Globalisation Unmasked
Petras and Veltmeyer
G-globalisation
Chapter 1- Globalisation or Imperialism?
Posing the Problem
As a description, globalisation refers to the widening and deepening of the
international flows of trade, capital, technology, and info within a single integrated
global market. It identifies a complex of changes produced by the dynamics of
capitalist development as well as the diffusion of values and cultural practices
associated with this development. As a prescription, however, G involves
liberalisation of national and global markets in the belief that free flows of trade
capital etc will produce the best outcome for growth and human welfare.
The authors describe a divide they believe exists in the perspectives on globalisation.
On one hand are those who view globalisation as a set of interrelated processes, and
see it as inevitable, something to which necessary adjustments can and should be
made. On the other hand are those who view G as a class project rather than an
inevitable process. This camp prefers to use another term for G: imperialism.
World Capitalism Today
Certain features of the system in place ( v v brief history of capitalism from the 1890s
to the 70s crisis):
1. The concentration of capital in the 1870s led to a system-wide crisis, resulting in the
growth of financialisation, corporate monopolies, the export of capital etc.
2. The fordist regime led to a system of mass production of uniform goods.
3. State-led economic reforms between the two World Wars created political
conditions for the Keynesian welfare state: the social redistribution of market
generated income, social programs for health, edu etc., full employment.
4. In the post WWII context, the US became the hegemon in the world economy, the
Bretton Woods accord resolved to impose a liberal world economic order, and the
Golden Age of capitalism was achieved. Countries in the global south were
incorporated into the development process.
By the end of the 60s, this system began to fall apart, with conditions of stagnant
production, declining productivity, intensifying class conflict. Some strategic
responses include (what happ after the 70s):
1. Efforts of the US admin to offset world market pressures on its production apparatus
in many ways e.g. moving towards floating exchange rates.
2. Relocation by TNCs of their labour-intensive industrial operations in the search for
cheaper labour.
3. The internationalisation of capital.
4. The creation and growth of an integrated production system based on a new intl
division of labour, the global operations and strategies of TNCs, a new enabling
policy framework and new tech.
5. The adoption of a new, flexible production method based on a post-Fordist regime of
capital and labour.
6. Capitalists launched an attack on labour in terms of its wages and conditions, and its
ability to unionise and negotiate.
7. New World Order- founding of the IMF and WTO, institutional intl framework for
free intl trade.
8. The restructuring of the capitalist state to serve the imperial project
The Economic Benefits of Globalisation and their Distribution
It is widely recognised that market-friendly developments associated with G have
exacerbated existing inequalities or generated new ones. Social inequalities are also
on the rise.
The WB and IMF have acknowledged that a large number of countries have actually
regressed in terms of their developments to levels achieved in the 80s, or even 70s.
In some parts of South Africa, for e.g., per capita income has fallen by 25% since
1987.
These growing inequalities are taken to be the short-term costs of the market-led
growth process by G advocates who have argued that these gaps can be closed with
correct policies and time. The problem is that G advocates believe that the rise in
average global incomes means that the poor are better off, when in fact the poor do
not have access to income-generating productive resources.
The Q of Governance
G advocates have also argued that the growth of free markets is followed by a
democratisation of institutions. There has on one hand been a loss of control by local
authorities over fund allocation, macroeconomic policy design etc, but on the other,
a shift away from military regimes towards civilian ones formed within liberal
democratic frameworks.
The latter trend has been pervasive enough to form a link between economic and
politic forms of liberalisation, forming the new ideology that political liberalisation is
either the necessary precondition or inevitable result of market reforms. Now
powerful players like the US or the IMF have appointed themselves guardians of
democracy and require democracy as a precondition for aid, or loans.
Labour in the World Economy
On one hand a huge global labour force has been created, and on the other, labour
supply is much higher than its demand. Tech change has worsened the latter.
