Transforming the 'World-Economy? . Nine Critical Essays on the New International Economic Order
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Transforming the 'World-Economy? . Nine Critical Essays on the New International Economic Order
edited by Herb Addo contribuiions by: Samir Amin George Aseniero Andre Gunder Frank Folker Frobel Otto Kreye Roy Preiswerk Timothy Shaw Immanuel Wallerstein
Acknowledgments
The authors and publishers are grateful to the following for permission to reproduce the essays in this book: the author for his chapter "An Historical Perspective on the Emergence of the New International Order: Economic, Political, Cultural Aspects. © 1977 by Immanuel Wallerstein; th.e author
and Heinemann Educational Books for the chapter "Rhetoric and Reality of the New International Economic Order'. © 1979 by Andre Gunder Frank; Monthly Review Press for the chapter "Self-Reliance and the New International Economic Order' by Samir Amin. Inc.
1977 by Monthly Review
British Library Cataloguing in Publicatiot;l Data.
Transforming the world-economy? -.Ji. International economic relations I. Addo, Herb HF1411 337
II. Amin, Samir
ISBN 0 340 35633 2 First published 1984
Copyright © 1984 by the United Nations University All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without permission in writing from the publisher. Represented in Nigeria and Cameroon by Nigeria Publishers Services Ltd, P .O.Box 62, Ibadan, Nigeria. Set in 11/12 pt Times by Colset Private Limited, Singapore. Printed in Great Britain for Hodder and Stoughton Educational, a division of Hodder and Stoughton Ltd, Mill Road, Dunton Green, Sevenoaks, Kent, by Richard Clay (The Chaucer Press) Ltd, Bungay, Suffolk
Contents
ix
Foreword Introduction:
Part 1
Pertinent Questions about the NIEO Herb Addo
1
The NIEO and the Mythology of Change
Chapter 1
An Historical Perspective on the Emergence of the New International Order: Economic, Political, Cultural Aspects Immanuel Wallerstein
Chapter 2
Hidden Dimensions of the International Economic Order
21 So-Called
New
Roy Preiswerk Part 2
33
The NIEO, the Crisis and Prospects in the
World-Economy Chapter 3
The Current Development of the World Economy: Reproduction of Labour and Accumulation of Capital on a World Scale Folker Frobel
Chapter 4
Western
Europe's
51 Economic
and
Social
Development and the Rationality and Reality of a New International Economic Order Otto Kreye Chapter· 5
The Non-Aligned Movement International Economic Order Timothy M. Shaw
and
119 the
New 138
vi
Part 3
The NIEO and the Ttansjormatiorzal Prospects
Chapter 6
7
Chapter
Chapter 8
Part 4
Rhetoric and Reality .. of the New' International Economic Order Andre Gunder Frank
165
Self-Reliance and Economic Order Samir Amin
204
the
New
International
Technology and Development: NIEO's Quest for Technology Transfer . George Aseniero
220
The NIEO as a Valid Transition
Chapter 9
Epilogue
Approaching the New Intern(;ltional Economic Order Dialectically and Transf ormationally Herb Addo
245 299
About the Contributors
Herb Addo, Institute of International Relations, University of the West Indies, St. Augustine, Trinidad, West Indies. Samir Amin, Council for the Development of Economic and Social Research in Africa (CODESRIA), Dakar, Senegal. George Aseniero, United Nations· University, Project on Goals, Processes, and Indicators of Development, Palais des Nations, 1211 Geneva 101 Switzerland. Andre Gunder Frank, Faculteit der Economische Wetenschappen, Universiteit -van Amsterdam, Netherlands. Folker Frabid, Starnberger Institut, Maximilianstrasse, 17, Starnberg D-8130, Federal Republic of Germany. ,Otto Kreye, Starnberger Institut, Maximilianstrasse, 17, Starnberg D-8130, Federal Republic of Germany. Roy Preiswerk (of late), L'Institut developpement, Geneva, Switzerland.
universitaire
d'etudes
du
Timothy Shaw, Department of Political Science, Dalhousie University, Halifax, Nova Scotia, Canada. Immanuel Wallerstein, Fernand Braudel Center, State University of New York at Binghamton, Binghamton, New York, USA.
Dedication
Dedicated to Roy P reiswerk, our friend, whose short life . was
invested in ways that will let all live humanely.
Foreword
May 1, 1984 will mark the tenth anniversary of the formal adoption of the call for a New International Economic Order (NIEO) by the United Nations General Assembly . By any reckoning , a decade is long enough to tempt us to take stock of what the NIEO was all about , and to ask whether it has come any closer to its obj ectives . However, this is not the purpose of this book . The purpose is to underscore the fact that we need to be reminded that there were some, who from the very beginning and all along, while they appreciated the need for a New International Economic Order , did not expect the NIEO, as it was proposed , to succeed much in the ,vay of transforming the world-economy. The rhetoric that accompanied the dramatic emergence of the NIEO proposals was conlbated by positions wanting to know why there was so much familiar praise and fury in the first place. These positions did not consider the NIEO proposals the historic milestone in the struggle against imperialism and exploitation of the Third World that its advocates professed it to be. Neither did they consider it to be the precursor of instability and disruptions in the global system that its (. detractors feared it to be. According to these positions , the NIEO was, and remains , a developmentalist strategy which therefore , far from challenging the constitutive and organisational logic of the world-economy, in the transformational sense, actually accepts it wholly and completely and only hopes to improve the position of the Third World countries within the existing international division of labour. As the world , once more, moves to celeberate the monumental failure of yet another grandiose dev:elopmentalist proposal, which the NIEO is , the views in this book suggest that we should recall why some considered it no more than an event. The NIEO is regarded as a historically unprecedented, b ut not unexpected , enterprise which, while promising something new , had to collapse under the weight of its own contradictions . These contradictions have their roots in the fundamental
X
TRANSFORMING THE WORLD-ECONOMY?
contradictions o f the world-eco nomy . To understand the failure o f the NIEO is , therefore , to understand , a little more , the nature of the transformational task and what it demands of us all . This book, then , is intended as a contribution to the continuing debate on the transformation of the world-economy. The idea i s to suggest what we can learn from the very failure of the NIEO aboutthe transformation of the world-economy . The strength of this book is that the chapters were written at various points during the life-time o f t he NIEO, with full attention to the ongoing debates on the transformation of the world-economy . Despite the critical tones of the chapters , however, there i s in each o f them the underlying b elief that the NIEO may yet lead t o something fundamentally new , b ut only if we recognize it for what it is and what it means in t erms of the fundamental logic of world-economy . The chapters collectively suggest that it is not possible to grasp the wholesomeness of this fundamental logic outside the emerging ' wo rld system approach' to the study of o ur contemporary capitalist histo ric world-system . All the authors in this book were in one way or the other connected with the United Natio ns University' s network project on Goals , Processes , and Indicators of Development (UNU-GPID) . Most o f the chapters were discussed at meetings j ointly organized b y the UNU GPID ' s Expansion-Exploitatio.n Sub-Group and the Max-Planck I nstitut, Starnberg (Federal Republic of Germany) , in March 1 97 8 , August 1 97 9 , and June 1 980, at Starnberg, and at the UNU-GPID Meeting i n Trinidad , January 1 98 1 . The idea for this book occurr ed at these meetings as a result of the lively discussions and i nterventions that took place . It is impossible to capture the full richness o f the exchanges . . This book represents the closest we can get to it . This b ook is i ntended to provide food for thought for political economists in particular , academics and intellectuals in general; and it contains material which should be o f great interest to the action oriented as well as the general publi c . As the editor, I have endeavoured to ensure that all difficult terminologies are clearly defined in the intro d uction as well as in the individual chapters . I must 'acknowledge the encouragement provided b y the contributors who agreed to have their published chapters reprinted here and those who revised their previously published chapters for this b ook . Special t hanks must go to the United Nations University, the Max-Planck Institut , Starnberg , and to the I nstitute of International Relations , University of the West I ndies , St Augustine , Trinidad for making this book p ossible . In particular , I thank Professor Gouda Abdel-Khalek o f Cairo University and Professor T Noguchi of the Keio University for their comments at the review stage of this book. The comments showed deep appreciation of the critical purpose of the book and helped to improve
FOREWORD
xi
its content and form . Lily Addo provided all the m uch needed secretarial assistance. For this, I lovingly thank her . Herb Addo St A ugustine, November, 1983.
Introduction: Pertinent . Questions about the NIEO Herb Addo Anthological compatibility All through the 1970s, the many works on the demands for a New Inter national Economic Order (NIEO) dwelt rightly on what it meant and what importance it held for the transformation of the world-economy. But the discussions in this regard were so involved, so .expansive and , at times , so confusing that they tended to obscure the critical considera tion of the extent to which the NIEO really could be said to be a vehicle for transporting the world-economy from its present exploitative state to one that is equalitarian, non-dependent, and , therefore, developed in the humanizing sense of the term . The valid question at the time was this: can the NIEO affect the structural-relational properties of th� world-economy in any way that is significant toward changing the world-system , as we know it? This question is even more valid now for the 1980s since, in the interim , we have gained a much better understanding of the nature of the world-economy, especially how it works, to make it possible for, among other. things , the central parts of it to continue to exploit the peripheral parts at this late post-independence phase of the capitalist world development. The intention behind this book is to add to the increasing awareness of what the NIEO reallyis and means transformationally at this point in world-history. In this regard, the following questions are pertinent: 1 Does the NIEO have the capacity to initiate the rapid transformation of the world-economy? 2 Or if the transformational processes are already in motion, can the NIEO serve as the basis for their intensification? 3 Does the NIEO go far enough in either of these two directions? 4 What are some of the aspects of, and the elements in, the NIEO that indicate the extent of the NIEO 's transformational potential? 5 And in which ways are these aspects and elements to be understood and appreciated by the different societies and states in the world system, especially by those of the periphery of the world-economy, if the transformational potential of the NIEO is to be fully realized in the respectable future?
2
TRANSFORMING THE WORLD-ECONOMY?
There are no set formulae for answering any of these questions : and this is why the discussions on the NIEO will remain' intellectually stimulating for a long time to come. Each of the questions' can be approached in a variety of different ways ; and some will always prefer some approaches to others , no doubt. This notwithstanding , once authors take particular positions on what the transformation o f the world-economy should mean , there appear to be particular consis tencies in their responses to the questions raised above. Thus one can quickly identify 'Northern ' views of the NIEO and ' Southern ' views o f it . An d within these two broadly distinct views , one can easily identify the conventional marxist , radical, and liberal readings of the extent o f the NIEO's transformational potential . I Each of the chapters in this book is distinct in its approach to the analysis of the NIEO and yet they all share certain common basic com patibilities . First , they all take the transformational approach to the NIEO . Second , they are all critical , in one sense or another , of the NIEO' s transitional indications within its transformational potential . The critical compatibility between the chapters alone would have been a good enough reason to publish them together; but there is even a better reason for doing so. It i sthat, third , the critical arguments and nuances constituting each chapter' s distinct and critical approach derive directly or indirectly from the world-system perspective for the study o f s ocial problems . All the authors presented here subscribe to the world-system view in one form or another . 2 In fact , some of the authors in this, book are at present among the leading proponents o f the world-system methodology for the study of the capitalist world-system as the all embracing , the integrative, and the primary unit for the study of all aspects of social problems in our historic capitalist world . 3 Together , the reasons supporting and indicating each author 's critical approach to the NIEO make the discussion of the NIEO , in terms of its transfor mational properties , come alive in this book. Given the fact that the NIEO can be viewed , and in fact is consi dered by many, as the most convenient summary of the main problems in the pOlitical economy of the capitalist world-system and given the confli ct ing multiplicity of positions on the subject, it should be considered opportune that this bo ok brings together a set of chapters on the subj ect " from a definite intellectual tradition. The world-system methodology has not become , over the last few years, only a definite intellectual tradition . As a method for the study of social systems , it is in many regards far superior to the classical or conventional (and some would even say vulgar) marxist, radical, and liberal traditions , which continue to envisage and interpret social reality, in the numerous forms it assumes , as if the precise identity of the world context does not exist; or t h at even if it exists , this identity is of little or no consequence. The emerging tendency among users of the world-system method is to view the identity of the world context as capitalist . This tendency
INTRODUCTION
3
itself may be contr()versial even among the users o f this approach , but that i s beside the point at the moment .4 The world-system methodology has , as its vital imperative , not only the compulsion to relate the struc tural-relational motions between the centre and the periphery, but also the compulsion to relate the motions in the internal structural-rela tionals of the periphery to those of the centre , in any attempt at explain ing the capitalist world , as a distinct large-scale and long-term historical system , to the whole world .
These compulsions do not amount to methodological shrines before which all world-system users must ritualistically worship before they write anything . Rather , they are constant reminders of the Eurocentric fallacy of the exaggerated importance of Europe in the conception o f the real world and the transformation o f it , a s this exaggeration derives from the presumed universal validity of the European world-view . They offer us an escape route from this epistemological fallacy . The dominance of Europe and Europe of the diaspora in the formation and the workings or the capitalist world-system is not in doubt . What the world-system methodology questions , precisely, is whether the Eurocentric fallacy does not blind us to world-transformationally crucial happenings in the periphery of the world-system ; this Eurocentric fallacy tends to ignore what is going on in the periphery on the false belief that whatever is going on in the periphery, or the south ,
of the world:..s ystem is either unimportant , in and b y itself, or worse, that whatever is going in the south i s mere developmentalist repetition of what went on in the centre , or the north , at earlier phases o f the development of the modern world - the capitalist world-system in evolution . In short , the world-system departure amounts to the insistence that the periphery o f the world-system be brought into the
wholesome study o f the evolution and the inevitable transformation o f the capitalist world-system .5 It is true that no comprehensive world-system study o f the NIEO exists . It i s true also that none of the chapters in this anthology pretends to be such a study, because it appears that none was written with that specific purpose in mind . But one o f the reasons for this anthology is that , if ever such a comprehensive work were to be written , some, if not all, o f the ideas (questions and approaches) employed in this anthology on the subject will have to be considered by that work . Such a world system study of the NIEO cannot be anything but a study of the trans formational significance of the NIEO for the capitali st world..,economy and the world-system it serves. Furthermore such a study will approach the NIEO not as something distinct to be studied apart from the real capitalist world , or something to be superimposed on a faceless world context. It will approach the NIEO as the product of capitalist world history , as an integral part of the workings of the contemporary phas e o f the capitalist world-economy, and a s a crucial indicator o f the evolu tion of the workings of the relations between the internal-periphery and i
it L
4
TRANSFORMING THE WORLD-ECONOMY?
internal-centre sources of imperialism , the related exploitation pro cesses and mechanisms of world capitalism. I shall proceed to make some general interpretative comments on the chapters , and , where I can and consider it appropriate, I shall attempt some editorial integration of some of the rich ideas they contain. In pro ceeding, it may be useful to touch base, so to speak, by asking whether the NIEO, by its nature , historical timeliness, and with respect to the world-economy, is a mere cosmetic or a genuine transformational agent.
Given the questions , what the chapters say The NI(E)O as kairos The chapter by Immanuel Wallerstein approaches the subj ect from the unavoidable perspective of the historical emergence of the subject o f change i n terms o f its economic , political, and cultural aspects . The transformationally-oriented quality of the essay is presented in the opening paragraph of the chapter . He writes : ' The "new international order" [the NIO] is at one and the same time , a programme and an analysis . It is a programme of social transfornlation; it is an analysis of why such social transformation is possible or even probable . ' The reader will notice that Wallerstein does not deal with the NIEO but with the NIO. The reason for this is clearly that the NIEO and the other international demands for ' new orders ' 6 are all aspects of the total search for the transformation of the old world order into a new world order . This opening chapter is a reminder that a world-system study o f the NIEO should never lose sight o f the other dimensions t o the new world order being sought; nor should such a study lose sight of the fact that, by a new world order , we mean no less than a new world-system with a distinctively new set of 'rules of the game' . I shall argue that since what is involved here is a transformation and not a reformation , crucial to the newness of the new order will be the extent to which the newnes s amounts t o a radical departure from the world capitalist historic theme of capital accumulation in pursuit of the world capitalist historic motives of the Bourgeois way of Life , its concomitant reproduction of the Prgletarian and Proletarianized Ways of Life, and the conflicts they engender , both at the national and the international levels : the movement from exploitative and therefore dehumanizing world-system to a non-exploitative and therefore a humanizing world-system . Wallerstein focuses on the word 'new' . He argues that premodern systems were no less changing than the modern world-system , the di fference being that in premodern times real changes were not recognized as such , while in our modern system 'whenever real change
J
INTRODUCTION
5
d oes not occur, it i s j ustified by asserting that change has in fact taken place ' . This difference should lead us to be much more subtle in our analysis of ' change ' and ' new ' in our time. The contradiction involved here is much more fundamental than the contradiction of things app earing to have changed and, yet remaining essentially the same. The real transformational contradiction of our time is the cardinal contradiction of things remaining the same and yet being justified as having changed. In this brief chapter , Wallerstein manages to relate the three basic antinomies of the capitalist world-system (the economy/policy, the supply/demand , and the capital/labour antinomies) and their changingness to the continuity of the capitalist world-economy from the sixteenth century and its persistence on the global scale in our time . He does all this in the context of the transformation of the world system. The most original feature in this thought-provoking chapter is the addition of a third time concept to Braudel ' s two-time concepts of the longue duree and the short term . The third is the introduction of Paul Tillich ' s time concept of kairos, 'the right time' , meaning 'the moment of choice and transition'. Based on the asympotic lin1its o f the three structural-relational antinomies , Wallerstein appears to think that the contemporary present is a kairos. But m ore importantly, the present is a kairos because of the paradoxical reasoning that, while the message of the kairos ' is always an error' , it is 'never an error' , because as a prophetic message, the kairos is always present : its power always grasps those who proclaim it before they proclaim it. This may or may not be an over-optimistic assessment of our contemporary present , but the insistence that kairos is now casts our concerns with the NIEO in their transitional.context and it invites us to look for the' NIEO ' s transition potential, to specify its probable transition path , and to identify its probable transition carriers, within the nebulous process of transformation . The questions that we must keep in mind , as we proceed , are the following : has the power of the NIEO, as a kairos, grasped those who proclaim it? ; and if so , are there any indications of such a grasp in the implications of the newness of the NIEO?
PIED and NIEO equal NIED Roy Preiswerk' s chapter deals directly with the transformational implications of this question: is the NIEO really new? He begins his chapter on a justifiably belligerent and appropriately polemical note; but he soon transcends this note to ask six most pertinent questions relating to the newness of the NIEO and its role in development . Preiswerk' s position on the subject is critical of Third World states ' formulation of the NIEO and their participation in its
6
TRANSFORMING THE WORLD-ECONOMY?
negotiation . He fears that cynics and hard-core realists may refer to the negotiation of the NIEO as an exercise in 'rhetorical 'rebellion o f the Third World ' ; and h e sees the NIEO itself a s contributing t o the 'modern mythology of change ' . To Preiswerk , the demands from the Third World states that constitute the NIEO are no more than pliant requests for the greater integration of their economies into the world-economy . He says , 'the apparent combativeness of Third World negotiators hides , more or les s consciously, the desire to create societies resembling those of the supposed enemy"':' the industrial countries' . This unoriginal impulse to imitate amounts to q. kind of ' mental self-colonization ' , the very antithesis of a developmental idea which is 'based on the principle of diversity in methods . . . and takes into consideration the cultural , economic and ecological specificity of each society' . According to Preiswer k ' s analysis , the NIEO is too much part of the modern mythology o f change for it to have anything particularly new in the transformational sense about it in the respectable future. The conclusion to be drawn from this chapter i s that , in essence, the NIEO is not really new . It is the product of familiar parentage: implicitly, it is dualistic and diffusionist in its assumptions about the development process , evolutionist in its historical perspective, rationalist-idealistic i n its conception of social change , statocratic in its conception o f the management of power in internationat relations and , finally, it is based on theoretical assumptions resulting from a merger of neo-classical and keynesian concepts . There i s only a small possibility that the NIEO will b e fully realized . But this is not really the problem for Preiswerk . For even if the NIEO were to be fully realized , he believes that it would change very little i n the real world . All this notwithstanding , the NIEO may still not b e totally worthless from the transformational point of view . Preiswerk ' s argument implies that , while the NIEO runs the risk of being a new mythology, we must also remember, in true dialectical fashion , that from mythology to mythology, tensions increase . But as tensions increase , Preiswerk fears that the world will 'flounder in the morass o f the Present International Economic Disorder [PIED] combined with the New International Economic Order , leading towards the New International Economic Disorder [NIED] ' . Preiswerk ' s chapter goes from exposing the lack o f newness in the NIEO into the difficult matter of alternative strategies for transforming the world-economy. He sees the developmental philosophy behind the NIEO as ' associative and standardizing s trategy' . The developmental philosophy he prefers is described as 'dissociative and differential strategy' , which is to be appreciated in terms of this philosophy's inner coherence and its cornerstone of 'the satisfaction of the basic needs o f the entire population o f a country' . H e defends his conception of development from anticipated charges ofit not being realistic . He states
INTRODUCTION
7
' . . . �'realism" is often nothing more than the "absence of new ideas , when it is not conscious resistence to a type of change perceived as detrimental to egoistic interests. ' In fact , he ends the chapter with-the telling observation that rather than the dissociative and differential strategies , it is the NIEO , as it was demanded by the Third World, 'that is the real utopia . . . ' .
