Capital, Crisis and the International State System - Peter Burnham

5 Capital, Crisis and the International State System
Peter Burnham

INTRODUCTION

The closing months of 1993 saw the conclusion of two agreements heralded by liberals as setting the world economy on a new and sound footing. The United States' ratification of the North American Free Trade Agreement (NAFTA) in November was capped in December 1993 when the Director-General of the General Agreement on Tariffs and Trade (GATT) brought down the gavel on the Uruguay Round, which had been formally launched in September 1986. Amid the popping of champagne corks the Financial Times declared that the agreements would provide, 'powerful underpinning for the world economy, fresh impetus to competition, and fresh hope for those developing and former communist countries that have been opening up to international commerce'.1 By the opening months of 1994 this liberal triumphalism looked somewhat premature in the face of the Zapatista revolt in Chiapas (see Chapter 7; and Cleaver, 1994) and tension in Europe occasioned by persistent economic stagnation and disputes over the enlargement of the European Union.

Whilst it is commonplace to point out that the re-regulated financial and trade markets of contemporary capitalism have considerably enhanced the power of internationally mobile capital, the implications of this shift for national states are less clear. The 'social costs' arising from the 'structural adjustment' of economies in the wake of trade liberalisation are likely to heighten class conflict within states in addition to exacerbating fiscal crisis and adding to the mountain of international debt. The aim of this chapter is to provide a Marxian framework for understanding how the crisis of contemporary capitalism is experienced as a crisis of the national form of the state. In so doing the chapter contributes to overcoming a weakness in Marxist state theory which has typically stopped short at theorising inter state relations.

In 1969 Ralph Miliband relaunched the state debate amongst western radicals by highlighting the paradox that whilst a 'theory of the state' underpins all political analysis, the state itself as an object of political study had long been neglected.2 Although Miliband's characterisation of the capitalist nature of the state has long been superseded, his focus on the capitalist state (in the singular) rather than on the multiplicity of states which comprise the international state system has remained the norm in Marxist accounts. With the notable exceptions of von Braunmühl (1978) and Barker (1978/1991), this deficiency has passed almost unnoticed, with the result that one might easily get the impression from a survey of Marxist literature that capitalism has but one state. The guiding theme of this chapter is that a materialist analysis of the inter-state system is a prerequisite for understanding current developments in the global political economy.

The first part of this chapter shows the importance of Marx's dialectical method in theorising the relationship between class and state. For Marx the state is perceived as the concentrated and organised force of class divided societies controlling and subduing the popular masses – the organised force of their suppression (Marx, [1871] 1986, pp. 486-7). However unlike Weber who reifies the notion of domination and thereby sees 'the political' as a distinctive form of action always and everywhere distinguishable from 'economic action' in terms of ends and means, Marx understands the 'moment of coercion' and the 'moment of appropriation' as elements of a totality, differences within a unity – the case with any organic entity (Marx, [1857] 1986, pp. 36-7). From a dialectical viewpoint therefore the state is not autonomous, or simply related to, 'the economy'. Rather it is an integral aspect of the set of social relations whose overall form is determined by the manner in which the extraction of the surplus from the immediate producer is secured.3 This conceptualisation provides a basis for analysing the historical specificity of the particular state forms (ancient, feudal, capitalist) which arise out of the social organisation of production in class societies.

From the vantage point of 'form analysis'4 the capitalist state is understood as the historically specific condensation of the 'political' in capitalism. The particularisation of the state (that is, its institutional separation from the immediate production process) is an important defining feature of its capitalist form. However it is only by locating the class character of the capitalist state in the context of the historical separation of state and civil society, achieved with the gradual disintegration of feudal social relations, that we can fully understand the specificity of the capitalist state form.

The third section of the chapter supplies a systematic account of the national states which comprise the international system. Only at this point (on the basis of a prior analysis of state forms) is it appropriate to introduce discussion of particular national states and their distinctive historical development. The weakness of much state theory becomes evident at this level. It is important to break free from studies which see the world system as an aggregation of compartmentalised units.5 The flaw in such studies has been well identified by von Braunmühl (1978, p. 162), who cogently argues that the international system is not the sum of many states, but on the contrary the international system consists of many states. Further more as Barker (1978/1991, p. 207) recognises, the dual determination of the state (vis-à-vis 'its citizens' and the international system) is a permanent feature informing all aspects of state policy and activity. Therefore, the appropriate focus for conducting theoretically guided empirical analysis of national states, is the world market – a single system in which state power is allocated between territorial entities. In this section I will map out one of the most important yet undertheorised tensions of late capitalism, that between the present national political constitution of the state and the global character of accumulation.