Chapter 3- Globalisation as Ideology: Economic and Political Dimensions
Systematic analysis of the composition of the international economy conclusively
demonstrates that U.S. multinational corporations are far and away the dominant
force and becoming more so over time. The authors argue that globalisation is just a
codeword for US imperialism.
US Corporate dominance can also be clearly seen, with the top 500 firms in the
world having 244 from the US, and only 176 from all of Europe combined.
The emerging market economies of Asia are a myth: only 5% of the top 500
countries in the world are from Lain America, Asia, Africa and the Middle East
combined, and when many Asian economies faced economic crises in the 90s, their
companies were taken over by American or European ones. While Asian markets
were seen as potential allies for US initially, in the post-Communist period, Asia is
seen as a competitor and all preferential economic policies have been rolled back.
Comparative Advantages of US corporations include:
1. Corporate lobbying is very strong in US, and corporations have undisputed control
over both the Democrats and the Republicans.
2. There is no serious left political threat, since there are only two parties. Trade unions
cover only 10% of the private labour force. All these factors combine to mean that
US corporations face very little political resistance, and have been able to
accumulate capital and expand overseas easily.
3. The US has the lowest corporate tax rates of any industrialised country, and the
highest percentage of workers without health coverage. These factors provide
corporations with higher profits.
4. The U.S. Treasury Department can finance the nation’s huge current account deficits
by issuing dollars—the major currency of exchange in world markets. No capitalist
competitor has this privileged ability to finance its negative balances.
5. Officials from the US hold powerful positions in international corporations like the
IMF and WB, which allows them to enforce policies that benefit the US.
Across the world, US officials in the IMF and WB decide policies such as govt
spending levels, property relations, development strategies etc. The political power
of these external representatives of corporate power alters the nature of electoral
political systems, becoming increasingly authoritarian. the routine threats of capital
flight by TNCs to undercut social reforms, and the amplifications of those threats by
political executives, are a form of blackmail that denies voters and legislatures the
ability to discuss and pass laws.
Neo-authoritarianism is a hybrid system that combines elite decision making and
electoral processes, elected legislators and non-elected corporate decision-makers
and electoral campaigns and decrees, undermining the notion of a civic culture. In
according to a written or unwritten constitution. Substantive citizenship refers to the
this context, formal citizenship refers to the legal attributes attached to a citizen
capacity of individuals to exercise those powers in actual debate and in the
resolution of political issues. Today, citizens are systematically denied the right to
address and vote on the most profound and substantive issues that affect their lives,
including state spending, taxation, privatization, austerity programs, and subsidies
for TNCs.
Chapter 6- Democracy and Capitalism: An Uneasy Relationship
There are theorists who believe capitalism and democracy are in contradiction, and
that a compromise between the 2 would lead to a tenuous equilibrium where the
forces of democracy must be constantly vigilant against a tendency towards
authoritarianism. Conversely, there are those who argue that capitalism and
democracy go hand in hand, that free markets and free elections are mutually
enforcing processes. According to this thought, free markets foster individualism,
free choice, and social pluralism.
There is also a third school of thought, which emerged in the latter half of the 20 th
century. Proponents argue that social agreement on the rules of political
competition (political consensus) guarantees that competing forces will accept the
outcomes of electoral and other democratic processes on the assumption that the
same rules will enable incumbents to retain power and the opposition to eventually
attain power. Offer argues that the contradiction between capitalism and democracy
was resolved with the emergence of mass political parties, the Keynesian welfare
state, and inter party competition.
A problem with the view that the two are incompatible is having to explain the
introduction and support of democratic regimes by capitalist politicians, for e.g. the
promotion of democracy in Latin America, Asia, and Africa. While supporters of the
incompatibility view might argue this was opportunistic or procedural, it calls into
question the 'inherent' contradiction that they try to point out.
