Abstract
Introduction
America is neither a dream nor reality. It is a hyperreality … because it is a utopia which has behaved from the very beginning as though it were already achieved. (Baudrillard, 1988: 28)
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Jean Baudrillard’s ironic summarizing of the American historical condition as a ‘hyperreality’ was driven by his concern about the mind-numbing consequence for its people due to technical-administrative dominance. Today, to believe the combined announcements of the texts at the center of this critique, the American Dream has achieved global coverage, transforming the world system into a capitalist hyperspace. Although environmental and population forces may bring it down, for the moment, with a) the ‘informal American empire’ (Panitch and Gindin, 2012) assuring the continued reinforcement of a one-world political-economy; with b) the ‘financialization of the neo-liberal social structure of accumulation’ assuring the world-system’s technical infrastructure (Tabb, 2012); and with c) ‘world money’ (McNally, 2014) defining the universal symbolic standard that integrates all interests according to dehumanized criteria of performance, questions of local history, culture or national government are reduced to decorative artifacts in a commoditized world where wealth building means making a few individuals immeasurably wealthy.
World Capitalism as American Empire: Panitch and Gindin
Panitch and Gindin propose that global capitalism has not conquered the world as historical necessity or as the teleological end of capitalism. That conquest is due to the constitution of a world-reaching ‘informal empire’ by the Americans; deployed by domestic and international means, assuring that the only recognizable form of world political-economy is open-market speculative capitalism, with its epicenter in the USA. The mechanisms for ‘accumulation of capital’ concentrate wealth to the advantage of American multinational corporations, with this pattern of organization maintained by an always expanding financial-industrial vector, reinforced as need with military and espionage tools. A tiny sharing of wealth for strategic purposes to select individuals and corporate entities around the world guarantees the ‘informal’ American Empire will flourish until the end of time – unless it implodes or destroys the environment by its hubris for plenty. 3
‘Informal American Empire’ is a menacing concept. Rather than based on terrestrial colonization, this new form of imperia is assured by the subtle play of political forces, maximizing an ever more efficient concentration of capital, extracted as surplus value on world labor. With unhesitant use of uniformed armies and occupational governments, geopolitical leverage has been used to impose changes in the domestic politics of country after country – in return for modest advantages, mostly consisting of others’ right to survive. This has opened the door of one country after another to capitalist market relations, each suffering until it accommodates its internal affairs to fit with the demands of external agents of trade and finance – in supply, distribution, accounting, technology; assuring success for American dominated multinational corporations (MNCs). 4
Rather than an open-strategy intended to weaken foreign state capacities for self-governance, emergence of global capitalism is the result of short-term trade-offs by political leaders, menaced as revolutionaries or terrorists if they resist accommodating their institutions with the demands of world capitalism. With few exceptions, at the level of national leadership worldwide, there are few victims, mostly volunteers.
Is there anyone to blame? Since the reach of neoliberal productive relations is now pretty much taken for granted, the real issue for Panitch and Gindin is one of agency: and establishing US responsibility is the point of their study. The central chapters of their book consist of a detailed inventory of pronouncements over the last century by key spokespersons for American geopolitical interests – secretaries of state, presidential representatives, and international actors beholden to America for their legitimacy; demonstrating the pervasive and persistent ambition to save the world by imparting a strange logic of Americo-centered ‘democratic freedom’, according to which anything goes for a foreign government as long as the result of its domestic policy enhances US economic supremacy.
The methodological challenge is to certify an unarguable tight liaison between the body of American realpolitik and the operative spirit of global capitalism. To that end, Panitch and Gindin’s detailed history of American political maneuvers cover many grounds, from Teddy Roosevelt on San Juan Hill, through the Depression of 1929, to entry and strategy in the Second World War, the Marshal Plan for European ‘recovery’, the Cold War, Vietnam, and since. Unlike for Descartes, where the soul was reassured by the gods never to fool us about the truth, in the case of capitalism, the inspiration is from the USA heartland, as dominating informal empire; assuring that everyone, everywhere, will be fooled into believing that the driving interest of US domestic leaders is to save the world from tyranny rather than to set it in a posture of docile subservience, assuring that the measure of progress is associated with the manifest destiny of the USA: more wealth for its wealthy.