On this basis, the final part of the chapter will show how the overaccumulation crises of post-war capitalism are manifest in terms of the national state-global economy relationship. From the post-war settlement, through the reconstitution and decline of Bretton Woods, to the multilateral trade talks and the process of financial re-regulation, national states have struggled in the post-1945 period to mediate the consequences of this national-global tension. Rather than focus on realist debates couched in terms of the loss of state sovereignty I will conclude that Marxist analysis must begin to understand 'international relations' as the national processing of global class relations.6 Struggle between labour and capital at all points in the circuit of accumulation produces crisis situations which are exacerbated by global competition (see Chapter 4 in this volume). Such crisis is manifest at the level of the state as a national crisis experienced in terms of balance of payments difficulties, fiscal crisis, low levels of productivity, political overload, etc. The contradictory basis of capitalist social relations ensures that crisis is endemic, producing constant change throughout the global system. National states, seen as the political form of capitalist social relations, are not simply affected by 'economic trends' or 'globalisation', rather they are part of this crisis of the social whole. In response to the latest and deepest crisis of post-war global capitalism we have not yet witnessed the extinction of the national state but the concerted and paradoxical attempt to retain the national form of the political, through schemes aimed at the regionalisation of the world market. Nevertheless the experience of the European Union points, in many ways, to the reformulation of the basis of national state relations towards an inchoate system of regional political coordination. In this way the recasting of class relations which has occurred since the demise of the Keynesian 'mode of domination' in western Europe in the mid-1970s, has now reached a new level of intensity and instability with the refashioning of the global political framework which maintains the 'real freemasonry' of the capitalist class vis-à-vis the working class as a whole. In short we are witnessing the restructuring of relations of conflict and collaboration between national states. The moves to regionalism evident across the globe (European Union, NAFTA, APEC) represent an attenuation of the tension between national states and the global economy as the crisis of the class relation is simultaneously expressed as a crisis of the international state system.

MARX, METHODOLOGY, AND 'POLITICAL DOMINATION'

It is common for 'Marxist' approaches to the state to be characterised as adopting one of two positions. Either, it is alleged that the state is capitalist because the economically dominant class is also politically dominant, or the state is interpreted as a deus ex machina divined from the structural logic of capital. Whilst the first position is simply radical-sounding pluralism, the second is an equally untenable Marxified Parsonian structural functionalism.7 The deficiencies of these approaches cannot be corrected simply by seeing the arguments as complementary.8 Both are flawed since they implicitly sanction a base-superstructure model of capitalism, denigrate the concept of struggle to that of an exogenous variable, and are predominantly ahistorical. But more importantly these viewpoints are deficient because they mirror the errors committed by orthodox political science, which takes the estranged forms of appearance of capitalist social relations and fails to trace what Marx refers to as their 'inner connections'.9 To appreciate the importance of this critique in relation to the state debate it is necessary to show how the notion of 'inner connection' is central to dialectical methodologies.10

The error of positivistic orthodoxy, Marx outlines in theGrundrisse, is that it simply brings outward appearances into an external relationship with one another, 'the crudity and lack of comprehension lies precisely in that organically coherent factors are brought into a haphazard relation with one another, i.e. into a purely speculative connection' (Marx, [1857] 1986, p. 26). Unlike non-dialectical research which begins with an isolated unit and attempts to reconstruct the whole by establishing external connections, dialectical research starts with the whole and then searches for the substantive abstraction which constitutes social phenomena as interconnected, complex forms different from, but united in, each other (Bonefeld, 1993, p. 21; Oilman, 1993, pp. 12-17). Notions of externality and structure are replaced by the dialectical categories of process and contradictory internal relationship.11 Whilst non-dialectical methodologies segment the social world and analyse the contingent relations of external phenomena, Marx focuses on how social relations take different forms, creating a differentiated, contradictory unity. Rather than understanding form in terms of species (the form of something more basic which lies behind the appearance), this view sees form as a mode of existence – something exists only in and through the forms it takes (see Bonefeldet al., 1992, p. xv). Hence diverse phenomena such as the state and the economy do not exist as externally related entities but as moments of the class relation from which they are constituted (Bonefeld, 1992, p. 100). As Clarke (1978, p. 42) clarifies, it is the concept of class relations as being analytically prior to the political, economic and ideological forms taken by those relations (even though class relations have no existence independently of those forms) that makes it possible for a Marxist analysis to conceptualise the complexity of the relations between the economic and the political, and their interconnections as complementary forms of the fundamental class relation, without abandoning the theory for a pragmatic pluralism.

This approach clarifies Marx's advance over the classical political economists who mistook the bourgeois form of social production for eternal, natural relations of production thereby failing to see the specificity of the value form and consequently of the commodity form, the money form and the capital form. In the work of the classical writers production is presented as governed by eternal natural laws independent of history, 'and then bourgeois relations are quietly substituted as irrefutable natural laws of society in abstracto. This is the more or less conscious purpose of the whole procedure' (Marx [1857] 1986, p. 25). The importance of this emphasis on 'form analysis' is not only that it sensitises us to the fluidity of social relations but more fundamentally it breaks with the old essence-appearance distinction and implores us to decode forms in and of themselves. The inability of orthodox political science to develop 'form analysis' is responsible for much of the confusion in discussions of the state.12 Similarly, no longer can we remain fixed in Leninist fashion to notions of the enduring nature of the nation-state. Instead our focus is on the changing nature of state form as the mode of existence of class relations.