The currents in the world-economy Folker Frobel ' s chapter on the transformational meaning of the curren ts in the contemporary expression of the world-economy derives from the protest that 'the majority of current approaches to the present development of the world capitalist economy are not particularly co nvincing . This applies especially to single-factor explanations, developed in response to superficially observable changes. ' Inspired by this protest , which few will dispute , Frobel has produced a most thorough historical chapter explaining in the most convincing way why the present currents in the world-economy have become what they are . It is in the context of these currents, as a historical product o f the world economy, that we are to situate the questions as to what the world economy is increasingly becoming for the peripheral economies and what the transformational relevance.of the NIEO appears to be in this regard . This exceptional chapter begins with the meticulous and extendable listing of twenty indicators all of which support the thesis that there has occurred 'a sharp contrast in capitalist development between the two decades leading up to the end of the 1960slbeginning of the 1970s, and the subsequent ten years, and show that the capitalist world economy has once again passed through a turning-point in its development ' . The qualitative feel of this turning-point in the capitalist world-economy is provided in the most clear quantitative detail in a twenty-table appendix to the chapter . All the twenty indicators Frobel lists and their combined meaning are important; but three are of particular interest to us in this book . They are: 1 'changes in the structure of the international division of labour ' ; 2 'rapid spread o f production facilities and production sites of a new type in many developing countries and centrally planned econo mies '; and 3 in many developing countries , there are 'the reorganization , intensification and extension of the capitalist exploitation and super exploitation of labour power ' . The first two factors mentioned above are part of the cluster of factors which indicate that one of the most significant transformations is the change in the structure of the international division of labour : a new international division of labour has arrived . The third factor
8
TRANSFORMING THE WORLD-ECONOMY?
mentioned indicates that out of this new division of labour comes the intensification of the exploitation of the periphery. I f, as Frobel shows , there are clear and strong 'tendencies which are undermining the [capitalist world-economy's] potential for further expansion!; if, 'at the same time, there is no clear indication of a transition to or a political installation o f any comparable alternative model of accumulation' ; and if, in all this , the plight of the periphery o f the world-economy is intensifying; then what are we t o make o f the trans formational content of the NIEO , in particular, what are we t o make o f the timely coincidence o f the emergence o f the demands o f the NIEO and the emergence of the new international division of labour? Frobel' s well argued verdict is that the NIEO, for a variety o f objective reasons , 'will not reduce the existing wide disparities i n the material positions of the maj ority of the population in the industrial and developing countries' . In fact , the coincidence between the emergence of the NIEO and the new international division of labour suggest strongly that the world-economy can make an adaptive use o f the NIEO t o prolong its life .
Western Europe's reality, rationality, and the NIEO The NIEO is a set of ' demands addres sed to the industrialized countries' and , therefore , there is good reason to ask whether , even with the best of intentions and in the best of circumstances , the industrialized countries are themselves able to do much for the realization of the NIEO ; and if they will do anything at all, which of the demands will they accept , which will they rej ect , and why? This is precisely the question that Otto Kreye' s chapter addresses from the circumstances of Western Europe' s present econonlic and social conditions . The source of Kreye' s chapter is the position that since the emergence of the new international division of labour phase of world capitalism i n the mid- 1 960s , both the world-economy and Western Europe 's economic and social conditions have undergone some far-reaching structural changes . These changes hc;tve been caused by what Kreye describes as 'a new set of conditions which are themselves the outcome of capitalist development up to this point' . And critical in these conditions are the 'technological developments that have rendered the [world-wide] reservoir of cheap labour useable'_ From this position , Kreye summons an impressive blend o f credible ·statistics and authoritative statements to serve as the basis for describing the contemporary reality of Western European social and economic conditions . And it is from this reality that Kreye derives th e rationality of Western Europe' s selective responses to the NIEO , as a package of demands emanating from the periphery of the world economy_
INTRODUCTION
9
Given the developmental trends in Western Europe, Kreye anticipates that ' firms , trade unions and governments of Western Europe will . . . fully support those proposals which are likely to achieve a realignment of the supranational political structure and which facilitate and promote the transnational reorganization of production and the transnational mobility of the companies ' . What the Western European firms , trade unions , and governments will adamantly reject out of hand and without discussion are those proposals that pose ' a threat t o the capitalist structure o f the world-economy itself . . . ' Kreye concludes that the realization of the NIEO , as it stands, will not serve the interests of the peoples of the underdeveloped countries . The NIEO serves 'the interest of capital valorization ' , as it integrates the peripheral economies more in their unequal partnership with the central economies in the capitalist world-system . The task, therefore, still remains for those who are genuinely concerned with a truly new order to address themselves to the unavoidable matters of outlining and struggling for such an order . The NIEO and Non-Alignment
If the NIEO , because of its very nature, attracts many aspects of contemporary reality into its discussion, then there is a component of the current crisis which is very much involved in the NIEO , either as a programme or as an analysis of social transformation . This is the crisis in the Non-Aligned Movement . Timothy Shaw ' s chapter deals with the connection between the two , from the point of view of ' a critical overview of the intellectual history of the movement' . His chapter discus ses the historical realizations which made the Non-Aligned Movement, an essentially political movement concerned with decolonization and racial equality in the 1 960s , turn its attention from ' positive neutrality' to demand fundamental restructuring of the world-economy in the form of a new international economic order. In doing this , Shaw sails very closely to the declarations of the Non Aligned Movement, as he traces the evolution in the group-thinking of the movement . The Non-Aligned Movement is not a homogeneous grouping of states . There are wide differences in the attributes of its membership ; and yet as this group moves on and as it comes to understand the elusive idea of development more and more, it is now concerned with 'dominance , interference and exclusion ' . According to Shaw, ' . . . these current concerns tend to be expressed in a distinctive ideological format '- self-reliance rather than decolonization , NIEO rather than development . ' But the member states of the movement have been plunged into some contradictions which cannot be resolved without fundamen tal 'transformation within both national and international political
10
TRANSFORMING THE WORLD-ECONOMY?
economy' . He argues that in the absence of such interrelated changes, 'the NIEO beconles an ideological construct designed to s alvage residual dignity and development for a few countries and 'classes in the Third World ' . Shaw refers to the ambiguities in the ideology of Non-Alignment with respect to democracy and underdevelopment . In this reference , the prognosis , for the next twenty years Qr so, is that the historical tension between the two will be most acute in the Newly Industrializing Countries in the Non-Aligned Movement. These countries can dislike external interference as much as they want , but it is b ound to occur, 'given the contemporary conj uncture, or the paradoxical nature o f the kairos' . The NIEO as an elitist al liance
The nuances in the preceding chapters to the effect that the NIEO i s elitist and a demand for the complete integration of the Third World into the world-economy, are exactly the subj ect o f Andre Gunder Frank ' s detailed study of the NIEO ' s history, and its implications for the disinherited social classes in the periphery of the world-system. Frank's chapter gives us necessary insights into the recent origins o f the NIEO , the structure of the demands , their contents , and their overall meaning for the purpose .of transforming the world-economy. The underlying thesis in this chapter is Fran k ' s well .... known thesis that the peripheral economies will continue to be exploited by the central economies for as long as they remain integrated in dependent ways in the world-economy. 7 The only salvation from this situation is if the dependent economies create or make use of the endemic crisis in the world-economy to increase the distance between their economies and those of the centre of the world-economy. From this , one possible interpretation o f Frank' s chapter is that while a severe crisis exists.in the world-economy , the peripheral states have invented the NIEO , an instrument which will integrate them more into the world-economy; and thus reduce the tensions constituting the current manifestation of the crisis and thereby impairing any chances they may have for autonomous development . Rather than intensifying the contradictions in the system , all appearances to the contrary notwithstanding , peripheral states , by their demands in the NIEO , dampen such contradictions . This is ,the line of thought that Frank pursues with his array of references , statistics , and indepth analysis. To Frank , then , the NIEO is capitalist pure and simple. It amounts to no more than a set of demands from the Third World partners in the global capitalist exploitation enterprise addressed to their partners abroad in order 'to institutionalize their collaboration with foreign capital' , for the primary purpose of exploiting local labour in the periphery.
INTRODUCTION
11
It is for this reason that Frank does not find it particularly necessary . to elaborate what is 'ne.w ' in the NIEO . He reasons that ' it is enough to note t hat there will and can be no new international economic order between states without a new political order within these states . ' He adds that 'it becomes increasingly evident that the demand for NIEO is a political conflict between the governing classes in the Third World and the political representatives of international capital in the capitalist worl d-economy. ' We confront again the 'modern mythology of change' in Frank ' s conclusi on . His position i n this regard i s that there could b e a. temporary interregnum of sorts between the old order and the new, ' through the revolutionary destruction, here and there, o f the old one ' . Until then, the old order will continue under the guise o f a new one , . mainly because it is Frank' s view that the NIEO is Third World states' attem pt to renegotiate dependence but with hardly any bargaining power to do so . From the above, we can say that between the rhetoric and the reality, upon which the NIEO rides , is a wide credibility gap detracting imnlensely from any immediate transitional potential which the NIEO may possess .
The NIEO as the RIO project One cannot meaningfully discuss the NIEO from the transformation perspective without referring to its historical time of emergence, and without relating this particular emergence to yet another historical emergence: the historical emergence of transnational corporations in their mature form . The preceding chapters deal with this matter very well; and from these chapters we can gather that the NIEO , transformationally approached, is a very complex subj ect . Frank ' s chapter i n particular, indicates that even the immediate roots o f the NIEO are extremely complex. However , it is Samir Amin' s chapter which shows how much more complex the NIEO as a subject can be, when it is viewed from the contrasting realities of the development of central capitalism and peripheral capitalism within the historic development o f world capitalism. Amin' s arguments in this regard are at once bold and simple: it is impossible to turn peripheral capitalism into central capitalisnl; and , therefore, it is false to expect that the NIEO, even if it were to be fully fulfilled , could ever lead to autonomous capitalist development in the periphery.s To Amin , the NIEO is not much more than a rebellion by the bourgeoisies of the periphery over the unequal division of the exploited proceeds from the perihery . But it is a rebellion all the same� and through some lucky historical accidents in the periphery and the centre , this rebellion can prove transitionally useful . Amin argues that the NIEO , as it stands , can best lead to what he calls
12
\
TRANSFORMING THE WORLD-ECONOMY?
'renovated dependence'. Still , he argues that , since the themes of the NIEO involve the aspirations of the bourgeoisies in the periphery t o control their national resources and to strengthen their weak national states, imperialism, through the instrumentality of transnational corporations , will attempt 'to substitute for the new order the Rio Proj ect (Reshaping of the International Order!) ' . By referring to the changing phases of imperialism, Amin manages t o make it quite clear that the bourgeoisies o f the periphery have always clashed with their external counterparts in the world imperialist enterprise. In fact , he states that 'the crisis of [the] second phase o f imperialism was opened by the demand for a new international economic order ' . It is precisely in the context of the changing nature o f the ever-present crisis in imperialism itself that Amin situates the p olitical relevance of ' self-reliance' and 'collective self-reliance' for autononl0US development as an objective (L e . necessary) choice between socialism and capitalism : with respect to ultimate goal s , autonomous development in the periphery includes socialism and excludes capitalism . The logic which leads Amin to propose an authentic strategy for both national independence and social progress are pretty clear in this chapter. This strategy leads one to appreciate self-reliance and collective self-reliance in special senses which herald socialism through national liberation . The undisguised reality against-which Amin approaches the NIEO is 'the struggle of the Third World against the dominant-imperialis t hegemony' . The conclusion t o this chapter is that 'for many reasons this struggle is still today the main focus for the transformation o f the world ' . This may or may not be news to many, but whatever the cas e , 'this is the reality' and i t must not b e forgotten. Technocratic rationalism, technology, and the N/EO
Technology, as the means and the reflection of the efficient production of things in the capitalist world-system , has become one of the k ey components of the NIEO . This is not surprising at all , in that amo,n g other things the developing nations believe that one of the reasons why they are underdeveloped is that they do not control technology: not that they do not have technology but that they do not control the tech nology needed at this time and in the foreseeable future to produce . commodities efficiently for the world export market . George Aseniero ' s chapter deals with this matter . He poses the basic issue involved when he argues succinctly that 'to a great extent NIEO perceives the problem of development as a problem of means , and sees these means as being monopolized by the industrialized countries . How to acquire these means is what "technology transfer" is all about . ' The argument is that there is more
INTRODUCTION
13
thi s b asic issue than is usually acknowledged . Aseniero demon with reference to recent empirical research, that if the ands for technology transfer are motivated by a desire to dem :r�HE O's bridge the widening 'technology gap' between the metropolitan centres and the Third WorId, to equip the latter with the latest technologies in order to bolster industrial and agricultural productivity, and thereby to lessen Third WorId dependence on the highly industrialized countries , the overall and long-run results could paradoxically be quite the opp osite . A fuller understanding o f the role o f technology i n the developnlent process calls for an articulation of the global technological structure . and how this parallels and supports the international division of labour . It is in treating the technology problem from this perspective that Aseniero argues that 'transfer of technology, with its concomitant dependence on capital equipment , technical know-how , and tied-in purchase of intermediate goods , plays right into the hands of the centre countries . It not only means big business for the transnationals who monopolize the global technology structure, it also means a tighter integration of the economies of the peripheries into the international division of labour and the international market system . ' In a vein resonant of Preiswerk '8 position, Aseniero sees the NIEO as following the technocratic logic inherent in the developmentalist philosophy which guides the nature of the demands contained in the NIEO and which informs the manner in which these demands are pursued . This technocratic approach is premissed on technological determinism, which Third WorId technocrats and industrialists share in common in the belief that technology is the crucial variable in propelling industrialization and economic development . The process of technology transfer is conceived as involving states , specialized international organizations and transnational corporations , but the most important of these by far are the transnationals . Despite the vague rhetoric about 'appropriate technology' , it is advanced technology that NIEO technocratic elites and industrialists are really after, and this is almost completely in the hands of transnationals .9 This treatment of the subj ect , relating to NIEO' s programme of action on technology transfer to the global business ' strategies of the transnational corporations , leads Aseniero to discuss in measured detail what the transfer of technology is , ho w thi'S transfer is being done, and what costs (financial and social) are involved in the transplantation of foreign technologies . The critical edge of this chapter makes us doubt the attainability of the NIEO' s ambitions in the technological aspects of development . Notwithstanding such doubts as to the chances of implementing NIEO' s programme of action on technology transfer , this pungent chapter states that there is a more fundamental question involved : what if the technology transfer obj ectives are attained , as envisaged by the ........,.�""C',
i
14
TRANSFORMING THE WORLD-ECONOMY?
NIEO? Aseniero ' s view on this is that, among other things, a.resulting global technological monoculture will retain intact the international system of dominant relationships . The valid and the arrested transition counterparts in the NIEO as a transformation process
Herb Addo ' s chapter, which uses insights from some of the earli er chapters , claims to be a dialectical approach to the transformation of the world-economy. It sees the NIEO as a good reason for this purpose. The virtue of this approach may lie in the consideration of the NIEO as the summary o f the main transformational issues in the capitali st world-economy: the summary of the historic contradictions o f world capitalism at its contemporary phase, as it is expressed in the NIEO as the foreign policy consequence of the maturing processes in the dependency historic product of world capitalist development . The chapter may be viewed as an honest attempt to grapple with an embarrassing problem. The problem is the puzzling reality in which the periphery, having been dominated and exploited by the centre in the historic past, continues , in this late post-independence phase of world capitalist development , to be exploited by the centre. The embarrassing p art is that it is now very clear that internal-periphery sources of imperialism assist internal-centre sources of imperialism in the exploitation of the periphery. This reality is not only as embarrassing as it is puzzling, it is also as bizarre as it is immoral. It is the historical link between these two internal sources of imperialism that Addo calls the imperialist problematique. If the above gives the identity of the chapter, its purpose is express ed by the author as an 'invitation to take a few steps down the dark realms of the misconception that imperialism concerns only the inter-state relations b etween the centre and the periphery of the capitalist world economy ' . The invitation is deemed necessary because of 'the pressing need to move from the correct, b ut by itself unhelpful, criticism of the imperialist dialectic at its inter-state level only' . He argues that what we need at t his stage of capitalist development is the endeavour to understand the imperialist phenomenon enough ' to realize that its roots are deeply s unk in internal -periphery contradictions within the global processes , which result in capital leaks from the periphery to the centre' . In the context of the transformation politics of the world economy, Addo argues that this realization should point to 'the strategic primacy of internal-periphery trans/ormation over inter-state reformations in the negation processes o f the imperialist exploitation generally and the dissolution of . . . the imperialist problematique in particular' . Addo blames the failure of the earlier developmental slogans on the poverty of transformational visions of the states in the periphery. The
·
INTRODUCTION
15
poverty of vision is in turn blamed on the attempts by these states to :jmitate and institute the very exploitative nature of the world-economy, which they condemn , in their own societies . In approaching the NIEO dialectically and transformationally, Addo insists that a sharp distinction be made between regime opposites and systemic opposites: anti�regime forces may contribute to the transformation of a system, but they are not necessarily anti-systemic forces. Further in this same vein, Addo suggests that transformation is too gross , nebulous, and too fluid a concept; therefore, in order to approach the NIEO transformation ally, he conceives the totality o f the transformation process in terms of the dialectical tension between what he calls the valid transition potential and the arrested transition potential. It is from these dialectical counterparts that Addo draws out the political contexts to discuss the NIEO in terms of what he calls valid politics of transition and arrested politics of transition. Thi s chapter touches on the political nature of the peripheral state. He discusses this in terms of the quality of the peripheral state. He considers this quality strained, because the peripheral states are composed of alliances which participate in the exploitation of the masses in the peripheral societies . The conclusion of this essay deals with the strategic importance of the relationship between the contradic tion of the strained quality of the peripheral state and the imperialist problematique. He points to the prominent fact that , states are yet to emerge in the periphery whose very emergence will be due to the strategic actualization of the dissolution of the imperialist problematique itself. When this happens, it will signal improvement in the quality of the peripheral state . But how is this to be brought about? Addo realizes the difficulties, involved here, but he seems to think that the first step toward this end is the need for the critical examination of the Eurocentric bases of prevailing philosophies of development . 10
Conclusions Some final words , in the form o f caveats , are in order . The summary meaning of the chapters in this book cannot be considered a final proj ect , just because their authors employed the world-system methodology to critically examine the transformational significance o f the NIEO for t h e capitalist world-economy. I cannot pretend for a moment that the world-system approach to the study of our current world is a methodological panacea for the understanding of our given world reality, far from it . As superior as I personally think this approach may be to others , I recognize that there are many problems relating to the NIEO , as the summary mode of contradictions within the world-economy, that are
16
TRANSFORMING THE WORLD-ECONOMY?
yet to be fully confronted with the analytic insights of the world-system approach . We are yet , for example, to use this methodology t o understand and t o explain the presumed developmental ' progress' being made by the so-called Newly Industrialized Countries ; or t o explain, i n terms o f differentiating between, the varieties within the generalized plight o f the periphery of the world-economy in the context of its generic unicity, insightfully described by Amin as 'capitalist formation o f the Periphery' . What all methodologies and approaches must endeavour to arrive at is a new type of analysis which is capable of shedding new light on the new types of contradictions the understanding of which can help us t o see additional causes a s t o why the NIEO had t o fail . T o do this properly, we need a methodology which is capable of referring the evolving contradictions within the reproduced varieties in the periphery and the centre and the way they relate to explain the fundamental centre-periphery contradiction within the evolving world-system : how to analyze fully the complex intricacies of the internal dynamics within the centre, the periphery and , most importantly, the contradictory resultant between- them . It is for this reason that the chapters in this book deal with some relevant aspects of the world-system-effective contradictions in the centre, the periphery, and between them.
