Global Capital and the National State - John Holloway

6 Global Capital and the National State

John Holloway1

The dilemmas of 'left' politics at the moment have much to do with the shattering of the myth of socialism in one country, whether in its 'communist' or social-democratic form. It has been made clear by the collapse of the Soviet Union and the regimes of Eastern Europe, by the increasing integration of China into the world market, by the changing orientation of so many 'socialist' regimes in different parts of the world, by the right-wing policies of social democratic parties in Europe, that the only possible way to think of socialism today is as a global project.

Just what this means or how it is to be achieved may not be clear, but it is clear that rigid conceptions of the state are a major obstacle to be overcome by such a project. As always. any attempt to conceptualise socialism must come to grips with the significance of the state and its relation to capital, but it is now clearer than ever that this relation can be understood only in a global context.

The immediate stimulus for writing this chapter was the experience of teaching a course on 'The Crisis of the Welfare State' in the Latin American Faculty of Social Sciences (FLACSO, Mexico). To talk about the crisis of 'the welfare state' or the reform of 'the state' in an international setting immediately raises the question of 'which state? where?' To someone who has lived most of his life in Europe, there is an additional problem: of what relevance are ideas developed in Europe about 'the state' to people whose main point of reference is the Paraguayan, Bolivian or Argentinian state? The answer can only lie through some concept of the fragmentation of a united world.

THE STATE

The very concept of the 'crisis of the welfare state' (or the 'reform of the state', another expression used widely to discuss current changes in the different states) points to the fact that we are identifying some thing common in the development of different states, and therefore proclaiming that an analysis oriented to one particular state is insufficient. The states appear to be quite distinct, separate entities, and yet we speak of the reform of 'the state' or the crisis of 'the state' as though there were just one state, assuming some sort of unity be tween that which appears to be separate. How can we understand the relation between the development of different states as a unity of the separate, the unity-in-separation/separation-in-unity of the state and the multiplicity of different states?

In the tradition of political science, the state is taken as a basic, and largely unquestioned, category. The state's existence is taken for granted before any discussion begins. In the tradition of Political Theory (at least as taught in British universities), categories such as authority, obligation and rights are discussed, but the state, as a category, is simply assumed. In the study of contemporary politics, the determinants of state action, the relations between states, the changing forms of government, and so on, are analysed, but all on the basis of an assumed starting point, the 'state'.

The overwhelming majority of work in the discipline takes one particular state as its almost exclusive framework, analysing political developments as though they could be understood in purely national terms. This is particularly true of work in the United States and Europe: for example, it has been common, on both left and right, to analyse 'Thatcherism' or 'Reaganism' as purely national phenomena, rather than as part of a global shift in the relation between the state and the market. Such analyses not only beg the obvious question of how then the global trend is to be understood, but they also focus political opposition on the national state, suggesting by the very terms of the analysis that all would be well if only Thatcher, Major or whoever were not in office. In Latin America people have been far more conscious of the world context within which current changes are taking place, but there is still a sense in which the unquestioned category of 'the state' restricts and defines discussion.

If the state is taken as the starting point for analysis, then the world (in so far as it appears at all) appears as the sum of nation states. Trends or developments which go beyond the borders of one state are discussed either in terms of inter-state relations (as in the tradition of the 'subdiscipline' of 'international relations') or in terms of analogy (as in the 'subdiscipline' of 'comparative politics'). Both approaches start not from a concept of the unity of the different states but from an assumption of their separation: common trends can be understood only as part of the inter-state network of power relations exercised either directly or through institutions such as the International Monetary Fund; or else in terms of the similarities between states in ideas, political institutions or social structures. An important example of the latter, comparative approach is the currently influential regulation theory, which establishes nationally defined concepts of Fordism and post-Fordism and then proceeds by analogy to discuss their applicability to different phenomena.

Inter-state pressures, pressures from international organisations, and institutional and theoretical fashions can certainly be seen as playing an important role in shaping the development of the state, yet they are insufficient to explain the depth and the global dimensions of the changes currently taking place. To explain the changes in terms of pressure from the IMF, for example, simply throws the question to a different level: what lies behind the policy orientation and influence of the IMF? Similarly, to explain the changes in terms of the influence of neo-liberal thought simply raises the question of why neo-liberal thought should have gained such influence in different countries at this particular time. Comparative analyses which focus on the occurrence of similar socioeconomic changes in the different countries, as in the regulationist analysis of Fordism, take us deeper, but the analogies, although suggestive, tend to be sketchy and superficial (Clarke, 1988/1991): the unity on which the analogies are inevitably based remains untheorised. To reach a satisfactory understanding of the changes taking place at the moment we need to go beyond the category of 'the state', or rather we need to go beyond the assumption of the separateness of the different states to find a way of discussing their unity.

Here, dependency theory offers itself as an attractive alternative, in so far as it emphasises the unitary character of the world, insisting on the importance of understanding the actions of particular states in the context of the bipolar relationship between centre and periphery, the periphery being subject to exploitation by the centre. Here there is a concept of the unity of the separate states, in so far as all arc elements of a bipolar world. However, in so far as the 'centre' and the 'periphery' are understood as the 'central states' and the 'peripheral states' (or groups of states as in 'Latin America'. cf. Marini, 1973), the analysis remains very state oriented. In this sense it is closely related to the tradition of international relations: although the emphasis is on the primacy of the world system over particular states, the world system is understood basically as an international state system, with the central states as the dominant actors, and with the only possible path out of dependence lying through the action of peripheral states.2 As in the mainstream tradition, the state defines a distinction between internal and external, the difference being that in dependency theory, the emphasis (in relation to the dependent states) is very much on the external, rather than the internal determinants of state action. Developments such as the state reforms being carried out in the peripheral states can, in this perspective, be understood only in terms of the external constraints arising from the centre periphery relationship, but there is no concept which allows us to understand the dynamic of that relationship.