Their study of USA policy activity throughout the 20th century demonstrates that political action by or supported by the USA preceded the global, neoliberal shift in one country after another. From there, ‘development’ is assessed in terms of an ever more total coverage of the countries of the world by systems and structures of speculative capitalism. It is not until the end of their trudge through that hefty American 20th century that they felt safe in summarizing their position:
Although Marx discerned in the middle of the nineteenth century that a new class of capitalists was creating ‘a world after its own image,’ it actually took until the beginning of the twenty-first century before ‘a constantly expanding market’ could be said to have fully spread capitalist social relations ‘over the entire surface of the globe.’ Moreover, it was not a generic ‘bourgeoisie’ driven by competition to ‘nestle everywhere, settle everywhere, establish connections everywhere’ that alone made global capitalism after its own image. It took an empire of a new kind, founded on US capitalism’s great economic strength and centered on the capacities of the American state, to make global capitalism a reality. Yet no sooner did the task look to be more or less complete when the fourth great crisis of global capitalism (after those of the 1870s, the 1930s, and the 1970s) spread rapidly across the world. Marx’s observation 150 years earlier that the making of capitalism on a global scale was ‘paving the way for more extensive and more destructive crises’ while at the same time ‘diminishing the means whereby crises are prevented,’ seemed all too fully confirmed. And it was now the American empire that seemed to resemble ‘the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells.’ (Panitch and Gindin, 2013: 331)
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Given the detailed inventory of pronounces and documents cited by Panitch and Gindin, it is difficult not to accept their point regarding the calculating US responsibility for world-wide exploitation in the interests of American MNCs – hidden under a fog of good-motive communication about the saving grace of world-reaching democracy. Considered in parallel with the recent data dense study by Piketty (2013), it is difficult not to conclude that the capital concentrating effect of the playing out of this ‘informal American empire’ is inconsistent with the equal-opportunity promise of modern democracy (O’Brien, 2015).
But, as an empirical fact, no amount of incidental data, based on what can always be discounted as a selective reading of history, can prove or disprove such a claim. Thus we confront once again what Haden White forcefully identifies (see O’Brien, 2014: ch. 7) as the potentially fictive quality of historical fact. No matter how compelling the description, the true motives and causes that operated at a former time in history cannot be captured now, in precise language. At least as concerns the USA and its international agents – the UN, World Bank, FMI, WTO, etc. – even if its capitalists profit most under current conditions, there is no way to conclusively prove that the past century of American imposed standards of international eco-geopolitics has done more harm than good.
The Scaffolding of Capitalism: Tabb
Consistent with the above description of the distorted organization of the world system, William Tabb set out to identify the universal ‘functional-structures’, application of which around the world assures a growing concordance at the level of government and enterprise, generating a maximum of capital accumulation, funneled at the speed of light into bank accounts in safe havens, far from the scrupulous eyes of tax collectors. That magical technical force is: ‘financialization’.
Having occupied posts in departments of economics, sociology, and political science at various points in his long career, Tabb specifies the means for ‘financialization’ to be ‘social structures of accumulation and world system thinking’, which he describes in a language avowedly consistent with Karl Marx – yet without notable orthodoxy.
As Tabb points out, in the wake of the 2007/8 ‘near collapse of the financial system’ the level of economic activity in most countries is still ‘around 10% below its pre-crisis trend’. While the fallout has reduced income and life style for general populations, as if untouched by the problem, ‘the very rich are getting richer’, with the ‘top 1% controlling more than the bottom 50%’. This signals a grave moral problem, with capital dedicated not to production intended to meet general ‘human need’ but now as ‘geared solely to its own expansion’ (Tabb, 2012: 9).
