Globalisation and empire

Globalisation really means the rise of the American Empire. That was the capitalist story of the 20th century. The story of the 21st century will probably be the fall of the American empire as the imbalances in the system unravel. Will the world slip back into some new form of barbarism or will it be replaced by real globalisation, namely world socialism?

Two important global events are taking place shortly. The first is more regional: the summit meeting of the European Union. British PM Tony Blair will be hosting the meeting as the last act of the six months of the UK presidency of EU before handing over to the Austrians.

Usually these meetings are just full of blah blah and little is actually decided, becoming more an expensive, security-surrounded jamboree. But not this time. The meeting will bring to a head a clash of approach on the very role and purpose of the European Union and the economic model that capitalist classes of Europe wish to follow.

On one side of the struggle is Britain. Led by a so-called Labour leader, but in reality by a true representative of the multinationals and the growing forces of the Christian right, the British ruling class (especially its huge financial sector) looks to the American model of capitalist progress and also to the 'free market' flow of money, capital and labour across all borders without hindrance to the profits of big business. The latter is called globalisation.

The British, along with the ruling elites of new entrants to the EU in central Europe (Poland, Czech Republic, Hungary, etc.) plus to some extent Holland and Denmark, want the EU to end all its regulation of capitalist business, finish off trade union influence in the work place, end subsidies to agriculture and industry and remove tariffs against foreign imports into the EU.

Against these promoters of globalisation are the ruling classes of France, Germany, Belgium and to a lesser extent, Italy and Spain - in other words, what the neo-conservative US defense secretary, Donald Rumsfeld, called 'Old Europe'. This group has always seen the EU as an entity designed to challenge the hegemony of the US in world trade and industry, and even to preserve its independence on how to police the world (e.g. Iraq, etc).

Moreover, this group is still under huge political pressure to maintain some sort of adequate welfare state for the sick, old and unemployed - objectives long since successfully destroyed by the American and British ruling classes under Reagan and Thatcher. Their European model is antagonistic towards 'globalisation', as they correctly see it as a euphemism for rule of the American empire in opening up the world's economies to US financial and business tentacles.

The clash between these two approaches comes to head again in the EU summit because Britain is again pressing for the French and Germans to agree to dismantling the Common Agricultural Policy that protects Europe's farmers (mostly the bigger ones of course) with subsidies and quotas against imports. The CAP is to be phased out starting in 2012. The British want it done earlier. With the UK's farming sector virtually wiped out, the capitalist class here are very comfortable with the idea of reducing EU budget costs and letting cheaper food in from slave-wage countries of Latin America, Africa and Asia.

Ironically, Blair will offer to dispense with the special UK 'rebate' under which the British receive over £2bn a year back from the EU from their contributions to the budget. This is for no apparent reason whatsoever, apart from keeping Britain from kicking up trouble for the Europeans when they were trying to get the Eurozone and single currency back in the mid-1990s.

Of course, the French and Germans say that Britain should give up its rebate anyway with no conditions, as they don't deserve it. Moreover, the French, whether led by old European Chirac, and the Germans, led by new rightist German Merkel are not going to concede on CAP, taxation, deregulation or anything else that damages the European economic model, because they know there would be a huge backlash from their own working people. Witness the defeat of the EU constitution referendum last May in France and the failure of the right wing to secure a clear victory in the German elections despite the huge disaffection with the 'new Labour' policies of the social democrats under Gerhard Schroeder.

So it will be stalemate. And it is very likely to be stalemate at the other big global event of December: the meeting of the world's trading nations in Hong Kong to pursue further reductions of tariffs, quotas and other trading restrictions under the so-called Doha round of trade liberalisation.

Again the battle lines are drawn broadly between those who favour 'globalisation' as the way forward for capitalism ("all will benefit and none will lose from ending restrictions on the free movement of goods, capital and labour") and those who fear that the opening up their agriculture or their industries and financial sector to American multinationals or imports from Latin America or Asia (produced by American multinationals) will hurt the interest of their own ruling class.

Those wanting to cut tariffs are first those countries that have huge cost advantages in selling food: namely Brazil in Latin America, New Zealand, Canada, etc (although they would lose from more foreign financial firms taking over their industry and banking). Also the Americans would gain across the board if they can make further inroads into Europe, Asia and above all, China.

Old Europe is opposed to cutting much because it would put EU restrictions under pressure and they would gain less than the Americans. And then there are just a few so-called 'developing countries' that wish to resist the pressure of global capitalism like Venezuela or Malaysia, each for different reasons.