Notes 1 For a discussion of the various views, see Robert Cox, 'Ideologies and the New International Economic Order: Reflections on Some Recent Literature', International Organization , 3 3 : 2 . 1 979, 257-302. 2 There are of course differences between world-system methodology users in their conception of the world-system and its economy as capitalist . For further discussion of this matter, see my 1 98 1 mimeograph 'The Histriograph Significance of a Hyphen: World-System and World Economy; or World System and World Economy? ' . 3 Unquestionably these proponents include Andre Gunder Frank, Samir Amin, Immanuel Wallerstein, Otto Kreye, and Folker Frobel . 4 See note 2 above . 5 I discuss this matter at some length in 'Prologue: Eurocentric State of the Discipline' (working paper), Tokyo : United Nations University, 1 982; and in 'Beyond Eurocentricity: Transformation and Transformational Responsibility', forthcoming in Development as Social Transformation: Reflections on the Global Problematique, Tokyo: UNU. 6 The other international demands include: the International Information Order, the New International Sex Order, the New International Environmental Order, the New International Seabed Order, and the New International Population Order . 7 See his Latin A merica: Underdevelopment or Revolution . New York: Monthly Review P ress , 1969.
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8 For the full development of this thesis , see hi s Unequal Development: A n Essay o n the Social Formation of Peripheral Capitalism , Sussex: The Harvester Press , 1 967 and his Class and Nation, Historically and in the Current Crisis, New York: Monthly Review Press , 1 980. 9 For further elaboration on this matter see Aseniero , ' A Reflection on Developmentalism : From Development to Transformation' , in Develop
ment as Social Transformation .
1 0 For further discussion , see the references i n note 5 above .
Part 1 Th e NIEO and the Mythology of Change
1
An Historical Perspective on the Emergence o f the New International Order : Economic , P olitical , Cultural Aspects * Immanuel Wallerstein
The ' new international order' is , at . one and the same time, a programme and an analysis. It is a progranlme of social transforma tion : it is an analysis of why s.uch social transformation is possible or even probable. As a programme it is couched in the Aesopian language of the United Nations . Caught amidst the linguistic differences of east and west, north and south , the United Nations has invented a suitably flat expres sion which is unexceptionable, since the only thing on which everyone can agree is that the ' new' may be desirable. It is often said that what distinguishes so-called 'traditional' , premodern systems from the modern world is that the premodern systems were unchanging whereas the modern world-system makes (technological) change its central focus. This is in fact false . Premodern societies were constantly changing, and the modern world has been, when all is said and done , a remarkably slow-changing world . Nonetheless there is an important di fference between the two in their ideologies of change: in premodern systems, whenever there was real change it was justified by arguing that no change had occurred. In the *Editor 's note: The author was present at the UNU-GPI D/Max-Planck-Institut joint meetings , 1 97 8 - 1 980 , i n Starnberg , where this chapter served as a basic input -for
discussions on the subj ect . This chapter is a reprint from the author' s The Capitalist World-Economy, Londo n , Cambridge University Press , 1 979, chapter 17, pp . 269-282.
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TRANSFORMING THE WORLD-ECONOMY?
modern world , whenever real change does not occur , it is j ustified by asserting that change has in fact taken place . Bearing in mind then the meaninglessness of the invocation o f newness , w e will approach this subj ect sceptically. What i s ' in fact new in the international order? And in what temporality is it new? For time is not singular . Indeed there is even more than one dimension o f temporalities . There is first o f all Braudel ' s 'plurality of social time . . . indispensable to a common methodology of the social sciences ' . 1 This is his now famous distinction between the longue duree which is ' slow moving, sometimes practically static' ,2 the 'conj unctural ' which is the turn in a cyclical movement and is medium-term , and the episodic or short-term (evenementielle) which is 'the tempo of individuals , of our illusions and rapid judgment . . . the chronicler' s and j ournalist ' s time ' . 3 Braudel asserts that w e must explicitly recognize the multiple social times because otherwise our models have no meaning : ' . . . models are of varying duration: they have the 'same time-value as the reality they record. And for the social observer , this time aspect is of prime importance - for even more important than the profound structures of life are their breaking points and their sharp or gradual deterioration under opposing pressures . '4 For make no mistake about it . Even the ' slow-moving , sometimes practically static' longue duree changes . The long term is not the:same, for Braudel, as 'the very long term , sheltered from accidents, conj unctures and breakdown s ' ,5 the time o f qualitative mathematics and of Claude Levi-Strauss, about whose very reality Braudel , the historian , casts a doubtful eye : ' if it exists , [the very long-term] can only be the time-period of the sages . '6 Thu s , Braudel gives us two dimensions along which time may be divided . There is first of all the variety of social times . And then there is the division between all finite social time, however slow-moving, and the eternal time of the sages (and the qualitative mathematicians , another name for universalizing social scientists) . There is however a third dimension of time, one bequeathed to us by the Protestant theologian, Paul Tillich . It is the distinction between chronos, ' formal time ' and kairos, 'the right time ' . This distinction, found within the Greek language, was used by Tillich to assert the difference between quantitative and qualitative time: .
.
Time i s an empty form only for abstract , obj ective reflection, a form that can receive any kind of content ; but to him who is conscious o f an ongoing creative life i t i s laden with tensions , with possibilities and impossibilities , it is qualitative and full of significance . Not everything is possible at every time, not everything is true at every time , nor is everything demanded at every moment . 7 We do not have to share Tillich 's theology to recognize the importance
AN HISTORICAL PERSPECTIVE
.
23
this other dimension of time, and to ask ourselves if perhaps Tillich :.was .right in being ' convinced that today a kairos , an epochal moment {'6f history, is visi ble' . 8 . I sho uld thus like to discuss three temporalities : the longue duree of the mo dern world-system; the secular trends and cyclical rhythms of that system; and the kairos, the moment of transition in which we are li ving today . , How long is a longue duree? That too depends o n which structures we are analyzing . The structures of social geography, of the ecological .underpinnings of our social relations , are finite but nonetheless milleniaL The structures of civilizations , of the cultural forms in which we clothe our social action and even more of the cultural ' barriers we erect , are multisecular , if not millenial . The structures of the social economy, of the modes of production which deternline the constraints within which social action occur , are perhaps shorter still, albeit still 'long ' , still multisecular . . The modern world-system is a capitalist world-economy, whos e origi ns reach back to the sixteenth century in Europe. Its emergence is the result of a singular historic transformation, that from feud�lism to capitalism .9 This capitalist world-economy continues in existence today and now includes geographically the entire world , including those states ideologically committed to socialism . In order to appreciate what is new and not new in the international economic order, we must first have a clear view of what this economic order is and how it differs froln other economic orders . We must elucidate what is capitalism , in what ways it represents a change from prior systems and presumptive or possible s uccessor ones . We could of course say that ' capitalism ' has always existed and may always exist . And if we define capitalism as merely the use of stored dead labour , then this is surely true , or at least has been true for tens of thousands of years. And it is unlikely to cease to be true . But this is to ignore the fundamentally different ways in which . human groups treat their capitaL The usefulness of capitalism as a term is to designate that system in which the structures give primacy to the accumulation of capital per se, rewarding those who do it well and penalizing all others , as distinct from those systems in which the accumulation of capital is subordinated to some other obj ective, however defined. If we mean by capitalism a system oriented to capital accumula tion per se, capitalism has only existed in one time and place, the modern world since the sixteenth century . Earlier there had been cap italists . There had even been embryonic or proto-capitalist systems . But there had not yet been the kairos, 'the moment of the fulness of time' , 1 0 which permitted the emergence of a capitalist system . These previous social structures were such as to circumscribe the individual capitalists found \vithin them , quash those forces that sought to change the social economy in a capitalist direction, and in general
24
TRANSFORMING THE WOR LD-ECONOMY?
destroy the fruit of ' enterprise ' . What distinguishes capitalism as a mode of production is that its multiple structures relate one to the other in such a way that , in con sequence, the push t o endless accumulation o f capital becomes and remains dominant . Production tends ahvays to be for profit rather than for use. In a capitalist system , the realization of profit is made possible by the existence of an economy-wide market , which is the measure of value even for those economic activities that do not pass through it directly . Many may seek to escape the market mechanism in a capitali st world-economy . . But the claim that one has succeeded is an idelogical stance, which any particular more disinterested observer can take for what it is worth . What provides the continuity of a capitalist world -economy through its longue duree is the continuous functioning of its three centr al antinomies : econon1y/polity; supply/demand; capital/labour. The coexistence of these three antinomies is defining of capitalism, and the way their contradictions fit into each other is the clue to the dynamics of the system as a whole. What is the nature of these three antinomies? Economy/polity : ' Economy is primarily a " world " structure but political activity takes place primarily within and through state structures whose boundaries are narrower than those of the economy . ' Supply/demand: ' World supply is primarily a function of market oriented "individual " production decisions . World demand is primarily a function of " socially" determined allocations of income . ' Capital/labour: ' Capital is accumulated by appropriating surplus produced by labour , but the more capital is accumulated , the less the role of labour in production . ' I I The continuity o f the capitalist world-economy from the sixteenth century to today is found in the interacting pressures generated by these three antinomies which have determined the largest part of social behaviour throughout the history of the system . Perhaps the exact percentage of social behaviour this matrix explains has varied somewhat over time, rising from the sixteenth to the late nineteenth and · early twentieth centuries , and declining slightly since, but the concept of capitalism can be used to denote a single system whose boundaries of time and space are those in which this matrix has predominated . There was a before (and an outside) ; there will be an after . What lies between and within is capitalism. The antinomy between the 'world ' -wide economy and the multiple " polities accounts for the continuing pressure towards state ' formation ' and centralization , the creation o f a world-wide state system , and the particular form of imperialism which thrives better on 'informal empire' than on direct political colonization . Unequal exchange is the principal outcome of this antimony. Unequal exchange has to do not with the initial appropriation of
AN HISTORICAL PERSPECTIVE
25
Ius value, but its redistribution , once created , from peripheral to regions. The absence of a world-empire, a single state · encompassing the whole world-economy, makes it structurally impossible for any ruling group to yield to pressures in favour of production for use-value, even were it so inclined . State structures that attempt to do so penalize their cadres and citizens in material ways , thus .creating internal (as well as external) pressures against the maintenance of such a policy. States therefore have tended to fall back into another role, as agents maximizing the division of the world surplus in favour of specific groupS (sometimes located within their borders , sometimes located outside) . Of course, not all states are equally successful in this attempt - a function of the ways in which the capital/labour and supply/demand antinomies determine their ever-changing capacities to affect the world market , as well as their ever-changing tactical . postures. States in which core activities are located have achieved the most efficacious state structures relative to other states . That is both the consequence of the nature of their economic activity and of the socio economic groups located within its limits , and the cause of their ability to specialize in core-like activities . States in which peripheral activities are concentrated are conversely weak , and are weakened by the very process of economic peripheralization . The semiperipheral state is precisely the arena where, because of a mix of economic activities , conscious state activity may do most to affect the future patterning of economic activity. In the twentieth century, this takes the form of bringing socialist parties to power . State nlachineries have interfered with the workings of the world market from the i nception of capitali sm. Moreover , the states have formed , developed , and militarized themselves each in relation to the others , seeking thus to channel the division of surplus value . In consequence, all state structures have grown progressively stronger over time absolutely, although the relative differences between core and peripheral areas have probably remained the same or even increased . This steady expansion of state machineries , sometimes called bureaucratization, sometimes called the rise of state capitalism, has not yet changed the nature of the contradiction between an economy whose structural forces transcend the frontiers of any state, however powerful, and thus render the world-economy still resistant to a fundamental political reordering of social pri orities of production . In short , capitalism still survives . The antinomy of supply/demand at the level of the world-economy is the necessary consequence of the economy/polity antinomy. The absence of an overarching political structure has made it virtually impossible for anyone (or any state) effectively to 'limit ' world supply. Supply is a functi on of the perceived profitability of production,
26
TRANSFORMING THE WORLD-ECONOMY?
whether the producer is a household , a private firm, or a state enterprise, and whether the profit is consumed by the ' producers o r reinvested . Hence , world-wide, production is 'individual' , anarchic , and competitive. Production proceeds as long as it seems more profitable to produce than not to produce. Rising real prices will o f course stimulate production. But even declining real prices will d o the same at first , as individual producers run after absolute profit by expanding quantity to make up for low profit ratios per item. Only a true 'crash' slows the process down , thereby eliminating the weak producers and increasing the world concentration of capital . , That these 'crashes ' are systematic is the other side of the economy/polity antinomy. The states 'lock in' demand by stabilizing (within a certain range) historic expectations of allocation of income . The state-wide class struggles between capital and labour result in political compromises that generally last at least decades , if not more , and which determine approximate ranges of wage levels . While each struggle is state-wide, the role of the state in the world-economy is a major constraint on the kind of compromise reached . At any given tinle, therefore, world-wide demand is ' fixed ' - the vector of the lnultiple state-side outcomes of their internal class struggles . World supply meanwhile is steadily expanding, following the ' star of capital accumulation per se. The absence of effective interstate coordination - even today - has led historically to these ' crashes ' . When a 'crash' occurs , world supply momentarily declines . But more importantly, it enables the state-wide political compromises to be reopened, leading over time (at least in some states) to a reallocation o f income s uch that world demand once more exceeds world supply and the upward spiral of capital accumulation can safely resume its heady pace. It is the combination of the workings of the economy/polity antinomy ' and that of s upply/demand that gives the capital/labour antinomy its particular forms . For if it were simply a matter that a bourgeois obtains surplus value from the proletarian he employs , and that this were the only (or at least the ' ideal' ) form of s urplus value , extraction , we could not account for the fact that the pure bourgeois/proletarian social relation is a minority social relation throughout the whole history of the capitalist world-economy - even today , even in s o-called ' advanced capitalist states ' . I f it were true that surplus value is only created when a propertyless proletarian {eceives ' wages ' , why would it not have been the case that the capitalist system engendered nothing but this social relation? The , classical answer is that there has been 'resistance' coming from ' feudal' (semi feudal, quasi-feudal) groups , a resistance that has been ' both un- 'progressive' and irrational from the perspective of the s ocial economy as a whole . But ·when an 'irrationality' lasts centuries , and seems to be s ustained precisely by those groups who are said to b e
AN HISTORICAL PERSPECTIVE
27
- politically (the bourgeoisie, or the capitalist class es) , then we at least investigate the possibility that our analysis is askew . ' lc ont end that when a product is produced for exchange, and value is . created greater than the socially necessary amount needed to reproduce the labour that created the product , there is s urplus value, whatever the nature of the social relation at the work place . And whenever the actual prod ucer has expropriated from him - via the market , the state, or direct coercion - a part of this surplus value, we have evidence of explo itation. It will be said that something like this happens in pre capitalist systems . And it does , with one crucial difference: the exploitation is not maximized over time and space , because capital accumulation per se takes second place in these other systems to other socio-political considerations . The mark of a capitalist system is that it rewards accumulation per se, and tends to eliminate individuals or groups , who resist its logic. Having said this , we must now look to see what social relationship optimizes the expropriation of surplus value. It is often said that proletarian wage labour does this , because it creates a market (often speci fied as the ' honle market ') for the realization of profit . It does do this , but the direct producer as consumer of finished goods is only one part of the picture . The other part is the direct producer as participant in the division of the surplus value. This double role of the direct producer is the heart of the contradictions of the capitalist system . The bourgeois increases his potential profit as the part of the surplus value the direct producer receives approaches zero, except that the bourgeois risks not realizing his profit at all, unless world-wide demand remains high enough, a function in large part of widening the distribution of the surplus value. Hence , the bourgeoisie as a 'world' class is pushed in two opposite directions simultaneously: towards dispensing the 'biologically' minimum wage, 12 and towards partial income reallocation (that is , higher wages) . The collective response of the world bourgeoisie takes the form of a functional split . Most direct producers receive the 'biologically' minimum wage. Some receive more . Here however we come to another contradiction. The world bourgeoisie is not a unity but an alliance of competing groups whose individual interests go against those of the collective. Individually , capitalist firms tend t o maximise profits b y increasing production. Hence over time, in order for the expanding production to find appropriate markets , an increasing number of direct producers must receive more than the 'biologically' minimum wage . But if this tendency goes too fast the bourgeoisie risks losing the rate of profit that is their raison d 'etre. Since we are still talking of the continuities of capitalism, we must look at how capitalists have handled these contradictions over time. The optimal way to arrange that a direct producer receive only the ail..., •.u. ... � ........... ... ..."" •• LJ ' ....A' -
28
TRANSFORMING THE WORLD-ECONOMY?
' biological' minimum is to have him and his household produce it for their own account , while producing the 'surplus ' without 'remuneration' (or with very little) for the legal account of a borugeois , provided however that the bourgeois can adj ust the quantity o f production of surplus value to his immediate needs in terms o f the world market . The ideal arrangement for this is one of the many varieties of so-called ' quasi-feudal' relations in which the cash-crop sector or industry is controlled by an enterprise . A full-time, life-long proletarian wage labourer will always (at least over time) receive a larger part of the division of surplus value than a part-time, part-life-Iong proletarian (our so-called quasi ' serf' o r semiproletarian) . Not only can full-time proletarians organize and defend class interests more effectively, but the supervision costs are high if the bourgeois wishes to obtain a work efficiency as high as that from the semiproletarian at the latter' s rate of real income. Hence , proletarian wage labour is a pis aller from the individual capitalist ' s viewpoint . Nonetheless , collectively the bourgeoisie needs it, b oth for 'efficiency' of expanded production , and to provide an expanding market . In s hort, the capitalist system requires proletarian wage labour to exist but as little as it can get away with . Its dilemma is that the supply/demand antimony regularly forces it to expand the size of the 'world-wide wage labour proletariat . We have outlined the continuities of capitalism, in the longue .duree. Our description of these continuities points uP. their contradictions and resulting cyclical rhythms . The ways in which these contradictions are regularly resolved may be summarized as the secular trend s o f capitalism . These trends are the opposite o f continuities ; they are the conj unctures of ongoing development and transformation o f the system as a whole . I will be briefer on the secular tendencies , and outline only four o f them , each o f which involves movements towards asymptotes , and hence temporally b ounded, since one cannot expand the curves indefinitely. 1 There is the process of expansion of the world-econonlY - the pushing of outer b oundaries of the world-economy to the limits o f the earth, the conquest o f the ' subsistence redoubts ' within . The dynamic of this expansion is located in the crises caused b y the supply/demand antinomy . Each wave of expansion has revitalized demand . But the physical limits of such expansion are being approached today. 2 There is the process of proletarianization , the conversion of 'quasi feudal'. semi proletarians into proletarian wage labour, determined by the j oint workings of the supply/demand and capital/labour antinomies . The process of proletarianization saves short-run profits (expanded demand) at the expense of long-run profits (increased
AN HISTORICAL PERSPECTIVE
29
share of surplus-value to the direct producer) . As long as expansion continues , proletarianization does not reduce the share of surplus value to the world bourgeoisie as the expanded amount of primary accumulation is greater than the reallocated surplus value . B ut as the rate of expansion slows down , further proletarianization will cut into the global share of surplus value retained by the bourgeoisie . 3 There is the politicization which accompanies the process of proletarianization and which takes the multiple forms of parties , workers ' movements, national (and" ethnic') liberation movements, et c. The picture is complex but the global impact is double . On the one hand , it creates a vast current of anti-systemic groups , including now organizations of the semi-proletariat , which are becoming too numerous simply to repress or co-opt . There is a threshold of collective size that is being approached . On the other hand, to counter this growing trend , the upper strata must reinforce (and purchase the services of) their cadres - military, political, cultunil. 4 Thus, we come to the fourth trend , which I shall call the janissarization of the ruling classes . As the working classes grow more political, it enables the cadres of the bourgeoisie (the technicians, the professionals , the managers) themselves to impose their demands on the legal owners of economic firms . This means de facto a partial redivision of surplus value within the bourgeoisie, from the top strata to their cadres. Furthermore, since these" cadres are disproportionately located in core states , this affects the politics of these states which . become welfare-state oriented or social democratic. On the one hand , this redistribution is at the imme diate expense of the top strata and not of the direct producers. On the other hand, this redistribution presupposes the continued expropriation of surplus value from the direct producers , and has not thus far diminished it in any significant way. This is the phenomenon of the expanding tertiary sector of the industrial states , breeding conspicuous content and political complacency b ased on indi fference to the 'barbarians' of the periphery. The obverse of this however is a dispersion of political will on the part of the bourgeoisie, no longer able to act with deft and firm swiftness of purpose. As janissarization increases, the ability to resist or co-opt the politicized world working classes diminishes . Thus we come to our third temporality that of the kairos, the 'right time' , the moment of choice and transition . The fact is that we are already there - inside this third kind of time, which is not the time of a moment, but of an epoch . The twentieth century has seen the steady growth of anti-systemic forces throughout the world . For every step backward (via regression or co-optation) there have been two steps forward . Any plausible measurement of the strength of anti-systemic forces will yield a linear upward curve. Beginning with the Russian Revolution in 1 9 1 7 , and
30
TRANSFORMING THE WORLD-ECONOMY?
