#sam gindin

[weil-weil-lautre]

Leo Panitch and Sam Gindin on The Political Economy of American Empire

[zwischenstadt]

Rather than taking the US trade deficit as a measure of industrial decline, it is instructive to consider US exports and imports separately.  The growth in the volume of US exports in the two decades up to 2007- even as the trade deficit accumulated- averaged a very robust 6.6 percent, leaving it only marginally behind Germany and China, the world's largest exporters; it was the relative expansion of US imports that was the source of the growing deficit.  The deficit, in other words, primarily came from increased US consumption, which grew faster than in other advanced capitalist countries.  This was partly linked to the very high income growth and conspicuous consumption of the most well-off segments of the US population, but it was also due to much faster population growth than in Europe and Japan, the longer hours worked by much of the US population, and, very significantly, their increased consumer debt.  This was supported by the international flow of funds into the US despite the size of the trade deficit.  It was in good part US consumer spending that maintained effective global demand into the first years of the twenty-first century.  The US trade deficit was not an adequate measure of the overall productive power of American capital; rather, it indicated its place in global capitalism.  The case of the Apple iPod illustrates this at a product level; since its final point of assembly was China, each iPod sold in the US represented an increase in the US trade deficit of $145, even though it involved an increase in the surplus captured by Apple from domestic- and especially- foreign labor. The average annual real rate of growth of the American economy in the quarter-century after the resolution of the crisis of the 1970s (from 1989 to 2007) was 3.5 percent.  This was higher than in any similar period from 1830 to 1950, and was only marginally less than during the so-called postwar 'golden age'; and, unlike then, US GDP growth in the quarter-century after 1983 surpassed that of the other advanced capitalist countries.  In the years from 1950 to 1973, US manufacturing productivity growth averaged 2.5 percent, well below that of the other advanced capitalist countries; between 1983 and 2007, it increased quite dramatically to 3.5 percent, running ahead of all the other G7 economics.  And in terms of attractiveness as a place for capitalists to invest the US was still, despite the wide dispersal of FDI to Europe and Asia by 2007, the largest single recipient of FDI inflows, and the rate of US manufacturing productivity growth ran considerably ahead of the growth in labor compensation at home.  As a result, the share of after-tax corporate profits relative to US GDP earned by American corporations in 2006 was at its highest level since 1945. Moreover, US MNCs' operations abroad consistently contributed about 30 percent to total US profits in the new millennium, compared with less than 20 percent in the 1980s.  At the same time, the foreign operations of so many American banks (in 2007, Goldman Sachs had about 8,000 people in Europe, including consultants, over four-fifths of them in London) were a significant factor in the increasing share of total profit going to US finance.  Notably, those profits increasingly came from the fees charged for the provision of an array of services (some of them payroll and accounting outsourced from industry) rather than returns on loans (the share of the total bank income coming from services other than interest on loans rose from 15 percent to 35 percent between 1990 and 2006). It was largely the failure to take sufficient account of the dominance and integration of American production and finance that led to the misreading of what US trade deficits signaled by way of undermining the value of the dollar and its place as the world currency.  It was the balance of capital flows more than the balance of trade that now determined the dollar's value.  The issue of US 'imbalances' that so many observers were fixated on in the first years of the new millennium failed to capture this central point.  Far from the capital inflows signaling the dollar's weakness, and being significant mainly in offsetting US trade deficits, they highlighted the central role of US banks and MNCs in the global economy, and the extent to which the integration of so many Third World countries was dependent on the pull of both US consumer and financial markets.

