Globalisation and the State. posted by Richard Seymour

‘The rise of the modern state over the past four centuries has been halted. In the twenty-first century we will witness only its decline.’ Discuss. There are notes attached below, but no bibliography. I can answer questions about that in the comments boxes if anyone has any.

Escaping the state?
The modern state is alleged to be experiencing a terminal crisis about which it can do little or nothing. Theorists of ‘globalisation’(1) (Harris, 1995; 2002), ‘postmodernity’ and ‘Empire’ (Hardt & Negri, 2000) argue that the nation-state is being outrun by changes in the world economy, which include: the drastic expansion in world trade since 1970; the increasing ability of capital to move operations off-shore; the freer movement of labour due to cheap air travel - in short, mobility. Capital, as Marx predicted(2) , has battered down all walls, Chinese walls included. According to Nigel Harris:

“Global integration is making the movement of commodities, of finance and of workers, greater and greater … movement increases faster than output. The world economy, it seems, has by now passed the point of no return, and we are set upon the road to a single integrated global economy, regardless of the wishes of governments and citizens. Indeed, any efforts to reverse the process, spell catastrophe.”(3)

Against this, I intend to argue that the changes in the world economy have been misunderstood; the capacity of capital for increased mobility has been over-stated; and the state’s relationship to capitalism has been misconstrued. I will also challenge the categories which I think have facilitated these errors. The modern state is not leaving us - it is merely changing its mode of operation.

What is the Modern State?
Discussion of this question has been defined by two poles of opinion: those who take a broadly Weberian view of the state, and those more inclined to a Marxian view. Max Weber defined the modern state in the following famous words:

“[A] state is a human community that (successfully) claims the monopoly of the legitimate use of physical force within a given territory.”(4)

He adds that the state also needs legitimacy, which can take three basic forms: traditional, charismatic and legal, the latter reflecting the more rationalised form of rule typical in modern states. This definition reflects Weber’s commitment to methodological individualism. He specifically opposes it to functionalist(5) explanations in the following words:

“Sociologically, the state cannot be defined in terms of its ends … Ultimately, one can define the modern state sociologically only in terms of the specific means peculiar to it.”(6)

Marx & Engels, by contrast, defined the state in terms of both its means and its ends. They took an ‘instrumentalist’(7) view of the state in which the “executive of the state is but a committee for managing the common affairs of the bourgeoisie”(8) , and a

“…public power which no longer directly coincides with the population organising itself as an armed force. This special public power is necessary because a self-acting armed organisation of the population has become impossible since the split into classes ... This public power exists in every state; it consists not merely of armed men, but also of material adjuncts prisons, and institutions of coercion of all kinds….”(9)

In the former explanation, the state is a semi-autonomous body claiming authority over a specific territory; in the latter, it is a ‘public power’ that emerges as a result of class division. Both of these explanations have been refined and drawn out by adherents of the respective theories. The Italian Marxist Antonio Gramsci, for instance, argues that the state is not merely a separate public power operating on behalf of the bourgeoisie, but rather is governed at any one time by a ‘power bloc’ whose objective is to win ‘civil hegemony’ to legitimise their rule. (Gamble, Marsh & Kent, 1999). These power blocs allied fractions of different classes together, (a classic example of this would be the Glorious Revolution of 1688 which welded what Perry Anderson called “a supine bourgeoisie”(10) with the feudal aristocracy).(11) The Weberian literature on the state has been varied, but certain themes remain intact, especially the emphasis on politico-military power, which is seen as autonomous rather than an adjunct of class rule.(12)

If the modern territorial state is conceived of as a contingent answer to the needs of an emergent capitalist economy which requires rationalisation and the standardisation of weights, measures, currency and language, then it may well become irrelevant if the capitalist economy becomes so transformed as to require new structures.(13) If, on the other hand, the state is seen as the outcome of class division, it follows that the state will be relevant in some form as long as class divisions remain. In particular, if the modern state is conceived of as a capitalist state, it is unlikely to be superseded as long as the capitalist mode of production remains intact. In what follows, I will try to assess the claims for globalisation in light of this discussion.

