Globalisation: the contradictions of late imperialism - 2003 - pt 1

Globalisation: the contradictions of late imperialism

In the Nineties, multinational corporations vied with each other to take over the industries and services of much of the world. Commentators coined the term "globalisation" to describe their domination. Keith Harvey explores the roots of this phase of imperialism in the growing contradictions of US capitalism in the decades after the Second World War and concludes that its days are already numbered.

Eleven years ago, visitors to Expo-1992 in Seville commented upon the small and unremarkable United States’ exhibition tent amid the grander efforts of most of the rest of the world’s big hitters. On enquiry, it transpired that many of the big names of the US corporate world had decided not to put funds into the enterprise. In this international showcase, Coca Cola and the like simply did not want to appear as US companies; they wanted to be seen, first and foremost, as global companies.

Philip Condit chairman of Boeing said in 1997 that being a global company meant that, “wherever you operated, people thought that you were a local company”. He sought to emulate BP, the 10th largest company in the world, British-based but globally ubiquitous. HSBC, one of the big four banks in the UK, markets itself as “the world’s local bank” because it is present in most countries.

Of course, there have been companies with an international presence before, ever since the US firm Singer set up its first overseas operation in Europe in the 1860s. Car giants, electrical goods firms and oil companies have all had a global presence for most of the last century. But, until recently, most could content themselves with secondary dependence on overseas markets, especially US multinationals.

Now that’s all changed. Now, most multinational companies (MNC’s) have to compete in world markets in order to survive. General Electric – the US electronic giant – is the world’s biggest multinational with total assets in 1999 of $405 bn and sales of $111 bn. Until he retired last year, Jack Walsh was General Electric’s Chief Executive Officer. In 1997, he explained what drives multinationals to depend more and more on overseas markets:

“There is excess global capacity in almost every sector. Pricing pressures are dramatic across sector after sector. One way of meeting such pressures is to go for the greatest possible scale – spreading costs and revenues across the world.”

Hence, there are more multinationals than ever before – 63,000 in 2000 – up from 7,000 in 1970, and they control a greater proportion of global output and sales than ever before.1 In the course of the last decade, their dependence on foreign markets for sales, assets and employment compared to their home bases has steadily increased.2

Roughly 30 per cent of General Electric’s assets and sales are overseas. This figure grows with each passing year. Today, a number of the other biggest players, such as IBM and ICI, rely for over half of their revenue on foreign sales. More than 98 per cent of Nestlé’s sales are outside Switzerland. Murdoch’s News Corporation empire has 96 per cent of its sales abroad.

These MNCs – in production, banking, media and retail – account for two-thirds of all trade. They are also the engines of foreign investment flows. In 2000, the total of Foreign Direct Investment (FDI) soared by 18 per cent to a record $1.3 trillion, 90 per cent of this ($1.1 trillion) took the form of mergers and acquisitions as MNCs sought to consolidate their global position.

Within the 63,000 multinational companies, 100 – a mere 0.2 per cent – have assets of $2.1 trillion and, in 1999, sales of the same magnitude. These top 100 companies account for 12 per cent, 16 per cent and 15 per cent respectively of the assets, sales and employment of all the world’s multinationals.

Ninety-one of them have their headquarters in one of the 17 “Triad” countries (European Union, USA, Japan), a figure which emphasises the dominant role of these countries in the world capitalist order.

Moreover, their share of the top 100 has increased during the last ten years. These are the countries which set the macro-economic policy agenda, control the world’s capital markets and direct the global multilateral institutions such as the World Bank, IMF and WTO.

The wealth, power and reach of the big capitalist corporations are beyond dispute and historically unprecedented. The sheer geographical spread and social depth achieved by the world capitalist market economy over the last ten to twenty years is also generally accepted. This has come to be known as “globalisation”.

While a good deal of “we won the cold war” US triumphalism lies behind the term, it is not good enough to dismiss the phenomenon as simply “globalony”, as merely the “same old imperialism”, as though little had changed.3

The purpose of this article is to understand the root causes of globalisation and define it more precisely. What propels it and what are its components? How has it evolved? What is its relationship to the concept of imperialism as it has been developed by Marxists since the early part of the century?

