The Official James Petras website

Large scale, longterm flows of capital, commodities, technology and labor across national boundaries define the process of globalization.

Globalization in Historical Perspective

Contemporary globalization retains many of the key features of the earlier phases of globalization: the driving forces are centred in the imperial state and the multi-national corporation and banks, backed by the international financial institutions. What is significantly different are the scale, scope and speed of the circulation of capital and commodities, particularly financial flows between deregulated economies. The technological changes, especially in communications (computers, fax, etc.), have been a prime factor in shaping the high velocity of movements of capital.

The scope and scale of movement of capital and commodities however, are due less to technological than to political changes. The demise of socialism in the former Communist countries of Europe and Asia, the conversion of nationalist-populist third-world regimes to unregulated capital and the demise of the welfare state in the West have opened vast areas for accumulation of profits (and surplus capital) and new markets for sales and investment. These political victories are central to the advance of the contemporary process of globalization in relation to the historical period immediately following World War II, and certainly in relation to the inter-war period.

The conflict between globalizing imperialist forces and the third world–what was erroneously referred to as the Cold War–was evident in the 23 million people who died in 143 wars, overwhelmingly in the third world, between 1945 and 1992. The contemporary phase of globalization was a consequence of what sub-commander Marcos refers to as the Third World War, which continues to this day.

A historical analysis of the phases of globalization allows one to refute some of the ideological claims of its proponents. A retrospective analysis reveals that globalization has been cyclical in world historical development. There were periods of high globalization, moments of crises and periods in which economic flows turned inward. There is no universal inevitable tendency toward globalization. Inter-imperial wars resulting from global competition, internal crises of overproduction and more important social and political revolutions have all affected the trajectory of globalist nations and classes. The cyclical nature of globalization allows analysts to identify the internal/external weaknesses of the globalist project and identify the alternative strategies that emerged from the crises of global projects in earlier times.

The very idea of globalization as a historical necessity is questioned by its cyclical history. The notion that we enter a new period is also dubious: foreign trade and overseas income were a greater percentage of GNP in Europe during the late 19th century that at the end of the 20th century. The idea that technology drives globalization omits the point that most of the new technologies emerged before the current globalist phase and are compatible with expanding domestic production and popular consumption.

The globalization idea is itself suspect. In its most widely expressed usage, it argues for a universal incorporation to the world marketplace and the spread of benefits throughout the world. The empirical reality is neither universal incorporation nor the spread of benefits: there are wealthy creditors and bankrupt debtors, super-rich speculators and impoverished unemployed workers, imperial states that direct international financial institutions and subordinate states that submit to their dictates. A rigorous comparative analysis of contemporary world social-economic realities would suggest that the globalist concept of interdependence is far less useful in understanding the world than the Marxist concept of imperialsim.

The Rise of Globalist Ideology

The rise of “globalist ideology” is found originally in the business journals of the late 1960s and early 1970s. The major expansion and conquest of markets by the multi-nationals was described as globalization by business journalists searching for an alternative to the existing Marxist vocabulary, since they sought to present the process in a favorable light. Gradually the term was taken over by the mainstream academic world and became the acceptable framework for talking about international capitalist expansion without having to deal with its origins, power relations and exploitative outcomes. What emerged from the academic recycling of the concept was “globaloney”: the embellishment of the concept by linking it to what was called the third technological revolution and imputing to it a historical inevitability and degree of interdependence that was remote from reality. From the business, journalistic and bourgeois academic world, the term was incorporated into the vocabulary of the Left intelligentsia. They too began to parrot the same properties and arguments in the context of a mindless flight from critical socialist paradigms. Thus globalization seems to have become a universal category of analysis, through which the imperial ruling classes exercise power and paralyses mass popular opposition.

The retreat of the Left intellectuals from the imperialist theoretical approach toward globalization is intimately related to the defeat and decline of revolutionary socio-political movements and the ascendancy of the financial and export elites. There is a dialectical interplay between imperialist power, globalist ideology and revolutionary socialist politics: the ascendancy of imperialism is directly related to the circulation of the globaloney discourse and the eclipse of the revolutionary paradigm.