Applying the dialectical method to the study of the state involves firstly specifying, on a very general level, the relationship between labour and political domination. Marx is emphatic that the most significant distinguishing feature of each social formation is not so much how the bulk of the labour of production is done, but how the dominant propertied classes controlling the conditions of production ensure the extraction of the surplus which makes their dominance possible (de Ste Croix, 1981, p. 52). Marx's clearest exposition of this point is in Capital, Vol. 3 ( [1894] 1981, p. 927), where he writes:

The specific economic form in which unpaid surplus labour is pumped out of the direct producers determines the relationship of domination and servitude, as this grows directly out of production itself and reacts back on it in turn as a determinant. On this is based the entire configuration of the economic community arising from the actual relations of production, and hence also its specific political form. It is in each case the direct relationship of the owners of the conditions of production to the immediate producers . . . in which we find the innermost secret, the hidden basis of the entire social edifice, and hence also the political form of the relationship of sovereignty and dependence, in short the specific form of state in each case.

The 'state' understood as 'politically organised subjection',13 charged with the enforcement of rule, empowered to exercise force to safe guard the relations which constitute the social order, is to be understood as the 'moment of coercion' without which no class divided society can exist. Throughout history the form of this enforcement has changed radically. However, all hitherto existing societies (above primitive levels) have presupposed establishing means of political domination (means which have gone far beyond Weber's stress on the claim to the legitimate use of physical force14 ).

Whilst this general analysis of the internal relationship between the organisation of labour and political domination tells us nothing about actual historical societies, it is nevertheless the bedrock which enables us to understand the development of the capitalist form of the state. This is the second step which is required before we consider in detail the specificity of the modern national states (the British and French states, for example) which comprise the international system. This task Marx achieves in his seminal, 'Contribution to the Critique of Hegel's Philosophy of Law' ([1843] 1975).

THE CLASS CHARACTER OF THE CAPITALIST FORM OF THE STATE

Marx's account of the rise of the modern political state is set against the social struggles which accompanied the overthrow of feudal relations of property and production. Whilst drawing attention to the exercise of monarchical power (based on property) within feudal relations, Marx argues that 'the abstraction of the state as such belongs only to modern times. The abstraction of the political state is a modern product' ([1843] 1975, p. 32). This argument needs close attention.

For Marx, the character of old civil (feudal) society was directly political. The elements of civil life – property, the family, the mode of labour – were raised to the elements of political life in the form of seigniory, estates and corporations. In this sense, an individual's position within an estate determined his/her political relation, that is, his/her separation and exclusion from other components of society. As he later clarified in Capital, Vol. I, ([1867] 1976, p. 170), 'here, instead of the independent man, we find everyone dependent – serfs and lords, vassals and suzerains, laymen and clerics. Personal dependence characterises the social relations of material production as much as it does the other spheres of life based on that production'. In these circumstances different subdivisions of trade and industry are the property of different corporations; court dignities and jurisdiction are the property of particular estates; and the various provinces the property of individual princes. Hence, in the Middle Ages we find serfs, feudal estates, merchant and trade guilds, and corporations of scholars, with each sphere (property, trade, society, man) directly political – 'every private sphere has a political character or is a political sphere; that is, politics is a characteristic of the private spheres too' ([1843] 1975, p. 32). Marx characterises the Middle Ages as the 'democracy of unfreedom', since in a context where trade and landed property are not free and have not yet become independent, the political constitution also did not yet exist. This discussion of the identity of civil and political society in feudalism has important ramifications for theorising the emergence of the capitalist state form. Marx saw the identity of the civil and political estates as the expression of the identity of civil and political society. Within each individual principality, the princedom (the sovereignty), was a particular estate – 'their estate was their state' ([1843] 1975, p. 72) – which had certain privileges but which was correspondingly restricted by the privileges of the other estates. Their activity as a legislative power was simply a complement to their sovereign and governing (executive) power, directed largely to civil affairs. As Marx summarises, 'they did not become political estates because they participated in legislation; on the contrary, they participated in legislation because they were political estates' ([1843] 1975, p. 73). To this can be added the significant rider that the relation of estates to the Empire was merely a treaty relationship of various states with nationality, 'their legislative activity, their voting of taxes for the Empire, was only a particular expression of their general political significance and effectiveness' ([1843] 1975, p. 72).

The emergence of the capitalist state form was neither an automatic response to the development of world trade, nor simply a matter of the transfer of power from one class to another. The historic change in the form of the state occurred gradually as political revolutions overthrew sovereign power (which constituted the political state as a matter of general concern), and fundamental social struggles, which were both prompted by and were expressions of, changing social relations of production, 'necessarily smashed all estates, corporations, guilds, and privileges, since they were all manifestations of the separation of the people from the community' ([1843] 1975, p. 166). These struggles simultaneously abolished the direct political character of civil society whilst creating the modern state. Gradually relations within civil society were transformed from the 'motley feudal ties' characterised by 'the most heavenly ecstacies of religious fervour ... and chivalrous enthusiasm' (Marx and Engels, [1848] 1976, p. 487), to the crass materialism of modern private property relations subject to the rule of money and law, and the egotistical struggle of each against all. Marx is emphatic, 'the establishment of the political state and the dissolution of civil society into independent individuals – whose relations with one another depend on law, just as the relations of men in the system of estates and guilds depended on privilege – is accomplished by one and the same act' ([1843] 1975, p. 167).

