Skip to content Skip to footer

The Nature of the Beast: Leo Panitch and Sam Gindin on “The Making of Global Capitalism“

Leo Panitch and Sam Gindin have just released their latest book, The Making of Global Capitalism.

Leo Panitch and Sam Gindin have just released their latest book, The Making of Global Capitalism. Gindin is the former Research Director of the Canadian Autoworkers Union and Packer Visiting Chair in Social Justice at York University, and Panitch is Canada Research Chair in Comparative Political Economy and Distinguished Research Professor of Political Science at York University. The two have worked together on many books and publications. Aaron Leonard recently sat down with them in New York City to discuss their work. The interview will be presented here in three parts over the coming days.

Part I: “An American Proposal”

Aaron Leonard: Let’s start by dialing back, before this global capitalism was in place. Your book recounts something called, “An American Proposal,” a joint statement from the editors of Fortune, Time and Life published in the midst of World War II (1942). In it they lay out the aims of a post World War II world, “to organize the economic resources of the world so as to make possible a return to the system of free enterprise in every country.” This is rather shocking in its brazen capitalist class-consciousness — what did it portend?

Sam Gindin: You have to understand that in the context of a developing awareness within the American state — and the development of corresponding capacities — that to preserve and strengthen American capital it was essential to keep the world more open to capitalism more generally. If that wasn’t achieved and other parts of the globe closed themselves off to capitalism, the threat was reviving the kind of problems faced with Germany in the interwar period — countries that can’t get access to resources and markets turn to o autarky, with profound implications for the U.S. itself.

Leo Panitch: I think the historical context is important as well. Roosevelt’s second New Deal ended in 1937-38 and there was a truce with business in which it was made clear that a very soft and weak Keynesian would be adopted and there would be no more major reforms for trade unions and for labor. Indeed some of what looked like the more radical elements of the Wagner Act had already been constrained by the Supreme Court and by the Labor Relations Board. A deal was done with capital. Then as the war approached the State Department was encouraging the Council on Foreign Relations and businessmen on Wall Street to form a roundtable, which they did in 1939 under the auspices of Fortune. They were working very closely and though it sounds like capitalists coming together and then telling the American state what to do, it was as much an interaction between corporate lawyers and officials inside the American state who were doing this thinking together.

Dean Acheson, who went on to be Secretary of State and wrote the great book Present at the Creation, gives a speech to the International Ladies Garment Workers Union in 1939 that says pretty much the same thing: that it’s going to be up the U.S., if the war is won, to remake the postwar world using the capacities that were developed with the New Deal — in a sense internationalize those capacities — so as to construct a world which is open to free enterprise. They do what wasn’t done after World War I, including forgiving loans, the refusal of which was one of the things that generated the economic crisis of the thirties.

AL: While the business of the U.S. building this global empire was going on, there were two major states, the Soviet Union and the People’s Republic of China that stood outside that paradigm. What impact on global capitalism did the absence of such a significant amount of the productive forces — people, technology, machines, raw materials etc. — have?

LP: At one level, you can say that these were arenas closed to capital accumulation. The American state was extremely worried about that in terms of the Soviet Union and they were very surprised to have lost China by 1949. But it wasn’t only a matter of these being places that American capital could not enter, though it has of course always been very important to the American state to be able to open markets for American multinationals and banks. And yes, important portions of the world’s resources, especially in the case of the Soviet Union, were not available to American capital.

But beyond this those resources were critical to Europe and Japan as they were remade as capitalist societies. The United States guarantees access, above all in the Middle East, to oil as part of rebuilding of Japan and Germany and Britain and France. A lot of people tend to think of American military interventions, or CIA interventions, in terms of ‘what they’re trying to do is secure oil for the United States.’ No. On the contrary they’re playing the role of the global state in the absence of an international global state. They are guaranteeing, to those countries they are rebuilding as capitalist states, access to resources that they otherwise would have had from Eastern Europe and that portion of Soviet Asia that is now closed to them.

SG: The other dimension is that the Soviet Union and China were examples of staying out of capitalism that spurred on liberation movements abroad. They also were supportive of economic nationalism on the part of Third World states, which by the late 1960s undertook a growing number of expropriations of foreign capital, but these numbers faded through the later 70s as the liberation movements were defeated and as Third World countries got more integrated into capitalism.

LP: What was attractive to many Third World countries was that aspect of the Soviet Union which was motivated by ‘socialism in one country’ which was essentially Russian nationalist. Of course the national bourgeoisies in Third World countries were very much holding onto private property, but nevertheless they, to some extent, emulated the space that communist governments had ostensibly carved out for themselves.

AL: The period in the wake of the U.S. defeat in Vietnam was a troubled and critical one. The depths of the crisis were such that, as you note, there was a TIME magazine cover of 1975, asking, “Can capitalism survive?” For all the complex mix of things going on, your conclusion is that it was indicative of “neither decline nor moderation but restructuring.” What do you mean by that?

LP: I do think the context for that was not so much Vietnam. It was rather these increased expropriations from nationalist regimes. In 1974 the UN General Assembly overwhelmingly voted for a charter of economic rights of states, which included the provision that they could expropriate foreign capital, even without compensation. To some extent, Wall Street discounted this as rhetoric because they knew that while Saudis had taken over the operations of foreign oil companies they paid them for this, and they were investing their surpluses on Wall Street. But the wording of the UN economic rights charter still did sound very shocking. And this rather militant sounding economic nationalism abroad came was all the more frightening in that it coincided with a lot of labour militancy at home.