The retreat of the Left intellectuals and the subsequent theoretical disarray of the popular movement contributed to the further strengthening of the imperial ruling classes: objective shifts in power resulting from political and economic successes were amplified by the ideological capitulation of the ex-Leftist intellectuals and the confusion sown in the popular movement. Left intellectuals and influential political leaders, having lost their conceptual anchorage, drifted from an imperialist conceptual framework to a technological determinism that undercut any notion of systemic transformative politics. The underlying political bases for the ascendancy of neo- liberalism (the ideological derivative of the globalization hypothesis), including the political and military defeats of the left, were slighted in favor of pseudo-explanations that pointed to historical economic imperatives.

The political and ideological hegemony of the globalist-neo-liberal project was further enhanced by the combined rigidity and flexibility of the neo-liberal state: opportunities for upward mobility for private-sector professionals and ex-Leftist intellectuals ensconced in well-heeled NGOs and downward mobility for the mass of peasants, and wage-salary workers, particularly in the public social services. The project provided massive flows of capital, cheap mass-consumer imports in the expansive phase and crises, collapse and unprecedented rates of bankruptcy and unemployment in the deflationary phase.

The Asian experience is a prototype of this process: political-economic victories for imperialism, the ascendancy of globalist neo-liberal political economic power, capitulation and integration of the ex-Left, followed by crisis, collapse and mass immiseration.

The Socialist Perspective

Faced with the demise of the globalist project, with the foreign investors picking the bones of the moribund carcass–namely, the lucrative local enterprises–how do we reconstruct a socialist alternative?

In the first instance, by recovering and reconstructing our theoretical tools. Secondly, by learning from and inverting the lessons from the Right on how to engineer a radical political-economic transition, a transition that combines social justice, democracy and efficiency in the organization of a new socialist economy.

To move from a critique of globalist-neoliberal configuration to a socialist alternative we need to adopt the method of historical materialism and ask ourselves: what do we learn from previous experiences of globalization via imperialism?

All the imperial powers throughout history were never globalized; they became globalizers (imperialists) precisely through the development of the home market. Globalization was an instrument to expand and deepen the home market and develop the forces of production. Globalization was given a universal, virtuous character in each epoch of outward expansion, either in terms of moral values (extending Western civilization) or as an opportunity (to become modem). To the degree that contemporary globalization leads to the internal exploitation of labour and state resources within the imperial centres, it has awakened a labour opposition that creates an objective and subjective basis for internationalist working-class action.

The history of globalization is fraught with inter-imperial rivalries that struggle to displace competitors and impose the rule of particular national multi-nationals and state rule. The selective anti-imperialism of local clients facilitates the entry of imperial latecomers. The reconstruction of the Left cannot be rooted in becoming the plaything of rivalries between ascending and declining imperial powers. In the present context, there are several issues: the U.S. exploitation of the Asian crisis to enhance its position relative to Japan, South Korea, etc. The temptation among some Leftists is to defend “state-centred capitalism against” neo-liberalism; for others, the alternative is to accept the harsh prescriptions of adjustment from the IMF in exchange for employment, etc.

The basic facts are that capitalism cannot sustain growth and rising income levels: that welfare and capitalism are a product of a special balance of class forces that no longer exists. The existence of a revolutionary socialist alternative was the basic reason forcing capital to make reformist concessions in Europe and Asia. It was the existence of revolutionary socialist regimes that forced the imperialist countries to tolerate state-directed growth in Asia and “showcase” their performance. Only the re-emergence of credible revolutionary alternatives might allow reformist and state-centred technocrats to negotiate concessions. As matters stand today, the real choices are between a capitalism that strips labour of all its social attributes, monopolizes public revenues and appropriate public enterprises and minerals and the socialist alternative–that needs to be reconstructed.

The Globalization Parabola

Crucial to the task of constructing the socialist alternative is to recognize the globalization parabola in the current period: the ascendancy in the seventies, its consolidation in the eighties and early nineties and its decline over the last several years, beginning in Asia, Latin America and spreading to North America and Western Europe. The second-biggest capitalist economy, Japan, is in a terminal tailspin, accompanied by its Asian clients. In China, stagnation and mass unemployment has set it. The Russian economy has collapsed. The U.S. and European economies will soon feel the reverberations as corporate earning declines, and exports collapse and speculative capital cannot find new lucrative outlets.

