Global Capitalism and Contemporary Imperialism

Globalization brought about important changes to global capitalism, many still not fully reflected in Left analysis and thinking. Capitalism has gone through a number of eras, from mercantilism, colonialism, imperialism to globalization. Throughout this history the fundamental logic of the system has remained. But the ways in which it unfolds and is expressed does change. And with those changes the character of the capitalist class, the working class, and the relations of production take on new aspects.

Commodity production for surplus value under conditions of competition, the exploitation of labor and nature and accumulation through exploitation are unchanging characteristics. Furthermore, Marx and Engels described capitalism as a worldwide system of production and exchange. But by the beginning of the twentieth century significant new analysis was developed by Lenin, Luxemburg, Kautsky, Bukharin and others. While different viewpoints were presented, defining imperialism as a new stage of capitalist development was common.

Lenin’s work had the most profound and lasting impact. Most importantly he analyzed the development of monopiles, the close alliance between banking and industrial capital, the dominance of finance capital and its export, international debt, and the territorial division of  the world among the most advanced capitalist countries. Imperialism was a competitive nation-centric world system, with national industrial champions promoted and protected by their states. Competition in the Global South was over resources and territorial control that shut out other national monopolies. Finance capital was also nationally based, and banks gathered together an alliance of specific national industrial giants. For example, J. P. Morgan Bank had controlling interests in Aetna, General Electric, Harvester, International Mercantile Marine, Pullman, U.S. Steel, Western Union and 21 railroads. Mellon Bank founded and managed Alcoa, Gulf Oil (now Chevron-Texaco), Westinghouse, Rockwell, Heinz, General Motors, and Standard Oil (now Exxon-Mobil).

The Left still adheres to most aspects of Lenin’s analysis, with the exception of territorial control. Colonial governments were swept out by the tidal wave of post-1945 independence struggles, spanning Indonesia in 1945,  India in 1947, China in 1949, the hard won victories in  Algeria, Vietnam, Cuba and many others. But imperialism soon adjusted using debt (already noted by Lenin) and the control of global commodity prices to enforce economic dominance.  There were some efforts in the Global South to develop an independent industrial base, but most countries served as a source of cheap labor and resources, politically ruled by a comprador class of elites beholden to imperialism.

Finance Capital

Globalization is still a system of monopoly capitalism and finance. But there have been key transformations in the organization and character of both. The most important changes have been the undermining of the specific national character of capital, and the transnationalization of monopolies and financial institutions. Finance capital is still key, but the composition of capital has altered. In Lenin’s time, capital had a specific national identity, whether British, French, German or US. I don’t mean money, where the dollar still holds sway. But in a more fundamental sense of assets and investment capital. Transnational financial institutions, no matter where headquartered, represent and serve the transnational capitalist class (TCC), not a specific national bourgeoisie.

Institutions such as BlackRock, Barclays, J.P. Morgan, Goldman Sachs, Deutsche Bank, the Commercial and Industrial Bank of China, State Street, Vanguard and others, function as organizational centers for transnational capital. They create thousands of different investment vehicles. These are different ways to organize and invest capital, attracting capitalists the world over. As transnational capital is centralized into various funds it goes out to countries in every continent. It goes into stocks, bonds, equities, futures, real estate, money markets, venture capital (the list goes on), making profits off the labor of working people, as well as purely speculative activities. The surplus value is re-centralized into these financial firms, distributed back to TCC investors, until its recirculated once again.

The level of transnational centralization was investigated in a study by the Swiss Federal Institute of Technology in Zurich that  traced ownership of transnational corporations. Examining a database of 37 million companies and investors, the study looked at shareholding networks, focusing on a core group of 147 predominantly financial institutions that control the most important sectors of the entire network. Situated in these financial institutions were 47,819 individual and institutional shareholders from 190 countries holding principal positions within the world’s largest transnational corporations.  In other words, members of the TCC, living in countries around the globe, invest their wealth through world spanning financial firms that hold positions of power in the world’s 15,500 biggest companies.

