------------------------------------------------------------------------ Globalization and the Revolutionary Imperative Part I - Chapter 3 - preliminary Copyright 1998 by Richard K. Moore 2 September 1998 - 5600 words comments to: •••@••.••• online book: http://cyberjournal.org/cadre/gri/gri.html Part I - Corporate globalization: what it is, where it came from, where it is heading ---------------------------------------------------------------------------- Chapter 3 - Capitalism: the growth imperative, the finite Earth, and the monopoly endgame ---------------------------------------------------------------------------- How is it that capitalism has over the past two centuries come to so totally dominate the world? The answer lies in capitalism's growth imperative, its need to constantly expand. As necessity is the mother of invention, so this growth imperative has led to boundless innovation. The seemingly irresistible power of capitalism arises from its harnessing of human creativity toward the single-minded objective of increasing capitalist wealth. In the previous chapters we've seen how this creativity has manifested itself in the development of republics, powerful elites, political corruption, imperialism, Pax Americana, and globalization. In each phase of capitalism, new varieties of creativity have arisen in response to the changing requirements of capitalist growth. In order to find out where the creativity-inspiring growth imperative comes from, and to understand better the dynamics of capitalism's evolution, we need to look at the processes of capitalism itself. My American Heritage Dictionary's definition of capitalism begins with: An economic system characterized by open competition in a free market... This definition describes rather well capitalism's earliest phase, competitive capitalism, which arose in its modern form first in Britain. In this phase entrepreneurs start businesses, compete with other businesses, and some succeed and some fail. In this struggle for survival among businesses, creativity expresses itself as the development of new and better products, more efficient production techniques, and improved means of distribution and marketing. But this kind of competition, even though it already unleashes the power of human creativity, does not explain the growth imperative. The necessity of growth is better captured in the dictionary definition of capitalist: An investor of capital in business... What distinguishes capitalism from earlier forms of private commerce and trade is the emphasis on external capital investment -- funds which are invested in an enterprise for the purpose of increasing the value of the investment. In particular capitalism is characterized by stock corporations, where ownership shares in a business can be bought and sold. Stockholders are technically the owners of an enterprise, but the interests of stockholders are not the same as the interests of an owner who also operates an enterprise. An owner-operator is concerned with operating a healthy business and developing it over time. He or she might be interested in growing the business, or might just as well be happy for it to stabilize at some manageable size and then bring in a stable ongoing profit. But a capitalist, an external investor, is interested solely in the growth of the business, which is what increases the value of the stock investment. A stable business translates into stagnant stock values; a business which is merely profitable is not a good place for capital investment. One can compare a corporation -- or any investment vehicle -- to a taxicab, and an investor to a rider. The operator of a taxicab is concerned with keeping the vehicle in good repair and making a regular profit over time. A rider, on the other hand, is only concerned with his own use of the vehicle. If the rider gets to his destination on time, he has little concern over whether the vehicle is destroyed in the process. Similarly a capital investor uses an investment vehicle. Only a period of growth is required by the investor. If the vehicle then falters, investors simply sell their shares and reinvest elsewhere. The history of capitalism is strewn with the carcasses of boom-and-bust corporations, industries, and whole economies. In a capitalist economy there is a pool of capital -- the sum of all the money investors are making available. Just as water seeks its own level, so this ever-growing capital pool always seeks the best available growth opportunities. And just as water over time can wear down the highest mountain, so the relentless pressure of this growth-seeking capital pool eventually creates an economy and society in which growth is the dominant agenda. External ownership -- the separation of ownership from operation -- is the origin of the growth imperative in a capitalist economy. The evolution of capitalism proceeds according to the following dynamic. In each phase of its development capitalism operates within a larger societal regime -- a particular political, cultural, technological, and economic environment. Within this regime, under the relentless pressure of the investment pool, the various investment vehicles are developed to the maximum practical degree. There always comes a point where further growth of the pool becomes problematic or impossible. When such a societal growth barrier is encountered, the creative energy of capitalism is unleashed on a new objective: changing the surrounding societal regime. There is thus a characteristic rhythm to capitalist evolution. Periods of growth within a regime are punctuated by changes of regime designed to create a new period of growth. A new societal regime might be characterized by technological changes (the Industrial Revolution), by political changes (creation of republics), or by new societal projects (imperialism.) Driven by its relentless growth imperative, capitalism has become the driving force behind societal evolution wherever it has taken hold. Apologists for capitalism call such societal changes progress and emphasize whatever real or imagined beneficial qualities might be present. In fact such changes have been designed by human creativity yoked to the objective not of societal improvement, but to that of creating new investment vehicles for the ever-voracious capital pool. In fact the intentional destruction of societies and economies, particularly but not only in colonized nations, has been a technique frequently employed to create