Transnational Capitalism

Professor of Sociology, Global and International Studies, and Latin American and Iberian Studies, University of California at Santa Barbara

Interviewed by the Greek newspaper Eleftherotypia

1. You argue that we are witnessing a world historical transition into a new phase of capitalism, with new forms of power and new forms of resistance. First, what’s new about capitalism today?

The key characteristic of this new epoch is the rise of truly transnational capital and a new globally integrated production and financial system.  Production has become fragmented into countless and constantly changing phases that are decentralized and dispersed across the planet.  In turn, the distinct segments are functionally integrated into vast global chains of production and distribution.  Each autonomous national economy has been restructured and externally integrated, so that each “national” economy because a constituent part of the larger global production system.

We also now have a truly global financial system.  There is no longer any such thing as a national financial system.  In fact, finance capital is the most mobile and the most transnationalized fraction of capital.  This has major implications.  Money capital exists in cyberspace, where it recognizes no borders and faces few, if any, state controls.  Money capital subordinates fixed capital.  Those who control money capital can appropriate values anywhere in the world by financial manipulation and relocate them on an ongoing basis to anywhere else in the world.

This globally-integrated production and financial system underscores the increasing interpenetration of capital in all parts of the world, organized around the giant transnational corporations that drive the global economy.

There are important new mechanisms that facilitate this transnationalization of capital.  The spread of stock markets, for instance, from the principal centers of the world economy to many if not most capital cities around the world, combined with 24 hour trading, facilitates an ever greater global trading and hence transnational ownership of shares.  The global integration of national financial systems and new forms of money capital, including secondary derivative markets, has also made it easier for capital ownership to transnationalize.

Other mechanisms of integration are the sharp rise in foreign direct investment and the spread of TNC affiliates, the phenomenal increase in cross-border mergers and acquisitions, the growth of transnational interlocking of boards of directorates, the spread of cross-border strategic alliances of all sorts, and the mounting influence of transnational peak business associations.

In this way, a transnational capitalist class has come into existence as the manifest agent of capitalist globalization.

2. You are not saying that national or regional capitals no longer exist, are you?

No, I am not saying that.  But there is a new type of class fractionation between local and national fractions of capital, on the one hand, and transnational fractions on the other.  Transnational capital is now the hegemonic fraction of capital on a world scale.  Trasnationally-oriented capitalist groups and elites are present now in all countries around the world, including in the state.  These fractions, or their bureaucratic allies, exercise considerable influence if not outright control within most of the state apparatuses around the world.  They often dictate policy.

We need to see here how capitalism has been reorganized into a new network structure, so that the system functions through interconnected webs that stretch across the globe.  This is important because the old corporate dinosaur vertical structures are extinct.  Now capital functions through vast networks of subcontracting and outsourcing, through numerous forms of alliance between different capitalist groups and other economic agents.

I am pointing this out because it is transnational capital that stands at the pinnacle of these global networks.  This means that there still may be local and national capitals but they cannot compete with transnationally mobile capital.  If they want to remain competitive, if they want to continue playing the game, they must link up with transnational capital, and they must do so, structurally, in a way that subordinates them to transnational capital.

3. Can we also speak of a global working class?

Yes.  There is a global working class that runs the factories, farms, and offices of the global economy.  Their ranks can be found in the maquiladoras, in the agro-industrial complexes around the world, among the armies of service workers in global cities.  However, the global working class is internally stratified.  It is divided along national – as well as racial, ethnic, and gender – lines.  The continued existence of the nation-state serves to distort the consciousness and subjective experience of the global working class.

In distinction, the transnational capitalist class is a class group with a subjective consciousness of itself and its interests.  Its members increasingly socialize together in their private institutions such as the World Economic Forum in Davos and develop a transnational class consciousness.  In this sense it is a class-for-itself, to use Marx’s language on this matter, whereas the global working class is a class-in-itself but not yet for-itself.

4. Where does actual political power rest in this new form of global capitalism that you describe?

 There is a new transnational configuration of power.  In part, this is where a transnational state comes into play, which is another novel aspect of the new epoch.  The question is how can the transnational capitalist class exercise its political authority?  Well, one way is through utilizing existing state apparatus in each country, and we have seen plenty of that.  Another is through the transformation of existing international institutions, such as the old Bretton Woods institutions or the agencies of the United Nations system, and the creation of entirely new ones, such as the World Trade Organization.  Transnational capital attempts to convert the structural power of the global economy over individual countries and over working classes in each nation-state into direct political authority or influence through this transnational state apparatus.

Transnational institutions attempt to coordinate global capitalism and imposing capitalist domination beyond national borders.  The IMF, for instance, by imposing a structural adjustment program that opens up a given country to the penetration of transnational capital, the subordination of local labor, and the extraction of wealth by transnational capitalists, is operating as a transnational state institution to facilitate the exploitation of local labor by global capital. Although it is true that nation-state power and autonomy has declined in relation to transnational power structures, this image is somewhat misleading since these transnational power structures are localized within each nation by concrete social forces that are materially and politically part of the emergent transnational power bloc.

5. In this context, how should we interpret America’s struggle for hegemony and global expansion?

Your question assumes that U.S. foreign policy must be interpreted as a struggle for U.S. national hegemony.  I don’t believe we can understand global hegemony, or the role of the U.S. state in the world, from such a nation-state/interstate framework.  Nation-state centric analyses of inter- and transnational relations fail to appreciate the integrative character of global capitalism.