Social struggle therefore is at the heart of Marx's account of the rise of the modern state. The unity of the feudal state rested on the political unity of estates comprising the principality. The social struggles which dissolved the personal and corporate foundations of this power effected the separation of state from civil society – which paradoxically underscores the dependence of the contemporary state on the reproduction of capitalist social relations. As Clarke (1988, pp. 127-8) makes clear, the formal separation of the capitalist state from civil society sets limits to its powers. The state merely gives form to the social relations whose substance is determined in civil society, so that the state 'has to confine itself to a formal and negative activity, for where civil life and its labour begin, there the power of the administration ends' (Marx, [1844a] 1975, p. 198). The formal and regulatory activity par excellence of the state is to uphold the basis of the. new social relations which comprise the framework of civil society.

For Marx, the state is 'based on the contradiction between public and private life, on the contradiction between general interests and private interests' ([1845-6] 1975, p. 46). By positively upholding the rule of law and money, the state maintains the formal discipline of the market, and thereby mediates the contradiction between the expression of general and particular interests. This discipline must necessarily be imposed in an 'independent form' which is divorced from private interests: 'Just because individuals seek only their particular interest, which for them does not coincide with their common interest, the latter is asserted as an interest "alien" to them, and "independent" of them ... in the form of the state' ([1845-6] 1975, pp. 46-7).

From the foregoing discussion it is clear that the class character of the capitalist state is not determined by the dominance of capitalists or the 'primacy of the economy'. Rather it is determined by the historical form of the separation of state from civil society. It is in this sense that we should see the perspicacity of Holloway and Picciotto's (1977/1991, p. 112) statement that a materialist theory of the state begins not by asking in what way the 'economic base' determines the 'political superstructure', but by asking what it is about the social relations of production under capitalism that leads to the creation ofapparently separate economic and political forms. Within feudal social relations although the Holy Roman Emperor and the Pope stood at the apex, the structure was not a continuous hierarchy but rather sovereignty was fragmented and acts of force were not centrally orchestrated or rooted in a general system of right (Kay and Mott, 1982, pp. 80-4). In the feudal corvée force was directly applied to the serf as producer compelling him to produce rent for the lord. This force was particular, applied to each serf separately, in contrast to the compulsion to work in capitalism which operates through an impersonal labour market. Relations therefore were not mediated through a central authority, but were made directly at all points. Feudal relations of production were immediately relations of power. By contrast capitalist relations take place through the apparent exchange of equivalents. Labour and capital meet in the 'exclusive realm of Freedom, Equality, Property and Bentham' (Marx, [1867] 1976, p. 280), brought together by a contract whose very nature expels all immediate political content. As Kay and Mott (1982, p. 83) make clear, a crucial presupposition of modern contract is that both parties are deprived of the right to act violently in defence of their own interests, with the consequence that, 'in a society of equivalents relating to each other through contract, politics is abstracted out of the relations of production, and order becomes the task of a specialised body – the state'. In this way, the state as the particularised embodiment of rule, and the replacement of privilege by equivalence, are part of the same process, since 'citizens' only face each other through the medium of the state which is 'equidistant' from them.

Our second level of abstraction has therefore located the specificity of the modern state in the historical form of the separation of state from civil society achieved gradually with the dissolution of feudal social relations. The enforced separation of state and civil society is, of course, an institutionalised illusion.15 The institutional existence of the state as a 'political' sphere presupposes the 'depoliticising' of civil society. The act of 'depoliticising' is itself political and this is the reality which the institutional state obscures, a reality founded on the basis of private property. An important conclusion of deriving the capitalist state form in the foregoing manner is that it reveals the notion of the 'autonomy' of the state to be pure sophistry. The power of the state in its liberal capitalist form is embodied in the rule of law and money (which are at the same time its own presupposition16 ). This is the most appropriate form to serve the expansion of capitalist social relations since the social power of the bourgeoisie is embodied in the abstract form of money. The political monopolies and privileges of feudalism are replaced by the 'divine power of money', whilst man as a 'juridical person' is not freed from property or the egoism of business but receives freedom to own property and to engage in business.17 The institutional separation of the public state represents the historically specific form of political domination – the political moment – characteristic of capitalist social relations. Marx's dialectical approach reveals this separation to be illusory and opens up space to theorise the state – civil society nexus in terms of differentiated forms of capitalist power.

NATIONAL STATES IN THE INTERNATIONAL SYSTEM

One of the major difficulties which has been encountered in developing a Marxist theory of the interstate system has turned on reconciling a view of the state primarily defined relative to a domestic class structure, with the fact that the state is a component of a state system.18

As Picciotto (1991, p. 217) has pointed out, this tendency has been greater in Marxist than non-Marxist writing, since the Marxist emphasis on the class nature of the state has made it necessary to discuss the state in relation to society, and it has become convenient to assume a correlation between the society and the classes within it and the state within that society.

This difficulty however is again a product of conftating levels of analysis. The capitalist state form is not derived from a 'domestic' analysis, to which 'external' determinants are then appended a posteriori. As I have indicated above, the form of state specific to capitalism is derived from Marx's analysis of the fundamental change in social relations wrought with the demise of feudalism. This level of analysis (as with most of Capital) is neither 'purely historical' nor 'purely abstract', but instead utilises the dialectical approach to approximate the concrete.