new investment vehicles. The rhythm of capitalist and hence of societal evolution proceeds with a slow beat of major changes as well as with a fast beat of minor changes. In the realm of technology development, which contributes both new products and more efficient operations to capitalism, change has been systematized in the form of research institutions and the research-and-development industry. Innovation in technology under capitalism becomes continuous, and is focused always on creating investment opportunities. Societal benefits, such as they are, arise from the need for products to be marketable, not from any inherent need for them to be useful or beneficial. The systemization of change, exhibited first in the realm of science and technology, has been extended by capitalism to all aspects of society. Today a generic agenda of never-ending change and growth has become the dominant societal paradigm globally, in essence a universal religion. Capitalism's growth imperative has manifested itself as a societal imperative for economic development. In the Middle Ages the answer to every question was sought in church doctrine; today the solution to every problem is sought in development. In retrospect the poverty of Middle-Ages thought seems obvious. But to those living through it, the intellectual regime was perceived as absolute God-given truth. For those living in today's capitalist-dominated societies it is difficult to comprehend how impoverished has become our societal problem-solving toolkit. For every societal problem we have only the hammer of development to apply. The branches of a tree, if they grow up under a strong prevailing wind, will be warped in a certain direction. Similarly our societies, under the prevailing pressure of the capital pool, have been evolving in a warped direction. In Part II, we will examine the rich possibilities opened to societies by looking beyond the straightjacket of the development paradigm. In this chapter we will examine how our societies have been warped by that paradigm. One of the most important and characteristic societal developments brought about by capitalism is the rise of capitalist elites. Given that the evolution of capitalism proceeds through an ongoing series of intentional societal changes, it is only natural that the mechanisms of societal control would themselves evolve over time and eventually be consolidated into political domination by a capitalist elite. People of the same trade seldom meet together... but the conversation ends in a conspiracy against the publick, or in some contrivance to raise prices. -- Adam Smith, Wealth of Nations In every society where capitalism has taken hold, a dominant capitalist elite has in fact emerged, along with the establishment of institutions designed to further elite interests in a systematic way. In Chapter 1 we saw how the United States itself has become a vehicle for managing world events so as to facilitate investment, to make the world safe for capitalism. In Chapter 2, we saw how TNC's have evolved into gigantic engines for generating capital growth, and we saw how TNC-dominated bureaucracies are being given decision-making power over a wide range of issues, loosely called economic -- and how those institutions are rapidly becoming in all but name a world government. Within the US, which is in many ways the most evolved example of a capitalist society, the means of elite capitalist domination are also very highly evolved. What is called "public debate" has become synonymous with whatever is presented in the mass media, and the mass media is nearly totally controlled, and mostly owned, by very large corporations. News, analysis, and entertainment consistently reinforce the dogma of economic growth and frame issues and events in ways that supports elite agendas. American political campaigns are conducted via the mass media, and the ability of the media to present candidates in either a good or bad light has been honed to a fine art, aided by techniques developed in the advertising and public-relations industries. Media spin, which is entirely at the discretion of the owners of the media, can and does determine the outcomes of elections. Not only can candidates or officials be made to look like fools by the kinds of questions they're asked on camera, but news events can be sensationalized by the media so as to bolster support for a favored candidate or to develop a constituency for an elite-desired platform agenda. The boundary between the US government and TNC's has become increasingly blurred. Top government officials -- people whose "expert" opinion carries more clout that the wishes of the President -- typically rotate between government posts and influential positions in the private sector. Corporate representatives have ready access to Congress and to Administration officials. Corporate-funded think-tanks produce the studies and analyses which become, frequently verbatim, the agendas of later administrations. With neoliberal globalization, the World Trade Organization, and the explosion of "free trade" zones (NAFTA and its clones), the political hegemony of the capitalist elite seems to have evolved nearly as far as it can go. The program has not yet been fully implemented, but we are clearly in the penultimate stage of its completion. The civilization-clash system of world order is being implemented at a break-neck pace. As I write the world is still reeling from the recent US missile attacks on Sudan and Afghanistan, which seemed all-at-once to make palpable a sense of chronic clash between the West and the Muslim world. Desert Storm and the ensuing sanctions, the Western interventions in Bosnia and Albania, and the settlement process in Northern Ireland -- in these events one can see the world described by Samuel Huntington being systematically brought into being. A conflict arises; it is interpreted by the media as a cultural clash; the West intervenes militarily or otherwise and "adjudicates" the problem. This is the geopolitical part of the New World Order which George Bush alluded to upon the completion of Desert Storm, and which Huntington elaborated under another label. National sovereignty is coming increasingly under assault by the newly constituted global regime, and not only by military intervention. Outside of the West, the IMF is becoming a global autocrat, dictating agendas to whole nations which further the interests of global capitalism, and which are devastating to