MMMMMMAAAAAARRRRRRXXXXXX,,,,,, MMMMMMOOOOOONNNNNNEEEEEEYYYYYY AAAAAANNNNNNDDDDDD TTTTTTHHHHHHEEEEEE MMMMMMOOOOOODDDDDDEEEEEERRRRRRNNNNNN WWWWWWOOOOOORRRRRRLLLLLLDDDDDD FINANCE CAPITAL AND IMPERIALISM TODAY Contents 1. Theories of late capitalist development: Harvey and Callinicos on contemporary imperialism Luke Cooper 1.1 Imperialism and the post-Cold War world 1 1.2 The long shadow of the classical legacies: contesting the nature of the system 3 1.3 The classical tradition in imperialism theory today 5 1.4 Mechanisms of surplus extract on: parasitism, ‘high finance’ and the system 7 1.5 Accumulation by dispossession – Harvey on the nature of imperial predation 13 1.6 Class structure in the imperial heartlands: the ‘labour aristocracy’ 19 1.7 Finance capital – the evolution of the capital form and imperialism 23 1.8 History, concepts and analysis: the method of non-deductive concretisation 28 1.9 Markets, states and ‘the international’: between Nicolai Bukharin and Hannah Arendt 30 2. Marx, money and modern finance capital 53 Markus Lehner 2.1 Money and the contradictions of capital accumulation 55 2.2 Money and crisis 57 2.3 Money as capital 64 2.4 The long-term tendencies of capital accumulation 68 2.5 The long-term tendencies and imperialism 70 2.6 The modification of the average rate of profit in the circulation of capital 71 3. The formation of finance capital 72 3.1 Interest-bearing capital 72 3.2 The many forms of interest 76 3.3 “Capital value” and employer’s profit 79 3.4 The accumulation of interest-bearing capital and the formation of fictitious capital 82 3.5 Derivatives 85 II Marx, Money and The Modern World - Imperialism and Finance Capital Today 3.6 Commercial credit 88 3.7 Bank capital and capital credit 90 3.8 State debt, issuing banks and credit money 95 3.9 Speculative bubbles 101 4. Finance and monopoly capitalism 105 4.1 International capital flows 108 4.2 Periods of imperialism 112 4.3 The business cycle and interest-bearing capital 114 4.4 Finance capital and the long-term tendencies of capital accumulation 117 4.5 Current developments and the structure of real and money capital accumulation 120 4.6 Finance market cycles since 1973/74 121 4.7 Finance capital and socialism 124 5. Finance capital unleashed: British imperialism today 129 Keith Spencer 5.1 1979-97: Tory onslaught on the working class 129 5.2 Labour embraces the market: 1987 to 97 132 5.3 ‘Supply side socialism’ 134 5.4 New Labour’s policies in practice 136 5.5 Investment in public services 138 5.6 Was New Labour successful in restoring the dynamism of British capitalism? 140 5.7 Did productivity and profits improve? 141 5.8 Profitability 143 6. The UK as an imperialist state 144 6.1 The rise and rise of British monopolies 146 6.2 The importance of capital flows 148 6.3 The City of London and the export of capital 148 6.4 Imperialism and the working class 150 6.5 The sources of profit in the finance industry 151 6.6 Labour and the economy 153 6.7 Long-term contradictions 155 III Introduction There are two moments in the first would deepen US economic woes as it decade of the 21st century that will be struggled out of recession. In retro- etched sharply in the historical record spect this was another telling expres- for many years to come. sion of the under-the-surface weakness and volatility of the US-led order. Al- (cid:129) On 11 September 2001 the attacks by most exactly seven years later this Al-Qaeda terrorists, on the World Trade would explode to the surface in the cat- Centre made history turn on a diabolic astrophic financial collapse triggered course. The most right-wing adminis- by the bankruptcy of US investment tration America had seen since the Lehman Brothers on 15 September Reagan years, took the opportunity 2008. The biggest ever bank bail out presented to declare a permanent war failed to avert the most synchronised on states and people’s considered hos- world recession ever. tile to US influence. If the 1990s was the decade of a The turn to the ‘war on terror’ con- great ascent and expansion of the cap- tained just as much hubris and tri- italist world order under the auspices umphalism as the claim to universalism of US hegemony, then the last decade and the “open door” policies of previous – and these two key turning points years. But under the surface the new within it – has seen this project enter a discourse expressed a sense of uncer- new phase of crisis. How this crisis will tainty and loss of superiority. The once unfold, which individuals, classes and frequent comparison amongst the polit- states, will win in the struggle under- ical elite with Pearl Harbour died away way for the future of the system, is the as it became an uncomfortable re- pressing question of our time. minder of American failure. Bogged down in two un-winnable imperial ad- Answering it will mean going be- ventures; this was a very different neath the surface of events and looking America to the one that had emerged for a deeper explanation of the mecha- unchallenged in the capitalist world nisms that govern today’s crisis-ridden after just five years of fighting follow- system. ing the attack on the US navy by the The starting point for the collection Japanese air force in 1941. of articles presented here is that we (cid:129) One of the memories that remain so can find the answers we need in the striking about the days after 11 Sep- classical canon of Marxist political- tember is Bush’s request to “shop for economy. America”, fearing the paralysis and in- Thus, this anthology seeks to do link activity sparked by the terrorist attacks together two