Globalization works in reverse. The extraordinary profits based on capitals appropriation of speculative returns no longer fuel the American and European stock market and giant financial monopolies. The worldwide bankruptcy of capitalism–its inability to reproduce itself-poses a major opportunity to argue for a socialist transformation and against strategies focused on adaptation and merely defensive struggles. Adaptation to austerity leads to new, regressive policies. The argument for one more adjustment is an unending melody. There is only more pain, not prosperity, in this never-ending tunnel. Defensive struggles, while necessary for sustaining elementary living conditions in the face of the economic collapse, provide short-term victories yet prepare strategic defeats, given the non-viability of the historic capital-labor partnership under present circumstances.

That leaves us with the concept of a socialist transformation–transformation of what? Toward what?

Past and Present Conceptions of Socialist Transformations

There are two basic fallacies regarding socialist transformations. One is the notion of “delinking” linked to the ideas of self-reliance and building socialism in one country . The other is the more recent idea of “market socialism,” the notion that market-driven forces can create the material basis for socialism. Both conceptions contain grains of truth, but in their underlying logic are very harmful to the construction of socialism.

First, the possibility of development of socialist productive forces de-linked from world production leads to costly, inefficient and ultimately prolonged periods of harsh accumulation. In most cases, de-linking is just not feasible without giving up essential products necessary for consumption and production. Only under harsh wartime conditions or in periods of boycotts and states of siege does it make sense to try to make a virtue of necessity by appealing for self-reliance, urging the people to sacrifice and encouraging the idea that, despite a harsh external setting, a revolutionary population can produce and survive. Such was the case when the U.S. and the ex-U.S.S.R. encircled Mao’s China and restricted its external trade relations. But it would be an egregious error to convert special circumstances into a model of development.

The second erroneous approach is the Dengist idea that market forces, private ownership, free trade and foreign investment directed by the Communist Party can become the driving forces toward the construction of socialism. The ascendancy of the market forces has transformed the Chinese labour force into a global reserve army of cheap labour; it has converted the cadres and leaders of the Party into business people who plunder the state for private gain, destroy the environment and produce ecological disasters. In a word, it is the market that directs the Party and its leaders and not vice versa. The result is the worst-case scenario, where the authoritarian political structures of Communism are combined with the brutal socio-economic injustices of capitalism and the catastrophic degradation of the environment. That is the operative meaning of market socialism. We should approach the construction of socialism in a different manner. First of all, the working class has created a vast body of knowledge over time that is world knowledge. The revolutionary regime must link up with this world knowledge in order to avoid the cruel and costly earlier stages of development in which this knowledge was created. In a word, the revolution must link up with world centres of knowhow as a necessary step to increase the local capacity to advance the forces of production and democratize the relations of production.

Secondly, the economic exchanges, market relations (both external and internal) can have a progressive function if they are subordinated to a democratic regime based in direct popular representation in territorial and in productive units. Assembly-style democracy is not only a strong deterrent of bureaucratic distortions, but also serves as an essential control mechanism over the content and direction of market exchanges.

The current fragmentation and dissolution of production is a result of the enclave nature of the export strategy, where key production units specializing in specific commodities serve the international strategies of overseas and domestic investor elites. The socialist strategy focuses on the creation or reconstruction of essential links between domestic economic sectors. The socialist economy resembles a grid rather than the spoke of a wheel that is characteristic of imperial- dominated export economies.

The current overseas economic packet that combines foreign investment, control and management decision-making with technology transfers (when they occur) must be disaggregated under socialism. The capturing of technology without the inconvenient encumbrances of foreign dictates and outrageous CEO salaries and foreign ownership is possible because of the plethora of technologically knowledgeable people, and enterprises who can be contracted and paid to transfer know-how. This form of dependence is temporary and has less possibility of perpetuating itself: learning from borrowing becomes the basis for adaptation to local needs and the development of autonomous innovative capacities. The breaking of the tyranny of globalization requires the rejection of ownership and control and the selective acquisition of the accumulation of knowledge and products that produce dynamic growth. The parasitical and exploitative structures of globalization need to be differentiated from the creative and productive components.