greatly accelerating after 1 945 , one state after another . has begun t o claim i t is o n the road t o socialism (or, indeed, already there) . Since the collapse of the unity of the world communist movement , it is no longer easy to find a con1monly accepted definition of what constitutes a socialist state, since many self-designated socialist regimes do not recognize the legitimacy of other self-designated ones. These so-called socialist states are in fact socialist movements in power in states that are still part of a single capitalist world economy - o ur familiar economy/policy antinon1Y. These 'socialist ' states find themselves pressed by the structural exigencies of the world economy to limit their internal social transformations . They are not therefore in fact socialist economies , though we may be willing to call them -socialist polities . They are caught in the dilemmas not only of the supply/demand antinomy but of the capital/labour one as well . Nonetheles s ; these regimes represent an important part of the anti systemic forces, and their existence has altered the world alignment of power . It is said that in nineteenth-century France, there were two parties : the party of order and the party of movement . These were not organizations b ut broad structural thrusts . This language is even more appropriate as a description of the contemporary world-economy. The secular trends of capitalism have accelerated the contradictions of the system . The result is that the world finds itself at the kairos. The first contradictio n is in the movements of popular sentiment . Nationalism and internationalism have served both as anti-systemic forces , and also as modes of participation in the system . The socialist party or national liberation-movement in a semiperipheral or peripheral state may in riding the crest of nationalism serve as an expression of t he party of movement; the same party or movement may aid other parties or movements in other countries in the name of international solidarity. But nationalism h as also been a primary means of denying the class struggle, and internationalism has often been a figleaf for imperialism . All this h as become increasingly clear . The examples are by now numerous . And this very clarity itself creates a pressure on the anti systemic regimes that works against the temptation of their cadres to j oi n the party of order . The forces that push for movement are becoming more difficult to tame, perhaps too difficult to tame, even for . revolutionaries with credentials . Thus , the party of movement is now . more than the expression of the will of its leaders ; it is the reflection of a structural thrust, itself the outcome of the successive conjunctures of the capitalist world-economy. And , on the other side of the political b attle, a second contradiction has become acute . The party of order is rent by an internal split which , far from healing, is steadily becoming wider . There are two organizational forces that have simultaneously grown stronger and more complex : the multinational corporations on the one hand , and the state machineries of the core states on the other. The relationship of
AN HISTORICAL PERSPECTIVE
31
these two forces has become an ambivalent one. On the one hand, they s upport each other constantly. On the other hand , their interests · frequently diverge . The corporations exist to make profit , and hence are ready to make alliances with whatever groups they need to deal with in order to maximize these profits over the mediunl and long run . The state machineries must however necessarily respond primarily to the needs of its own citizens , especially in the core states . Insofar as the cadres everywhere are demanding a larger share of the pie, their collective interests stand opposed to that of the multinationals, whose maj or recourse has been, will continue to be, to play one set of national cadres off against another. As long as the world-econonlY is expanding over all, this contradiction can be contained. But as we approach limits, the constraints imposed upon all economic actors may lead t o increasingly acute conflict between regimes in (at least some) core states and the multinationals . As with the party of movement , so the party of order m ay now be more than the expression of the will of its leaders . But in this case, the structural pressures are towards fission, and therefore the weakening of the ability to stand up against the party of movement . We may now return to our opening discussion on the new international order . The very discussion is part of the kairos. The language is Aesopian to cover over · the struggle between the party o f order and the party of movement . But the Aesopian language cannot last . It is an attempt to keep us all operating within the temporality of conj uncture , when an understanding of the temporality of the longue duree will make it clear that we are participating in the kairos. This attempt will not succeed . Tillich ended his essay on the kairos with a question and an answer : One question may still be raised, and we offer a brief answer to it : ' Is it possible that the message of the kairos is an error? ' The answer is not difficult to give. The message is always an error ; for it sees something immediately imminent which , considered in its ideal aspect , will never become a reality and which , considered in its reid aspect , will be fulfilled only in long periods of time . And yet the message of the kairos is never an error; for where the kairos is proclaimed as a prophetic message, it is already present ; it is impossible for it to be proclaimed in power without its having grasped those who proclaim it . n
Notes 1 Fernand Braudel , ' History and the Social Sciences' in Peter Burke (ed .), Economy and Society in Early Modern Europe (New York : Harper Torchbooks, 1 972), p. 1 3 .
32 2 3 4 5 6 7
8 9
10 11
12 13
TRANSFORMING THE WORLD-ECONOMY?
Ibid . , p. 20. Ibid . , p. 1 4 . Ibid . , p . 32. Ibid . , p. 33 . Ibid . , p . 3 5 . Paul Tillich, '�airos ' , i n The Protestant Eta (Chicago : University o f Chicago Press , 1 948) , p � 3 3 . Ibid . , p . 48 . The argument that this transition was singular and not repeated on many successive occasions in different ' societies ' or 'social formations ' is spelled out in nly 'From Feudalisnl to Capitalism: Transition or Transitions? ' , Social Forces. 5 5 : 2 (December 1 976), 273-83 , and above , ch . 8 . Tillich , ' Kairos' , p . 3 3 . These definitions are cited from 'Patterns o f Development o f the Modern W()rld-System ' , research proposal of the Fernand Braudel Center for the Study of Economies, Historical Systems , . and Civilizations , published in Review, 1 :2 (Fall 1 977) , 1 1 1 -45 . I am aware that what.seems to be 'biologically' minimum is itself a function of social definition . Yet behind this variation , there does lie a true bottom line. Tillich, ' Kairos ' , p . 5 1 .
2
Hidden Dimensions o f the So -Called New International Economic Order * Roy Preiswerk
* *
With the possible exceptions of the Bandung Conference in 1 955 and the increase in oil prices in 1 973 , no collective initiative taken by Third World countries has had such important repercussions at the interna tional level as the proposals to bring about a New International Economic Order (NIEO) , formulated in resolutions adopted by Special Sessions of the United Nations General Assembly on 1 May 1 974, 1 6 September 1 975 , and 1 5 September 1 980. The media seized upon it; no diplomat or minister , no expert on 'development' would dream of speaking on the present world situation without at least referring to the term . From the very beginning, some people were suspicious of it , later became tired of it , and labelled it a mere slogan and a clever mythology. Cynics and hard-core realists refer to the entire exercise as a rhetorical rebellion of the Third World . It would be callous , however , to leave it at that, for what is involved is the improvement of the standards of living of three quarters of the world' s population and, beyond this , the fair and equitable functioning o f the . world economy. Shortly before his death in 1 977, Harry Johnson said that the New International Economic Order was neither new, nor international , nor .
* EditOr 's note: Roy Preiswerk was a member o f the UNU-GPID network . His chapter was s peci fically requested by this editor for this volume . The author completed the final
version o f the chapter j u st before his death in August 1 98 2 . * * A uthor 's
note: Revised a n d expanded version of ' Is t h e N e w International Economic
Order Really New ? ' in The Caribbean Yearbook oj In ternational Relations, 1 977 . (Alphen aan den Rij n : Sijthoff and Noordh o ff, 1 980, 1 47- 1 5 9 . )
/
34
TRANSFORMING THE WORLD-:ECONOMY?
economic , nor an or:der . Our position coincides only in part with Johnson ' s and can be summed up as follows : what the promoters of the NIEO consider as new factors are not really sufficient to change the essential character of the Present International Economic Disorder (PIED) . l We plan to submit the NIEO, to the extent that it is already inscribed on paper , to critical and , on certain points , deliberately polemic scrutiny. This springs from our pro found conviction that we must publicly expose what many think privately. The reticence of some to voice frank and open criticism is partially based on the fact that the militants of the struggle against inequality and poverty in the world hesitate, for a variety o f reasons , to question the very proposals of the Third World . Nationals of the Third World itself find that it is o ften difficult .to oppose official ideas; sometimes their personal safety and professional future is at stake. Even among Third World politicians and negotiators , the anxiety to preserve the united front presented at New York takes precedence over their doubts about the course o f action taken . It is hard t o imagine that Chinese or Tanzanian leaders voted happily, and with conviction, on texts which oppose their own philosophies and methods o f development . We may now ask six questions about the NIEO: 1 What is new about it? Do the explicit declarations contain the outline of an order? 2 What type o f vision of the world is hidden behind the words? What are the implicit ideas of the NIEO? 3 Can and will the NIEO be implemented? 4 [fit becomes a reality, what would be the probable effects on interna tional relations? 5 How should these effects be evaluated? 6 What major dimensions of present debates on development have been left outside the realm of the NIEO?
The explicit discourse : what
has actually been said?
In the texts on the NIEO one finds ideas which have already been simmering for some time at the international level, particularly within UNCTAD , but which are making their appearance for the first time i n resolutions adopted a t the, U N b y a large majority of states . I t would b e tedious t o deal with them here i n detail a s they are very well covered in the liberature. 2 Let us j ust indicate where the promoters of the NIEO think they have introduced innovations . First of all there is a reorga nization of international trade by the cartelization of raw material
H IDDEN DIMENSIONS
35
kets, an increase i n the price o f raw nlaterials , indexation o f prices pri mary products on those for industrial products, as well as a full range of measures designed for the better distribution of benefits arisiri g from international trade. In addition the NIEO aims at a more equit able division of labour by a series of measures designed to encourage the industrialization of Third World countries which would ensure them 25 per cent of world production by the year 2000 (Lima . Resol ution) . Here one already wonders where the innovation lies . Perhaps it is in the magnitude of the change demanded rather than in the p rinciple itself. One could make the same remark regarding the principle of sovereignty over natural resources or the right to nation. alize foreign property. Nationalization has been recognized in interna tional law for a long time and the new texts do not contribute any solutio n to the still controversial problem of 'adequate compensation ' . Most surprising in what has actually been said are the number o f proposed measures which are geared towards a n intensification o f existing econonlic relations . A n entirely outward-looking concept of development is adopted : increased trade, more rapid transfers of technology, higher amounts of financial aid and better technical as sistance . All the methods of 'improvement ' put forward by the Third World for the transformation of the world economy are geared towards a greater integration of their countries into a system that looks very similar to the present .one.
The first hidden dimension : what lies behind the words ? It is fundamental t o understand what an analysis of the texts does not easily render explicit . Whether negotiators are conscious of the implicit content is not important . There is perforce a v�sion of the world underlying any proposal advanced with a view to changing an existing order. The first interesting element to note in this respect is that o f diffusion ism . The industrial world i s called upon · t o maintain the highest rate of expansion in order to increase its consumption o f Third World goods , pay better remuneration for what it consumes , and transfer a larger portion of its capital and technology. By a process of diffusion, the advancement of one would benefit the other. The same process would then be reproduced within Third World countries . From poles of development (or what Myrdal called enclaves more than twenty-five years ago) progress would radiate to the entire country and the population as a whole would have access to new factors of produc tion . The industrialized world is officially acknowledged as the centre which diffuses its riches towards the periphery where those in control o f
36
TRANSFORMING T H E WORLD-ECONOMY?
the poles of development decide the fate of their subperipheries . 3 In his 'Seven Fallacies about Latin America' , Rodolfo Stavenhagen rightly denounces the i,dea of diffusionism together with that o f dualism . I n dualistic societies , a s they are said t o have emerged during the colonial era, a ' modern ' , 'dynamic' and 'progressive' sector is promoting development , while a supposedly untouched 'backward ' , 'archaic' or 'traditional ' sector is in the process of being integrated through the diffusion of values , goods , capital and behaviour patterns . Stavenhagen' s main point is that the economic and social condition o f this 'backward' and poor periphery i s largely the result o f the action exerted upon it by the colonizer over the past centuries .4 As for the present , there is overwhelming evidence to the fact that the 'trickle down' effect of the benefits of development from the 'modern ' sector to the 'traditional' sector is by no means important enough to bring about real improvements in the standards of living among the whole population . It is generally acknowledged today that internal inequali ties have been growing in almost all countries of the world inspite o f development efforts pursued over the last thirty years . A second hidden element is linear evolutionism . All o f Western philosophy and science from the early 1 9th century onwards has been strongly marked by this particular conception of the development o f mankind . It implies that all societies move through the same sequence of stages to an identical ideal state. The content of the stages may vary with differing ideologies (liberalism, Marxism) but the principle is the same . Linear evolutionism is the opposite of development based o n cultural identity and relativistic pluralism, which acknowledge the existence o f different forms of social change within the existence o f different forms of social change within an unhierarchically structured variety. In an evolutionist scheme, a particular society is at any moment said to be moving from ' feudalism to capitalism ' or, having passed the ' take-off' point , going through ' self-sustained growth' to 'mass-con sumerism ' . In a pluralistic concept , societies are j ust different from each other and likely to move in rather unexpected directions, creating hitherto unknown models of development . In United Nations debates on development , the apparent combative ness of Third World negotiators hides, more or less consciously, the desire to create societies resembling those of the supposed enemy - the industrial countries . Raul Prebisch has called it imitative development . 5 The psychological background to this attitude varies according to the situation and the people involved. A person who is aware of the existing balance of power may genuinely believe that without a Realpolitik, without full industrialization, without atomic bombs, without nuclear power plants , a Third World country is nothing on the world map . Then there is the person who, faced with the model of the industrialized world , succumbs to a kind of mental self-colonization since he has already internalized the model in question and propagates it as if it were
HIDDEN · DIMENSIONS
37
pro duct of his own society. 6 There i s also the cynic, very aware o f the advantages that the upper as ;cl ses of the Third World would derive from a strengthening of ties with the industrialized world and who does not really believe in the ' beneficial effects of the NIEO for the people. Third , the NIEO is based on rationalism and idealism. There is a smell of social engineering in the air : man, due to reason, is thought to be capable of discovering the laws which should govern the social order. He will see the means of achieving his objective, and may possibly manipulate social change . He finds these solutions around conference tables and formulates them in written agreements and resolutions , adopted by large assemblies . The changes demanded provoke debates and verbal confrontations . One gets the impression that irreconciliable positions are at stake , but the confrontation takes place within an international upper-middle-class which , particularly in its implicit . vision , is rather cohesive . The divergences in positions are not , in any . case, as wide as those which exist between this priviledged class and the populations which will be manipulated on the basis of the new p rinciples adopted, wherever on the map the country may be. There is of course nothing reprehensible about attempting to solve, through logical reasoning around conference tables , s ome of the more pressing problems facing mankind .. But one must realise that not all issues will be s olved amicably. First of all , a real confrontation within the international elite is not to be excluded if resolutions adopted remain on paper . Then too, the worsening of the situation among the most disinherited populations may lead to cO.nfrontations that political rulers in the Third World will not be able to control. The ideology of functionalism of a David Mitrany, which holds that peace must be preserved by economic and social activities, has not yet shown conclusive results . Certainly the United Nations system has improved its capacity to contribute to conflict resolution as the idea is pushed further . But the problems defined in 1 945 as falling within the domain of 'functional ' activities of the United Nations are so a�utely topical today (hunger , p overty, malnutrition, health, habitat , water , energy, natural resources , environment, demography, etc . ) that one has every right to wonder if the capacity of 'rational' man to solve them without conflict is sufficient . Fourth, the NIEO is also based on a 'statocratic ' concept ofinterna tional relations and of the role of international organizations . The primacy of the state is reaffirmed at every opportunity. International conferences repeat with great regularity the litany found in the Charter of Economic Rights and Duties of States of 12 December 1 974 : sovereignty, non-interference in internal affairs, self-determination, territorial integrity, and the like . These principles are reaffirmed with an obstinacy that is only matched by the frequency of their violation. This is perhaps the case with all laws . But two problems should be
38
TRANSFORMING T H E WORLD-ECONOMY?
considered when a statocratic vision underlies an international negotia tion". First of all there is the asymmetry between stateS of unequal power . This problem is certainly not resolved by the, insertion of clauses of non-reciprocity or by the adoption of resolutions carried by an over whelming maj ority representing states without a great deal of military or economic power . Now the fact that Third World countries have made their presence felt on the international scene by a kind of juridico political insurrection , and comprise a numerical maj ority, in no way solves the problem of inequality"in negotiation . 7 One realizes then that there is a contradiction between the constant affirmation of the primacy of the state and the inability of an international system based on that very primacy to bring real benefits to those who find themselves , from the beginning, in a position of weakness . Why then do the elites of the Third World seek so much to defend a system based on the primacy o f the state? Here we must ask the most troubling question on statocracy . Do those who 'represent' the Third World in negotiations on the NIEO have an interest in reaffirming the primacy of the state because i t pf.o tects them when their behaviour with respect to their populations i s questioned? Former US President Jimmy Carter' s political acrobatics betw((en the affirmation of respect for human rights and the acceptance of the principle of non-interference in the internal affairs of states is a good example o f the dilemma wh�ch arises as soon as the supremacy of the state is no longer the only principle governing international relations . A prominent businessman once claimed that the misery and poverty of people fall under the internal jurisdiction of states and should not b e looked into b y outsiders a s long as governments do not feel concerned . (This was in the course of a discussion in which the principal concern was not to 'interfere ' in domestic affairs but to discover the connection between poverty in the Third World and the attitudes adopted by rich countries in international relations. ) It would seem that internal inequality in Third WorId countries is still almost inevitably considered 'natural ' , if not a condition of 'development ' . I n spite o f what many assert, international organizations do not in themselves represent a force which is opposed to the principle o f the primacy o f the state. Certainly they make governments face many fundamental problems which otherwise would be neglected or treated in an anarchic fashion . But states do not miss the opportunity of a single international conference to reaffirm the supremacy o f their power over any body which might take away the smallest of their prerogatives . Let us look at just one other hidden element in the NIEO : an economic theory based essentially on a merger of neD-classical and keynesian concepts, with minor nlodi fications added from a socialist perspective. This is a type of economics still linked to the 1 9th century
HIDDEN DIMENSIONS
39
idea o f natural science, largely based on the first law of thermody namics . The economy is perceived as a closed system within which vari ous forces· are interacting in a mechanistic way. For each dependent variable , there is an independent variable . The interaction of various forces usually results in a state of equilibrium . Thus for instance , quantities of goods produced (dependent variable) are regulated rough price adj ustments (independent variable) . This will bring . th about an equilibrium between scarcity and overproduction . Almost all NIEO proposals in the area of international trade are of the price adjustment type. What remains totally outside the mental horizon of the originators of NIEO is a type of economics based on the second law of ther modynamics - the law of entropy. 8 All economic activities result in a loss of energy. The degradation of energy is an irreversible process . When forces o f production and forces o f destruction interact , the ulti mate outcome is a state of disequilibrium and growing disorder. A society in a growing state of energy, which is already the case of indus trial countries, tries to exploit available energy sources in countries it is able to dominate. This has been termed the thermodynamic paradigm of unequal development. 9 The effects of such action are often to aggravate environmental des truction and entropy in the dominated systems . Many of the NIEO ·measures tend to increase disorder in raw-material and energy supplying countries and to maintain some order in consumer countries . As opposed to neo-classical and keynesian economics, these considera tions are integrated into institutional economics and are particularly emphasized by the eco-development school. 10
The chances of success : is the
NIEO
possible?
