book intro, Part II

Les Schaffer schaffer at
Fri Feb 23 21:35:43 MST 2001

[ Part II ]

An Elementary Primer on Capitalism

It is the thesis of this book that the world economy is now fulfilling
the predictions first laid out by Karl Marx and Frederick Engels more
than 150 years ago in the Communist Manifesto and by Marx in Capital.
Aided by a technology which is itself the product of capitalism, the
world economy has become increasingly capitalist, both in the sense of
extending its reach to the far corners of the earth and permeating
even the most intimate parts of everyday life.  Let us take a few
paragraphs to see exactly what this does and does not mean.

The goal of every capitalist business firm is to accumulate capital.
This means that each firm seeks to make as much profits as it can and
to use these profits to grow as much as possible.  "Maximum profits
and maximum growth" is the motto of every business.  Or as Karl Marx
put it more poetically, "Accumulate, accumulate, that is Moses and the
prophets."  There are two critical points to made about capital
accumulation.  First, the ability of capitalists to accumulate depends
on their ability to extract surplus labor time from their workers.
The monopoly which a relatively few employers have of the means of
production (land, tools, machines, etc.) and the fact that the vast
majority of people own no means of production but must have access to
them to live, gives employers the power to force workers to labor
longer than they might if they owned the means of production
themselves.  What is critical to employers is the workers' time; the
job of the management of any company is to get as much actual work out
of the workers as possible.  Other things equal, the employer will try
to make the working day as long as possible, to compel the workers to
work as intensively as possible during each hour of the working day,
and to hire the workers as cheaply as possible.

Of course, as history shows, workers sooner or later catch on to all
of this and begin to rebel against it, typically by trying to form
labor unions and organizing politically.  Given that workers acting
collectively can prevent accumulation from occurring, employers must
resist these collective efforts with utmost vigor.  They have at their
disposal certain devices which are, in fact, part and parcel of the
accumulation process itself.  The can subdivide the labor of their
workers into details, replacing skilled labor with unskilled and
thereby swelling the number of persons capable of doing any given job.
They can replace living labor with the dead labor embodied in
machinery.  The can fire troublemakers, blacklist them, and generally
make their lives miserable.  But this economic power can not be
effective, in the end, unless there is some sort of potential violence
to back it up.  If, for example, organized workers occupy a factory
and decide to run it themselves, what could the owner do?  Worse yet,
what if workers in many workplaces did this?  Employers could try to
hire private police to keep the workers in line, but this would be an
expensive proposition, and what if potential police recruits, who
would by definition have to come from the working class, instead sided
with the workers causing all the trouble.

The solution to this problem of controlling a possibly refractory
working class is the state.  While in capitalist societies it is true
that there is a formal separation between the economy and the
government, the two have always been intimately connected.  The state
has always been a primary agent of capital accumulation.  One of the
reasons capitalism developed first in England is because England had a
much stronger central government than did the rest of Western Europe.
The power of the English state was primarily responsible for the
domination of British capital during capitalism's first two centuries.
Everywhere that capitalism comes to exist it relies upon government in
absolutely critical ways.  Capitalists rely upon the state to directly
and indirectly subsidize capital accumulation, by collecting taxes
from the masses of people and using these to reduce the costs of
everything from transport to the acquisition of information critical
to profit making.  Capitalists in the rich nations (typically the
first except for the United States and Japan) rely upon their states
to enforce the outcomes of capital's penetration into what became the
poor capitalist nations.  Without state-controlled arms how would this
penetration have been possible?

Within each capitalist nation, the state plays an indispensable role
in subjugating labor to the rule of capital.  The state give legal
sanction to private property and stands ready to prosecute workers
bold enough to challenge the "rights" of property owners.  This
prosecution takes many forms: the outlawing of labor unions, the
enforcement of other types of anti-labor laws, the crushing of
strikes, the denial of basic civil liberties to workers in their
workplaces and in the streets, the persecution and imprisonment of
radical labor leaders, and many others.  The state in collaboration
with capital promotes the ideology of nationalism, encouraging workers
to identify with the state (and by extension with their employers).
The state-sponsored systems of public education in every capitalist
country propagandize endlessly in favor of this nationalism and in
doing so, help to provide employers with docile and loyal workers,
willing even to kill the workers of other countries if their
government orders them to do so. The schools also provide employers
with labor appropriately skilled from capital's point of view.

