18TH A K GOPALAN MEMORIAL LECTURE

Imperialism, Fundamentalism and the Uses of “Terror”

Jayati Ghosh

On Tuesday, July 18, Dr Jayati Ghosh delivered the 18th A K Gopalan Memorial Lecture, organised by Jana Sanskriti, at Vithalbhai Patel House, New Delhi. The first part of the text is being reproduced here. Subheadings have been added.

IT is an extraordinary honour --- and a privilege --- for me to be invited to deliver this lecture today. For many people of my generation, Comrade A K Gopalan was a larger than life figure in many ways, a source of great inspiration as well as a symbol of all that is best about the communist movement, expressing the finest qualities of those who struggled in the national movement and afterwards for a better society. The combination that was embodied in his life of continuing dedication and commitment, his crucial leadership qualities, his role in people’s struggles, especially the peasant movement, his simplicity and approachability, remains a model worthy of emulation. Especially in the current context, when some degree of cynicism seems to pervade the atmosphere, even among the young, his consistent idealism is important to remember.

In this lecture I would like to take up some of the issues that were central to the political activism of Comrade AKG himself, which have acquired a particular urgency today.

Imperialism and the

Global Economy

at the Start of

the 21st Century

Two features of the capitalist world economy in the early years of the new century must be noted at the outset. The first is the continuing, indeed overwhelming, significance of imperialism as the defining feature of global economic relations, with imperialism broadly defined as the struggle by large capital for control over economic territory of various types. The second is that this current imperialism is different in several crucial ways from that described by Lenin nearly a century ago as the monopoly stage of capitalism. To some extent the differences are simply the result of history, the evolution of both the institutions and processes of capitalism. But they are also the result of the effects of the recent processes of deregulation of trade and capital markets as well as other forms of economic liberalisation (constituting the essence of what is typically called “globalisation”), which have given the new imperialism its cutting edge.

IMPORTANT DIFFERENCES

In terms of the current world economy, a number of important differences from the imperialist globalisation of the late 19th century can be identified. These include:

1) the implications of accentuated internationalisation and concentration of both production and finance;

2) the greater domination and changed nature of finance capital; 

3) the use of multilateral institutions and rule-based regimes to further the aims that in earlier periods of history were resolved through more direct militaristic or political means;

4) the changed nature of the systemic instability of global capitalism;

5) the new forms of economic territory that are currently being contested, as well as the creation of new markets;

6) technological changes that have furthered the process of global corporate dominance as well as allowed for the possibility of confronting it at an international level;

7) the implications of the global spread, privatisation and concentration of media industries;

8) the current submergence of inter-imperialist rivalry in the face of a sole superpower whose military might is increasingly being systematically used to perpetuate dominance. I have earlier referred to this as “hyper-imperialism,” with the US taking on more and more powers and disregarding international institutions whenever it chooses to do so.

It is obvious that the processes of concentration and centralisation of capital, as well as the internationalisation of production, have gone much further, with some important implications. The recent phase of globalisation has been marked by some of the strongest and most sweeping waves of concentration of economic activity that we have known historically. In terms of multinational firms’ activities, the possibility of vertical disintegration of production, which has allowed parts of the production process to be relocated and geographically separated, has been associated with greater vertical integration of the control (and ownership) of production internationally. In addition, the past decade in particular has witnessed a wave of cross-border mergers and acquisitions across not only major manufacturing industries but even in the services sector and in utility provision. The increased concentration of economic activity in general could reflect the recession and slump in recent years: concentration is always more marked in the downswing phase of economic cycles. But the process is also evident in some of the more “dynamic” sectors, such as telecom, the media and entertainment industries, and even during the expansionary phases of such sectors. This process should not, however, be misinterpreted to imply that the links between multinational conglomerates and their home governments have disappeared: they may appear to be more tenuous, but nevertheless still exist and continue to influence geo-political and economic strategies of the major capitalist powers.