The Claims for Globalisation
Before going any further, I want to outline some of the key processes which theorists of globalisation suggest are undermining the modern state, for good or ill. As I suggested before, they rotate around the notion of mobility. But not merely of labour, capital and goods – also of values, culture, gustatory choices, religion and sumptuary proclivities (albeit that these could be seen as a certain type of good). The increasing availability of cheap air transport, for instance, makes it easier for people to move across the planet and seek work opportunities. The management of this process is one which nation-states are finding increasingly difficult and politically contentious. The production and distribution of illicit drugs is so vast that national and even international police institutions have found it impossible to prevent.(14) Simultaneously, technological developments – especially the internet – have caused a ‘globalization’ of culture, in which a Baghdad blogger may communicate his thoughts with a Texan rancher.

There has been a dramatic increase in the level of global trade since the collapse of the Bretton Woods system in the early 1970s, growing by an annual rate of 6% in the 1990s.(15) Between 1970 and 1997, world trade increased sevenfold to account for $400 billion. From 1973 to 1998, the daily turnover in foreign exchange markets rose from $15 billion to $1.5 trillion.(16) The collapse of the ‘tiger economies’ in South East Asia during the last quarter of 1997 is often cited as an example of what can happen with such vast and (it is argued) uncontrollable flows of financial capital, but Brenner (2002) points out that the same processes were at work in America during the same period.(17) Cross-border mergers and acquisitions increased from 42% of Foreign Direct Investment (FDI) in 1992 to 59% in 1997.(18) This increasing global integration of capital has been seen by some as representing a fundamental break in capitalism, in which “both ‘industry’ and ‘finance’ have been internationalized but with separate and uncoordinated circuits. This has then massively weakened the individual nation-state” leaving it “unable to regulate or orchestrate its national currency”.(19)

With these underlying processes have come decisions by states to cede control over certain aspects of national economies. India reduced its tariffs from 82% in 1990 to 30% in 1997, while Brazil cut 25% to 12% in the same period.(20) The decision by Chancellor Gordon Brown to make the Bank of England independent was a precondition for joining the European single currency, while those that have already joined have been obliged to accept strict stipulations about public spending and stability in line with prescriptions associated with neoliberal economics.(21) There has been a tendency to reduce the state’s involvement in the economy through the privatisation of national industries.(22) Similarly, states have delegated power upwards to economic institutions like the World Trade Organisation, the International Monetary Fund and the World Bank.(23) The UN is a global political body in which nation-states formally cede control of many issues which infringe on national sovereignty to its agencies.

From all of this, the argument appears to suggest itself: capital, finance, labour, culture and politics are increasingly global, to the extent that the nation-state can no longer properly contain them. Its territorial control is threatened by what Hardt and Negri call the “deterritorializing apparatus” of capital, and “information networks” which “release production from territorial constraints insofar as they tend to put the producer in direct contact with the consumer regardless of the distance between them”. Production is said to be increasingly decentralised and dispersed across the globe.(24) These processes, over the long term, are eroding the nation-state and will, at the very least, halt its long ascendancy.

Multinational capital and the nation state
In the lexicon of postmodernity(25), the term ‘decentred’ figures prominently. Not only the subject, but now also capital, is decentred. The global integration of capital and its increasing mobility means that a transnational like Nike may outsource production of its trainers to Vietnam and sell them across the world at inflated prices. At the same time, information networks(26), just-on-time delivery systems and low-cost transport allow for greater fluidity of capital and goods. The increasing mobility of capital and finance is a fact of life. But the internationalisation of capital is not a new process – it has been a feature of capitalism since its early mercantile phase (Braudel, 1981). It was particularly pronounced in the period before 1914. As sociologist Michael Mann points out:

“Domestic saving and investment still correlate about 75 percent among OECD countries, indicating that foreign capital is not all that internationally mobile... And the differences in real interest rates between countries are about the same as they were a century ago. Indeed, it is doubtful whether, in many respects, capital is more transnational than it was before 1914, except in the special case of the European Union.”(27)

Figures in Hirst & Thompson (1996) show that direct investment in the period 1992-3 specifically privileged ‘home’ nations.(28) And although it is true that between 1970 and 1997, the level of world trade rose to $400 billion, it is also true that 60% of this went to OECD states.(29) Hirst & Thompson (1999) similarly point out that profits to multinational companies (MNCs) are based largely in the ‘home’ regions, while sales and assets are overwhelmingly based in home countries.(30) Flows of FDI to developing countries are highly concentrated, as well, with the bulk of it going to the NICs in Asia and Latin America, while Eastern Europe, the Middle East and Africa are largely excluded. Gill (2003) notes that the US, EU and Japan each have 12% or less of their GDP composed of exports.(31) This surely suggests that a) globalisation is neither as truly global, nor as ‘decentred’ as some suggest and b) capital is not as mobile as is often suggested either.