This processes of rejection and acquisition poses one of the most important challenges to any transition from neo-liberal globalism to a socialism. Namely managing the inherent contradiction between internal socialist relations and external participation in the capitalist marketplace. This requires not only democratic control over the economic processes but, more fundamentally, the ideological and cultural education of working people in values of solidarity, co-operation and equalitarianism. This educational and cultural process can have credibility only if the values articulated reflect the behavior and practices of the leadership and cadres. The great failure of socialism in the ex-USSR was the dissociation of the ideas expressed by the leaders and their practices–which led to disillusion, cynicism, distrust and, worse, a fatal attraction for globalist propaganda.

A fundamental appeal in constructing the socialist power bloc to transform the society and a primary task on assuming power is the creation of socio-economic linkages between domestic needs (and latent demands) and the reorganization of the productive system. The socialist transformation recognizes the enormous potentialities of the domestic market based, on equalized property, income and education and health. It recognizes the tremendous potential in the utilization of unused or under-used labor among the employed.

The turn inward is essential but the external linkages to overseas markets and knowledge remains a key factor to provide earnings and technique to complement the domestic revitalization of the economy. What is crucial, however, is that external exchanges not substitute for local production and the creation of local centres of technical knowledge creation.

Essential to any socialist undertaking is a profound agrarian reform that includes redistribution of land and transfer of property ownership, along with the reorientation of credits, technical assistance, marketing and transport, to facilitate food production for mass consumption at affordable prices while providing livable income for rural producers. Whatever the particular ownership patterns–and there are too many variables to provide general blueprints–the agrarian reform should encompass agro-industrial complexes and related job-generating employment. Practical experience, plus the negative lessons of the ex-USSR, teach us that the structure of agriculture requires a decentralized organization, in which direct producers make basic decisions in consultation with technical advisers in the context of integrating exchanges between regions, sectors and classes.

The transition from a globalized imperial export strategy toward an integrated domestic economy depends on integrating regions and production/ consumption into a unified whole: of recreating the nation in a substantive way and reorienting the state away from serving the imperial or globalist aspirations of export and financial elites.

The Strategy of the Transition

A necessary precondition of a socialist transformation is a fundamental political change in the structure of the state. Contrary to the unreflective musings of globalist theorists in both their rightist and leftist versions, the state has played a powerful role in formulating the strategies of globalization, allocating economic resources to global actors, bailing out elite losers and re- enforcing the policing of globalist victims and opponents. To argue that the state has been weakened is to mistakenly identify the state with the welfare state; it is to confuse the apologetic pronouncements of the ideologues of the globalists, who lament their impotence faced with globalist pressures, with the reality of their active collaboration via state institutions.

The state and nation become the central units for reconstructing a new internationalist socialist order. The popular movements in civil society are in basic conflict with the ruling classes of civil society over who controls the state and the nature of the socio-economic project. Once again ex- leftist ideologues disorient the popular movement by pointing to conflicts between”the state” and “civil society”–rather than examining how the most wilful and cruel exploitation occurs within civil society between landowners, bankers and financiers on the one hand and landless peasants, indebted small producers and unemployed workers on the other. So let us move on beyond the intellectual posturing of repentant ex-leftists seeking merit-points from their new paymasters to the practical measures that move the popular movement from political power to a socialist transformation.

In this regard we can learn a great deal from the transition strategies engineered earlier by the neo-liberal globalists. Key to the implantation of the new socialist economy is the immediate implementation of shock therapy for the ruling class: profits should be drastically reduced; bank accounts and financial holdings intervened and frozen; overseas payments suspended and a moratorium on debt payments implemented. The shock therapy has political and economic value: politically it disorganizes and disorients the ruling class; economically it prevents hoarding, capital flight and the provocation of hyper-inflation. More important it involves strong state intervention to restructure the economy and reconfigure state budgets and institutions. The purpose is to open the economy for domestic production, to liberate credit and investment for expanding production and exchanges at the national, regional and local level. Shock therapy predictably will evoke protests and dire cries of injustice and arbitrariness. But quick and resolute action in following up the shock therapy with substantive new investments and credits toward the domestic market can generate more than sufficient support for sustaining the regime.

