The shape of things to come?

things to come? The shape of Global restructuring Piers Cavendish/Reflex

capitalist major imperialist necessarily increased rivalry "each crisis leads to between the powers" Page 13 period will be a viclous triangular battle for economic dominance between the USA, xist academics) have tended to neglect a further crucial aspect of the crisis: each capitalist crisis necessarily leads to increased rivalry between the major imperialist powers - and a new international division of labour, a new fluence, between the major capitalist Today this expresses itself, within shaky "Westem alliance" in a bitter three-comered fight foreconomic and political dominance between the European imperialist countries, of which West Germany (FRG) is casily This economic restructuring inter- carving up of economic spheres of in- the framework of the increasingly United States, Japan, and the the most economically powerful. powers. recession", while highly controversial Beginning at the end of the 1960s, but most dramatically in the world stump of 1973-5, world capitalim has since Quite rightly, Marxists have con- centrated their altention on the effects of this crisis on the living standards of vanced and the dependent countries) and on the drive towards the austerity and militarisation offensive which came in the wake of the crisis, and the But by putting these matters at the forefront of their attention, revolu- at the time, is now hardly disputed. the working class (in both the ad- political consequences for the fionary socialists (unlike some Mar- workers' anti-capitalist struggle. been in continual crisis! SOCIALIST OUTLOOK no 14 April 1989 Russian cconomist Kondratieff, has ment, put forward as long ago as 1964. It is now widely recognised by Marxists that capitalism goes through long periods of expan- sion and recession, as well as capitalism has been in the grip of a long period of recession since the late 1960s/early 1970s. The notion of long waves in capitalism, first systematised by the been most developed in the last two decades by Emest Mandel. His argu- that the long post-war capitalist hoom would he followed by a long period characterised by lan undertone of conjunctural booms and slumps, and that world Europe and Japan.

