The autumn of the Empire and of Capitalism

08/05/2013
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When the Empire is incapable of maintaining its hegemony by providing solutions to the systemic crises it has recourse to "exploitative hegemony" (1) with all the violence and destruction that accompanies this. This was the pattern with the decadence of the imperial hegemony of Holland.
 
The attempt to rescue the system through free trade with an exploitative hegemony put an end to the British Empire, and something similar, but of a different nature, is what we have witnessed for some three decades now with respect to the decadence of world hegemony on the part of the United States.
 
Exploitative hegemony sounds just right as an epithet for neoliberalism, that extraordinary financial, commercial and industrial expansionism that US imperialism attempts to carry to its extreme limits, that it can no longer control, nor remedy its terrible consequences of social dissolution and economic disaster.  Nor can it revert the concentration of power and wealth in the accounts of the oligarchy, holders of the monopolies already established in practically all branches of the economy, not to speak of the environmental destruction and global warming that threaten life on the planet.
 
In the cases of the Netherlands and Great Britain, the phases of exploitative hegemony were in effect the "autumn" of these empires, but also the "springtime" in the development of capitalism, and in particular of the mode of production of industrial capitalism.
In the case of the U.S. Empire there are reasons to think that exploitative hegemony is not only the "autumn" of the Empire but also of the capitalist mode of production, which already faces the "insurmountable barrier" anticipated by Karl Marx.
 
Under the U.S. Empire industrial capitalism has acquired its most perfect and developed form – not only in the US – the bases of a mode of production based in automatization, being able to establish one part of the great objective of big capital, that is, to produce in a continuous fashion and without needing the greater part or the totality of the salaried work force.
 
For more than a half-century now, through the transformations that automation has made in the mode of production, the development of transnational business structures and the growing role of financial capital in the determination of investments, which became possible through direct investment, financial flows and the outsourcing of production, the capitalist system became universal, bringing to a conclusion the second part of the objectives of big capital.
 
The grand dream of capital, to free itself from salaried work forces or to pay the lowest possible salaries, became reality through automation and outsourcing.  But this transformation also implied a growing replacement of the extraction of surplus value, the use of a salaried work force in the advanced societies – that created the necessary "points of consumption" for the realization of capital, that Marx talked about – with the surplus value extracted offshore, in other societies, and which reaches the headquarters in the imperial centre in the form of differential income, that is to say, profits that end up with the stockholders and business executives.
 
It is from this unraveling, in my opinion, that it is possible to explain both the nature of the structural crisis of capitalism and the relatively irreversible reality at the present time in societies of advanced capitalism.
 
Thus it would be possible to explain this crisis of overproduction and under-consumption, the growing and increasingly chronic technological unemployment – as John Maynard Keynes defined the replacement of workers by machines – in a context of greater creation of wealth that is concentrated in a few hands of monopolies and financial capitalists, and which only marginally impacts the reproduction of capital in advanced countries.
 
This explains how under-consumption tends to become chronic due to the reduction of employment and total wages in a society, a factor that augments the spiral of unemployment and underemployment, and which ends up creating a state of crisis in those branches of the economy that are not yet automated.
 
This also explains the increase in household debt – due to lack of jobs and low wages – and the debt burden of States through the loss of collectable taxes (as the tax burden rests fundamentally on the wages of workers) and the increase in public expenditure to remedy unemployment, among other factors.
 
It should not be forgotten that this universalization of capitalism and of new technologies tends to explain the rapid emergence of new industrial powers in Asia, where the transnationals had to integrate into a capitalist system partially regulated by States that refused to cede all of their sovereignty in the face of neoliberalism.
 
It may also explain that in the light of Asian experiences and of the lack of true economic development, in developing economies that suffered first from the neoliberal experience, those of Latin America, there is a search for new development strategies to repair the damage done by the neoliberal heritage, such as unemployment and underemployment, poverty and extreme poverty, the destruction of state systems and of social programs of health, education and pensions.
 
The hook without bait
 
According to sociologists Giovanni Arrighi and Beverly J. Silver, it is impossible to know when, but it is certain that this exploitative hegemony of the US Empire will end badly (2).
 
For the moment we simply note that, in the face of their impotence to escape these crises, imperialism has returned to and emphasized predatory policies – such as the perfidious institutionalization of free trade that enables them to increase the extraction of profits – and together with their allies, returns to the war-making and colonialist policies of the past, with their terrible social, economic and political consequences for all of the affected peoples.
 