Shock therapy, rationally applied, means renegotiation with former globalist patrons and partners, not repudiation. It does not spell rupture but a reordering of priorities and relations to favor the new forces of the domestic market.

The second phase in the transition involves economic reconversion: the shift from hyper- specialization in single commodities and limited activity in the industrial production cycle (assembly plants) to diversified production, a better balance between local consumption and export production, and greater investment in education, research, health and productivity.

To realize economic reconversion requires a shift in investments, employment and income policy. This means the implementation of a structural adjustment program from below. Essentially this means the redistribution of land, income and credits, the breakup of private monopolies and the reform of the tax system, the protection of emerging industries and the opening of trade for commodities that don’t compete with local producers. Financial controls will eliminate speculative activity, and state planning can redirect investments to human capital formation, employment-generating public works and inter-regional production.

To avoid inflation and stabilize the economy, a tight monetary policy will need to be put in place. Monetarism from below means the elimination of state bailouts of billion-dollar debts due to mismanagement, swindles or speculation by the private sectors; the elimination of low-interest (subsidized) loans and cheap credits to exporters, elimination of tax abatements for multi-national corporation in so-called free trade zones. The gains in state revenues and savings can fund alternative socio-economic activity without resorting to the printing of money.

There are significant differences between a socialist and a neo-liberal structural adjustment program. Socialization will replace privatization as a key to increasing efficiencies, competitiveness and productivity. Socialization will include extending transport and communication networks to further interregional exchanges, thus revitalizing provincial enterprises, markets and producers.

Socialization of economic enterprises is necessary but not sufficient to create a viable socialist economy. What is required is a plan of industrial reconversion that allows popular demand, not impersonal corporate bureaucrats to decide on “winners and losers.” This means closing or reconverting luxury-producing and importing enterprises and substituting enterprises that produce quality of goods for mass local consumption. This requires that working people as consumers play a vital role in the decision-making process to avoid the shabby quantitative output of the ex- Communist states.

Industrial reconversion requires, however, a balance between domestic and overseas production: exports earnings will continue to be important to finance vital inputs to the dynamic domestic growth model. What is crucial in this relation is the reinvestment of surplus export earnings in the development of the internal market, not their transfer overseas or to speculative activity as is the case today.

Crucial to the structural adjustment model from below is the modernization of the state. The state in the export model is largely made up of regulators who fashion rules and allocate resources to satisfy overseas investors and traders, drawing on domestic resources and providing little information to local producers about the decision-making process.

In rejecting the neo-liberal export model, there is no going back toward the centralized bureaucratic state that stifled popular democracy, blocked innovative initiatives and produced gross inefficiencies. The modernization of the state means the decentralization of administrations of state allocations to local recipients in civil society who vote on their priorities. State reform means the relocation of health workers to the neighborhoods, agronomists to the countryside and teachers to the overcrowded popular urban schools.

Consumers and citizens have to play a key role in directing the state and economic institutions to avoid having another “dictatorship over the proletariat” or an abundance of cheap consumer goods that nobody is interested in purchasing because of quality, style or attractiveness.

Probably the most basic and novel feature of the new socialism is the key role that workers, consumers and ecologists will play in the review, evaluation, hiring and firing of managers. The avoidance of a privileged bureaucracy in the public economic enterprises rests with an active role of the direct producers and consumers in fundamental decision-making. Thus, under the new socialism, self-management at the state, regional and local level is the alternative to the private export elite of the globalized economy and the state bureaucrats of the past.

The key role of direct producers also involves responsibilities. Guaranteed lifetime employment is not viable: periodical peer evaluations of performance of quality and quantity of services should be the norm. Chronic offenders should be fired. Abusive bureaucrats called to account. Public utilities workers made accountable for unacceptable delays. Local, decentralized organization allows friends, neighbor and citizens to take decisions into their own hands. Absentee teachers should receive absentee salaries and answer to parents, students and others. Professors who recycle outdated lectures on yellowing note cards should be evaluated and advised to upgrade their courses or face dismissal.

January 1999