Supply-Chain Democracy and the Circuits of Imperialism
TEXT AND CLASS
TEXT AND CLASS
Concepts are abstractions of the actual conditions of life and, for this reason, historical maps of the class conflict that determines which theories are taken as accurate representations of the "real" and which are marginalized or excluded as "terroristic" threats to the existing order (Lyotard, The Postmodern Condition 63). In other words, although they reflect the material developments of labor and therefore must be understood in relation to what "is," concepts are never simply neutral reports of the existing. They represent a divided space in which competing classes "become conscious of the conflict" over what "is" and "fight it out" (Marx "Preface" to Contribution 21). It is in this context that since its first emergence in the 1980s, "globalization" has become the premier concept in bourgeois cultural and social theory for ideologically justifying as beyond exploitation the regime of capital accumulation which emerges in the years following the Second World War, covering the period from what is known as the "long boom," through the period of global economic recession described as the "long downturn," and up to the contemporary moment (Brenner, The Economics of Global Turbulence).
In the mainstream and popular presses, globalization is championed as the period of capitalism's ultimate triumph over communism with the end of the Cold War and, furthermore, the transcendence of the fundamental contradiction between capital and labor in the apparent centrality of cultural production and immaterial labor to the expansion of capitalism globally. As Chris Harman writes, the "new orthodoxy" of globalization is "used to mean that the world economy has reached a new stage, which governments and workers alike are virtually powerless to withstand" ("Orthodoxy" 3). The reading of globalization Harman refers to, in which it is concluded that "More or less everyone has learned to accept, if not necessarily love, capitalism—in much the same way as they have democracy...At this time, no one can see any effective alternatives to the combination of a market economy and a democratic political system" (Giddens and Hutton, Global Capitalism 11) functions ideologically to banish any discussion of the exploitation of labor that is at the core of capitalist production by substituting changes in how something is produced or where production takes place for a transformation in the fundamental logic which governs production under capitalism. The ideology of globalization as "post-capitalist" (Drucker, Post-Capitalist Society) is based upon two interrelated arguments. First, it is argued that globalization corresponds to a "broad cultural shift…away from a dominance of production over our everyday lives to a dominance of consumption" (Tomlinson 88), in the sense that the primary source for the accumulation of new value is said to no longer be labor or manufacture (material commodity production), but knowledge and its embodiment in communications and other "digital" technologies. According to sociologist Helmut Willke, the shift to a digital, global economy means that "digital goods are weightless and they move along the fiber optic lines at the speed of light" (199) and thus operate beyond the former political and economic controls of industrial, national capitalism. It is on these terms that globalization is understood to constitute a new stage of capitalism based upon the "inexhaustible" resource of information which, it is assumed, disrupts the economics of scarcity that manifest in the class inequalities of capitalism and removes the divisions of ownership that constituted class identities in the pre-global age by placing the means of production in the hands of every "creative" person. As Mark Poster argues, "There is no need for a capitalist market in the area of digital cultural objects, and these objects need not become commodities…indeed, digital cultural objects resist market mechanisms" and, in turn, transform "the nature of the producer and the consumer, blurring the boundary between them" (Information Please 195-196). Accordingly, the global expansion of a new regime of capital accumulation based upon knowledge is said to have the effect of creating new spaces of cultural heterogeneity and exchange in which the "fixities of nation, community, ethnicity and class," as Jan Nederveen Pieterse states, "become fragments" dispersed in the flows of financial markets and cultural exchanges (83). Or, to put it more concisely, it is argued that "the notion of a class society remains useful only as an image of the past" (Beck 91). The elevation of digital over analogue production is therefore represented as ushering in a more "democratic" globalization than the internationalism of communism because of the ways in which it supposedly re-maps cultural and political institutions as spaces defined in the terms of individual desire and personal lifestyles, rather than social need (Waters 24). As management theorists Görtz and Bleher write, "technological innovations have enabled an increasing number of individuals to choose, create, and cultivate transnational communities according to their personal interests, values, habits, and attitudes" ("Transnationalisation" 297).
Second, it is argued that the development of post-labor means of production creates the conditions for the expansion of capital globally, in turn disrupting the traditional boundaries between nations, thereby creating a "flat" or "borderless" world of free cultural and financial exchange (Friedman, The World is Flat; Ohmae, The Borderless World). What "flat" or "borderless" signifies is an increased "capitalization" in the post-WWII period of formerly socialist and colonized nations and their incorporation into the global system of production, either through the shifting of manufacture from the "North" to the "South" ("outsourcing"/"off-shoring") or by becoming integral players in a post-national "supply-chain" that has been enabled by advances in communication as well as the opening up of trade and financial barriers to free up the flow of formerly "trapped" or unproductive capital. Proponents of the "flat world" thesis point to the expansion of international trade which, according to the IMF, "has grown five times in real terms since 1980, and its share of world GDP has risen from 36 percent to 55 percent over this period" (IMF 137). This "flattening" of the global economy, in which it is said that the expansion of production and trade relations between nations constitute the emergence of a level playing field between formerly unequal or hostile nations, is essentially premised upon a theory of a "universal evolution in the direction of capitalism" (Fukuyama xv) in which there is no longer any "outside" to capitalism. In this reading, the "developed" economies of the North have moved beyond the traditional economic cycle, while transplanting the conditions of new growth and prosperity to the "developing" nations in the South. As Martin Wolf writes, "In the post-war era, the most successful route to development seems to have been via the export of labor-intensive manufactures, the route on which China has followed Hong Kong, Singapore, Taiwan and South Korea" (147).
The "problem" for the ideologists of capital and this image of globalization as leveling the world is that insofar as concepts are abstractions of reality the continuing existence of deep social and economic inequalities cannot be solved at the level of ideas and thus still have to be explained. That is to say, even though "globalization" has become synonymous in theory with the end of the economic challenges to capitalism's dominance, this does not change the reality that the expansion of capitalism globally has corresponded in actuality with a rising level of inequality and a sharpening of the class divide, both between the North and South, as well as within the respective countries of each. This is because capitalism is a system that depends upon the exploitation of labor. Regardless of whether or not the primary location of production is the North or the South, or whether the workers work in factories that are highly mechanized or newly digitalized, it is the production of surplus value extracted from the surplus labor of workers by owners that drives capitalism forward. That exploitation remains even in the "global" factories of today is supported in a recent study from the World Bank which, despite touting the results of "free-market" globalization as having reduced the number of people living in poverty—defined as the ridiculously low, and ultimately arbitrary, sum of less than $1 per day—by 260 million in the period 1990-2004, nonetheless showed that real inequality between the rich and poor has actually increased during this time in 46 of the 59 developing countries surveyed (4). Over the same period, a study by the International Monetary Fund also found that "Inequality has been rising in countries across all income levels, except those classified as low income" and that overall "the income share of the richest quintile has risen, whereas the shares of the remaining quintiles have declined" (158-159). That the two main representatives of capitalist finance found rising inequality and a sharpening of the class divide despite representing globalization as moving beyond class binaries is due to the fact that the economic contradiction between capital and labor does not reside at the level of the concept—in other words, the conflict over globalization is not simply a political or intellectual struggle over how to best define the term—but rather in the property relations that enable the owners of the means of production to accumulate capital at the expense of those who own only their labor power. As Marx argued more than one hundred fifty years ago and which is proven once again by the increases in global inequality, "even the most favorable situation for the working class, namely, the most rapid growth of capital, however much it may improve the material life of the worker, does not abolish the antagonism between his interests and the interests of the capitalist" (Wage Labor and Capital 39). Even as developments of labor productivity result in new, higher standards of living for some workers, these developments are always restricted under capitalism to the accumulation of surplus value and thus it is always the interests of the bosses that will take precedence over the needs of the working class.