Leo Panitch & Sam Gindin, The Making of Global Capitalism

[zwischenstadt]

When in 1942 'An American Proposal' envisaged the replacement of 'a dead or dying imperialism' with an American empire of a new kind, in order to establish 'universal free trade' by reorganizing 'the economic resources of the world so as to make possible a return to the system of free enterprise in every country,' it acknowledged that the primary barrier to this was the 'uprising of the international proletariat' that had occurred over the previous twenty years.  Despite all the subsequent Cold War rhetoric, it was not the threat of external Soviet military expansion but the new political and economic strength of the working classes in so many societies, including within the advanced capitalist countries, which was the real barrier.  It was only overcome, as we have seen, once the postwar contradictions of strong working classes coexisting with increasingly strong capitalist classes had led to the crisis of the 1970s, and then to the defeats suffered by the working classes in its wake.  To the extent that, in the course of the postwar years, the working classes increasingly lost interest in the idea of socialism, this had much to do with the belief that the Bretton Woods agreement and Keynesian economics would usher in a crisis-free, socially just 'mixed economy.'  Yet not only the crisis of the 1970s, but also the economic instability and growing inequality of the neoliberal decades that followed, proved this to be an illusion. Equally illusory is the belief that there is a way back to a supposed postwar 'real economy' from the finance-led capitalism which greased the wheels of globalization.  Capitalist finance is in truth no less real than capitalist production- and not just because of the way it affects the rest of the economy during both boom and bust, but because it is integral to capitalist production and accumulation as well as to the extension and deepening of global capitalism.  There is in fact no possibility of going back to the largely mythical 'mixed economy' of the New Deal and Keynesian welfare state are imagined to have represented.  In the US itself, as the last chapter showed, just as democracy appeared to trump race with the election of a black president, so did he reinforce once in office, even through his timid reforms, the neoliberal system of class power and inequality.  We have seen Southern and Eastern Europeans being sharply rebuked for even having aspirations to catch up with what Northern Europeans can still claim from their reduced welfare states after the neoliberal reforms of recent decades.  An already marked democratic deficit in Europe was further expanded, as the crisis in Greece and Italy ushered in 'national unity' governments headed by central bank technocrats, whose mettle was supposed to be tested by whether they could calm German anxieties about 'moral hazard'- which would itself largely depend on whether they could 'get tough enough with the unions.

The Making of Global Capitalism: The Political Economy of American Empire by Leo Panitch and Sam Gindin

[zwischenstadt]

The real issue was less about changing consumption patterns than whether any other state would be capable of playing the crucial role in the reproduction of global capitalism played by the American state.  Claims that this would be a European supra-state now looked threadbare indeed.  And amid all the talk about the impending dominance of China, the crucial question rarely posed was whether the Chinese state had the capacity to take on extensive responsibilities for managing global capitalism.  No one seriously imagines Russia, even with its admission to the WTO, could readily develop such capacity; but even China is manifestly still a very long way from being able to do so.  To this point, far from displacing the American empire, China rather seems to be duplicating Japan's supplemental role of providing the steady inflow of funds needed to sustain the US's primary place in global capitalism. Were this to change, it would require deeper and much more liberalized financial markets within China, which would entail dismantling the capital controls that are key pillars of Communist Party rule- at a time, moreover, when its own banking system is under severe stress.  Furthermore, a major reorientation of Chinese patterns of investment and production away from exports towards domestic consumption would have incalculable implications for the social relations that have sustained China's rapid growth and global integration.  It would involve a restructuring of the country's coastal industries, which would come up against powerful vested interests among Chinese capitalists and regional officials.  And getting households to spend their savings on current consumption would also require the development of a welfare state, as well as ongoing increases in wages.  Given the redistribution of income that this would entail, which could only happen through a substantial shift of power to the working class, all of this- while certainly possible in the long run- would meet resistance that would go well beyond just those firms involved in exporting low-wage goods.