When turning to analyse the contemporary international system it is fundamental to switch our focus and level of abstraction from 'the state' (capitalist state form) to particular national states (the Swedish or Mexican state).19 In so doing we are confronted with the following paradox. Whilst from its earliest stages accumulation has proceeded on a global level, capitalist states have developed on the basis of the principle of territoriality of jurisdiction. The fragmentation of the 'political' into national states, which from their very inception comprise an international system, has developed in an uneven fashion along side the internationalisation of capital. As Picciotto (1991, p. 217) clarifies, the transition from the personal sovereign to an abstract sovereignty of public authorities over a defined territory was a key element in the development of the capitalist international system, since it provided a multifarious framework which permitted and facilitated the global circulation of commodities and capital. However the neo-realist image of independent and equal sovereign national states is a fetishised form of appearance, since the global system does not comprise an aggregation of compartmentalised units, but is rather a single system in which state power is allocated between territorial entities. This is significant since exclusive jurisdiction is impossible to define, so in practice there is a network of overlapping and interlocking jurisdictions.

Whilst therefore the class character of the capitalist form of the state is globally defined, the political stability of individual states has up until the present been largely achieved on a national basis – although alliance and treaty have occasionally broadened the management of stability. The question of why the 'political' fragmented into national states (which is to be answered through detailed historical analysis of the overhang from absolutism) is less important than the implications which this fragmentation has for national states today. One of the most important features therefore of the global capitalist system – a feature which itself is a historical product of the class struggles which overturned feudal social relations – is the national political constitution of states and the global character of accumulation. Although exploitation conditions are standardised nationally, sovereign states via the exchange rate mechanism are interlocked internationally into a hierarchy of price systems. In the same way that jurisdictions transcend national legal systems, world money transcends national currencies. National states therefore founded on the rule of money and law (as the source of their revenue and claim to legitimacy) are at the same time confined within limits imposed by the accumulation of capital on a world scale – the most obvious and important manifestation of which is their subordination to world money (see Marazzi's, 'Money in the World Crisis', Chapter 4 in this volume).

National states (understood as the historically shaped political form of bourgeois class relations) in addition to upholding the authority of the market, through forms of regulation of law and money, respond in policy terms to the crises which result from the contradictory basis of their social form. 'Politics' is not therefore to be read off from 'economics'. Rather, the political and the economic are both to be seen as forms of social relations, whose differentiation enables the everyday conduct of government and yet whose contradictory unity circumscribes the volition of states. Governments thereby respond to (and take pre-emptive action in relation to) the power of labour at home and are forced to deal with the consequences of labour-capital struggles on a global level. The contradictory basis of capitalist accumulation20 is expressed in class terms as capital's ability to impose work (abstract labour), in ever-greater degrees of intensity, through the commodity form (exchange value). The fallout from these endemic class struggles confront national states in terms of declining national productivity and financial crises. Moreover, the anarchic condition of international politics, itself a consequence of the fragmentation of the 'political', necessitates that national states attend to security issues, with the probable consequence of having to mediate the effects of the power-security and defence dilemmas (Buzan, 1991). Whilst the national state cannot ultimately resolve these contradictions (since it is itself an expression of the crisis on the political level), it may be able to mobilise resources and refashion international political and economic relations, to gain a more favourable temporary position in the interstate system characterised by uneven development.21 National states provide both the domestic political underpinning for the mobility of capital and offer rudimentary institutional schemes aimed at securing international property rights as a basis for the continued expansion of capital. In this way, national states are best theorised as differentiated forms of global capitalist relations. The contradictory basis of class relations however ensures that far from accommodation and even development being the norm, interstate relations are instead characterised by conflict and collaboration, as national states struggle to mediate the consequences of the national-global tension. Whilst each national state strives to regulate the terms of class conflict within its jurisdiction, the overall interests of national states are not directly opposed, and relations of antagonism and collaboration are thereby reproduced at the interstate level.

The national-global tension confronts individual national states with the following dilemma. The world economy is driven by the creed, 'Accumulate, accumulate! This is Moses and the prophets' (Marx, [1867] 1976, p. 724). In response to the vulgar economists who claimed that capitalist overproduction was impossible, Marx ([1884] 1978, p. 156) clearly outlines that the volume of the mass of commodities brought into being by capitalist production is determined by the scale of this production and its needs for constant expansion, and not by a predestined ambit of supply and demand, of needs to be satisfied. The continued extension of the market has thus accompanied increases in both the production and realisation of surplus value which has depended not only on the globalisation of trade but also of production, capital export, the purchase of labour power and the globalisation of capital ownership.

National states ultimately derive both their revenue and their power from capital. This is true in the abstract sense inasmuch as the power of the national state is expressed in the rule of law and money which are the fetishised forms of the power of capital, and in the concrete sense that revenue derives from the capital outlaid and the working class subsequently employed within the bounds of its jurisdiction. To increase the chances of attracting and retaining capital within their boundaries (see Holloway's 'Global Capital and the National State', Chapter 6 in this volume) national states pursue a plethora of policies (economic and social policy, cooption and enforcement, etc.) as well as offering inducements and incentives for investment. However the 'success' of these 'national' policies depends upon re-establishing conditions for the expanded accumulation of capital on a world scale. The dilemma facing national states is that whilst participation in multilateral trade rounds and financial summits is necessary to enhance the accumulation of capital on the global level, such participation is also a potential source of disadvantage which can seriously undermine a particular national state's economic strategy. The history of the post-war international system is the history of the playing out of this contradiction. An important feature of the tension is its spatial dimension, which guarantees uneven development and shifts the manifestation of capital's global crisis to particular national states and regions. The crisis of the capital relation is thus at the same time a crisis of the international state system. Crisis, the endemic feature of the capital relation, is therefore less the result of a blanket exhaustion of a particular 'regime of accumulation', and more the consequence of the social form of capitalist production itself (Clarke, 1991b), leading to overaccumulation, the effects of which are worked out differentially across the globe. The final section of the chapter will illustrate these remarks through a brief review of the restructuring of the interstate system in the post-war period.