SOCIALIST OUTLOOK no 14 Apnl 1989 Whereas tures between these corporations, their national sovereignty and owner- ship is, in general, not in doubt - ex- cept in the case of international tions which operite on a world scale, they are nearly all owned by the capitalist class in one imperialist country: 1BM and Ford ure American; Hoffman-Roche and Nestle are Swisk; there may he examples of joint ven- coporation' is often confusing when discussing the real economic warfare between the major capitalist states. The tem "transnational corporation" is much more sccurate because when we examine any of the major curpora trade deficits are all examples uf this, multinational Carter and Reagan have all tried to dominance against the Japanese and Eurupean challenge. "Star Wars", the Nicaragua, and the US financial and Successive Presidents Nixon, utilise a combination of dollar/finan- ciu leadership, and military leader- ship of the West to retain US aggression against Libya and 4.3 2.9 1.3 18 Pensar Giobalmente. Actuar con Audacia. 25.4 14.7 10.7 13.9 2.9 6.3 Markets and 'large 1984 4.4 5.8 3.9 28.4 8.2 7.3 3,0 14.1 economic zones' ICT is British, and so on. Think Globally, Act Courageously. 9,3 14.6 3,0 6.7 4.2 3.1 13 1,7 1979 3.4 4.8 6.4 4.3 28.3 7,A 7.3 23.5 14.2 15.5 Note the decline of US production and stagnation of growth of NICs' - Newly Industrialised Countrics. & Corporale Skigen tur 1988 term 3.6 0.7 1.7 1973 8.2 19.5 12.4 7,1 14.0 2.8 6.7 2.8 as we shall see. 3.8 17.2 5.0 7.4 4R 29.5 7.8 Table1: The Global Distribution of Industrial Production The 5.6 12.2 4.1 3.2 3.1 0.4 2.9 1966 35.2 7.3 16.7 11-1 2.1 4.8 18.8 5.3 8.1 5.4 53 25 5.3 measured in labour productivity, it is 9.4 R.4 63 22 14,0 1.9 43 2.9 0,1 ing currency, in which debts between economy is not the most productive, still by far the largest, with carily the 1948 15.4 5.4 4.6 5.3 44.4 1.6 it a vital component of most major And the dollar, despite the ending of the 1944 Bretton Woods agreement nations and major corporations are settled. Moreover, even if the US 6.7 much of its economic dominance, it remains overwhelmingly the world's leading military power - which makes was losing its economic dominance to West Germany and Japan (see tabic I). But the major contradiction, which conditions much of the triangular con Rict between the the major imperialist centres, is that while the US has lost political/military conflicts worldwide. which included automatic Conver- tability is still the world's major trad- sion in the 1970s the US, by a whole series of economic indicators - par- ticularly that of labour productivity - the inflation caused by the Vietnam war, leading to the decline of the dol lar and the end of the US's pre- time of the onset of the world roces- The US was hit particularly hard by 2,5 10,4 2.9 2.2 1.3 2.7 0.2 123 1938 75 28.1 5.7 10.9 7.2 4.9 2.3 eminent economic position. 10.2 27.5 7.7 largest intemal market. American pre-eminence. 19,0 42,0 4.0 3.0 -1929 7.0 12,0 3.0 9.0 1926 Đfi Source: The Global Economy David M Gordon NIR 168. been destroyed or defeated, and the 'third tech- began to erode labour sible by factors Marshall Plan, cheap labour in countries where movement had M economics in the 1950s and including the nological '60s, made pos revolution* 4.0 4.0 1913 7.0 14.0 36,0 1.0 20.0 14.0 3.0 1.0 17.0 5.0 -1900 20.0 7.0 17.0 30.0 1896 the United States emerged in 1945 as most powerful economic and political state, leader of World War 2 devastated much of as the major imperialist power. With the free world" In every sense. But the reconstruction of the Japanese and Europe and Japan, and finally com pleted the process of Britain's decline the Soviet Union in economic chaos, bachev and the international debt political reality. Our intention here 1s simply to try to describe some of the elements of this changing situation, which are crucially important for Mar- xists in analysing what sort of politi- cal approach they should adopt in Britain to phenomena as diverse as the 1992 single European market, Gor- over which the Europe, Japan and the What is at stake here is the whole configuration of world economic and temational "peaceful coexistence' centres is now 'overdetermined' by a perestroika in the Soviet Union and which could open up massive new markets in the post-capitalist states countries of the "Pacific tim' - Korea, Singapote, Hong Kong and Taiwan - as major centres of industrial produc- tion. But this three comered fight he- tween the three major imperialist new factor - Gorbachev and the possibility of a new period of in- 32.0% sects with the emergence of a serica of semi-industrialised dependent countrics in the 'third world' which can no longer be simply described as "semi-colonial': the international debt crisis which hits the nations of Latin American particularly cruelly; and the spectacular emergence of some of the 3.0 S UP P hegemony - and Its 1870 10.0 13.0 23.0 15.0 4.0 The decline of US Centrally Planned Reons Country or Grouping Euro Ecos, Community Otber Advanced Econs Less Developed Econs Other Asia NICs L Amer. NICs European NICs US will bitterly fight. the uncontested United Kingdom Latin Amerka Other CPEs Other LDCs Rest of EEC United States Other Asia Germany France USSR Japan crisis. the dollar is dominance, whelmingly ...while the currency... US has lost much of its the world's power and it remains economic military world's still the leading trading major Page 14 over-

the United States has forced Canada The three "large economic zones' would could thus emerge would be a US-Canada axis with predominant in- led Asian axis, incorporating the four countries. Each would then fight for influence and markets in the rest of the ample of the gearing-up for the trian- gular inter-imperialist fight is the way , in effect a single market dominated by the US fluence on a reluctant Latin America: a West European axis; and a Japanese- *newly industrialising part of these discussions. A furtherex The relocation of to accept a 'free-trade zone", Asian world. trusts. Ultimately such industrial integra- stage afler 1992 they need a bigger financial and productive base than they currently have, The logic is the merging and integration of the bigger European countries into real "multinational' conglomerates, which in why firms like GEC, Siemens and political integration - a single Western European state, no less. This was acutely recognised by the then US Secretary of State Dean Rusk when he said in 1969: "The problem with Europe playing an economic role capacity in that its political units are Phillips are all looking for new tion supposes financial and even commensurate with its production UPPLE European partners. takeover bids, which only proves the tions have divided up the world into pheres of uncontested dominance, tion, especially in the countries which are experiencing a limited, dependent, For example, in Asia Japanese cor- porations are waging an all-out war against US companies in Thailand you will hardly see anything but Japanese cars - not a Ford or Chrysler in sight - a reversal of the situation 20 years ago. But if the world economic crisis worsens over a long period, then national economic protectionism, and a fight to construct "large economic point. We are a long way off a situa- tion where the transnational corpora but there is a real trend in that dirco- industrialisation.

