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Monopoly Capital and the New Globalization

John Bellamy Foster is editor of Monthly Review. He is the author of Marx’s Ecology: Materialism and Nature and The Vulnerable Planet, and co-editor of Hungry for Profit: The Agribusiness Threat to Farmers, Food, and the Environment, all published by Monthly Review Press.

This Review of the Month was originally written as a chapter (“Paul Sweezy and Monopoly Capital”) for Douglas Dowd, ed., Understanding Capitalism: Critical Analysis from Karl Marx to Amartya Sen, to be published by Pluto Press in July 2002. It is printed here by permission. For more information, go to Pluto Press.

We live at a time when capitalism has become more extreme, and is more than ever presenting itself as a force of nature, which demands such extremes. Globalization—the spread of the self-regulating market to every niche and cranny of the globe—is portrayed by its mainly establishment proponents as a process that is unfolding from everywhere at once with no center and no discernible power structure. As the New York Times claimed in its July 7, 2001 issue, repeating now fashionable notions, today’s global reality is one of “a fluid, infinitely expanding and highly organized system that encompasses the world’s entire population,” but which lacks any privileged positions or “place of power.”*

Even the revolutionary figure of Karl Marx has been enlisted in support of this view of inexorable global destiny, which seemingly determines everything, but which has no manifest agent of change. Thus the World Bank quoted from The Communist Manifesto by Marx and Engels on the opening page of its 1996 World Development Report, arguing that the transition from planned to market economies and the entire thrust of neoliberal globalization was an inescapable, elemental process, lacking any visible hand behind it:

Constant revolutionizing of production, uninterrupted disturbance of social conditions, everlasting uncertainty and agitation…All fixed, fast frozen relations, with their train of ancient and venerable prejudices, and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air…

Gone—spirited away by ellipses in the World Bank quotation from the Manifesto—were Marx and Engels’ allusions in the same passage to “the bourgeois epoch” and their subsequent reference to how “the need for a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe.”

It is no doubt largely in response to this atmosphere of inevitability, in which globalization is divorced from all agency, that the movement against the neoliberal global project has chosen to exaggerate the role of the visible instruments of globalization at the expense of any serious consideration of historical capitalism. Radical dissenters frequently single out the WTO, the IMF, the World Bank and multinational corporations—and even specific corporations like McDonalds—for criticism, while deemphasizing the system, and its seemingly inexorable forces.

These two distorted viewpoints, one generally in support of globalization, the other generally opposed, are mutually reinforcing in their unreality. Those who wish to intervene in these processes are thus left with no real material basis on which to ground their actions. Both perspectives have in common an emphasis on the decline of nation state sovereignty. Adam Smith described capitalism in the late eighteenth century as a system that eliminated all need for a sovereign power in the economic realm, replacing the visible hand of the absolutist or mercantilist state with the invisible hand of the market. “The Sovereign,” he wrote, “is completely discharged from a duty” with respect to the market (Book 4, section 9). Now we are told that this invisible hand has been globalized to such an extent that the sovereign power of nation states over their territorial domains themselves has been vastly diminished. For New York Times foreign affairs columnist Thomas Friedman, author of The Lexus and the Olive Tree, globalization is a new technological-economic system based in the microchip and ruled by an “electronic herd” of financial investors and multinational corporations, free from any nation state or power structure, and beholden to none.

Those seeking to dispel such views might reply that capitalism with all of its contradictions remains. But most current conceptions of capitalism are too lacking in historical specificity and concreteness, and too wrapped up in the notion of unfettered competition, to be useful in countering this dominant ideology. Indeed, the very idea of capitalism is being shorn of all determinate elements. The notion of global free market hegemony without the nation state and without discernible centers of power (only highly visible instruments of the market) means a concept of capitalism that has become virtually synonymous with globalization. There is, it is proclaimed, no alternative because there is nothing outside the system, and no center within the system.

The ideological fog that pervades all aspects of the globalization debate is bound to dissipate eventually, as it becomes clear that the contradictions of capitalism, which have never been surmounted, are present in more universal and more destructive form than ever before. For those seeking to penetrate this fog at present and to understand the constellation of forces in the world today what is needed above all is a concrete and historically specific conception of capitalism that will allow us to see through such issues as globalization. Within Marxism such an analysis was provided in the twentieth century by the theory of monopoly capitalism.

