His initial focus is on iconic global commodities—T-shirts, iPhones and coffee—and Smith emphasises the disparity between the wages of those producing values and the retail prices and profits in the advanced importing countries. Smith argues, therefore, that value produced in the South is disproportionately captured as profit in the North. Meanwhile, the horrors of globalisation, including environmental devastation and the deaths of workers in unsafe factories and dormitories, are concentrated in the Global South.
Smith argues that the scale of transnationalised production is understated by foreign direct investment FDI data since transnational corporations TNCs increasingly organise global production chains via arms-length relations with independent Southern firms, rather than investing directly in overseas production. These relations have grown dramatically in recent decades: export processing zones, home to much Southern manufacturing, now exist in over countries and in there were million industrial workers living in the Global South compared to million in the imperialist countries p The share of wages in national income is falling everywhere more rapidly than official figures indicate since, as Smith points out, the stratospheric pay packages, bonuses and stock options of employers and managers are included as income to labour.
But for Smith the low wages of workers in the Global South are at the heart of imperialism. Global labour arbitrage involves the shift of production to low-wage economies, where it is reinforced by factors such as repressive labour regimes and huge flows of female workers and workers from the countryside into factories. The value of labour power is the socially necessary labour time required to produce and reproduce that labour power.
He presents these events as part of the same historical process, the ruination of US supremacy and its ideological support, "small government". In the main, the book effectively offers the general reader an introduction to the complexities surrounding these events, which stretch over decades. It is divided into two basic sections titled "Finance Humbled" and "Empire Confined", which telegraph their contents.
Callinicos is very good at summarising and explaining the growth of what is commonly referred to as "financialisation", the latest form of imperialist capital, which has dominated our world for the last few decades and which created the subprime loans-instigated global disaster. But by the mids, finance and industrial capital in the imperialist heartlands began to relatively separate again, or at least mark out distinctive arenas of operations, because the major corporations effectively did not need to borrow. In the USA, where wages have been effectively frozen since , productivity and profitability have soared, allowing major companies like General Motors to finance their operations through retained revenue.
They not only did not have to go to the banks, their finance arms became banks. Each carved out different parts of the growing pie of speculative wealth.go
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At least these banks have some semblance of state regulation, whereas hedge funds operate within the pores of society, roaming the globe like locusts, exploiting whatever opportunity comes their way no matter the social cost. Of course, bonuses have become the norm for the elite in this financial universe that floats free of connection with real production.
While scarcely connected to real production, this financialised capital has preyed upon the working class nonetheless. Working-class households have been drawn into the insecure world of speculation. While capitalists will shamelessly declare bankruptcy to escape debt, workers are not so footloose or fancy free. We are tied to our jobs, families and communities, we do not have an army of high-priced lawyers at our figure tips -- so we are prime candidates for milking by the finance sector. The key was to open up areas of private life to financialisation through the deliberate creation of insecurity.
Millions of families in the advanced countries can only survive through credit card debt.
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This mirror-world logic was the background of the now infamous subprime loans. The loans, foisted on the poorest of the poor, were profitable only because they were the raw material for the construction of "collateralised debt obligations" —- the fraudulent speculative commodities marketed by the biggest banking firms in the world. To explain the inherent instability of financialised capitalism, Callinicos demonstrates his notable capacity to read and summarise theory by digging into ideas from the Marxist David Harvey, the Keynesian Hyman Minsky and the godfather of neoliberalism F.
Of course, von Hayek was revolted by the thought that the state should do anything to stop crashes; that should be left to his beloved price signals! Minsky was an acute reader of the instability of financial markets, providing many useful insights. Callinicos shows, however, that his ideas stopped short of linking finance and the broader capitalist economy perhaps that would have been a step too far for the child of Menshevik refugees.
Minsky and von Hayek both saw financial crises as dysfunctions of markets. Thus, in agreement with Harvey and Marx , Callinicos argues that our current economic crises are not unusual or extreme events, but are built into how capitalism is constructed and operates. Crisis is as natural to capitalism as crushing the savannah grass is to a herd of elephants. Callinicos discerns three corresponding processes behind the present disaster: a fundamental crisis of capital overaccumulation, with its consequent tendency for the rate of profit to decline; an insanely unstable financial system; and a conscious policy by bourgeois states to build credit bubbles as drivers of economic expansion.
This is a controversial proposition that has been argued over for decades without effective resolution. Another emblematic theory is that of "state capitalism", which originally was a term used to explain the economic basis of the Stalinised Soviet Union. But here the term has leaked into describing every capitalist state; all instances of where a capitalist state makes decisions affecting the market warrants its use and of course all capitalist states do just that, always.
Such a casual sweeping together is unsustainable. The capitalist state exists to "organise capital and disorganise labour"; every state intervention is ultimately designed to maintain and expand capital.
If state intervention creates state capitalism — albeit along a spectrum from neoliberal, state capitalism lite to full-blown Stalinist state capitalism classic — then we have to ask if capitalism, as Marx spoke of it, has ever existed. What Callinicos is referring to is the return of the individual state as opposed to the role of international bodies such as the European Union, the G8 or G20 and the World Trade Organization. This return of the state contrasts, Callinicos says, with the undermined authority of international organisations, such as the EU, in the financial crisis when nations pursued their own interests -- all the while mouthing platitudes about free trade.
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But if all forms of capitalism in the world are just varieties of state capitalism, why is the Russian variety's fight back a fundamental game changer? Would it not just be a variation of the "game" established by US state capitalism in Iraq and Afghanistan? To posit all this as a return of the state as a player in capitalist dynamics simply flies in the face of the history unrolled in the first section of the book.
The state never went away, it has been central to the bubble economy of modern capitalism all along, constructing bubbles in individual nations as part of a globalised system.
The Political Economy of Imperialism: Critical Appraisals
It has changed its role now that it is propping up the banks and transferring the cost of the bubble onto the shoulders of the workers, again on a global scale and in individual countries. In fact, European austerity has been decreed by the European Central Bank and enacted by the individual states.
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Perhaps he rushed into print too early with this argument? He has certainly stamped out a distinctive IST worldview on the crisis, but it appears to be standing on thin ice. Callinicos is on firmer territory when he points out the Russian war on Georgia was a geopolitical response to US efforts to expand NATO influence into eastern and central Europe.
Callinicos spends more time looking usefully at the contradictions and inherent confrontations in the China-US relationship and draws no connection between that and the supposedly epochal Georgia-Russia matter. Perhaps the Georgia-Russia war loomed large on the European horizon in a manner that it does not in the rest of the world, which would be unfortunate for an internationalist commentator like Callinicos. That Callinicos with this book makes ham-fisted use of his own argument about the nature of imperialism inadvertently reduces its stature, which is unfortunate. Leninists have always observed the multifaceted nature of imperialism and delving into the entrails of the beast is valuable -- and there is much useful information in this book.
Callinicos appears to want to prove that he and the IST have something new or unique to offer regarding the analysis of imperialism. If he toned that down, this contribution would be more useful. Powered by Drupal - Design by Artinet. About Links Editorial advisory board Contact us Comments policy. Click on Links masthead to clear previous query from search box.