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The State and the Making of Global Capitalism


The Making of Global Capitalism, is the role of states in the making of global capitalism, and especially the role of the American state as an informal empire in that making—and in superintending it to this day.

The question of the state’s relationship with capital remains an important—and still highly contested—one for scholars as well as activists. In the work of most economists, capitalism is seen as virtually synonymous with markets. Globalisation in this framework is essentially the geographic extension of competitive markets, a process dependent on the removal of state barriers to this, and the overcoming of distance through technology. Political scientists, for their part, have usually understood that markets are not natural and had to be made, and that states are fundamental actors in this process, but they rarely probe deeply into the ways this process has been shaped by the intersections of capitalist social relations and the dynamics of capital accumulation. 

The mutual constitution of states, classes and markets has been the main focus, of course, of political economists working within a historical materialist framework. But they have often been hampered by Marxism’s inclinations to analyse the trajectory of capitalism as derivative of abstract economic laws.[1] The conceptual categories Marx developed to define the structural relationships and economic dynamics distinctive to capitalism can be enormously valuable, but only if they guide the understanding of the choices made, and the specific institutions created, by specific historical actors. Building on earlier attempts to develop a theory of the capitalist state along these lines, it is this approach that guides our study of the role of the American state in the making of global capitalism.[2]

Politics and economy under capitalism

One of capitalism’s defining characteristics, compared with pre-capitalist societies, is the legal and organisational differentiation of state and economy. This is not to say there was ever anything like a complete separation between the political and economic spheres of capitalism. Indeed, as capitalism developed states became more involved in economic life than ever, especially in the establishment and administration of the juridical, regulatory and infrastructural framework in which private property, competition and contracts came to operate. Capitalist states also were increasingly major actors in trying to contain capitalist crises, including as lenders of last resort. Capitalism could not have developed and expanded unless states came to do these things. Conversely, states became increasingly dependent on the success of capital accumulation for tax revenue and popular legitimacy. 

It is one thing to say that capitalism could not exist unless states did certain things, but what states do in practice, and how well they do them, is the outcome of complex relations between societal and state actors, the balance of class forces, and not least, the range and character of each state’s capacities. Capitalist states have developed varying means of promoting and orchestrating capital accumulation, as well as anticipating future problems and containing them when they arise, and this has often been embodied in distinct institutions with specialised expertise. It is in these terms that we should understand the ‘relative autonomy’ of capitalist states: not as being unconnected to capitalist classes, but rather in having autonomous capacities to act on behalf of the system as a whole. In this respect, capitalists are less likely to be able to see the forest for the trees than officials and politicians whose responsibilities are of a different order from that of turning a profit for a firm. But what these states can autonomously do, or do in response to societal pressures, is ultimately limited by their dependence on the success of capital accumulation. It is above all in this sense that their autonomy is only relative.

The differentiation of state and economy eventually allowed for the organisation of class interests and their representation vis-à-vis opposing classes and the state. As capitalists, farmers, and workers developed distinctive institutions, the arbitrary authority of states was constrained, but the capacities of states were at the same time generally enhanced. One aspect of this was the establishment of the rule of law as a liberal political framework for property, competition and contracts. Another was the establishment of specialised agencies to facilitate accumulation through regulating markets. Yet another was the establishment of liberal democracy as the modal form of the capitalist state, although this was not realised in any stable fashion even in the advanced capitalist states until the second half of the twentieth century.