The Origins of Monopoly Capital Theory

The term “monopoly capitalism” has been widely used within Marxian economics to refer to the stage of capitalism dominated by large corporations. This stage of capitalist development originated in the last quarter of the nineteenth century and reached maturity about the time of the Second World War. Marx’s Capital, like the work of the other classical political economists, had assumed that the market system was characterized by conditions of free competition, in which capitalist enterprises were small, mainly family-run firms. Classical political economy never included such absolute fantasies as “perfect” or “pure” competition, which were to be imported into economics in its later neoclassical stage. Nevertheless, it assumed in its bedrock theory of free competition that price competition was fierce, and that no individual capitalist or firm had the power to control a significant portion of the market.*

In the case of Marx, as distinct from the other classical political economists, however, capitalism was a historical system, and thus dynamic in character, passing through various stages. Although Marx himself did not present a theory of monopoly capitalism, he did point to the concentration and centralization of capital as a fundamental tendency of accumulation under capitalism. The whole development of the credit system and the stock market was for Marx “a new and terrible weapon in the battle of competition and is finally transformed into an enormous social mechanism for the centralization of capitals” (Volume 1, chapter 2, section 2). In preparing Volumes 2 and 3 of Marx’s Capital for publication two decades later, Engels emphasized the fact that free competition had reached “the end of its road” (Volume 3, chapter 27). Marx and Engels, however, were prone to see these developments as signs of new conditions of socialization of production that would help usher in a new mode of production—not as indications of a new stage of capitalism.

It remained for later thinkers, therefore, to analyze what these developments meant for capitalism’s laws of motion. The first to do so was the heterodox U.S. economist Thorstein Veblen, who in The Theory of Business Enterprise (1904) and subsequent works, charted the economic implications of the rise of big business, and the transformations in credit, corporate finance and the forms of salesmanship that went along with this. But Veblen’s influence on economics did not extend beyond the United States. Within the Marxist tradition, then centered in Germany, the first important theorist of monopoly capitalism was the Austrian economist Rudolf Hilferding in his Finance Capital: The Latest Phase of Capitalism (1910); soon followed by Lenin in his Imperialism: The Highest Stage of Capitalism (1916).

Hilferding pointed to the tendency of concentration and centralization of capital to generate a greater and greater consolidation of capital, pointing eventually to one big cartel—an overly simplistic view that failed to perceive some of the countervailing influences at work. He saw these changes as mainly quantitative in character, and though his work was full of important insights, he did not explore the question of qualitative alterations in the laws of motion of capitalism. Hilferding’s perspective did, however, inspire Lenin to connect imperialism with the monopoly stage of capitalism, and to perceive the growth of giant capital therefore as integrally related to both the expansion of capital on the world stage, and the struggle between nation states for shares of the world market. But Lenin, like Hilferding before him, did not pursue the question of how capitalism’s basic laws of motion might be modified in the monopoly stage. The concept of monopoly capitalism was to remain axiomatic for Soviet economists in the 1920s and 1930s, during which some important new departures were begun. But by the late 1930s it had been reduced to a mere dogma within the rigid orthodoxy that prevailed under Stalinism.

In the 1930s in the West, meanwhile, mainstream academic economists finally began to deal with monopoly, particularly in the work of Joan Robinson, Edward Chamberlain and the young Paul Sweezy. Yet the theory of “imperfect competition” that was to emerge from these analyses had a formal character that was usually divorced from real his torical processes. Nor was it intended as more than a minor qualification to the theory of perfect competition, which continued to be considered the general rule, and prevailed over economics as a whole. By the 1930s Marxian economics could be said to have three strands: (1) the theory of capital accumulation and crisis; (2) the beginnings of a theory of monopoly capitalism (based on Marx’s concept of the concentration and centralization of capital); and (3) the theory of imperialism. The second and third strands—growing monopolization and imperialism—had been linked to each other by Lenin. But, paradoxically, there was no theoretical analysis that linked the second strand to the first—that is, no connection was drawn between growing concentration and centralization of capital and the forms of accumulation and crisis. The debate on economic crisis in Marxian theory, which in the early twentieth century centered on Marx’s famous reproduction schemes in in Capital, Volume 2, took place in a context that was completely separate from the analysis of the growth of monopoly.