Insofar as these social contradictions cannot simply be ignored if one is to be taken seriously as a social critic, economic divisions have to be explained in terms that can be recognized institutionally as "real" explanations of the existing while at the same time reassuring the intended audience that the problem is not with the economic status quo. This is the function of ideology: to make the exploitation that is inherent in the exchange of labor for wages appear as "fair" in the commonsense. In this context, what one finds in the most popular cultural and economic discourses in the North is an inverted and distorted representation of the existing social divisions which responds to actual developments in production but places the effects of exploitation in front of the causes and substitutes a range of pluralizing concepts for social binaries such as class. Instead of the rigid social structures of industrial/national/analogue capitalism, workers are told that post-industrial/global/digital capitalism "transcends the 'us' versus 'them' dualism that prevails in cultural and political arenas (Pieterse 117), that "there has been a sharp move…away from bipolarity and the coming into being of a much more multipolar international circumstance" (Robertson 184), that "the notion of class retains a material value which is indispensable to make sense of the experience of concrete historical subjects" but "does not explain or make sense of the heterogeneity and yet commonalities of internet users" (Terranova 82), that "inequalities by no means disappear" but are "redefined in terms of an individualization of social risks" (Beck 100), that "class cannot be ignored" but that it "is not the single, ultimately determining instance" of globalization (Robbins 108), and if class stratification still exists "that stratification pattern is now focused on possibilities for consumption rather than production" (Waters 56). Any theory of globalization, in other words, which situates the growing worldwide economic divisions as a result of property relations at the point of production is defined as too reductive to effectively address the plurality of contesting forces engendered by the process of globalization which "have arguably served to reinforce the sense of the significance of identity and difference" (Held 211). Yet, class does not simply disappear. Instead, class becomes in these discourses an amorphous and fluid relation of "power" which has no recognizable ties in the mainstream readings to capitalist exploitation. This is what has made the ideology of "globalization" so effective for the ruling class—it takes up actual developments in production, but frames the entire debate and its impact on global society as if there is no exploitation in the wage-labor/capital relation.
Globalization, particularly for many on the left, is instead situated as a struggle for cultural hegemony between the "homogenizing" tendencies of the global and the "heterogeneous" forces of the local (Appadurai 221). According to this reading, the main "problem" with globalization is not exploitation, but the dominance of the global marketplace by Western corporations such as McDonald's, the Gap, and Coca-Cola and the threat that this cultural homogeneity poses to local diversity and difference. Against the corporate control of culture, the means for resistance are said to be located in local acts of daily consumption that takes place in "the streets, the houses, the churches, the workplaces, the bars, and the shops that lie beyond the business or tourist centers" (Tomlinson 7). George Ritzer, for example, argues in The Globalization of Nothing (and its sequel The Globalization of Nothing 2) that "We live in an era in which, truly for the first time, capitalism is unchained and free to roam the world in search of both cheap production facilities and labor as well as new markets for its producers" (Nothing 81). And yet, he concludes from this that "it is important not to reduce all of this to (capitalist) economics alone" (Nothing 82). Instead, Ritzer states that too much attention has been paid to what he calls "productivism" and that the main battle today is between the homogenizing forces of "nothing," which he defines as "centrally conceived and controlled social forms that are comparatively devoid of distinctive substantive content" (Nothing xi) or "grobalization" (Nothing 75), and the resistance of "something," defined as "a social form that is generally indigenously conceived, controlled, and comparatively rich in distinctive content" (Nothing 7) or "glocalization" (Nothing 75). Based upon the reading of globalization as the conflict between "grobalization" versus "glocalization," Ritzer declares that to "go beyond capitalism" (90) is to find and celebrate the "local farmers' market" (Nothing xii) "flea markets, craft fairs, and co-ops" (Nothing xiii), and above all the "craft consumers…who single out parts, or a segment, of the available mountain of nothingness and alter them, sometimes so dramatically that they become virtually unrecognizable" (Nothing 2 207). According to Ritzer, the use of commodities by "regular" people, regardless of their class status, shapes the meaning of the commodity and thus provides the solution to corporate hegemony. It is, to put it on slightly different terms, a theory of spiritual values in the market place. What matters is not the broader logic of production, but the local intentions of the consumer. If those intentions are "ethical" or "creative"—in other words, if they are "spiritually" just—then the problems of inequality no longer carry material significance and class is simply one difference among many. Differences, in this sense, are always local and reside on the surfaces of capital, in the spaces of cultural consumption.
On the right, one also finds economic differences rewritten as cultural differences, and in many of the same terms, but the sides are reversed. Instead of the image of encroaching corporate homogenization led by the United States imposing its cultural will on the local communities in the South, it is precisely U.S. and European capital that is the guarantee of heterogeneity and difference. As David Pryce-Jones writes in "Why They Hate Us", "Democracy means Us and Them. Yet nothing in the history or the culture of Arabs and Muslims allows them to put this into any form of political practice. From long ago they have inherited a cast-iron absolute system, in which the ruler does as he pleases, and the rest have no redress, indeed going to the wall" (Pryce-Jones 8). According to this logic, which has perhaps been most popularly advanced in Samuel Huntington's The Class of Civilizations, global conflict is driven today by a cultural divide between the values of "democracy" and "free enterprise" in the West and authoritarian, closed, anti-capitalist regimes in the East. Huntington writes, "[i]n the post-Cold War world, the most important distinctions among peoples are not ideological, political, or economic. They are cultural" (21). It is in these terms that Huntington rewrites economic divisions as cultural differences. He argues, "[i]n this new world the most pervasive, important, and dangerous conflicts will not be between social classes, rich and poor, or other economically defined groups, but between peoples belonging to different cultural entities" (28). Again, sharpening global class divisions are constructed as those between homogeneity and heterogeneity in which the "West" represents a civilization of "democracy, free markets, limited government, human rights, individualism, the rule of law" with the "Rest" who are said to oppose such values (184). These divisions are then naturalized as the source of capitalist development and expansion—an updated version of Weber's "protestant ethic" in which "values" and "attitudes" produce reality, rather than being an effect of it. Although Huntington himself believes it to be "immoral" to impose Western cultural values on the East (for the "paternalistic" reason that that the East is not prepared or interested in any form of "democracy" or "human rights") others on the right, such as "anglobalization" historian Niall Ferguson, take this thesis and argue that globalization is the means by which to spread through a new colonial project the culture of democracy, free markets, and individual liberty to what he describes as the "failed states" of the South that lack the "cultural values" of the North (Ferguson 25).