The imperialism-capitalism entanglement

The age-old history of empires as involving the political rule over extended territories was fundamentally affected by the differentiation between state and economy under capitalism.[3] As part of the differentiation of economic and political spheres, particular capitalists extended their range of activity beyond the territorial boundaries of their respective states. Insofar as states often encouraged and supported capitalists in doing this, there was always a specifically national dimension to processes of capitalist internationalisation. And as the interaction with foreign capital affected domestic social forces, this in turn contributed to generating that combination of inside and outside pressures whereby states came to accept a certain responsibility for reproducing capitalism internationally. It is mainly in this sense that we can properly speak of the ‘internationalisation of the state’.[4]

It is therefore wrong to assume an irresolvable contradiction between the international space of accumulation and the national space of states. Rather, when looking at the role that states have always played on the international economic stage, we need to ask how far their activities have been consistent with extending capitalist markets internationally—and also consistent with the actions of other states. The role of some states has been much greater than others in this respect, of course, and this cannot be analysed without taking into account the relationship between state and empire in capitalism. 

The analysis of the international dimension of capitalism, and the insight that the export of capital was transforming the role of the state in both the capital-exporting and importing countries was the most important contribution of theorists of imperialism writing at the beginning of the 20th century. But the link these theorists made between the export of capital and the inter-imperial rivalry of those years was problematic, and would become even more so over the years from 1945 onwards. The problem was not only that the classical theories of imperialism saw states as merely acting at the behest of their respective capitalist classes, and thus did not give sufficient weight to the role of pre-capitalist ruling classes in the inter-imperial rivalries of their own time. It was also that they treated the export of capital itself as imperialist, and in doing so their theories did not really register the differentiation of the economic and political spheres in capitalism, and the significance of informal empire in this respect. This was itself a product of the failure, as Colin Leys once noted, to ‘disentangle the concept of imperialism from the concept of capitalism.’[5]

In the ‘golden age’ after 1945 domestic markets were anything but saturated; the profits were realised through expanding working-class consumption, yet capital exports continued, driven by quite different factors, as the export of capital itself was transformed over the twentieth century in the context of the international integration of production through multinational corporations and the extensive development of international financial markets.[6] In the passage from Britain’s only partially informal empire to the predominantly informal American empire something much more distinctive had emerged than Pax America replacing Pax Britannica. The American state, in the very process of supporting the export of capital and the expansion of multinational corporations, increasingly took responsibility for creating the political and juridical conditions for the general extension and reproduction of capitalism internationally. 

This was not just a matter of promoting the international expansion of American MNCs. That state actors explained their imperial role in terms of universal rule of law considerations was not mere dissembling, even if they always also cast an eye to whether this would benefit American capitalism. As with the informal regional empire that the US established in its own hemisphere at the beginning of the twentieth century, a proper understanding of the informal global empire it established at mid-century requires a scale of analysis that can identify not only the domestic but also the international role of the American state in setting the conditions for capital accumulation. It also requires a very different understanding of the roots of US empire than those advanced by critical historians who linked the US ‘policy too directly to its capitalists’ needs for exports due to over-accumulation at home (or even to businessmen’s belief in that need).[7] It is incorrect to try to explain US imperial practices in aid of commercial interests merely in terms of capitalists imposing them on the American state. The danger with this type of interpretation is that it exaggerates the extent to which capitalists’ consciousness of their interests was always so fixed and clear. It also often leads to drawing far too rigid distinctions between internationally-oriented and domestically-oriented elements of the US capitalist class. The tensions as well as synergies between the American state’s role vis a vis its own society and its growing responsibilities for facilitating capital accumulation in the world at large cannot be reduced to the lobbying of various ‘class fractions’.[8] Most crucially, such an interpretation gives insufficient weight to the relative autonomy of the American state in developing policy and strategic directions and bringing about political compromises among diverse capitalist forces—and between them and other social forces. 

