Globalization: Capitalism in the Age of Electronics
(page 1 of 2)
is the Political Report from the April 19, 1997 meeting of the
Steering Committee of the League of Revolutionaries for a New
ruling class has had its global dimension and “global”
aspirations. The level of the development of the productive forces
and the economic relations of a society determine the form of
this imperial oppression and exploitation. The Romans with their
highly organized slave empire subjugated the world as they knew
it and extracted taxes and slaves as their main source of wealth.
Similarly, every stage and phase of development of capitalism
has had a corresponding form of global activity.
At the beginning
of this century, Lenin described the stage of the development
of capitalism at that time as “imperialism.” Developing
from major technological breakthroughs like electric generators
and motors, the internal combustion engine, new steel-making processes,
the telephone and the radio, the 19th-century system of competitive,
industrial capitalism gave way to a global form of monopoly capitalism.
This new stage
of development of capitalism was characterized by the concentration
of production such that monopolies controlled the economy; the
emergence of “finance capital” as the decisive form
of capital; the growing importance of the export of capital, as
opposed to the export of commodities; and the territorial division
of the world among the major capitalist powers.
system of imperialism is giving way to globalization - a new stage
of capitalism characterized by electronics-based production; the
desperate attempt to maintain value and surplus value production
by whatever means possible; the internationalization of capital;
and the replacement of productive capital with speculative capital
as the dominant form of capital.
was capitalism in the age of electro-mechanically based monopoly
capitalism; “globalization” is capitalism in the age
End of Imperialism
I and World War II grew out of the struggle among the imperialist
powers to territorially redivide the world. The end of World War
II, with the European and Japanese economies in ruins, marked
the beginning of the end of direct colonialism, a system which
had seriously constrained the ability of capitalist countries
to invest outside their own colonies. The process of the dismantling
of direct colonialism lasted over the next several decades.
Led by the
efforts of the United States, which had emerged as the economically
dominant power by the end of the war, the agreements made at the
Bretton Woods meetings in 1944 formalized the new international
economic order. The U.S. dollar, fixed in relation to gold, was
made the chief international currency. The United Nations was
the political counterpart of the institutions made possible by
the Bretton Woods agreements - the World Bank and the International
With the revival
of the European and Japanese economies by the mid-1960s, the period
of U.S. economic hegemony was over. The end of this period was
signalled by the dissolution of the Bretton Woods agreement in
the early 1970s. Capitalism is driven by the maximization of profit.
The drive for profits requires both a constant advance in technology
to cheapen production and eliminate competitors, and a constant
expansion of the markets in which to sell the commodities. This
demanded the ultimate expansion of the market to encompass the
entire world, free of national barriers; and, at the same time,
the lowering of the cost of production to the absolute minimum.
This expansion demanded the end of a territorially divided world,
which was accomplished by dismantling direct colonialism.
At the same
time, the introduction of labor-replacing technology means the
beginning of the end of productive investment capital. All value
(and profit) comes from the exploitation of labor. Laborless production
means valueless production - and hence, profitless production.
With laborless production, capital can no longer be utilized to
create more value and more surplus value. So, capital is being
shifted into purely speculative investment. A critical portion
of capital is no longer “exported” (in the sense of
being invested overseas for the production of more commodities).
It is merely shifted, moved, transmitted around a global roulette
extended industrial production throughout the world. The introduction
of electronics into capitalism is ending the stage of imperialism,
and opening the new stage of globalization.
of development of capitalism are defined by specific developments
in the productive forces; the microchip defines the current stage
of the development of the productive forces. Introduced in the
early 1970s, the microchip is a light, tiny, cheap device that
can be widely deployed to control production processes. It was
the result of an effort to satisfy the growing demand for devices
to reduce production costs and to cheapen the cost of coordinating
the growing world economy.
and its sister developments in electronics made possible practical
robotics. It cheapened the cost of the instruments of scientific
production, paving the way for breakthroughs in other fields like
“smart” materials, biotechnology, and digital communications;
and it dramatically reduced communication costs.
of the microchip threw a radically new quality into an already
global economy. Twenty-five years after its introduction, the
power of the microprocessor continues to double every 18 months.
As chips develop, they infiltrate new areas of production, increasing
output and replacing the need for living labor - workers - in
At the same
time, as the British newsweekly The Economist noted, “by
reducing the cost of communications, [new technologies] have helped
to globalize production and financial markets. In turn, globalization
spurs technology by intensifying competition and by speeding up
the diffusion of technology through direct foreign investment.
Together, globalization and [new technologies] crush time and
space.” Cheap transportation and communication have also
created a global commodity market, including a global labor market.
the market can absorb the constantly expanding output of capitalism,
the economic system freezes up and enters a crisis. Ultimately,
this crisis is a result of the introduction of advanced technologies
that brings on a crisis in profitability, but it appears as
a crisis of overproduction, the inability to circulate commodities
that the market cannot absorb.
W. Keller, director of the Office of Technology, has complained,
“Capitalism everywhere is turning out to be too damn
productive.” So, to out-compete the other capitalists
on this world stage, each capitalist is compelled to seek
out the cheapest labor and the most advanced technology.
productiveness of capital has not been matched by a proportionate
increase in markets. William Greider defines the “central
economic problem of our revolutionary era [as] the growing,
permanent surpluses of goods, labor and productive capacity
inevitably generated by technological innovation and the free-running
industrial globalization.” (Chicago Tribune, January
20, 1997.) These surpluses affect steel, auto, textiles, electronic
appliances - virtually every industry, except those on the
cutting edge today (like semiconductors or communications).
profitability, corporations must lower their break-even point,
redeploying parts of the production process overseas, reducing
fixed costs by selling plants and other assets, cutting out
middle-level employees, converting jobs to temporary work.
This results in reserves of idle people and unused production.
is further complicated by the fact that some countries still
have varying amounts of control over their markets. The United
States has tried repeatedly to break down market barriers
in Japan. China has been successful in limiting its home market,
while benefiting from open markets, particularly in the United
States. China's strategy is to build up high-cost, high-tech
exports based on technology (gained from trading foreign technology
for access to their markets), while producing cheap goods
made by low-cost labor for its rapidly growing domestic market.
Foreign goods enter China under strict rules. The Japanese
feel particularly threatened by China's growth. As Harou Shimada,
a Keio University economist, bluntly put it:
is a horror story for the rest of the world if it simply grows
as an exporting nation. Overcapacity will have to be squeezed
down. It will be increasingly unprofitable for companies to
build new capacity in advanced nations. If the Chinese develop
the technology and become productive without wages rising,
then they will be a tremendous competitive menace against
the rest of the world. If you bring in 1.2 billion workers
at those wages, that can destroy the global trading system.”
(Quoted in One World, Ready or Not: The Manic Logic of Global
Capitalism by William Greider, Simon & Schuster, New York,
1997, p. 162.)
high rates of economic growth in China coupled with low wages
have produced a glut in the Chinese market, with goods worth
$64 billion stockpiled, representing about one-fifth of China's
total production. (“Bloom is Off China's Boom,”
Chicago Tribune, February 4, 1997.)
same time, the United States is running up huge trade deficits
as it attempts to soak up excess commodities. For the first
time in a century, in the fourth quarter of 1993, the United
States passed a critical threshold. The outflow of financial
returns paid to foreign investors on the assets they held
in the United States exceeded all of the profits, dividends
and interest payments that American firms and investors collected
from their investments abroad. In 1994, the annual outflow
was negative for the first time since 1914. Trade deficits
reached a record volume in 1995. (Greider, p. 201) More