The Making of Global Capitalism: The Political Economy of American Empire by Leo Panitch and Sam Gindin

[zwischenstadt]

Most US job losses stemmed not from foreign outsourcing but from the impact of the sustained increases in manufacturing productivity at home, which in the boom of the 1990s was compensated for by job creation (usually at lower wages) in other sectors.  In the context of the Asian crisis it was widely predicted that manufacturing unemployment would soar as Korean, Thai, Indonesian, and other currencies were devalued, but this lowered consumer prices in the US without any significant impact on US production, except for the steel industry.  China's entry into the WTO considerably changed the overall picture, but while US manufacturing job losses were indeed heavy after 2001 (especially in auto and electrical appliances, as well as the long-suffering textile and apparel sector), the US was still producing more manufactured goods and receiving more foreign investment in 2007 than all the BRICs (Brazil, Russian, India, and China) combined. Rather than taking the US trade deficit as a measure of industrial decline, it is instructive to consider US exports and imports separately.  The growth in the volume of US exports in the two decades up to 2007- even as the trade deficit accumulated- averaged a very robust 6.6 percent, leaving it only marginally behind Germany and China, the world's largest exporters; it was the relative expansion of US imports that was the source of the growing deficit.  The deficit, in other words, primarily came from increased US consumption, which grew faster than in other advanced capitalist countries.  This was partly linked to the very high income growth and conspicuous consumption of the most well-off segments of the US population, but it was also due to much faster population growth than in Europe and Japan, the longer hours worked by much of the US population, and, very significantly, their increased consumer debt.  This was supported by the international flow of funds into the US despite the size of the trade deficit.  It was in good part US consumer spending that maintained effective global demand into the first years of the twenty-first century.  The US trade deficit was not an adequate measure of the overall productive power of American capital; rather, it indicated its place in global capitalism.  The case of the Apple iPod illustrates this at a product level; since its final point of assembly was China, each iPod sold in the US represented an increase in the US trade deficit of $145, even though it involved an increase in the surplus captured by Apple from domestic and- especially- foreign labor.

The Making of Global Capitalism by Leo Panitch and Sam Gindin

[zwischenstadt]

To the extent that the profound malaise in American society was taken as evidence of an imperial malaise, much of the left cheered on its apparent failures. After all, if American power is a repressive force, its weakening must be a good thing. Yet in the absence of an effective left, highlighting declinism is at least as likely to lead to a lowering of expectations in the US as to a more progressive or radical reaction. It can, for example, lead to support for strengthening US corporations to make them more competitive, with the corollary that workers must accept restraint.

To many workers, coping with survival and no clear alternatives or counterforce, the return to a recent past that they formerly criticized seemed, in the face of the new turmoil in their lives, not all that bad and even acceptable. Or, as with Trumpism, existing frustrations could be captured by the far right even if their nationalist dictums are facile in terms of solving their problems. (For all of Trump’s promises to bring jobs back by raising tariffs on China, the ultimate result of his performative actions was that China further opened its markets to US financial and high-tech firms while manufacturing jobs in the US mid-west continued to languish.)

Furthermore – and again affected by the absence of a strong left – the American empire does not rest on meeting social needs but on its material capacity to further the profitable expansion of capital. Unless the social letdowns lead to a challenge to the economic and political structures of capitalism and impose limits on their functioning, then capitalism – even a very ugly capitalism – can lurch on. It is to that material capacity of American capital and the American state, key dimensions around which a decisive decline of the American empire revolve, that we now turn.

Sam Gindin, "Morbid Symptoms, Premature Obituaries: The American Empire"

[zwischenstadt]