Historical developments, however, were pointing to such a connection. Since the turn of the century in the United States there had been a groundswell of popular agitation against the giant monopolies and trusts. The great merger wave at the beginning of the twentieth century was widely viewed as representing a qualitatively new reality. It has been estimated that between a quarter and a third of all U.S. capital assets underwent consolidation in mergers between 1898 and 1902 alone. The mammoth merger of the period, the formation of U.S. Steel in 1901 under the financial guidance of the investment banking house of Morgan, fused 165 separate companies. The result was a monopolistic corporation controlling about 60 percent of the total U.S. steel industry. In 1936, Arthur R. Burns wrote his classic study, The Decline of Competition: A Study of the Evolution of American Industry. And in the context of the Great Depression of the 1930s it was frequently contended within heterodox economic circles, especially among those influenced by Veblen, that the stagnation was worsened by the growth of giant corporations with a large degree of monopoly power. One of the objects of the Temporary National Economic Committee established by the Roosevelt administration during the Great Depression was to investigate this question (though the results that they came up with in the end were quite meager).

Yet, despite all of this, John Maynard Keynes’ General Theory of Employment, Interest and Money (1936), which transformed macroeconomics in response to the depression, remained rooted in the age-old assumptions of atomistic competition.

The first economist to connect the theory of crisis to the theory of monopoly was the Polish economist Michal Kalecki, who drew his inspiration from Marx and Rosa Luxemburg. Kalecki’s work in the early 1930s in Polish had developed, according to Joan Robinson and others in the circle of younger economists around Keynes, the main elements of the “Keynesian” revolution, in anticipation of Keynes himself. Kalecki moved to England in the mid-1930s where he helped further the transformation in economic analysis associated with Keynes. There he developed his concept of the “degree of monopoly,” which stood for the extent to which a firm was able to impose a price mark-up on prime production costs (workers’ wages and raw materials). In this way, Kalecki was able to link monopoly power to the distribution of national income, and to the sources of economic crisis and stagnation. Kalecki also explored the more general historical conditions affecting investment. In the closing paragraphs of his Theory of Economic Dynamics (1965) he concluded: “Long-run development is not inherent in the capitalist economy. Thus specific ‘developmental factors’ are required to sustain a long-run upward movement.”

This analysis was carried forward by Josef Steindl, a young Austrian economist who had worked closely with Kalecki in England. According to Steindl’s Maturity and Stagnation in American Capitalism (1952), giant corporations tended to promote widening profit margins, but were constantly threatened by a shortage of effective demand, due to the uneven distribution of income and resulting weakness of wage-based consumption.* New investment could conceivably pick up the slack. Yet such investment resulted in new productive capacity, that is, an enlargement of the potential supply of goods. “The tragedy of investment,” Kalecki wrote, “is that it is useful.”* Giant firms, able to control to a considerable extent their levels of price, output, and investment, would not invest if large portions of their existing productive capacity were already standing idle. Confronted with a downward shift in final demand, monopolistic or oligopolistic firms would not lower prices (as in the perfectly competitive system assumed in most economic analysis) but would instead rely almost exclusively on cutbacks in output, capacity utilization and new investment. In this way they would maintain, to whatever extent possible, existing prices and prevailing profit margins. The giant firm under monopoly capitalism was thus prone to wider profit margins (or higher rates of exploitation) and larger amounts of excess capacity than was the case for a freely competitive system, thereby generating a strong tendency toward economic stagnation.*

Monopoly Capital: An Essay on the American Economic and Social Order

The appearance in 1942 of Paul Sweezy’s classic study The Theory of Capitalist Development, one of the great works in Marxian economics, marked the beginnings of a distinctive tradition of Marxian analysis within the United States—one that was later to become associated with the magazine Monthly Review, which Sweezy founded in 1949 along with historian and journalist Leo Huberman.1 In The Theory of Capitalist Development, Sweezy drew on Marx’s theory of realization crisis—showing the close connection between that and Keynes’ theory of effective demand—and developed a sophisticated analysis of economic stagnation. The Theory of Capitalist Development also extended the Marxian analysis of monopolization. But these two elements remained separate in his work. It was this criticism that Steindl presented in a long discussion of Sweezy’s book in Maturity and Stagnation in American Capitalism. Steindl went on to argue that a more unified theory could “be organically developed out of…Marx” based on Kalecki’s model of capitalist dynamics, which had connected the phenomenon of realization crisis to the increasing “degree of monopoly” in the economy as a whole.