things: the contradictions IV Marx, Money and The Modern World - Imperialism and Finance Capital Today of the global economic system and the American banking system. developing tensions and frictions in in- Luke Cooper surveys the work of two ternational relations with the rise of recent high profile Marxist theories of new global powers. imperialism developed by David Harvey Marcus Lehner offers an outline of and Alex Callinicos. Karl Marx’s theories of money, banking And Keith Spencer makes a case- and finance and shows how it can pro- study analysis of a ‘Great Power’ that vide a compelling account of what was at the centre of the global financial caused the great financial crisis. Updat- whirlwind: Britain. ing an earlier analysis written for the German Marxist journal Revolutionärer This is a special issue of the Marxist Marxismus he applies the theory to the journal Fifth International. Tables and graphs Foreign Direct Investment inflows, 1992-2003 (Billions of dollars) 9 Composition of international capital flows, 1980-2005 10 External Debt Stocks as proportion of Exports and Gross National Income (GNI) for Low and Middle Income Countries 12 Interest payments on External Debt as proportion of Exports and Gross National Income (GNI) for Lower and Middle Income Countries 13 Deindustrialisation - The fall in proportion of total employment in industry in the most advanced capitalist economies across the 20th and 21st centuries 23 “Growth of the mass of money M3 in comparison to GDP in current values and in real values” 60 Components that influence inflation (propensity to save, M3-increase, producer price index) and consumer price index for Germany, 1995-2007 63 Long-term tendency of different types of interest rates in the USA, 1954 - 2009 74 Comparison of profit after tax and interest payments with interest paid/received and dividends paid for US non-financial corporations, 1954 - 2008 (in billions of dollars) 81 Share of the top 10% wage earners in regard to the total wage income in the US, 1927-2007 72 Lehmans' Leverage (borrowed capital in relation to own capital), 2003-2009 93 Key data of US commercial and saving banks, 2004-2009 94 Development of the money supply in relation to real GDP in the USA, 1981-2006 98 Development of the value of outstanding contracts on the Derivatives Markets ($ trillions), 1995-2007 99 Price/Earning Ratios for Standard and Poor's 500 102 Development of commodity futures in comparison to spot markets 104 Volumes of daily turnover on foreign exchanges ($bn) 1992-2007 109 Share of major financial institutions in foreign exchange trade, 2007 110 The relationship of the cycle and interest rate movements 117 Investment per worker where UK equals 100 135 VI Marx, Money and The Modern World - Imperialism and Finance Capital Today Changes in the UK economy. Share of gross value added by sector (per cent) 141 Gross value added 1998 (black) and 2008 (grey) at basic prices (£ billions) 142 Annual rates of return (gross) for UK private non-financial companies 144 Changes in employees by sector (millions) 150 British trade in goods and services 152 Theories of late capitalist development: Harvey and Callinicos on contemporary imperialism Luke Cooper 1.1 Imperialism and the post-Cold War world The last decade has seen an upturn of interest in Marxist theories of imperialism.1 The background has been, of course, the drive of the last American administration to fundamentally alter the balance of power in the strategically important, oil-rich region of the Middle East, by using unilateral military power to achieve ‘regime change’ in states considered hostile to US influence. The bellicose rhetoric of the Bush administration and the idea of an unending number of supposedly ‘preventa- tive’ wars (‘the Bush Doctrine’) put forward by leading neo-conservative protago- nists at the time, provided fertile ground for a renewal of debate and argument on the Marxist left over the concept of imperialism. Bush’s Iraq adventure had, after all, undermined a number of previously ac- cepted assumptions about the post-Cold War world. On the left and the right many had viewed America’s ‘unipolar moment’ of the early 1990s and the globalisation of the world economy under its leadership in the two decades that followed, as hav- ing inaugurated a new world order marked by an amelioration of inter-state conflict and global social and political integration.2The belief and excitement in ‘globalisa- tion’ may now largely exist as little more than a distant memory of a collective flight of fancy, but, for a time, the features of the post-1991 order appeared to se- riously challenge classical Marxist assumptions about the nature of the global sys- tem. In particular, the issue was to what extent global economic integration and political multilateralism in a world with only one superpower represented a post- imperial evolution of the system? Proponents of the view that it did, could point to the new discourse of multilateralism and strictly ‘humanitarian’ intervention by al- lied western powers into supposed ‘trouble spots’, the proliferation of international agreements and the formation of the WTO, the sharp increase in the reach and power of western multi-national companies globally, and the booming world trade system and financial markets. The Iraq and Afghan conflicts – not to mention the explicitly imperialist designs of the Project for a New American Century school of thought that underpinned these wars – broke these ambitious but flawed theoretical edifices, which had argued the various concrete features (international