In this context, the extent of the theoretically unselfconscious use of the term ‘rivalry’ to label the economic competition between the EU, Japan (or East Asia more broadly) and the United States is remarkable. The distinctive meaning the concept had in the pre-World War I context, when economic competition among European states was indeed imbricated with comparable military capacities and Lenin could assert that ‘imperialist wars are absolutely inevitable’, is clearly lacking in the contemporary context of overwhelming American military dominance. But beyond this, the meaning it had in the past is contradicted by the distinctive economic as well as military integration that exists between the leading capitalist powers today. The term ‘rivalry’ inflates economic competition between states far beyond what it signifies in the real world. While the conception of a transnational capitalist class, loosened from any state moorings or about to spawn a supranational global state, is clearly exceedingly extravagant, so too is any conception of a return to rival national bourgeoisies. The asymmetric power relationships that emerged out of the penetration and integration among the leading capitalist countries under the aegis of informal American empire were not dissolved in the wake of the crisis of the Golden Age and the greater trade competitiveness and capital mobility that accompanied it; rather they were refashioned and reconstituted through the era of neo-liberal globalization. None of this means, of course, that state and economic structures have become homogeneous or that there is no divergence in many policy areas, or that contradiction and conflict are absent from the imperial order. But these contradictions and conflicts are located not so much in the relationships between the advanced capitalist states as within these states, as they try to manage their internal processes of accumulation, legitimation and class struggle. This is no less true of the American state as it tries to manage and cope with the complexities of neo-imperial globalization.  Nor does the evolution of the European Union make the theory of interimperial rivalry relevant for our time.86 Encouraged at its origins by the American state, its recent development through economic and monetary union – up to and including the launching of the Euro and the European Central Bank – has never been opposed by American capital within Europe, or by the American state.What it has accomplished in terms of free trade and capital mobility within its own region has fitted, rather than challenged, the American-led ‘new form of social rule’ that neoliberalism represents. And what it has accomplished in terms of the integration of European capital markets has not only involved the greater penetration of American investment banking and its principle of ‘shareholder value’ inside Europe, but has, as John Grahl has shown, been ‘based on the deregulation and internationalization of the US financial system.’

Leo Panitch and Sam Gindin, “Global Capitalism and American Empire” in the Socialist Register

There are no serious contenders to American imperialism in the modern world, and won’t be any for a long time, whatever the headlines say

[zwischenstadt]

Yet by the late nineteenth century this 'state of courts and parties'- and not least the patronage system that allowed, as Engels said, 'two great gangs of political speculators' to exploit state power- was in many respects increasingly dysfunctional for American capitalism, and a movement for reform found growing support within the capitalist class.  Some important elements of a more modern state had already begun to take shape during the Civil War, not least with the US Treasury's establishment of an income tax and the nation-wide marketing of Treasury securities.  The national banking system established after the war 'effectively brought the Treasury into a central position within the New York money market,' so that by 1975 '63 per cent of the investment portfolios of the New York national banks was made up of Treasury securities, and the Treasury increasingly played an active role in providing liquidity during frequent periods of stringency and financial crises.  In the wake of the political fallout from the economic crisis of the 1870s, further important steps were taken to improve the state's capability, especially through the establishment in the 1880s of the Interstate Commerce Commission and the introduction of the merit principle for appointments to the civil service. In the absence of the kind of traditional state bureaucracy that oversaw late-nineteenth-century capitalist development in Europe and Japan, the legal profession came to play an especially important role in this modernization of the American state.  The large law firms that arose alongside the new corporations acted as broker-dealers not only with Wall Street and London investment houses, but also with governments at all levels- even to the point of drafting 'the documents they needed to build governance and capital structures to settle the rights, duties, and discretionary authority of the participants in the enterprise and [having] them approved by a legislature or a court.'  At the same time, the scandals that tainted many a legal reputation in the era of the 'robber barons' reinforced moves to professionalize the bar and the law schools, and lawyers took the lead in advancing Progressive reforms in the name of 'legal and administrative science.'  Thus, while acting to squeeze the interests of their clients through every possible loophole that the law allowed for, lawyers simultaneously advanced the notion of the rule of law as 'a tool for the efficient management of the social order in the public interest.'  And in what has been called the 'institutional schizophrenia' that links lawyers to the state as 'double agents,' the practice was born (often followed by capitalists in the twentieth century as well) of taking time off from the private firm to engage in public service.  In US business and legal circles, and in the political culture more broadly, it came to be accepted (and remains so to this day) that it is 'appropriate for lawyers in one role to do the utmost to undo their accomplishments in the other.'

Leo Panitch and Sam Gindin, The Making of Global Capitalism: The Political Economy of American Empire

I find it funny when people complain about the preponderance of lawsuits and lawyers in American society.  The U.S. was designed to be a lawyers play ground and firing range.