Global Courant
Early American capitalism was centered in New England. After some time, the pursuit of profit led many capitalists to leave that area and move production to New York and the mid-Atlantic states. Much of New England was left with abandoned factory buildings and depressed towns visible to this day.
Eventually, employers moved again, leaving New York and the Mid-Atlantic for the Midwest. The same story kept repeating itself as the center of capitalism moved to the Far West, South and Southwest. Descriptive terms such as “Rust Belt,” “deindustrialization,” and “producing desert” were increasingly applied to more and more parts of American capitalism.
As long as the movements of capitalism remained largely in the US, the alarms of abandoned victims remained regional and did not yet become a national issue. However, in recent decades, many capitalists have moved production facilities and investments outside the US to other countries, especially China.
Persistent controversies and alarms surround this capitalist exodus. Even the celebrated high-tech sectors, perhaps the only remaining strong center of American capitalism, have invested heavily elsewhere.
Since the 1970s, wages abroad have been much lower and markets have also grown faster there. More and more American capitalists had to leave or risk losing their competitive advantage over the capitalists (European and Japanese, as well as the US) who had gone to China earlier and showed stunningly improved earnings.
System rewards the already rich
Outside of China, other Asian, South American, and African countries also offered incentives for low wages and growing markets, ultimately prompting American capitalists and others to invest there.
Profits from the movements of those capitalists stimulated more movements. Rising earnings fed back to the rise in US stock markets, driving large gains in income and wealth.
This mainly benefited the already wealthy company shareholders and top executives. In turn, they promoted and funded ideological claims that the capitalism that failed the US was in fact a great gain for American society as a whole.
Those claims, categorized under the headings of “neoliberalism” and “globalization,” neatly served to hide or obscure one important fact: higher profits, mainly for the wealthiest few, were the main goal and result of capitalists leaving the US.
Neoliberalism was a new version of an old economic theory that justified capitalists’ “free choices” as the necessary means to achieve optimal efficiency for entire economies. According to the neoliberal view, governments should minimize any regulation or other interference in the profit-oriented decisions of capitalists.
Neoliberalism celebrated “globalization,” the preferred name for capitalists who specifically chose to move production abroad. That “free choice” would allow for “more efficient” production of goods and services, as capitalists could tap available resources worldwide.
The point and punchline arising from the glorifications of neoliberalism, the free choices of capitalists, and globalization was that all citizens benefited as capitalism moved forward. With the exception of a few dissenters (including some trade unions), politicians, mass media and academics largely joined the intense encouragement of the neoliberal globalization of capitalism.
The economic consequences of capitalism’s profit-oriented movement from its old centers (Western Europe, North America and Japan) brought capitalism there to its current crisis.
Advantage: China
First, real wages stagnated in the old centers. Employers who could export jobs (particularly in manufacturing) did. Employers they couldn’t automate (especially in the service industries).
When employment in the US stopped increasing, so did wages. Since globalization and automation boosted corporate profits and stock markets while wages stagnated, the old centers of capitalism have seen an extreme increase in income and wealth gaps. Increasing social divisions followed and now culminated in the crisis of capitalism.
Second, unlike many other poor countries, China possessed the ideology and organization to ensure that capitalist investment served China’s own development plan and economic strategy.
China required the sharing of advanced technologies from incoming capitalists (in exchange for those capitalists’ access to cheap Chinese labor and fast-growing Chinese markets). The capitalists entering Beijing’s markets also had to facilitate partnerships between Chinese producers and distribution channels in their home countries.
China’s strategy of prioritizing exports meant gaining access to distribution systems (and thus distribution networks controlled by capitalists) in its target markets. Developed mutually beneficial partnerships between China and global distributors such as Walmart.
Beijing’s “socialism with Chinese characteristics” included a powerful development-oriented political party and state. Together they oversaw and controlled an economy that mixed private capitalism with state capitalism.
In that model, private employers and state employers each manage masses of workers in their respective enterprises. Both types of employers function depending on the strategic interventions of a party and a government determined to achieve its economic goals.