CONCLUSION: MANAGING POST-WAR CRISIS

The disorganisation of the working classes in 1945 enabled politics once again to be channelled through the form of the national state. As in the aftermath of the First World War, the European working class forewent the opportunity for unity and struggle over the form of the state, opting instead to alienate their social power and seek political representation through the national state.

The most immediate task facing the war-torn societies of western Europe in 1945 was physical reconstruction. The achievement of reconstruction aims and the expansion of economic growth depended however on the more subtle diplomatic reconstruction of international trade and payments systems which would facilitate international exchange and secure the regular import of essential commodities and raw materials.22 The primary barrier to rapid accumulation in 1945 was the uneven development of world capitalism which had produced a serious disequilibrium in production and trade between the eastern and western hemispheres, as experienced in the 'dollar gap'. The economic strategy of European national states therefore turned on finding a solution to recurrent balance of payments crises which were a manifestation of this uneven development, itself a consequence of the contradictory basis of the class relation. For these national states the need to maximise accumulation was translated into the need to accumulate world currency. Britain (acting largely on behalf of European states) and the United States thereby engaged in a series of protracted negotiations to restore global circuits of accumulation. In conditions of such fundamental structural imbalance the United States' multilateral objectives (immediate full currency convertibility, non-discrimination in trade and reduction of tariffs) were successfully resisted by Britain and, contrary to popular perception, the Bretton Woods system was effectively shelved until 1959 (see Chapter 4 in this volume). The key episodes of intergovernmental negotiation which characterised the restoration of post-war capitalism clearly illustrate the contradictory relations of conflict and collaboration which exist between national states. Constructing an efficient mechanism for international exchange was a prerequisite for all nations in 1945. However the struggles in determining the pattern of European trade and payments agreements illustrate the degree of conflict which existed both within Europe and between European states and the United States, as each national state sought a competitive advantage in relation to the dollar gap.

Towards the latter stages of the reconstruction phase, rising wages and the growth of consumer credit maintained steady, but far from uniform, economic development in western Europe. By the late 1950s however the controls and exchange restrictions which European national states had used to husband world currency after the war, appeared as a fundamental barrier to further growth. With controls now perceived to be redundant, liberalisation of trade and payments led to the intensification of competitive pressure in world markets culminating, by the late 1960s, in the overaccumulation of capital and overproduction of commodities. As Clarke (1988, p. 125) cogently argues, the fundamental error of Keynesianism is the belief that overaccumulation and underconsumption are two sides of the same coin, so that the expansion of the market will resolve a crisis of accumulation. However once we locate the source of crisis in the social form of capitalist production itself (in the uneven development of the forces of production within branches of production), it is clear that neither the growth of the market nor the expansion of credit can 'resolve' capitalist crisis. Whilst credit temporarily frees capital from the limits of monetary constraint, it simultaneously relieves the pressure on backward capitals to restructure, thereby creating the potential for even more devastating crisis in the future.

By the 1970s it was clear that many European national states had failed to develop economic policies capable of delivering sustained growth. In Britain for example, liberalisation of trade and sterling convertibility ended the relatively inefficient 'domestic' production of goods destined for safe Commonwealth markets. Despite the attempt of the British state to devalue the cost of labour power through a restructuring of the organisations of labour, it was nevertheless unable to effect a radical reconstitution of the institutional structures which affect 'competitiveness'. By contrast, freed from the necessity of maintaining a high ratio of military expenditure to GNP and with no effective legal limit to the length of the working day, the Japanese state, through the utilisation of innovative production methods (and backed by American capital during the period of the Korean War), achieved a dramatic reconstitution (Morioka, 1989). As the penetration by advanced capitals operating out of Japan and Germany into formerly protected markets gathered pace, the fragility of the Bretton Woods gold-dollar exchange standard became evident. As early as 1950 the United States had begun to record balance of payments deficits. Between 1950 and 1964 the governments' foreign accounts showed an accumulated deficit of $35 billion, the result of military assistance and direct defence expenditure abroad (excluding the direct budgetary cost of the Korean War, Burnham, 1991). Reeling from both the social struggles and the expenditure generated by the Vietnam offensive, the United States brought the international financial system to the brink of crisis in the early 1970s, unable to devalue with the liquidity problem stimulating intense speculation against the dollar. Although Germany and Japan prized the effects of the overvalued dollar on their own exports, the stabilisation of the world financial system demanded the introduction of a system of floating exchange rates (amended in 1978 to enable further diversity in IMF members' exchange rate arrangements).