The new intemational division of labour in the 1970s involved a restless quest by the large coonomic corpora- contres of cheap production. Of course, one of the main elements here was the price of labour (another strik- basic comparisons will show what is economy is at least twice the size of - Labour is often cheaper. Labour in tions to find new markets, and new ing confirmation of the labour theory of value, but leave that aside). Some involved, While the Japanese the British - it is a much richer country Italy costs three times that in Hong Kong, which in tum is twice as expen- sive as that in Thailand The trend production Lord Young and why they want to which has been obvious for 25 years too small'(!). There lies the problem, and more. A single West Europeun state would be either German- dominated, or dominated by a Ger- man-French axis. It is this which scares the life out of Mrs Thatcher and hang on to the "special relationship' During the 1970s an august intema- tional body called the Trilateral Commission", consisting mainly of ex-government ministers and liberal ment from the Carter administration, was set up to discuss the possibility of academics from the advanced countrics, but with some encourge zones' of influence will become an ir- reversible trend. One of the first signs of this fight over the new internation- al division of labour is the growth of economic protectionism of home Protectionism in Japan, through a complex system of import licenses and spurious technical specifications, makes it very difficult for European and Americen companies to compete in the Japanese national market. There is a growing trend to protectionism in the United States, many echoes of were expressed in the 1988 presidential election campaign, and there is not the slightest doubt that a "single Europcan market' in 1992, will markets.

in 1969: Secretary of The with Europe ...US State Dean Rusk said problem playing an economic role and cheap is obvious. The constraint is the lack of fixed plant and capital in transnational corporations is in other But the quest for cheap sites of imperialist countries or for local sale (The example of all those products therefore to try to relocate production to countries where labour is plentiful those countries. In fact, of course the majority of foreign investment by developed countries, not in the semi- colonial or semi-industrialised production led to a well-known result. In seveml countries of the third world, transnational corporations have con- structed assembly plants for com- ponents made in the advanced countries, either for re-export to the countries. operation. Interestingly, Australia has joint management of world economic affairs by Europe, Japan and the US. It was an unofficial body, which hoped that this jount management would then aid the economic development of the third world. World economic reality intervened, and 'trilateralism" col- world bourgeois politics It has been replaced by triangular economic war- Fare between the three major centres of tion, has been paralleled by an attempt by the Japanese led ASEAN countries to deepen their co-ordination and co- lapsed as an influential current in The trend to construct large economic zones, and the move towards European capitalist integra- the advanced capitalist world. have a dynamic towards a 'fortress - on an economic level at centres, guarding their own internal markets, will then fight for dominance The whole project of the single ing a political-economic entity which No one doubts that it will be a Japan especially is so concemed to heef-up its productive capacity within the boundaries of the EEC, which its least. The three large imponalist European marker" is about construct- cun compete with Japan and the USA. protected" market, which is why products produced in Japan and in Equally, more and European corporations are other Asian nations will have difficul over larger cconomic zones. Ly penetrating. more