There are reasons for this. Research by Ruigrok & Tulder shows that of the Fortune 100 top companies, at least twenty would not exist had it not been for their being saved by their respective ‘home’ states, while many had benefited enormously from “preferential defence contracts” and so on.(32) Further, as Wood (2003) points out, citing the research of Alan Rutger, “Scrutiny of corporate operations is likely to reveal that ‘multinational enterprises are not particularly good at managing their international operations’, and that profits tend to be lower, while costs are higher, than in domestic operations”. Similarly, it is true that states are submitting themselves to the growing authority of supraterritorial institutions like the WTO, but the state “still provides the indispensable conditions of accumulation for global capital”. One “can imagine capital continuing its daily operations if the WTO were destroyed” but “it is inconceivable that those operations would long survive the destruction of the local state”.(33) Examples are not hard to come by: Nike could not continue to profit from cheap labour operations in Vietnam were it not for the government proactively creating the conditions in which capital can thrive. Castells is right to suggest that states themselves “created the foundations for globalization”.(34)

But if capital has not been as omnicompetent and mobile as globalisation theorists sometimes maintain, neither has the state entirely lost its control over the movement of labour. Nigel Harris (2002) reports that the US and the EU in particular have moved to severely increase the costs and decrease the rewards of migration outside of legally managed channels – with some (often tragic) success. Cultural transmission is much easier now than ever before, but this does not necessarily lend itself to an undoing of the nation-state. As Gill (2003) points out, the fear of cultural homogeneity can prompt attachment to the nation-state or to a local culture.(35) Nation-states have ceded political as well as economic authority to supranational institutions, true, but all of these were founded at the behest of nation-states and are maintained by them. (In a touching irony, the United Nations was founded in San Francisco, its formation principally driven by the US).(36) NGOs have some clout but, as David Chandler points out, they have increasingly relied on states for funding and co-operation.(37)

Conclusion
I think it is useful to dispense with the term ‘globalization’. Given what has been said, it can be seen as an obfuscatory device with little real referent.(38) ‘Globalization’ is used to refer to different, incommensurable processes which run parallel to one another, but not strictly as part of the same movement. For instance, there is no obvious correlation between the freer movement of capital and that of labour. At the same time, it is often alleged that the state is finding its powers encroached on: but while many relinquish certain social welfare functions, most are accruing to themselves greater authority of governance over non-economic life, a process with only tenuous connections to the internationalisation of capital. ‘Globalization’, in falsely bundling together these different processes, is a fiction, an ideological construct. What Milanovic is complaining about is an economic orthodoxy, generally known as neoliberalism. If he said that globalization was making the poor worse off, while someone else said that it enabled one to communicate with many people of different faiths and backgrounds, they would not be disagreeing because they are speaking of different things.

The processes which are said to be undermining the nation-state have been exaggerated and misconstrued. And where there are tendencies which could potentially undermine the authority of the nation-state, demanding a more local or global polity, there are simultaneous processes which are reinforcing its hold from within and without. The relationship between state and capital, it seems to me, conforms more fully to the Marxist understanding of the state than the Weberian one. In that understanding, the modern state is a capitalist state which, given present indications, is likely to persist as the axis of political and economic activity for some time.