The crisis of 'Bretton Woods' is predominantly interpreted in technical terms as one of 'liquidity'; 'adjustment'; 'seigniorage'; and/or as an illustration of 'Gresham's Law' (Pilbeam, 1992). These explanations accurately convey the surface manifestation of crisis, yet conceal its source. To locate the root we need to focus on production, and in particular how the national-global tension shifted the overaccumulation crisis to American shores as a more intensive imposition of work and associated capitalist strategies revolutionised the labour process in the Pacific Basin. Evidence for this can be gleaned from US balance of payments figures which show that in April 1971 the US trade balance went into deficit for the first time this century (US Dept of Commerce, 1975). Whilst Japan's crude steel production was only 5.5% of that of the United States in 1950, by 1980 it had exceeded the US level, with Japan even outstripping the United States in passenger car production by 1988. Similarly whilst the period 1981-7 saw Reagan unsuccessfully attempting to lift the American economy by borrowing over $531 billion, Japan became the biggest creditor nation in the world with its net overseas asset balance, which stood at $11.5 billion in 1980, increasing to $291.7 billion by 1988 (Rothschild, 1988; Shinohara, 1991).

The success of capital located in and operating out of the Japanese state illustrates that although national states experience crisis most sharply in fiscal and financial form, the source of crisis is to be located in the production process reflecting uneven development. In the same way that domestic credit temporarily shores up inefficient capitals, international borrowing is an option for national states struggling to generate the institutional structures which could enable capital to increase its scale of production, enhancing the attractiveness territories for further investment. The tragic lesson of the debt crisis in Latin America is that this option risks a further overaccumulation crisis with even deeper attendant consequences.23

The cause of contemporary crisis is often attributed to the whirl wind process of the internationalisation of capital (particularly financial capital) affecting the sovereignty of national states.24 Globalisation is not however the cause but is rather the result of crisis. The successful reproduction of accumulation within national state boundaries is premised on the reproduction of accumulation on a global scale. Whilst the integration of global circuits of accumulation is always contingent, resting on the continued subordination of the working class and the containment of militancy, it sets the context for the relations between national states vying to minimise the consequences of global overaccumulation. For national states capable of reconstituting the institutional structures which enhance 'competitiveness', the internationalisation of capital presents an opportunity for temporarily lifting the barrier to economic growth and penetrating world markets. The appearance of crisis is then not the result of the process of internationalisation itself, but rather is the consequence of capital attempting to overcome its inherent contradiction, thereby producing overaccumulation on a global scale. Global crisis is then experienced by capitalist states in a national form. This contradiction although it is mediated by national states through multilateral rounds, financial summits and limited forms of regionalism cannot be resolved within the framework of capitalist social relations since it is an expression of the social form of those relations.

The liberalisation of trade and finance which has occurred since the late 1950s has revealed with each new bout of global crisis that the national form of the state is increasingly unable to function as an integrated unit supplying the political stability which is the prerequisite for global class relations. Even the most powerful national states (Germany, the United States and Japan) are now turning to seek regional solutions to national balance of payments problems and the regulation of trade and finance. The 'hollowing out' of the national form of the state is not (pace Jessop, 1992) a response to 'post-Fordism' but is rather a recognition that the revolutionising of relations and the uninterrupted disturbance of all social conditions which Marx had already associated with capitalist society in 1848 extends also to the restructuring of the interstate system. The signs in western Europe are that the European Union could – however falteringly – transform political relations between western states. If present trends continue, then it is possible that the creation of a European currency and central bank and the increased transfer of political authority to Brussels could ultimately result in the establishment of a complex system of regional political coordination throughout Europe. This restructuring (unless it extends to fully fledged political regionalism) would not free the present states of western Europe from the monetary and fiscal problems which now appear so intractable. However, regionalisation of the world market and regional political coordination will set the context for a more intense phase of global class struggle.

The prospect of a simple transfer of authority from the national to the regional is most unlikely. Rather it seems that a more complex pattern will emerge whereby some national state capacities are transferred to pan-regional or international bodies, others devolved to local levels within the national state, and yet others are usurped by emerging horizontal networks (local and regional) which by-pass central states and connect localities and regions in several nations (Jessop, 1992; Rosewarne, 1993). The management of monetary relations looks set to follow a similar line as evidenced in the changing role of the IMF (there has not been a single western borrower from the IMF since 1979, reflecting the enhanced role of the European Monetary Committee-European Commission).

If the national form of the state is now undergoing transformation and we are witnessing a regional coordination of political relations, this will simply reproduce on a larger scale the pattern of conflict and collaboration which currently characterises the inter-state system.25 However it may also foster closer cooperation between 'national' labour movements and further increase the concentration and centralisation of capital moving closer to the situation depicted in the Communist Manifesto where national differences diminish owing to 'the development of the bourgeoisie, to freedom of commerce, to the world-market, to uniformity in the mode of production and in the conditions of life corresponding thereto' (Marx and Engels, [1848] 1976). In the present context of the revival of political nationalism (as well as neo-fascism) the moves already made towards the regional coordination of political relations look fragile, and Marx's prognosis overly optimistic. Nevertheless this restructuring creates opportunities for socialist strategy which can no longer be hidebound by the 'internationalism versus socialism in one country' dilemma.