Sweezy was immediately impressed by Steindl’s argument, as was Paul Baran, professor of economics at Stanford, and a close friend and associate of Sweezy and Monthly Review. In 1957, Baran published The Political Economy of Growth, which adapted the theory of monopoly capitalism arising from Kalecki and Steindl, while also analyzing the role of imperialism in reinforcing the economic underdevelopment of countries in capitalism’s third world periphery.2

With respect to the latter part of his argument, Baran made a big departure from orthodox economics. Rather than following the common practice of assuming that the poorer economies of the periphery had always been relatively “backward,” Baran approached the issue historically. “The question that immediately arises,” he wrote, “is why is it that in the backward countries there has been no advance along the lines of capitalist development that are familiar from the history of other capitalist countries, and why is it that forward movement there has been either slow or altogether absent” (Political Economy of Growth, p. 136). The answer, he suggested, was to be found in the way in which capitalism was brought to these regions during the period of what Marx called “primitive accumulation,” characterized by “undisguised looting, enslavement and murder,” and in the way in which this very process has served to “smother fledgling industries” in the colonized societies (Ibid., p. 142).

It was thus the European conquest and plundering of the rest of the globe that generated the great divide between the core and periphery of the capitalist world economy that persists to this day. In illustrating this, Baran highlighted the different ways in which India and Japan were incorporated into the world economy as a result of the globalizing tendencies of capitalism: the first as a dependent social formation carrying the unfortunate legacy of what Andre Gunder Frank was later to call “the development of underdevelopment” the second representing the exceptional case of a society that was neither colonized nor subject for long to unequal treaties, and that, retaining control over its own economic surplus, was free to develop along the autocentric lines of the core European powers. The implication of this analysis was clear: incorporation on an unequal basis into the periphery of the capitalist world economy is itself the main cause of the plight of the underdeveloped countries.

For Baran, imperialism, in this sense, was inseparable from capitalism. Its central underpinnings were to be found in the mode of accumulation operating in the advanced capitalist world. An international division of labor had evolved that geared production and trade of the poor countries in the periphery much more toward the needs of the rich countries in the center of the system than to the needs of their own populations.

No treatment of contemporary imperialism was complete, however, that did not take account of the laws of motion of monopoly capital. In The Political Economy of Growth, Baran applied the concept of economic surplus to analyze not only the development of underdevelopment in the periphery, but also to throw light on the problem of accumulation and stagnation within the United States and other leading capitalist nations. This argument was further extended in Monopoly Capital: An Essay on the American Economic and Social Orderr, coauthored with Paul Sweezy, and published in 1966 two years after Baran’s death. Between 1966 and 1974 Monopoly Capital was translated into sixteen languages and was “adopted…almost immediately as a standard text” of the New Left.3

The basic dilemma of accumulation under monopoly capitalism was laid out in Kaleckian terms. Workers, the vast majority of the population in the rich countries, had little or no access to economic surplus in the forms of profit, interest and rent. Workers’ income was almost exclusively wage income. Most working people lived from paycheck to paycheck (though sometimes able to make large purchases on credit), and had no savings to speak of. Workers therefore spent what they got on necessities, or what economists sometimes called wage goods.

Capitalists, in contrast, had access to economic surplus and had as their main goal accumulation of even greater surplus. They spent a small portion of their total income on luxury goods for their private consumption, but mainly sought to ensure the enhancement of their wealth through investment in capital goods—new productive capacity. But here a dilemma entered in: if all investment-seeking surplus was invested in new productive capacity (new plant and equipment), that new capacity, once it came on stream, would result in a total capacity to produce goods that might well exceed final demand, leading to over-production, declining prices and rapidly falling profits. In order to prevent such a situation from developing and in order to prevent price reductions that would threaten profit margins, monopoly capital held down production levels, increasing the normal amount of idle productive capacity and carefully regulating investment. Yet all of this meant that the surplus that the system was actually and potentially capable of producing normally exceeded the capacity to absorb that surplus. The result was a trend rate of economic growth well below the potential.