THE STATE AS A FORM OF SOCIAL RELATIONS

Each state proclaims its own separateness from other states, its own national sovereignty. In order to understand that which allows us to speak of the crisis or reform of 'the state' as though there were only one state, we need to soften that separateness, to dissolve the state as a category.

To dissolve the state as a category means to understand the state not as a thing in itself, but as a social form, a form of social relations. Just as in physics we have come to accept that, despite appearances, there are no absolute separations, that energy can be transformed into mass and mass into energy, so in society too there are no absolute separations, no hard categories. To think scientifically is to dissolve the categories of thought, to understand all social phenomena as precisely that, as forms of social relations. Social relations, relations between people, are fluid, unpredictable, unstable, often passionate, but they rigidity into certain forms, forms which appear to acquire their own autonomy, their own dynamic, forms which are crucial for the stability of society. The different academic disciplines take these forms (the state, money, the family) as given and so contribute to their apparent solidity, and hence to the stability of capitalist society. To think scientifically is to criticise the disciplines, to dissolve these forms, to understand them as forms; to act freely is to destroy these forms.

The state, then, is a rigidified (or 'fetishised', to use Marx's term) form of social relations. It is a relation between people which does not appear to be a relation between people, a social relation which exists in the form of something external to social relations. This is the starting point for understanding the unity between states: all are rigidified, apparently autonomous forms of social relations.

But why do social relations rigidify in this way and how does that help us to understand the development of the state? This was the question posed by the so-called state derivation debate, a slightly peculiar but very important discussion which spread from West Germany to other countries during the 1970s.3 The debate was peculiar in being conducted in extremely abstract language, and often without making explicit the political and theoretical implications of the argument. The obscurity of the language used and the fact that the participants often did not develop (or were not aware of) the implications of the debate left the discussion open to being misunderstood, and the approach has often been dismissed as an 'economic' theory of the state, or as a 'capital-logic' approach which seeks to understand political development as a functional expression of the logic of capital – thus leaving no space for class struggle. While these criticisms can fairly be made of some of the contributions, the significance of the debate as a whole was precisely the opposite: it provided a basis for breaking away from the economic determinism and the functionalism which has marred so many of the discussions of the relation between the state and capitalist society, and for discussing the state as a moment of the totality of the social relations of capitalist society.

The focus of the debate on the state as a particular form of social relations is the crucial break with the economic determinism implied for example by the base-superstructure model (and its structuralist variants). In the base-superstructure model, the economic base determines (in the last instance, of course) what the state does, the functions of the state. The focus on the functions of the state takes the existence of the state for granted: there is no room in the base superstructure model to ask about the form of the state, to ask why, in the first place, social relations should rigidify into the apparently autonomous form of the state. To ask about the form of the state is to raise the question of its historical specificity: the existence of the state as a thing separated from society is peculiar to capitalism, as is the existence of the 'economic' as something distinct from overtly coercive class relations (Gerstenberger, 1990). The question then is not: how does the economic determine the political superstructure? Rather, it is: what is peculiar about the social relations of capitalism that gives rise to the rigidification (or particularisation) of social relations in the form of the state?4 The corollary of this is the question: what is it that gives rise to the constitution of the economic and the political as distinct moments of the same social relations? The answer is surely that there is something distinctive about the social antagonism on which capitalism (like any class society) is based. Under capitalism, social antagonism (the relation between classes) is based on a form of exploitation which takes place not openly but through the 'free' sale and purchase of labour power as a commodity on the market. This form of class relation presupposes a separation between the immediate process of exploitation, which is based on the 'freedom' of labour, and the process of maintaining order in an exploitative society, which implies the use of coercion (cf. Hirsch, 1974/1978).

Seeing the state as a form of social relations obviously means that the development of the state can only be understood as a moment of the development of the totality of social relations: it is a part of the antagonistic and crisis-ridden development of capitalist society. As a form of capitalist social relations, its existence depends on the reproduction of those relations: it is therefore not just a state in capitalist society, but a capitalist state, since its own continued existence is tied to the promotion of the reproduction of capitalist social relations as a whole. The fact that it exists as a particular or rigidified form of social relations means, however, that the relation between the state and the reproduction of capital is a complex one: it cannot be assumed, in functionalist fashion, either that everything that the state does will necessarily be in the best interests of capital, nor that the state can achieve what is necessary to secure the reproduction of capitalist society.

To speak of the state as a rigidified form of social relations is to speak both of its separation from, and its unity with, society. The separation or rigidification (or fetishisation) is a process constantly repeated.5 The existence of the state implies a constant process of separating off certain aspects of social relations and defining them as 'political', and hence as separate from the 'economic'. The antagonism on which society is based is thus fragmented: struggles are channelled into political and economic forms, neither of which leaves room for raising questions about the organisation of society as a whole. The riots in Los Angeles and other cities last year are an obvious recent example, where the stability of the existing society depended very much, not just on the use of brute force, but on the society's ability to channel social discontent into the established procedures of the political system, to impose certain definitions on an often ill-defined rejection of the existing order. This process of imposing definitions on social struggles is at the same time a process of self-definition by the state: as a rigidified form of social relations, the state is at the same time a process of rigidifying social relations, and it is through this process that the state is constantly reconstituted as an instance separate from society. The very existence of the state is a constant process of struggle. Revolution, by implication, involves the development of anti-state organisation, of social relations which defy rigidification (Holloway, 1980/1991, 1992).