With automation and outsourcing, replacing workers, and the Communist "threat" having disappeared with the collapse of the Soviet Union, US capitalism has totally dismantled the basic program described by Immanuel Wallerstein: World capitalism could not accommodate "the combined demands of the Third World (for relatively little per person but for a lot of people) and the Western working class (for relatively few people but for quite a lot per person".
 
In effect, as Wallerstein observed two decades ago, capitalism undertook a return to "the pre-1848 situation in which, within the traditional loci of the liberal state... the "workers" will be poorly paid and outside the realm of political and social rights" (3).
 
Without any real possibility, in the short, middle and long terms, of a vigorous economic recovery,  the transnational companies and the banks of the advanced countries are "sitting on" billions of dollars and have been unable to use the almost free loans that the central banks have offered them.  As the Canadian columnist Thomas Walkom, of the Toronto Star, notes, “businesses won’t invest in new job-creating capacity unless they expect a market for their products”.
 
This general situation and the policies of austerity to maintain the deflation that benefits the financial system has already given rise to political crises and significant social protests, that in the European Union have begun to generate fear among the political classes, as we see in the struggle on the part of some governments to extend -- and not to suppress -- the deadlines required to fulfill the goals of fiscal austerity.
 
In the midst of these simultaneous crises the principal objective of the U.S. is to expand and deepen liberalization with the Trans-Pacific Strategic Economic Partnership (TPP), while the European Union attempts to reach an agreement on economic and financial liberalization with Canada, to begin to negotiate a similar agreement with the United States.
 
There is no need to ask if in negotiating these agreements the governments involved are acting in accord with the interests of their countries, or simply in the interests of transnational corporations and monopolies that contribute little or nothing in these countries from a fiscal point of view, or in job creation and the creation of internal demand.
 
It is well know that the U.S. has ceased to be the "workshop" of the world, which is now in China and the rest of East Asia and that they have also lost – as Arrighi and Silver have pointed out – the role of unique "cashier" of world finances.  And if this were not enough, the lack of consumption in the U.S. has made it impossible to continue being the "driving force" of global economic expansion.
 
If the reality has changed we have to change our thinking
 
Last February the historian and economist Robert Skidelsky described the wave of automation in manufacturing in the Western countries -- which is already coming to China -- and that the substitution of wage labor by capital (automation) is “now () moving beyond manufacturing” and is not only "eating" low-skilled jobs but also “a wide range of jobs that we now think of as skilled, secure, and irreducibly human may be the next casualties of technological change” (4).
 
Referring to the "technological unemployment" of John Maynard Keynes, Skidelsky believes that the solution is to reduce the work day: “If one machine can cut necessary human labor by half, why make half of the workforce redundant, rather than employing the same number for half the time? Why not take advantage of automation to reduce the average working week from 40 hours to 30, and then to 20, and then to ten, with each diminishing block of labor time counting as a full time job? This would be possible if the gains from automation were not mostly seized by the rich and powerful, but were distributed fairly instead".
 
He ends pointing out that “rather than try to repel the advance of the machine, which is all that the Luddites could imagine, we should prepare for a future of more leisure, which automation makes possible. But, to do that, we first need a revolution in social thinking”.
 
In 1996 the late French essayist and writer Vivianne Forrester (5) affirmed, in an interview with L'Humanité, that "the economic horror (of the neoliberal society) is due to a great extent to the fact that we live with nineteenth century criteria with respect to employment", underlining that she does not confuse "the idea of work, a fundamental value, with the idea of employment."
 
But by keeping to the criteria of the nineteenth century -- said Forrester – we blame those who suffer from the situation.  The whole argument is founded on the need to find a job.  We should stop telling people – in particular young people – that they can't find a wage to survive, that the only model of living permitted is that of wage labor.  The programs of the political parties are identical to what they were when they thought that unemployment was temporary.  Policy must take into consideration the factor of globalization, of high technologies, and not leave these realities as the property of the economic sector.
 
For the brilliant analyst the question was already posed: "what to do in a society when wage work, salaried employment", is constantly reduced; and that it is time to ask if "we should continue to say that [human] dignity depends on having a job."
 
Asked by L'Humanité if she hoped for anything from "a party such as the French Communist Party", the essayist replied that she was not a member of this party, but "I hope that all the parties, including your own, can look at the situation in a way that is realistic, modern and contemporary. Let them concern themselves more with globalization and high technology, and the consequent reduction in employment, so that they can stop thinking that an industrial era that is now obsolete can be fixed, and stop feeding the shame that so many out of work people feel at being unemployed, or the fear that those in work feel for losing their jobs."
 
So what are the TPP and other agreements for...
 