The NIEO's programme of action is composed essentially of a list of Third World demands addressed to the industrialized countries . It is up to them to lower or eliminate import barriers without reciprocity, increase their aid , pay more dearly for raw materials. The most concrete obligation of the developing countries is to increase co-operation among themselves, particularly through technical co-operation . The reaction of the industrialized countries must be examined both by what is said and by what is actually done. In connection with texts on the NIEO (resolutions, charters, reports) it is symptomatic that on the occasion of the vote on the Charter of Economic Rights and Duties of States, six countries, among them Great Britain and the United States , voted against , while most o f Western Europe and Japan abstained . This hostility to Third World proposals is often open . However, the most widely used tactic consists in accepting the principle of a reform of
40
TRANSFORMING THE WORLD-ECONOMY?
the international system and supporting the ideas put forward by the Third World , without offering concrete concessions . The speech by the Minister of External Affairs of the Federal Republic of Germany on 2 September 1 975 , before the General Assembly of the United Nations is a case in point . 1 1 Almost all the reforms demanded bythe Third World are conscientiously listed and there are even a few promises of support , when the time shall come, in seeking methods of implementation . One can sense the diplomatic manoeuvre: Western governments must appear conciliatory before large international assemblies without for getting that the political and economic sectors of the countries they represent are still lagging far behind even the weakest reformist posi tions coming from the Third World . In addition, .the speech in question also contains scarcely veiled threats . Reference is made to the most serious recession since 1 930, sluggish world economic growth, balance of-payments deficits , unemployment , inflation . Conclusion : the Third World must recognize the interdependence of all countries and strive to promote the increased growth of the industrialized countries : ' Both sides can then share the benefits of expansion or together suffer stagna tion . Whoever does not take into account the changes of growth of the other j eopardises his own growth at the same time . Those whose policies compron1ise the others ' growtJ1 , will inevitably harm them selves . ' Diffusion in all its glory. But it also contains warnings : do not raise the prices of raw materials too much, know that we distrust producers ' associations , do not threaten us with boycotts and especially do not meddle with the rules of a liberal world economy, alone capable of ensuring growth . This is in open contradiction to the verbal adherence to reforms proposed in the same speech . The behaviour of the socialist countries is , in some respects , even more disappointing . Representatives of the Third World are well aware of this . These are the countries from which one expects the most in action and the least in rheto ric . And yet at ev J ry assembly we witness a . ritual which is now very familiar . The Soviet U nion avoids problems b y . reaffirming that i t does not share the responsibilities of the former colonial masters to repair the damages caused by capitalist imperialism , and also indulges in lengthy statements about how disarmament would free large revenues for development . On this latter point, the Soviets are not wrong but perhaps they could begin by applying the idea to them selves . China never misses the opport�nity to talk about the socio imperialism of a ' certain superpower' (the Soviet Union) and offers ample support to Third World positions . At that point the German Democratic Republic or some other Easteni European country feels obliged to come to the rescue of the position defended by the USSR, and Albania inevitably rallies to the Chinese viewpoint (only up to the 1 975 Special Session of the General Assembly) . Then the process o f turning around i n circles can begin again . With the exception of the Lome Convention negotiated outside UN
HIDDEN DIMENSIONS
41
bates, the industrialized countries show no clear desire t o act . Neither two sessions of UNCTAD held since 1 976, nor, in particular , the rth-South dialogue ' in Paris leads one to believe that a new world ' ' order will be established in the near future. The refusal to accept real change is dangerous . Boycotts , embargoes or other coercive measures may be substituted for an orderly trans formation of the status quo. Thus we could well be entering the era of the New International Economic Disorder (NIED) .
' The probable consequences : what might happen? Let us suppose for a moment that the NIEO is established . Without venturing too far into speculation , one can reasonably assume the following four possibilities : i The international division of labour would be slightly modified, not in its fundamental structure but in the percentage representing the Third World's share of world industrial production . 2 The raw rnaterial - and energy-producing countries would benefit from an increase in export revenue. Probably half of these resources (it is difficult to give a precise figure) are found in th� industrialized countries , which would then enj oy advantages comparable to those of the Third World as far as exports are concerned . 3 Inequalities between states and within states would continue to increase as in the past . Indeed the potential to achieve whatever deve lopment is planned varies enormously from one country to another and the necessary resources are very unequally distributed . Note that international inequality will worsen not only between North and South but also between industrialized countries (superiority of the United States and the Soviet Union) and between countries of the Third World . 4 At the same time we 'would witness the increased dependence of non-industrialized countries on industrialized countries from the viewpoint of capital, technology and know-ho·w . This dependence would be particularly serious in the case of countries which do not produce either raw materials or energy. But the producers too may fall into dependence . When we speak , sometimes too quickly , of the interdependence of producers and consumers, we forget that the dependence of the seller (Third World) on the buyer can be total , depending on the product and the state of the market . We should speak of interdependence only where there is a perfectly symmetrical relationship , a very rare situation indeed . 1 2 We realize that certain states and certain classes within states would gain advantages by the establishment of the NIEO . The maj or losers would be, as always , the most disinherited social classes in countries
42
TRANSFORMING THE WORLD-ECONOMY?
which are neither industrialized nor producers of raw materials and energy.
Appraisal : what to think of it all? The efforts expended to install the NIEO are important and should not be underestimated . It is praiseworthy that an attempt is made to expose the serious problems afflicting the poor countries at a time when the multiple failures of international co-operation for development are becoming increasingly obvious . While problems are becoming more serious , a dialogue is still taking place. The strategy of development and co-operation proposed under the designation of the NIEO is associative and standardizing. It is associa tive in that it seeks peaceful solutions through intetnational negotia tion, opts ' for outward-looking development and leads towards the complete integration of the Third World i nto the world economy. 13 It is standardizing because it suggests no concrete measures allowing for consideration of the great diversity of situations in which the countrie s of Africa, Latin America and Asia fi n d themselves . Only the occasional reference to the ' poorest countries ' opens the possibility of taking into consideration specific situations within the Third . World. As for deciding whether one should qualify an associative and standardizing strategy as a positive or negative one, this depends on one's scale o f values, economic beliefs and political choices . But i t i s advisable t o point o u t a serious dilemma which arises on examining the reactions to proposals made for a NIEO . On the one hand, strong resistance is felt in the business sectors o f market economy countries . Anything that inlplies control of market s , producers ' associations , indexing of prices o r price increases i s viewed with scepticism by the defenders of a liberal world economy. But with the Third World exerting pressure, politicians and negotiators from . countries with market economies find themselves caught between two extremes . For the moment they extricate themselves by verbal adherence to the exigencies of the majority of states , while proceeding with great reluctance to promote real structural changes . How long can this game last? The other aspect of this dilemma is the wait-and-see policy adopted by a large number of those who in actual fact identify with the Third World cause. "They believe that the NIEO will be realized and that it will provide the desired solutions . Now this position is equally dangerous for there is the risk of discovering, within only a few years , that once again the Third World has been nourished · on rhetoric while the fundamental problems continue to worsen .
HIDDEN DIMENSIONS
43
he second hidden dimension : what is omitted? heat of the debate on alternative development strategies , which in the early seventies , has not been sufficient to warm up rted sta gates at the United Nations negotiations on the NIEO . 14 And yet , dele . the fundamental differences between the proposed new strategies of develo pment and the dominant ones presently in effect were rapidly rifi ed in this debate, for instance with regard to the obj ectives o f cla . v de- elo pment , relations between man and nature o r time perspectives (see Table 2 . 1 ) . Above all , critics of the associative and standardizing strategy of the NIEO introduced the idea of a dissociative and differen tial strategy . Dissociative strategies are of two kinds . They are radical or absolute when they lead to a complete rupture of relations between states . This means isolation or autarchy, or a moratorium when the rupture is con sidered for a certain length of time only . It is difficult to imagine , in the twentieth century, for a country to choose this option . Even the Soviet Union and China did not totally cut themselves off from the rest of the world after the 1 9 1 7 and 1 949 revolutions . In other words, emphasis should be placed on selective dissociative strategies . The best kno\vn among these is sel f-reliance: the idea that a people must rely on its own forces, its powers of imagination, and its human and natural resources instead of allowing external forces to define objectives and methods of developmenL Self�reliance is a global option encompassing all aspects of the life of a community (local, national, regional) in food produc tion, technology, education, etc. It is only when foreign contributions in a particular field prove to be indispensable that the community should look to the outside world . 1 5 Dissociation can also be achieved by sectors . One begins by becoming independent of foreign contributions in restricted fields (education , pest control , information services , etc. ) . I f the movement spreads , a system close to that of self-reliance results . A differentiated strategy takes into account the cultural diversity of so-called ' developing ' societies . It is therefore based on the principle diversity in tpe methods of development and takes into consideration the cultural, economic and ecological specificity of each society . 1 6 The satisfaction o f the basic needs of the entire population of a country is one of the corner-stones of proposed strategies . 1 7 This idea never appears in the 1 974 and 1 975 resolutions of the General Assembly ! Today, it is so prominent that it cannot be kept outside future debates. Two comments are in order with regard to the above mentioned Table. First, it shows a relatively good vertical coherence, L e . the indi vidual items listed under proposed and dominant strategies respectively really fit together . For example, under 'Relation to nature' in the proposed strategies , attitudes of harmony and equilibrium are closely
t
Table 2 . 1 Proposed and dominant strategies: dissociative-differential versus associative-standardizing
Point Qf departure
Proposed Strategies
Dominant Strategies
Over- and under-developed areas and sectors in
o-j � )-
The North is · developed , the South is under developed.
CIl
both North and South; globally the world is mal developed . Level of analysis
Centres and peripheries . Human beings .
States .
Roots of underdevelop ment
Domineering, exploitative forces from the rich centres creating growing inequalities within and among countries .
Poor, uneducated masses . Gap between them and the sophisticated , ' modern' societies .
Objective of develop ment
Satisfaction of basic needs , material and non material, above a minimal level , but not beyond a maximal level .
Economic growth .
Main priorities
Agriculture, industry, health habitat, education
Infrastructure, education , industry,
Role of material goods
Primacy of distribution .
Primacy of production .
Relation to nature
Harmony and equilibrium .
Exploitation
and
units to outside world
Dissociative . Selective de-linking. Counting o n one 's own forces and using one's own resources .
Structural transformation to reduce internal and international inequalities . Reduction of struc . tural violence.
s: l-! Z Cl o-j l:
trl
�
tTl () o
domination .
a s: �
.�
Anthropo
Associative. Increasing integration
into
existing
world
economic system. Concept of structures
��
� t'"" o
centrism. Relation of developing
Z
Respect for, or limited reform of, existing national and international structures . .
Table 2.1
-
continued Proposed Strategies
Dominant Strategies
Totality of the process of development. Inter vention based on system's analysis .
Fragmented and compartmentalized approach to restricted sectors of development .
Time perspective
Solidarity with future generations , mainly in use of resources and relation with environment .
Short and middle-term planning. Development decades.
Applicability in space
Respect of cultural diversity and hence of the
Uniformity. Universal model , valid for all types of societies.
Concept of process
diversity of development processes . Reference in economic theory
Institutional economics and ecodevelopment school . Concepts of entropy, irreversibility and disequilibrium.
Neo-classical school and keynesianism. Con
tt:
cepts of mechanistic interaction, reversibility and equilibrium .
g
8
Z I::'
�ttl .� o � � v.
46
TRANSFORMING THE WORLD-ECONOMY?
related t6 the solidarity with future generations indicated under ' Time perspective' . Also, a close relationship can be observed in the dissocia tive strategy between the satisfaction of basic needs and the preserva tion of cultural identity. 1 8 Second, the Table obviously suffers from its dichotomous form of presentation. A priori, . there is no mutual horizontal exclusivenes s between the two columns , L e . elements i n one column are not neces sarily incompatible with elements in the other colunln. An obvious question in this regard is about the degree of growth required for the better satisfaction of basic needs . 1 9 Also , states have a significant p art to play in the implementation of dissociative strategies .
Concluding remarks We have today arrived at a turning point in the definition of develop ment itself. Proposed strategies are sometimes said not to be realistic . But ' realism' is often nothing more than the absence of new ideas , when it is not conscious resistance to a type of change perceived as detrimental to egoistic interests . Where is the utopia really? It is said that approximately 2000 inter governmental meetings on the NIEO were held during the seventies . One of the two major topics for discussion at the 1 1 th Special Session o f the United Nations General Assembly o n Economic Issues i n 1 980 was called ' Global Negotiations ' . The idea, pressed by the Third World, is that better results could be reached in a package deal comprising international trade, financial transfers , the reform of the international monetary system and energy, rather than negotiating on each of these items separately. This is really nothing more than a negotiation on the procedure of future negotiations . And even this came to a deadlock . With the decision of the Reagan Administration not to bring about a ny fundamental change in North-South relations , the prospects are high that thousands more meetings will be necessary before agreement on a NIEO becomes a reality. Tensions will increase as we go from o ne mythology to the next . Right now, it looks like realism is bringing abo ut a world which will flounder in the morass o f the Present International Economic Disorder combined with the New International Economic Order, leading towards the New International Economic Disorder (NIED) . So, faced with the serious prospect that a NIEO in the form in which it was demanded by the Third World is the real utopia, some other new international order may be sought . Call it anything, as long as it brings . about real change.
H IDDEN D IMENSIONS
2
3
4 5
6
7
8 9
47
It may appear controversial to designate in s uch a way the current world economic system. However, other authors have gone further and do not hesitate to talk about anarchy or even chaos. Where does one still find, in studies on 'development' , reassuring conclusions which allow us to talk about an international economic order? Certainly, there are international. conventions, trade agreements , GATT, OECD. But there is also, and this is a great deal more important, the incredible confusion which reigns in the monetary field with all the attendant uncertainties for investors , exporters, importers and - what a joy - speculators . Some accumulate enormous food surpluses, while perhaps half of mankind suffers from malnutrition. The over-consumption and waste of some keeps pace with the famine and scarcity suffered by others . The tremendous fluctuation in prices (as has recently been the case for sugar and coffee) has resulted in a number of countries finding themselves in the impossible position of planning their economic development for one-year periods only. Workers from Southern Europe, imported by the hundreds of thousands like cattle into Northern Europe, are repatriated at the first signs of a recession. What would they say about the international economic system if they had the means and the right to express themselves? These are only a few isolated signs but enough to point out that to designate as an order what is presently happening in international economic relations is to strip the word of all significance. Jyote S. Singh, A New International Economic Order (New York: Praeger, 1 977) . UNITAR has published an important collection of documents : A New International Economic Order, Selected Documents 1945-1975 (New York: UNITAR , 1 977) 2 vols . For a bibliography of over 30 recent studies on the NIEO, see UNITAR News, Vol. XII, No. 2, Autumn 1 980. To measure the impact of diffusionism on development thinking, see Gunnar Myrdal, Economic . Theory and . Underdeveloped Regions (Lon don : Duckworth, 1 95 7) . Rodolfo Stavenhagen, 'Seven Fallacies about Latin America' , New Uni versity Thought, 1 96 7, pp. 1 4-3 1 . In an address to the IVth UNCTAD meeting at Nairobi, 1 9 May 1 976. For more on this concept see Roy Preiswerk , ' Neocolortialisme ou auto colonisation: l'identite culturelle de l 'interlocuteur africain' , in Le Savoir et Ie jaire - Relations interculturelles et developpement (Geneva: Institut universitaire d'etudes du developpement, Cahier No . 2 , 1 975) pp. 6 1 -70. Roy Preiswerk, ' La reciprocite dans les negociations ent re pays it. systemes sociaux et it niveauz economiques differents' " Journal du droit interna tional, Paris ( 1 967) No . 1 , pp. 5-40. Nicolas Georgescu-Roegen, The Entropy Law and the Economic Process (Harvard: Harvard University Press, 1 97 1 ) . Alf Schwarz has studied the impact o f the second law o f thermodyna mics on African studies, in Les jaux prophetes de rAjrique ou rAjri(eu)-canisme (Quebec: Presses de l'Universite de Laval , 1 980) , in particular pp. 1 44- 1 56 . The most significant contribution on the role of the entropy law in development studies is by Jacques Grinevald in the Cahiers No . 1 and No . 5 of the Institute of Development Studies , Geneva, published by Presses universitaires de France, Paris, 1 975 , 1 97 7 .
48
TRANSFORMING THE WORLD-ECONOMY?
10 Rolf Steppacher, B . Zoog-Walz, H. Hatzfeld (eds � ) , Econom ics in Institutional Perspective (Lexington: Lexington Books , 1 977) . Ignacy Sachs Strategies de reco-developpement, (Paris : Ecpnomie et humanisme, 1 980) . Ignacy Sachs et al. , Initiation a reco-developpement (Toulouse: Privat, 1 98 1 ) . 1 1 United Nations General Assembly, Seventh Special Session, Document A/PV 2328, September 2, 1 975 , pp. 1 7-4 1 , translated from the French version distributed during the UN debate. 1 2 Joseph Ki-Zerbo, the African historian, puts it very well : ' Interdependence is a fact, but it i$ also a fact, that some are more interdependent than others . The horse, for example, in relation to its rider ' , in ' Concerning a . Borderline Case: Aid to the Least-Developed Countries' , Prospects (UNESCO) ( 1 976) . VI, No . 4, p. 606 . 1 3 A quantitative analysis of the contents of Resolution 320 1 -S-VI of the United Nations General Assembly (1 May 1 974) reveals that 1 6 associative concepts are cited 79 - times (community, co-operation , equality, law, justice, interdependence; equity, participation, assistance, harmony, etc . ) , while 1 0 dissociative o r conflictual concepts appear 1 9 times (sovereignty, rift , emancipation, self..determination, integrity, affranchisement, etc . ) . 1 4 Among the earlier important documents are : the annual speeches o f Mr McNamara, President o f the World Bank since 1 972; the 1 974 Cocoyoc Declaration UNPE/UNCTAD ; What Now? (Dag Hammarskjold Foundation) 1 97 5 ; The Planetary Bargain (Aspen Institute for Humanistic Studies), 1 97 5 ; A nother Development - Approaches and Strategies (Dag Hammarskjold Foundation), 1 977. An International Foundation of Deve lopment Alternatives , presided by Marc Nerfin, was created at Nyon (Switzerland) in 1 976. 15 Johan Galtung, Peter O 'Brien and Roy Preiswerk (eds . ) , Self-Reliance: A Strategy for Development (London: Bogle-L 'Ouverture, 1 980). 1 6 See 'Global Development: The End of Cultural Diversity? ' , Declaration of the International Federation of Institutes of Advanced Studies (IFIAS, Stockholm) , 1 97 5 . Annex III to the volume mentioned in the preceding note. 17 An important clarification of the many controversial points in the bas ic needs debate can be found in Katrin Lederer (ed .), Human Needs: A Con tribution to the Curren t Debate (Cambridge, Mass . , Oelschlager, Gunn and Hann, 1 980) . , 1 8 Roy Preiswerk, Cultural Identity, Self-Reliance and Basic Needs (Tokyo : United Nations University, 1 979) . Also published in Development (Society for International Development, Rome), 1 98 1 , No. 3/4, 83-91 . 1 9 J ohan 'Galtung has attempted to list a number of questions which should be asked about the NIEO and the basic needs approach before any definitive statements on their possible incompatibility should be made . See John Galtung, 'Grand Designs on Collision Course' , In ternational Develop men t Review, ( 1 978), No. 3 + 4, pp . 43-47 .
Part 2 The NIEO, the Crisis, and Prospects in the World Economy
3 The Current Development o f the World-Economy : Reproduction of Labour and Accumulation of Capital on a World Scale * Folker Frobel
In the two decades following the Second World War, the capitalist world-economy experienced the greatest boom in its history . This boom came to an end toward the close of the 1 960s . Since then the world economy has been in a phase of decelerated growth , . intensified structural change, and heightened political instability. This p aper begins by adducing some of the indicators which illustrate this development . We attempt to identify the immanent developmental tendencies which characterized the political and economic model o f accumulation of the boom decades - tendencies which are now under mining the model's potential for further expansion. At the same time, there is no clear indication o f a transition to or a political installation o f any comparable alternative model of accumulation. *
Translated from German b y Pete Burgess .
Editor's note: This paper was written i n February 1 980 and presented a t seminars i n Starnberg (Federal Republic of Germany) i n June 1 980 and in Port of Spain (Trinidad) in January 1 98 1 . The German text was published under the title 'Zur gegenwartigen Entwicklung der Weltwirtschaft ' in Starnberger Studien 4, 1 980, 9-8 8 . The Eng lish text was circulated within the United Nations University system as a working paper from the Project on Goals, Processes and Indicators of Development (HSDRGPID-36/UNUP- 1 50) .
A slightly rearranged version (omitting the original 's
appendix and tables) was published in Review, V, 4, Spring 1 982, 507-55 5 ; it is repro duced here adding again (and updating) the original 's' appendix and tables on world industrial production and world trade, 1 948- 1 980.
52
TRANSFORMING THE WORLD-ECONOMY?
The analysis is focused upon the general trends and tendencies o f accumulation: t h e concretization , modification, o r transcendence o f these trends and tendencies through 'local' particular circunlstances will require further research .
I 1 A large number ojindicators reveal a sharp contrast in capitalist devel opment between the two decades leading up to the end oj the 1960s and the beginning oj the 1970s, and the subsequent ten years, and show that the capitalist world-economy has once again passed through a turning point in its development . Among the principal indicators since this turning-point are : 1 Drastic fall in rates of overall economic growth in the market eco nomies as a whole , and especially in the industrial countries . 2 Declining or comparatively low rates of capacity utilizatio n of industrial plant in the industrial countries . 3 Drop or stagnation in i nvestment in industrial plant in the industrial countries ('investment gap' ) . 4 Rising o r comparatively high shares of replacement investment and investment for rationalization coupled with falling or compar a tively small shares of investment for extending capacity in the industrial countries . 5 Changes in the structure of the international division of labour: In manufacturing industry shifts of production not only from one industrial country to another (US - Western Europe) , or within industrial countries (traditional industrial centres - less developed regions) , as in the preceding phase , but to an increasing extent from industrial countries to developing count ries and centrally planned economies . In agriculture, the adoption of 'non-traditional' world market oriented production in the developing countries (e. g . , fruit, vegetables , flowers , soya beans, meat) . In the service sector, grow ing integration of the developing countries, for example, through ' the tourist trade . 6 Rapid spread of production facilities and production sites o f a new type in many developing countries · and centrally planned econo mies . World market factories for world market oriented (semi-) manufacture in free production zones , export enclaves and other sites , with a structure of production which is competitive on the world market (not merely the local protected market) , is very frag mented, highly susceptible to trade fluctuations , and basically parasitic on the local economy and society . 7 ' Structural crises' in industrial branches : the international competi- .