Financialization assures huge revenues for major wealth holders: ‘in the past 25 years … 80% of all the new income went to the top 1%’ (Tabb, 2012: 1–3). In 2005, US$300 billion of total profits in the USA were in the financial sector, compared with only US$530 billion profit from production and services. With at most 5% of the population as wealth holders, that elite minority rakes in approximately 40% of the annual benefit from American business activity (Tabb, 2012: 14).
Tabb’s argument about the financialization of the global economy rests on the validity of a certain nest of assumptions, all in line with macro-institutional theory. This is reasonable, since it is there that central tenets drawn from his three affiliated disciplines find common ground. Stated more formally than does Tabb, we must assume that there is a world-system as institutional political-economy; that its driving force is the logic of capital; that its world view is that of a neoliberal paradise; and that the technical instrument for its realization is a web of systems and structures overdetermined by speculative financial considerations, largely disconnected from any objective other than the accelerated concentration of capital.
Although Tabb does not, I might add that the distribution of the ‘global elite’ is as unequal between countries as it is within them. By my rough estimate, while about 30% of the US population is able to live very well off the profit from the global invasion by the tools of financialization, the same applies for only about 10% of the French population and less than 1% of Indians. 6
On the surface that imbalance ought to be judged as not only heinous but absurd. Yet drawing on Horkheimer (2010 [1930]), as pointed out in my recent book, it fits precisely with the bourgeois philosophy of history that has dominated the political consciousness of occidental leaders for the past five centuries. One nub of the issue is the seriously outdated assumption that the stability of political regimes depends not on the production of wealth and its distribution and use for general well-being, but on the reproduction of the means to assure the ever expanding wealth and privilege of its bourgeois elite and their aristocratic country cousins. This transformation of privileged self-interest into global virtue epitomizes the most repeated Machiavellian postulate: when governments deal with ordinary citizens, as needed, the lie is the truth.
‘Social Structures of Accumulation’ (hereafter ‘SSA’) is the operative concept around which Tabb weaves his narrative, without being very specific about how to know one other than after the fact. 7 His proposition is clear enough: the SSA ‘framework suggests that periods of growth require a coherent set of mutually reinforcing institutions favorable to capital accumulation. … relatively long lasting accommodations between contesting social forces, including stable understandings between capital and labor’, This assures ‘institutional stability … under which the behavior of others can be predicted over the relevant planning horizon’. Progressively, then, ‘such institutional understandings and practices take on a certain solidarity … and people can act with confidence that mutually understood rules and norms will be followed’. Thus, ‘the growth of capitalism’ is assured thanks to ‘a relative stability of institutions over an extended period of time’ (Tabb, 2012: 25).
Tabb’s study reveals the recent dramatic shift in the center of gravity of capitalism. Ignoring the overt slavery and then the administrative-colonial phases of western economic growth, for most of the past two centuries, until the end of the 1960s, in order for financial capital to accumulate it was necessary to invest (directly or indirectly) in production, then maximize the surplus value over costs by a combination of technology advances coupled with squeezing labor to its striking point. With financialization, capital accumulates its greatest gains, not by employing, then exploiting a mass of workers or peasants; not by hording, then manipulating the price of goods stuffed into the holds of sea freighters and desert warehouses; big money is made simply by the sale and resale of the right to collect interest from debt.
Far from a Pollyanna, Tabb seems not to fear that all is lost for humanity. He argues that SSAs have a practical life cycle of about 30 years. Implicitly deploying a constructivist view point, he believes that global conditions can and invariably do shift; that signs of a ‘breakdown of once mutually reinforcing accords and understandings of relationships between key constituencies … signals a crisis of the SSA. Over decades, one SSA gives way as contradictions and conflicts grow, and eventually a new set of accommodations come into being’ (Tabb, 2012: 26).
‘Theorists’ on the subject have identified four SSA cycles in US history: 1) Civil War to end of the 19th century; 2) from then to the 1929 crash; 3) from the New Deal to post-Second World War; and now 4) that of ‘free-market global neoliberalism’ (Tabb, 2012: 26). Tabb concentrates on the most recent of the list, under which we presently exist, and for which he suggests the remaining days are numbered.
