In the second of his studies of globalisation and capitalism, Boris Kagarlitsky assesses the role of the state in the globalised world. He argues that far from being powerless and irrelevant, the state can and should play a significant role in the twenty-first century.Kagarlitsky challenges the notion that globalisation is a completely new phenomenon. However, transformation of the state in response to globalisation is according to Kagarlitsky urgently needed, and in order for the state to once again play a key role in the economy, it must change radically.Kagarlitsky examines questions of state intervention in the economy and draws on examples from Russia and the Czech Republic to show new ways in which the state sector is being recreated. He demonstrates that even without the participation of the left, a spontaneous recreation of the state sector is emerging in response to neo-liberalism. Kagarlitsky also discusses the national question and looks at cases in the former USSR, Eastern Europe, and the Balkans. He argues that failure of socialists to link the question of self-determination to other democratic rights has meant socialists have been slow to respond in the wake of the developing nationalist movements.
About the Author
Ephraim Nimni is Lecturer in Political Science at the University of New South Wales.
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The State and Globalization
For Marxists, the question of the state has always been above all a question of power. Marx and Engels spoke of state institutions as a system of organized and legalized class coercion. Lenin not only saw in the question of power the main question of any revolution, but also reduced it to the seizure and subsequent transformation of the 'state machine'. By the 1970s, however, it had become obvious that the state no longer enjoyed a monopoly on power. Michel Foucault shook the thinking of the French radical intelligentsia by showing that power is dispersed, and does not by any means reside where people are accustomed to look for it. Inevitably this has been reflected in the strategy of the left.
Realizing that the state did not possess the totality of real power in modern capitalism, leftists became disillusioned with the possibilities which the state offered. But if the state does not dispose of all power, that does not mean that the question of power can be decided outside of and apart from the state. Too few leftists have posed the question of using the state as a bridgehead in the struggle for real power. Without this, any discussion of reforms loses its meaning.
Democracy and the Market
Andrey Ballaev noted on the pages of Svobodnaya mysl' that the main weakness of socialists has always been their underestimation of the need for links between socio-economic and political reforms. 'To put it somewhat crudely, socialism perceives the "rules of the game" of modern democratic republics as a sufficient and even indispensable precondition for its progress.' In practice, everything is far more complex. The new problems of society require a qualitative transformation of the state system.
Because the capitalist market cannot get by without nonmarket institutions, the state as a non-commercial entity plays a key role, not only financing public bodies but also overseeing the interaction between the development of the economy and that of the various structures of the social sphere. Among Marxists in the early twentieth century a bitter polemic raged between those who saw in the West the triumph of 'pure' democracy and those who viewed the state above all as an instrument of class coercion. In essence, however, both sides merely revealed the limitations of 'classical' Marxism. It was no accident that Gramsci in his Prison Notebooks devoted so much space to the concept of 'hegemony' that later became so fashionable. Without a certain consent by the governed, the state could hardly perform its class function. But this means that the state system, as an instrument of the ruling class, cannot fail to take account of the interests of other social layers as well. When the institutions of power prove incapable of this, the state system enters into crisis.
The contradictory nature of the state's role is reflected in the similarly contradictory policies of the left in relation to the state. But it is not only the left that has problems here. Liberalism, that proclaims the principle of the 'small state', needs police coercion in order to put its ideas into practice. It seems strange at first glance that liberalism, as an ideology of the bourgeoisie, should attack the bourgeois state. But this contradiction is illusory; liberalism is aimed against the non-bourgeois elements in the bourgeois state. Liberalism continually calls for a reduction to the minimum of the role of those institutions that are not linked directly to the defence of the capitalist order. In so doing, it constantly destabilizes this order.
The institutions of the state ensure the historical continuity without which the legitimacy of power can seem very dubious. This is why Britain and the Scandinavian countries have retained the monarchy, even though their political systems have become models for many republics. If kings and lords constitute a link with the pre-capitalist past, the welfare state provides a link with the future. Neo-liberal reaction is aimed at breaking this link. If history comes to an end, the future will never happen. And to ensure this, it is necessary to take the appropriate measures.
The representatives of the social sphere – those working in public services, science, education, etc. – do not like the state, but their situation becomes still worse when state institutions are weakened. Intellectuals cannot stand bureaucrats, but they constantly appeal to them for help. Without the state the secular intelligentsia cannot exist. The clerical intelligentsia can, as is proved by the history of feudalism. But the average modern intellectual is not prepared to enter a monastery.