NATIONAL STATES AS FORMS OF THE GLOBAL TOTALITY OF SOCIAL RELATIONS

'The state' is thus doubly dissolved: it is not a structure but a form of social relations; it is not a totally fetishised form of social relations but a process of forming (fetishising) social relations (and hence a constant process of self-constitution). But the discussion is still at the level of 'the state': nothing has yet been said of the fact that 'the state' is not one state but a multiplicity of states. As otherwise sympathetic critics of the 'state derivation' approach have pointed out (Barker, 1978/1991; von Braunmühl, 1974, 1978), the debate 'treats the state as if it existed only in the singular. Capitalism, however, is a world system of states, and the form that the capitalist state takes is the nation-state form' (Barker, 1978/1991, p. 204).

At one level, this criticism is misdirected, because the state derivation debate was concerned not with the understanding of a particular state, but rather with the understanding of 'statehood' or, better, 'the political'. The derivation of 'the political' from the nature of capitalist social relations abstracted from the fact that 'the state' exists only in the form of a multiplicity of states. In the context of analysing the general relation between state and society, it was, as Picciotto points out, 'convenient to assume a correlation between the society and the classes within it and the state within that society'.6 Yet, convenient or not, this point was never made clear in the debate, and the result was a serious confusion between 'the state' in the sense of 'the political' (henceforward referred to simply as 'the political') and 'the state' in the sense of the Mexican, Argentinian or German state (henceforward referred to as 'the national state').7 This led to an impoverishment of the concept of 'the political', and it also contributed to some of the difficulties in carrying the debate further once the general theoretical argument had been made.8

What are the implications of opening up this distinction between the political and the national state? The political, it was seen, is a moment of the totality of capitalist social relations. The 'totality of capitalist social relations' is a global (world-wide) totality. Capital, by its nature, knows no spatial bounds. The 'freedom' of the worker which distinguishes capitalism from earlier forms of class exploitation is at the same time the freedom (in a much more real sense) of the exploiter. When serfs freed themselves from feudal bondage, they became free to wander wherever they would in search of a means of survival: no longer tied to a particular place of exploitation, they could go and be exploited wherever they chose, providing they could find an exploiter willing to accept them. By the same token, the lord was no longer tied to exploiting the serfs he had inherited, but could convert his wealth into money and use the money as capital to benefit from the exploitation of workers in any part of the world. The freeing of the worker from a particular exploiter, the freeing of the exploiter from a particular group of workers, implied the establishment of social relations in which geographical location was absolutely contingent, in which capital could, and did, flow all over the world. The destruction of personal bondage was also the destruction of geographical constraint. The lord-turned-capitalist may or may not know where his money is being used for the exploitation of labour: that is in any case irrelevant, since all capital shares in the exploitation of all labour through the equalisation of the rate of profit through competition. Relations of exploitation exist in space, since people exist in space, but the space is undefined and constantly changing. The absolute contingency of space is epitomised in the existence of capital as money. Whenever money capital moves (i.e. constantly), the spatial pattern of the relations between capital and labour changes.

The global nature of capitalist social relations is thus not the result of the recent 'internationalisation' or 'globalisation' of capital,9 both concepts which imply a moving out from a historically and logically prior national society. Rather, it is inherent in the nature of the capitalist relation of exploitation as a relation, mediated through money, between free worker and free capitalist, a relation freed from spatial constraint. The aspatial, global nature of capitalist social relations has been a central feature of capitalist development since its bloody birth in conquest and piracy.

The political, then, as a moment of the relation between capital and labour, is a moment of a global relation. However, it is expressed not in the existence of a global state but in the existence of a multiplicity of apparently autonomous, territorially distinct national states.10

Historically, the liberation of the relations of exploitation from spatial constraint was accompanied by the development of a new territoriality in the form of the national states. The particularisation of the state, the abstraction of coercion from the immediate process of exploitation, was expressed in a contrasting movement: as the relation of exploitation was liberated from spatial bonds, the coercion which provided the necessary support for capitalist exploitation acquired a new territorial definition. An important activity of the emerging national states was the territorial definition of coercion, the limiting of the mobility of the newly 'free' workers through measures such as the series of laws to define and control vagabondage.

The political, then, is fractured into territorially defined units: this fracturing is fundamental to an understanding of the political, a crucial element that is lost if it is assumed that society and state are coterminous. The world is not an aggregation of national states, national capitalisms or national societies: rather the fractured existence of the political as national states decomposes the world into so many apparently autonomous units.

The distinction between the political and the national state thus gives a new dimension to the concept of the state as a process of fetishising or rigidifying social relations. The decomposition of global society into national states is not something that is accomplished once national boundaries are set. On the contrary, all national states are engaged in a constantly repeated process of decomposing global social relations: through assertions of national sovereignty, through exhortations to 'the nation', through flag ceremonies, through the playing of national anthems, through administrative discrimination against 'foreigners', through war. In short, the very existence of the state is racist. The more feeble the social basis of this national decomposition of society – as in Latin America, for example – the more obvious its forms of expression. This decomposition of global social relations is a crucial element in the fragmentation of opposition to capitalist domination, in the decomposition of labour as a class.11