too small."* political commen- its surate with production capacity is that its units are Page 15 with Japanese names like Toshiba and Share ann.% +5.2 -1.7 +1.4 -1,9 -2.0 Otber LDCs Table 3: Developing Countries' Share of 6.0 9.1 6:3 6,9 6.1 5.5 Tables 2 & 3 show the stagnation of "third world" production Manufacturing Value-Added ann.% +1.1 +2.9 +3.3 -0.2 +1.1 NICS Based on numbers and sources from Table 1. Share 4.4 4.9 5.9 7.1 8.5 8.4 CPE = centrally planned economy Share ann.% +3.5 L0.7 +2.1 +0.7 -1.0 Total LDCs LDC = less developed country expressed a strong desire to become 10.496 14.6 14.0 12.2 14.0 13.9 Year 1938 1948 1966 1973 1979 1984 Table 2: The Composition of Global Based on numbers aod sources from Table 1. & CPEs LDCS 3.0% 3.0 10.4 14.0 14.0 14.6 13.9 SOCIALIST OUTLOOK no: 14 April 1989 3.0 3,0 12.2 realising that to compete on a world 4.0% 33,6 Japan 6.0 7,0 12.9 10.0 30.9 6.0 22.0 27.3 Production 93.0% (-Japan) DMEs 91.0 91.0 89.0 76.7 76.0 65.8 58.7. 54.5 52.8 1896-1900 1926-1929 Year(s) 1870 1913 1938 1948 1966 1973 1979 1984

in some ways it became the complete reverse. The US launched what has Kcynesianism" - a vast increaso in defence expenditure — by printing dol- Tars, and sucking in investment capi- tal from overscas. As has been con- vincingly demonstrated by Mike many socialists were still talking about Reaganomics' being identical to the deflationary phase of Thatcherism in the early 1980s, in fact been described an 'military declined ty rich and powerin lanot made the point about the strength of the US intemal market, and indeed within the overall proceer of relative economic decline, there are sectors of the US coonomy which have ex- ing class, which are a long way off and If US economic begemony has about to surrender. We have alroady The US fights back EMEN very far from being certain. pendent industrialisation does mean that it is no longer simply possible to describe some of the so-called "third crease in the urban population and a decline in the peasantry. It has not dependence, economic and political. on the advanced imperialist centres. It will not prevent them from being the targets for incorporation into the zones of influcnce of the three major im- a certain "autonomous" development the growth of world trade, a rise in the price of oil in the 1970s, and the spill- over from the post-war boom. But in manufacturing industry, the role of the transnational corporation investment Without doubt this phenomcnon has led to an increase in the size of the proletarial in these countries, an in- however freed these countries from perialist centres. But thin limited de- world' countries as 'semi-colonial? tures made in the advanced countrics. This is not to deny that there has been in some of these countries, a result of Saisho made in Singapore and Taiwan is an obvious case in point). In very schematic and simplified terms, this is an important part of the basis of the process of dependent industrialisation in a number of countries - a very limited number - which have partial- ly escaped the fate of most semi- colonial countries as suppliers of raw materials and importers of manufac- P. P S U has been decisive. comes down Hong Kong, to about six Mexice and Singapore, number of industrial- generally- - Taiwan, countries accepted Brazil." Korea, newly ising "The