One characteristic of the TPP and the agreements for economic and financial liberalization that the European Union is negotiating with Canada and soon with the United States is that these negotiations are conducted in secret, they take place between government technocrats and the representatives of the transnationals, they are not presented to parliaments for discussion, amendment or subjected to a vote (6).
 
Concerning the rationale for these negotiations it is necessary to mention what Arrighi and Silver have underlined in the above-cited book, on the transnational economic integration launched by the U.S., which in East Asia was "less institutionalized and substantively more open" than what was produced by the integration in the European Union.
 
"Thus success of U.S. attempts to use its declining but still considerable politic-economic leverage in the region to redirect regional economic integration toward institutionalized forms that would create a more favorable environment for U.S. exports and investments has been limited" (op. cit., p. 281).
 
On the other hand, US transnational corporations, and in particular high-tech industries, do not effectively behave as "wedges to keep open" the influence of the U.S. in East Asia, and in fact can be moving in the opposite direction.   Because of this, they add that "Clearly the forces of transnational economy are undermining the power of states. But in the process, some states are actually empowered," (ibid.) such as Japan and other Asiatic countries.
 
Later they pointed out that "The astonishing speed with which this regional formation has become the new workshop and cash-box of the world under the 'invisible' leadership of a businesslike state (Japan) and a business diaspora (the overseas Chinese) has contributed to a widespread 'fear of falling' in the main centers of Western civilization." (op. cit., p. 287).
 
In effect, if indeed the Western industrial relocation into Asia is a phenomenon that is both known and studied, there is less discussion on the Asian "cash-boxes", the important financial centers (Hong Kong, Singapore and others) where the transnationals operate and in which regional decisions are taken just as are those of Wall Street, the City of London or Frankfurt.
 
There is also the key role that monetary authorities and central banks, public and private, of Japan, China and South Korea are currently playing and have played.
 
An Empire in decadence looking to live on profit
 
The transnationalization and relocation of industrial production and of finances in the context of East Asia and particularly China has increased the power of the States of this region and has reduced the hegemonic power of the U.S., which explains the desire of Washington and the monopolies to recover this power through the institutionalization of rules (the strait jacket) of neoliberalism, which includes economic, financial and commercial  aspects, such as the crucial element with respect to intellectual property that is found in the TPP.
 
Referring to "what end is served by the TPP" it is clear that institutionalization implies an attempt to impose this exploitative hegemony through the extraterritorial application of U.S. legislation in the markets of the signing countries, to strictly apply the protection of intellectual property rights, among other aspects, and thus increase the collection of income on the part of transnational business.
 
This institutionalization will give powerful leverage to Washington and US interests – through obligatory arbitration outside the courts – to operate in the political and legal framework of other signing countries and thus to impose a veto power with respect to political and economic changes that affect their interests.  This is what Washington and Ottawa wanted with the FTAA, but were unable to obtain.
 
The negotiation of the TPP accelerated the interest of the European Union in negotiating with Canada and the US, and eventually with the countries of Latin America.
 
The objectives are similar: advance in the institutionalization that constitutes the strait jacket that maintains the established order in order to prevent the strengthening in Asia of state powers that limit neoliberalism, and the consolidation of Latin American institutions, such as ALBA, UNASUR, MERCOSUR and CELAC.
 
In a word, all this defines the exploitative hegemony that U.S. imperialism has established, and which may well result in the decline of both the Empire and of capitalism itself.
La Vèrdiere, France.
(Translation: Jordan Bishop)
 
 
- Alberto Rabilotta is an Argentine-Canadian journalist.
 
Notes:
 
1.- It was the American economist David Calleo who coined the term “exploitative hegemony” to describe the imperial powers in decline that instead of adjusting and shaping, attempt to underpin their tottering supremacy in an exploitative hegemony. David Calleo, Beyond American Hegemony: The Future of the Western Alliance, New York, Basie Books, 1987, page 142, quoted by Giovanni Arrighi and Beverly J. Silver.
 
2.- See the "five propositions" that make up the conclusions of the book by sociologists Giovanni Arrighi and Beverly J. Silver:  “Chaos and
Governance in the Modern World System". Minneapolis, Univ. of Minnesota Press, 1999, p. 272 ss.
 
3.- Immanuel Wallerstein, “Response: Declining States, Declining Rights?" 1995. International Labor and Working-Class History 47, quoted by Arrighi and Silver. p. 14, 15.
 
 
5.- Vivianne Forrester, author of “L’horreur économique” (1996), has died at the beginning of May at the age of 87. The quoted interviews are in French, in the daily newspaper L’Humanité. The first one in 1996:
 

   

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