In doing this, we can dismiss from the outset the facile, but still prevalent, explanation that “globalisation is an objective fact, a reflection of dramatic technological change, not policy.”4 This standard refrain from its 1990s evangelists was designed to depoliticise globalisation, to abstract it from the historical, national and class relations within which it took place.

It was meant to disarm the opponents of this corporate dominated process with the idea that technological developments had created a trend to greater international integration which was inevitable and unstoppable, destined to sweep aside all trade union and national government barriers to the movement of capital.

The current malaise refutes this explanation in so far as the technological achievements in transport and communication that have relativised the importance of time and place in economic transactions remain firmly embedded but they have failed to prevent the onset of global recession or de-integration.

On the other hand, these very same negative economic circumstances have prevented the significant introduction of the next generation of technologies (e.g WAP) that promised much in communication terms. In reality, technology is the dependent variable in globalisation, not the independent one

As Robert Went has said: “ The truth is that technological change has only facilitated globalization processes set in motion by conscious political decisions”…5 We could add that those “conscious political decisions” themselves reflected deepseated changes in the US economy which had outgrown the framework of policies and institutions established decades earlier.

In order to understand these “globalisation processes”, therefore, we have to go deeper into the historical and structural reasons why capitalism expands and retreats, and examine the economic and political barriers that capital confronts and seeks to overcome.

In this, our starting point is the recognition that it is in the very nature of capital to break down every barrier in the way of its further enlargement. Self-expansion is its essence. It cannot be satisfied with merely local, regional, or even national dominance. “The natural tendency of our economic system, therefore, is to seek to break through the state boundaries” as Trotsky put it.

We first have to explain what historical forms this self-expansion has taken, what barriers it has had to overcome and what conditions allowed for this at some points and not at others. Why, for example, did capitalism regress internationally between 1914 and 1945? What determined the pattern of international capital flows in the post-war boom (1950-71)? How did capital free itself of restrictions inherited from the post-war settlement to spread out rapidly and in more varied forms in the 1970s and 1980s? And finally, what changes in the nature of world capitalism were wrought as a result of the victory of the USA in the Cold War and the subsequent boom in the US economy under Clinton’s presidency?

Imperialism

This is not the first time a big debate has taken place about the significance of major shifts in the capitalist world economy. Around 100 years ago, the term “imperialism” was coined to describe the emergence of new features in the organisation of capitalist production and finance.

Although they were not the first to use the term, Marxists began to analyse these features in the first decades of the twentieth century.6 They recognised that a major qualitative change in the nature of capitalism had taken place from the 1870s onwards. It was a change which affected both the organisation of domestic production and finance and the pattern of international trade and investment.

Its first and principal cause was the emergence in the main capitalist countries of huge corporations which had cornered their national markets and come to dominate them. Their development, which was an inevitable outcome of competition between the earlier generation of smaller firms, led the bigger capitalists to see the advantage of monopoly. By practically wiping out their domestic competitors, the monopolists could not only reap greater profits from the booms but also survive the slumps that they had learnt to expect from the business cycle.

The original, small-scale, family-owned firm now gave way to large companies owned via stocks and shares. In Germany, this was achieved largely through horizontal integration between firms in the same line of business who either merged or established an agreement on price levels and market share (cartels).

In the USA, from the 1880’s, this was largely prevented by law and so monopolisation took the form of vertical integration. In this, firms swallowed up both their suppliers and the firms to which they sold their products, thereby achieving great savings in transaction costs and boosting profits.

This tendency to concentrate was also apparent within financial capital. The banks developed from being “middlemen”, used by the family run firms to provide cash to help with their operating costs, into powerful monopolies in their own right. In turn, as they became more and more involved in supplying this investment finance, they sought to gain leverage within the monopolies in order to protect the value of their loans. In some cases, this led to representation on the boards of directors, in others, to equity holdings.