If by imperialism, we mean relentless pressures for outward expansion of capitalism and distinct political, military and cultural mechanisms that facilitate that expansion, then, yes, we are obviously seeing ongoing imperialism in 21st century.  But there is nothing in this “new” imperialism to suggest it is a U.S. drive for empire in competition with other nation-state capitalists.  Those who make this argument have frozen their historical analysis in an earlier moment.   They are trapped in world of late 19th and early 20th century.  They see world capitalism as still in its national “monopoly” stage of Lenin’s and Hilferding’s day, so that U.S. intervntionism can only be a drive for “U.S.” hegemony over other states.

Recent U.S. policies such as the imposition of neo-liberal structural adjustment programs and sponsorship of free trade agreements have served to further pry open regions and sectors around world to global capitalism, to transnational capital.  The IMF and other transnational state agencies have not acted as simple instruments of “U.S.” imperialism.  I know of no single IMF structural adjustment program that creates conditions in intervened country that favors “U.S.” capital in any special way, rather than opening up the intervened country, its labor and resources, to capitalists from any corner of world.  The first thing the U.S. occupation forces did after the invasion of Iraq was not to seal off country to all but its own capital but to decree a foreign investment law that invited capitals from any corner of the world to invest.

The U.S. state has attempted to play a leadership role on behalf of transnational capitalist interests.  That it is increasingly unable to do so points not to heightened national rivalry but to the impossibility of the task at hand given the crisis of global capitalism.  In this sense, interventionism and militarized globalization are less a campaign for U.S. hegemony than a contradictory response to the crisis of global capitalism – to economic stagnation, legitimation problems, and rise of counter-hegemonic forces.

6. What specific, new problems does the new globalism produce?

The system is in chaos; its contradictions are explosive and, frankly, humanity is in grave danger.  The global crisis is one of social polarization and social reproduction, reflecting the deeper structural problem of over-accumulation.  The crisis is also of sustainability.  An ecological holocaust has already begun.  If we do not pull back from the precipice, and very soon, we could well be facing catastrophic consequences.

 Let’s step back and see the big picture.  The 1980s saw a recovery of profits following the decline of the 1970s.  There was a massive wave of transnational investment in the 1980s and the 1990s, leading to overcapacity and overproduction.  Capital began increasingly to seek an investment outlet through financial speculation – the notorious “casino capitalism.”  The volatility of financial speculation in the face of over-accumulation led to the 1995 Mexico peso crisis and its “tequila effect” elsewhere, followed by the 1997-98 Asian financial meltdown, the Russian, Turkish, and Brazilian crises, and worldwide recession in 2001-02.

It is at this point that structural and political pressures building up in the system lead towards a militarization of global accumulation.  The U.S. state as the guarantor of the system sought to open up new outlets for the global surplus through a military Keynesianism and a war mobilization, through the “creative destruction” of war.  From the 1990s to date we seen a shift in the axis of accumulation, from computer and information technology as the cutting edge, along with financial speculation in stocks, real estate, and so forth, to a military-industrial-petroleum-construction-engineering complex.

States are responsive to the demands of transnational capital yet are unable to capture and redistribute surpluses, to regulate the circuits of accumulation, and therefore to fulfill social functions.  States cannot absorb popular demands and resolve contradictions.  All this leads to crises of legitimacy and governability, to chronic instability, to waves of crime, social decomposition, spreading anomie.

The problem of social control in the global capitalist order becomes primordial.  This was symbolized in the late 2005 insurrection of the excluded in Paris.  We are seeing a transition from social welfare to social control states, the rise of police states that manage prison-industrial complexes to contain the excluded population, new forms of social and spatial apartheid, social cleansing, Katrina-type militarized control responses to disasters and other stresses.  We may be heading more generally towards a global police state.

7. Hasn’t globalization also led many nations out from underdevelopment?

Your question is phrased within a misleading nation-state framework of analysis, as if what “develops” or what is “underdeveloped” is a nation-state.  This ignores class polarization, power relations, and social inequality within each nation-state.  Globalization has turned many people in the South into participants – consumers – in the global marketplace – and spread the culture of global capitalism, with its individualism, consumerism, escapism and banality.  But it has generated downward mobility, marginality and immiseration for many more.

Inequalities worldwide have reached unprecedented proportions.  The pattern is a polarization between 20 percent of the population that is advancing, on the one hand, and 80 percent that is falling behind, on the other.  There are new transnational class inequalities that cannot be understood within the North-South divide.  The global South is increasingly dispersed across the planet so too is the global North.  India now has 200 million middle class consumers who participate in the global market, as does China, even while majorities in those countries sink into destitution.  Global social polarization is cutting across national lines in new ways.

8. What viable strategies do you see for challenging transnational capitalism?

 Social justice requires a measure of transnational social governance over this global production and financial system as a necessary first step in a radical redistribution of wealth and power to poor majorities.  What would such a new redistributive component involve and how would it come about?  Certainly it would require a reversal of neo-liberal policies at the nation-state level.  But redistribution is not enough.  It must be linked to the transformation of class and property relations.  Local class and property relations have global implications.  Webs of interdependence link the local to the global.

Pockets of counter-hegemony are now emerging more clearly, for example, in the rise of an anti-neo-liberal power bloc in Latin America centered around Venezuela.  Nonetheless, the challenge is how to convert a reactive global resistance into a proactive global program.  The recent experiences of Venezuela, Brazil, South Africa, and Haiti, among others, make clear the limitations to reintroduction of a redistributive project at nation-state level alone.

Any challenge to capitalist state power must involve a major transnational component.  Struggles at nation-state level are far from futile.  They remain central to the prospects for social justice and progressive social change.  But any such struggles must be part of a more expansive transnational counterhegemonic project and a program to rein in on the global market and the power of global capital.  An alternative to global capitalism must be a transnational project, involving transnational trade unionism, transnational social movements, transnational political organizations, and so on.

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