, and region of capital attempts to shift the costs of devaluation onto other units, networks, and regions. And those who control capital mobilise their vast economic, political, and ideological weapons in the attempt to shift as many of the costs of devaluation as possible onto wage-labourers, through increased unemployment, lower wages, and worsened work conditions.26 As the concentration and centralisation of capital proceeds in the course of capitalist development, both overaccumulation and the resulting need for devaluation necessarily tend to occur on an ever-more massive scale. Global turbulence and generalised economic insecurity increasingly become the normal state of affairs. It may not be logically impossible for a high level of basic income guarantees to be maintained across the global economy in such circumstances. But it will surely tend to be increasingly difficult to do so. To summarise, if we assume that the remaining planks of cosmopolitan law ful(cid:142)l their objectives, a case can be made that a high level of basic income is, in principle, compatible with the continued reproduction of the capital/wage- labour relation in the global economy. But, if the theory of overaccumulation 25 Brenner has provided considerable empirical evidence that the lower rates of growth that af(cid:143)icted the world economy after the so-called ‘golden age’ ended in the late 1960s and early 1970s were due, in part, to excess capacity (or, better, insuf(cid:142)cient surplus-value) in the leading sectors of the global economy. Fred Moseley argues that an increase in the ratio of unproductive and productive labour also played a major role in this story (Moseley 1991). I consider the two accounts complementary. 26 See Smith 2000a, Chapter 5. 12 (cid:149) Tony Smith crises is accepted, it follows that this compatibility cannot be maintained over time. Held’s (cid:142)rst proposal thus does not appear to be generally compatible with capitalist property relations, even if an exceedingly favourable (and, as we shall see below, implausible) assumption is made for the sake of the argument. One (cid:142)nal comment is in order before turning to Held’s other proposals. Setting a baseline of income below which people are not allowed to fall does not, in itself, remove economic inequality. Providing such a baseline in a global social charter is even fully consistent with a signi(cid:142)cant increase in the relative inequality of the distribution of income and wealth. This is a profound problem for Held, since he himself explicitly grants that large economic disparities tend to be translated into disparities in social power great enough to constrict the effective exercise of autonomy by disadvantaged individuals and groups. We may conclude that providing a level of basic income suf(cid:142)ciently high to further the effective exercise of autonomy is ruled out by capitalist property and production relations. Access avenues The second feature of cosmopolitan-democratic law relevant to the global economy is the precept granting labourers, local communities, consumers, and investment fund-holders access to the sites of industrial and (cid:142)nancial decision-making. Held insists that this access must go beyond mere ‘con- versation or consultation’. Management must negotiate with representatives of these groups ‘to create decision frameworks on matters as diverse as employment prospects, work methods, investment opportunities, and income and dividend levels’.27 The German system of co-determination, a social- democratic reform reserving just under half of board seats for representatives of labour, offers an example on the national level. Here, too, Held’s cosmopolitan law can be understood as an attempt to globalise social democracy. And here, too, one can question whether Held’s objectives are compatible with the property and production relations underlying the capitalist world market.28 27 Held 1995, p. 253. 28 I shall examine ‘access avenues’ to investment decisions in the following section. The implications of the access avenues proposal for community groups, consumers, and so on, will not be discussed here, although many of the following arguments regarding wage-labourers could be extended to these other social groups.

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