By the time of the First World War, Lenin could observe:

“Finance capital took over as the typical “lord” of the world; it is particularly mobile and flexible, particularly interknit at home and internationally, and particularly impersonal and divorced from production proper; it lends itself to concentration with particular ease, and has been concentrated to an unusual degree already, so that literally a few hundred multimillionaires and millionaires control the destiny of the world.”7

After the relatively long boom at the end of the nineteenth century (1895 onwards) and the crisis of 1900-1903, monopolies and cartels were recognised as “one of the foundations of economic life” (Lenin). In the US, in 1904, 1.1 per cent of businesses were responsible for half of all production.

A second, and linked, factor was a massive expansion of capitalism internationally as the monopolies strove for international markets and access to raw materials. In effect, the process of monopolisation rendered the national economy too restricted a sphere of operation within which to make adequate profits.

Between 1870 and 1914, but especially after 1895, this international expansion of capitalist trade and investment accelerated. Horst Köhler, Managing Director of the International Monetary Fund (IMF) even went so far as to say, in a speech in January last year, “The global economy was actually more integrated at the end of the 19th Century than it is today.”8

Without going as far as that, a recent World Bank report dubbed the period 1870 to 1914 “the first wave of modern globalization”.9 It explained, “Flows of goods, capital, and labor all increased dramatically. Exports relative to world income nearly doubled to about 8 percent. Foreign capital more than tripled relative to income in the developing countries of Africa, Asia, and Latin America. Migration was even more dramatic. Sixty million people migrated from Europe, primarily its less developed parts, to North America and other parts of the New World. South-South labor flows were also substantial. The flows from densely populated China and India to less densely populated Sri Lanka, Burma, Thailand, the Philippines, and Vietnam were probably of the same order of magnitude as the movements from Europe to the Americas. The total labor flows during the first wave of globalization were nearly 10 percent of the world’s population.”10

Similarly, Robert Went has pointed out that, in 1913, the ratio of export and import of goods to GDP reached an average of 42.6 per cent for the top half dozen powers. Nonetheless, the most important new feature was that export of capital started to predominate over the export of commodities. During this period, for example, around half of all British savings and profits were channeled abroad. By 1914, the foreign capital stock of semi-colonial countries had risen to 32 percent of their income.

During this period, the imperialist nation states completed their seizure of all of the territories on the planet. As Leon Trotsky noted in 1914:

“The whole globe, the land and the sea, the surface as well as the interior, has become one economic workshop, the different parts of which are inseparably connected with each other. This work was accomplished by capitalism.” 11

However, this internationalisation of capital was not a peaceful, linear process from which all classes and all nation states benefited equally. Rather, the world had become completely divided up between a handful of “Great Powers”. All the countries excluded from this club became either formal colonies or informal “spheres of influence”.

The eruption of the First World War announced – in Trotsky’s words – the fact that “the forces of production which capitalism has evolved have outgrown the limits of nation and state. . . .The national state, the present political form, is too narrow for the exploitation of these productive forces.”

In turn, this led to the systematic outbreak of wars and revolutions within this imperialist epoch: wars for the forcible re-division of the world into protected “spheres of influence” and “backyards”; revolutions prompted by wartime privations, the collapse of defeated ruling classes and by the injustice of national oppression.

The First World War, however, did not result in the emergence of a clear victor, able to pursue its own economic expansion at the cost of its defeated rivals. Instead, the imperialist powers concentrated their attention on their own spheres of influence, thereby throwing the world economy back decades and undoing much of the first phase of capitalist internationalisation. By the late 1940s, trade, as a share of GDP, was still only back to its level of 1870. By 1950, the foreign capital stock of developing countries was reduced to just 4 percent of income – far below even the modest level of 1870.

Interantionalisation after the War

While there is no question that the decades since the Second World War have, once again, been characterised by increasing levels of international trade and investment, the pattern of this increase has not been uniform. Four quite distinct periods can be identified and, as we shall see, their characteristics are related to the varying roles played by finance capital against the background of a changing international balance of power.