In the substitution of the discourse of "culture" and "values" for class relations what is placed outside the boundaries of "real" discourse by both the left and the right is any theory of globalization as imperialism, in which the primary goal of capital expansion is explained as a necessary effect of the material conditions for the further accumulation of capital. This is what has made "globalization" such an effective concept for global capital—it substitutes for economic imperialism a world of spiritual conflicts and cultural bargains. In this context, while a number on the right are calling for reconsideration of "imperialism" as a way of spreading "democracy," many on the left have simply abandoned the theory of imperialism and argue that "the term imperialism may no longer be adequate to address the present situation […which…] is less coherent and less purposeful than imperialism" (Pieterse 77). Or, as Hardt and Negri put it more succinctly, "imperialism is over" (Empire xiv). To draw connections between the global expansion of capitalism and rising inequality is to be too reductive and trapped in the metanarrative of the past (Waters 186). Instead, the world is described as "multidimensional" (Steger 14), "without borders and spatial boundaries" (Waters 5), and "a complex, overlapping, disjunctive order, which cannot be understood in terms of existing center-periphery models" (Appadurai 221). What is at stake for both the right and the left in deploying the rhetoric of cultural difference as a substitute for class divisions is obscuring the economic realities of imperialism in order to maintain the illusion of the possibility of capitalism without exploitation that works at the level of ideology to divide the global working class against one another and bind them to the capitalist system.
In contrast to these narratives, which are superficial readings of the contemporary in the sense of describing rather than analyzing recent economic developments and therefore remaining on the surfaces of society rather than addressing its fundamental logic, I argue that in actuality capitalism has become more itself, not less, by going global and that the most effective means for understanding the interests of capital today remains the historical materialist theorization of imperialism. While the dominant approach to the developments of globalization obscures any discussion of the material conditions in which global society is currently being produced by inverting the relationship between culture and the economic, what is represented as the emergence of a fundamentally new moment in capitalism based in communication technologies, cultural and economic networks, and immaterial labor is best understood as the global mode of accumulation corresponding to the stage of monopoly capitalism as explained by Lenin in Imperialism, The Highest Stage of Capitalism: namely the increasing concentration and centralizing of production in monopolies, the subsequent development of "finance capital" and the export of capital to "underdeveloped" regions required by the rising level of organic capital in "developed" nations, and the division of the world's markets and resources between the economic monopolies. What makes such a view so controversial today, particularly for the Northern Left, is that while theories of globalization have increasingly had to attend to the growing contradictions of global capitalism it still remains almost universally accepted, even among more "radical" social theorists who argue that capitalism is a global system of "exploitation," that the labor theory of value, which Lenin argues is essential to understanding why capital must expand globally and why it can be transformed into socialism, no longer has any explanatory value (Brenner 11; Wallerstein 20; Hardt and Negri, Multitude 150).
In contrast to the dominant cultural readings of globalization in which the culture, politics, and economics of globalization exist in "overdetermined" relation to one another, I will show why it is necessary to return to the work of Marx and Lenin if one is to understand why "globalization" is a social theory whose meaning is determined by property relations, in the division between those who own and control the means of production and those who own only their labor-power, and furthermore that this view is supported by the actual developments of the global economy in the post-WWII period. What one finds is that in contrast to the end of imperialism narrative, capitalism has in actuality become even more "universal" than ever before, as the division between those who own the means of production and who as a result exploit those who own nothing but their labor power is heightening globally, forcing the question of how the future of production will be organized. In order to develop this thesis, I address the digital theory of "networks," and in particular the theories of Manuel Castells and Thomas L. Friedman, because of the way in which the image of the "network" increasingly operates as both the metaphor for, as well as the new managerial logic of, global capitalism. What I show is that the development of mass production and exchange on a global scale, which is central to the arguments that "network" capitalism has replaced imperialism as the logic of globalization, cannot in itself constitute a "break" from the fundamental structures of capitalist society such that production and labor are replaced by consumption and immaterial labor. Through an analysis of the superficial arguments that the culmination of globalization lies in the production of a post-class, post-capitalist, post-imperialist "network" economy, I argue that what is at stake in reading globalization is the question of the organization of production in society: whether society will continue to be divided in terms of owners and workers or, on the contrary, whether the inequality of class society will be transformed through the collectivity of the international working class.
The dominant ideology today is that the labor theory of value has lost its explanatory effectivity because globalization represents a fundamental transformation in the relations between capital and labor resulting from the shift from an industrial to a post-industrial and now to a digital economy in which value is created not through the exploitation of labor but the generation of knowledge and the consumption of commodities. More specifically, the emergence of globalization as "the concept, the key idea by which we understand the transition of human society into the third millennium" (Waters 1) is said to correspond to the development of a new economic dynamic defined by the evaporation of social boundaries of nationality, ethnicity, class, and region and the opening of cultural flows across all borders. This view is shared by cultural theorists and management theorists alike. In The Global Market, for instance, management theorists John Quelch and Rohit Deshpande differentiate between globalization and previous forms of international and transnational production on the grounds that "globalization implies economic activity in the absence of national boundaries, whereas internationalization implies an increasing number of transactions across the borders of nation-states" (25). Similarly, Mike Featherstone describes globalization in the introduction to Global Culture as "cultural integration and cultural disintegration processes which take place not only on an inter-state level, but processes which transcend the state-society unit and can therefore be held to occur on a trans-national or trans-societal level" (1). The ridiculous irony, of course, is that the expansion of capitalism globally is used here as "proof" that capitalism is no longer itself—that it is not based upon the exploitation of labor—when in fact the global division of labor points to the reality that capitalism has never been more "itself" than it is now. That is to say, the globalization of capitalism means not the end of exploitation, but that the division of property between owners and workers now exists on an international scale.
Perhaps the most influential of the early "post-national" theorists of globalization is management guru Kenichi Ohmae who in The Borderless World and The End of the Nation State argues that the expansion of capital globally effectively draws a close to the historical necessity of the nation-state. According to Ohmae, capitalism is increasingly organized around "regions" rather than states and, in turn, nation-states "need to cede meaningful operational authority to the wealth-generating region states that lie within or across their borders" (End 211). This is because, Ohmae argues, "in terms of real flows of economic activity, nation states have already lost their role as meaningful units of participation in the global economy of today's borderless world" (End 205). Instead, in his work as a management theorist and consultant to global capital, Ohmae proposes that capital needs to move towards an "interlinked" economic model in which goods and companies "change hands across borders as easily as paintings, patents, and real estate" (Borderless xii). This post-nation economy is premised upon the ability to generate more value outside of the imperialist model of globalization in circuits of trade and exchange, if "imperialism" is understood solely in political terms of direct colonialism. "Wealth," he writes, "is now created in the marketplace rather than in colonies and in soils that contain natural resources" (Borderless xii). What the "borderless" theory of globalization is responding to is the reorganization of production globally in the post-WWII period, in which the global integration of production and markets that exists at the beginning of the Twentieth Century and which sharply declines with two intra-imperialist wars and the collapse of the colonial division of the world begins to re-emerge in the 1950s and which receives a sharp boost in the post-colonial, post-Cold War era of the Twenty-First Century. It ideologically disconnects the expansion of global capital from the logic of exploitation in order to represent as "new" what is necessary for capitalist production—the constant global search for cheaper sources of labor and raw materials.