The globalization theorists discussed above say that today the state
is rapidly losing its importance in the face of global capital; that
is, capital is somehow today gaining its independence from the nation
state.  The implication is that it is no longer possible for any one
nation to effectively control capital.  This misses the obvious fact
that most of the increasing globalization of capital has been the
handiwork of the same states of which capital is now supposedly
independent.  Every trade agreement is the product of the state.  The
global organizations of capital, such as the World Bank, the
International Monetary Fund, and the World Trade Organization were
created by governments and could not exist without them.  Nor could
such organizations take action independent of states, most especially
the United States, the most powerful nation.  States did not make
trade agreements and create international organizations because they
were powerless in the face of global capital.  They did these things
because this is what states have done since capitalism began. States
are not separate from capital but integral to the whole process of
capital accumulation.

This argument that states are now superfluous in the new world economy
is nicely criticized by Ellen Wood:

We can debate how much globalization has actually taken place, what
has and what has not been truly internationalized.  But one thing is
clear: in the global market, capital needs the state.  Capital needs
the state to maintain the conditions of accumulation and
competitiveness in various ways, including subsidies and rescue
operations at taxpayers' expense (Mexico, the Asian Tigers).  It needs
the state to preserve labor discipline and social order in the face of
austerity and "flexibility," and to enhance the mobility of capital
while blocking the mobility of labor.

Behind every transnational corporation is a national base that depends
on its local state to sustain its viability and on other states to
give it access to other markets and other labor forces.  "Executives,"
writes New York Times journalist Thomas L. Friedman, "say things like
‘We are not an American company.  We are IBM U.S., IBM Canada, IBM
Australia, IBM China.' Oh yeah?  Well, the next time you get in
trouble in China, then call Li Peng for help.  And the next time
congress closes another military base in Asia . . . call Microsoft's
navy to secure the sea lanes of Asia."

The second critical point to make about capital accumulation is that
it is driven forward by ceaseless and ruthless competition among the
various capitals.  Competition among business firms is what causes
them to try always expand their horizons, from local to national to
international markets, from one product to many products, from simple
labor processes to complex and highly mechanized ones.  But this
competition also calls forth state action.  Again labor must be
suppressed so that firms in one nation can compete effectively against
those centered in other countries.  And the state must be prepared to
settle differences which arise within the capitalist class itself.  At
times the state must favor one firm or sector over another so that the
position of national capital as a whole is as strong as possible and
so that labor is as weak as possible.  To the extent that workers can
be convinced to side with national-based capital in its competitive
struggle with the capitalists of other nations, so much the better.
Here the state plays a crucial role as it aims to convince workers
that the national interest is best served if national capital can
compete with maximum effectiveness in the international competitive

Labor and the State

The globalists, by arguing that the nation state has been mortally
wounded by global capital, tell us that workers cannot hope to improve
their circumstances by struggling on the terrain of the nation. As we
have seen, some contend that labor organization is completely
irrelevant and indeed detrimental to workers, while others declare
that labor's only hope lies in cooperating with national capital to
help it win the struggle to conquer global markets.  On the left, the
supersession of the nation state by global capital means that only a
globally organized working class can hope to confront employers.  All
of these arguments are fatally flawed and cannot stand empirical