The decades after 1945 saw an almost immediate revival of internationalisation as expressed in both trade and Foreign Direct Investment (FDI). By 1970, international trade had surpassed the pre-1914 levels and its annual rate of increase continued to outstrip the growth in output in subsequent decades. At the same time, however, foreign investment grew even faster and saw “an annual increase four times greater than the annual growth rate of international trade.”12

The forms of investment were also broader than in the pre-1914 phase, when it was largely restricted to bonds. After 1950, investment abroad in new plant and equipment grew. The impulse for this wave of FDI, which lasted into the Seventies, was mainly the locational advantages of the host countries. Specifically, the countries possessed immobile natural resources or their markets were protected by trade barriers.

Throughout this phase, which it calls, “the second wave of globalisation” the World Bank admits that, “most developing countries remained stuck in primary commodity exporting and were largely isolated from capital flows . . . The ratio of FDI stock to GDP of the South was 11 per cent in 1978 – well below the 32 percent reached in 1914.”13

This trend ensured that the “second wave globalization was not golden for developing countries”, according to the World Bank. “The gap between rich and poor countries widened. The number of poor people continued to increase . . . There was little net change in the distribution of income among and within developing countries.”14

The long expansion of trade and investment between 1950-71 took place within a definite policy framework which expressed the priorities agreed upon by the major architects of the post-war economic order at the Bretton Woods conference in 1944. Their overriding concern was to sustain a stable system of international trade and so avoid the calamity of the inter-war years. At this time, the principal role of finance capital, therefore, was to facilitate this resurrection of trade. The General Agreement on Tariffs and Trade (GATT) existed to negotiate an orderly reduction in tariffs, mainly between Triad countries, that is to say, between the imperialist powers. Similarly, the IMF existed to ensure that funds were available to member states to bridge any current account deficits that emerged as a result of a sustained imbalance between a country’s exports and imports, and thereby forestall pressure on the currency.

Most importantly, there was a system of fixed exchange rates between countries, precisely to facilitate the smooth and rapid growth in international trade. This system was underwritten by the United States which possessed the bulk of the world’s gold reserves (accumulated by providing the weapons for the Allies in the war). In 1944, they guaranteed to exchange all dollars at a fixed rate against gold.

As a result of these policies, the direction of investment (which continued up until the 1980s) was similar to that prior to the First World War; most foreign investment was sourced from, and received by, members of the Triad. This shows that the key integrationist dynamic in the world economy throughout this period was between the European Union, the USA and Japan, not between them and the South. As we shall see, this was destined to change.

However, although all this underpinned US hegemony, the very success of the expansion of international capitalism after 1945 inevitably began to undermine it as the basis of this financial might. Investments and aid ensured that, by the late 1960s, more dollars were held abroad than could be exchanged against the US gold reserves at the agreed rate. In 1972, to preserve US reserves, President Nixon abandoned the Bretton Woods agreement and floated the dollar; soon all major currencies were floated.

1972-82, finance capital slips its leash

The break up of the Bretton Woods system of financial controls removed one barrier in the way of the self-expansion of capital. If, hitherto, capital had been forced to be little more than the handmaiden of trade expansion, the removal of controls within the major OECD countries after 1974 liberated it. Capital was now free to diversify its forms and seek out the best returns across the world.

However, even leaving aside the bureaucratically planned economies where few inroads could be made, there was still the problem of how to stimulate demand for such new financial instruments and investments in the rest of the world. The Triad faced continued obstacles in the form of capital controls throughout much of the Third World, as well as trade barriers. World recessions in 1974-76 and again in 1979-82 made such obstacles even more irksome to the major multinationals who were impatient for new markets and new labour forces to exploit. This was made all the worse for finance capital by the inflationary consequences of the Keynesian demand management policies pursued by most governments in response to the recessions.

The 1980s: the neo-liberal offensive

The 1980’s, the decade of Reagan and Thatcher, saw a concerted political offensive by MNCs, governments and the IMF/World Bank to smash down the barriers to their exports and capital in the South. Their objective was to cut operating costs, enlarge economies of scale and to take advantage of authoritarian anti-labour governments.