That is to say, the fact that capital is a global system is not new. As Marx and Engels wrote more than 150 years ago: "The need for a constantly expanding market chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle, everywhere, establish connections everywhere" (Manifesto 487). What we are witnessing, then, is not a new social formation, but a heightening of the inherent tendencies of capitalist production. It is at the beginning of the Twentieth Century that, while the logic of capitalism does not change, one starts to see the global logic of capital as theorized by Marx and Engels become the dominant mode of organizing production. As Chris Harman describes, "Until the 1880s most industries consisted of a multiplicity of small producing units. This began to change at the end of the century with the concentration of production within each major company into trusts and combines which set out to conquer world markets from rivals abroad" ("Orthodoxy" 9). Similarly, Hirst and Thompson mark that from the emergence of manufacturing multinationals in the second half of the 19th century, "[i]nternational business activity grew vigorously in the 1920s as the truly diversified and integrated MNC matured, but it slowed down during the depressed 1930s and war-torn 1940s" (20). Although global capital expansion slows in the middle of the Twentieth Century as a result of the capitalist World Wars, in the 1960s the levels of international integration of production and trade start to return to the pre-WWI levels (Brenner 55). What happens in the post WWII period, particularly in the United States but also in Europe and Japan, is a restructuring of the global economy enabled by investment in technology during the war, which increased productivity and the availability of capital for investment abroad. The first evidence of this global restructuring emerges during what is known as the "long boom," the period between roughly between 1950 and 1973 when "the advanced capitalist world experienced record rates of growth" (Brenner 39) and investment in developing new areas of production outside of the "home" market surged. For example, "[b]etween 1957 and 1968, manufacturing investment by majority-owned foreign affiliates of US companies in new plant and equipment overseas grew at an astonishing annual rate of 15.7 per cent" (Brenner 56). Although the "long boom" gave way to global economic downturn after 1973, due to overproduction and a falling rate of profit (Duméil and Lévy 21-28), it is in the 1980s that capital once again begins to restructure and return to development of global manufacture, aided in part by advances in computers and telecommunications which "made possible unprecedented levels of coordination between geographically separated productive units" (Brenner 201). For instance, in a sector of the economy not normally considered part of the "digital" revolution but nonetheless effected by it, "[o]cean freight costs per short ton, in 1990 US dollars, have come down to less than $30 in 2000, having been $100 in 1930" because of "the development of new technologies in transport and telecommunications" (de la Dehesa 3).
The developments in digital technologies (computing and telecommunications) and a slow growth in both levels of productivity and the rate of profit during the 1970s result in the necessity for finding the most effective use of technology and capital reserves for expanding capitalist production. It is in this climate that one begins to find in the 1980s the emergence of "borderless" theories of organizing production on a global scale. As developments in technology enable corporations to advance the global division of labor, what becomes necessary is the development of economic and social theories which can theorize how to put labor, technology, and capital reserves to their most productive use. It is in this sense that contemporary cultural theory reflects the development of new forms of organizing labor on a global scale. This is what makes the theory of global networks so effective as the ideology of contemporary capitalism. The concept of the "network" has emerged to theorize the global expansion of capital, the importance of digital technologies to this growth, as well as serve as the means by which this growth is separated at the level of ideas from the growing levels of inequality between capital and labor that have developed over the same period.
The concept of a network structure is defined as "a collection of links between elements of a unit" (Dijk, Network Society 24). In "simple" modes of organization, such as those between the elements or parts of an atom, it is argued that a hierarchical or static set of relations is adequate to account for the connections between elements. "When matter becomes more complex," however, network theorists argue that it becomes necessary to develop more complex forms of organization that can "produce order out of chaos" by linking the elements in a more dynamic fashion (Dijk, Network Society 24). That is to say, a "network" is a conceptual structure in which, rather than a hierarchical or vertical organization of agents or information, the system consists of semi-autonomous but interconnected "nodes" each with a productive, but transitional, relation to the whole. The image of society as a network has become so popular, in fact, that one finds it not only within the discourses of digital culture and corporate management theory, but also as the basis of a new historiography (Mattelart's Networking the World, 1794-2000), a new biology (Johnson's Emergence: The Connected Lives of Ants, Brains, Cities and Software), and a new sociology, (Barabási's Linked: How Everything is Connected to Everything Else). What links these accounts of contemporary society is the idea that the history of human society is best conceptualized as increasingly driven by an overdetermined set of social interactions in which politics, culture, and economics exist in an interrelated and interconnected web without any determinacy. As Tiziana Terranova argues,
To think of something like a "network culture" at all, to dare to give one name to the heterogeneous assemblage that is contemporary global culture, is to try to think simultaneously the singular and the multiple, the common and the unique. When seen close up in detail, contemporary culture (at all scales from the local to the global) appears as a kaleidoscope of differences and bewildering heterogeneity […] each with its own identity and structure, they appear to us as a meshwork of overlapping cultural formations, of hybrid reinventions, cross-pollinations and singular variations. (1-2)
In other words, the network is said to represent the emergence of a new social formation in which binaries such as the local and the global, the past and the future, the inside and the outside, and (most importantly) owner and worker have lost their material force and instead are replaced with a constantly changing series of relations without a singular organizational principle. The attractiveness of such a concept for organizing production is that it corresponds to the ability capital has acquired in the digital age to more effectively move resources to where they can be put to the most profitable use. As Chwo-Ming Joseph Yu writes, "a network approach, focusing on patterns of relationships that surrounds a firm, has captured the attention of academics and business writers" because of the way in which "vertically disaggregated and spatially concentrated production networks are sometimes a more viable and often desirable alternative to the vertically integrated corporation" (96-97). With this new form of capital and market integration, it is argued that a "network" logic calls into question all hierarchical social relations as well as deeper class divisions and replaces them with a rhizomatic series of interconnections without any singular organizing logic such as exploitation (Deleuze and Guattari, Anti-Oedipus: Capitalism and Schizophrenia). In other words, the development of "network capitalism" is supposed to mean the end of a binary class relation between capital and labor and, in turn, the conditions of monopoly capital that result in imperialist conflict.