The conservative arguments are dealt with easily.  Nearly every study
ever done on the effects of unions on wages and benefits shows that
unions have a significant positive and independent effect.  In
addition, unions everywhere give workers a voice in their workplaces,
which, in turn forces employers to treat workers with some dignity and
respect.  The argument that unions in the advanced capitalist
countries cannot stand up to the hyper mobility of capital is
incorrect.  If we look at manufacturing, for example, we find most of
it occurring in the advance capitalist countries, putting the lie to
the position that manufacturing capital is rushing to set up shop in
the poor countries and thereby making it impossible for unions in
advanced capitalist countries to win wage and benefit gains for their
members.  Much manufacturing capital is simply not mobile in the short
run; it must be depreciated before any decision to relocate will be
made.  And there are considerations such as closeness to market and
adequate infrastructure which make the rich nations prime candidates
for location in any event.  Furthermore, in the advanced capitalist
nations, huge fractions of total employment are engaged in the
production of services and in the public sector.  In services, a good
deal of production is not mobile at all, for example, in fast foods,
nursing homes, and office building cleaning and security.  Public
sector employment can be eliminated, but this has little to do with
globalization.  In both sectors, unions are far from irrelevant, as
any unionized school teacher or janitor will tell you.

The notion that organized labor must accept the inevitability of
globalization but maintain its relevance by helping its nation's
capitalists compete in global markets is equally fallacious.  As soon
as unions accept the ideology of competitiveness, they are playing
ball on the employers' home court.  As unions that have taken this
path, usually under the guise of some sort of labor-management
cooperation, have discovered, when members in one workplace are pitted
against those, it soon becomes a race to the bottom as far as wages
and benefits are concerned.  And the employers' promises of greater
worker input into the decision-making process are seldom realized.
What is true within a nation will also be true if workers in one
nation see it as their duty to out compete workers in other countries.
Transnational employers will simply pit one group against the others
and both groups will find their living standards falling.

The ideologues of labor-management cooperation believe that success in
the global economy hinges on the ability of one nation's capitalists
to export their products.  Each nation has to "shape its advantage" in
the world market by pursuing policies that will make its exports
cheaper than those of its rivals.  Labor management cooperation, often
with state-subsidized worker training are seen as key components of
this strategy.  However, a minute's reflection tells us that all
nations cannot simultaneously pursue such as strategy.  As Gregory
Albo notes,

If the actions of a single trading partner can create problems for the
theory of shaped advantage [How can one nation ensure that its experts
will be the right ones and will continue to grow?], a world of many,
if not all, countries seeking to shape advantage makes a shambles of
social democratic economic policy.  It is obvious that not all
countries can have successful export-led economic strategies.  As all
countries cannot run trade surpluses to improve employment: some must
incur deficits.  Trade imbalances and unemployment will necessarily
co-exist.  Indeed, this has been the norm for the world economy over
the economic history of capitalism.  This is, in effect, what happened
in the great crisis of the 1930s.

Finally, a third analysis of globalization, made by leftists, that the
only way for workers to win in the global economy is to begin
immediately to organize internationally, is suspect.  Cyrus Bina and
Chuck Davis put this case as follows:

"Workers of the world, unite" ipso facto is becoming increasingly
relevant and applicable as capital transcends the boundaries of
nation-states.  The transnationalization of capitalist relations–that
is, the emergence of a global tendency to real subsumption of labor
under capital (production of relative surplus value)–brings the common
interests of workers in different countries into sharper focus.
Workers are commonly affected by the global integration of labor
processes; this elevates the objective conditions for labor solidarity
to an international level.  On an international basis, workers are
integrated into a new relationship.  If workers can confront
transnational capital with their own international organizations, they
can begin to mitigate the deleterious effects of capital's worldwide
mobility.  At the stage of transnationalization (i.e. the global
integration of social capital), labor organizations must play a
central role to enhance the capacity of the working class worldwide in
order to transform capitalist social relations.