The social sphere, which plays an increasing role in the life of humanity, cannot develop outside the state, but at the same time the structures of the state are quite unsuited to it. 'For the present', noted Ballaev, 'this conflict is more reminiscent of a contest in which the social sphere is gradually gathering strength, despite suffering constant defeats.' This conflict shifts more and more towards the regional and inter-state level, where the contradictions that were earlier evident on the national level are reproduced in a new form. Sooner or later such development leads either to catastrophe or to 'the transformation of the economic system and of the political nature of the state'.
The contradiction between the theoretical need for the renewal of the state and the practical bankruptcy of the state in its present-day form spills over into the impotence of the political strategy of the left, the confused declarations of ideologues and the bewilderment of activists. A theoretical argument which is frequently invoked in order to justify inaction holds that the national state, as a central element in the strategy of leftists (whether Marxists or social democrats), is now losing its significance. The weakening of the role of the national state in the context of the 'global market' is an incontestable fact. But it is equally indisputable that, despite this weakening, the state remains a critically important factor in political and economic development. It is no accident that transnational corporations constantly make use of the national state as an instrument of their policies.
It is clear that leftists need to have their own international economic strategy, and to act in a coordinated way on a regional scale, but the instrument and starting point of this new cooperation can only be a national state. There is no need to suppose that capital can reconcile itself to radical reforms in the sphere of property. In a country where unique resources are present (and many countries including Russia, Mexico and South Africa have such resources), and where regional business interests are concentrated, even large transnational corporations will prefer to make concessions to the state sector rather than to place at risk the very possibility of their participating in this market.
In general, it should be noted that among left ideologues a healthy scepticism with regard to the possibilities of the state has very quickly been replaced by completely absurd theories in the spirit of 'stateless socialism'. In the 1950s, when socialists posed the question of nationalization, liberal ideologues stressed that property itself was not as important as the mechanism of control. In the 1980s, however, massive privatization began, leading to the destruction of the state sector on a world scale. Meanwhile, a significant sector of the left has not only failed to resist privatization, but has in practice become reconciled to its results.
The Logic of Globalizaton
For the most part, the ideologues of the left have become reconciled to an image of the state as a demoralized bureaucratic machine that is quite unable to carry out effective management, and which merely swallows the money of taxpayers. It has to be recognized that such images do not appear out of thin air. But in most countries it was not the left that created the state bureaucracy, even if the left figures in the consciousness of millions of people as its servant and defender. At the same time the right effectively exploits for its interests both the annoyance of citizens with the state, and their no less powerful demand that the state defend them against foreign threats. Such threats more and more often turn out to consist not of hordes of foreign warriors, but of mountains of foreign goods, crowds of half-starved emigrants and a mafia that is rapidly internationalizing itself – in short, the natural consequences of the economic policies pursued by the right itself.
The problem of the state becomes insoluble for leftists from the moment they reject the idea of the radical transformation of the structures of power. The established state structures start to appear unshakeable. They can either be accepted or rejected. On the symbolic level, leftists do both. Practical politics, which unavoidably gives rise to constant changes in state structures and institutions, becomes a monopoly of the right.
The democratization of power and the participation of the masses in decision-making cannot in themselves guarantee that social reforms will be successful. But if leftists, on coming to power, do not begin promptly to democratize the institutions of the state, this can only end in the degeneration and ignominious collapse of the left government.
Meanwhile, in the 1990s the very possibility of serious structural reforms on the level of the national state has been placed in doubt. Globalization has become a key idea of neoliberalism in the 1990s, against a background of the downfall of all other ideologies. At the same time, the thesis of the 'impotence of the state', that has become widespread among leftists, has acquired three bases. Governments have been regarded as powerless in relation to transnational corporations (such as Microsoft, Ford or the Russian Gazprom); in relation to international financial institutions such as the World Bank and the International Monetary Fund; and finally, in relation to interstate formations such as the North American Free Trade Agreement (NAFTA), which links the US, Canada and Mexico, or the bodies created on the basis of the Maastricht Treaty in Europe.
Globalization, however, is nothing qualitatively new in the history of bourgeois society. Capitalism was born and grew to maturity as a world system. It was only towards the end of the eighteenth century that national capitalism, rooted in the social structures of particular Western countries, began to develop. This national capitalism, like modern nations themselves, was not a precondition for but a product of the development of capitalism as a world system. At the end of the twentieth century, capitalism is again becoming directly global. This does not put an end to national societies or states, although these, as in the epoch of early capitalism, are in profound crisis. As Wallerstein notes:
Modern states are not the primordial frameworks within which historical development has occurred. They may be more usefully conceived as one set of social institutions within the capitalist world-economy, this latter being the framework with which, and of which, we can analyze the structures, conjunctures, and events.