IMPLICATIONS OF THE PROCESSES

Internationalisation is, of course, most marked for finance. The domination of financial flows in cross-border transactions, as well as the greater role played by speculative elements and the separation (and to some extent supremacy) of finance capital over productive capital, are too well known to require further discussion. However, some of the more significant implications of these processes may be noted. They include:

1) the enhanced differentials in speeds of adjustment between capital markets and the markets for goods and services, implying both more rapid changes in terms of financial variables and more accentuated effects on real economies;

2) the destabilising role played by speculative capital flows, leading to more volatility of relative prices in general and periodic crises of varying intensity in particular economies;

3) the constraints on, and deflationary impetus imparted to, national economic policy making, especially fiscal and monetary policies in almost all countries, and the heightened inability of states (independent of political persuasion) to ensure basic needs and minimum socio-economic rights to all citizens;

4) the necessity on the part of finance for constantly (if temporarily) discovering new avenues (or emerging markets) for investment, which ensures that deflation is not a uniform process across the world economy, but is always accompanied by a few pockets of capital-inflow-led boom.

The domination of finance capital has had effects on the nature of inter-imperialist rivalry as well. The point is essentially as follows: when finance capital, independent of national origin, seeks to ensure the stability of its investments, then it will be especially concerned about some degree of stability at the capitalist core, notably in US government and private securities. This means that (notwithstanding the recent and continuing decline of US stock markets, the revulsion away from US financial assets and the associated decline of the US dollar in world currency markets) there will be attempts to maintain some degree of stability in terms of the most important financial assets available, and therefore to reinforce the geopolitical arrangements which underlie such stability. This requirement creates a different source of pressure from that determined solely by US military domination. It means that in crucial political and economic areas, the important capitalist powers tend to act together or at least implicitly endorse the positions taken by the US, whether in the WTO negotiations or in the use of the IMF, to determine country policies to directly or indirectly benefit US-based capital, or in the “war on terror,” and treatment of so-called “rogue states,” and so on. It also means that US unilateralism in economic and political matters tends to be accepted (if not condoned), whether in terms of allowing the continued use of unilateral protectionist measures such as Super 301 etc, or the US Farm Bill, or in terms of pushing for greater enforcement of multilateral liberalisation in precisely those sectors in which the US economy is perceived to have competitive advantage, or in terms of military engagements with what it chooses to define as “rogue states,” or even, now, of illegal occupation of another country along neo-colonial lines.

It is worth noting that the new imperialism, in addition to utilising new institutions and international rules and protocols to its own end, is also about the struggle to control newer forms of economic territory. This is not to deny the continuing significance of economic territory as traditionally conceived, that is natural resources, markets and labour. Indeed, control over natural resources --- particularly energy and oil resources --- remains central to imperialist preoccupation. This is demonstrated by a number of recent and current events: the significance of the proposed (and soon to be constructed) oil pipeline in Afghanistan to the US military intervention and ongoing geopolitics of the region; the (failed) attempt to instigate and support a military coup in Venezuela against a president elected by a huge popular margin. The war on Iraq, and its subsequent occupation, is simply the latest manifestation of this. While these are in fact the most blatant political expressions of imperialism today, it is in the area of developing new markets that the economic implications are most pronounced.

SEEKING TO DEVELOP NEW MARKETS

These new markets are sought to be developed and made accessible in two ways. The first is the opening up of existing markets in developing and formerly socialist countries through the processes of trade and investment liberalisation, using the agencies of conditional lending by the IMF and World Bank and more recently, the rules and dispute settlement procedures of the WTO. Such opening up, especially if it involves the relative deindustrialisation of the newly liberalised economies, contributes new markets for manufactured goods and services for the core capitalist countries. It is surely not an accident that, despite fears of manufacturing jobs being “exported” from North to South, in fact the manufacturing trade balance of the South with the North remains negative and indeed the deficit has been growing. Associated with this is the lowering of world prices of Southern exports, which stems from the fallacy of composition problem, as more and more developing countries are forced to increase export volumes either to repay debt, or to pay for more imports, or simply because they have been told that it is good for them to do so. This is turn provides the related advantage of cheaper imports to the core countries, not only of raw materials and tropical agricultural commodities, but also of the manufactured goods which developing countries have been encouraged to specialise in and which are now characterised by massive over-capacity internationally.

The more innovative form of finding new markets in the recent past has been that of creating markets where none previously existed, that is, by encouraging and furthering the commercialisation of activities that were earlier not perceived as commercial, or were defined in the public domain, or were only enabled by social intervention. The push towards commercialisation and then privatisation of a range of public services --- such as power, telecommunication, and now water and sanitation --- is the most obvious expression of this. The proliferation of new forms of commerce has never been so rampant. Knowledge and what is defined as intellectual property, rights to energy use, pollution control certificates, all are now subject to trading; even the via media for trade have expanded to include e-commerce and the like. The forced commercialisation of a wide range of services therefore provides the newest and most promising hinterland for capitalist expansion.