The internationalisation of the capitalist state

The most important novelty of the relationship between capitalism and imperialism that World War II set in train was that the densest imperial networks and institutional linkages, which had earlier run north-south between imperial states and their formal or informal colonies, now ran between the US and the other major capitalist states. The creation of stable conditions for globalised capital accumulation, which Britain had been unable to achieve (indeed hardly even to contemplate) in the nineteenth century, was now accomplished by the American informal empire, which succeeded in integrating all the other capitalist powers into an effective system of coordination under its aegis. The significance of this can only be fully appreciated with a proper understanding of what it meant in terms of the internationalisation of the capitalist state. The creation of new international institutions in the postwar era did not amount to the beginnings of a proto-global state; these institutions were constituted by national states, and were themselves embedded in the new American empire. National states remained primarily responsible for reorganising and reproducing their respective countries’ social relations and institutions of class, property, currency, contract and markets. But they were now 'internationalised' in a different way than they had been before. Now they too had to accept some responsibility for promoting the accumulation of capital in a manner that contributed to the America-led management of the international capitalist order. The American state did not so much dictate this to other states; rather it ‘set the parameters within which [the others] determined their course of action.’[9]

Many US administrative, legal and constitutional forms were imitated in other states, but this was always mediated and refracted by the specific balance of social forces and institutional make-up of each of them. Their politics were never a direct reflection of American economic penetration of their economies. Nor did other states become merely passive actors in the American empire; ‘relative autonomy’ characterised the internationalisation of these state as well. It was their relative autonomy within the American empire that allowed them to pressure the US governments to carry out their pre-eminent responsibilities in the management of global capitalism in ways that would not simply reflect the political and economic pressures to which they were subject at home. But in doing so, they recognised, usually explicitly, that the US alone had the capacity to play the leading role in the expansion, protection and reproduction of capitalism. 

The interpenetration of capitals

As capitalist states increasingly sought to attract foreign investment, their policies became more oriented to offering equal treatment to all capitalists, independent of their nationality, which was precisely what the American state had pressed for. MNCs came to depend on equal national treatment by many states; and these states were also internationalised in the sense of coming to take on more and more responsibility for creating and strengthening the conditions for non-discriminatory accumulation within their borders. This eventually included legal and regulatory changes that facilitated the development of their own MNCs along the lines pioneered by the American state. This did not spawn a ‘transnational capitalist class’, loosened from any state moorings or a supranational global state; ‘national capital’, in the shape of firms with dense historic linkages and distinct characteristics, did not disappear.[10] Nor did economic competition between various centres of accumulation. But the interpenetration of capitals did largely efface the interest and capacity of each ‘national bourgeoisie’ to act as the kind of coherent force that might have supported challenges to the informal American empire about to spawn. Indeed they usually became hostile to the idea of any such challenge, not least because they saw the American state as the ultimate guarantor of capitalist interests globally.

The new relationship between capitalism and the informal US empire should not be understood in terms of the old ‘territorial logic of power’ long associated with imperial rule merely becoming fused with the ‘capitalist logic of power’ associated with ‘capital accumulation in space and time’.[11] The US informal empire constituted a distinctly new form of political rule. Instead of aiming for territorial expansion along the lines of the old empires, US military interventions abroad were primarily aimed at preventing the closure of particular places or whole regions of the globe to capital accumulation. This was part of a larger remit of creating openings for or removing barriers for capital in general, not just for US capital. The maintenance and indeed steady growth of US military installations around the globe after World War Two, mostly on the territory of independent states, needs to be seen in this light, rather than in terms of securing territorial space for the exclusive US use of natural resources and accumulation by US corporations.[12] Most important, however, and very different than the previous imperialisms based on territorial expansion, American state apparatuses like the Pentagon and CIA are actually much less important in the making and superintending global capitalism than the US Treasury and Federal Reserve. It is the latter which play the key roles, not just in sponsoring the penetration and emulation of US economic practices abroad, but much more generally in promoting free capital movements and free trade while also trying to contain the international economic crises spawned by a global capitalism.

This article is adapted from the introduction to Leo Panitch and Sam Gindin’s Global Capitalism and the State.

Leo Panitch is editor of the Socialist Register and distinguished research professor at York University, Canada.

Sam Gindin is the former Research Director of the Canadian Autoworkers Union and Packer Visiting Chair in Social Justice at York University.