THE CURRENT DEVELOPMENT OF THE WORLD-ECONOMY
8
9 10 11
12 13
14 15 16
17 18
53
tiveness of manufacture at traditional sites is threatened by lower cost manufacture at new sites (increasingly located in the develop ing countries and centrally planned economies) . Examples can be found in synthetic fibres, textiles and garments, leather and footwear , steel-making, ship-building, watchmaking , optical industry, and sections of the mechanical and electrical engineering industries . Growing international synchronization of business cycles - the i 974-75 recession was the first general recession since the end of the Second World War - impairing the possibility of effective national anti-cyclical policies based on the internationally unsynchronized nature of national business cycles: the as-yet less successful attempts to co-ordinate economic policies on a world scale, taking - into account changed world economic circumstances ('world eco nomic summits' ) , have not been able to revive the shaken neo-Key nesian optimism in the possibility of economic policies to prevent capitalist economic crises . Increase in average rates of inflation . Breakdown of the Bretton Woods Agreement , symbol of the erosion of the world economic hegemony of the US . Radical redistribution of world incomes following the so-called oil crisis , discernible, for example , in the changed structure of world trade and increased balance of payments problems for many devel oping countries . I ncreasing number of officially tolerated or encouraged cartels which have arisen through the economic crisis . Public subsidy of 'ailing ' branches or firms , together with protec tionist tendencies in the industrialized countries aimed at slowing down the pace and minimizing the social effects of 'necessary struc tural adj ustments ' . Rising or stagnating unemployment at a relatively high level in the industrial countries . Growing disparity between the skill structure of those seeking work and vacancies , with a consequent growth in the share of 'structural' or ' frictional' unemployment . Instead of improving and extending the coverage of the social services in the industrial countries, existing services are being 'consolidated' : i . e their coverage is restricted and overall provisions reduced. Increase in the intensity of conflict between employers and workers over the maintenance of real incomes, j obs, and conditions in the industrial countries . In many developing countries , the reorganization , intensification and extension of the capitalist exploitation and super-exploitation of labour-power . Strengthening of the state apparatuses for legitimation,
54
TRANSFORMING THE WORLD-ECONOMY?
manipulation, and repression, either preventively or in step with the anti-capirevival and growth of ethnic, national, anti-imperial ist, ' talist, feminist and ecological movement s . This list of indicators could be further extended; all confirm the exis tence of a turning-point in the development of the capitalist world economy at the end of the 1 960s and the beginning of the 1 970s . 1 What is important here is not the meaning of any individual indicator, but the fact that all the indicators agree on this central point . In particular, the most general world aggregate variables show the existence of such a turning-point: this particularly important point is expounded in an Appendix to this paper . Since the empirical proof of the validity o f many of the other indicators is not i n doubt, and , further, because more detailed studies of certain indicators are given elsewhere2 (structural change in the textile and garment industries , relocation of production of Federal German manufacturing industry, free production zones and world market factories) we do not offer additional proof here. 2 When we turn to the question of how to characterize this turning-point in general economic terms , L e . at a higher level than that of individual indicators, the varied and comprehensive nature of the evidence cited shows that , in contrast to the views of a number of authors , the turning ' point indicates more than such relatively marginal or contingent pheno mena as the structural transformation of individual branches (garment industry, sections of the electrical engineering industry) , or the catching-up of the internationalization of the industry of an individual country (such as Federal Germany), or the effects of increases in t he price of oil . In fact, the indicators listed above refer to nothing less than the end of the post-war boom (the biggest boom in the history of capitalism) and the beginning of a phase of noticeably reduced world economic gro wth with the simultaneous transformation ofa number ofstructural features of the capitalist world-economy which had remained stablefor many years. One o f the most significant of these transformations is the change in the structure of the international division of labour. For example" in marked contrast to previous decades , especiafly those of the boom, it has been possible recently to observe a rapid advance in the production of manufactured goods in the developing countries , which are competi tive on the world market . 3 The last ten years have seen the increasing use of s ections of the immense potential labour-force in the developing countries in situ for world market oriented capitalist production in manufacturing industry - and no longer merely in the limited produc tion of agricultural and mineral raw materials for export or occasionally for modest 'import-substituting' manufacturing which hitherto
THE CURRENT DEVELOPMENT OF THE WORLD-ECONOMY
55
direct employment i n local capitalist productio n . 4 A long in which capitalist production was concentrated in a few tradicentres in a s mall number of industrial countries , with a growing h omogeneity of social conditio ns for both the material production and th e rep roduction of labour (labour legislation , investment law, policy " on the family, s ocial welfare , etc . ) , is thus being replaced by a m ovement in which capitalist production is being decentralized to what were ,,,-",,,,... �. .......
. •.
.I. •., ... ... .�L
perip heral regions beyond the borders of the traditional industria.l co untries . This process i s accompanied by a growing heterogeneity in the social conditions of material production and the reproquctio n o f labour-power, that i s , by international decentralization and social .
diversification of material production and reproduction .
We stress this particular aspect o f the current development of the capitalist world-economy, first , because it should be o bvious to even the most superficial observer , and, second , because such a pattern o f geographical decentralization and social diversification i n phases o f decelerated capitalist growth h a s some notable parallels i n the h istory . of capitalism . In particular, we refer to the installation o f a specific type of rural,.;,industrial commodity production in parts of Europe prior t o the Industrial Revolution (aimed at interregi onal and even world markets ) , and the demotion of England from its position of ' workshop of the world ' through the industrial-capitalist development of some western European countries and the US in the last quarter o f the nine teenth century . Naturally, any explanatory model of present-day . capitalist development which selects this particular .aspect as its starting-point must als o be able to account for and explain the other characteristic features o f contemporary development .
3 The majority o f current approaches to the present development o f the capitalist world-economy are not particularly convincing . This' applies especially to single-factor explanations, developed in response to super ficially observable changes. For example: references to the breakdown of the Bretton Woods Agreement and the switch to free-floating
parities , to the erosion o f the world economic dominance and political hegemony of the US, to alleged ' excessive ' increases in labour-costs in the industrial countries , to the shortfall in investment , with the bulk o f investment directed at rationalization rather than expansion , t o an alleged lack o f so-called basic technical innovations - all these quite accurately highlight s ome symptoms of .change . Ho wever, they share the common feature of lacking any fundamental explanatory power . Other attempts seek to restrict the globally observable deceleration in accumulation since the end o f the 1 960s and the beginning of the 1 970s to the recession years of 1 974-75 , and base their explanations on the 1973- 74 'oil crisis ' and its immediate aftermath (regional-sectoral shift
56
TRANSFORMING THE WORLD-ECONOMY?
and temporary fall in world effective demand , temporary difficulties i n adjusting production structures to changed price and demand . struc tures , etc.) . In view of the actual chronology of the events and changes revealed in our indicators , in particular changes in rates of growth , such attempts at explanation are clearly unsatisfactory. Although the ' oil/energy crisis' (in itself a result of two decades of unprecedented capitalist growth fuelled by cheap oil) undoubtedly magnified a number of difficulties in a phase in which world accunlulation had begun to slow down anyway for other, independent reasons , it also made a not unwelcome contribution to improving valorization in the energy economy as a whole (possibly at the expense of other sectors) , and in "" many countries may have facilitated a redistribution of income t o capital under the guise of energy policy. Other studies have set themselves the aim of empirically determining the crelocation potential ' of industrial branches. For example, correla tions are established between the physical capital and amount invested in training per employee, and the international competitiveness of industrial countries in selected branches (an approach pursued by the Institut fur Weltwirtschaft , Kiel) . Alternatively, survey techniques applied to firms are used to weight the relevance of a number of pre-selected motives for undertaking the relocation of production (e.g. Ifo-Institut, Munich) . Although such stuc;lies are a first step toward describing the phenomena in question, they suffer from the limited number of factors admitted or considered as possible causal determinants , neglecting , for example, the central role played by the decomposition of manufacturing processes into a set of sub operations . Political factors ('the climate of investment' ) are either ignored as much as is feasible, or made unrecognizable by being cast into pseudo-obj ective formulations . Motives for relocation are pre sented as independent variables instead of being analyzed as the combined result of the imperatives of capital accumulation .
4 In contrast to these inadequate, partial analyses (which nonetheless do acknowledge the existence of some structural changes in the world economy requiring explanation) , attempts at explanation within the framework of traditional theories ofdevelopment (e. g . stages theory of economic growth , modernization theory, dependency theory) offer a more comprehensive explanatory perspective. However , it is no longer a matter for dispute that stages theories and theories of modernization have been shown to have failed in their analysis of the earlier phases of capitalist development . Their funda mental conception of an unambiguous path of development which all societies or nations necessarily follow at different stages , or will follow, on their way to becoming a modern industrial society, and thence to
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'post-industrial society' , automatically excludes any c�nsideration o f . the ess ential difference i n the development of the so-called 'developing countries � ('underdevelopment ') as a function of the subordinate inte gration of these countries into the metropolitan or global process o f accumulation. N o alternative paths o f development are envisaged, and the only explanation offered for changes in the structure of the interna tional division of labour and the initiation of 'modernization' is that o f th e effects o f nlerely contingent or exogenous factors . Dependency theories arose out of a critique of stages and moderniza tion theories , and, correctly, both stress and demonstrate the polar unit y of 'development and underdevelopment ' as fundamental ele ments within capitalism . In addition, however , dependency theories also embrace the politically significant conception that the unity of 'development and underdevelopment' relates primarily to the comple mentary development of industrial and developing countries, and further propose as an absolute tenet that this duality constitutes an inescapable fate which is constantly reproduced in the course of the global development of capitalism, albeit 'at an ever-higher level ' : the global division of labour as determined by capitalism constantly (re-) produces the subordination of dependent underdeveloped countries which, first, experience a systematic transfer of resources to the benefit of the centre (migration, 'brain drain' , unequal exchange of quantities of labour , energy, protein, pollution, etc .), and, second, and more important , a systematic distortion of what Play have been autonomous development . In fact , it is even suggested that once any country has been assigned this peripheral status it will retain it as long as it remains integrated into the capitalist world-system . The conclusion that the developing countries are doomed to inesca pable and permanent marginalization (within the framework of world capitalism) can be questioned both theoretically and empirically. As we will s how, the likelihood that certain foreseeable tendencies within the capitalist world-system could transform some present developing coun tries into industrial-capitalist societies, with a corresponding model of accumulation, can no longer be merely dismissed out of hand. 5 We cannot claim to offer a full exposition of current theories ai'med at interpreting and explaining the present development of the capitalist world-economy here , nor claim to provide a fully adequate basis to undertake a critique of them . Our basically negative stance toward them is intended primarily to encourage the skeptical reader to acknow ledge the need for a theory of accumulation on a world scale (more pre cisely: a theory of the long-term uneven and unequal development of the accumulation of capital on a world scale), even though such a theory still has to be synthesized from a number of dispersed fragments .
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World history over the last five hundred years is dominated by the struggle for or against the imperatives of capital accumulation. on a world scale. This struggle is not only about the appropriation of a surplus-product which has already been produced , but centres j ust as . much on the question of the size of the surplus-product and conditions for production and reproduction in general . Whilst the totalizing ten dency of capital-accumulation and its agents constantly seeks to sub ordinate and transform the historically inherited complex o f forms of life and work to the purposes of productive activity (Le . activity which creates surplus-value and maximum profit) , there is at the same time a struggle to extricate traditional forms from the grasp of capital or t o steer social development along paths other than those directed b y capital (such a s efficient production of exchange-values, rather than use-values; separation of mental and manual labour; control of the whole of life , including ' leisure' and reproductive behaviour) . Taking this perspective of the struggle around accumulation as the motor of capitalist development, it is possible to identify a number of crucial moments within the historical development of capitalism - listed below - without any full historical or logical exposition: 1 The development of a specific global division of labour as a fundamental instrument for the production and appropriation of surplus-value - i . e . depending on the capacity or willingness of the producing classes to resist or collaborate, a combination of forms of exploitation of different types of labour for different constituents of the global capitalist process in different regions . In this process industrial-capitalist wage-labour with its seemingly superior poten tialfor increases in labour productivity, for political containment of the working class, and, at times, for increases in mass consumption plays a dominant role. 2 The capacity or willingness of groups, strata, or classes to resist the dictates of capital or collaborate with them . Examples are: the resis tance of non-capitalist strata t o the destruction of their traditional economic and social order, or conversely, their willingness to adapt; the tendency of the organized ' old ' work-force in the centres of capi talist production to conclude a ' social pact' with their 'social partners ' , instead of waging a political struggle against the bases of the capitalist system; the self-organization of the ' new·' wage-labour classes and other ' socially marginal groups ' to achieve a form of reproduction as independent as possible from capital, whether this be in the phase of the origins of industrial capitalism, or later in the case of groups suffering discrimination (ethnic minorities , youth, women, etc . ) . 3 The competition for valorization between branches and competition between firms in the same branch , fought out either in the form o f (wage) competition for the best workers and/or in the form o f increases in productivity with results such as : centralization and
.
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concentration of capital; growth of huge transnational concerns , which in some cases monopolize whole branches and dominate entire countries; the only seemingly inexplicable resistance by agricultural and industrial family enterprises in some sectors of commodity production . 4 The rise and fall of various forms of the capitalist · state which in different ways create and maintain the pre-conditionsfor accumula tion (both the general conditions, such as guaranteeing private pro perty and obstructing the self-organization of the working class, the institutionalization of a model o f accumulation which may vary from time to time, and the corresponding necessary provision o f specific services for private-capitalist production, and the reproduc tion of labour-power). This process culminates on one hand in the liberal-bourgeois state, and o n the other in forms of colonial administration. Or, on one hand , the social-democratic welfare state (with high degree of commercialization of the sphere of reproduction high wages) , and , on the other, the repressive dictatorships of developing countries (non-capitalist subsidy for the reproduction o f labour-power low wages), depending o n the functions 'which dif ferent territories can or must exercise in a specific phase of capitalist development for the global process of accumulation, and the power relations within local or national class conflict . 5 Conflicts, including inter-imperialist war, between economically advanced countries for hegemony in the capitalist world-system, which permit a country to impose a model of world-wide capital accumulation, including its corresponding global division of labour - the optimal one for the interests of its ruling class, and maybe also apparently acceptable for sections of its working class (Holland, England, US) . 6 The resistance of dependent countries and their populations against their subordination to the exigencies of a process of accumulation, dominated by a few ' countries, and its local representatives and beneficiaries. 7 As the product and conjunction ofsuch moments, short-, medium-, and long-term cycles, fluctuations and trends of accumulation, including crises. To show how all of these moments are specifically linked together as different expressions of the struggle around accumulation is the tas k of a theory of accumulation on a world scale which is now b eginning to crystallize in a rudimentary form , and which we seek to present here in a slightly more consistent form . =
=
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II 6 The accumulation of capital occurs within a variety of forms of material production and their corresponding forms for the reproduc tion of labour-power. Initially, capital usually uses these varying forms as it first finds them , only later adapting them as fully as possible t o match its specific requirements, given the limits set b y the resistance o r collaboration of those populations concerned . We indicate three such typical forms below , together with the use which capital has made o f them : l'
The subsistence economy of primitive ' tribes or clans, lacking both obligations to pay tribute and links to markets. Such structures are usually self-sufficient units of production and reproduction . Any surpluses over and above what is required for subsistence are 'unproductively consumed ' in festivals or holidays , or alternatively, if-the productivity of the land permits it, translated into population growth and thus denied the control o f any potential ruling class . Apart from constituting the target of a progres sive critique ( 'the idiocy of rural life ' , 'general mediocrity' , etc. ) such ' primitive' self-sufficient economies are also forced to accept the inexorable verdict of both the old and modern fanatical advocates o f surplus-production . As far a s capital i s concerned , their self-suffi ciency renders them totally useless; however , eventually the day o f their 'civilization ' or ' modernization' arrives . They are destroyed o r dispersed s o that accumulation can proceed unhindered or , better still, restructured to make a positive contribution to accumulation . Extermination or enslavement , expropriation of land, exaction o f tribute, 'and forced or peaceful integration into the patterns o f com modity-producing market societies by missionaries , traders , devel opment proj ects , or migratory labour (often forced through the need to pay money taxes) are but some o f the methods of civilization e mployed by capital .