The world’s largest asset holder, US-headquartered BlackRock, recently announced the majority of its new investors are foreign. That should be no surprise because foreign investors own about 40 percent of US corporate equities. Retirement accounts, consisting mostly of middle class US households, own about 30 percent, and 5 percent are held by NGOs, leaving wealthy US investors with 25 percent. In terms of decision-making power we need to discount the millions of small households. So while US capitalists have the largest holdings based on singular national identity, collectively foreign transnational capitalists hold the greatest amount of US equity.  In June of 2021 foreign holdings of all US securities (debt, bonds, derivatives, as well as equities) totaled $27 trillion, adding about $14 trillion to their investments in equities.  

Of course, US capitalists themselves have vast amounts of foreign investments. The US still records the largest amounts of foreign direct investments (FDI), with China as number two. But this data points to the deep integration of transnational capital, not simply the power of US capitalism. When we examine US FDI we’re not simply looking at US capital, but investments from majority owned US corporations that also have foreign investors. Majority ownership simply means 10 percent or more. A similar viewing of equity holdings is necessary. The 40 percent owned by foreign TCC members mixes with the 25 percent owned by US-based transnational capitalists. Although the data sets are reported in individual silos, in reality they operate as integrated capital.

Global Production

Another way to understand the transnational economy is to examine manufacturing. Most people still think in terms of national industrial champions. The old GM slogan of “What’s good for GM is good for America” is a perfect representation of this thinking. When GM used that marketing device it had the majority of its sales, production and employment in the US. But that’s no longer true. As of 2006 GM’s assets in the US were $40.5 billion compared to $91 billion abroad; home sales were $73.5 billion compared to $149 billion abroad; and employment was 145,000 US workers with a global workforce of 243,000.

So what exactly do we mean when we think of a corporation as uniquely American?  Are we talking about corporations committed to maintaining a large base of good paying American jobs? GM and the rest of the auto industry instituted a two tier wage system years ago that will permanently lower their salary structure. Do we mean an industry pledging allegiance to protect and build the national economy first and foremost before their global interests? GM’s largest and fastest growing market is China, and those vehicles are built in China not exported from the US. Or does the definition simply mean US-located headquarters linked to an assumption of national economic loyalty? But as we all know, loyalty is first and foremost to major stockholders, many of whom are foreign.

Some may argue that by national champions we mean corporations are promoted and defended by their own states. Some aspects of this may be true, but the bottom line is that many of the major investors in corporations (whether US, German, Chinese or Russian) are foreign capitalists. Therefore, states mainly defend and promote the TCC, not their “own” capitalists. Moreover, when we use the term “national” we speak to the interests of all citizens of a nation-state, not just the ruling class. The bargain of the social contract is citizenship and economic well-being in return for national loyalty. It’s the breaking of this relationship that is causing today’s political instability.

Apple is another good example of the transnational/national conflict, particularly because of their massive supply chain spans the world. Apple has about 90,000 workers inside the US, but another 64,000 abroad, and about 700,000 working as sub-contractors among 4,000 global suppliers. Manufactured parts from this global assembly line go to China where they are assembled into phones and then sent to the US and elsewhere. This movement of parts is considered exports from a nation-centric viewpoint. But they are really an intra-firm trade of Apple importing and exporting to itself. Politicians and media playing to working-class fears and anger point their xenophobic finger at China for “unfair” trade practices, neatly avoiding any discussion of Apple’s transnational character.  When the Left operates from a similar nationalist viewpoint it loses sight of the true character of global capitalism, and misaligns our fight with the integrated nature of the contemporary imperialist system.

By taking an overview of the transnational economy we can see its built around specific practices that are clearly different from the previous international system. A brief description would include the following: foreign direct investment, cross border mergers and acquisitions, foreign affiliates, global assembly lines, cross border financial flows, transnationalization of corporate boards and networked relationships, foreign investment activity by sovereign wealth funds, the vast network of national subcontractors tied to transnational corporations, the transnational character of stock ownership, the role and function of global cities, the ratio of foreign owned assets, employment and sales to similar national figures, the percent of foreign revenues and profits, and tax havens for both corporate and private accounts. Some of these characteristics existed in Lenin’s time, but have qualitatively expanded in depth and scope.