This was when the IMF and World Bank changed the nature of their operations, reflecting the renewed pre-eminence of finance capital. They used the increasing debt burden of the semi-colonies as a weapon against the Third World; in return for short-term relief they oversaw programme after programme of trade liberalisation, deregulation and privatisation – all of which were designed to create new profitable opportunities for the MNCs and banks of the Triad.

The implementation of these policies gathered pace through the decade as experience was gained and techniques were perfected. Nonetheless, there were still limits to the reach of finance capital. The first bridgeheads had been established within the bureaucratically planned economies, notably in China’s “Enterprise Zones” but their economies were, essentially, off-limits and as long as that remained the case, other countries could hope to manouevre between the two great blocs.

The triumph of globalisation

The breakthrough, the qualitative change in the period, came with the collapse of the Soviet bloc, the recession of 1989-91 and the decision to dismantle planning in China and open the country to capitalist investment. 15

The pattern of investment flows was revolutionised, as the western MNCs relocated plants from high-cost home countries, bought up state assets and lent money to foreign governments and firms for export-oriented industrial projects. As a result, manufactures rose from less than a quarter of developing country exports in 1980 to more than 80 percent by 1998.

Similarly, total capital flows to developing countries went from less than $28 billion in the 1970s to some $306 billion in 1997, in real terms. In the process, their composition changed significantly. Official flows of aid were cut by more than half and private funding became the major source of capital for a number of emerging economies.

The composition of these private capital flows also changed markedly. FDI grew continuously throughout the 1990s. In real terms, net portfolio flows grew from $0.01 billion in 1970 to $103 billion in 1996, as new international mutual funds and pension funds helped to channel the equity flows to developing countries. Meanwhile, bank loans decreased.

Most of the upsurge in FDI to the South took place in the 1990s which saw the most rapid increase in foreign capital flows of the whole century.16 In 1990, bank lending, FDI, bonds and equity flows all stood at or around $50bn. Then the massive upsurge began and peaked in 1997.

It was this flood of largely US finance capital which led commentators to coin the term, “globalisation” to describe the apparently sudden ability of the world’s major corporations to implant their brands and their logos, at will, anywhere in the world.

It was fuelled in the first half of the decade by the selling off of state companies in Latin America and Asia to Triad-based multinationals, as capital controls were relaxed throughout the Third World. There were 1,187 such FDI liberalising measures between 1991-2000. In the period 1994-97, in particular, this led to massive bank lending to Third World companies and domestic banks. This victory for neo-liberalism was symbolised by the transformation of GATT into WTO in 1995.

In the second half of the 1990s, mergers and acquisitions, especially within the Triad countries, accounted for the overwhelming bulk of FDI as stock markets boomed (making more equity capital available) and then the Asian financial crash of 1997 prompted a redirection of speculative capital towards the USA.

The Asian “meltdown” of 1997 also prompted another shift in world capitalism – a rapid increase in the tempo of capitalist development in China under the impact of imperialist capital imports, especially American.

After the 1997 crash, capital investment in South Korea and Indonesia, for example, plummeted.17 China by contrast has seen a massive extra influx since 1997 as “increasing competition, falling transport costs and flagging consumer demand are forcing multinational companies to flock to the region with the lowest production costs.”18 In 2002, foreign investment into China was $52.7bn – a record.

In its wake, the massive inflows of investment are in turn giving rise to a huge – historically unprecedented – wave of commodity exports from China to the rest of the world. Guangdong province exported more in 2002 alone that in the years 1978-90 combined!. Total Chinese exports have doubled in the years since the Asian crash of 1997. By contrast, it took Britain, Germany and Japan 12, 10 and 7 years respectively to double their exports at the height of their economic power in the 19th and 20th centuries.19

Today, more of the world’s population, both in absolute numbers and as a proportion of the total, are being exploited by capitalism than at any time in history. The geographical breadth of capitalist social relations was never more global.

The degree of integration of capitalist nations – as expressed in the ratios of trade and FDI to GDP – also reached new heights, even if this took the form of greater regionalisation and one-third of the world’s nations and people were more marginalised than ever before from this process.

