28.03.2013

Review: Nation-states, globalised capital and a former Marxist

Moshé Machover reviews, Nigel Harris: 'The return of cosmopolitan capital'. IB Tauris 2003, pp292, £24.50

In his book The return of cosmopolitan capital: globalisation, the state and war, economist Nigel Harris argues that the key feature of the new era of capitalist globalisation, dating from the final decades of the 20th century, is the declining economic role of the nation-state: capitalism has become (or is in the process of becoming) cosmopolitan.

This is a “return” - on a higher level, to be sure - to a much older form of a cosmopolitan capitalist market, which existed since ancient times. The two cosmopolitan epochs, old and new, of capitalism were separated by an era, lasting some five centuries, of the modern nation-state - primarily a militarised, war-making machine. This form of state, which arose first in western Europe, was eventually duplicated in the rest of the world, mainly thanks to its exportation by the great western empires of the original modern states.

The present article is not a direct critique of Harris’s book - which, by the way, I recommend for its many insights - but a presentation of an alternative view of the three epochs of the world market. Harris, a former Marxist, has lost sight of a central Marxian category, which I wish to put centre-stage. He writes a great deal about ‘capitalism’, a lax term, which Marx never used as far as I know.¹ Instead, Marx addresses the capitalist mode of production - which is not at all the same thing. The point is that Marx was concerned primarily with exposing the essence of exploitation, the extraction of surplus. And one of his most profound and valuable insights was that the source of the surplus is located not in circulation or exchange, but in production; and that relations of production underlie social structure and dynamics.

Marx was perfectly aware that capitalists, who derive profit from invested capital, existed in ancient times. So did international trade and a world market. But in those times capital was predominantly mercantile. Marx notes that a “revolution of the world market” occurred at “about the end of the 15th century”,² at the dawn of the “capitalistic era”, which dates from the 16th century.³ As it happens, this is approximately the time when, as Harris tells us, the modern state began to emerge.

So, without disputing Harris’s periodisation (as far as dates are concerned), let me survey the three eras of the world market - before the 16th century, from then on until the late 20th century, and finally the present era of new globalisation - from a Marxian perspective: focusing on the mode of extraction of the surplus. This analysis owes much to the late comrade Ken Tarbuck.⁴

1. Pre-capitalist world market

Before the capitalistic era, the profit of capitalists - mostly merchants, but including also moneylenders and proto-bankers - was derived, more or less indirectly, from exploitation of direct producers, very few of whom were wage workers. For the most part they were tribesmen and tribeswomen, free petty producers, slaves or serfs. (In the last two cases, the capitalists’ profit derived from a share of the surplus extracted by the slave owner or feudal lord.)

Note that the surplus from which a merchant’s profit derives may have been extracted at both ends of the double transaction⁵: namely, both at the original locus of purchase and at the locus of sale. This is especially true of international trade. For example, the profit from trade in silk bought in China and sold to a Roman patrician or emperor was derived from the surplus extracted both from the Chinese weavers and from Roman slaves.

Was the world market in that era capitalist? It was in Harris’s sense; but not in the Marxian sense, because the profits of trade did not derive from capitalist production.

2. Semi-capitalist world market

Things began to change with the advent of the capitalistic era, with the rapid spread of the capitalist mode of production. The world market during this second era was increasingly dominated by the capitalist countries, but it would not be entirely correct to call it a ‘capitalist’ world market. To be precise, it was semi-capitalist, because much of world trade consisted of transactions between a capitalist core and non-capitalist periphery.

Accordingly, only part of the profits of world trade derived from capitalist production. For example, the profits from textiles produced in Manchester and sold in India derived in part from exploitation of British proletarians, but in part also from exploitation of Indian peasants. The same is true, in the reverse direction, of cotton imported from Egypt to England.

Still, the capitalist core kept exporting to the periphery not only its products, but also its mode of production. The virus of capitalist relations of production spread across the world like a blot of ink on blotting paper.

This process encountered obstacles, as some countries (such as China and Japan) attempted to erect barriers to protect themselves against the change. It also suffered a great reverse, from 1917 to the early 1960s, as first the Russian empire, then eastern Europe, then China, and finally Cuba stamped out capitalist relations of production and partly withdrew from the world market.

The societies in those countries were not capitalist even according to Harris’s lax definition, as they were clearly not “dominated by commodity exchange”: neither labour-power nor means of production were commodities, and consumer goods were commodities only in a very limited and perverse sense. Instead of commodity exchange, the dominant economic mechanism was bureaucratic allocation. (There is some irony here, for Harris used to be a leading member of the International Socialists/Socialist Workers Party, whose main dogma was that those societies were ‘state capitalist’.)

3. Truly capitalist world market

With the demise of the Soviet bloc, the implosion of the Soviet Union itself, and the deliberate turn of China to what may correctly be described as state capitalism, that great reverse was in its turn reversed. At the same time, capitalist relations of production are increasingly dominant within a growing number of third world countries. This is the era of the new globalisation: the creation of a fully capitalist world market, in which virtually the entire global surplus is generated through the capitalist mode of production.

From this perspective, the new globalisation is not a ‘return’ to anything, but an entirely unprecedented novel historical moment. This is bound to have momentous consequences, as capitalist relations of production are reaching the limit of their possible geographic spread. As a matter of fact, not only geographic. For the new era of globalisation happens (?) to be also that of savage privatisation within capitalist countries. Here the Marxian perspective intersects with Harris’s: the declining economic role of the nation-state.

If early 20th century Marxists such as Rosa Luxemburg were right in arguing that the capitalist mode of accumulation needs, for its very survival, a non-capitalist periphery, then the global triumph of the capitalist mode of production is leading it towards “the death-bed whereon it must expire”: it will be “consumed with that which it was nourished by”.⁶ But even if - as is more probable - they were not entirely right, there is the following to consider. A capitalist market economy, with its blind forces and numerous feedback mechanisms, is by its very nature unstable; and the larger and deeper it is, the more unstable, especially so without the restraining hand of state regulation. Who knows? The present global crisis may perhaps prove in retrospect to have been like one of the many tremors felt, as Pliny the Younger tells us, by the inhabitants of Pompeii for several years before August 24 AD 79.

Perhaps not; but in any case we are most probably entering an era of great turbulence. Tighten your seat belts.

Notes

1. Harris defines ‘capitalist society’ as “one dominated by commodity exchange” (p10). According to this definition, the societies in ancient (1200-800 BCE) Phoenicia, in 6th century Mecca, and in most of the Arab world since the 8th century were capitalist. However, this notion is not entirely useless, as we shall see below.

2. K Marx Capital Vol 1, chapter 26, footnote.

3. “Although we come across the first beginnings of capitalist production as early as the 14th or 15th century, sporadically, in certain towns of the Mediterranean, the capitalistic era dates from the 16th century.” Ibid (main text).

4. See ‘Marxism in the new age: towards the 21st century’ New Interventions Vol 3 No3, 1992: www.whatnextjournal.co.uk/pages/newint/Tarbuck2.html.

5. Represented schematically by Marx as M-C-M?.

6. W Shakespeare, sonnet 73: www.shakespeare-online.com/sonnets/73detail.html.