The national state, then, is crucially a form of fracturing global society. Seen in this light, there is a basic territorial non-coincidence between the state and the society to which it relates. The 'convenient' assumption, mentioned by Picciotto, of a correlation of state and society is quite simply wrong, crucially wrong. If capitalist social relations are inherently global, then each national state is a moment of global society, a territorial fragmentation of a society which extends throughout the world. No national state, 'rich' or 'poor' can be understood in abstraction from its existence as a moment of the global capital relation. The distinction so often made between 'dependent' and 'non-dependent' states falls. All national states are defined, historically and repeatedly, through their relation to the totality of capitalist social relations. The distinction made by Evers, for example, in his development of the state derivation debate in relation to the capitalist 'periphery', between the 'central' states in which there is a 'social identity between the economic and the political sphere' and the 'peripheral' states, in which there is no such identity (Evers, 1979, pp. 77-9), is quite invalid. In spite of the national orientation of most theorists in the 'richer' countries, the existence of the national state as a moment of the global capital relation is no less crucial for an understanding of Thatcherism in Britain, say, than it is for an understanding of the rise of neo-liberalism in any so-called 'peripheral' country (as Bonefeld, 1993, convincingly shows).12

This is not to say that the relation between global capital and all national states is the same. On the contrary, although all national states are constituted as moments of a global relation, they are distinct and non-identical moments of that relation. The fracturing of the political into national states means that every state has a specific territorial definition and hence a specific relation to people within its territory, some (usually but not always – South Africa, Kuwait – the majority) of whom it defines as 'citizens', the rest as 'foreigners'. This territorial definition means that each state has a different relation to the global relations of capitalism.

The contrast between the spatial liberation of the process of exploitation (mediated through the flow of capital as money), on the one hand, and the spatial definition of coercion (expressed in the existence of national states), on the other, is expressed as a contrast between the mobility of capital and the immobility of the state. The territorial definition of the state means that each state is immobile in a way that contrasts strongly with the mobility of capital. The national state can change its boundaries only with difficulty, whereas capital can move from one side of the world to the other within seconds. Where national states are solid, capital is essentially liquid, flowing to wherever in the world the biggest profits are to be made. Clearly there are obstacles to this flow, limits to this mobility. Crucially, the reproduction of capital depends on its (transitory) immobilisation in the form of productive capital, involving its embodiment in machinery, labour power, land, buildings, commodities. Other obstacles also impede the free flow of capital, such as state regulations or the existence of monopoly situations but, in its most general and abstract form, money, capital is global, liquid and fast-flowing. Money knows no personal or national sentiments.

The relation of the national state to capital is a relation of a nationally fixed state to a globally mobile capital. It is in these terms that both the relation between the national state and the world and the relation between national states must be conceptualised. This is important because it has been common, particularly on the left, to discuss the relation between the state and capital as though capital were immobile, as though it were attached to particular activities, places or persons. This gives rise to analyses of political development in terms of conflict between capital fractions (textile capital versus chemical capital, say, or banking capital versus industrial capital) as though capital were in some way tied down to a particular activity13 or, more to the point in the present discussion, to the discussion of the state in terms of some sort of fusion, unity or interlocking between the state and 'national capital', as though capital were tied down in some way to some particular part of the world. The link between the state and capital is shown in terms of family links, personal connections, the existence of military industrial complexes, and these links are theorised as showing the capitalist nature of the state (as in Miliband, 1969), or in terms of a 'fusion' of state and monopolies (as in state monopoly capitalist theories), or as the formation of competitive state-capitals (as in state capitalist theories such as Barker, 1978/199114 ), or in classic theories of imperialism. All of these approaches treat capital as though it could be understood in terms of its personal, institutional or local attachment, instead of seeing these attachments as transitory moments, staging posts in the incessant flow of capital. Certainly personal, institutional and political links exist between groups of capitalists and national states, but 'groups of capitalists' are not the same as capital and often national states are obliged to break their links with their capitalist friends and act against them in the interests of securing the reproduction of capital as a whole (cf. Hirsch, 1974/1978). The relative immobility of the national state and the extremely high mobility of capital makes it impossible to establish such a simple relation between a national state and any particular part of world capital (Murray, 1971; Picciotto, 1985/1991).

The competition between states and the changing positions of national states in relation to global capital can therefore not be adequately discussed in terms of competition between 'national capitals'. The discussion must start not from the immobility of capital but from its mobility. In so far as the existence of any national state depends not just on the reproduction of world capitalism, but on the reproduction of capitalism within its boundaries, it must seek to attract and, once attracted, to immobilise capital15 within its territory.16 The competitive struggle between national states is not a struggle between national capitals, but a struggle between states to attract and/or retain a share of world capital (and hence a share of global surplus value). In order to achieve this end, the national state must try to ensure favourable conditions for the reproduction of capital within its boundaries (through the provision of infrastructure, the maintenance of law and order, the education and regulation of labour power, etc.) and also give international support (through trade policy, monetary policy, military intervention. etc.) to the capital operating within its boundaries, largely irrespective of the citizenship of the legal owners of that capital.

In this competitive struggle positions of hegemony and subordination are established, but a hegemonic position does not free states from the global competition to attract and retain capital. Relative positions of hegemony and subordination are based ultimately on the existence of more or less favourable conditions for capital accumulation in the different state territories: hence the long-term decline of Britain as a hegemonic power and the present instability of the international position of the United States. Conditions for capital accumulation depend in turn on the conditions for the exploitation of labour by capital, but there is no direct territorial relation here. Capital may accumulate in the territory of one national state as the result of the exploitation of labour in the territory of another state – as in the case of colonial or neo-colonial situations, but also in cases where states, through tax advantages or other incentives, make themselves into attractive locations for capital accumulation (the Cayman Islands and Liechtenstein are obvious examples).