In his book The Rise of the Network Society, foundational network theorist Manuel Castells advances the idea that developments in information technology are transforming "the material basis of society" (1) from the industrial age of labor and production to an informational age of knowledge and cultural exchange. As a result of the application of new scientific developments in communication and management technologies to production, he writes, "A new economy has emerged in the last two decades on a worldwide scale. I call it informational and global to identify its fundamental distinctive features and to emphasize their intertwining" (66). Although Castells writes that "for the first time in history, the capitalist mode of production shapes social relationships over the entire planet" (417)—in other words, that the social and political changes we are witnessing are, in essence, the effects of the economic motives of capitalism—he also argues that what differentiates the new "informational" stage of capitalism (18) from previous modes of production is the way in which "information" has become "the key ingredient of our social organization" and "flows of messages and images between networks constitute the basic thread of our social existence" (477). According to Castells, the social and cultural changes resulting from technological advances in production and communication represent not just a development within capitalist relations, but a more fundamental social restructuring in which "money has become almost entirely independent from production" and "the social relationships between capital and labor are profoundly transformed" (474). That is to say, the organization of production according to the logic of "networks" means not only new ways of managing business. It is ushering in a fundamental change to social relations in which capitalism itself becomes virtually unrecognizable. While, he argues, capitalism in the pre-industrial and industrial age depended upon a strict property relation between owners and workers, he proposes that network capitalism blurs such class divisions by opening the production of capital to the flows of finance and thus to a more plural theory of ownership in which anyone with access to culture (and credit) can participate in the shaping of its meaning. Castells writes, "In the new informational mode of development the source of productivity lies in the technology of knowledge generation, information processing, and symbol communication" (17) and value is "mainly generated by innovation" (243). For Castells, then, what is significant about the emergence of global economic "networks" is the way in which they destabilize class relations by creating new sources of value in cultural exchange that, insofar as they are "enacted by informational networks in the timeless space of financial flows" (472), no longer depend upon the extraction of surplus value from the labor of workers. Instead, the new universality of capitalism is founded on the interconnection of informational networks and the global flows of messages and images; in short, on expanding the avenues of consumption after production. On these terms, instead of a class conflict over the control of the means of production, Castells describes global capitalism as a cultural struggle over consumption between the "interacting" who, he argues, are able to "selec[t] their multidirectional circuits of communication" (371), and the "interacted", who are limited to "a restricted number of prepackaged choices" (374). As a result, he concludes, "[t]he new economy cannot be characterized as being centered any longer on multinational corporations, even if they continue to exercise jointly oligopolistic control over most markets…because corporations have transformed themselves into a web of multiple networks embedded into a multiplicity of institutional environments" (195) and that "who are the owners, who the producers, who the managers, and who the servants, becomes increasingly blurred in a production system of variable geometry, of teamwork, of networking, outsourcing, and subcontracting" (475). In a post-hierarchical organization of production and exchange, Castells writes, "who are the winners and the losers changes by the year, the month, the day, the second…" (472) because,
under the new technological, organizational, and economic conditions, who are the capitalists? They are certainly not the legal owners of the means of production, who range from your/my pension fund to a passerby in a Singapore ATM deciding to buy stock…yet neither are the corporate managers…for managers control specific corporations, and specific segments of the global economy, but do not control, and do not even know about, the actual, systematic movements of capital in networks of financial flows, of knowledge in the information networks, of strategies in the multifaceted set of network enterprises. (473)
It is this "blurring" of social relations, particularly within the social division of labor, which is said to be the defining characteristic of "network" capitalism. While, on the one hand, the network is theorized by Castells as the thousands of business and communities linked up in a vast global communications systems, he also situates it as something "more": the primary feature of a network society is an increasingly decentralized set of relations without a determining locus or center. He writes, "a network architecture…cannot be controlled from any center, and is made up of thousands of autonomous computer networks that have innumerable ways to link up, going around electronic barriers" (6-7). It is, he argues,
a culture of the ephemeral, a culture of strategic decision, a patchwork of experiences and interests, rather than a charter of rights and obligations. It is a multifaceted, virtual culture, as in visual experiences created by computers in cyberspace by rearranging reality. (199)
The key to understanding the logic of this argument is the way in which the fluid, ephemeral nature of the network—in which any connection, regardless of how big or how small its initial capital, has the opportunity to generate new and innovative ideas without having to depend upon either the productivity of labor or, according to a "cultural capital" reading, the weight of the past for determining its cultural value—is said to bring an end to the domination of the more hierarchical modes of organization and the rise of more flexible and adaptable modes of organization which can "survive and prosper in a fast changing environment" (Castells, The Internet Galaxy 1). In other words, the network society is represented as a more flexible mode of economic and social organization because it creates a structure that can more quickly adapt to local changes. According to this logic, because the network expands horizontally rather than vertically anyone can enter and thus fundamentally transform the structure of the network because the structure of the network is never finally determined and is therefore not bound to any particular formal arrangement. In the new economic model of network capitalism, this argument goes, property relations are no longer determinant of who controls the economy—class, in other words, is no longer an objective relation determined at the point of production, but rather a matter of access to knowledge and thus, in the most basic terms, all that matters is a good idea. Or, as Steve Lohr argues, the network society represents "a big step in the democratization of information technology" because,
The old story of technology in business was a trickle-down affair. From telephones to computers, big companies came first. They could afford the latest innovations, and they reaped the benefits of greater efficiency, increased sales and expansion into distant markets…Now that pattern is being challenged by a bottom-up revolution…a cost leveling that puts small companies on equal footing with big ones, making it easier for upstarts to innovate, disrupt industries and even get big fast. (G1)
The most "popular" version of this narrative is advanced by Thomas L. Friedman, the foreign affairs columnist for the New York Times and winner of three Pulitzer prizes for his work on globalization. What has made Friedman's work so popular is the way in which it normalizes economic relations by presenting them in an "anecdotal" fashion, thereby making the unnatural relations of capitalism appear more "natural" because we are meant to read his stories as not mediated by the abstractions of theory. Yet, the fact that he essentially vetted his most recent book, The World is Flat, with leading capitalists such as Bill Gates, Michael Dell, and the strategic planning committee of IBM before publishing it, demonstrates clearly that despite his rhetorical populism, his discourse is firmly on the side of capital.
In his endlessly reprinted The World is Flat, Friedman puts forward his take on network capitalism as the "flattening of the world." He writes, "we are now connecting all the knowledge centers on the planet together into a single global network, which—if politics and terrorism do not get in the way—could usher in an amazing era of prosperity and innovation" (8). In particular, Friedman advertises the emerging network society as creating a capitalism that is more than ever working in the interests of the individual because more than ever the individual is in control of their labor. The network society, he states, is dependent upon "the new found power for individuals to collaborate and compete globally…Individuals must, and can, now ask where do I fit into the global competition and opportunities of the day, and how can I, on my own, collaborate with others globally" (16). And, just as Castells argues, this new structure means the end of rigid and unequal social hierarchies: "Everywhere you turn, hierarchies are being challenged from below or transforming themselves from top-down structures into more horizontal and collaborative ones" (45).
At the center of Friedman's theory of the flat world is the "supply-chain," which he describes as "a method of collaborating horizontally—among suppliers, retailers, and customers—to create value" (129). The importance of the supply-chain for Friedman is that it combines the technological developments of the digital age with the open borders of the post-Cold War period. The primary example he uses is Wal-Mart, "the biggest and most profitable retailer on the planet" (131). Over the past two decades, Friedman argues that Wal-Mart has been at the forefront of the network society:
In 1983, Wal-Mart invested in point-of-sale terminals, which simultaneously rang up sales and tracked inventory deductions for rapid supply. Four years later, it installed a large-scale satellite system linking all of the stores to company headquarters, giving Wal-Mart's central computer system real-time inventory data and paving the way for a supply chain greased by information and humming down to the last atom of efficiency….Now Wal-Mart, in its latest supply-chain innovation, has introduced RFID—radio frequency identification microchips, attached to each pallet and merchandise box that comes into Wal-Mart…[which]…allows Wal-Mart to track any pallet or box at each stage in its supply chain and know exactly what product from which manufacturer is inside. (135)
What the "supply-chain" represents, according to Friedman, is a more open and democratic way of organizing capitalist production, one that benefits both workers and owners equally. On the owners' side, supply-chains promote the universalization of the most effective productive practices for capital:
the more supply chains grow and proliferate, the more they force the adoption of common standards between companies (so that every link of the supply chain can interface with the next), the more they eliminate points of friction at borders, the more the efficiencies of one company get adopted by the others, and the more they encourage global collaboration. (129)
On labor's side, even if Friedman finds that Wal-Mart is an example of extreme corporate "ruthlessness" in its treatment of workers (137), he writes that supply-chains are the great global equalizer "because they deliver us all sorts of goods—from tennis shoes to laptop computers—at lower and lower prices" (129).