While some late-twentieth-century economists and sociologists emphasize the changes that are connected with globalization, other writers stress that the processes under discussion are far from new. James Petras argues that:
Economies, North and South, have alternated between the global and national/regional markets over the past 500 years.
In the twentieth century 'globalization' was intense until 1914, followed by a prolonged period of shift to national development during the late 1920s to the mid-1940s, followed by an increasing and uneven effort from the 1950s to the 1970s to return to globalization. The overthrow of nationalist and socialist regimes and the increased competitiveness of Asian capitalism in the 1980s has led to the current period of 'globalization', a phase which is itself today under increasing attack from within most countries, North and South. Thus globalization is not the 'ultimate' phase of capitalism but rather a product of state policies linked to international economic institutions.
Petras focuses on the fact that transnational corporations also have direct precursors in the form of the merchant companies of the period from the sixteenth to the eighteenth centuries. The development of capitalism is cyclical in principle, and there are no grounds for asserting that the changes that have occurred in society by the end of the twentieth century are in principle 'irreversible'. Nevertheless, we should not lose sight of the qualitative differences between globalization and the preceding periods of internationalization of capitalism. Thanks to technological progress and victory in the Cold War, for the first time in its history the capitalist world system has really become a world system. The prediction by Marx and Engels in the Communist Manifesto that capitalism would overcome all state and national boundaries, has been realized in full measure only 150 years later.
Taking issue with writers who link globalization solely with the technological revolution, Petras is inclined to consider that technology has no relation whatever to this process. Globalization in his view takes its origins from a relationship of class forces that has changed to the advantage of capital. 'Technology and new information systems are just as compatible with nationalist models as neo-liberal, as the Asian capitalists demonstrated.' The question, however, is not the degree to which new technology is 'compatible' with various social phenomena, but the way in which it influences the overall development of capitalism. In this sense Petras's views, despite the understandable political charge that they carry, represent a sort of sociological subjectivism. Analysing the world expansion of capitalism in the nineteenth century, Marx and Engels did not by any means consider technology to be neutral. On the contrary, they directly linked the new phases of development of capitalism to the new productive potential.
It is significant that the 'international' cycles in the development of capitalism have been linked with periods when the technologies that expedite trade and communications have been developing more rapidly than the technologies of production itself. The period of mercantile capitalism of the sixteenth to the eighteenth centuries was an age of geographical discoveries, of rapid improvements in ship design and construction (it is enough to compare the slow-moving Mediterranean galleys with the frigates of later times), of road-building, and so forth. The Industrial Revolution coincides with the rise of the national state. The appearance of Fordist mass-production technologies also coincides with the growing role of the state in the twentieth century. Production is always local; it needs a particular setting, where concrete social and political problems have to be resolved.
In the late twentieth century, despite the growth in the productivity of industrial labour, the pace of development of communications technologies has been substantially more rapid. It is here that we see the most impressive achievements of the technological revolution. This is beyond question an objective precondition of globalization. But the situation will not always be thus. The development of capitalism is not only cyclical, but also uneven. Communications technologies cannot develop at a forced tempo forever, simply because society does not need this. By the mid-1990s the supply of technological innovations already clearly exceeded the demand for them. Resistance by users to the introduction of new processors and computer systems had already become a serious problem for the firms operating in this market. The cycle was coming to an end.
The globalization of the late twentieth century is the third in the history of capitalism, but it is qualitatively different from its predecessors. If the internationalization of the economy in the period from the sixteenth to the eighteenth centuries was accompanied by an acute crisis of the state, in the late twentieth century the strengthening of the state (at least in the countries of the 'centre') and the expansion of the capitalist market have gone hand in hand. This is the essence of the phenomenon known as imperialism. In the epoch of the early bourgeois revolutions, the bases of the feudal state were being undermined. In the epoch of imperialism, by contrast, the state was quite adequate to the demands of capitalist development, having become fully bourgeois. What we observe in the late twentieth century shows that a contradiction has arisen between the present forms of the state and the interests of capital. On the whole it is not the state as such that is in crisis, but merely those of its structures and elements whose development has extended beyond the bounds of capitalism. Therefore, the present globalization is tightly interlinked with social reaction.
Excerpted from "The Twilight of Globalization"
Copyright © 2000 Boris Kagarlitsky.
Excerpted by permission of Pluto Press.
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Table of Contents
1. The State and Globalisation
2. Is Nationalisation Dead?
3. Nations and Nationalism
4. Third World Labyrinth: is a Democratic Model Possible?