Monopolization, this theory argued, was not the only historical element serving to slow down capital accumulation. Also important was the phenomenon of “maturity” emphasized by Keynes’ leading U.S. follower Alvin Hansen during the debates on secular stagnation in the 1930s. Investment, in this perspective, had to be viewed historically. Most new industries went through a highly competitive shakedown phase in which prices tended to fall and investment took a highly dynamic character. But once such industries had “matured,” with more productive capacity built-up than they could normally utilize—and once these industries had also fallen under the sway of three or four monopolistic or oligopolistic firms—investment tended to fall off. What investment took place was more and more supplied out of depreciation funds with relatively little new net investment taking place. Moreover, the nature of industrialization was such that in the highly developed economies a larger and larger portion of industry would consist of mature markets in this sense.

The overall theory thus suggested that the stagnation that had characterized the 1930s was not simply an anomaly, but reflected conditions deeply embedded in the laws of motion of capitalism in its monopoly stage. Yet, the immediate reality at the time that Monopoly Capital was written was not stagnation but rapid economic growth. As Baran and Sweezy wrote in the introduction to their book: “The Great Depression of the 1930’s accorded admirably with Marxian theory, and its occurrence of course strengthened the belief that similar catastrophic economic breakdowns were inevitable in the future. And yet, much to the surprise of many Marxists, two decades have passed since the end of the Second World War without the recurrence of severe depression” (Monopoly Capital, p. 3).

If a monopoly capitalist economy was prone to economic crisis and stagnation, how had the U.S. economy managed to expand for two decades without a major crisis? This was the question that Monopoly Capital sought above all to answer. Baran and Sweezy singled out a number of countervailing factors that had served to prop up the economy: (1) the epoch-making stimulus provided in the 1950s by a second great wave of automobilization in the United States (which was to be understood as also encompassing the expansion of the steel, glass, rubber and petroleum industries, the building of the interstate highway systems and the stimulus provided by suburbanization); (2) Cold War military spending, including two regional wars in Asia; (3) the growing wasteful penetration of the sales effort into production (a point first emphasized by Veblen); and (4) the vast expansion of financial super-structure of the capitalist economy, to the extent that it even began to dwarf production itself. (This last element was mentioned in Baran and Sweezy’s analysis, but given much more emphasis in Sweezy’s later writings than in Monopoly Capital itself). Through these means the U.S. economy managed to absorb surplus and thus to stave off a severe economic crisis.

All of these countervailing factors, however, were either self-limiting, or produced additional contradictions for monopoly capitalist society. Automobilization represented a shift in the entire geographical basis of the economy; and once these effects had been achieved the process slowed down. Moreover, no new epoch-making innovation on the same scale seemed to be on the horizon—even the digital revolution in recent decades has been small in comparison, in its effect on overall investment. The emphasis on military spending committed the United States, which now accounts for roughly a third of all military spending in the world, to global militarism and imperialism—and to the search for new justifications for a large and expanding arms budget once the Cold War had ended. The penetration of the sales effort into the production process meant the production of huge amounts of waste (unnecessary packaging, useless products, throwaway goods and product obsolescence within the process of production itself). Naturally, this was not without its effects on business costs and competition. The sky-rocketing growth of the financial superstructure of the capitalist economy at the same time as the relative stagnation of its productive base could only contribute to the uncertainty and instability of capitalist economies worldwide.

Monopoly Capital dealt with the changing nature of competition, the modifications in accumulation, and the growing militarism and imperialism under monopoly capitalism. It largely ignored, however, a question at the heart of Marx’s critique of capitalism: the labor process itself, and the exploitation of workers. This topic was taken up Harry Braverman, director of Monthly Review Press—a former skilled worker in metal working industries—in his magnum opus, Labor and Monopoly Capital: The Degradation of Work in the Twentieth Century (1974). Braverman, while rooting his analysis in Marx’s Capital, applied this to the growth of scientific management or Taylorism, which had emerged along with the giant corporation at the beginning of the twentieth century. He showed that the forces directed at the extraction of ever greater amounts of surplus from the direct producers by means of the relentless division and subdivision of labor, and hence the degradation and dehumanization of work, had only intensified under monopoly capitalism. At the same time, the “universalization of the market,” to the point that all aspects of social existence became dependent upon it, represented the hidden set of chains behind the much-celebrated growth of “consumer society.”4