The long middle chapters of this book focus little on the architectural rigidity that is probably the main source of the fatal breakdown of an SSA; nor does he detail just what are neoliberalism’s, ‘regimes of accumulation, labor relations, taxation, spending priorities of government, and regulatory norms consonant with the composition of dominant class alliances and the ideological predilections favored by this historic block’ (Tabb: 2012: 30).
Like a scenario writer for a film-noir recount of financial decadence, he carries us though the long 20th century series of booms and busts, accompanied with palliative blustering on the part of US political and economic leaders, which has opened the path for the crisis conditions of today. Of which, ‘the greatest crisis … is the result of the long-term weakening of the real economy to accommodate short-term profit maximization’ (Tabb, 2012: 54). With ‘big money on Wall Street’ managed by ‘hedge funds and investment banks like Goldman Sachs’ and driven by ‘a handful of high frequency traders’ causing ‘major market breakdowns’.
He concludes his analysis with the astounding statistic that ‘total illegal money laundering, which the IMF puts at US$1 trillion a year … [is] perhaps the largest “business” in the global economy’ (Tabb, 2012: 230). Following that gloomy account of our speculation driven global economy, we might hope that based on his ‘years of teaching and thinking about American economic history’ (Tabb, 2012: 3), in his final chapter, Professor Tabb would propose a remedy for the financialized neoliberal SSA that now motorizes the world-system. To cut short such false hopes – and handcuff readers who study books from the back – his closing line is clear: ‘We make our own collective history. There are no answers at the back of the book’ (Tabb, 2012: 276).
Money Gone Mad: McNally
David McNally’s (2014) analysis of the ‘blood of the commonwealth’ provides a third historical reading of our current global economic crisis, focusing on the emergence and deployment of a sinister symbolic device: ‘world money’. Now published as a journal article, he laid this out most recently in a lecture delivered at a conference in London honoring his reception of the Deutscher Memorial Prize for his then most recent book, Monsters of the Market: Zombies, Vampires, and Global Capitalism (McNally, 2011). Before spiraling deeper into the key points he raised in that remarkable paper, a few words are in order to explain the ghoulish images in the title of his prize-winning book.
Contemplate speculative capitalism sucking the investment life-blood out of useful production with no other objective than adding a layer of gold bricks to off-shore bank vaults; then using this horded and havened financial capital, which as Marx pointed out is in fact dematerialized or dead-labor, as poison for the tip of the tools imposed on governments and enterprises to assure compliance with neoliberal orthodoxy; finally, shifting back a certain aesthetic distance, what other than a horror film comes to mind, of a world economic system as matrix of dangerous spaces, infested, well, by zombies and vampires? Since the way McNally (2011) portrays this is as undiscussable as black humor usually is, other than recommending it for general reading, we won’t try to say more.
Extending that metaphorical imagery, McNally’s 2013 lecture was a sequel to his prize-winning book. Entitled ‘The Blood of the Commonwealth: War – the State and the Making of World Money’, this text provides a historical-materialist analysis of the how denationalized, fully virtualized ‘world money’ came into being and then was produced in such volumes as to eventually displace all other standards of value: national, institutional, and personal. World money flowing in the global economy is like synthetic blood plasma: injecting a certain amount into a wounded body can aid its recovery, but lacking fundamental qualities, an overdose easily leads to fatal hemorrhaging. It is this kind of money-with-a-wink that the monsters of the financial markets siphon off at their leisure, then re-inject into weakened enterprises – and countries – to buy them out, displace their work force, strip their assets, and dissolve their productivity.
According to McNally’s discussion, this fascinating development of the social power of decontextualized money began with the minting of coinage. Money since the Greeks was two-faced, representing the land on one side and the monarch on the other, indicating who possessed the value of the land, which at the time was the base of all value, since off it came food, animals, natural products and, most importantly, people. Assuring prosperity required adding a dose of labor, which for a monarch was assured, one way or another, and at a good price. Thus in the beginning ‘coin’ represented the society as organization, the value assertion as technical instrument, and the symbol of the legitimate authority of the monarch. Simply put, coined money was the iconic phenomenalization of empire.