One aspect of this is also that information and entertainment have themselves become not just commercialised but have emerged as major industries; indeed, they are now the fastest growing segments of the global economy. They are also among the most concentrated and centralised of all sectors. The multimedia boom has spawned large multimedia companies who can now be counted among the largest multinational corporations. This is really a phenomenon of the last decade, or of at most the last 15 years or so, as giant media firms have sought "synergy" through not just vertical integration but by effectively "acquiring control of every step in the mass media process, from creation of content to its delivery in the home." The 1990s witnessed an unprecedented wave of mergers and acquisitions among global media giants. (As a result, the top six multinational conglomerates --- News Corporation, Time Warner, Disney, Bertelsmann, Viacom and TCI --- now effectively own and control huge swathes of the media, publishing and commercial entertainment activities across the world.) Many of these firms have explicitly rejected national identities and posited themselves as global or internationally based corporations. Nevertheless, and despite the attempts to programme according to local sensibilities, the bulk of the content, the forms of expression and the structures of ownership and management reflect the domination of the core capitalist countries, especially the US.

In sheer quantitative terms, the most important new markets are of course the financial ones, and the explosion of financial activity reflects the ability of capitalism to create and enlarge the spheres of economic activity even where material production is flagging. In addition, financial services such as banking and insurance --- an area in which companies based in the core capitalist countries clearly have competitive advantage --- have been among the fastest growing areas of world trade. The huge cross-border and intra-border flow of financial resources often reflects trade in commodities which are purely notional, such as derivatives trading. That huge profits can be made from this pyramiding of financial assets reflects the ingenuity of capitalism, but it also marks speculative bubbles, which do have to burst eventually.

In addition, the new imperialism seeks to make use of particularly the skilled labour to be found in some developing countries. This has meant greatly enhanced labour mobility of a small section of highly skilled and professional employees, even as other labour finds it much more difficult to move, and aggregate rates of labour migration are lower than they have been in the history of capitalism. This in turn has contributed in no small measure to the enthusiasm for the process of global integration among such groups of skilled workers in developing countries. In fact, it can be argued that one important reason for the success of imperialist globalisation has been its ability to draw local elites and middle classes across the world into its own ranks, to offer part inclusion into a privileged international space within which the travails of the local working poor can be forgotten, even while their crucial role in generating productive surplus is sustained.

INSTABILITY OF WORLD ECONOMY TODAY

Despite the appearance of complete domination by a single and determined superpower, which has been a requirement for period of stable world capitalism in the past, the current world economy is an unstable one, which is prone to systemic instability and constant possibility of crisis. This emerges from the following factors.

First, the US is not currently fulfilling its role (in the Kindleberger sense) of leader in the world economy to maintain stability. Such a role requires the fulfilment of three functions at a minimum: discounting in crisis; counter-cyclical lending to countries affected by private investors’ decisions; and providing a market for net exports of the rest of the world, especially those countries requiring it to repay debt. The absence of discounting in crisis is not universal; there are countries that have received large bailouts orchestrated by the US Treasury and the IMF. But the spectacular collapse of Argentina, the bleeding of Sub-Saharan Africa despite impending large-scale famine, and the indifference to implosions in Eastern Europe and elsewhere, bear witness to the fact that the US administration does not see its responsibility to discount in crisis in terms of salvaging the larger system. Similarly, counter-cyclical lending has been discouraged, as private finance (including portfolio capital) has been associated with creating sharp boom-and-bust cycles rather than mitigating them, and US policy has been geared towards protecting such behaviour rather than repressing it. Finally, while the US did play a crucial role as engine of world trade by running very large external trade deficits in the 1990s, that role has been much diminished after 2000. Indeed, even before then, the import surplus in the US reflected private investment-savings deficits, as the government’s budgetary role became more contractionary.

