The Making of global CapiTalisM: The poliTiCal eConoMy of aMeriCan eMpireBook byLeo Panitch and Sam GindinInterviewed byPeter Brogan and David Hugill Department of Geography, York University
IntroductionCanadian political economists Leo Panitch and Sam Gindin have long held that states are not the unwitting stewards of capitalism but key actors in its maintenance and reproduction. With The Making of Global Capitalism: The Political Economy of American Empire (Verso 2012) they make this case more explicitly than ever by forensically tracing the decisive role that the American state has played in es-tablishing the foundations of the contemporary global capitalist space economy. Their weighty tome – which was more than a decade in the making – is a com-prehensive account of the rise of American empire. It details the proximity between prescriptions devised and favored in Washington and the shape of con-temporary capitalism. Panitch and Gindin’s crucial contribution, however, is not simply that they record the emergence of a Pax Americana but rather their revelation of the historical uniqueness of this new form of imperial rule. The authors demonstrate that the post-war American state was uniquely placed to “relaunch” global capitalism after the mid-century bloodletting, but through strategies that were far more “informal” than those of its predecessors. They show that in promoting the interests of American capital and attempting to maintain an accumulation-friendly generalized rule of law the American state took the lead in “creating the political and juridical conditions for the general extension and reproduction of capi-talism internationally” (Panitch and Gindin 2012: 6). Much of the book’s twelve chapters are committed to telling this story, chronicling the convoluted process by which the American state became the central force in the emergence of a truly global post-war capitalism. Peter Brogan and David Hugill sat down with Leo Paniich and Sam Gindin in late November 2012 to discuss The Making of Global Capitalism and its reception. What follows are excerpts from that con-versation.
Peter Brogan and David Hugill (PB/DH): In the Making of Global Capitalism you describe the emergence of a new imperial form, an unprec-edented post-war “American Empire.” Would you say something about the territorial politics of this new constellation of power?
Leo Panitch (LP): One of the results of thinking about these questions in terms of states is that the notion of territoriality we have is of the territory of nation states, the territory that nation-states are ruling within. So when we define empire as extended political rule we mean extended beyond the territory of a par-ticular nation-state. That can be done through direct territorial rule - through colonies, conquest, etc. - or it can be done informally, which we see being repre-sented by the American state, more than any other in history. Our book charts out the path by which the American state has developed a set of responsibilities for superintending global capitalism and the remaking of other states so that they are functional to the repro-duction of global capitalism. We are very much con-ceiving of territoriality in terms of nation-states and globalization as the spread of capitalism to penetrate an increasing number of nation-states.
Sam Gindin (SG): The notion of a contradic-tion between a capitalism that is global, in terms of its space, and nation-states that are national in terms of their territory is, in our understanding, addressed through the internationalization of nation-states that take responsibility for global accumulation within their own territory.
LP: That is how we define the internationaliza-tion of the state. Which in terms of state theory is the main conceptual development we are making. We are defining the internationalization of the state, not as the creation of international states, but in terms of states developing responsibilities for managing global capitalism. This includes the concern of aligning domestic policies with the reproduction of a global capitalism.
PB/DH: Yet in spite of the fact that states have taken on these responsibilities you continue to insist on their relative autonomy from capitalist ac-cumulation and this is really crucial to your theo-rization of the making of global capitalism. Can you tell us why? Additionally we’d like to ask you to differentiate between your own work and the work of others that have conceptualized the new impe-rialism as constituted by the dialectic of a “terri-torial logic of capitalism” and an “economic logic of capitalism” (Harvey 2003). You are trying to say something pretty different, aren’t you?
SG: There are two separate issues here. In terms of the territorial logic of empire, it seems to be a very loose notion to point to two separate logics that aren’t connected to each other. So when you ask why does the US go into Vietnam and you suggest that this is somehow about a different logic – i.e. about territory – it misses the point. The logic of empire is that you are trying to keep spaces open for global capitalism. So the two aren’t unrelated. In trying to keep the world open to global capitalism you are keeping the world open for accumulation. They are not two separate logics.
