Kees van der Pijl, author of The Foreign Encounter in Myth and Religion (Pluto, 2010) and Nomads, States and Empires (Pluto, 2007) has written an article for the New Left Project, ‘State Capture and the Democratic Movement’, in which he considers the need for (and absence of) a powerful democratic movement at a juncture where the neo-liberal project seems to have failed.
Van der Pijl’s analysis is a timely and astute one. We’ve reproduced an extract of the article below. For the full piece, go to the New Left Project, here.
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We are currently witnessing the collapse of the neoliberal project and yet, in the absence of a serious, purposeful democratic movement, it looks very much as if the combined forces of neoliberal capitalism are consolidating their hold on Western society. The last crisis, in the mid-seventies, was resolved only with Thatcher’s election in 1979 and Ronald Reagan’s a year later, and the launch of the neoliberal project. Prior to this, European society resisted this change of tack. NATO’s decision to deploy missiles in Western Europe and the Cold War response to Soviet support for its client modernisers in Afghanistan met with popular resistance and governmental scepticism, respectively. Moreover financial liberalisation, at the heart of the neoliberal project, was still regarded by most European and American policy-makers as ‘voodoo economics’.
However as Nikos Poulantzas argued in 1973, all capitalist states must necessarily adopt the practices of the most advanced centre in order to compete. In addition, as Craig Murphy and Enrico Augelli note, the steady inflow of people trained in neoclassical economics surreptitiously created a mass base for Neoliberalism—whilst the hedonistic culture that was one part of the May 1968 post-war youth revolt also prepared the ground for a sea-change. One by one the ruling blocs of Fordist mass production industry, in state-monitored class compromise with labour, were dislodged as post-war corporate liberalism unravelled.
Neoliberal financialisation is an Anglo-American project. It gives the state/society complexes of the Lockean heartland an advantage over societies in which the state historically has guided social development. ‘Contender states’ resisting the liberal West, especially those (Germany and Japan, Austria and Italy) that emerged when second-generation heavy industry made its appearance, lacked the capital to compete with the City and Wall Street, the centres of global finance. German investment banks, as well as their Austrian counterparts and the Japanese zaibatsu, typically combined with national industries under state auspices into what Rudolf Hilferding in 1910 famously called ‘finance capital’. So for over a century, people in these societies have looked to the state to ensure general well-being; this was only reinforced in the Fordist era. Seeing banks operate independently in global speculative ventures will still, even today, raise eyebrows.
Yet from the 1980s onwards the trend everywhere was to break up existing bank-industry combinations, liberalise finance, and privatise assets. The Anglo-American neoliberal drive profited from the Lockean antecedents of their state/society-complexes, property-focused political culture, and in the final analysis, their greater readiness to use force. These structural advantages of the Anglophone West in launching footloose finance gave it the upper hand in the transformation to neoliberalism. So did the vehemence with which its strategy of abrogating the class compromise with organised labour was executed—the miners’ strike in Britain, the air traffic controllers’ strike in the United States, and many other instances of provoked class struggle. A full analysis would also include the way in which the attacks of 9/11, unintentionally but not unwelcome, cut down to size what appeared at the time to be developing into a full-fledged anti-globalisation movement.
The contender state economies, including those of continental Europe, underwent a much more painful and intensely contested process of adjustment. In the first decade of the new century, Germany also launched a veritable assault on its working class to allow its strongest capitals to join the drive to world markets of their Anglo-American counterparts. Dutch, German and French banks were prominent players in the dubious sub-prime mortgage business, and like them were packaging titles into securities in the inter-bank market and other speculative operations. But in 2007-8, with the first signs of a slowdown, the transnational circuit of money capital ground to a halt, affecting banks on both sides of the Atlantic.
At the G-20 in London in May 2009 there was general acknowledgement that the crisis was a banking crisis. But the strong rhetoric about banks, bonuses and greed was not matched by serious surveillance measures. Instead the financiers demonstrated that they had a hold on policy-making that would not easily be dislodged. As François Chesnais writes in his book Illegitimate Debts,
‘The massive aid extended to the banks and the investment funds in September-October 2008 expresses the social and political power of the shareholders and owners of the banks and the industrial groups, of fund managers and directors paid in stock options. The success of the rescue operations has allowed them to preserve their domination.’
Taking on a large slice of bank losses and translating them into sovereign debt, the states involved (including the Eurozone) helped transmute the crisis of speculative banking into a debt crisis. In 2009 the public debt of the ten richest countries was expected to rise from 78 per cent of GDP in 2007 to 114 per cent in 2014. Costas Lapavitsas and his co-authors, in their recent book on the Eurozone crisis, show how in the EU alone, sovereign debt in 2009 jumped by almost a trillion euros, whilst the level of debt of monetary financial institutions has declined proportionally.
For the rest of the article, go to the New Left Project, here.
Modes of Foreign Relations and Political Economy, Volume I
Kees van der Pijl
‘Pioneering and ambitious … Kees argues [in favour of] a reformulation of IR theory and history as a whole.’ Fred Halliday, LSE
“Van der Pijl’s innovative concept ‘modes of foreign relations’
“Tracing the history of foreign relations, Kees van der Pijl shows that they are inscribed in daily life. Nomads, Empires, States is an artful study that redefines the field of international studies.” – James H. Mittelman, Professor, School of International Service, American University, Washington, DC