Austerity faces workers in the USA - the belly of the beast Davis*, this had numerous reflation- ary spin-offs throughour the US economy. and created a more economic space for the US middle classes - numerically vast compared with any other nation. These affluent millions were the political base of Reaguism, unattracted by even the mildest roforences by the Democrals to social welfarism. But of course in- creused wealth for the US middle clas- ses was matched by lay-offs, "give backs" and austerity for sections of the working class, and the massive growth ot poverty and a homeless Despite the consumplionist buoyancy of the US economy, it was based - in the end on borrowing or printing money, and the expansion of service industries, especially financial services, rather than any real advances in labour productivity and basic In: dustrialisation vis-a-vis Europe Japan. Only through the burgeoning detence industry did the US manage to keep its technological edge in com and electronics, an advantage persistently challenged by Japan The most ruthless US fightback has been on the political and military front The early 1980k missiles and Star Wars offensive forced die West SOCIALIST OUTLOOK no 14 Apn| 1989 panded - especially those in the South West sunbelt (where the lahour move ment is weaker, and where the bour geosie is more concemed about Asian markets than is its cast coast counter- part). This sector of the US bour- geoisic tends to be more isolationist and less concemed about the alliance On the economic front, the US has ruthlessly used the trade and budget deficit to suck in capital from Japan and Europe, and by effectively devalu- ing the dollar, has lessened the wealth of all international corporations and financial institutions which hold the bulk of their capital in dollars - still, as we have mentioned, the world's major trading currency. This has had a contradictory effect on the rest of the Western capitalist world in the carly and mid 1980s; whereas the budget deficit has reflated the US and thus world ceonomy and boosled world trade, it has at least temporarily strengthened the position of the US everyone now agrees, going into The precise mechanisms of the US cconomic revival were spectacularly innovative, and had immense effects inside the United States itself. While with Western Europe. within this reflation Above all, it is important not to overstate the extent of third world in dustrialisation. Nigel Harris has been imprudent enough to title a book The End of the Third World, as if global industrialistich near and. Buttere who underestimate industrialisation of the "periphery" (see his book Miracles and Mirages, Verso) lists a total of only eleven newly industrialising countries" - and his eleven include Greece, Portugal, Spain, Israel and Yugoslavia - countries not normally associated with the 'third world'. The number of generally-accepted newly industrialising countries comes down to about six - Taiwan, Singapore, Kong, Korea, Mexico and Brazil. The lalter two, together with Argentina (long a semi-industrialised * are in the thrall of debt bondage and unlikely to deepen their industrialisation process significantly in the foresccahle future. Kotea also has a deht problem and growth is slow. The progress of third world in- dustrialisation will depend primarily on whether the long period of reces- sion in the world economy is replaced by a new expansion such as occurred in the 1950s and 60%. This depends on huge world-historic political and economic developments, including hig defeats for the international work Alain Lipiets., ...the US classes - numerically compared with any other nation were the political base of Reaganism, unattracted by even the mildest references by the Democrats to social welfarism." Page 16

UPPL to the Soviel proposals managementof conflict, and major aid and trade, US intends to lessen its the Soviet Union. Star will be one of the major how the US-Europe- There is as yet no. proposals for a mutual The response of the doned; Gorbachev's Bush govemment team fum evidence that the fand thus cconomic) pressure on on joint political determining factors in Wars has not been aban Japan battle pans out. Eurupeans to concede political and technological superiority to the US. European political openings towards the USSR, which would have had strong trade spin offs. The anti-Libya offensive, including the bombing of ship, disrupting European trade and diplomatic links in the Middle East, hind US political objectives. The same world'* leading manufacturer of and for good meanure disrupted any Tripoli, was - among other things - ahout asserting US political leader- and dragging the West Europeans bo- considerations are involved in the ultra hypocritical US furore about the Libyan chemical factory (from the chemical weapons!), which neatly stole a march at the intemational con- world's leading

Gorbachev meets the people in Siberia: can he deliver his economic reforms? And what will they cost the workers? MI. strengthening of the USSR; but of course, business is business, especial- ly if it can be done at the expense of alone is a market of 280 million people. Add in the rest of castem Europe, and this is an immense poten- world capitalism. None of the major imperialist powers Want to see a real economic tial opening for the US wants to put more of the cost its NATO allies, and believes that it of the military budget in Europe onto can replace troops with its huge new arry of ultra sophisticated and ter- rifyingly destructive "smart" conven- All that being said, Gorbachev's detente offensive does present the US reductions in Europe, it demilitarisation of the Pacific met with a cool response: and if the US response to Soviet unilateral military is talking about troop is not primarily in reductions, but because tional weapons: ference on chemical warfare and put about their mle in the Libyan factory. newest military equipment (Like F-16 the West Germans on the defensive Military clout counts for an im- mense amount in world politics. The countries like Saudi Arabia with the fighters) determines, in part, who is going to be their political ally and where they bank their petro-dollars. Since World War 2 Japan has not counted for much in the military field, an immense handicap in the economic struggle with the USA, and none of the individual Europcan countries can contest the immense US defense in- dustry (which is why there is such issue of who is going to supply