LP: I think [David] Harvey got this notion from [Giovanni] Arrighi and then Arrighi took it back from Harvey. A lot has to do with World Systems theory never quite figuring out what capitalism was and where it began. So they are dealing with very old empires that expand territorially through military conquest. That eventually overlaps with a capitalist logic but then it is as though the territorial drive is always present in history including the way in which the British Empire operated, which we (along with Ellen Wood) argue was the first capitalist empire. The United States goes much further in this respect but it is very difficult to disentangle American military interventions from their role within a specifically capitalist empire. That is not to say that we should reduce everything that the United States does directly to promoting the ac-cumulation of capital by its own capitalists and capi-talists everywhere. Our argument about the American invasion of Iraq or its role in Afghanistan is geostra-tegic but it relates to capitalism in the sense that it is keeping waterways open for the delivery of certain resources, above all oil; it is taking responsibility for other capitalist states to be able to get Middle Eastern oil. So its not that they are concerned with the ability of certain American corporations to accumulate over and above corporations from elsewhere, which is what a lot of the left superficially thinks. And then there is another dimension that goes with being a state but isn’t understood in terms of a logic of territorial expansion. The main responsibility of a capitalist state, like any other, is to keep order, and this does relate to relative autonomy. It is to promul-gate laws, make sure that they are obeyed, etc. and that involves a big policing role. You need to look at what the American state does internationally, militarily, as 104Human GeographyMAKING OF GLOBAL CAPITALISMthe equivalent to what the American state does do-mestically through its police forces. When the LAPD polices South Central Los Angeles nobody speaks of it as territorial expansion. Yet given its military dominance, the American state gets landed with the burden of trying to keep order in a chaotic world full of morbid symptoms and in the instances where they don’t, they get blamed by human rights international-ists, as in the case of Rwanda, for example. So such interventions don’t have to have any immediate capi-talist meaning for the US to get pulled into playing this role; but they are not about territorial expansion like the empires of old that expanded to increase their resources, etc.
SG: One of the problems with World Systems theory, to elaborate on what Leo is saying, is that such a large sweep of history ends up to be ahistorical. It ends up missing what is actually specific about this kind of empire and the extent to which it actually operates through states and through markets, as opposed to territorial expansion. The thing about the relative autonomy of the state is that once you stop seeing the state as merely reflecting capitalist interests, as if capitalists know what their interests are all the time, you have to start thinking about how the state has some autonomy. You have to think in terms of the reproduction of the system, although the state is always limited because of its dependence on capital ac-cumulation and profit. This leads to a lot of interesting questions about how the capacities of the American state developed so that it could take on these respon-sibilities of maintaining global capitalism. How did it develop through, and learn from, the present crisis? The Federal Reserve’s radical turn from trying to set interest rates to a vast expansion of the money supply (quantitative easing), for example, was a role that it hadn’t played before.
LP: Gindin turned the question of relative autonomy on its head because he hasn’t read that much state theory. He would often write some really penetrating stuff in the middle of the night. He wrote a paragraph that is in the intro that is in one sense totally off the wall, but totally right. Normally we use relative autonomy in terms of how autonomous the state is from the capitalist class, or the bourgeoisie. But he turned this on its head and said that the state is dependent on capital accumulation and in that sense it is not autonomous at all. But insofar as it is not dictated to by capitalists, that autonomy is relative.
PB/DH: We want to bring the conversation back to something that I think you share with a lot of radical economic geographers who draw heavily on the French Regulation School of political economy. They also tend to focus on historical and geographical variation and contingency, seeing it as imperative to look at how the messy reality of neo-liberalism and contemporary capitalism is playing itself out on the ground. What distinguishes your theorization of global capitalism and empire from such work as that rooted in the Regulation theory or World Systems theory?
LP: It is very similar in terms of our argument that for the American state to have played such an extensive role in the world, it had to create appropri-ate conditions at home – above all by integrating the working class in such a way as to support establishing the material base for empire. And that is very similar, obviously, to Regulation theory. The trouble with Regulation theory, however, is that it operates as a template that gets laid on different places and periods, I think, in a really formulaic way. The very special role of the American state – which we are trying to trace and understand – gets lost in Regulation theory. With it, you get this template laid on any state in the world that a researcher wants to lay it on. As Robert Brenner pointed out in reaction to Regulation theory, you could say Fordism was operating in 1900, certainly 1905 in the United States, whereas Aglietta and others introduce it in 1945. Perhaps Brenner is putting too much emphasis on this but Regulation theory does tend to have this kind of fixation on the post-1945 period, its breakdown, and then post-Fordism. History is too fluid to be captured by this kind of a template. There is also the big problem, which I wouldn’t apply to all of them, of a tendency in Regulation theory to look for what is the next way that capitalism could stabilize itself, and almost to be advising for that – which isn’t our business. Of course, we all wonder 105Volume 7, Number 3 2014PETER BROGAN AND DAVID HUGILLabout how it is going to stabilize itself, but it seems to incline certain people to become very reformist in terms of searching for a flexible post-Fordism that will keep capitalism going.