the nations themselves. The case of Rwanda is particularly poignant. Rwanda had a reasonably healthy economy which was divided into two primary parts. One part was a general agricultural economy, supplying food for domestic consumption. The other part of the economy was the coffee-exportation business, bringing in needed foreign exchange. In 19xx, when Rwanda needed funding from the IMF, two ominous conditions were laid down. It was decreed by the IMF that payments to coffee growers be reduced to a certain figure -- a figure which was less than the cost of production. It was also decreed that the retail price of petrol be raised to a certain figure -- a figure at which farmers could no longer afford to deliver their goods to consumers. The conditions of credit completely and systematically destroyed the Rwandan economy. The IMF is in fact the ultimate capitalist vehicle for engineering societal evolution. Once a nation is in need of IMF credit, and this is already the fate of xxx nations, the power of the IMF to dictate small and large societal changes is total and arbitrary. There is no government nor agency that has official power over the IMF, and those nations which have the most influence over the IMF are as dominated by the capitalist elite as is the IMF itself. One might ask what global capitalism gains from destroying economies as it has done in Rwanda, Southeast Asia, the former Soviet Union, and elsewhere. One way to answer this question is to look at the history of colonialism, where the destruction of economies and societies has historically served to "clear the land" for the development of dependent colonial economies. In today's global economy there are additional reasons for the selective destruction of national economies, additional investment vehicles that can be created. Global capitalism today is coming up against several constraints, and globalization, in its full dimensionality, can be seen as the very creative attempt by very competent, corporate-funded planners to overcome those constraints. One of the constraints comes from the very global success of capitalism -- there is no longer any possibility of growth through territorial expansion. Other means of growth -- and many have been perfected over the years -- must be deployed. The capitalist benefits of an IMF intervention such as that in Rwanda become obvious when one looks at the balance sheet of the "transaction" from the perspective of global capital. Before the intervention, Rwanda was not importing much food from TNC agribusiness operators, and it was increasing the supply of coffee on the global market, exerting a downward pressure on coffee prices. After the intervention, Rwanda's coffee was removed from the market, and Rwanda was forced to import most of its food, creating growth opportunities for corporate agribusiness. Furthermore, the agricultural land and coffee plantations, being largely put out of business, became available for bargain purchase by TNC's if by any chance they fit into some development scheme or the other. In addition, the people formerly employed in agriculture and coffee became in need of employment, and without much bargaining power, in case their labor was needed in some development scheme. All in all, the intervention was a good deal for global capital, even while being a complete failure if the goal of the IMF had been to recoup its loans to Rwanda. In Southeast Asia the collapse scenario was a variation on this same theme. One can debate the process by which the financial collapse came to pass, and one must acknowledge the power of large (capitalist) financial institutions to influence the value of currencies and the expectations of speculators. But there can be little debate about the consequences of the ensuing IMF edicts, consequences which were immanently predictable by any reasonable person in possession of the facts. As in Rwanda, Korea and others were forced to import what they formerly exported; their export products were taken off the global markets; their domestic assets became available at bargain prices to global investors. An additional growth vehicle, and one which benefits from the boom-and-bust policies of the IMF, is the international currency and securities market. Ingenious derivative schemes, exemplifying the human creativity characteristically harnessed by capitalist necessity, have leveraged this marketplace to the point where only xx% of daily transactions are related to the real economy -- that part dealing with goods and services. Fluctuations in the global economy are transformed by derivative markets into capital growth. This particular growth vehicle is known from history to be unstable, an over-tuned pyramid-scheme race car, and dealing in some way with its ultimate crash is an elite problem to be discussed later in this chapter. One of the barriers currently being faced by capitalism is called the crisis of over-production. The efficiency and size of TNC producers have evolved to the degree where much more can be produced than can possibly be consumed. In automobiles, electronics, and many other industries there are simply too many producers chasing too few consumers. IMF interventions such as those described above have become a systematic mechanism to selectively cull global competitors, thus creating growth room for those that remain. By this means and others, ownership of global commerce and wealth is being highly concentrated in a relatively small number of ultra-large TNC operators. In food, transport, communications, aircraft production, banking, pharmaceuticals, and entertainment -- in nearly every business sector -- a handful of operators are coming to dominate on a global basis. As long as this concentration process can be continued, the dominant and growing TNC's provide a vehicle-of-convenience for the global capital pool. There is a limit to this shakeout phase, a point where further concentration becomes impractical and the monopoly phase begins. Although the dominance of a single operator is one of the possibilities (Microsoft), the more typical outcome seems to be a clique of large operators who learn to collaborate with one another in a fraternal way, allocating markets amongst themselves, avoiding price competition, and generally managing the industry to their mutual benefit. The classic example of this paradigm is the Seven Sister petroleum majors. ------------------------------------------------------------------------ (continued...)