Politics and Superstructure

All this needs to be structured, rules need to be written, laws need to be passed. As governments got down to the job of creating this new superstructure they were captured by transnational elites through the involvement of political parties, industrial associations, lobby groups, and strategic policy institutes. The emergence of a new transnational capitalist class was based in the above economic and political activities, but also on a sociological level through such networks as exclusive clubs, fraternities, private schools, the boards of arts and charitable institutions, elite communities and so on. Hegemonic blocs of transnational forces came to dominate governments implementing neoliberalism as their platform to re-engineer the relations of production. The debate over whether governments became less powerful avoids the real question of who do governments serve and what fraction of capital is hegemonic.

While the above activities are directed towards the common goal of constructing a unified system for global capitalism, a common project does not mean a common policy. There continues to be major differences over how the new world system should be run, and each country adopts according to their own history, culture and economic needs. Emerging powers like China and Brazil, both very much part of the global economy, may clash with the US or Europe over regional trade pacts, the control of global institutions, or state-directed economic policy. It’s not that these countries are anti-global, but that they want a larger say and more influence over the rules of the game. Consequently major transnational institutions such as the International Monetary Fund, World Bank, World Trade Organization and G20 take on greater importance as political arenas where global political and economic policies are fought over and decided.

Neither do national traditions and identities just fade away. In fact, the exact opposite occurs. A battle goes on between those benefiting from old national arrangements with those who advocate and fight for the new global order. These battles result from the changing character of the relations of production. The postwar social contract between labor and capital has been largely undermined. The working class faces a vast expansion of precarity, part-time work, self employment, the stagnation of wages, greater insecurity when facing the social costs of health and education, and the creation of a global proletariat in linked cross border assembly lines. The Keynesian arrangements that came out of the Great Depression and World War II have been replaced by the policies of neoliberalism. The result is a loss of governmental legitimacy and growing anger which finds both Left and Right expressions. In fact, right-wing nationalism is the offspring of the excesses of globalization.

The crisis of legitimacy has created strains between state elites and the TCC. Charged with maintaining social stability and political support for capitalism to insure the smooth functioning of the market state elites oversee and regulate the relations of production. As Nicos Poulantzas pointed out, the state is a condensation of class relationships and works to maintain class hegemony. But this means acting within an unstable equilibrium of compromises. With intensifying social contradictions and environmental crises caused by globalization, state elites have responded to nationalist and populous pressures with trade wars, military maneuvers, and rhetorical attacks against foreign countries. Such acts disrupt the free flow of cross-border capital and the coordination and expansion of global production. This is why the US Chamber of Commerce, the National Association of Manufacturers, and other major corporate lobby groups have consistently opposed tariffs and trade wars.

Some of the greatest tension has been between the US and China, although their mutual economic relationship has been at the core of globalization. But for all the hot rhetoric US investments in China, as well as aggregate transnational investments, have continued to climb. There are about one million transnational corporations operating in China, and it is still the number one destination for global FDI. US investors held $831 billion worth of mainland stocks and bonds at the beginning of 2020, and investments from Japan and the UK are much larger. As for new listings on US stock markets, the value of Chinese companies rose 204 percent in 2021, blowing away the 49.6 percent gains for US listings and 31 percent gains for European corporations. Overall, US-China economic interpenetration totals $3.3 trillion.

Richard Haass is chair of Washington’s most elite foreign policy think tank, the Council on Foreign Relations. As Haass has recently stated, “The United States, China, and the rest of the globe cannot fully uncouple when national economies, financial markets, and supply chains are irreversibly tethered together. A great-power steering group is the best option for managing an integrated world no longer overseen by a hegemon.”

The Impact of Technology

Lastly, we need to consider the qualitative changes brought about by technology. Without the revolution in information and communication technologies the real time command-and-control of global capitalism, and the organization of data that makes it work, would be impossible. The SWIFT system of computer payments transfers that recently got attention for limiting its use by Russian banks, is just one part of the system in which trillions of dollars cross borders every day. A trillion doesn’t mean much to the average person. But to understand the amount of currency rocketing through the digital world, compare one million seconds, which runs just 12 and a half days, to one trillion seconds which spans 36,000 years.