is a market people. Add ...the of 280 million USSR alone Reagan's summit with Gorhachev in Moscow, which decided nothing of government circles that if Europe (and with the Soviet Union, the US cannot afford to be left out. In a sense, this is facing the Bush administration. Willit military and political clout to prevent political importance, was an indica- tion of a growing realisation in US perhaps now Japan) are going for a major programme of aid and trade the central foreign policy dilemma make a major tum towards detente and trade with the Soviet Union? Hasit the the other Wester powers from going ahead anyway ? And if the US does goes for detente and economic co- operation, what more political conces- autumn a West German govemment with a tremendous foreign policy and international trade dilemma. Last and trade delegation -led by Chancel- cow, to howls of protest from the US government (and Margaret Thatcher). The reason is obvious: the USSR lor Kohl but including dozens of lead- ing business executives - visited Mos- General Secretary GORBACHEV pressure for an integrated European lence - 1s beginning to change the hall Gorbachev's new foreign policy - that of detente and peaceful coexis game in the tangular conflict be- tween the major imperialist powers. Enter perestroika defence industry).

capitalism." in the rest potential Europe, immense of eastern and this is an opening for world Page 17 It is important to realise that there is an important debate inside the United States political elite and establishment over tween those want to do business with Gorbachev and those who want to keepup the cold war. Before going all- out to become the main imperialist aid and-trade partner of the USSR, the issue of whether Gorbachev will last, and whether he can deliver economic reforms which will open up majer markets has to be settled. It is quite Gorbachev and perestroika The op fions are not so simple as a divide he- sions can it force out of the Soviets? foreign policy His name in lights in Times Square: but the US wants more con- RESTS *** SOCIALIST OUTLOOK no. 14 April 1989 cessions from Gorbachev

N 3 SUPPL limited business with the USSK, conceivable that the US will adopt a complex package of pressure - and at the same time trying to stop the Europeans and Japanese getting too close to the USSR. There in already evidence that the Japanese are selling high tech goods to the USSR, which prevent Western allies supplying for 'security" reasons. But it will simultancously trying to do while keeping up the military the COCOM agreements SU banks today owed by the $1 trillion... third world "The total is around Western to the

he a difficult bulancing act for mense markets of the USSR- Of coursc, there is a sense in To break the USSR's dustry and raw materials, to tum towards more production for the desperately needs a reduction in Bush, as the West Germans and Japanese hungrily eye the im- which the United States can try lo scupper perestroika al- nver-concentration on heavy in- consumer market, Gorbachev and the military budget. If the US simp military production eastern Europe. together.

which the debt is used an a forn of political warfare was graphically il- SOCIALIST OUTLOOK no 14 April 1989 portion of the debt for whole or part ownership of local finns. The way in lustrated when Costa Rica's president Arias announced hiscentral American peace plan. The TIS government im- mediately intervened with the US Lons have been impoverished by the debt crisis. But this crisis is of connec ing promoted by the West inthe 1970g to facilitate the profitable re-invest- ment of petro-dollars and the partial industrialisation which we discussed The policy of the IMF towards the deht-laden countries is simple. Imple- ment austerity against your own mas- scs: export as much as possible, al whatever rock-bottom prices the world market dictates, and don't stop out of line politically, with the US in selves arc cashing in by debt-fot equity swaps, which retire a small austerity, decided by the IMF. Mil- directly the result of huge hank lend- particular. The Westem banks them Third world debt makes a fat living for western banks carlicr. il economic policy, universally that of But there are many other sections poor in those countries held in debt bondage. The total owed by the third world to the Westem banks today is around S1 trillion - in fact, in today's world, a small amount. (The total public debt of the US is $2 trillion, and the annual turnover of the top 200 Despite occasional scares about the over-extension of Westem banks' lending cupucity, the debt crisis works to the permanent advantage of the Numerous countries, particularly in with old technologies — have declined disproportionately. But, of course. overall there has been a generalised at tack, continuous since 1975-6, on the living standards of the masses in the of the world's working class par- lions of workers, peasants and urban Western banks and ruling classes. ticulary hit by