PB/DH: The post-war transformation of capital-ist finance and the integration of the working class into that process is central to the story you tell. Yet you locate the postwar period as the moment where these contradictions start to intensify, where com-modification intensifies, rather than in the 1970s or 1980s. At one point you quote Badiou saying that finance is the blood and the “real economy” is the heart of contemporary capitalism to show that we shouldn’t conceptualize the real productive economy and finance as disconnected. You suggest that we need to understand the centrality of finance within the making of global capitalism, especially in how it served to discipline the working class and integrate them into the circuits of consumption, commodification and so on.
SG: This is why our analysis ends up to be a very different historical explanation of the postwar period. We see the makings of what becomes neoliberalism emerging in the earlier period in the sense that you see the roots of it in the earlier period and that there are also contradictions in that period leading towards a neoliberal response. In terms of finance, for example, there is a common notion that finance was controlled in the early years after World War II. But this was actually a period that included an incredible financial boom. Finance was involved in the development of private workers’ pensions and the rising mortgages of workers into the 1950s and 1960s, as well as the in-ternational expansion of multinational corporations and the related development of the Euro market in the 1960s. There is also the breaking of the working class after 1945 in the sense that the thrust of the working class is channeled away from more radical possibilities and into making gains within the system. Workers came to emphasize selling their labour for the wages to access individual consumption as opposed to challenging capital. The left is defeated in that earlier period with implications for later struggles. And though Bretton Woods is seen as regulating the global economy in a particular way, Bretton Woods is also contributing to the development of the international trade and capital flows that eventually contribute to undermining fixed exchange rates in the early 1970s. So all of these developments are setting the stage for the globalized capitalism that emerges later and for a weaker working class to accommodate that. And then, in the context of the full employment of the 1960s, workers remained strong enough – even after the defeat of the earlier left – to effect productivity, corporate profit rates, and inflation, which in turn affected the dollar. With such contradictions emerging in that “pre-neoliberal” period, Regulation theory’s stress on a virtuous circle was clearly overdone. Again, in contrast to Regulation Theory, we think you have to start theorizing the American state in par-ticular, and not just as another state. There is something different about this state and how it developed histori-cally, its capacities and the role it plays.
LP: Both at the level of intent and at the level of class forces, what is going on in 1945 is that the people who construct Bretton Woods are aiming at getting back to the 19th century world of free trade and free capital movements. Not getting back to the gold standard, with the American dollar back and fixed exchange rates, but getting back to that world. And one of the reasons they are looking forward to getting to that world is because of the strength of Wall Street and financial capital, already in 1944 in the United States. The New Deal does save American finance in a way. And finance was not an inconse-quential force in 1944. The US Treasury has to really engage in a lot of pressure, propaganda and bargaining with Wall Street to get Bretton Woods through. One of the outcomes of that bargaining is that the British will engage in convertibility of sterling by 1946. Because Wall Street wants whatever capital there is in Europe to flow there. And those who want to rebuild Europe know that that is a disaster. But these greedy Wall Street bankers are looking for more money to play with. So they get the British to agree to convert sterling in 1946 – which is a disaster and they have to pull back. Why I am stressing this is because both in terms of a long-term vision and in terms of class forces, the people who made the post-war order - and it wasn’t some model that suddenly gets plunked on 106Human GeographyMAKING OF GLOBAL CAPITALISMthe world – were a group of human agents who were making something in the face of the disaster that was World War II, with large parts of the world being closed to capital accumulation by communist revolu-tions, etcetera. They are looking to a world that will later get labeled as deregulation. They know it is going to take a while to get there and I think the fact that this was there at the beginning is missing in Regu-lation Theory. Its immediate implementation is held back by the balance of class forces and by the need to rebuild capitalist states in Europe and Japan, but with that earlier history absent, you have this static model and as history goes on, a search for the next model.