Second, partly because of this inadequately accepted role of the leader, and partly because of the deflationary impulse provided by the greater mobility of finance capital, aggregate growth in the world capitalist system has been far below expectations in the recent phase of globalisation. It is now clear that the period has been associated with a deceleration of economic activity in much of the developed world, a continuing implosion in vast areas of the developing world including the continent of Africa, and a dramatic downslide in what had hitherto been the most dynamic segment of the world economy --- East and South East Asia. (Global output growth, which averaged 3 per cent in the period 1990-97, was less than half that rate in 1998-2000, and even worse subsequently. Nearly 40 developing countries have experienced declines in per capita income since 1990.) These processes are reflected in rates of growth of world trade (in value terms), which have decelerated despite the enforced liberalisation of trade in most countries, as well as in declining rates of greenfield investment across the world.

Third, the recent process of imperialist globalisation has been marked by greatly increased disparities, both within countries and between countries. (The gap in per capita income between industrial and developing worlds has more than tripled between the 1960 and 1990. Between 1960 and 1991, the income share of the richest 20 per cent of the world's population rose from 70 per cent to 85 per cent, while the income share of the poorest 20 per cent of population fell from 2.3 per cent to 1.4 per cent. In fact, the income shares of more than 85 per cent of the world's population actually fell over this period. The ratio of shares of the richest to the poorest groups doubled from 30:1 to 60:1. Subsequent data indicate a marked worsening of such disparities.) While there is --- inevitably --- a debate over this, most careful studies find increased inequality within and across regions as well as a stubborn persistence of poverty, and a marked absence of the “convergence” predicted by apologists of the system. In addition, the bulk of the people across the world find themselves in more fragile and vulnerable economic circumstances, in which many of the earlier welfare state provisions have been reduced or removed, public services have been privatised or made more expensive and therefore less accessible, and employment conditions have become much more insecure and volatile.

Fourth, these features in themselves have led to a major crisis of legitimisation for the system. Not only are the basic tenets of the neo-liberal argument (which forms the theoretical support for the current pattern of imperialist globalisation) under question, but increasingly the institutions which serve to uphold it (the IMF, the WTO and so on) lack popular support and legitimacy. The anti-globalisation umbrella movement is one expression of such growing dissent in local and national contexts. One important --- and new --- feature, is that the process of integrating elites from developing countries, and rewarding them materially for their active cooperation in furthering corporate globalisation, has slowed down. As argued above, the complicity and participation of local elites has been a potent force in ensuring the success of global capitalist integration --- but as the world recession bites and rewards become more scarce, such complicity can no longer be taken for granted. Since the political economy of resistance movements everywhere requires the involvement of at least some middle class and professional elements and often some local elites as well, this may prove to be a critical development.

Fifth, imperialism has an increasingly ambiguous relationship with various backward looking, revanchist and reactionary tendencies in different parts of the world. At different times and places, such tendencies have been encouraged and allowed to spread, but increasingly many of them are now seen as threats to the system, to be rooted out and destroyed. All of those currently seen as enemies of the US and therefore as the objects of attrition in the current “war against terror”  --- Osama bin Laden, Al Qaeda and the Taliban, Saddam Hussein --- have been at one time or the other overt or covert darlings of the US administration, used against other perceived enemies or simply to destabilise regions. Even now, in clientelist regimes such as that in Saudi Arabia, reactionary forces have been allowed to grow. Elsewhere, US imperialism has turned a blind eye or even implicitly encouraged the growth of semi-fascist movements (such as the Hindutva tendencies in India) as well as separatist forces, which encourage the disintegration of large nations. However, many of these movements now threaten to spin out of control and to destabilise the system itself, even if only partially. The terrorist attacks of September 2001 mark a watershed only, insofar as they forced a realisation of this tendency towards destabilisation; they do not mark any major changes in basic organisation of the system itself, which is still run as cynically as before.

Finally, one important contradiction looks likely to become more significant in the near future. This is the requirement of deflation, which predatory finance capital imposes on the system as a whole even while it encourages differential rates of deflation in different areas so as to maximise its own profits. A sustainable prey-predator relation requires the continued existence of the prey, but widespread deflation makes this less likely. The current downslide in the major equity markets, and especially in the US, suggests that while finance can be separated from real economic trends for extended periods, and can even profit by such separation, it cannot do so indefinitely.

All this means that, while the world capitalist system may not yet be in full-fledged crisis (even though parts of it clearly are), there are systemic instabilities which suggest that the current pattern cannot continue without some changes or even substantial overhaul in the medium term.

(To Be Concluded)