2 The family-economy (such as the peasant economy) within a larger community, with obligations to pay tribute and links to markets. Families (households) are not self-contained units of production and reproduction and are compelled to produce and surrender a surplus product on a regular basis . In addition , they frequently constitute a flexible reservoir of labour-power for the larger social unit , either as sites for the production and supply of additional fresh workers , or as sites for the absorption and care of workers who are tem porarily surplus to requirements or no longer able to work . A large number of variants can be distinguished . For example , in feudal or
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tribute-paying modes o f production the means o f subsistence (pri marily land) are put at the disposal of personally dependent peasant families , subj ect to revocation, in return for the payment of a tribute, in labour or kind or money, to the ruling class or state. The surplus-product can enter the circuit of capital via trade; rising external demand in conjunction with the appropriate powers of enforcement by the feudal lords or state can lead to a 'second serfdom ' in which families are left with a piece of land barely able to provide subsistence in return for a high labour-rent . Another variant is non-capitalist commodity production through formally indepen dent agricultural or industrial family enterprises owning their own means o f production ; such enterprises can often only survive by adopting a long working-day, a high intensity of labour, the inclu sion of all members of the family in labour, a very low remuneration to employees who are not family members (in some instances) , and, finally , the abandonment o f any concept of commercial profit. The more they are forced to buy machinery and artificial fertilizers or introduce greater specialization to boost production and produc tivity (for example, to pay off money-obligations which arise through bourgeois agrarian reform , to compensate for a fall in the price of their products caused by the intervention of parasitic merchants or competition from the industrial-capitalist sector, or to be able to retain potential migrant workers by offering incentives) , the more those mechanisms which deprive families of their surplus product intensify and multiply , and the greater the danger that higher costs will not be covered by higher output or yields . Although in many cases such enterprises were already in reality subj ect to the terms dictated by the outside world of capital, the loss of the families ' means of production (principallyJand) signals the final and formal surrender of their autonomy . 3 Industrial-capitalist wage-labour in material produ.ction, with the reproduction of labour-po wer in the proletarian nuclear familyIn contrast to the two forms noted above, the system of 'wage slavery' , like the slave-economy proper, is characterized by the extensive separation of the spheres of production and reproduction (however, the wage-relation is much the more efficient as far as the needs of contemporary accumulation are concerned) . In its most extreme form , the family merely exercises the mininlunl of the labour of reproduction (bringing up children , physical regeneration of labour-power) . Whether this takes place is determined primarily by the requirements of capitalist accumulation, and secondarily by o ffi cial policy on the family (L e. population and 'manpower ' policy); the burden of such labour falls overwhelmingly on women . Again, in its most extreme form , material production, including the produc tion of those goods and services required for the reproduction o f
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labour�power (food , consumer durables , clothing, ho.using, trans port, education , nurseries , hospitals , old-peoples ' homes , commodi ties produced by the leisure industry) , is removed as much as possible from the sphere of non-capitalist self-production (e.g. in the family) and either directly or indirectly (via the state) placed under indus trial-capitalist controL In general, however , the division of labour between industrial-capitalist wage-labour and the proletarian nuclear family is a flexible one and not restricted to this most extreme form. As historical experience has shown , out of the many forms of pro duction and reproduction adapted and combined by capital, the latter (3) has, in the long-term, played the most dynamic and dominantrole in the global process of accumulation, even though it may not have been quantitatively the most widespread. Why is this so? As far as the valorization of capital is concerned , there is a high social premium within capitalism on the development of the productive forces as a means (a) of exploiting non-capitalist modes of life and work , and , if necessary, displacing them; (b) of plundering nature; and (c) o f making profits and super-profits i n inter-capitalist competition. I t will be clear that one factor in the development of the productive forces is the availability of an easily controlled, regionally mobile , occupa tionally flexible and industrious work-force - a condition apparently most effectively fulfilled so far through the association between indus trial-capitalist wage-labour and the proletarian nuclear family : eco nomic necessity, hierarchical authority-structures , and (sometimes) material incentives mean that free wage-labourers are forced or induced to expand their labour-power to an almost unlimited extent , especially where labour is in excess supply and trade unions are weak . In addition , under certain circumstances , privileged sections of the working class can develop a form of truncated class consciousness ('reformism ' ) in which the lack of a recognition of fundamental class antagonisms ('the class interests of capitalists arid workers may differ but are not neces sarily opposed ') leads to a systematic interest in the perpetuation of the system ; at the s ame time, such a constellation of forces also produces an increase in the surplus-product (the cake, the growth of which is meant to guarantee larger slices for the working class) . Furthermore, in indus trial capitalism, the concentration of the means of production facil itates the introduction of machinery and the factory-system , the systematic application of science and technology of ' western ' origin , and so-called ' scientific management' - all means of depriving workers of control over the production process once they have been divested o f ownership o f the means o f production o r instruments o f labour , and forcing them into a higher intensity and productivity of labour . By contrast, in other modes of production, surplus-labour is usually a function of extra-economic coercion, only sustainable in the face of the
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p as sive resistance of the direct producers at a high , and often prohibi , dve , cost . Furthermore, capital can exploit the need Jor human warmth, together with the family's continuation as a bulwark of patri archal dominanc�, to produce a mechanism within which children can be raised, the desired ideological values and discipline inculcated ('civil ization ') and labour-power psychically and em otionally restored , which is , as yet, unrivalled for cheapness and efficiency. In addition, the family also serves as a reservoir of labour-power and as a buffer between factory-labour and open unemployment (discernible in the large medium-term fluctuations in the participation rate of married women) : The link between industrial-capitalist wage-labour and the ,prole tarian nuclear family also possesses a number of advantageous features as far as the realization of surplus-value is concerned . When necessary, the means for the reproduction of labour-power , and under certain cir cumstances the means for satisfying needs which go beyond this, can b� extensively transformed i'nto commodities and multiplied almost without limit; this allows capital to extend massively its internal market without totally impairing the possibility o f switching back again to an increasing share of unpaid house-work if overall conditions of accumu lation require it (this is in marked contrast with families in the form of loose associations of j uridically and. economically equal partners) . 7 Capitalist development over the last five hundred years has been the history of the changing forms of the division of labour between the specifically industrial-capitalist and other forms of production and reproduction which are available for the accumulation process of capital. Thesefortns of the division of labour are themselves marked by the struggle over accumulation . In particular , the basis for the history of the international division of labour, as one important moment in the process of accumulation on a world scale, is the characteristic, region ally differentiated development of the social contexts within which labour-power of each type originates . Apart from the fact that since the October Revolution one-third of humanity has been removed from the direct sphere of the rule of capital, probably the most obvious product of the preceding history of the international division of labour is the divergence between the industrial countries and the developing coun tries, which is the product of the optimal combination and adaptation of the various forms of production and reproduction by capital, within the limits of resistance and collaboration set by those affected . It is, in fact , the product of the precarious symbiosis with, naked despoliation of, and imperial management of these various forms (including the pro ductive forces of nature) . The central differences between the industrial countries and the developing countries are to be found in the model of
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accumulation which is specific to each within global accumulation , and, related to that , in the specific nlanner in which they recruit and reproduce labour-power . The first reasonably clearly delineable form of a world division o f labour which points toward and/or can be attributed to capitalism was the result of attempts by the agents of decentralized western European feudal society to overcome crises , which, although · differing from region to region, could be traced back to the tendency for ground rents and productivity to fall with periodIc overpopulation. Faced with regionally varying resistance, and in mutual competition, these agents sought to expand and extend commodity production geographically in ways which were still essentially feudal . However , the almost inevitable consequence was the release of elements capable of establishing the foundations for a world-wide process of capitalist development . The key moments in this process include: geographical expansion , the estab lishment of the ' old ' colonial system based mainly on plunder and ' monopoly, the unfolding of commercial and finance capital within the pores of late-feudal society on the basis of long-distance trade in luxury goo ds and some raw materials together with the organization of large scale credit, the beginnings of the economic decline of the Mediterra nean countries and large parts of central Europe, the complementary rise of the Netherlands and England, and export-oriented grain produc 'lion based on the 'second serfdom' in eastern Europe . However , the factors which were to prove the most decisive for later developments were the commercialization of agriculture, the transformation of land into negotiable private property, and the associated first steps in the proletarianization of the rural population in some areas of western Europe. The destruction of the bases of independent agricultural subsistence production through primitive and primary accumulation/exploitaiton and the commercialization of the land constituted the prelude to the centuries-long preparatory phase of industrial capitalism in western Europe, characterized by capital ' s attempts to subsume to itself reluc tant and recalcitrant labour-power . Initially tied to feudal relations o f dependence i n the small-peasant family-economy and i n the guilds , and subj ect to varying degrees of uncertainty of existence, these pro ducers were however also protected from the direct incursions o f capital . Capital, in the form o f commercial capital and finance capital at the limits of the possibilities of its development within late-feudal society ('crisis of the seventeenth century ' ) , was forced to adopt the institutional innovation of a development of. trade and production in mass consumer goods for the inter-regional and indeed world-market , which alone had sufficient capacity to absorb such an output . In order to break the resistance of the guilds, the traditional institutional context for industrial conlmodity production, to their subordination to the imperatives of capitalist production , capital had to resort to the
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integration and devel()pment of dispersed rural industry. As the pro letarianization of the rural population developed , this increasingly becanle the material basis for rural existence and probably also brought about a change in the pattern of fertility . By its very nature, dispersed rural industry did not allow any decisive increases in labour productivity; as a consequence , increases in production could only be achieved by extending the area of those regions engaged in domestic industrial production ('extensive accumulation ' ) . This also corresponded with the transition from the ' old' to the 'new' colonial systenl marked by the . switch to the production of agricultural and mineral raw materials in conjunction . with a conscious management of labour-power (for example , the sugar plantation economy of the West Indies based on the importation of African slaves one link in the Atlantic triangular trade) and by the suppression of autonomous commercial or industrial development in the colonies , either through direct force, or through the forces of the market . This period also coincided with the gradual replacement of Holland by England as the hegemonial power in the emerging capitalist world-system . The victory, or consolidation , of the English Revolution meant that the possibility of world capitalist development became politically ratified and irreversibly secured . . A sufficiently advanced degree of proletarianization of the direct producers and commercialization of material production leading to the creation of a growing internal market , the vast increase in the possibili ties for selling goods on the world market , and a state prepared to give virtually unconditional support to the promotion of capitalist produc tion facilitated a · further institutional innovation in the shape of England' s Industrial Revolution; this created the preconditions on which capital could now finally undertake the real subsunlption of labour-power . With the arrival of the characteristic relation of domina tion over industrial-capitalist free labour-power in the factory system , metho ds for raising productivity became the characteristic means for the valorization of capital and the expansion of production - without other (extensive) forms of commodity production ceasing to function as a necessary complement to industrial-capitalist production (' inten sive accumulation'). Capital 's realization that an excessively long working day made output decline , together with the increasing pressure of an organized working class, led to some effective legal restrictions on the production of absolute surplus-value . This in turn spurred on the development of the productive forces in order to produce relative surplus-value, a development usually linked with a higher intensity of work and increased control of labour by capital . Among the consequences of the phase of the so-called Great Depres sion (1 873-96) in Europe were the rise of new industrial-capitalist socie ties in Europe and elsewhere , the termination of England' s period of indisputable hegemony, the rapid expansion of capital export abroad , the extension of a global network of shipping and rail connections (with
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their associated infra-structure) , and, finally, a wave of transatlantic emigration of the millions made 'superfluous ' by accumulation in Europe . The development of the 'white' settler colonies , which served to absorb the emigrants, presupposed an 'open frontier ' - i . e . the 'pacification' and virtual elimination of the indigenous population. Increasing imports of agricultural produce to western Europe lowered the value of labour-power, at the cost of a serious crisis in western European agriculture, whilst at the same time' real wages slowly began to rise. In Japan , which shared a feudal past with Europe, the resolute adoption of certain key elements from capitalism set the nature of the policy of survival in the face of the capitalist threat . The process of the degradation of the developing countries to the status of complementary instruments for metropolitan accumulation was finally accomplished . All industrial countries experienced the comprehensive development of the specifically capitalist mode of production to a relatively high degree, and , with it, the wage-labour/capital relation together with the organizations of the working class. This implied and was accompanied by the large-scale and progressive destruction of other modes of pro duction, although under certain circumstances it also led to the reten tion, transformation, or transformed revival of those modes . For example, some modes may have proved particularly resilient in the face of the rising capitalist mode, or they may have been consciously main tained to secure political stability (such as peasant or artisanal family enterprises); alternatively, they may have been granted a stay of execu tion if their attempts to maintain their particular patterns of living and working complemented the valorization of capital - until they finally fell victim to the increasing efficiency of industrial-capitalist pro duction (for example , rural industry in many places , the handloom weavers, sweat shops, etc.) . Workers . themselves were predominantly brought up in the proleta:dan nuclear family and held ready for use by capital , with women taking on the dual role of unpaid house wives/mothers in the family, and highly exploited wage-workers in capitalist production outside the home. 8 Without abandoning the occasional necessity of absorbing cheap labour-power released by the disintegration of non-capitalist modes of production in the industrial and the developing countries , capital acquired the capacity to regulate the basis of its supply of labour-power to an extensively autononlOUS extent ; any exhaustion of the reserve army through the industrial cycle, or any undue growth in the degree of control exercised by workers over capital ' s power to preside over an atomized work-force, could be met by measures such as mechanization and ' rationalization' intended to reduce the numbers of workers needed and to lower the costs of employing them.
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Each of the initial years of the boom phases in the world-economy . al so signify points at which capital has succeeded in politically neutral izing the working class in the centres of capitalist production , following a prec eding phase of depression and subsequent restructuring; this has either taken the form of outright defeat through 'class struggle from above ' , or , under more developed conditions , through the negotiation o f a ' social pact' between capital and the working class. in which the funda mentals of the capitalist economic and social system are put beyond discussion : 1 793 Conservative reaction i n England saw workers in both factory and domestic industry temporarily ' deafened by the din of pro duction' ; in France , setbacks to the working class included the collapse of the demand for a guaranteed minimum living standard, legislation against the right of workers to combine (loi Le Chapelier) , abolition of feudal obligation to the benefit o f peasants , and hence the removal from the political struggle o f the workers' most important potential allies . 1848 The defeat of the democratic revolutions accomplished the exorcism of the ' spirit of communism' which circulated through Europe prior to 1 848 and which threatened to abolish capitalism before it had scarcely put down roots. 1896 Concentration and centralization had reduced competition between individual capitals and hence removed a certain degree of protection from the working class ; the slow rise in real wages led some sections of the working class in western Europe to begin orienting themselves toward an accommodation with the capita list system . 1948 Early phases of industrial-capitalist development were charac terized by the almost unlimited drive , not only of individual capital , but also of aggregate capital, to keep labour costs as low as possible in the interest of maximum profit . The consequence of this policy was a realization-crisis based on the inadequate pur chasing power of the mass of the population; in the 1 920s and 1 930s such a crisis even threatened the existence of the capitalist system itself. Once this most serious economic and political crisis in the history of capitalism had been terminated by the war economy, high unemployment , world economic crisis , obstruc tion of 'economic democracy' , ' moderation' and 'trade union responsibility' (at the expense of the mass of the population) , a new model of social partnership in the industrial countries was developed with the intention of avoiding the previous threatening defects in the system through planned increases in mass consump tion . In addition, ideological competition with the socialist countries was to be waged through the economic satisfaction and political integration of the organized core of the ' old' working class .
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9 The m odel of accum ulation which sustained the unprecedented post war boom in the years after 1 948 was a product of US hegemony. After an initial period , the industrial countries pursued a policy of wage increases linked to increases in productivity which ensured that the aggregate share of wages in national income did not 'become too high or too low' (Giovanni Arrighi) , thus avoiding both the Scylla of crises of valorization and, in particular, the Charybdis of crises of realiza tion. s Moreover , wage increases also meant 'payment by results ' , con serving or widening wage differentials in order to foster the politically desired ' aspirant ' mentality , The raising of· mass-consumption based on a �social pacr between Isocial partners ' - i . e . the extension of the circle of needs , all of which however can only be satisfied in commodity-form (which corresponded to the overall demands of the system and increasingly also to the demands of the trade unions) - led to the creation of an internal market capable of apparently unlimited expansion (including the fast-growing 'leisure market ' , as shaped and cultivated in the interests of valoriza tion by its own branch of industry) . This in turn constituted an essential precondition for an enduring and , by some accounts, even self-perpe tuating process of capitalist industrialization . Of course, such an exten sion of mass-consumption should not be taken to imply that a growing 'wage basket ' in the traditional industrial countries contains, on average, more than is necessary for the reproduction of labour-power under the 'given ' circumstances (including unpaid housework by women) . Under current circumstances in the industrial countries , expenditures on an ample diet , expensive rented housing or owner occupation, consumer durables , cars , lengthy education, long holi days , social insurance, etc . , on the one hand the result of the ' social contract ' and hence in theory associated with rising productivity rather than the necessary costs of reproduction, are in fact to a large extent a part of these necessary costs for a work-force which is expected to be highly qualified and regionally mobile , and subject to intense and psy chically stressful work . As far as individual workers are concerned , it becomes more and more difficult to avoid meeting these expenses in money-form as the opportunities for satisfying these needs in non commodity form contract both materially and psychically, It might appear then as if the specific link between the specifically capitalist mode of production and other forms of production and reproduction, in particular domestic labour, in conjunction. with commensurate state activities after the Second World War , has enabled a process of autonomous 'immanent ' extended reproduction of capital and labour-power to take place, in both technical and economic terms . This type of reproduction is not systematically reliant on periodic or permanent transfers from the Third World (understood here in its narrow geographical sense) , although such transfers , including migrant
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workers (Gastarbeiter), may in fact continue. Increasing mass incomes (even if they were very much simply a neces s ary consequence of the growing capitalization of the sphere of repro ductio n and the increased marketing of leisure time) , a tendency toward full -employment , and an extension of the 'welfare state ' made this model attractive , especially to the hard trade-unionized core of the 'old' working class . ' This is our state! We won't destroy it ! ' The political . expression o f this was the hegemony of reformist workers' parties in the industrial countries (social-democratic welfare states) ; the fact that external control and pressure for greater efficiency at work, in both factory and office, in the family, in school, and during leisure percep. tibly increased (compare the increase in premature retirement, drug dependency illnesses , etc.) was accepted in return for the promise of the possibility of further advance in reform policies or in return for greater monetary reward. However, unlike the organized working class, capital could in prin ciple discard this model should changed circumstances require it. The long period of accelerated and increasingly ' autocentric' accumulation which began . at the end o f the 1 940s led, around the mid- 1 960s , to a perceptible reduction in the size of the industrial reserve army in most capitalist industrial countries (euphemistically known as ' full-employment' ) . The point at which this state was reached was modified , onthe one hand , by the dissolution of small-scale agriculture and an increase in the participation rate of women, together with the forced addition of labour-power from abroad up to their 'natural ' or political limits , and , on the other hand , by the extension of the tertiary sector, reductions in working time, and other similar measures . In such a situation, not untypical in the history of capitalism, a temporary reduction in investment (consider the 'investment gap' since 1 970! ) together with an increase in the share o f investment devoted to rationa lization was the tried and classic (and, as it seemed, the only) method . for bringing the supply of available labour-po wer, and the terms on which it was supplied, to a level andform acceptable to the demands of valorization. This time, ho wever, capital was not completely confined to this method o f temporarily reducing domestic investment and increasing the share devoted to rationalization - fortunately, so to speak, since the creation of mass unemployment as an instrument for directing and disciplining the working class in the interests of accumulation requires greater ideological camouflage in a ' welfare state' . This time capital could rely on Cobjective ' causes (supposedly or even effectively lying outside capitars and the state 's control or influence) to enforce partial relocation ofproduction to the Third World. It is at this point that we have to recall the developing countries ' history in order to explain why partial relocation was not only desirable or even urgent but at the same time possible as well .
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10 The social structures which today's developing countries had · histor ically inherited proved either defenseless or eventually outnlatched when pitched against the built-in expansionary aggression of western European late feudalism/early capitalism. The antithesis between almost stagnant productive forces (sometimes at a high level) and the , stimulation of rapid development in strategically crucial and rewarding areas s uch as 'guns and sails ' (gunnery and seasmanship) played an important, if not decisive role. The developing countries lay open to their assigned role as desirable or necessary complements for the main tenance of feudalism or the development o f capitalism: L e . as reservoir s o f cheap labour (ranging from slaves t o modern immigrant workers) , a s markets for industrial products (local producers were eliminated a s competitors either by open force, or - more civilized - through the hidden forces of the market) , as suppliers of (in the short-term) non substitutable or very cheap raw materials, and as sites for polluting industries . This subordinate subsumption of the developing countries to the changing demands of the metropoles and accumulation on a world scale is the basic determinant of the development of the specijical/y capitalist mode of production in the Third World, in particular the snairs pace at which this ,development proceeds - the result of both local conditions and the mechanisms of global accumulation. These local conditions include , i n particular, the economic, social, and cultural resistance of non-capitalist ' sectors ' and their members to the destruction of their traditional ways of life and forms of labour; in the long term this resistance is aided by the economic tenacity of these ' sectors' , based on the intense exploitation of their workers, including where necessary ' self-exploitation' by the owners of the means of pro duction (who as landowners , petit-bourgeois , or at another level benefi ciaries of patriarchal relations , have the greatest interest in such resistance) . On the other hand , the gain which has been repeatedly derived, and is still drawn , from the adaptive use, rather than destruc- . tion , of these ' sectors' under suitable circumstances by both the local ruling class and capital is large enough to explain the raison d'etre of these ' sectors' in the global process of accumulation and the conscious efforts directed at their conservation. Capital makes use of the labour-power of the developing countries in three basic forms . First , capital uses direct wage-:labour in industria/ capitalist production . Secondly, capital uses labour in non-capitalist commodity production , principally in the family-economy. Both the duration and extent of this form of production are deternlined by the requirements of valorization as an alternative to the use of commodities produced in the industrial-capitalist sector as inputs for capitalist pro duction (examples are ground-nut production by small-peasant farms ,
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which is marketed by agribusiness and sewing and embroidery by _home-workers or in 's weat-shops on contract for exporting firms or , foreign retailers) . Finally, capital exploits the 'labour of reproduction , i .;e . the labour of raising and looking after workers who will later be us ed by capital, either directly in industrial-capitalist production or indirectly in the non-capitalist commodity-production of elements of variable and constant capital. This latter point requires expansion. The 'wages which wage-workers receive in developing countries are often only sufficient to cover the monetary costs of the daily restoration of labour-power during the ·period of actual employment, but not those: expenses required for bringing up a new generation or for care in ' old age' and invalidity, once workers have been thoroughly drained by labour in the capitalist sector . These have to be borne by the so-called 'backward ' (traditional, informal , etc. ) sectors . And even those monetary costs required for the , day-to-day restoration o f labour-power during actual employment by capital are reduced by the use of non-capitalist sectors to a degree far exceeding that found in the industrialized countries - either in the form of unpaid services which the wage-worker's extended family provides, or has to provide, from the small surplus produced in non-capitalist production , or in the form of the cheapening of means of subsistence through having them produced in simple (non-capitalist) commodity production. For 'capital , what is important is that the reproduction of labour-po wer is subsidized externally to a much greater extent when it is located in a predominantly non-capitalist environment than is usual in the industrial countries (although it is still significant there), which con sequently allows the super-exploitation of labour-power . It is the pre sence o f such subsidies , and not the high rate of unemployment ana the 'law of supply and demand ' , which make low wages economically and socially possible in developing countries . Because of these low wages and because, up until the present , the specifically capitalist sector has only accounted for a narrow sector upon a broader base of non-capitalist modes of production, adapted and used by capital, the working-class in waged employment has by and large represented a cost-factor (valorization) and not, as in the industrial countries , at the same time a demand-factor (realization) in industrial-capitalist production . As a result one of the key precondi tions for an enduring or maybe even self-perpetuating process of the capitalist industrialization of the developing countries is absent , or at least appears to be so.