Another extension of the theory of monopoly capitalism was provided in the work of Harry Magdoff—who in 1969, following Leo Huberman’s death, became coeditor with Sweezy of Monthly Review. Magdoff’s The Age of Imperialism: The Economics of U.S. Foreign Policy (1969) had as its object nothing less than the rediscovery of the long suppressed topic of U.S. imperialism. It demonstrated that the U.S. had an empire, although one different from the empires of Britain and France that had preceded it. This, even more than the contest with the Soviet Union, was the context in which the Vietnam War, then taking place, had to be understood. Arguing against the widespread view that the U.S. economy had very little involvement in the world economy, Magdoff emphasized the flow of foreign direct investment abroad and its effect in creating a cumulative stock of investment generating a return flow of earnings. He criticized the common error of simply comparing exports or the foreign investment of multinational corporations to the gross domestic product. Rather, the importance of these economic flows could only be gauged by relating them to strategic sectors of the economy, such as the capital goods industries; or by comparing the earnings on foreign investment to the profits of domestic nonfinancial corporations. Earnings from overseas investments, Magdoff pointed out, had grown from 10 percent of after tax profits for U.S. nonfinancial corporations in 1950, to over 20 percent in 1964.5 In answer to the question “Is Imperialism Necessary?” Magdoff insisted that imperialism was the global face of capitalism—as fundamental to the system as the drive for profits itself.6

The formation of the General Agreement on Tariffs and Trade, the International Monetary Fund, and the World Bank after the Second World War facilitated, Magdoff argued, the development of an international order in which the United States assumed a hegemonic position. Already in The Age of Imperialism in the late sixties he emphasized the international financial expansion of U.S. capital, based on the dollar’s hegemonic position in the world economy, and the growth at the same time of a debt trap in the third world. In the closing pages of The Age of Imperialism, Magdoff wrote:

The typical international business firm is no longer limited to the giant oil company. It is as likely to be a General Motors or a General Electric—with 15 to 20 percent of its operations involved in foreign business, and exercising all efforts to increase this share. It is the professed goal of these international firms to obtain the lowest unit production costs on a world-wide basis. It is also their aim, though not necessarily openly stated, to come out on top in the merger movement in the European Common Market and to control as large a share of the world market as they do of the United States market (p. 200).

The New Stage of Globalization

The theory of monopoly capital developed by Sweezy, Baran, Magdoff, and Braverman, on foundations laid by Marx, Veblen, Hilferding, Lenin, Kalecki, and Steindl, thus pointed early on to many of the phenomena that are now commonly associated with “globalization.” But in this perspective, capitalism had been a global system from the start. Although one could refer to a “new stage of globalization,” it was part of a long historical process, inseparable from imperialism (Magdoff, Globalization—To What End?, p. 3). Capitalism, as Sweezy stressed, had emerged in the fifteenth and sixteenth centuries. From its earliest infancy the system had been constituted as “a dialectical unity of self-directed center and dependent periphery.” Further:

The fact that capitalism has from the beginning had these two poles—which can be variously described by such terms as independent and dependent, dominant and subordinate, developed and underdeveloped, center and periphery—has at every stage been crucial for the evolution of its parts. The driving force has always been the accumulation process in the center, with the peripheral societies being molded by a combination of coercion and market forces to conform to the requirements and serve the needs of the center (Sweezy, Four Lectures on Marxism, p. 73).

Within this global system much higher rates of exploitation were to be found in the periphery than in the center; and at the same time surplus was siphoned off from the periphery to meet the development needs of the center. Consequently, the gap in income and wealth between the center and the periphery as a whole has tended to increase, despite development in some peripheral countries. Conflict between center and periphery, was therefore inevitable, oftentimes taking the form of revolution and counterrevolution (the latter invariably supported by the United States and other imperial powers in the center of the system, sometimes through direct military intervention).