Notes.
1. In fact, Harris prepared this thesis while still a revolutionary Marxist and long before such theories were in vogue. See Nigel Harris, The End of the Third World: Newly Industrialising Countries and the Decline of an Ideology, Penguin, 1986.
2. See the famous passage from The Communist Manifesto:
“The need for a constantly expanding market chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere.
“The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. All old established national industries have been destroyed or daily are being destroyed. They are dislodged by new industries...that no longer work up indigenous raw materials, but raw materials drawn from the remotest zones, industries whose products are consumed not at home, but in every quarter in the globe... In place of the old local and national seclusion we have intercourse in every direction, universal interdependence of nations.”
3. Nigel Harris, The New Untouchables, 1995, (p 226).
4. Weber, Essays in Sociology, H H Gerth & C Wright Mills ed., (p 78).
5. For a functionalist explanation of the modern state, see Ellen Meiksins Wood’s account in Empire of Capital, London, 2003: “Capitalism is, by nature, an anarchic system, in which the laws of the market constantly threaten to disrupt the social order. Yet probably more than any other social form, capitalism needs stability and predictability in its social arrangements. The nation state has provided that stability and predictability by supplying an elaborate legal and institutional framework, backed up by coercive force, to sustain the property relations of capitalism, its complex contractual apparatus and its intricate financial transactions”. (pp16-7). And elsewhere: “On the one hand, the state must help to keep alive a propertyless population which has no other means of survival when work is unavailable, maintaining a ‘reserve army’ of workers through the inevitable cyclical declines in the demand for labour. On the other hand, the state must ensure that escape routes are closed and that means for survival other than wage labour for capital are not so readily available as to liberate the propertyless from the compulsion to sell their labour power when they are needed by capital.” (p. 18).
6. Ibid, pp 77-8.
7. Ralph Miliband’s The State in Capitalist Society (1969) is an account of the state which is faithful to this model; the personnel occupying administrative positions are considered to be drawn from, or the servants of, the capitalist class. The capitalist class does not itself govern, Miliband approvingly quotes Karl Kautsky as saying, “it contents itself with ruling the government” (p. 51).
8. Karl Marx & Friederich Engels, The Communist Manifesto, (p 82).
9. Friedrich Engels, The Origins of the Family, Private Property & The State, 1884, quoted in Colin Barker, ‘The State as Capital’, International Socialism 2:1, Summer 1978.
10. Perry Anderson, The Origins of the Present Crisis, 1965
11. Bertell Ollman tacitly acknowledges these refinements in summarising Marx’s position thus:
“In capitalism, the state is an instrument in the hands of the capitalists that is used to repress dangerous dissent and to help expand surplus value … Marx also views the state as a set of political structures interlocked with the economic structures of capitalism whose requirements … it must satisfy, if the whole system is not to go into a tailspin. And, finally, the state is an arena for class struggle where class and class contend for political advantage in an unfair fight that finds the capitalists holding all the most powerful weapons.” (Bertell Ollman, Theses on the Capitalist State, http://www.nyu.edu/projects/ollman/docs/theses.php).
From being an ‘instrument in the hands of the capitalists’, the state moves to being ‘an arena for class struggle’ where class and class contend for hegemony, albeit in an unfair right.
12. For a Marxist discussion of this debate, see Alex Callinicos, Theories and Narratives: Reflections on the Philosophy of History, Cambridge, 1995, (pp 110-28). It should be noted that while their respective positions were often subsumed into a theoretical Cold War, the Marx-Weber debate involved a great deal of cross-fertilisation. The political scientist Christopher Brooke describes Perry Anderson’s Lineages of the Absolutist State, accurately I think, as “an exercise in Weberian comparative macrosociology”, albeit one that is carefully integrated into a Marxist heuristic (http://voiceoftheturtle.org/show_article.php?aid=131).
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14. According to the United Nations Drug Control Programme, “More than 300 tonnes of heroin are thought to have been produced annually in the 1990s, mostly for export”, while “In recent years, illicit drug consumption has increased throughout the world. Various indicators -emergency room visits, substance abuse related mortality cases, arrests of drug abusers, number of countries reporting rising consumption levels -make clear that consumption has become a truly global phenomenon.” They attribute this to the increase in global trade. "Despite the positive implications which the increase in world trade has for prosperity and efficiency, sustained growth in international trade can complicate efforts to control the illicit drug problem." See United Nations, World Drug Report, 1997, pages 17, 18 & 29. (http://www.un.org/ga/20special/wdr/wdr.htm).
15. Wayne Ellwood, The No Nonsense Guide to Globalization, London, 2001, (p. 16).
16. Fred Halliday, The World at 2000, New York, 2001, (p. 61).
17. Private purchases of US assets increased from $375.5 billion in 1996 to $669.15 billion in 2000. By the first half of 2000, gross US assets held by the rest of the world reached $6.7 trillion or 78% of US GDP. Robert Brenner, The Boom and the Bubble: The US in the World Economy, New York, 2002, (pp 208-9).
18. Ellwood, op cit, (p.58).
19. Scott Lash & John Urry, The End of Organised Capitalism, Cambridge, 1987, cited in Alex Callinicos, Against Postmodernism: A Marxist Critique, 1989, (p. 136).
20. Ibid, (p. 33).
21. The fact that many European states have not themselves adhered to these restrictions is suggestive, but David Held avers in respect of the EU that “sovereignty is … clearly divided: any conception of sovereignty which assumes that it is an indivisible, illimitable, exclusive and perpetual form of public power – embodied within an individual state – is defunct”. Held, Democracy and the Global Order: From the Modern State to Cosmopolitan Governance, 1995, (p. 112).
22. The economist Edward Luttwak explains that each privatisation of an industry in one national economy pressure other state to follow suit, “forcing the pace of decontrol” internationally. Luttwak, Turbo Capitalism: Winners and Losers in the Global Economy, Orion Business Books, London, 1998.
23. David Held notes that accepting the intervention of the IMF may not represent an immediate threat to sovereignty, but it “is often the result of recognition that there is minimal scope for independent national economic policies”, while conditions attached to assistance from the World Bank “have been insisted upon by the ‘dominant coalition’ of advanced industrial countries which effectively control World Bank policy”. Held, 1995, op cit., (pp. 110-1).
24. Michael Hardt and Antonio Negri, Empire, Harvard, 2000, (p xii, pp. 296-7).
25. This is another category that needs challenging, although I have not the space to do it here. See, in particular, Callinicos, 1989, op cit. and also Perry Anderson, The Origins of Postmodernity, London, 1998. Callinicos accurately traces the overlapping economic, philosophical and political tropes which have been associated with postmodernism, debunking what he calls ‘the myths of postindustrialism’, critically engaging poststructuralism, and noting that those literary and artistic devices often associated with postmodernity are in fact distinctly modern. Anderson traces the genesis of the concept to a ‘conservative reflux’ within literature which met the challenge of modernism’s powerful lyricism with its own perfectionism of detail and the use of irony. Its development into a theory of epochal change is also noted for its inconsistency and inadequacy. My suggestion is that the notion of postmodernity is of little use in assessing the prospects for the modern state.
26. On this, see Manuel Castells, The Rise of the Network Society: The Information Age, Volume I, Oxford, 2000. In particular, his analysis of ‘informational capitalism’ in which multinational corporations are increasingly decentralised into ‘interlocking networks’, in which power is exercised ‘randomly’ rather than dominatively in hierarchical structures. (pp. 208, 210).
27. Michael Mann, ‘As the twentieth century ages’, New Left Review 214, 1995
28. The following table, constructed from those figures, appears in Chris Harman, ‘Globalisation: A Critique of the New Orthodoxy’, International Socialism, 2:73:

PERCENTAGE OF BUSINESS FOR MULTINATIONALS IN HOME COUNTRY

manf'g service manf'g service
sales sales assets assets
US 64 75 70 74
Japan 75 77 97 92
Germany 48 65 n/a n/a
France 45 69 55 50
UK 36 61 39 61

29. Fred Halliday, op cit, (p. 66).
30. Paul Hirst & Grahame Thompson, Globalisation in Question, 2nd Edition, Cambridge, 1999, (pp. 82-3).
31. Graeme Gill, The Nature and Development of the Modern State, London, 2003 (p. 241).
32. Cited in Chris Harman, ‘Analysing Imperialism’, International Socialism, 2:99, Summer 2003 (p. 43).
33. Wood, op cit, (pp. 139-40). Gill also remarks that “The forces of globalization themselves rely directly upon the state for their ability to function. Markets, NGOs, media companies and all the other institutions that propel globalization need to have some guarantees that they will not be subject to criminal or terrorist attack”. (p. 248).
34. Castells, op cit, (p.147).
35. Gill, op cit, (pp. 239, 246). Slavoj Zizek deserves mention in connection with this, for suggesting that the preservation and encouragement of discrete local cultural nuances is always-already inscribed into the internationalisation of capital, not merely as a means of creating new market niches, but also of reducing difference to harmless cultural twists which can easily be absorbed by multinational capital. (One thinks of the HSBC campaigns in which it advertises itself as ‘the local bank’ because of its understanding of local cultural nuances etc).
36. Peter Gowan, ‘US:UN’, New Left Review 24, Second Series, November/December 2003. The recent war on Iraq certainly demonstrated that nation-states could, as always, simply ignore the UN, which is even weaker than the League of Nations (that at least had its own army). But this is because the UN is composed of nation states of varying strengths, in which none can match the power of the US. The UN should be understood as a means by which states regulate their dealings with other states; international law is a process and not a monument.
37. David Chandler, From Kosovo to Kabul: Human Rights and International Intervention, London, 2002.
38. Gill suggests that “globalization is dialectical, not unilinear, promoting opposing tendencies: integration and fragmentation, universalism and particularism, homogenisation and differentiation”. Gill, op cit, (p. 246). My assessment above is a malign twist on this.