The struggle of national states in the global economy is not to be perceived as a struggle between 'social democratic Sweden' and 'monetarist Britain', but as one of warring political brothers (necessarily united vis à vis the working class) competing to avoid the deleterious consequences of an overaccumulation crisis erupting on their shores courtesy of uneven development. The theoretical lesson of this chapter is that national states are a differentiated form of capitalist power – a complementary and contradictory form of class relations. The crisis of the national form of the state is producing a restructuring of interstate relations. The indeterminate outcome of a shift to complex political and economic forms of regional coordination (and more pertinently the outcome of a crisis of this regionalisation) throws open real opportunities for global socialist strategies and finally lays to rest all talk of a national road to liberation.

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• 1Financial Times (16 December 1993), p. 18.
• 2Miliband (1969, pp. 3-4). The nature of the state had of course been widely discussed in socialist and anarchist circles at the turn of the century. See DeLeon (1896); Kropotkin (1897); Paul (1916); Lenin (1917): Hunter (1918). However, serious analysis largely perished from the early 1930s onwards under the twin influence of Stalinist state monopoly capital theory and western social democratic pluralist viewpoints.
• 3See Marx's famous section in CapitalVol. Ill. Chapter xlvii; and for a clear exposition de Ste Croix (1981, p. 52).
• 4For a discussion of form analysis see the Introduction to Bonefeld et al. ( 1992).
• 5The most eloquent defence of this position remains Bukharin ([1917] 1972). Bukharin, of course, fully recognised that 'national economies' no longer exist. However he presents an aggregate account of the world economy, with states simply the 'state capitalist trusts' of nationally based groups of bourgeoisie. The simple identification of state and capital in this fashion is both historically inaccurate and theoretically bankrupt. The whole point of state theory is to explain why and how state and capital are related. Bukharin begins from an assertion which itself must be the object of critical appraisal.
• 6For a more extensive analysis of this point see Burnham (1993).
• 7The first account is pluralist because it locates the capitalist nature of the state in terms of interest articulation rather than the social relations of production. The second is functionalist because it assumes that 'capital' has a priori needs which are met by the state. 'Relative autonomy' conceptions of the state are equally unsatisfactory since they tend towards tautology. Carnoy (1984), provides a good summary of Marxist debates, as does Jessop (1990). Seminal critiques are Clarke ( 1977/1991) and Holloway and Picciotto (1977/1991).
• 8This is the surprising solution offered by Miliband (1991, p. 521 ).
• 9Marx ([1894] 1981, p. 956). A good example of the 'inconsistencies, half-truths and unresolved contradictions' of orthodox political science is found in the work of the guru of realist international political economy, Robert Gilpin. In discussing the contemporary political economy Gilpin (1987, p. 10 n. 1) writes:
  the historical relationship of state to market is a matter of intense scholarly controversy . . . but one whose resolution is not really relevant to the argument of this book. State and market whatever their respective origins, have independent existences, have logics of their own, and interact with one another.
• 10For useful accounts of Marx's dialectical method, see Rosdolsky (1977); Murray (1988); Bonefeld (1993).
• 11For an account, see Bonefeld et al. (1992, p. xv).
• 12A good example of such confusion is found in the debate between Wallerstein (1984) and Skocpol (1979) on the relation of 'the state' to the development of capitalism. Neither has grasped that theform of the state can be understood only on the basis of the historically specific social relations of which it is a part. In posing the question of whether 'states' postdate or antedate capitalism, these writers are already guilty of conflating levels of analysis, thereby guaranteeing erroneous conclusions.
• 13This is the useful term coined by Philip Abrams (1977) in preference to the 'state' – which Abrams argues lends itself too easily to reification.
• 14Weber (1918, p. 78). Also see Corrigan and Sayer (1985).
• 15This is emphasised by Murray (1988, p. 32), and demonstrated by Holloway and Picciotto (1977/1991).
• 16A point well made by Clarke (1988, p. 127).
• 17Marx ([1844b] 1975, p. 325) and ([1844c] 1975, p. 167).
• 18See the debate between Chris Harman, Alex Callinicos and Nigel Harris, summarised in Callinicos (1992).
• 19A point well made by John Holloway's 'Global Capital and the National State', Chapter 6 in this volume.
• 20Clarke (1991 b) offers a useful view of the primary contradiction being the tendency to develop the productive forces without limit, whilst confining the development of those forces within the limits of profitability.
• 21See Hall (1986) for a useful analysis of the institutional structures which affect 'competitiveness', namely, the organisation of labour; the organisation of capital; the organisation of the state; the position of the state within the international economy; and the organisation of its political system.
• 22For details see Burnham (1990).
• 23Consequences, which as Cleaver (1989) highlights, are heaped on the working class and which themselves are products of global class struggle.
• 24See for instance the special issue of Capital and Class, 43 (1991), continuing the debate begun between Robin Murray and Bill Warren; see Radice (1975).
• 25It should be clear that I am not offering a version of Kautsky's ultra-imperialism thesis. Regional coordination is not to be equated with the 'peaceful alliances' of internationally united finance capital which resolve the contradictions of imperialism. On the contrary, moves toward the complex political and economic regionalisation of the global system intensify contradiction and uneven development.