Finally, it was in this period, with finance capital triumphant, that the classic features of imperialism, as described by Lenin, re-emerged as the defining features of the world’s economic system. Monopolies were massively consolidated as the core of economic life and, within this, financial conglomerates extended their power as never before; capital export – with its revolutionising effect on those areas that received it – reached new heights and, crucially, the world was being re-divided up once again as the USA and Europe vied for the markets, labour and natural resources of the ex-degenerated workers’ states.

The guarantor of globalisation: US imperialism

The key factor in explaining the pattern of development after the Second World War, and the role of finance capital within it, is the expansion and maturation of the US economy. At the beginning of the period, the US was already hegemonic over the other imperialist powers, both the victorious and the defeated. This hegemony stemmed from the fact that the United States monopolised the world’s capital, its gold supplies and key sectors of industrial output in 1945.

At the end of the war, Washington made a political decision to regenerate the other imperialist powers, Allied and Axis alike, through credit and aid. The objectives were the creation of economic stability in those countries, avoidance of any repeat of the revolutionary upheavals of the 1918-21 period and provision of markets for US goods and capital. At the time, these were best met by stimulating trade by dismantling tariff barriers and regulating exchange rates.

Unsurprisingly, the US got its way in the debates about the scale and function of the IMF, World Bank, GATT, NATO and the United Nations in 1944-48. It also promoted the formation of the EEC in 1950s and, until 1971, sustained the international financial architecture and, through it, the expansion of international trade.

In subsequent decades, the US installed a series of military bases around the world to defend its own interests, protect dictatorial semi-colonial capitalist regimes and combat Stalinist-led national liberation movements in Asia and Africa. Alongside this, it implicitly backed the process of decolonisation in Africa and Asia against old European imperial powers in order to open these continents more fully to US corporate and diplomatic influence.

In short, it overcame the disjuncture between political, economic and military power that lay behind the lack of imperialist leadership in the two decades before 1940. This allowed the US to achieve what we can now say is a prerequisite for capitalist globalisation: that one major power, acting in its own particular interest, actually promotes the general interest of the global capitalist system and guarantees the conditions necessary for its reproduction.

Of course, for two or more decades after 1945 it did this in conditions of rising profits, productivity and output for all imperialist powers, a period of shallow business cycles and expanding trade during which inter-imperialist contradictions were sublated even if conflicts over decolonisation flared up occasionally.

Ultimately, what this proves is that during the inter war years, and the war itself, the US had undergone an internal development that obliged it to abandon Isolationism and take up its new global role. Nor was that internal development already finished by the end of the war. On the contrary, several decades of continued domestic expansion and further maturation lay ahead of the new imperialist hegemon before it would begin to face its own nemesis.

From the 1960s, this absolute hegemony came under challenge from various directions. It had failed to fill the breach left by retreating French imperialism in South-East Asia and suffered a massive military defeat there in 1973. This also meant political defeat at home under the impact of a mass anti-war movement. On the back of this, the USA suffered a string of reverses for the rest of the decade from Iran to Central America. It was forced by its weakness into détente with China.

In the 1960s and 1970s, the USA began to lose its competitive advantage in a number of markets to the EU and Japan. The productivity and innovation gap narrowed, market share was taken away from the US MNCs. Europe improved its GDP per capita from 54 per cent of the US figure in 1954 to 75 per cent by the 1980s.

The crisis of the first half of the 1970s was the inevitable result of these factors and the USA ended the 1970s as only the first among equals, rather than their overlord. In these circumstances, and given two serious international recessions between 1970 and 1979, inter-imperialist tension and rivalries emerged, especially with Europe, over trade and foreign policy.

In the early 1980s, while the US struggled to regain lost ground, Japan emerged as the dynamic economic superpower and the US entered into trade conflict with, and financial dependence on, Japanese imperialism for the first time since 1945.

Despite this economic stalling and the military reverses at the hands of national liberation movements, the United States never lost its relative economic lead, its reactionary grip on South American regimes, or its overwhelming military superiority within Nato.