Let’s examine just one market out of many, the foreign exchange market for cross-border currencies that trades $6.6 trillion each day. This market doesn’t invest in building anything, it just trades one currency for another. Computers are programmed to look for arbitrage between currencies, or the small differences in the price of money in different parts of the world at the same moment in time. Algorithms operating in tens of thousands of computers are reading each other’s information. J.P. Morgan’s computer may see that euros are being sold for one-tenth of a penny less in Tokyo than in Frankfurt. Within milliseconds the computer will buy hundreds of millions of euros in Japan and offload them in Europe, thus profiting several millions of dollars. That speed is made possible by fiber optic cables that transmit data at about a billion feet per second—speed enough to circumnavigate the earth 7.6 times a second. Some 90 percent of all money moving between countries is for financial products. Bain Capital reported that by 2010 financial assets reached $600 trillion, or ten times the value of the global output of all goods and services. Such is the system built by the TCC, and its use of technology to expand markets.

This mix between technology and globalization means profits are acquired on the power and speed of an algorithm, written by skilled programmers, often in teams of 100 to 200. Never in history could the work of so few produce a technology that continues without constant human oversight and produces billions in profits. This type of technology is a difference in kind, working at speeds no person can ever match, and without real time human control and direction. Marx wrote about the shrinking of time and space with the development of world markets. For Marx this was the time it took sailing ships to bring American cotton to the mills in Manchester, and later the increased speed of rail. But neither he nor Lenin could ever imagine that capital could leap from one side of the planet to another in milliseconds.

This aspect of globalization, particularly when acting in purely speculative markets, undercuts the value of labor for capital. The results are clear. When the point of production is inside a computer and work is carried out by an algorithm the need for a well-financed social contract is no longer necessary. Wealth can be accumulated in ever greater quantities with less reliance on living labor. A perfect recipe for neoliberalism, but one which creates greater social crisis’ and an ever more unstable capitalism.  The entire cryptocurrency market that is a creation of algorithms based in factious speculative capital is but one example.

The Left must have an understanding of both the transnational and national in order to have a viable analysis of global capitalism. If we view the world only through the lens of nation-centric politics and economics we miss fundamental realities that shape our times. The central contradiction is between national and transnational forces. Each exists side-by-side and in the same institutions. The struggle between these linked socioeconomic systems is determined by the balance of class forces, and ebbs and flows with the political struggle. The world is neither fully national or transnational, but in the midst of a historic dialectic in which the synthesis is still unfolding.

Can the Left affect the struggle in a way that determines the character of the synthesis?  Globalism created its dialectical opposite, reactionary nationalism. The appeal of “Make America Great Again” is not only to white supremacy, but also to Americans who benefited from a nation-centric political economy. It’s why Trump has a large political base among the small- and middle-size business class which numbers 30 million, and employed 48 percent of all workers before the pandemic. As globalists and reactionary nationalists fight over political power, how does the Left create an independent strategy? How do we oppose both wings of the capitalist class while recognizing the main danger is white supremacy and authoritarian capitalism?

Part of the answer may lie in the Green New Deal as a program for jobs, as well as social and environmental justice. This may mean tactical unity with sections of capital that want to build the ecological modernization of the means of production, engage in social justice reforms and oppose neo-fascism.  After all, it’s not the Left that’s financing and building solar panel and wind turbine factories, and the planet can’t wait for the ecosocialist revolution to start this transformation. It also means the Left must avoid jingoism in our demands to rebuild the US economy, and stress international solidarity.  Part of the Republican and Democratic strategy to win political support is to attack the most convenient foreign enemy, China – while ignoring that US corporations sent production and investments to China as a cornerstone in constructing globalization, which both parties supported. All workers, whether in China, Mexico or the US, deserve good paying jobs with good conditions of labor. The call from Marx for workers of the world to unite is more relevant today than ever before. Developing ways to organize and express this unity is an urgent task. Rebuilding our economy with the Green New Deal should not be sold as competition against China, but as a road towards social and environmental justice that needs global cooperation and coordination.

We should support the development of an environmental proletariat in the US and China.  Our target is to expand green manufacturing and make it a unionized industry, addressing environmental racism at home and abroad.  We need a strategic path that rejects both neoliberal globalization and authoritarian capitalism – a path that engages in the struggle to transform our economy, builds Left independence, and leads towards an ecosocialist future.