National states thus compete to attract to (or retain within) their territory a share of global surplus value produced. The antagonism between them is not an expression of exploitation of the 'peripheral' states by the 'central' states (as dependency theorists suggest) but rather expresses the (extremely unequal) competition between them to attract to their territories (or retain within their territories) a share of global surplus value. For that reason, all states have an interest in the global exploitation of labour. It is true, as dependency theorists argue, that national states can be understood only by reference to their existence in a bipolar world characterised by exploitation, but the exploitation is not the exploitation of rich countries by poor countries but of global labour by global capital, and the bipolarity is not a centre-periphery bipolarity but a bipolarity of class, a bipolarity in which all states, by virtue of their very existence as states dependent on the reproduction of capital, are located at the capitalist pole.17

The relation between national states is thus not adequately under stood as an external relation, even though it presents itself as such. If the national state is a moment of the global capital relation, then neither the global capital relation ('international capital') nor other states can properly be understood as being external to it. In trying to understand the development of any national state, it is thus not a question of choosing between the 'external' determinants of state development (favoured by dependency theory in the case of 'peripheral' states) and the 'internal' determinants (preferred by regulation theory, Hirsch, 1992). Nor can state development be understood as being the result of a combination of endogenous and exogenous motor forces, the solution pursued by Dabat (1992). The distinction between inside-outside, internal-external, endogenous-exogenous reproduces the apparent autonomy of national states, and so reinforces the murderous rigidification of social relations which national boundaries represent, but is not adequate as an explanation of state development. All national states manipulate the internal-external distinction as a crucial element of practical politics. All states which have dealings with the IMF, for example, present the results of such dealings as being externally imposed, whereas in reality they are part of the seamless integration of 'national' and global political conflict. This is equally true of the terms 'imposed' by the IMF on Britain in 1976 (an important victory for the Right in Britain) and the terms recently 'imposed' by the IMF on Venezuela, which form an important element of the Venezuelan state's strategy to restructure society in such a way as to create more favourable conditions for capital accumulation. Global capital is no more 'external' to Cochabamba, Zacatlán or even Tannochbrae than it is to New York, Tokyo or London, although the forms and consequences of its presence differ enormously.

Understanding the development of the state cannot be a question of examining internal and external determinants, but of trying to see what it means to say that the national state is a moment of the global capital relation. Most obviously, it means that the development of any particular national state can be understood only in the context of the development of capitalist social relations, of which it is an integral part. The 'global development of capitalist social relations' is not a logical process nor something 'out there', but a historical process of conflict, a conflict which, although fragmented, is global. The structure of that conflict (ultimately the form of capital's dependence on labour, the relation of surplus value production) gives to capitalist social relations a characteristic instability which is expressed in capitalism's tendency to crisis. It follows that the development of national states, their relation to each other and their existence as moments of global capital can be understood only in the context of the crisis-ridden development of capitalist class struggle (cf. Holloway, 1992).18 However, the relation between any particular national state and global development is a complex one. Although the fact that all national states are moments of the same global relation is expressed in the occurrence of common patterns of development, as illustrated by the 'reform of the state' in so many countries in recent years, the differential relation of national states to global capital means that the forms taken by the struggles around the development of global capital, and hence the development of the national states, can differ enormously, and often what appears at first to be a common development (the neo-liberal reform of the state, for example) conceals a large number of different (and competing) strategies to achieve a redefined relation to a global capital in the process of restructuring.19

THE REFORM OF THE STATE AND THE NATIONAL POLITICS OF GLOBAL OVERACCUMULATION

Capitalism is a restless mode of domination. If the dissolution of feudalism liberated exploiters from their ties to particular workers, and from a relation of exploitation which no longer functioned, it also condemned them (or rather their wealth) to an endless search for a new, stable relation of exploitation. The history of capital is the history of a constant flight forward, a constant flight from the inadequacy of existing relations of exploitation, from the inadequacy of its own domination of the power of labour on which it depends. This flight exists all the time, but acquires a particular intensity in times of crisis, crisis being the manifestation of the inadequacy (for capital) of existing relations of exploitation.

The restlessness of capital is epitomised in its existence as money. In its existence as money, capital is free, free to flow globally in pursuit of obtaining maximum benefit from the exploitation of labour, in ·pursuit of profit. Capital, of course, does not exist only as money: it flows constantly through its different functional forms, existing now as money, now as productive capital embodied in means of production and labour power, now as commodities. Each form has different implications in terms of spatial mobility. Capital in the form of money can travel from London to Tokyo in seconds. Capital in the form of productive capital embodied in machinery, buildings, workers, etc. is much less mobile geographically. Capital in the form of commodities is clearly somewhere in between the other two forms in terms of mobility.

In the shifting forms of capital, production plays a decisive role, since it is production which is the sole source of surplus value and hence of the reproduction and expansion of capital. Capital, however, is blind to such theoretical considerations: in its endless restlessness, it will flow into whatever form appears to offer the biggest profits, the best possibilities for expansion. Thus, if the inadequacy of existing relations of production express themselves in a fall in the profitability of production and the saturation of commodity markets (what 'Marxist economists' – a contradiction in terms – refer to as 'economic crisis'), then capital will flow into the money form. The result will be a radical change in the mobility of capital.

Changes in the mobility of capital are crucially important for the development of the national state. While capital flows globally, the national state is fixed. Capital flows globally, but at any given moment it has some spatial location, be it in the account of some financial institution or tied up in the bricks and mortar of some factory. The different states compete to attract and immobilise the flow of capital. The relation of particular national states to global capital is mediated through this competitive process of attraction-and-immobilisation.