Ultimately, the theory of a "flat world" is most dismissive of the theory of imperialism. In the example of Wal-Mart, Friedman describes how trade between Japan and the United States was first established at the end of a bayonet, but has since become a more "co-operative" exchange. He writes, "Commodore Matthew Calbraith Perry opened a largely closed Japanese society to the Western world on July 8, 1853 when he arrived in Edo (Tokyo) Bay with four big black steamships bristling with guns" (139). Of course, as might be expected given Friedman's defense of corporate globalization generally and his importance to capital as a popularizer of globalization theory, this forced exchange was not really a problem because it "led to an explosion of trade between Japan and the United States, helped open Japan to the Western world generally, and is widely credited with triggering the modernization of the Japanese state, as the Japanese realized how far behind they were and rushed to catch up" (139). Leaving aside the irony that Friedman's theory of the supply-chain was, in fact, first developed in Japan and was initially seen as a threat to US economic dominance in the 1980s (Brenner 80-82), what is more significant at the moment is how supply-chain democracy differs from even the "beneficial" imperialism of an earlier age. Friedman writes, "Unlike Commodore Perry, Wal-Mart did not have to muscle its way into Japan with warships. Its reputation preceded it, which is why it was invited in by Seiyu, a struggling Japanese retail chain desperate to adapt the Wal-Mart formula in Japan" (139). This image corresponds more broadly with the peaceful integration of markets that Friedman argues will emerge from network capitalism. He argues, "No two countries that are both part of a major global supply chain…will ever fight a war against each other as long as they are both part of the same global supply chain" (421).
It is this image of network capitalism as a post-class, post-capitalist, post-imperialist, and post-conflict stage of production that is most useful for capital today because of the way in which it addresses the surface developments of capitalism—relative growth in cross-border trade, the emergence of "outsourcing" as a result of advances in technology and communications, and the formation of international finance treaties—while isolating these developments from the underlying logic of capitalism itself, claiming that whatever happens in the economy—whether it is the re-emergence of global conflict or the rising levels of inequality—it is not connected to the exploitation of labor which drives the capitalist engine. That is to say, what Friedman and Castells promote as the "control" over their labor that network capitalism offers more workers than ever is in reality the same control that capital has always offered workers; namely, the "freedom" that is offered under the condition of survival to sell their labor-power for a wage. If this form of "control" is available to more workers around the world, as Castells and Friedman argue, this means not that capitalism no longer requires exploitation. Rather, it means that capital now exploits the labor of more workers than it ever has before. In contrast to Castells' and Friedman's popular because superficial reading of globalization, which promotes the ideology of the "fairness" in the relation between capital and labor, I argue that it is necessary to return to the theory which so many on both the left and the right argue is "outdated"—namely Lenin's theory of imperialism—becausebecause it will enable us to go beneath the surfaces of globalization to counter the first argument that globalization has nothing to do with the imperialism of the past.
Imperialism, as Lenin explained, is the competition of transnational capitalists in their attempts to monopolize social resources and to establish their dictatorship of the "free market" around the world. The monopolization of capital emerges from within the capitalist mode of production as a logical outcome of the division of property between owners of the means of production and owners of nothing but labor-power and the private accumulation of capital that this relation engenders. The problem with the idea advanced by network theorists that the relation between capital and labor is transformed through the introduction of new means of production that not only extend the capitalist system across the globe but transform it from an exploitative system to a fluid system of oscillating power relations is that capitalism is defined neither by the kinds of technique used in the production of commodities nor by the geographic distribution of production. These are features of changes in the modes of accumulation used to extract surplus value but not in the underlying logic of how and why labor relations under capitalism result in the production of surplus value. As Marx explains in Capital, what differentiates labor-power, defined as "the aggregate of those mental and physical capabilities existing in a human being" (I 177), from all other commodities, is that it "not only produces its own value, but produces value over and above it" (I 219). In the most basic terms of the "free market," capitalists hire workers to work for a set period of time, regardless of the value their labor produces. While on the surface it appears a fair exchange, it is not. Rather, the ability of the worker to produce more than the cost of the wage during the period of her daily employment means that the capitalist is able to appropriate the additional value the worker produces in manufacturing new commodities from the raw and semi-manufactured materials which the capitalist has purchased. This period of time Marx calls the "working day," the division of time between the period for which the worker produces to reproduce the conditions of labor that is received in the wage and the period for which the worker produces surplus value which is appropriated by the capitalist. As such, it is in the capitalist's best interest to increase the rate of exploitation—the amount of surplus over necessary labor time—so as to increase the surplus value available to him. This is accomplished two ways. First, by lengthening the time in which the labor works ("absolute surplus value") and, second, by increasing the productivity of labor through the introduction and development of new means of production ("relative surplus value"). As the capitalist introduces new machinery, the productivity of labor increases, enabling the capitalist to produce more commodities and, in turn, capture a larger share of the market as long as the relative technological advantage is maintained. When a market is relatively new and the competition among capitals has not fully developed, the rate of profit is high because the amount of capital necessary for establishing the production process is low and the amount of labor employed in production is high. However, other capitalists do not remain stagnant and either adopt the technological improvements of their rivals, or are purchased by their more productive and more profitable competitors. As competition increases, each capitalist is forced to introduce new technologies, which although they drive down the cost of labor by intensifying production also have the consequence of increasing the costs of production and introduce the simultaneous effect of eliminating the primary source of value, labor.
In fact, the contradictions between labor and capital are actually exacerbated and not lessened by increased technological development because technological advances in production are the means by which capitalism increases the productivity of labor and thus the rate of exploitation. The computer does not change the logic of wage-labor, in other words, merely the speed and productive ability of the workers using it. In addition, it is precisely because the exploitation of labor is the source of surplus value under capitalism that developments in production also enable the geographical reorganization of production—what Castells' calls capitalism's "variable geometry" (475)—so as to maximize profits through such labor practices as outsourcing and subcontracting which are designed not only to create competition between workers to prevent them from collectively organizing against capital across national boundaries but to find or create cheaper sources of labor as a means of maximizing profit. Just as the development of capitalism on a "national" scale meant brutal competition to gain monopoly control over production and thus take "more or less complete possession of the industry of their own country" (Imperialism 246), Lenin's analysis of monopoly capital explains why the increasing development of capitalism means the inevitable drive of capitalists to compete globally for access to cheaper sources of labor and thus to control the rate of exploitation.
Imperialism, as Lenin outlines, is the direct effect of the necessity of capitalism to counter a falling rate of profit through exploiting cheaper sources of labor-power and securing monopoly prices over social resources. He writes:
The principal feature of the latest stage of capitalism is the domination of monopolist associations of big employers. These monopolies are most firmly established when all the sources of raw materials are captured by one group, and we have seen with what zeal the international capitalist associations exert every effort to deprive their rivals of all opportunity of competing, to buy up, for example, ironfields, oilfields, etc. Colonial possession alone gives the monopolies complete guarantee against all contingencies in the struggle against competitors, including the case of the adversary wanting to be protected by a law establishing a state monopoly. The more capitalism is developed, the more strongly the shortage of raw materials is felt, the more intense the competition and the hunt for sources of raw materials throughout the whole world, the more desperate the struggle for the acquisition of colonies (Imperialism 260).