Similarly, the supporters of the hand-in-hand view have a problem accounting for
the huge number of historical examples illustrating the origins of capitalism had
nothing to do with democracy. The conquest and enslavement of millions for the
early development of capitalism shows no necessary link between capitalism and
democracy, as do the more recent military dictatorships in Chile, Indonesia,
Argentina etc for market reforms. The 'lag' theory that some offer as an explanation
fails to explain the reverting of advanced capitalist countries like Germany in the
1930s or Turkey in the 80s to authoritarian rule.
While on this score the third school might have better explained the set of
prerequisites for democracy independent of ideological considerations, their
'democratic rules of the game' argument has a serious flaw, that of being
tautological. Also, the general statement about the importance of procedural rules in
sustaining democracy overlooks the manner in which these same procedures have
been applied, revised and redefined in different historical contexts to sustain
incumbents and their class cohorts in power.
An Instrumental View of Capitalism
The authors propose that instead of looking at democracy as an end in itself, it
should be looked at as an unfinished process, as a condition contingent on the
perpetuation of a regime of property, power, and privilege. Capitalists themselves
tend to have an instrumental view of democracy in which its virtues or defects are
defined in terms of property interests. When a democratic state is governed by the
capitalist class or, operated in its interests, democracy is viewed as a “good in itself.”
However, when it provides a platform for transforming social relations and property
rights, the tendency is to view it as a “luxury,” as expendable and properly replaced
by an authoritarian system better able to protect the relations and perquisites of
property.
The primacy of capitalist property relations and hegemonic interests over democracy
is thus the real meaning of the term “capitalist democracy.” Thus there are limits on
democracy even within the most “advanced” state committed to democracy as an
end in itself. This unwritten “law” can be illustrated by reference to numerous
historical experiences in Europe, North America and the Third World.
[this chapter goes on to describe experiences across countries and time to prove the
instrumental view of capitalism. All those examples are brief historical reviews, and making
notes of them would mean copy pasting all of it, so I'm not doing that, especially since this
book isn't that important. I don't think we need to do these examples, nobody will ask Qs
about what happ in Guyana in 1951 or Finland in 1918, but if anybody wants to read them,
pls read pages 111-119 in chapter 6]
Chapter 9- The US Empire and Narco-Capitalism
Throughout history, invaders and colonisers have attempted to give moral
justifications to their exploitations, like the white man's burden. In the 20 th century,
US military interventions were justified as 'defending order and stability and
protecting American citizens', and after the Cold War, interventions were to do away
with the Red Menace. Now, the US has turned towards the 'narcotic threat' to justify
its interventions in Latin America.
The “fight against narco-trafficking” has served Washington’s empire-building
purposes. First, it has disguised Washington’s repressive and exploitative policies
behind a high moral purpose, and thus domestic public opinion has been neutralized.
Second, the fight against narco-traffickers has allowed Washington to penetrate the
internal security forces of Latin America and establish its own political agenda. Third,
the “narco-traffic war” has allowed Washington to have direct access to the society
in order to push its economic and counter-insurgency agenda.
The US and New Colonialism
Latin American military forces are under US command, with US ambassadors and
State Deptt officials dictating which officials are 'acceptable' and which ones should
be dismissed. The strengthening of U.S. control over Latin American internal security
affairs is paralleled by Washington’s pressure on Latin governments to strengthen
their repressive internal police and military forces.
The New Imperialism is not “neocolonial” in form; it is direct executive control
exercised through a routine command structure via Latin American executive
officials evaluated according to U.S. criteria of responsibility and effectiveness.
There is very little resistance to this New Imperialism, especially in the higher circles.
Most of the opposition comes from the countryside, from the Zapatistas in Mexico,
the Landless Workers Movement in Brazil etc. The most significant opposition has
come from the Revolutionary Armed Forces of Columbia (FARC), which has made the
US focus its drug campaign in Colombia.
The expansion of the new peasant movements is centred on economic, cultural and
social dynamics that have transformed “isolated peasants” into a cohesive, class-
conscious and revolutionary force.