The relation can perhaps be imagined in terms of a series of reservoirs seeking competitively to attract and retain the maximum amount of water from a powerful and largely uncontrollable river. As the metaphor suggests, national states do not control the overall pressure, speed and volume of the flow of water. This can be understood only in terms of that which produces the movement of the water in the first place. The national states, the reservoirs of the metaphor, can only respond to changes in the magnitude and power of the river.

The major changes in the organisation and conceptualisation of the state which have taken place over the last fifteen years or so throughout the world are a response to a radical change in the flow of the river of capital. This radical change is the expression of crisis, the intensified flight of capital from the inadequacy of its own basis, from the insufficiency of its own subordination of the power of labour.

The destruction caused by the Second World War and the pre-war depression, combined with the experience of fascism in a number of countries, created favourable conditions for capitalist exploitation globally. The twenty-five years or so after the war was generally a period of high and steady growth based on the profitability of capitalist production. The resulting relative stability of capital created the basis for the development of a certain type of relation between national state and global capital, giving credibility to a world composed of 'national economies'. The relative stability also created an environment in which it was possible for the international agreements established after the war to regulate the economic relations between national states: particularly important in this respect was the Bretton Woods agreement which, by creating a system of fixed exchange rates, regulated to some extent the movement of money between national states and hence insulated national states to some degree from the global movement of capital (cf. Bonefeld, 1993). This relative insulation, founded on the relative stability of productive capital and bolstered by international regulation and by international policies to control the movement of capital, provided the basis for the state oriented politics of this period, be it the politics of the Keynesian welfare state or the politics of import substitution. The same relative stability also made possible the creation of reasonably stable alliances between the national states and groups of capitalists – the sort of alliances fixed conceptually in the theories discussed above (military industrial complex, state monopoly capitalism, etc.); and also between the state and bureaucratised labour movements, as found in many varieties of corporatist political development.20 Many of the theoretical conceptions concerning the state that are still common – particularly the abstraction of 'the state' from the world, discussed above – arose from the experience of this period, which was also a period of rapid expansion for 'political science' and the social sciences in general.

The relative insulation of the national state came to an end with the end of the long period of post-war boom. From the mid-1960s there were clear signs of growing instability. The conditions which had made production profitable throughout the post-war period were weakening: the costs associated with the exploitation of workers (often referred to as the organic composition of capital) were rising, the labour discipline (and general social discipline) established by the experience of war was weakening, the state bureaucracies associated with the post-war pattern of development were proving costly for capital. Investment in production came to be a less secure means of expanding capital. The inadequacy of the existing relations of exploitation as a basis for the expansion of capital was manifested in falling profits.

In these circumstances the inherent restlessness of capital asserted itself. Capital, in order to survive, needed to free itself from the existing relations of exploitation, to spit out some of the workers currently being exploited, to restructure its relations with others, to go in search of new people to exploit. Capital takes flight from the inadequacy of its own basis: this flight is expressed in the conversion of capital into money and the movement of that money in search of profitable means of expansion.

This process can be described in terms of the over-accumulation of capital. In the years of the boom there had been a rapid accumulation of capital: more capital had accumulated than could now find a secure and profitable outlet in productive investment. When that happens, then, in much the same way as bees swarm when there is no longer enough honey in the hive to support an expanded population, capital swarms – part of it gets up and flies in search of a new home.21 Capital assumes the liquid form of money and flows through out the world in search of profit. Instead of embodying itself in the bricks and mortar, machinery and workers of productive investment, it flows in search of speculative, often very short-term means of expansion. Many of the factories which have now become unprofitable are closed down, the buildings and machinery sold, the workers laid off: the capital released remains as money, which may be transformed into productive investment elsewhere, but is more likely to remain in the form of money as long as conditions for productive investment remain relatively unfavourable. The difficulties of production express themselves in an increase both in the supply of money, as previously productive capital converts itself into money and offers itself for loan, and in the demand for money, as the capital which remains in production tries to overcome difficulties through borrowing, and states try to reconcile growing social tensions through increasing their debt.

The crisis of production relations is expressed in the liquefaction of capital. There is a sharp change in the relation between productive capital and capital held in the form of money:22 money, instead of appearing to be subordinate to production, now appears as an end in itself. Inevitably, the shift in the form of capital means a change in the relation between the territorially fixed national states and the global movement of capital. This is not an 'internationalisation' or 'globalisation' of the economy, as it is often called, but a change in the form of the global existence of capital. The flow of capital, previously relatively stable, turns into a fast-moving torrent and this torrent23 sweeps away the institutions and assumptions of the post-war world. One of the first pillars of the post-war world to collapse was the Bretton Woods system of fixed exchange rates based on a fixed parity of the dollar with gold. The rapid growth in the 1960s in the quantity of dollars held as money outside the United States (and outside the regulatory powers of any national state), the so-called Eurodollars, led to an undermining of the position of the dollar and the abandonment in 1971 of the Bretton Woods system, which was eventually replaced by a system of floating exchange rates. This was just the first step. The rapid growth and the increasing integration of world money markets throughout the 1970s and 1980s, together with the increased speed of movement of money facilitated by the application of new technology, has had drastic consequences for the organisation of national states.24 National states seek to attract and retain capital within their territories: what this means changes radically with the new liquidity of capital. Competition between states to attract their share of capital increases sharply, obliging all national states to find new ways of making themselves attractive to capital. The fact that a higher share of capital is invested on a short-term basis means that states are under constant pressure to maintain conditions which will hold capital within their territory.25 States, as states, must bend to the restlessness of capital. The old ideologies go: the new rule of money finds expression in the new ideologies of neo-liberalism, supply-side theory, monetarism, all of which say in one way or another: money rules. The old alliances go. The established links between groups of capitalists and the state come to be seen as a hindrance once it is seen that capital in its money form attaches to no group of people and no particular activity. The patterns of corporatist domination through trade unions also come under strain: what is needed to attract global money is a new organisation of work, a new 'flexibility' and new discipline that is incompatible with the old trade union structures, a new way of 'learning to bow' (cf. Peláez and Holloway, 1990/1991). Money, in its desperation to find a way of expanding itself, forces open areas previously closed to private capitalist investment: everywhere areas of activity previously controlled by national states are privatised, opened up to the torrent of money in search of a profitable home.26 Even the most solid bastion of them all, the Soviet Union, is opened up and torn apart by money.