As a result of the way it defined and implemented its socialism, China’s economy gained more (particularly in terms of GDP growth) from neoliberal globalization than Western Europe, North America and Japan. China grew fast enough to now compete with the old centers of capitalism.
Short-sighted American response
The decline of the US within a changing global economy has contributed to the crisis of US capitalism. For the American empire that emerged from World War II, China and its BRICS allies (Brazil, Russia, India and South Africa) represent the first serious, sustained economic challenge.
The official US response to these changes to date has been a mixture of resentment, provocation and denial. These are neither solutions to the crisis nor successful adaptations to a changed reality.
Third, the war in Ukraine has exposed the main effects of capitalism’s geographic movements and the US’s accelerated economic decline relative to China’s economic rise. The US-led sanctions war against Russia has thus failed to crush the ruble or collapse the Russian economy.
That failure was followed in large part by Russia receiving crucial support from the alliances (BRICS) already built around China. Those alliances, enriched by investment from both foreign and domestic capitalists, especially in China and India, provided alternative markets as sanctions closed Western markets to Russian exports.
Previous income and wealth gaps in the US, exacerbated by the exportation and automation of high-paying jobs, undermined the economic base of that “massive middle class” that so many workers thought they belonged to.
In recent decades, workers who expected to enjoy “the American dream” found that the increased cost of goods and services meant the dream was beyond their reach. Their children, especially those forced to borrow for college, were in a similar or worse situation.
Fight back
Resistance of all kinds (trade union movements, strikes, left and right “populism”) arose as the living conditions of the working class continued to deteriorate. To make matters worse, the mass media celebrated the staggering wealth of the few who benefited most from neoliberal globalization.
In the US, phenomena such as former President Donald Trump, Independent Senator Bernie Sanders of Vermont, white supremacy, unionization, strikes, explicit anti-capitalism, “culture” wars and often bizarre political extremism reflect deeper social divisions.
Many in the US feel betrayed after being let down by capitalism. Their differing explanations for the betrayal exacerbate the nation’s widespread sense of crisis.
The global move of capitalism helped raise the total GDP of the BRICS countries (China + allies) well above that of the Group of Seven (US + allies). For all countries of the South, their calls for development aid can now be directed to two potential respondents (China and the US), not just those in the West.
When Chinese entities invest in Africa, their investments are naturally structured to benefit both donors and recipients. Whether or not the relationship between them is imperialistic depends on the specifics of the relationship and the net profit balance.
Those gains for the BRICS are likely to be significant. Russia’s adjustment to Ukraine-related sanctions against the country not only led it to lean more on BRICS, but also strengthened economic interactions between BRICS members.
Existing economic ties and joint projects among them grew. New ones are coming up fast. Not surprising, Additionally countries in the South have recently applied for BRICS membership.
Capitalism has moved on, leaving its old centres, bringing its problems and divisions to a crisis level. Because profits still flow back to the old centers, those who collect the profits there deceive their country and themselves into thinking that all is well in and for global capitalism. Because those profits greatly exacerbate economic inequalities, social crises there deepen.
For example, the wave of militant labor that is engulfing nearly all American industries reflects anger and resentment at those inequalities. The hysterical scapegoating of various minorities by right-wing demagogues and movements is another reflection of the mounting difficulties.
Yet another is the growing realization that the problem, at its core, is the capitalist system. These are all parts of the current crisis.
Even in the new dynamic centers of capitalism, a critical socialist issue returns to stir the minds of the people. Is the organization of workplaces in the new centers – preserving the old capitalist model of employers versus employees in both private and state-owned companies – desirable or sustainable?
Is it acceptable for a small group, employers, to exclusively and inexplicably make most of the important decisions in the workplace (what, where and how to produce and what to do with profits)?
That is clearly undemocratic. Workers in the new centers of capitalism are already questioning the system; some have begun to challenge and oppose it. Where those new centers celebrate some form of socialism, workers are more likely (and faster) to resist subservience to the remnants of capitalism in their workplace.
This article was produced by Economy for everyonea project by the Independent Media Institute, which it provided to Asia Times.
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