The reason the stalemate in Hong Kong is inevitable is that globalisation is just not working. It is not working for those economies that are raped by the big multinationals once the doors are opened. But what worries some strategists of capital much more is that, far from globalisation generating steady economic growth that is balanced across the world, it is breeding serious imbalances in capitalism.

One figure alone shows the risk these strategists feel: China's 1.3bn people consume only 42% of their annual output: they save and sell the rest overseas (40% to the US). At the other extreme, Americans consume 71% of their annual output, saving nothing and increasingly importing all their energy and daily consumption needs. The US is borrowing hugely to finance its spending binge and is becoming increasingly dependent on the rest of the world, particularly Saudi Arabia, Russia, China, India, Brazil and Japan to provide these needs on credit. The US is now the world's biggest debtor, while Japan/China is its biggest creditor and the gap is widening.

So far, the US has sustained this imbalance because it controls the purse strings with the dollar as the major international currency; it has a huge banking and financial sector; and, as a last resort, its mighty military machine makes it possible to end any resistance to its imperial control (not always successfully!).

Globalisation really means the rise of the American Empire. That was the capitalist story of the 20th century. The story of the 21st century will probably be the fall of the American empire as these imbalances unravel. It remains an open question whether the world slips back into some form barbarism, as happened with the eventual collapse of the rapacious Roman empire in the 5th century or whether it will be replaced by real globalisation, namely world socialism.

Indeed, "empire" has become the buzzword for many of the business best sellers in America this Christmas. The one that appeals to those capitalists who reckon that all is fine and dandy is Thomas Friedman's "The world is flat: a brief history of 21st century". In it, Friedman argues that globalisation, along with the hi-tech revolution and the internet, is opening up the world into one great global village where everything will be standardised (McDonalds, Coca Cola, Gucci, etc) and the people of world will gradually equalise their incomes and wealth and develop harmoniously under the 'free market'.

A much more pessimistic, but capitalist view, is expressed in another bestseller, "The Empire of Debt", which sees the US as heading for disaster because its people don't save and just spend and so run up debts that will never be paid back. So US capitalism will slide backwards compared to China and even Europe and possibly bring everybody down with it.

The authors are not Marxists. On the contrary they are free market theorists of the so-called Austrian school, which argues that the way to capitalist success is not to spend Keynesian-style but to save everything you can. Sure, if capitalists never pay their workers much and don't spend themselves, they can boost investment and profitability, for a time. But what happens when nobody has enough income to spend on the goods made? Such is the dilemma for capitalism between excessive spending and excessive saving. Neither seems to preserve profits for long!

A more revealing view of the effect of globalisation is the book, "The Politics of Empire" by Alan Freeman. Here the American empire is seen from its impact on working people and in the inequalities between nations. In one perceptive chapter, Freeman shows that between 1980 and 2000, the population living in the so-called advanced countries (the main capitalist economies) fell from 32% to 19% and yet their share of world income rose from 80% to 84% - such is the success of globalisation for all! The annual income per person of the advanced economies was 11 times greater than in the so-called developing countries in 1980. By 2000, this ratio had reached 23 times.

And globalisation is not even helping the capitalist system as a whole. Whereas in 1988 the average annual output per person in the whole world was $4885, in 2002 it had fallen to $4778! In the 1970s, annual world GDP per head rose at over 4% a year; in the 1980s it slowed to just 0.8% a year; in the 1990s, it was negative. The world under capitalism is going backwards. The result is even worse if you take China, an economy only just entering the control of capitalism, out of the figures.

And, of course, as this column has often pointed out, even in the heart of the American capitalist empire (the US itself), globalisation has done nothing for the average American worker as the big multinationals shift their industry abroad to cheaper locations and the government allows cheaper imports of goods and services to wipe out local industry.

As a result, inequalities of income and wealth within the US have worsened, particularly in the recent heyday of globalisation. Now, if your household income in America is just $57,000 (or £32,000) a year or below, you are in the majority 75% of households. In 1993, the bottom 50% earned 15% of national income; in 2003 that fell to 14%. Meanwhile, the top 25% have increased their share from a massive 62% to an even more humungous 65% by 2003.

So globalisation, the next stage of capitalist development, has not generated a flat world with harmonious development and enrichment for all. It has bred imbalances and contradictions for capitalists that cannot resolve and it has increased the inequalities between nations and within nations. The rich get richer and the poor get poorer, but the rich also find it increasingly difficult to make it work.