The struggle over imperialism, however, did not simply occur between North and South. As Lenin had argued, the growth of monopoly capital was inseparable from rivalry among the advanced industrialized nations within the center of the world system, taking the form of trade and currency conflicts, struggles arising out of the promotion of their respective national corporations, and even leading to war (as in the First and Second World Wars). Much of this imperialist rivalry was directed at spheres of influence and control in the periphery, with each of the great powers laying primary claim to certain dependent regions. Concentration and centralization of capital, stagnation tendencies in the center, imperialist exploitation in the periphery, globalization of finance, and imperial rivalry between the advanced capitalist countries—together made up the general picture of the world developed by monopoly capital theory. This generated an approach to the latest phase of globalization entirely different from those most commonly encountered today. National sovereignty in the center of the system (as opposed to the periphery), according to the perspective of monopoly capital theory, was not eroded. The world economy was seen neither as chaotic, in the sense of a lack of powerful organizing forces, nor, as some contended, as giving rise to a new international of capital led by the WTO and other supranational organizations. “For the sake of perspective,” Magdoff explained in his treatise, Globalization—To What End? (1992):

it is worth recognizing that the recent splurge in globalization is part of an ongoing process with a long history. To begin with, capitalism was born in the process of creating a world market, and the long waves of growth in the core capitalist countries were associated with its centuries-long spread by conquest and economic penetration. In the past as in the present, competitive pressures, the incessant need for capital to keep on accumulating, and the advantages of controlling raw material sources have spurred business enterprise to reach beyond its national borders….While the expansion of capitalism has always presupposed and indeed required cooperation among its various national components…there has never been a time when these same national components ceased to struggle each for its own preferment and advantage. Centrifugal and centripetal forces have always coexisted at the very core of the capitalist process, with sometimes one and sometimes the other predominating. As a result, periods of peace and harmony have alternated with periods of discord and violence. Generally, the mechanism of this alternation involves both economic and military forms of struggle, with the strongest power emerging victorious and enforcing acquiescence on the losers. But uneven development soon takes over, and a period of renewed struggle for hegemony emerges (Globalization—To What End?, pp. 4-5).

The “strongest power” at present remains the United States, which has managed to maintain a global hegemonic imperialism since 1945. This hegemony has been under challenge from other leading capitalist countries since the 1970s. The United States has sought to maintain its preeminent position at every opportunity—through an expansion of its role as the leading military power, and by wielding its economic and financial might. “The fact that U.S. hegemonic imperialism proved to be so successful, and still continues to prevail,” István Mészáros has explained in his Socialism or Barbarism (2001)—a work associated with the same broad tradition of Marxian analysis—“does not mean that it can be considered stable, let alone permanent. The envisaged ‘global government’ under U.S. management remains wishful thinking, like the ‘Alliance for Democracy’ and the ‘Partnership for Peace,’ projected— at a time of multiplying military collisions and social explosions— as the solid foundation of the newest version of the ‘new world order.’” Instead what is emerging is the “potentially deadliest phase of imperialism” evident in: (1) growing rivalry between the United States, Europe and Japan; (2) increasing concern within U.S. ruling circles about the potential threat represented by China, viewed as an emerging superpower rival; and (3) aggressive U.S. attempts to preempt such challenges by extending the geopolitical sphere of its hegemony (Socialism or Barbarism, pp. 51-52). All the talk about globalization having integrated the world and disintegrated all centers, eliminating all sovereign powers, is largely illusion. Nation state sovereignty and U.S. imperialism have not gone away but continue to exist in this new phase of capitalist globalization in an explosive mixture.

Globalization of capital in the present stage of capitalism is thus inseparable from increasing monopolization, that is, the concentration and centralization of capital on a world scale—which necessarily produces bigger contradictions and crises. “The three most important underlying trends in the recent history of capitalism, the period beginning with the recession of 1974-75,” Sweezy argued in Monthly Review in 1997, were: “(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.” All of these underlying trends were a product of the driving force of capitalism, the capital accumulation process itself, rather than arising from globalization—which was to be seen as a process that has been going on as long as capitalism, but which could only be understood in terms of the latter. Nevertheless, all three of these “underlying trends,” associated with capital accumulation, Sweezy was to emphasize, must be seen as taking place in “a context of continuing globalization which puts its imprint on the way the various processes play themselves out.”7

What is perhaps most evident is that stagnation, monopolization, financialization, and the new phase of globalization, all combine to generate quite new and highly visible power mechanisms. As British political economist Michael Barratt Brown wrote in his Models in Political Economy (1995), “the system of production for profit in the market is still what organizes production. But the hand is no longer invisible, decisions are no longer unplanned. It is increasingly obvious that the hand is the hand of the managers of a few giant companies playing the market and planning the use of the world’s resources to make money rather than to meet wants. More and more people can see this is so” (p. 37).

