To challenge global capitalism we must first understand it: an interview with Leo Panitch

Leo Panitch speaks to Peter Newell and Sam Knafo about his book The Making of Global Capitalism – and what it means for strategy and action aimed at ‘un-making’ capitalism

January 23, 2014
11 min read

Leo-PanitchGlobalisation and Imperialism

Tell us about the background to this book and what’s different about your take on the history of global capitalism and American empire? In other words, why did we need a book like this?

About 20 years ago, the burgeoning globalisation literature about how capital was bypassing and diminishing states made me increasingly aware of how much a theory of the state mattered and how much we needed an account of the special role that the US came to hold in the making of global capitalism. Two things were coming together that needed to be explained: first, the reconstitution of capitalism in a neoliberal era, strengthened by the discipline of US capitalism, imposed on its own working class at home; and, second, the central role of the US state not just in facilitating free trade and capital flows internationally, but also its central role in ‘failure containment’ in the context of the repeated financial crises of the 1990s in Asia and elsewhere.

Can globalisation essentially be reduced to Americanisation then?

Insofar people think of Americanisation in terms of imposition, not really. Of course, US multinationals dominate a great many sectors of the global economy, and much of the international legal framework for capital movements and free trade is rooted in American laws. But insofar as this reflects Americanisation abroad in the sense that many people aspire to the American way of life, this is not a matter of imposition, it is a matter of invitation. Nor can the American state’s international role be understood as merely as matter of it subordinating itself to US capitalist interests – of the American capitalist class telling it what to do. On the contrary, because of the conflicts within that class, the state is manoeuvring through an unstable field of compromises, at home as well as abroad, as it plays the central role of managing the global capitalist economy.

Is it really the case that other states have not also assumed the responsibility for promoting and protecting global capitalism?

The US is a new type of empire that only rules in conjunction with other states

That’s a good question, one that’s not fully resolved. The US is a new type of empire that only rules in conjunction with other states, especially G7 states. It’s not merely an imposition. It requires a lot of institutional coordination and interpenetration. That said, the Germans in particular have been recalcitrant in taking responsibility for ‘failure containment’ in light of financial volatility. Neither has Japan been very forthcoming. By contrast, the relationship between UK and US Treasury is particularly close in playing this failure containment role, although the UK accepts that the US is the senior partner, if for no other reason than it has greater capacity. A senior treasury official in the UK told us, ‘we all play a role but the US is qualitatively different: the UK is expert on 50 countries, whereas the US is on 150, and can go to the IMF to initiate decisions with incredible resources.’

It is a big challenge for the left to understand the way in which the US is genuinely burdened by the responsibility of sustaining global capitalism. They are exercising their enormous power in a world they do not fully control. The American empire’s primary concern is with the capacities of other capitalist states to police and discipline themselves to the end of sustaining global capitalism, not least because the bureaucrats of US empire are constantly worried about over-stretching their global role. But the idea that Germany, Japan or China have the capacity, the appropriate institutional apparatus, let alone the will, to assume this role so as to displace the Americans from it, is other-worldy.

Many readers of Red Pepper might expect a book on American empire to say more about war, imperialism and the coercive side of making global capitalism, especially in the era of the ‘new imperialism’ since Bush Jr. Why did you not address these aspects of power more in the book?

People are right to expect more on this. But so much has been written on this, we felt we didn’t need to do more than touch on this. For all the misuse of the word imperialism by the left in the 20th century, the term still serves an important ideological function. It gets people’s blood boiling, and it should. Imperialism is a useful political concept and the coercive role of the US state is important. But interpreting the invasion of Iraq primarily in terms of the interests of American oil companies is wrong. That’s not what it was about. It was about ensuring Saddam didn’t have enough capacity to dominate the Middle East.

It is also worth noting we deliberately don’t use the term hegemony much in the book. The trouble with hegemony is that no matter how often people say it is about material practices, ideology is always lurking there as primary. Whereas we wanted to stress that empires are states, and to ask: what is different about the US in world history and its informal empire? What are its institutional capacities? These are the questions we address.

Crisis and resistance

What impact has the financial crisis had on the making of global capitalism?

We are in for a very long period of capitalist stagnation, maybe like the period of 1873-1896. There is low investment despite the very low interest rates set by the advanced capitalist states because even though credit has resumed to the working classes, this does not by any means solve the problem of effective demand that comes from stagnating and even falling working class incomes, aggravated as this is by fiscal austerity. Although the G20 states of the global south like Brazil and China were encouraged by the G7 states to pick up the slack by expanding further their own domestic markets, they can’t do enough to offset the ways in which they have been primarily integrated into an export-oriented global capitalism.