In the article from which this quote is taken, the authors fail to
make a convincing case that capitalism has completely transcended the
nation state.  I certainly do not believe that it has.  Nor do they
tell us exactly how labor is to magically become internationally
organized.  Throughout the advanced capitalist world, union densities
(the percentage of all employees unionized) are falling, and unions
are failing to organize eminently organizable workers.  So how are
such labor movements going to transform themselves into international
organizations?  Or are international organizations suddenly going to
spring out of the ground?  The statement that because capital is now
international, labor must also internationalize is just empty

The Rest of This Book

Through a series of case studies of advanced capitalist countries, I
will argue that it is realistic to assume that nation states are
integral to capitalism and that they are here to stay, for at least a
very long time to come.  I will show that specific states have been
responsible for creating an environment in which capital is now freer
of social constraints that at any time since the 1920s.  So naturally
capital is expanding around the earth.  Electronic technology is
helping this expansion just as technology has always helped capital,
given that it is creature of capital.  Since the state has not lost
its autonomy, it is still possible to confront national states and
force them to protect workers and improve their life circumstances.
Most importantly, I will show that labor unions have been dealt sharp
defeats by capital and the state not because of some inevitable and
impregnable globalization but because labor was not well enough
organized to withstand capital's assault.  In every country examined
in this book, we shall see that the labor movement abandoned or failed
to develop a class politics and instead succumbed to a politics of
class collaboration and as a consequence could not sustain the
allegiance of a large enough mass of workers to adequately confront
capital after the onset of economic crisis in the mid-1970s.  In
addition, class collaboration was intimately tied to a corrosive and
anti-labor nationalism which prevented any sort of real unity among
workers of different nations.

The most important question to ask, then, is what should working
people about what has been happening to them?  Throughout this book, I
will suggest several courses of action.  First the labor movements of
every advanced capitalist country must engage in maximum organizing
and maximum political agitation.  Employers responded to the
mid-1970s' crisis by declaring war on their employees and by exerting
very strong pressures on governments to do their bidding.  When labor
was weakened enough, capital went on the offensive and got states to
enact laws, sign treaties, and pursue policies which made it easier
for capital to move around the globe in pursuit of profits and growth.
It follows, therefore, that labor must regain and increase its
strength if it is to combat a powerful foe.  Because workers are
stuck, for the most part, in a particular nation and face, for the
most part, national employers and of course a national government,
organizing and agitating must, for the most part, occur inside of each
nation.  There are plenty of opportunities for success. Millions of
workers labor for manufacturing firms that are not going of move
overseas, and the same can be said for millions of service sector and
public employees.  Workers can organize politically to force the state
to do their bidding as the valiant French workers demonstrated.

As workers build their strength within their own countries, they must
also make common cause with workers in other countries.  This is so
for two reasons.  As capitalism more and more infiltrates daily life ,
workers everywhere come to face similar problems.  At the same time,
while the globalization hypothesis criticized above greatly
exaggerates capital's mobility and power, it is true that political
decisions have allowed capital, both financial and physical, to roam
the world more freely than at any time since the 1920s.  In the
advanced capitalist countries workers often face similar employers and
have similar problems with them.  Coordination among the workers would
work to the benefit of all of them.  For example, it would be easier
for workers in Europe to win shorter work hours if workers in the
United States were fighting hard for the same thing.

While this book deals only with labor and the state in the advanced
capitalist countries the issue of international solidarity among
workers is especially important with respect to workers in the poor
capitalist nations.  Increasing wage and benefit gaps between the
workers in rich and poor nations encourages a race to the bottom for
all workers.  Furthermore there are millions of immigrants from poor
lands in the rich capitalist countries.  The imperialistic attitude so
common among workers in the rich nations will make it very difficult
to organize these workers, thereby making it impossible to build
strong labor movements in the advanced capitalist states.

In this book , I will argue forcefully that labor movements are most
likely to be rebuilt if organized labor embraces a radically
egalitarian and class conscious ideology and practice.  Within each
nation this will mean struggling for union democracy; fighting against
gender, racial, ethnic, and all other inequalities which divide
workers; building cooperative relationships with many other groups
battling for social justice; and developing an independent labor
politics.  Among nations it will mean abandoning nationalism and all
of its warmongering and racist practices and embracing

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