The legitimacy of money was originally anchored in the prosperity of the realm, personified as its reigning head. However, in the wake of the voyages of discovery, by the 17th century internationalization of foreign relations had escalated. Resulting competition soon put everyone at war for control of the non-European world, and then, with increasing intensity, in a battle for domination of Europe itself. Using England as an ideal typical example, due to frequency, intensity and reach, the price of war rose, and soon the treasury of the king fell short. As McNally tells us, the sovereign was forced by horrid necessity to license the founding of a national bank, by which money could be raised in safety, from private parties, including foreigners; then loaned to the monarch for ships and gunpowder, all the time creating the appearance of domestic well-being by printing and putting into circulation bank-notes with his or her head on it. The more commonwealth blood was shed by warfare, the more the empire became beholden to its bank – which, we must recall, was now privately owned. Other banks soon emerged; being a-political, they could loan to all sides, assuring profitability no matter who lost. The private banking industry was born; God save the realm – and the people.
With less than two hours of time to discuss five centuries of western money madness, McNally focused on key events between 1690 and 1790; opening, when after losing the Battle of Beachy Head in a naval battle with the French, William III was forced in 1694 by the need for credit to allow incorporation of the Bank of England – under private ownership; and closing, when in the shadow of the French Revolution of 1789, on seeing that even royal heads of state can roll, the banks decided to place the functioning of all national governments on the general market for debt, supported by tradable financial instruments (bonds), which the sovereigns backed by law, with receivables and payables accounted on a universal standard of gold-backed money.
This dramatic shift in the measure of national authority, from social or even military performance to pure market accountability, did not occur without a battle; there were in fact many of them, and very bloody ones. The period focused on in this lecture was particularly grim; European kings made war, and often, each time borrowing to do so; the national debt to the bank(s) rose to an astounding degree, but still, the legal tender was treated popularly as if it were the ‘king’s money’, even if it was printed and backed by private banks. Since the continuous consequent of western leadership soon became warfare above all else, bankers became hesitant to continue this practice; after all, military destruction ultimately imposes costs on future production. In the end, the privately held banking sector won its autonomy, based on willingness to loan to the government, which included the right as a free-standing institution to issue money as it pleased and to charge governments ‘market rates’ of return.
The inversion was complete: the state was henceforth beholding to private bankers rather than the other way around. Thereafter, circulating liquidity depended on bank notes, from the bank, by the bank, for the bank; with the only public fact being the royal image decorating their face. Money had become a depersonalized commodity, with the banks producing it in varying volumes, based on demand for credit, substantially by governments. In turn, government’s first obligation was to use the money loaned to it by those private banks to pay back the industries which supplied them with armament and logistics. With those industries financed by the same banks – thus profiting twice – there was rarely much liquidity left for social purposes. The more people died from warfare, the more banking and industry prospered, based on the labor generated surplus value drawn from the backs of the people.
This transition due to the cost of war, shifting monetary authority from governments to banks, both signaled and facilitated the bourgeois revolution: the putting in place of the depersonalized state, with depersonalized money from very personally owned private banks, symbolizing prestige of possession and power of conquest. However, banks do not give money away, they sell it at a price. The standing of quality for both nations and individuals then came to be measured based on credit ‘rating’: the right to borrow, and at what rate.
Depersonalized state, depersonalized money, depersonalized commodity relations, markets, production, etc.: that was the new bourgeois state. Through the early 19th century, bank credit was still linked at least loosely to collateral value, associated with gold, the physical production of goods and services or land held by the aristocrats. That materialized the ‘labor theory of value’, which served as a cornerstone in the analysis by Marx in Capital. Unfortunately, connecting value to social relations and practices is evaluated by the bourgeoisie as a source of capital inefficiency.