The US capitalist class has spent the last twenty years winning back the ground it lost. It sponsored successful covert and overt reactionary wars in Central America. Through rearmament, it broke the back of the USSR by 1989. This, in turn, broke the back of lingering resistance to the US-sponsored neo-liberal economic agenda: the end of capital controls and trade barriers, privatisation of state assets, deregulation of both labour and environmental protection. As a result, it was the Nineties which saw the most dramatic changes in virtually all aspects of the US economy and its international role.

Nonetheless, many of the foundations for that change were laid in the 1980s. At home, the Reagan administration launched a successful offensive on the labour movement in 1981, resulting in a historic weakening which paved the way for two decades of falling labour costs, greater labour flexibility and longer hours. In turn, this gave the US MNCs a platform from which to restore profits, investment and, eventually, a major improvement in domestic productivity and product innovation in the 1990s.

This set the scene for a massive expansion of investment, profits and market share in the 1990s. The MNCs from the United States have raised their share of the overall total of foreign assets held by the world’s 100 largest MNCs by about 6 per cent since 1990. In comparison, the share of EU MNCs has remained fairly stable.20

The number of US MNC affiliates tended to stagnate in the 1980s21 in conditions of debt crisis in Latin America and the slow dismantling of capital controls in much of the non-OECD world. Their numbers grew by just 6 per cent. However, in the 1990s, they mushroomed as capital controls fell away, Russia, China and Eastern Europe opened up and Latin America revived. Between 1989 and 1998, the number of US MNC affiliates expanded by 38 per cent.

The period 1989-97 saw the annual rate of growth of output by majority-owned foreign affiliates of US MNCs rise at an average 7.2 per cent. This far outstripped the rate of increase of the US domestic economy and of the output of US-based plants of the parent US MNCs.22 By the end of 2000, the total stock of US owned assets abroad stood at $7.2 trillion.

At the same time, US MNCs spread beyond the OECD. In 1989, OECD countries had hosted 71 per cent of all US MNC affiliates; they accounted for 83 per cent of all sales of US MNC’s, for 80 per cent of their capital stock and 70 per cent of their employment.

By 1998, while OECD countries were still host to 67 per cent of all affiliates, there had been a doubling of affiliates in non-OECD Asia. The share of OECD in capital stock of US MNCs declined from 80 per cent in 1989 to 68 per cent by 1998. A considerable growth in US investment in South-East Asia and China and a small but significant presence in Eastern Europe were the key features of the decade.23

Despite this broadening of US MNC presence abroad, it is necessary to recognise that, in 2000, the bulk of US capital stock and annual FDI still found its way to Europe (55 per cent).24 Hence, a distinction needs to be made between the decisive weight of US investment lying within the Triad countries and the rapid spread of investment around the world, adding to US imperialism’s global geo-political interests.

During the 1990s, the profile of the US MNC’s also changed markedly. In 1982, US oil companies accounted for 11 per cent of all MNC affiliates, 36 per cent of sales and 43 per cent of capital stock. In 1998, the comparable figures were 6, 11 and 25 per cent respectively. The decade also saw a greater diversification to other industrial sectors and, although it started from a low base, the most dynamic sector was finance and insurance which witnessed a 350 per cent increase in its capital stock and a doubling of sales.25 US financial multinationals’ investments grew at 13 per cent a year from 1982-98 on a world scale, three times the rate of manufacturing.

During the course of this resurgence, US MNCs also pulled away from their European and Japanese rivals. Productivity in the US economy in the 1990s improved at an annual average of 2 per cent. Although well below the 1957-73 period, this was a substantial improvement upon the 1970s (1.3 per cent) and 1980s (1.5 per cent). Moreover, unlike the EU’s increases in the first half of the 1990s, which were, to a large degree, a result of rising unemployment (1% a year decrease in hours worked), the 1990s productivity gains came in a decade which saw a 1.6 % a year jump in hours worked.

The long US upturn of 1991-2000 contrasted with the stagnation endured by Japanese capitalism and the more muted growth of the EU in the same period. GDP per head in the US between 1995-2001 grew at 2.3 per cent a year compared to the EU’s 1.4 per cent. By 2001, real GDP per head in the EU was only 67 per cent of US levels as a result of greater productivity, longer hours and more of the US population being in work.