agreements, economic integration, et al) of the international system in the 1990s, were basically epiphenomenal expres- sions of more profound and transformative changes in the relationship between states and markets across the globe. If, however, as seemed increasingly obvious, 2 Marx, Money and The Modern World - Imperialism and Finance Capital Today there was continuity as well as change in the pre and post Cold War worlds (most importantly, the endurance of the capitalist-nation-state system) then a space could be opened up for a reconsideration of classical theories of imperialism as explanans - the means by which we go about finding an explanation - for the workings of the contemporary international order. Part of the issue was explaining the juxtaposi- tion of the ‘war on terror’ policy of the United States with the on-going globalisa- tion of international economic exchanges; how did the two intersect? If the actions of the Bush regime were not simply ‘mad’ but based on at least some kind of ra- tional calculation of US geopolitical and economic interests, then there must be a relationship to be excavated between the contradictions of the global economy and the superpower’s increasing propensity to openly promote its own imperial power. This question of how the pursuit of economic and political power connect with one another in late capitalist development concerned two Marxist theorists, David Harvey and Alex Callinicos, who have both played an important role in stimulating the resurgence of debate of imperialism over the last decade. Both were concerned to situate the aggressive policy of the last US administration within the tectonics of global capitalism as it had developed historically over previous decades. As David Harvey described his own endeavour in the opening pages of his New Imperialism: “I seek to uncover some of the deeper transformations occurring beneath all the sur- face turbulence and volatility, and so open up a terrain of debate as to how we might best interpret and react to our present situation.”3 The common thread to both Callinicos and Harvey’s work was their shared view that the logics of political and economic power had to be situated in an irreducible but dialectical relation to one another, if, that is, a concrete explanation for the lat- est bout of American imperial hubris was to be achieved. Meanwhile, the theoretical explanations of international political economic devel- opment they offered have simultaneously had to wrestle with crucial changes in the global political economy happening across this time. Any reinvigorated Marxist the- ory of imperialism had to rise to the challenge of not only explaining the historical changes in the international system since the end of the Cold War, the related impact of neo-liberal/conservative Anglo-American policies on the world stage since the late 1970s, but, in addition to this, the great financial crisis that erupted in the fall of 2008, the deep global recession which followed, and the new Obama-led admin- istration in the United States, who has of course invoked a language suggesting some degree of policy change with the Bush era. The consequence of this more re- cent set of historical changes is a world order that makes for a dramatic contrast with 1992: i.e., one increasingly eliciting a tendency to ‘multi-polarity’ with the US capacity to pursue its interests freely in the name of the system as a whole increas- ingly inhibited by the growth in the relative political and economic power of its rivals. Whatever we might make of all this,4it is quite plain that the fast-changing and crisis-ridden nature of global political and economic life in the last decade has pro- vided ample grounds for testing and elaborating competing theories of the global system. It is against this background, then, that below we consider the work of David Harvey and Alex Callinicos. The analysis and critique proceeds along four Theories of late capitalist development: Harvey and Callinicos on contemporary imperialism 3 basic lines. The first part of the article situates today’s debates within the context of the contested legacies of the classical tradition in Marxist imperialism theory. It then draws out two themes based on criticisms Callinicos makes of Lenin’s Impe- rialism: (i) whether the idea of ‘parasitism’ remains an essential means by which to understand the bondage of the south and east to the imperial heartlands and the related impact on the internal class structure of these ‘core’ states; and (ii) whether the notion of ‘finance capital’ as used by Lenin and Hilferding was attached to a spe- cific organisational form that no longer exists, leaving not only their theories out- dated, but our idea of ‘imperialism’ itself in need of quite fundamental re-formulation. The fourth part moves onto the major point of convergence between Callinicos and Harvey; the need to conceptualise imperialism as the intersection of geopolitical and economic logics of power. Through the course of these four themes the article seeks to show the strengths of a more traditional ‘Leninist’ approach to the world system; understanding imperialism as a specific evolutionary stage of capitalist development based on corporate oligopoly. 