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More (or Less) on Globalization

Paul M. Sweezy is co-editor of Monthly Review.

Much has been written about “globalization” in the last few years. It is not my intention to add to this literature but only to put the topic into the context of my own understanding of the history of capitalism.

Globalization is not a condition or a phenomenon: it is a process that has been going on for a long time, in fact ever since capitalism came into the world as a viable form of society four or five centuries ago; (dating the birth of capitalism is an interesting problem but not relevant for present purposes). What is relevant and important, is to understand that capitalism is in its innermost essence an expanding system both internally and externally. Once rooted, it both grows and spreads. The classic analysis of this double movement is of course Marx’s Capital.

But Marx never raised the question whether a fully globalized capitalism, i.e., with no more non-capitalist space to move into, would be viable. The reason, of course, was that he expected capitalism to be overthrown and replaced by another system long before its spatial limits had been reached. He did not ask, hence did not try to answer, whether a fully globalized capitalism would be able to survive, let alone flourish, by entirely internal expansion.

It was left for Marx’s followers to wrestle with this and related questions. The boldest and in some ways the most interesting attempt was that of Rosa Luxemburg in her magnum opus The Accumulation of Capital (1912). She put forward the theory that, since its earliest days, capitalism had lived, and could only live, by expanding into surrounding non-capitalist space. Her answer therefore was that the using up of this space would bring a final crisis from which there would be no escape.

Lenin, by contrast, focused not on capitalism as a whole but on capitalism as a collection of units in which the stronger ones competed among themselves for control of the weaker, including remaining non-capitalist areas. This was the core of his Imperialism: The Latest Stage of Capitalism, written during the First World War and itself providing a wealth of supporting empirical evidence. This struggle among the leading imperialist powers tended to weaken the capitalist system as a whole and opened the way for revolutions from below, especially the Russian Revolution, which threatened the continued viability of capitalism. The system, however, did recover, and soon after the war the imperialist powers resumed their internecine struggles, now complicated by the existence of a major non-capitalist power. This renewed struggle climaxed with the Second World War, a new round of revolutions, especially the Chinese Revolution, the emergence of the Untied States as the sole superpower, the division of the world into two parts: the capitalist part under U.S. dominance, and the non-capitalist consisting mainly of the Soviet Union and the Peoples Republic of China. The ensuing conflict between the two parts, known as the Cold War and usually thought of as being between two groups of states, was actually much more complicated, including major hot wars, guerrilla wars, attempted revolutions, and successful counter-revolutions.

Lasting almost all of the second half of the twentieth century, the Cold War ended with the restoration and triumph of capitalism on a truly global scale. But this outcome was anything but the result of a smooth process of capital expansion within or beyond its traditional limits. Violence of various kinds played an enormous role, and there are large areas in the formerly non-capitalist countries where capitalism has been proclaimed, legalized, and deliberately planted, but where there is absolutely no guarantee that it will take hold and grow in a “normal” way. Furthermore there have been changes in capitalism as it matured in its traditional stronghold (the United States, the European Union, Japan, and the former colonial countries) that pose serious questions about what the continued expansion of capitalism implies in the post-Cold War period.

What I have in mind here is the three most important underlying trends in the recent history of capitalism, the period beginning with the recession of 1974-75: (1) the slowing down of the overall rate of growth, (2) the worldwide proliferation of monopolistic (or oligopolistic) multinational corporations, and (3) what may be called the financialization of the capital accumulation process. This has of course been a period of quickening globalization, spurred on by the improved means of communication and transportation, but the three trends in question are certainly not caused or generated by globalization. Rather, all three can be traced to changes internal to the capital accumulation process, the beginning of which go back about a hundred years to the concentration and centralization movements that characterized the late nineteenth and early twentieth centuries and marked the transition from early (competitive) capitalism to late (monopoly) capitalism. Interrupted by the First World War and its aftermath, the impact of this transition hit with full force in the great Depression of the 1930s, from which there was no spontaneous recovery and which gave strong evidence of being the beginning of a period of secular stagnation and decline. Once again, however, world war came to the rescue and, together with its ensuring aftermath and the Cold War, produced what has come to be known as capitalism’s “golden age” (1950-70). This came to an end in the recession of 1974-75 and was followed by the reassertion and intensification of the trends dating back to the turn of the century: retarded growth, increasing monopolization, and the financialization of the accumulation process.

These three trends are intricately interrelated. Monopolization has contradictory consequences: on the one hand it generates a swelling flow of profits, on the other it reduces the demand for additional investment in increasingly controlled markets: more and more profits, fewer and fewer profitable investment opportunities, a recipe for slowing down capital accumulation and therefore economic growth which is powered by capital accumulation.

The foregoing describes what happened during the 1920s, a decade characterized by a persistent rise of underutilized productive capacity in industry after industry, culminating in the collapse of 1929-33. Already at that time there was a growing tendency for profits that could not find profitable outlets in real capital formation to be diverted into purely financial and mostly speculative channels. Hence the spectacular stock-market boom and crash of the late 1920s. The same double process of faltering real investment and burgeoning financialization reappeared in the “golden age” of the post-Second World War decades and has persisted with increasing intensity to the present.1

All of this certainly takes place in a context of continuing globalization which put its imprint on the way the various processes play themselves out. But globalization is not itself a driving force. It remains what it has been throughout the period we think of as modern history: the always expansive and often explosive capital accumulation process.


  1. The two forms of investment, real and financial, are of course related, though not in the simplistic (and mostly wrong) way mainstream economics takes for granted. For a fuller discussion of these processes, see Harry Magdoff and Paul Sweezy, Stagnation and the Financial Explosion (Monthly Review Press, 1987).
1997, Volume 49, Issue 04 (September)
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