Wednesday, April 05, 2006

Grauniad Does Marxian Economics

Blimey. Here's Andrew Glynn in today's Grauniad arguing that with the vast size of the 'reserve army of labour' in rapidly industrialising China and India we might well see a huge increase in Western FDI in those countries and a concommitant "long period of investment stagnation in the industrialised countries". Glyn admits that, currently, Western based MNC investment in developing countries' is still only 3-4% of their investment at home each year', but argues that, in the near future, 'the trickle [could] turn into a flood? '[W]ith such low wage costs in China and growing numbers of skilled workers,' Glyn argues 'why should northern producers continue investing to maintain their capital stock in the north, let alone extend it?'

Such developments would 'bring intense pressure on jobs and working conditions in Britain and elsewhere' says Glyn and, indeed, the 'bargaining chips would be in the hands of capital to a degree not seen since the industrial revolution'. Glyn raises the possibility that Marx's prediction of a 'rising rate of exploitation' (and does Glyn suggest, a gradual, but sure, process of 'immiseration' of workers?*) will soon be borne out - after having been temporarily counter-acted by the contingent political necessity of (and possibility) of Keynesian labour-capital compromise during the Cold War period.

If memory serves, Glyn is rather neo-Ricardian in outlook (perhaps I'm thinking of a different Glyn(n)?). His (implied) assertion that the profits squeeze of the late 60s and 70s was driven by a strong and organised labour movement - 'a decline in the power of private ownership' - certainly seems to me to rest on neo-Ricardian assumptions. More orthodox Marxists would assert that the labour/capital struggle is not necessarily a zero-sum game and that the end of the long boom cannot be explained simply by reference the weakness of capital in relation to labour (in this case why did the profits squeeze only start to hit home in the late 60s and why were growth rates in the 1950s, at the height of the 'Keynesian consensus', so high?) In other words Glynie-boy has forgotten all that stuff about the LTV, the organic composition of capital and the Tendency for the Rate of Profit to Fall, innit.

This neo-Ricardianism seems to condition Glyn's suggestion that investment might be about to flood out of the advanced capitalist world and into the newly emerging giants of Asia. It seems unlikely to me, however, that capital is about to start flooding out of the West - which is not to say that it will not increasingly migrate. Glyn is sailing uncomfortably close to the breathless hyper-globalisation theories that were all the rage a few years ago, but are now fairly scorned and rather dated (they seem very 1990s now, like Britpop or Vic and Bob). There are many reasons why capital does not tend to have a high propensity to flee overseas (except financial capital - hot money). Key amongst these reasons is the fact that there tends to be a certain 'structural interdependence'* between state and capital - that is capitals usually grow up within a single state and become structurally intertwined with 'it's' state and also with other home grown capitals, making it quite difficult for that capital to later up-sticks and move into a new 'ecosystem', as it were, in which structures are often quite different. The Regulation School Marxists also talk about 'Social Structures of Accumulation' - which covers the same territory as 'structural interdependence' in a way. But the Regulation School also, centrally, assert that there can be different types of successful accumulation regimes and that, therefore, profitable accumulation does not necessarily require global uniformity or convergence on the same neo-liberal territory - low wages, low corporate taxation, low public spending, low inflation etc. Many capitals will actually continue to find Western European capitalism more to their liking and their convenience than low wage China for the foreseeable future (unless something changes drastically). In fact some social democratic theorists and politicians (see Colin Hay, Mark Wickham-Jones, Oskar Lafontaine, Will Hutton*) argue that profitable accumulation is compatible with a much more robust (trans-European) social democratic regime than currently prevails. I think this social democratic theory has severe limitations (see an excellent critique of Hay and Wickham-Jones here, by David Coates*), but the overall, general idea - that higher public spending, better welfare, higher corporate tax and so on is still, at the moment, compatible with capitalism - is broadly convincing.

None of this is to suggest that there's nothing in Glyn's argument. Clearly capital will increasingly migrate to Asia - though it won't flood out, and we're not on the edge of competitive collapse. Clearly, the emergence of serious global competition will frighten the shit out of Western capitalists and will be used by Western neo-liberal politicians as a big stick with which to beat the labour movement. There will be increasing struggle over the future of the welfare state. Perhaps the biggest threats, which Glyn doesn't mention, however, are the environmental and the military ones. It's clear that the planet simply cannot sustain advanced capitalist patterns of production and consumption in the USA, Europe and China and India - in fact it can't even sustain the US economy on its own as it is for very much longer. Secondly, the emergence of China as a serious contender for the status of world superpower is likely to translate into serious military rivalry between it and the USA (and Europe possibly). These two probable developments do not bode well for the future.

Sometimes I think that the question of humanity's future comes down to a rather simple calculation. Which of these two paths would kill fewer people: 1) a transition to socialism, or 2) an attempt to beef up social democracy in Europe in the hope that we're not wiped out in a global inter-imperialist bloc war and in the hope that advanced capitalism can be modified in order to make it more environmentally sustainable. Both of these paths might wipe out the human race - any transition to socialism is likely to be a bloody affair, and in the age of nuclear weapons and desperate imperial blocs it might well be a suicidal undertaking. On the other hand, a radical reformist project might not work (and even if it could be reached it could never be a finished, stable regime because it necessarily runs up against the logic of capital), might not be able to head off environmental catastrophe and might be knocked out anyway by increasing imperialist bloc tensions.

Sorry to sound so melodramatic. We're all fucked though aren't we?

* Which in fact Marx did not predict - it's a myth.
* This is Harman's term, I think.
* Actually I'm not sure about Will Hutton anymore.
* My hero - him and Eagleton. Don't tell him.

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