Nowhere has US supremacy been as evident since the end of the Cold War as in the military sphere. It has the money, personnel and hardware to take on the rest of the world. It now also has the political conviction that the state sovereignty of other nations is dispensable and presents no obstacle to the pursuit of its own national imperialist interests. It is not committed to securing the agreement of its main allies (still less agencies like the UN) before launching attacks on those deemed an enemy of the USA.

The Financial Times said in February 2002:

“In military terms, there is no serious rival to prevent the US from pursuing its national interests. Even before President Bush came to office, the US outspent its closest allies inside Nato substantially. With more than 118,000 military personnel in Europe, around 92,000 in East Asia and the Pacific, the US has an unrivalled global reach – in addition to 1.13m active duty personnel on its own territory. The gap with the rest of the world will only widen in cash terms, as the Bush administration plans for the biggest rise in military spending since the Reagan era. Under its budget proposals, the administration intends to boost the Pentagon’s annual spending by $120bn over the next five years, including $48bn next year to $379bn. That, according to figures from the Stockholm International Peace Research Institute, exceeds the total combined military budgets of the next 14 biggest spenders – including Japan, Western Europe, Russia and China.”26

Since September 11th, the US has accelerated and consolidated its military grip on the world. Today, it has a military presence in 100 of the 180 countries in the world, ranging from a few dozen “advisors” to functioning bases. It has established bases in key states in the ex-USSR such as Uzbekistan and Kyrgyzstan. It has deployed marines in Georgia to fight Chechens and special forces in the Philippines to hunt down Muslim guerrillas. The numbers of “advisors” and their role in anti-FARC operations inside Colombia have been stepped up since September 11th.

In retrospect then, it is possible to see that the obituaries that were written for US imperialism in the 1970s and 1980s were premature. US imperialism was not “rotten ripe” as several imperial powers had been on the eve of the First or Second World Wars. Yet, the law of uneven and combined development applies with equal force to the United States. US hegemony within the imperialist camp was never greater than immediately after the Second World War, when its allies and rivals alike were prostrate. However, a sixth of the globe was sealed off from its reach, having overthrown capitalism and disengaged from the world market. Also, paradoxically, as a capitalist power, the US was, in certain respects, still relatively undeveloped. It was still highly dependent on its domestic market for accumulation, profits and final demand.

Today, that picture has changed. Forced by the breakdown of the post-war financial architecture, the competitive challenge of European and Japanese imperialisms and the end of the post-war boom (that allowed profits and wages to rise in tandem), the United States was forced to go global like never before – economically, diplomatically and militarily. That is why, today, its MNCs are more diversified, larger, more numerous, have a greater weight compared to their rivals and are backed by a larger and more technologically superior armed power than ever before. The US has been involved since the end of the Cold War in a pre-emptive strike against its imperialist rivals, and those like China and Russia who have pretensions to enter this club.

Since September 11th, US imperialism has deepened, broadened and accelerated its reactionary attempt to crush all resistance to the rule of its corporations and its foreign policy objectives. It has waged war in Afghanistan, and more significantly Iraq, emboldened Israel to crush the Palestinian intifada, stepped up its military support for Colombia’s war against the FARC, and colluded in an attempted overthrow Chavez in Venezuela.

The Bush administration has manoeuvred and bullied to remove the heads of the Organisation for the Prohibition of Chemical Weapons and the International Commission on Climate Change. The former since Jose Bustani demanded that the OPCW be allowed to inspect US facilities with the same freedom that the US demands must apply to Iraq and the rest of the world; the latter, because the US oil companies demanded the removal of this critical voice.

In Joseph Conrad’s 1904 novel, Nostromo, US businessmen Holroyd says of a young American imperialism surveying the planet: “Of course some day we will step in. We are bound to. We shall run the world’s business whether the world likes it or not.” One hundred years later, whether the rest of the world likes it or not, the Bush administration is working all out to realise Holroyd’s dream.

Wed 09, August 2006 @ 15:17