Rather than representing the realization of Adam Smith’s invisible hand on a global scale—a seemingly inexorable mechanistic reality against which there is no recourse—capitalism is more and more a contested sphere, in which concentration and centralization of production on a world scale and hence increasingly global competition between firms has its counterpart in the globalization of exploitation. Struggles over nation state hegemony have not disappeared in this new stage of globalization, but continually resurface, often in more potent form.

Globalization as the end of history, as the end of nation state sovereignty, as a new world order, as the integration of all peoples, or as a reality for which there is no alternative—are all myths carefully cultivated in our time. To see through these establishment myths—along with the “progressive” myth that we can oppose the instruments of neoliberal globalization without opposing the system itself—it is necessary to understand the historical changes associated with the development of monopoly capital on an increasingly global scale. Neither capitalism’s monopolistic tendencies nor its imperialist divisions are in any way surmounted by the new globalization. At most these contradictions simply assume more universal forms. More than ever before a world of globalized monopoly capital and hegemonic imperialism, led by the United States, presents us with a stark choice: between a deadly barbarism or a humane socialism.


  1. For a detailed discussion of Sweezy’s views, from which part of this analysis is taken, see John Bellamy Foster, “Paul Marlor Sweezy,” Philip Aresits and Malcolm Sawyer, ed., A Biographical Dictionary of Dissenting Economists (Northampton, Mass.: Edward Elgar, 2000), pp. 642–651.
  2. For a more thorough treatment of Baran’s work, from which some of the present discussion is adapted, see John Bellamy Foster, “Paul Alexander Baran,” in Arestis and Sawyer, ed., A Biographical Dictionary of Dissenting Economists, pp. 36-43.
  3. Joanne Barkan, “A Blast from the Past: Paul A. Baran and Paul M. Sweezy’s Monopoly Capital,” Dissent 44, (Spring 1997), p. 95.
  4. A fuller account of Braverman’s ideas can be found in John Bellamy Foster, “Introduction,” in Harry Braverman, Labor and Monopoly Capital (New York: Monthly Review Press, 1998), pp. ix-xxvii.
  5. For a more extensive treatment of Magdoff’s life and work, from which part of the present discussion has been drawn, see John Bellamy Foster, “Harry Magdoff,” in Arestis and Sawyer, A Biographical Dictionary of Dissenting Economists, pp. 385-94.
  6. A similar view, emanating from the third world, was presented in Samir Amin’s path-breaking work, Accumulation on a World Scale (Monthly Review, 1974; first written as a dissertation in 1957).
  7. Paul M. Sweezy, “More (or Less) on Globalization,” Monthly Review, September 1997.

* The New York Times was encapsulating the views of Michael Hardt and Antonio Negri in their fashionable, postmodernist work, Empire (Cambridge, Mass.: Harvard University Press, 2000).

* Much of the discussion in this and the following paragraphs draws on Paul M. Sweezy, “Monopoly Capitalism,” New palgrave Dictionary of Economics, vol. 3 (New York: The Stockton Press, 1987), pp. 541-544.

* All books by Steindl, Sweezy, Baran, Magdoff, Braverman and Mészáros mentioned in this essay are published by Monthly Review Press in New York.

* Michal Kalecki, Essays in the Theory of Economic Fluctuations (London: Allen and Unwin, 1939), p. 149.

* The monopoly capitalist economy does not consist simply of giant firms, of course. Within manufacturing, for example, there are hundreds of thousands of firms, which together employ a substantial share of the work force. These smaller firms are often attached to the giants, some supplying parts, others occupying various other niches. Such firms tend to bear the brunt of an economic downturn. Conversely, during an expansion they tend to grow more rapidly than the dominant, monopolistic firms.

2002, Volume 53, Issue 08 (January)
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