Atelier N°.0, article 12

Paul Sweezy :
(Monthly Review, September 1997)

                                                    More (or Less) on Globalization
                                                                        by Paul M. Sweezy

                               Much has been written about "globalization" in the last few years. It
                                is not my intention to add to this literature but only to put the topic
                                into the context of my own understanding of the history of capitalism

                                Globalization is not a condition or a phenomenon: it is a process that
                                has been going on for a long time, in fact ever since capitalism came
                                into the world as a viable form of society four or five centuries ago;
                                (dating the birth of capitalism is an interesting problem but not
                                relevant for present purposes). What is relevant and important, is to
                                understand that capitalism is in its innermost essence an expanding
                                system both internally and externally. Once rooted, it both grows
                                and spreads. The classic analysis of this double movement is of
                                course Marx's Capital.

                                But Marx never raised the question whether a fully globalized
                                capitalism, i.e., with no more non-capitalist space to move into,
                                would be viable. The reason, of course, was that he expected
                                capitalism to be overthrown and replaced by another system long
                                before its spatial limits had been reached. He did not ask, hence did
                                not try to answer, whether a fully globalized capitalism would be
                                able to survive, let alone flourish, by entirely internal expansion.

                                It was left for Marx's followers to wrestle with this and related
                                questions. The boldest and in some ways the most interesting
                                attempt was that of Rosa Luxemburg in her magnum opus The
                                Accumulation of Capital (1912). She put forward the theory that,
                                since its earliest days, capitalism had lived, and could only live, by
                                expanding into surrounding non-capitalist space. Her answer
                                therefore was that the using up of this space would bring a final crisis
                                from which there would be no escape.

                                Lenin, by contrast, focused not on capitalism as a whole but on
                                capitalism as a collection of units in which the stronger ones
                                competed among themselves for control of the weaker, including
                                remaining non-capitalist areas. This was the core of his
                                Imperialism: The Latest Stage of Capitalism, written during the
                                First World War and itself providing a wealth of supporting
                                empirical evidence. This struggle among the leading imperialist
                                powers tended to weaken the capitalist system as a whole and
                                opened the way for revolutions from below, especially the Russian
                                Revolution, which threatened the continued viability of capitalism.
                                The system, however, did recover, and soon after the war the
                                imperialist powers resumed their internecine struggles, now
                                complicated by the existence of a major non-capitalist power. This
                                renewed struggle climaxed with the Second World War, a new
                                round of revolutions, especially the Chinese Revolution, the
                                emergence of the Untied States as the sole superpower, the division
                                of the world into two parts: the capitalist part under U.S.
                                dominance, and the non-capitalist consisting mainly of the Soviet
                                Union and the Peoples Republic of China. The ensuing conflict
                                between the two parts, known as the Cold War and usually thought
                                of as being between two groups of states, was actually much more
                                complicated, including major hot wars, guerrilla wars, attempted
                                revolutions, and successful counter-revolutions.

                                Lasting almost all of the second half of the twentieth century, the
                                Cold War ended with the restoration and triumph of capitalism on a
                                truly global scale. But this outcome was anything but the result of a
                                smooth process of capital expansion within or beyond its traditional
                                limits. Violence of various kinds played an enormous role, and there
                                are large areas in the formerly non-capitalist countries where
                                capitalism has been proclaimed, legalized, and deliberately planted,
                                but where there is absolutely no guarantee that it will take hold and
                                grow in a "normal" way. Furthermore there have been changes in
                                capitalism as it matured in its traditional stronghold (the United
                                States, the European Union, Japan, and the former colonial
                                countries) that pose serious questions about what the continued
                                expansion of capitalism implies in the post-Cold War period.

                                What I have in mind here is the three most important underlying
                                trends in the recent history of capitalism, the period beginning with
                                the recession of 1974-75: (1) the slowing down of the overall rate
                                of growth, (2) the worldwide proliferation of monopolistic (or
                                oligopolistic) multinational corporations, and (3) what may be called
                                the financialization of the capital accumulation process. This has of
                                course been a period of quickening globalization, spurred on by the
                                improved means of communication and transportation, but the three
                                trends in question are certainly not caused or generated by
                                globalization. Rather, all three can be traced to changes internal to
                                the capital accumulation process, the beginning of which go back
                                about a hundred years to the concentration and centralization
                                movements that characterized the late nineteenth and early twentieth
                                centuries and marked the transition from early (competitive)
                                capitalism to late (monopoly) capitalism. Interrupted by the First
                                World War and its aftermath, the impact of this transition hit with full
                                force in the great Depression of the 1930s, from which there was no
                                spontaneous recovery and which gave strong evidence of being the
                                beginning of a period of secular stagnation and decline. Once again,
                                however, world war came to the rescue and, together with its
                                ensuring aftermath and the Cold War, produced what has come to
                                be known as capitalism's "golden age" (1950-70). This came to an
                                end in the recession of 1974-75 and was followed by the
                                reassertion and intensification of the trends dating back to the turn of
                                the century: retarded growth, increasing monopolization, and the
                                financialization of the accumulation process.

                                These three trends are intricately interrelated. Monopolization has
                                contradictory consequences: on the one hand it generates a swelling
                                flow of profits, on the other it reduces the demand for additional
                                investment in increasingly controlled markets: more and more
                                profits, fewer and fewer profitable investment opportunities, a recipe
                                for slowing down capital accumulation and therefore economic
                                growth which is powered by capital accumulation.

                                The foregoing describes what happened during the 1920s, a decade
                                characterized by a persistent rise of underutilized productive
                                capacity in industry after industry, culminating in the collapse of
                                1929-33. Already at that time there was a growing tendency for
                                profits that could not find profitable outlets in real capital formation
                                to be diverted into purely financial and mostly speculative channels.
                                Hence the spectacular stock-market boom and crash of the late
                                1920s. The same double process of faltering real investment and
                                burgeoning financialization reappeared in the "golden age" of the
                                post-Second World War decades and has persisted with increasing
                                intensity to the present.1

                                All of this certainly takes place in a context of continuing
                                globalization which put its imprint on the way the various processes
                                play themselves out. But globalization is not itself a driving force. It
                                remains what it has been throughout the period we think of as
                                modern history: the always expansive and often explosive capital
                                accumulation process.


                                  1.The two forms of investment, real and financial, are of course
                                     related, though not in the simplistic (and mostly wrong) way
                                     mainstream economics takes for granted. For a fuller
                                     discussion of these processes, see Harry Magdoff and Paul
                                     Sweezy, Stagnation and the Financial Explosion (Monthly
                                     Review Press, 1987).