If it is to increase profits, capital must constantly search for new markets to find cheaper sources of raw materials, increase and develop production, and drive down the costs of labor-power. Imperialism is thus the necessary outcome of the development of the productivity of labor under the conditions of private ownership, in which "the uneven and spasmodic character of the development of individual enterprises, of individual branches of industry and individual countries" (Imperialism 215) necessarily leads to the "superfluidity of capital" (Imperialism 216) in the hands of the ruling class that becomes more profitable by moving to less developed areas than it does by remaining in highly developed and monopolized areas of production. In other words, capital can achieve higher rates of profit by moving to areas in which "capital is scarce, the price of land is relatively low, wages are low, [and] raw materials are cheap" (Imperialism 241) than it can by remaining in highly developed and monopolized areas of production. This goes back to the discussion of surplus value and what Marx theorizes as "the tendency of the rate of profit to fall." As the level of "constant" capital—the amount needed to invest in production—rises in a particular industry, the lower the amount of "variable" capital—the amount invested in labor—that is necessary. Marx called this ratio of constant to variable capital the "organic composition of capital." Improvements in the means of production enable a particular capitalist to (momentarily) undercut his competitors by producing more for the same price, thereby driving them from the market and gaining a monopoly share. Yet, at the same time, the more productive labor becomes and the more the cost of investment in fixed capital rises, the more commodities the capitalist must sell in order to achieve the rates of profit that existed prior to intensification of production. Thus, while the single capitalist may be able to accumulate a larger mass of surplus value than before by gaining monopoly control of the market, the rate of profit available in the industry declines overall. Furthermore, when the rate of profit is high in a particular industry, eventually investment capital comes flooding in, leading to a leveling of the competitive advantage of the early adopter of new technologies and a saturation of the market. Both of these factors combined—the rising organic composition of capital and the direct competition between capitals over control of the market—ultimately leads to a crisis of over-production and a reduction in the rate of profit.
This process which requires the holders of accumulated, but unproductive capital, to find new avenues of production and thus avenues for the production and accumulation of new value and has two primary factors. First, as Lenin writes, "The necessity of exporting capital arises from the fact that in a few countries capitalism has become 'over-ripe' and…capital cannot find 'profitable' investment" at home and thus must go abroad (Imperialism 216). Second, it leads to development of what Lenin defines as "finance capitalism" which is the combination of banking and industrial capital that results from an increase in the capital accumulated through advances in production and the need to find new avenues for the profitability of unproductive capital. As Ernest Mandel explains, "[t]he export of capital and the colonialism associated with it are monopoly capital's reaction to the fall in the average rate of profit in highly industrialized metropolitan countries, and to the reduction in profitable fields of investment of capital in these countries" (MET 454). That is to say, having divided "amongst themselves, first of all, the whole internal market of a country, and imposed their control, more or less completely, upon the industry of that country," capital must expand outside of the "home" market to find new avenues for profitability abroad (Imperialism 219). This expansion is what Lenin defines as the logic of imperialism:
Imperialism is capitalism in that stage of development in which the domination of monopolies and finance capital has established itself; in which the export of capital has acquired pronounced importance; in which the division of the world among the international trusts has begun; in which the partition of all the territories of the globe among the great capitalist powers has been completed. (Imperialism 237)
Despite his disagreement with the labor theory of value and the idea that rising levels of organic capital lead to a fall in the rate of profit (11), Robert Brenner's analysis of capital expansion in the Twentieth Century in The Economics of Global Turbulence demonstrates precisely this logic at work. Beginning from the start of the period known as the "long boom," we find that "[b]etween 1940 and 1945, the rate of profit for the private economy was, on average, some 50 percent above its level in 1929 and 60-70 percent higher than the average for the years 1900-1929" (48). This "epoch-making" level of profitability, in turn, was driven by and resulted in the massive investment in developing the means of production, so as to increase the productivity of labor. In fact, "over the years 1938-1950, gross investment in both the private economy and the manufacturing sector grew at an average rate of around 11 percent" (48), meaning that "output per hour increased 2.7 per cent in the private business economy and in manufacturing—3.8 per cent and 5.5 per cent for these sectors, respectively, in the four years between 1946 and 1950" (48). In other words, a high rate of profit at the start of the cycle led to increasing investment which, in turn, had the effect of increasing the productivity of labor, the source of new value. Yet, as the labor theory of value and the tendency for the rate of profit to fall explain, this level of productivity and profit cannot be indefinitely maintained. First, the massive growth in productivity during this period and the rising level of investment required to maintain this level of productivity meant that US corporations found less return in investing at home than in investing in the rebuilding markets of Germany and Japan. Brenner writes, as the "long boom" unfolded, US capital was "increasingly attracted to the superior opportunities for profit-making overseas, especially in Europe, where they could combine relatively cheap labour with relatively advanced technology and produce against relatively weak competitors in rapidly growing markets" (56), leading to an increase in the export of capital abroad. Second, as the productivity of labor in Germany and Japan grew as a result of the newly imported capital and technology, the corporations in these countries then flooded the market with even cheaper commodities, further driving down the rate of profit. The crisis of over-productivity and the averaging and declining rates of profit globally are what ultimately led to the period from 1973 to the mid 1990s known as the "long downturn." From 1973-1984, for example, the rate of profit declined in the United States from 20.6 percent to 15.4 percent, and in Europe from 18.1 percent to 13.8 percent (Duménil and Lévy 28).
The emergence of what is most commonly recognized as "globalization" in the 1990s is again demonstrating the importance of Lenin's theory of imperialism. The development of new forms of production, communication, and transport has enabled capital to renew its global expansion, while at the same time sharpening the division between classes. This becomes clear when we examine some of the central tenets of "network" theory and the image of global capitalism as "post-imperialist"; namely, that the development of "supply-chain" systems of production and the opening of new avenues for the circulation of capital have the effect of displacing global conflict while creating the conditions for decreasing inequality.
The relative rebounds in productivity and the rate of profit which first appear in the middle of the 1980s and reach their peaks at the end of the 1990s is the result of two interrelated factors, both of which support the Marxist theory of imperialism. To take the example of the US economy, which is most often held up as the primary example of profitability of network capitalism, the declining rates of profit and the rise of international competition, particularly from the emerging economies in Asia, required the rethinking of the organization of labor in order to create the conditions for increasing the conditions of exploitation and thus the rate of extracting surplus value. In order to address these conditions, at the end of the "long downturn" investment begins to shift, and takes a particularly sharp jump in the years between 1978 and 1983, towards the improvement of information technologies in an attempt to solve the economic crisis through an intense rationalization of industry (Duméil and Lévy 153). In other words, capital sought to increase its efficiency in "the capacity to organize production, distribution, and financial operations and to reduce costs" (Duméil and Lévy 154). What "efficiency" means here is the process of further streamlining production and to make the most effective (again, profitable) use of labor so as to increase productivity, decrease the costs of labor, and restore rates of profit to pre-crisis levels. This is where "network" theory originates. The theory advanced by Ohmae, Friedman, and Castells, in which production is organized around a central hub with temporary "nodes" of production positioned in areas where profitability can be achieved, reflects the needs of capital to apply the new technological developments in production in a way that provides the greatest return. In fact, these developments enabled the United States during the period 1990-2000 to claim growth rates in productivity above the 1973 level, as well as above its closest economic competitors in Europe, which achieved significantly lower rates of growth in productivity and output over the same period of time (Cobet and Wilson 55). At the same time, the United States remained attractive to investment because of the attacks on labor that led to a stagnant growth rate in the costs of wages, to the point where the real value of the minimum wage is actually lower in 2005 than it was in 1960, even when adjusted for inflation (Mishel, The State of Working America 2006-2007). As Brenner notes, during this period "US capital had become profoundly dependent on close to zero wage growth inside manufacturing to help counter intense competition from their leading international rivals" (196).