1.2 The long shadow of the classical legacies: contesting the nature of the system The evolution of the capitalist order across the 20th century has of course been a re- curring subject of great debate amongst Marxists. In the pre-war period the great writers of the classical tradition (Lenin, Hilferding, Bukharin, Trotsky, Luxembourg, Grossman et al) developed the concept of imperialism to describe not only the colo- nial conquest and economic subordination of much of the world to the most highly developed Great-Powers, but, also, and arguably most intriguingly, to develop an historical and evolutionary account of the changing forms of capitalist economic pro- duction, trade and exchange within a single, internationally consolidated system. In the post-war period, the collapse and decline of the great socialist and communist internationals and the access of Marxists to the universities from which they were previously barred, for good or ill created an academic Marxist milieu to whom the baton was passed and with it the task of reappraising the classical tradition in light of the transformation in the international order following the war. The latter cer- tainly stimulated debate and an extension of research into wider areas, but it had the disadvantage that, unlike debates between the major writers in the early part of the last century, it tended to become disconnected from political practice. So whereas in the classical tradition – with the sharp polarisation on the left and the wider, inten- sive political and social instabilities of the first half of the 20th century – political and programmatic consequences were demarcated very clearly, the tendency in the post- war debates is for them to be downplayed. Another consequence of these two stages in the intellectual lineages of imperi- alism theory is that it has been marked by a great deal of contestation and argu- ment. Firstly, the political split in the Second International in 1914 over the First World War led to the development of different analytical frameworks by the re- formist and revolutionary sides on the nature of the international system and its (stable or crisis-ridden) prospects. Secondly, in the post-war period the academic- turn encouraged greater heterogeneity as a penumbra of distinctive competing par- 4 Marx, Money and The Modern World - Imperialism and Finance Capital Today adigms developed (world systems theory, dependency theory, unequal exchange theory, the under consumptionist/monopoly capitalism school, et al). The classical tradition caste a long shadow over the latter developments – with Lenin’s work particularly influential, even amongst those who criticised it – as competing schools drew on different aspects of their approaches, and dropped others, to develop new theories. Andre Gunder Frank and his co-thinkers amongst the underdevelopment theorists, for example, took up the idea of exploitation of the periphery states by the developed nations, but, dropped more fundamental Marxist assumptions about cap- italism and historical materialism. As with all discussion of imperialism in theory and practice Lenin’s famous work, Imperialism: the Highest Stage of Capitalism,5acts as an overarching histor- ical and theoretical influence on both Harvey and Callinicos’ efforts. Lenin’s work was produced as part of a wide-ranging debate amongst Marxists of his genera- tion who were all concerned to understand how capitalism was evolving as it moved from a period in which it was struggling for the domination of the globe to one in which it had become the dominant international system, incorporating to an ever-greater degree other more backward social systems in the periphery of the system. Naturally enough this theoretical task necessitated building on Marx’s understanding of capital, and applying the framework he developed – at its different levels of abstraction and concretisation – to these historically new circumstances. It is the strength of Callinicos’ book, Imperialism and Global Political Economy, that he offers a theoretical reflection on the classical tradition and situates the whole question within the context of continuing Marx’s Capital.As he notes, this endeavour was historical just as much as it was theoretical; the challenge for the ‘Marxists after Marx’ was reaching a more historically specific understanding of the contemporary changes in the capitalist world economy.6Marx’s work established a set of theoretical prescriptions – the abstract categories of analysis by which he the- orised the substantive essences of capitalist relations – that later thinkers had to both respect and creatively re-elaborate in light of the changing historical transfor- mations of the capitalist system. These stipulations are not dogmatism but are a crucial part of achieving the kind of historically focused application of Marx’s the- ory that makes it genuinely testable and scientific, and, consequently, open to em- pirical refutation: “… I wish to emphasise that this strategy for continuing Capitalby developing a more concrete theory of different phases of capitalist development seems perfectly consistent with Marx’s own approach. But that approach also imposes an important constraint on such efforts, namely… that the conceptualisation of imperialism be consistent with the more abstract account of the constitutive relations, tendencies and mechanisms of the capitalist mode developed in Capital,or, where they depart from that account, that they provide good reasons for doing so. This stipulation may seem like a dogmatic confinement of empirical research, but this is not my intention. In the first place, the classical theories of imperialism that explain it as a specific phase of capitalist development can only claim to be continuations of Capital if they observe some such constraint. Moreover, in doing so, far from representing a retreat from em- pirical enquiry, they offer a way of making Marx’s discourse open to refutation…