The goal of a pure form of money-as-value disconnected from all material referents took a bit longer. It was finally achieved in the mid-20th century, with the progressive end of the gold standard at Bretton Woods (1944); with other currencies henceforth fixed against the US dollar; finalized in 1976, when the US government officially removed all references to gold from its money. That is not to say that gold lost its value or disappeared; rather it, and not money, became the only real means of holding transferable value left in the world. Today, backed by the trusted god of American greenbacks, due to its virtualized status, banking and finance are concerned not with real money but only with debt, which is distributed, allocated, traded among bankers and their agents, generating derivative markets of hyper-debt, with hyper-rates of return.
Debt, as the antimatter of value, is now the principle of the circulation of wealth. Symbolizing what is referred to as ‘fiat money’, every national government is beholden to it. Accounted as a universal standard, world money refers only to lines of credit. The spiritual problem of humankind is resolved: no longer tortured about heaven or hell, the only practical worry is economic purgatory – should a country’s credit rating slip. When, for lack of structural anchorages, the world money system goes chaotic, there is no one to blame. With depersonalized money, there is depersonalized power and thus depersonalized responsibility, assuring maximum personalized benefit – for the chosen few.
Conclusion
This analysis of the world political-economy provides worrisome evidence of a serious imbalance between the detached power of capital concentration and the fragile basis of response on the part of national governments.
With his demystifying historical narrative of the ‘making of world money’, McNally shows remarkable skill with political aesthetics. He approaches the peril of debt hidden behind the pleasing face of world money as the crucial mechanism allowing the subject of capital to assure its object of power, by dissolving the false boundary between them. With potent erudition, he stimulates person-on-the-street appeal for a relentless critique of this highly charged topic. He is hardly the first to have done so; thinking back to my recent book on Critical Practice (O’Brien, 2014), Voltaire and Schiller come to mind; they achieved widespread appeal from a position of high critique by composing plays, poems with major fictive elements aimed at exposing the need for political revolution. McNally depicts the truth of his subject – the anonymous danger of world money – not just by conceptualizing it but by also incarnating it, demonstrating that the much-discussed barrier between consciousness and material reality is the fiction of myth.
The historical-material study of the ‘informal American Empire’ by Panitch and Gindin demonstrates critical practice with a steamroller. Read, clipped, filed, from archives and journals, day after day, for years, their data provide a dry, indisputable record of the presumptive discourse by US leaders and their agents aimed at justifying worldwide activity to assure there might be no alternative to the US model and its self-defined measure of progress. Although anchored differently, the result brings to mind the grinding diligence of critical Foucault: relentless, total, no loose ends, precipitating little response beyond silence.
Finally, there is Tabb, who took on the historical challenge of explaining the ‘restructuring of capitalism in our time’: from production to ‘financialization’. A classical study of the truth of the concept, his work comes across as neo-Kantian. One picks the subject of concern, conceptualizes it and then explores the breadth, depth and reach of expression. Targeting ‘financialization’ as the teleological end of existing and world-gripping Social Structures of Accumulation, his skillful institutional analyses helps unravel the causes and consequences of the current global economic muddle; doing so in a fashion that chinks in the amour of current practice are exposed for possible intervention.
Thanks to his use of an institutional framework, Tabb is able to move with agility between economic levels, exposing the macro-micro interplay of capitalist dynamics, explaining the difficulty of identifying a vector that might threaten its supremacy. Focusing on the all-in-all of institutions, this form of analysis depersonalizes by systematizing; concentrating attention on the structural level as the source of its authority. Like a historical documentary for television, this detailed record of how ‘financialization’ has taken hold of the world system is painful – of its heating up and accelerating relations among technical economic elements beyond the capacity of the productive enterprise to endure or the political force of the people to control.
Exemplifying the tragic face of modern economic crises – crimes without criminals – there is no one to blame for the cycles of exploitation-based profitability or the collapsing of the web of human productivity that underwrites it. Thinking back to that giant furnace in Fritz Lang’s 1927 film, Metropolis, the practical effect of this late-modern speculative chicanery is like marching the global labor force into a kiln fueled by the fractured structures of their employing enterprises, with the only residue in the bottom of this neoliberal vat being gold.