PB/DH: You resist the narrative that locates the birth of neoliberalism in the 1970s and the view that it was at that point that finance was dramati-cally deregulated and allowed to run wild. Why might that telling of the history of contemporary capitalism have dangerous political implications?LP: We are socialists and we are looking for an analysis of capitalism that demonstrates to people that there is no way to regulate capitalism in a way that removes its inequities and contradictions. We need an analysis of capitalism that doesn’t give the impression that you can regulate it in such a way that you won’t have crises, that you won’t have greed, you won’t have asymmetries between classes. So I think we are very much concerned to show that the role finance plays in an integrated global capitalism is one that requires a lot of speculation. And that the introduction of certain regulations will inevitably be modified so that finance can continues to play that role. SG: So the contradiction is that finance is actually essential to the system but also has all this volatility and craziness. If they try to regulate it completely, they might strangle it and lose the potential benefits. Their dilemma is that capitalism needs this kind of crazy finance.
LP: We wouldn’t deny that, just as deposit insurance has saved the savings and banks of a fair number of people, there are certain types of regula-tions that could, certainly, restrict certain types of financial speculation. SG: We just don’t think you can get rid of the volatility.
PB/DH: One of the most important elements of your book, and your theorization of capitalism more generally, is the central role that you accord to working class struggles in shaping/resisting cap-italism. Can you elaborate on some of the ways that working class agency, struggles and institutions (or the lack thereof ) have been fundamental in the production of global capitalism? SG: The role of the American state in the making of global capitalism was conditional on containing the American working class as a social force. This was clear after the Second World War when the militancy of American labour was channeled into support-ing economic growth and individual consumption as opposed to class conflict over democratizing the workplace and investment. It was also central to the crisis of the 1970s, which was about the negative impact of working class militancy in the context of relatively full employment on both profits and, by way of inflation, confidence in the dollar (i.e. the material and financial base of the empire). In the present crisis, it has, ironically, been the very weakness of the working class – its financial fragility – that has played a role in the financial collapse. Looking ahead, we have argued that the collapse of capitalism will not come from a mechanical law of falling profit rates, inter-imperial rivalry, splits between financial and industrial fractions of capital, but from contradictions and social conflicts within states. And that takes us back to the creative invention of new forms of working class or-ganization and struggles that address the transforma-tion of national states to the end of democratizing all aspects of society, above all property relations.PB/DH: In contrast to many other theorists of the global economy who understand a renewed American imperialism as accompanied by a decline in the strength of US economic power and dynamism you argue that it has actually been the immense power of both the American state and American capitalism that has made global capi-talism possible. Why is this argument analyti-cally important for understanding contemporary
107Volume 7, Number 3 2014PETER BROGAN AND DAVID HUGILLcapitalism and politically relevant for developing a renewed socialist politics? SG: Differences in the meaning of statistics are common among researchers but the more fundamen-tal issue here is that it is mistaken to focus on national statistics absent a framework that include their inter-national, and in the case of the US, their imperial, context. Consider for example the fact that the US share of capitalist industrial production fell from close to 50% in the post-war period to under 25% by the early 1970s. To argue that this is an indicator of decline misses the fact that the spread of capital-ism was central to the American project; the spread of capitalism was a condition for expanding opportuni-ties for American capital. This dispersion of industrial capital is therefore a measure of American success, not failure. Similarly, to focus on US trade imbalances (a constant over the past three decades) as a sign of competitive weakness ignores the fact that the sales of American MNCs abroad – which don’t show up in such statistics – are four times as high as exports from the US. Moreover, US exports have themselves generally done very well (lagging only Germany and China) and the fact that the US can continue to import more than it exports over a long period of time reflects the role of the US dollar and the ability of the US to access and consume a disproportionate share of the value produced by global labour. A final point relates to the “hollowing out” of the American economy. As much as workers experience the reality of lost indus-trial jobs, from the perspective of capital this is better understood as restructuring: the restructuring of the workplace, introduction of radical new technologies, shifting relations to suppliers, the geographical disper-sion and relocation of industry, the move to higher tech production and new services above all business services like engineering, accounting, legal, consul-tancy and of course finance. That is, such restructur-ing has placed American capital at the forefront of the “commanding heights” of the international economy. The political significance of all this is a matter of soberly facing up to what we confront: a long-term process of building new capacities that can match a powerful and dynamic, if also destructive, social system. ReferencesAglietti, M (2000) Theory of Capitalist Regula-tion: The US Experience. London and New York: Verso.Harvey, D (2003) The New Imperialism. New York: Oxford University Press.Panitch, L and Gindin S (2012) The Making of Global Capitalism: The Political Economy of American Empire. London and New York: Verso