And then there is debt. The transformation of capital into its money form means that much of that money is offered for loan, that it is converted into credit and debt. The last years of the post-war boom were sustained by a rapid expansion of debt. In the late 1970s, after the crisis of profitability had made itself felt in the richer countries and monetary austerity had been proclaimed, the flood of money moved south, particularly to Latin America, offering itself to governments looking for a way of containing social tensions, and converting itself into debt. After it became clear, on the Mexican government's declaration of difficulties in 1982, that Latin America was not a safe location for loans, the money flowed north again, breaking the short lived attempts at tight monetary control in the United States and giving rise to a massive expansion of consumer debt and of military led government debt. With debt comes a new politics of debt, both internationally and within national states (cf. Cleaver, 1989; Holloway, 1990). The growth of debt means the growth of discrimination, discrimination between those deemed worthy of credit and those who are not, a new division that has made itself horribly obvious both between national states and in society throughout the world.

The shift in the relation between national state and global capital means a significant change in the forms of global capitalist domination. There is, as Marazzi puts it, 'a shift in state power to the world level – the level at which monetary terrorism operates' (see Marazzi's 'Money in the World Crisis', Chapter 4 in this volume). Political decisions taken at the level of the national state are now more directly integrated into the global movement of capital.27 The obviousness of this shift brings its problems, however: the subjection of the national state to the global movement of capital makes more difficult the national decomposition of society, and gives rise to tensions evidenced in very different ways by the recent difficulties of the Venezuelan government, the fall of Thatcher in Britain or the speech of President Salinas in Mexico distinguishing his patriotic 'social liberalism' from the neo-liberalism which knows no national sentiment.

In all this, capital appears all-powerful. Money is the brashest, most arrogant form of capital. Its successes throughout the world have been many and obvious. And yet the dominance of money is the manifestation of capital's weakness. Bees in swarm too are the brashest, most arrogant form of bee, yet they are in swarm precisely because there is not enough honey to go around. Money dominates because production has ceased to be so attractive for capital, but ultimately it is production and only production which provides the honey: production is the sole source of capital's self-expansion. The violent restlessness of capital is the clearest indication of the inadequacy (for capital) of the existing relations of exploitation, of capital's incapacity to subordinate the power of labour on which it depends. Despite appearances, the restless movement of capital is the clearest indication of the power of the insubordination of labour. It is not the breaking of old patterns by money, not the 'reform of the state', which holds the key to the recovery of capitalist health, but the reorganisation of exploitation, the restructured subjection of the power of labour to capital; and despite all the changes in the organisation of production, and despite all the aggressive politics of capital over the last ten or fifteen years, it is not clear that capital has yet succeeded in achieving this end.

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• 1This chapter, first published in English in Capital& Class,52 (Spring 1994 ), is a modified version of an article originally published in Spanish inPerfiles Latinoamericanos, 1, FLACSO (Facultad Latinoamericana de Ciencias Sociales), Mexico City (December 1992). The theme of the issue is the Reform of the State in Latin America. Many people have provided helpful comments on the chapter: my particular thanks to Colin Barker, Werner Bonefeld, Peter Burnham and Eloina Peláez.
• 2See Dabat (1992) for a similar critique of dependency theory.
• 3On the state derivation debate and its spread, see, for example: Holloway and Picciotto (1978); Clarke (1991) (GreatBritain); Vincent (1975) (France);Perez Sainz (1981)(Spain); Criticas de la Economia Politica (1979, 1980); Sanchez Susarrey (1986) (Mexico);Archila (1980); Rojas and Moncayo (1980) (Colombia);Fausto (1987)(Brazil).
• 4The state derivation debate revived the question that Pashukanis had posed in 1923:

  why does the dominance of a class not continue to be that which it is – that is to say, the subordination in fact of one part of the population to another part? Why does it take on the form of official state domination? Or, which is the same thing, why is not the mechanism of state constraint created as the private mechanism of the dominant class? Why is it disassociated from the dominant class- taking the form of an impersonal mechanism of public authority isolated from society? (Pashukanis, 1923/1951, p. 185).

  This question eventually cost Pashukanis his life, since its implication, namely that the state is a specifically capitalist form of social relations, was incompatible with Stalin's attempt to build a statist 'socialism in one country'.