Once again, as explained in Marx's theory of the tendency of the rate of profit to decline, a rising level of profitability resulted in the factors which lead to the concentration and centralization of capital and the monopolization of the marketplace, a reality borne out by the fact that "[b]between 1980 and 1989 there were 31,105 mergers and acquisitions, totaling in value $1.34 trillion dollars" (Brenner 211). What we see then in the period immediately following is a renewal of expansion of capital abroad to find more profitable avenues for investment, a point that can be traced out in the growth of Foreign Direct Investment (FDI). FDI is defined as "investment in which a firm acquires a substantial controlling interest in a foreign firm (above a 10 percent share) or sets up a subsidiary company in a foreign country" (Chen 6). Although it is the case that most FDI flows between the industrialized countries, the level of investment in developing countries has nonetheless increased in the period 1990-2000, from a level of 25.4 % in 1982-1987 to 31.6% in 2001 (Flanagan 120), and from $50 billion to a high of $1 trillion in 2000 (Mann 7). In this sense, the export of capital increasingly takes on the characteristics of monopoly capitalism. The large amount of capital invested in the "developed" countries reflects the high organic composition of capital and the higher costs of labor, as well as the ability to produce in relatively stable economic environments, while the lower level of investment in developing economies reflects the increasing productivity of labor in these areas and the attempt to maintain low production costs by locating production in nations which suppress wage levels below that of the home market: "FDI improves the overall efficiency of the resource allocation via the transfer of capital, technology, and managerial and marketing know-how" (Smekal and Sausgruber 38). In other words, capital can move production to lower wage areas to achieve at least average, if not above average, rates of profit for lower levels of investment than are required in the home market.
In addition, the idea that FDI results in a "flattening" of the world, or a more "peaceful" integration of capital, is not evident either. The theory of a "peaceful" imperialism actually emerges in the beginning of the Twentieth Century, when the world market had reached a similar level of integration as the current period. Karl Kautsky, as the most prominent left theorist of the "peaceful" imperialist movement, argued that capitalist had reached a stage of "ultra-imperialism" in which the expansion of capital globally and the development of interconnected networks of production and trade would ultimately require that nation-states would be forced to unite into cartels or "federations" that would no longer compete with one another. Kautsky writes,
We have no reason to supposed that British trade with Egypt would have been less developed as a result of the mere operation of economic factors, without military occupation…The urge of present-day states to expand can be best satisfied, not by the violent methods of imperialism, but by peaceful democracy (qtd in Lenin 256-257).
In other words, according to Kautsky the need to export capital abroad requires the stabilization of political factors and ultimately the organization of capitals into non-competitive cartels, "which will introduce the joint exploitation of the world by internationally united finance capital in place of the mutual rivalries of national finance capital" (qtd in Lenin 261). As Lenin demonstrated at the time, the ability to export capital to other markets is dependent upon the existence of unequal levels of development between the center and the periphery. As such, capital cannot reach a "peaceful" balance because the creation of new values and the accumulation of capital cannot help but to expand, rather than shrink, the division between nations. "As long as capitalism remains what it is," Lenin argues, "surplus capital will never be utilized for the purpose of raising the standard of living of the masses in a given country, for this would mean a decline in profits for the capitalists; it will be used for the purpose of increasing profits by exporting capital abroad to the backwards countries" (Imperialism 216). The very competition between capitalists towards the monopolization of the market could not but ultimately pit capitalists against one another and, in turn, the nations that represent them, as was manifest in World War I and World War II.
The state is not eliminated by the network because, as Ernest Mandel writes, the state "is a product of the social division of labor" (Late Capitalism 474). It is the legal manifestation of the mode of production. Under capitalism, the state is the political arm of the owning class that is used to ensure that the exploitation of labor can continue unabated by protecting the property rights of owners. In the age of imperialism it serves as the means by which individual capitalists attempt to control the global market through the use of political and military power. This was recognized by U.S. President Woodrow Wilson at the beginning of the Twentieth Century:
Since trade ignores national boundaries and the manufacturer insists on having the world as a market, the flag of his nation must follow him, and the doors of the nations which are closed against him must be battered down. Concessions obtained by financiers must be safeguarded by ministers of state, even if the sovereignty of unwilling nations be outraged in the process. Colonies must be obtained or planted, in order that no useful corner of the world may be overlooked or left unused (Lens 195).
The re-emergence of the theory of ultra-nationalism in Ohmae's theory of "regionalization" or Friedman's theory of "supply-chain" capitalism, and furthermore in the theory of network capitalism more broadly, sharply contrasts with the economic realities of the Twentieth Century. Far from integrating markets in a "flat" or "borderless" chain, capital remains concentrated and centralized in the hands of a few capitalists who then compete with one another for control of the world markets, while relying upon their national governments to protect their economic interests both at home and abroad. Despite the arguments for a borderless economy, the Forbes list of the top 500 most profitable companies shows that capital accumulations remain centered in the North, as 162 are in the United States, 67 are in Japan, 38 are in Germany, 37 in France, and 33 in the UK. In addition, while productivity in the developing nations has often increased faster than that of the developed economies, "countries with worse endowments of physical and human capital at the outset might never converge with the more developed economies, which have a greater capital stock, thanks to increasing returns of scale of this stock and the positive externalities derived from scientific and technical knowledge for the rest of their factors of production" (de la Dehesa 13). What this means, in other words, is that the "supply-chain" is not about developing countries, but establishing relative control over labor abroad. This explains why the industrialization of the South through the export of capital from the North, while resulting in a relative raise in the level of wages, has nonetheless increased inequality between and within nations. Smaller amounts of capital exported abroad are able to achieve average rates of profit compared to domestic production. However, insofar as the primary purpose of this production is for export, the majority of the surplus value produced returns to company's "home" country. Network theory provides the theoretical means to effectively organize capital in this manner, while simultaneously representing the exchange between developed and less developed countries as fair and equal. Far from being equal, however, the decline of wages in the North and the growing inequality in the South demonstrates that what is at the core of network theory is creating a more effective climate for subjugating the workers of the world to the interests of capital in private accumulation.
As Lenin's theory of imperialism explains, capitalism in its monopoly stage represents the expansion of capitalist relations not only across the globe but "into every sphere of public life, regardless of the form of government and all other 'details'" (Imperialism 212). The commodification of the most basic social resources such as water, food, healthcare, education, and shelter that mark the economic reality of globalization has brought about a growing crisis that spans across all social levels, making clear that the growing contradictions of capitalism are indicative of the inequalities that, as Marx and Engels argued over 150 years ago, systematically arise and place the entire capitalist system on trial. As Lenin's theory of imperialism makes clear, the problem with the fuzzy concepts of a post-imperial, post-capitalist, post-class "network capitalism" is that while globalization is pronounced as a new stage of capitalist development, the ongoing failure of capitalism to address the material needs of the majority of the world's population has not only become increasingly difficult to ignore but, more importantly, is impossible to solve without a fundamental social transformation from a society based in private accumulation to one founded upon meeting the needs of all.
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