The inflation of the 1970s stemmed from the inability to quell that militancy in the advanced capitalist countries. To top it all off, the breakdown of Bretton Woods, itself a product of such inflationary tendencies, had created consequent uncertainty about the impact on trade, just as Japan and Germany had become major exporters to the U.S., and as the United States was by this point starting to import a lot of capital from these countries as well. In other words, there were a whole number of things coming together at the time TIME magazine asked whether capitalism could survive. Things looked quite frightening — but if the U.S. initially responded shock and horror, it soon took more practical steps that Sam calls restructuring.

SG: The restructuring was mainly about coping with the profit squeeze of the 1970s that was produced by many of the above factors. Mainstream economists, describing the period from the 1980s through the 1990s refer to it as a period of moderation. Basically after ’83, apart from the brief recession at the turn of the 1990s was the longest period of uninterrupted U.S. growth in the postwar era. Yet at the time both the left and the right saw this period as one of U.S. decline, arguing first that Japan and then that Europe were going to replace the U.S. as the dominant capitalist force in the face of was a ‘hollowing out’ of American economic strength. We’ve argued that it wasn’t hollowing out, it was restructuring.

In fact American capital came through that period very successfully. That doesn’t mean working people did well. It was obviously a period of great inequality and insecurity, with stagnating wages, etc. But for the corporations, the period included a major restructuring of workplaces, new technologies, changes in the relative importance of specific industries, and dramatic shifts between manufacturing and services, consumer services like retail, and business services like engineering, consulting, accountancy, legal become very important at home and internationally. There were also regional shifts in economic activity (Detroit vs. the American South) and major geographic shifts such as the integration of Eastern Europe and then China. This has to be seen as a major period in which American capital, having defeated labour, was left with more autonomy to do what it felt needed to be done to revive capital and restructured, establishing the material base for the revival of the American empire.

AL: How did the collapse of the Soviet Union fit into all that?

LP: Even before that, it seemed in the seventies, as the crisis was accelerating, a political left was emerging inside the major working class-affiliated political parties that had a chance of getting elected, and when TIME said, “Can capitalism survive?” they were also thinking about the bubbling up of radicalism inside those government parties. What was being argued by the left in these parties was that the welfare state reforms that had previously been won were now coming under enormous pressure and would be lost unless workers could go beyond them, to take the decisions about what is invested and where it is invested away from capital. You were hearing this from the forces behind Tony Benn in Britain, Rudolph Meidner in Sweden, from the German unions calling for investment planning, from those forces on the left in France that eventually got Mitterrand’s Socialist Party elected in France in conjunction with the Communists on the most left-wing program in the postwar period. And even in the U.S., the left in the Democratic Party was very strong in the mid-1970s.

Yet all this was turned around. By the late 1970s, the Democrats under Carter eviscerated the left wing of the Democratic Party. The Humphrey-Hawkins full employment bill, which was calling for economic planning to secure full employment again, was turned into an empty piece of legislation. The unions by the late seventies either were giving concessions to the auto companies like Chrysler in exchange for a bailout, or they were more explicitly aligning themselves with a need for competitiveness. The union militancy was broken in Britain even before Thatcher by the Labour government, and the German Socials Democrats eviscerated the left in the unions, as did their Swedish counterparts. And once Mitterrand had to choose between either imposing capital controls and interrupting the capitalist process of European integration, or giving up his radical program — he famously did the U-turn.

Moreover, if you look at what happened to Third World economic nationalism Wall Street was right, the rhetoric of these nationalist bourgeoisies needed to be very heavily discounted. Even in the face of the debt crisis of the 1980s they came on board with the IMF and American Treasury in introducing the kind of structural adjustment program that would invigorate their markets, make them competitive, restrain their internal balance of class forces. As Larry Summers said, the main affect of NAFTA was to insure that Mexico would follow market oriented policies and be favourable to the United States instead of following socialist policies and be unfavourable to the United States, very explicitly. That was a process begun in the 1980s carried through in the 1990s.

This was much more important than the collapse of the Soviet Union. That’s not to say that the Soviet collapse didn’t have an effect in terms of a sphere becoming open to capital accumulation and demoralizing those portions of the left which thought a different world was all tied up with this very disappointing and undemocratic authoritarian example. I think one tends to enormously over-blow the significance of that collapse in fact, given that the important things inside the capitalist world had already largely taken place by then.

SG: The main periodization isn’t before the Berlin Wall falls and after. Even going back to 1948 and the common understanding of the Marshall Plan as revolving around the external Soviet threat, we argue rather that you have to understand it more in terms of what was happening inside European countries and the internal threat from the left and the American concern, apart from the Soviet Union, of how to keep a world open to the making of global capitalism. One of the things that does happen with the collapse of the Soviet Union is that Third World countries trying to find some space vis-à-vis the American state have lost the leverage coming from the kind of support they would have from the Soviet Union. But a lot of that had been broken already.

AL: It puts the whole concept of containment into a whole different light…

SG: Yes, in a very different light. Its much more of a political economy explanation than one based on the cold war explanations.

It takes longer to read this sentence than it does to support our work.

We have 1 day left to raise the $27,000 needed to meet Truthout‘s basic publishing costs this month. Will you take a few seconds to donate and give us a much-needed boost?

We know you are deeply committed to the issues that matter, and you count on us to bring you trustworthy reporting and comprehensive analysis on the real issues facing our country and the world. And as a nonprofit newsroom supported by reader donations, we’re counting on you too. If you believe in the importance of an independent, free media, please make a tax-deductible donation today!