• 5It cannot be assumed, as Jessop does (1991), and as Hirsch seems to assume, at least in his later work, that the particularisation of the state is a process completed at the origins of capitalism. Such an approach inevitably leads to functionalism. For a critique of Jessop, see Holloway (1991).
• 6'There has been a tendency for Marxist analysis of the capitalist state to focus on the state, the individual state. This is perhaps a greater tendency in Marxist than in non-Marxist writing, since the Marxist emphasis on the class nature of the society makes it necessary to discuss the relation to the structure of society, and it becomes convenient to assume a correlation between the society and the classes within it and the state within that society' (Picciotto, 1985/1991, p. 217).
• 7In that sense, Barker (1978/1991, p. 208) is quite right when he criticises an article by Picciotto and myself (Holloway and Picciotto, 1977/ 1991 ), saying 'their whole article is concerned with an abstraction called "the state" whose connection with the actual states of the capitalist system is not adequately developed'.
• 8For a related discussion of this issue, see Burnham (1992).
• 9The editorial introduction to Capital& Class,43 (1991) maintains that fundamental issues of analysis and theory are raised by the globalisation of capitalism', and goes on to ask: 'must we now adopt a more "globalist" framework of analysis, or does the nation-state still provide a satisfactory framework within which we can understand capitalist development and change, and struggle for socialist objectives?' The 'fundamental issue' is surely that there is no globalisation of capitalism, and that the nation-state never provided a satisfactory framework for understanding and struggle. Important is rather that the change in the form of global nature of capitalism makes more obvious the failings of the previous analyses oriented towards the national state. As Barker puts it in a comment on an earlier draft of this chapter, 'What marks the present is that we are emerging out of a period in which the predominant theories and practices of the world's left took national arguments for granted, whether in theories of purely national reformism or in arguments for 'socialism in one country', or again in arguments for 'national-developmental-socialism'.
• 10A similar point is made by Burnham (1992, p. 12).
• 11The recomposition of labour as a class, it follows. thus involves the fundamental rejection of all forms of nationalism. of all forms of discrimination against ·foreigners', however defined. In so far as the very existence of the state is racist, an anti-racist politics must be anti-state.
• 12In the case of Britain, a dramatic example of this point is provided by 'Black Wednesday', 16 September 1992, and all the political consequences that have flowed from it.
• 13For a seminal critique of fractionalism, see Clarke (1978).
• 14Although Barker's critique of the limitations of the state derivation debate is basically correct, the conclusion he draws about the need to analyse the national states in terms of competing state-capital blocks is thus quite wrong.
• 15Protectionism is just as much an expression of the global existence of capital as free trade policies designed to attract capital.
• 16The extent to which particular states can break from these constraints in revolutionary situations would require a separate discussion. which is not attempted here.
• 17For a discussion of the relations of conflict and collaboration between national states, see Burnham (1992).
• 18It is surprising that Picciotto, in his discussion of the internationalisation of the state (1991), does not relate international state development either to the concept of capital or to a concept of crisis. This leads him to separate social and class relations. the economic and the social, and class and popular struggles.
• 19In all this there must be no functionalism. One of the problems associated with the analysis of the 'capitalist state' as though there were only one state was that it led very easily to the functionalist assumption that because the state was a capitalist state it therefore performed the functions required of it by capital. As pointed out in the account of the state derivation debate, this is already an unjustifiable conclusion at the level of 'the state', but the weakness of the functionalist argument becomes much clearer when it is borne in mind that capital is global and 'the state' is a multiplicity of national states: it cannot be assumed from the fact that the reproduction of global capital would be promoted by some political action that some state or states will achieve what is required (Picciotto, 1985/1991). It cannot be assumed that capital will always solve its crises.
• 20Many of these interconnections have been analysed in the regulationist discussion of Fordism. but since regulation theory takes the national state and not global capital as its frame of reference (cf. Clarke. 1988/1991; Hirsch, 1992), it has not succeeded in relating these issues to the mobility of capital. The orientation of regulation theory to the national state is a reflection of the fact that the national state in the post-war period probably played a more central role in the global containment of labour than at any other time; but because the national state is taken as given in regulation theory, this remains quite untheorised.
• 21Metaphors mix without shame in this section. But bees and rivers are enough.
• 22For a much more detailed account of the processes described in these paragraphs, see Bonefeld (1993), to which the present chapter owes a considerable debt. See also Bonefeld (1992).
• 23On the scale of the change in the transnational flow of capital, see Crook (1992, pp. 6-9). Among the figures which he gives to indicate the scale of the growth of the international movement of money: 'during the past decade the stock of international bank lending (i.e. cross-border lending plus domestic lending denominated in foreign currency) has risen from 4% of the OECD's GDP to 44% '; 'turnover in foreign exchange, including derivatives, is now put at roughly $900 billion each day . . . Currency trading has grown by more than a third since April 1989, when a central bank survey estimated net daily turnover at $650 billion – and that was double the previous survey's estimate for 1986'.
• 24The World Bank makes the point succinctly, pointing out 'that in a global marketplace there is a sharply-reduced tolerance for poor policies': Fidler (1993, p. v).
• 25The nature or the pressure in the case of Mexico, for example, can be inferred from the fact that the inflow of capital to Mexico in 1992 represented over 8.4% of GDP; of this between one-third and one half is short-term funding, ' "hot money" – money attempting to capture profit from interest differentials or foreign exchange market inefficiencies, and which is likely to be withdrawn as soon as the perceived risk associated with the investment increases': Fidler (1993, pp. ii, iii).
• 26This 'torrent of money' can be seen as the assertion of the tendency of the equalisation of the rate of profit. On recent trends, see Marx (1971, pp. 195-6).
• 27One implication of this development is that, paradoxically, it becomes easier to reconcile the democratic political form with the interests of capital. It is this, Cavarozzi et al. (1992) suggest, which is the key to understanding why the growth of democracy in Latin America in recent years has gone hand in hand with a growth of poverty and social inequality.