From Corporation to Crisis: A Landmark Work of Historical Materialism

A Review by Mel Watkins

Canadian Dimension

March 29th 2013

The Making Of Global Capitalism: The Political Economy Of American Empire
Leo Panitch and Sam Gindin
Verso Books, October 2012

The authors tell us this book has been “a long time in the making.” It has been well worth the wait.

The dust jacket bears endorsements, fulsome even by the necessities of the medium, from four distinguished scholars and writers, David Harvey among them. Living next door to the United States, bearing the fullness of its embrace, can be an advantage in understanding global capitalism. Panitch and Gindin have understood the early intrusion of the American-based multinational corporation into the Canadian economy and polity as being the quintessence of subsequent American imperialism world-wide — American Manifest Destiny results in the Canadianization of the globe, which may or may not make you feel proud — and made of that insight, and all it contains, this excellent book.

In the latter part of the 19th century, the then dominant British Empire was of a dual nature: the traditional imperialism of conquest and the novel imperialism of free trade. The rising American Empire toyed with conquest among the remnants of the Spanish Empire, but triumphed with free trade as it morphed into freedom to invest abroad for the multinational corporations which the Americans were creating faster than in the rest of the world. We know all this to our peril from today’s so-called free trade agreements, which are really Charters of Rights and Freedoms for corporations.

The consequences for global political economy have been deep and pervasive. To invest abroad requires guarantees of that investment, which have to be given by the “host” state. The terminology is revealing: the receiving country must be a good host, treating the guest with due deference, and even cleaning up after any mess that is made. The internationalization of the corporation compels the spread of those policies, pioneered within the United States, namely, the internationalization of the state— a fuller integration, a deeper, more pervasive intimacy than that required by the free trade of yore.

Still, as Panitch and Gindin are at pains to demonstrate — it takes up many good pages in this book — in the nature of imperialism the bottom line is the role of the “home” state, of Washington, where actual ownership and control resides, to practice and to push pro-corporate policies. The American state must demonstrate its capacity and willingness to maintain what passes for order while restructuring the world in America’s image, managing crises, particularly financial, and containing labour and the left.

So it is that Panitch and Gindin properly insist that today’s neoliberalism is not about the withering away of the state, but about its active role in the care and feeding of the corporation. Unions must be kept in their place, or the class struggle inherent to capitalism could get out of hand. National liberation movements, even chatter about economic nationalism, must be stifled. (Environmentalists likewise: this we certainly know in Canada in the age of Harper.) Not only are multinational corporations persons, as is regularly ruled by the US Supreme Court, they are huge, giant persons lobbying your government and mine, making these their government.

The other major part of the story told in truly impressive detail is that of the American-led management of international finance. If the corporations are yours, it makes sense to be the world’s banker and the American dollar the world’s currency, and making that happen is hard work. The London-led system of finance had been radically undermined by the Great Depression and the Second World War. It was necessarily rebuilt under American auspices. It was not without its problems, even its crises, but American leadership proved sufficient to their resolution and none toppled American dominance.

We are taken up to and through the crisis of 2007/8. It’s the kind of crisis that left activists are wont to insist is a clear sign of the weakness of capitalism, the better to rally for the struggle. Panitch and Gindin are rather inclined to be impressed by the ability of Washington to contain the damage and put things back on an even keel.

What does surprise this reviewer is the authors’ willingness to describe “new financial instruments” like those infamous derivatives as “crucial to globalization,” the better to hedge against the escalation of risk. There is some truth to this, but overall it runs counter to much of the commentary by progressive economists about manic exuberance, about how risk is increased rather than decreased. It imagines that what is inherently uncertain about the future (Donald Rumsfeld’s “unknown unknowns”) can be dealt with by pretending it is assessable risk that can be insured. We were told by the great Keynes himself, who our authors otherwise treat with great respect, that there is genuine uncertainty that can only be dealt with by greater caution.

In a book that already packs so much into its more than 400 pages, it may seem ungracious to point out what is missing but it is odd, to say the least, that there are no more than passing references to the Pentagon and the CIA and the role they play in making the globe safe for the American corporation. Isn’t all that arms spending helpful in keeping the doors open for American corporations, and has it not at some points, like the Cuban missile crisis, even put the whole project and the lives of millions — and the very existence of the American empire and hence of this book — at risk?

Our authors are dismissive of the challenge from China. There is some merit in that position. There is still a lot of fight left in that old dog of Western imperialism. Yet the role of China in the past has been consistently underestimated in the West. Perhaps we should bear that in mind when judging its future.

A review of such a stimulating book as this one must end on a positive note. Unlike too many of the academic scribbles in the social sciences these days, this book is refreshingly light on theory into which the facts must be crammed, and laws to which they must therefore conform. It is a demonstration of how far a historical materialist framework rooted in Marx can take us once the search for immutable laws and certain truths is abandoned. It deserves a wide readership, inside and outside the academy.