Given the likelihood of long-term stagnation, we can expect to see more nationalist and xenophobic sentiments, more calls for ‘gated capitalism’, but at the same time we have to be very careful not to frighten ourselves into immediately opting for a popular front strategy in response to this. If in fact globalisation is going to be reversed by the far right, then the left would have to fall back on such a strategy, where we minimise our political differences with all those who reject an extreme nationalism. But I do not think we are at such a reactionary moment, and in fact you still see a lot of public sympathy towards the plights of migrants, for example.

The late Peter Gowan used to remind me that a break from globalisation might not come from the left but from the right, and this might one day especially come from Germany. The big question is whether there is a national bourgeoisie which has elements in it that are so powerfully oriented towards closing borders and not accumulating outside of their own borders. There are not many bourgeoisie like that left.

It is much more likely in the current conjuncture that such a break could be initiated by the Greek left. The Americans are worried the Germans are aggravating the likelihood of this, and there is a fear that this could open the way to a wave of more and more radical capital controls.

What lessons, if any, can be derived from the book about the potential for un-making of global capitalism?

The project of global capitalism has to be continually re-made as it moves in and out of crisis. We don’t outline a clear manifesto for how to unmake it, which our book In and Out of Crisis of a few years ago was more concerned with. This book ends by saying that a radical politics requires a sober perspective on what currently exists, and about how we got here, so as to be able to understand more clearly the nature and scale of the task involved in getting somewhere better.

What such a sober perspective shows us is why the old social democratic attempts to secure and manage a more humane capitalism have failed, why a return to Keynesianism is impossible and why the German model of capitalism is not what is claimed in terms of a progressive alternative to Anglo-American capitalism.

It is impossible to predict whether the left will be able to develop the capacity in the coming years to go beyond protest and build the institutional capacity to enter the state and start remaking it so as to be able to initiate an un-making of global capitalism. Were this to happen in Greece with the election of a Syriza government, one fears that unless it would encourage a shift in the political balance of forces in Northern Europe so as to allow a Syriza government the space to implement an alternative program, the people of Greece would suffer even further by being economically penalised and isolated. In this sense we are back to 1917, and the hope Russian revolutionaries entertained about the revolutionary implications of a break in the ‘weakest link’.

Radical politics requires a sober perspective on what currently exists, and about how we got here

Of course, given the central role of the American state in global capitalism, it would seem that any unmaking, even while not necessarily being initiated by radical forces in the heart of empire, would only be able to go so far unless it encouraged a radical political shift inside the US. And there is in fact more mobilisation and scope for progressive action within the US than people elsewhere imagine, through workers’ action centres and the like, building non-sectarian cadres at the national level and beyond.

Especially with today’s environmental challenges, there is also a sense of a dual crisis for capitalism, with ecological issues high on the agenda. That said, I do have a problem with ‘catastrophism’, the narrative that we have a very short time frame within which to respond to ecological challenges or else we’re all doomed. If that’s true, we’re all screwed – progressive politics becomes impossible because it’s not going to happen overnight.

Of course, discussions about a ‘just transition’, aimed at the unmaking of global capitalism by pointing to the need for a fairer, greener economy, can be valuable in bringing together progressive elements of labour and environmental movements. It would be very positive if this can be linked in the short run in a positive way to what consumers are experiencing under conditions of austerity, as we’ve seen with the popularity of Ed Miliband’s call to freeze energy prices.

Pointing to the very real effects and further implications of climate change can help in advancing a longer-term socialist politics of economic conversion. This would also further the case for turning financial institutions into public utilities so as to facilitate democratic economic planning, with all this would mean for releasing the potential for left-led technological innovation and cleaner production. But none of this can happen unless we also address the need to go beyond policy proposals, however radical, and put on the agenda the need to transform capitalist states so they can become agencies for developing the popular capacities to really determine democratically what gets produced, and how, in ways that would realise genuinely socialist values.

Leo Panitch and Sam Gindin’s book The Making of Global Capitalism: The Political Economy of American Empire is published by Verso and has been awarded the prestigious Deutscher memorial prize. Peter Newell and Sam Knafo are based in the Centre for Global Political Economy in the department of International Relations at the University of Sussex


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