11 Taking the above outline of the present state achieved b y the differing social contexts within which labour-power originates in industrial and iIi developing countries , we can sort out some structural conditions for
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the current valorization of capital. These conditions represent on one hand the theoretically predictable and empirically verifiable outcome of the preceding unequal development of the capitalist world-system , and , on the other, those factors which in combination are likely to induce sonle nlovement in the international division of labour, as deter mined by capital . 1 On the world scale an almost inexhaustible reservoir of potential labour-power has come into existence, consisting of several hundred million people (compared with a labour-force of 300 million or so in agriculture, industry, and services of the industrial-capitalist coun tries) . The bulk of this reservoir lives in the developing countries (the result of the gradual, but by no means complete, disintegration and destruction of non-capitalist modes of production) and represents a mass of labour-power available for use by capital when required as a supplement either to the supply of labour-power in the traditional industrial countries , or to the additional potential located in the cen trally planned economies which it already taps through international sub-contracting. Despite the concrete differences which exist between developing countries , this reservoir has certain common features which determine how it is , or may be, used in the capitalist valorization process . The wages paid by capital in the industrial-capitalist sector (i) amount to around 1 0 010 to 20010 of those in the traditional indus trial countries (around the year 1 970 and later) . This may be even lower where capital contracts out to non-capitalist commodity producers and pays labour costs indirectly (as in modern domestic industry, cash crop farming, etc . ) . As stressed above, t�e possibility of such low wages is bound up with the existence of non-capitalist 'backward' sectors which function as breeding-grounds for fresh labour-power, as producers of cheap foo d-stuffs , and as ' refuges for the supernumerairies' . (ii) In the industrial-capitalist sector the working day (working week or year) is noticeably longer for the individual employee, and very substantially longer for the 'collective worker' than is the case in the traditional industrial countries , where collective agreements and labour legislation limit working hours . In the developing countries extensive shift working, night and holiday work , and very small amounts of time lost through sickness , holidays , maternity, lateness and absenteeism, and for training allow the working day to be greatly extended and permit highly profitable rates of capacity utilization . It may well be that th e same applies , and perhaps even more so, in the so-called ' backward ' sectors whenever they are directly used by capital or forced to compete with the industrial-capitalist sector . (iii) In view of the immense number of j ob-seekers , employers have enormous freedom to hire andfire (assisted by suitably flexibl e
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labour-legislation) . In particular , this allows a higher intensity of labour, since workers can be ' drained' more rapidly and then replaced by fresh workers . · (iv) I n many cases , the size o f available reservoir o f potential labour-power allows a selection of workers which is opti11Jalfor valorization, L e. according to age, sex, state of health, skill, discipline, etc. Favoured groups are women aged 1 5-22, at most 25 ('girls ' in management terminology) , who are paid even lower wage rates than male workers . (In many instances , despite its low remuneration, wage-labour may be welconled by these 'girls ' as an alternative to and a means of temporary escape from patriarchal forms of exploitation .) (v) Measured by the capitalist standards of the traditional indus trial countries , the level of occupationally specific training is usually very low (attributable in part to the 'brain drain' from the developing countries) . Among the exceptions are seam stresses , who at many locations constitute a group of workers which capital, or domestic commodity production, can turn to . fo r 'traditional' s kills . Requirements such as punctuality, sense of responsibility, cleanliness , and submissiveness are inculcated through both economic and extra-economic disciplinary mechanisms , such as instant dismissal on the slightest pretext, and the proscription o f effective trade union activity . In the long term , a suitably organized education system together with " the 'civilizing' effects o f wage-labour under conditions o f high unemployment will no doubt be able to adapt the skills and dis cipline o f the work-force to the imperatives of capital to an even greater extent than has already been achieved . Productivity in the world market oriented, industrial-capitalist (vi) sector , expressed as output per employee per hour (the result of the combination of work-organization, discipline, .capital equipment , etc . ) , compares very closely with levels in the traditional industrial countries for similar processes , and in some cases exceeds it . This comparison is based on processes which have actually been transferred to world market factories and are in operation; it would be impermissible to conclude from this that the same would apply without qualification to the ' old' import-substitution manufacturing industry (for the local protected market) . However, it is probable that comparable levels of productivity could be attained eventually in aU those processes requiring rapidly trained , semi-skilled workers . 2 The technologies and the organization of the labour-process for the purposes of decomposing complex production processes into elementary parts have been refined to a degree (or could .be so per fected) such that rapidly trained, s emi-skilled workers could carry out most of the fragmented routines which make up one entire
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production process. As the ' factory' or 'technical ' division of labour , this form appears to be conceptually distinct from the terri torial or international division of labour , or the division of labour between different modes of production . I n practice they are inse parable within the actual process of valorization. Apart fro m the fact that such a decomposition often represents a first step toward or is the precondition for mechanizatio n or automation , this form o f the division of labour h as three significant aspects . First , it permits an increase in the intensity and productivity o f labour (Adam Smith) � . Second, it cheapens production by allowing each fragmentary opera tion to be allocated to workers possessing the minimum level of skill necessary for each routine , meaning, as a rule , workers whose labo ur-power -is abu ndant and therefore easily available and very cheap (Charles B abbage) . And , third , it facilitates tighter control o f workers b y making once-necessary skilled workers n o longer indis pens able , thus placing a weapon in the hands of capital against 'tem peramental ' skilled workers , whose skills endow them with a degree of monopoly; moreover , this weapon is not blunted by the fact that other skilled workers may be temporarily needed elsewhere (Andrew Ure) . Considered in terms o f what is abstractly possible technically and organizationally, the fragnlentation of the production process can now b e taken s o far, if required, that the training period for indivi dual operations in processes which as a whole are very complex can , in many instances , be cut to a few days , a few weeks , or perhaps a few months (even in the running-in phase for a new product) . The -more the utilization of labour-power within the immediate process of pro duction in the developing countries appears as possible (and neces sary) under the concrete imperatives o f capital accumulation , the more the generally low level of occupationally specific skill possessed by workers in these countries \yill operate as one factor, among others , for the realization of these abstract possibilities and will in fact force technology and techniques of work organization in this direction. For example, the so-called electronic revolution may well enable great ' progres s ' to be made in the direction of increased auto mation at the same time reducing the level o f skill demanded of those : workers still employed in the industry . 6 These determinants o f the development and application of technology, which follow from the imperatives of capital accumulation , will no doubt be gladly over looked by those analysts who blithely extrapolate those tendencies which once , or allegedly once , characterized technical development in the traditional industrial countries and who now regard the trend
toward automation as the inevitable ' reply of the industrial countries ' , intended to counter or even reverse the trend toward relocation . 3 Techniques of transport, communication and data processing allow ,
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industrial 'production to be located and managed to an increasing , extent irrespective of geographical distance (containers , roll-on/roll off, air-freight , telex and other electronic equipment , etc . ) . Produc tivity has increased faster than average in these branches , the result of a quite correct assessment of the improved conditions for valori zation opened up by a geographical redistribution of capitalist production in other branches , a redistribution initially within and between the traditional industrial countries , and now (as an unintended consequence?) world-wide. 12 The three main points above emphasize those elements and changes in the contemporary structural conditions for the valorization of capital which, although not individually, in conjunction could bring about change in the international division of labour . On the assumption (dis cussed below) that what we have identified as essentially qualitative changes have now reached sufficient quantitative proportions , we can expect to see either the development of entirely new relations of interna tional competitiveness , or the significant broadening and intensifica tion of existing relations . Two factors are of central importance. First , a world-wide industrial reserve army has been created , along with a world marketfor labour-po wer. Although capitalism has always been characterized by enforced or voluntary migrations of workers, workers have usually been obliged for economic , social, and political reaso"n s to find jobs which match their skills in the vicinity of a fixed location . In contrast, capitalism is able to create j obs with specific skill-requirements either ' here or there' depending on the prevailing conditions for valorization. The changed constellation of structural conditions in the world-economy means that workers in the traditional industrial countries now have to compete for their j obs to an unprece dented extent not only with workers from other industrial countries, but also with workers from the developing countries, all of whom can be played off against each other by capital . Second, a world market for production sites is developing , in which the traditional industrial countries and the develop I ng countries are forced to compete against each other to retain or attract world market oriented manufacturing industry. Although capital uses and needs the state to fulfill a variety of functions, this does not necessarily mean it has to be reliant on one particular state. These changes in the structural conditions for valorization mean that in order to remain competitive, firms must take systematic account of the option of relocating production to sites with cheap , disciplined labor, not merely in other industrial countries or less developed regions: in their own countries , but to an increasing extent in developing countries ; firms must include such possibilities as a complement or
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alternative to other policies in making investment decisions . Rationa lization at traditional sites has been. and still is an indispensable instru ment in the valorization of capital ; what is now clear is that the policy of relocating parts of the production process to developing countries , as a complement to rationalization or integrated with it , will grow in importance . What is novel about such a world-wide reorganization of capitalist production is not that production processes are split into fragments so that the fragments can be distributed to sites and assigned to a specific type of labour-power in a way that the combination of a specific division o f production in part-operations , a specific distribution o f these operations t o particular sites , and their specific allocation to a certain type of labour-power ensures the optimal valorization of capital under the prevailing economic and political conditions . 7 What is new is that in contrast to preceding decades , if not centuries, o f capitalist development , the spectrum of alternative sites which can now be used i s expanding rapidly and at the same time being changed qualitatively. This spectrum now embraces not only sites in different industrial countries or different regions within one industrial country (in the final analysis with the subdivisions of the labour-force by age, sex, race, nationality, etc. ) , but to an increasing extent sites in a large number o f developing countries. This has meant an extreme process of diversifica tion in the social context within which labour-power for industrial-capi talist production is recruited. Without a detailed knowledge of the material on which corporate calculations are based, and without a glimpse into a company' s books , it is of course impossible to say precisely which product-innovation, o r which particular complex o f innovations of site, process , and type o f labour-force is the one dictated for any individual firm ; nor is it possible to specify the ways in which labour-power will be utilized at new sites , or at which new sites ; these options range from buying-in from domestic industry to the construction of a world market factory at a free production zone . Nevertheless , the information which is avail able is adequate, both qualitatively and sometimes in quite precise financial detail, to allow such calculations to be simulated. s The extra profits promised b y a world ..wide reorganization of capita list production in accordance with these new conditions for individual firms , and the universalization of this reorganization through the mechanism of competition, are sufficient to explain the possibility and reality of such a reorganization in a qualitative sense . For example, this perspective provides a plausible explanation for many of the indicators listed in the. introduction which showed the existence of a distinct turning-point in capitalist development especially changes in the international division of labour, at least as far as the general trend is concerned . Consider, for example, the doubling in the share of the developing countries in world exports of manufactured goods between . . _
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and 1 978 , an expression of the rapid growth in the competi .';"'T�'np�s of sites in the developing countries for world nlarket oriented manufacturing .9
However, the foregoing factors (explained in sections 1 0 to 1 2) are not in themselves sufficient to explain the timing of the phenomenon , L e . the specific and quite abrupt point in time at which the world- wide reorganization of capitalist production began, i. e. the end of the 1960s and the beginning of the 1970s. It is only in combination with our former analysis (sections 8 and 9) o f the developmental tendencies inherent in the post-war model of accumulation that an explanation o f th e timing o f the phenomenon i s possible . By the mid- 1 960s , two decades of unprecedented economic growth had led to a perceptible reduction in the size of the industrial reserve army in most capitalist industrial countries and to a perceptible strengthening in the bargaining position of the. trade unions . It is very doubtful whether in such a situation a tempora�y reduction in domestic investment, together with an increase in the share of investment devoted to rationalization, in isolation would have been a politically feasible means for bringing the supply of available labour-power, and the terms on which it was supplied , to a level and form acceptable to the demands of valorization . But the working of the post-war model o f accumulation with its two decades of productivity-linked wage increases in the industrial countries had also led to such a large gro wth in the differential between average industrial wages in the industrial coun tries and average industrial wages in the developing countries that, in conj unction with all the other structural conditions for the valodza tion of capital which had not changed so rapidly, a relocation of parts of the manufacturing and other activities o f the industrial countries to the developing countries became clearly economically feasible . For an increasing number of processes by the end of the 1 960s and the begin ning of the 1 970s the cost-advantages of industrial countries (infra structure, education and training of workers , political stability, proximity to suppliers and consumers, etc .) were no longer sufficient to compensate for the other types of cost advantages encountered in the developing countries (low wages, other working conditions favorable to valorization, adequate labour productivity, numerous government subsidies , etc . ) . I n other words: the model of social partnership based o n wage increases linked to productivity increases is n ot tenable over a long period of time as a model of (increasingly autocen tric) accumulation in the industrial countries, since what appear to be merely residual rela tions oj the industrial countries to their social en vironment, principally the developing countries, sooner or later serve, via the mechanisms of
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rationalization and relocation, to deprive this model of the central pre condition of its functioning, its self-sufficiency. Rationalization combined with relocation, which constitute the response to the new structural conditions for the valorization of capital, are now bringing abbut a falling trend in employment in the industrial countries through the world-wide reorganization of production . Because o f the relative decline i n the competitiveness o f capitalist production in the industrial countries and because ' what has been taken by the oil-sheikhs cannot be redistributed once more' , the social partners have tacitly agreed that in future the growth in wagesfor those still employed in the industrial countries will no longer be linked to pro ductivity but will be less, to an extent determined by what is �economi cally feasible ' . . Workers are assured that restructuring will contribute to making . those remaining j obs in the industrial countries ' more secure' ; reloca tion of production to low-wage countries allows firms to achieve an 'optimal mix' and hence secure that production renlaining in the indus trial country . ' Defensive rationalization' and ' economically feasible' wage increases in high-wage countries lower the share of wage costs in total production costs and hence lead to a reestablishment o f competi tiveness and profitability - 'today's profits are tomorrow' s invest ments and the day after tomorrow' s j obs ' (an extremely misleading piece of propaganda as long as profits continue to be invested in rationalization and/or relocation) . Finally, the energy crisis , t he product of two decades of incomparable economic growth fuelled by a flood of (excessively) cheap oil , is necessitating a fundamental restruc t uring of the economy and opening up new fields for investment . These expectations remain , however, as yet unfulfilled . The outcome of the various restructurings to date has been a reduction in the growth of effective demand in the industrial countries and world-wide - the ' slackened growth in mass incomes in the industrial countries has not yet been balanced by a corresponding increase in the developing countries . (including OPEC), or in any other way. This is the �central' cause of the ' falling trend in rates of growth in domestic product, industrial output, , and (with a lag) foreign trade observable in the industrial countries and to a lesser extent in the developing countries (�central' because it is the direct product of the conditions of the functioning of the post-war model of accumulation) .
III 14 It is not particularly difficult to predict that the world-wide reorgan . tion and decentralization oj capitalist production, accompanied
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tively lo w rat�s oj growth, will continue over the next Jew , as there is no sign yet that the structural conditions for the valori zatio n of cap�tal which underlie this development are likely to change in th . e foreseeable future. There is , for example, no discernible political force which is b oth willing and able to impose a drastic reduction in the international freedom of movement of commodities and capital, and which could therefore restore that self-sufficiency which is required as a precondi tion for a renewed policy of wage increases tied to productivity in the .industrial countries . The resistance of the organized working class in the industrial countries means that it is difficult to imagine a drastic deterioration taking place in wages and working conditions which would constitute the decisive element of a policy of austerity, although this resistance is being paid for in the form of relatively high and rising unemployment . On the other hand, the level of subsidy from the quan titativelSr still significant non-capitalist modes of production and the competition between developing countries on the world market for pro duction sites mean that a noticeable improvement in wages and working conditions in the developing countries is virtually impossible (always o n the assumption that the current social and economic structure remains essentially as it is) . Only a drastic deterioration in the industrial coun tries and/or a noticeable improvement in the developing countries would be sufficient to affect the balance of cost advantages between respective sites such that the advance of the world-wide reorganization and decentralization of capitalist production might be placed in doub t . Thus the principal factors which might necessitate a reappraisal of our original prognosis are not likely to be operating in the foreseeable future. Secondary factors might influence the speed , but not the fact or direction of this process . A number oj such secondary Jactors do act to Javor and accelerate reorganization: international organizations such as the World Bank, the IMF or UNIDO exercise a not inconsiderable role as . representatives of the general i nterests of world capital in the encouragement of this reorganization . The members of the bourgeoisie in the developing countries attempt to secure their local hegemony as brokers of capitalist world market oriented sub-industrialization through the creation of the preconditions for the exploitation of the human and natural resources of their countries (as much as this is possible in the face of internal resis tance) . (The reqUired means are removed from alternative uses which favour the interests of the maj ority; foreign credits are usually accom panied by strict conditions for use in the interests of world-wide capital accumulation rather than for programmes to increase local welfare; the resultant economic and social structure then represents a heavy mortgage for any future reform policies) . Governments and interest groups in those industrial countries, in particular the Federal Republic of Germany, whose position as technological leaders in conj unction
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with a corresponding structural change in their own economies appear to offer favourable conditions for the maintenance of their inter national competitiveness ('Modell Deutschland' , Le. monopoly rent through the supply of turnkey plant , export of blue-prints , etc . The corresponding appropriate economic policy finds a mass basis in those white and blue collar workers who see the chance for upward mobility and promotion and consequently advocate trade union 'moderation' in order to participate in the monetary gratifications of the system in the future , even though these might be less than previously, and possibly, of necessity, at the expense of their co-workers who may be rendered ' superfluous ' by structural change, rationalization, and relocation and/or who may not possess the . requisite amount of regional or occupational mobility) . Finally, even the state bureaucracies of the centrally planned economies have surreptitiously accomnlodated themselves to the world-wide reorganization of capital in the hope of stabilizing the status quo in their own countries and , where possible, of deriving some benefit from their position of relative strength (compared with the developing countries) through a selective 'and modest involvement in this development (see, for example, proj ects propounded through 'tripartite co-operation ' or industrial co-opera tion agreements involving transfers of technology and know-how) . Other secondary factors constrain and slo w down reorganization , such as the difficulty in creating the broad range of preconditions for capitalist production in developing countries outside of a few privileged sites (such as free production zones) as it were in the twinkling of an eye - preconditions such as labour discipline and skill, infrastructure , efficient administration, etc . and , in particular , a ' favourable climate of investment ' and ' political stability' . The resistance of organized workers in the industrial countries is expressed, for example, in protec tionist measures aimed at the excessive social disruptions following from unregulated structural change; mass unemployment on a scale comparable to that of the inter-war period is not politically practicable in the industrial countries . A deep feeling of insecurity has arisen in a number of camps about the way ahead , since it has beconle evident that capitalist growth can no longer be regarded as an attainable social stra tegy for the future .
15 What effects can be expected given that the general tendency toward world-wide reorganization and decentralization of capitalist produc tion makes further advances in the foreseeable future? As far as the developing countries are concerned , one thing is imme diately clear : measured in ternlS of the nunlbers of j obs created in the last ten to fifteen years in world market oriented production in the ' developing countries , this process simply does not possess the potent ·
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reduce unemployment or underemployment in the developing coun in whole or part, whatever the prevailing wages and conditions. "' ..... ''' a't''' c a . ..u , the unemployment created in this combined process of ratio nalization and relocation in the industrial countries is , in quantita tive t erms, by no nleans negligible when set against total employment in the industrial countries . A 'New International Economic Order' in . which this process plays a key role will not reduce the existing wide disparities in the material positions of the maj ority of the population in the industrial and developing countries . H owever , it is highly improbable that the relocation potential o f manufacturing industry (and in other ways of agribusiness , tourism, etc.) will be realized by all the developing countries in equal measure . 'Local ' , historically explicable peculiarities on the one hand , and cost advantages based on the regional concentration of relocated produc tion on the other, have led to the fact that at present a large proportion of world market oriented industry is concentrated in a small n umber of developing coun tries (the so-called threshold or newly industrializing countries , such as H ong Kong, Singapore, Taiwan, South Korea, Brazil, Mexico) . Compared with the standard of reference provi ded by the, industrial countries (or alternatively its converse in the maj ority of the developing countries) the possibilities for the massive subsidization of the valorization of capital by non-capitalist modes of production and reproduction has either ceased or will soon do so in these 'threshold ' countries . Industrial wages will of necessity have t o increase (or already have increased) in line with this development in order to guarantee the reproduction of labour-power on an aggregate social scale, with due regard for the contribution made by domestic labour and external labour-reserves (compare Singapore' s Malaysian hinterland) . It is therefore possible to conceive of two alternative paths of development for the developing countries within the framework of the capitalist world-system . Either the ensemble of relevant structural conditions for the valoriza tion of capital (in which wage-levels figure as only one, if important, element) will develop in such a way that industrial production remains competitive despite rising and possibly relatively high wages (compare Hong Kong and Singapore in relation to the Philippi n es) . These coun tries would then have the opportunity to undertake a progressive extension of their production since - in contrast to the case of import substitution industry where (with the possible exception of the most populous developing and OPEC countries) the limits to industrial expansion are swiftly encountered because of the limited local demand in peripheral capitalist countries - they will be faced with a relatively large market, namely the industrial countries in whose trade they can possibly secure a growing share. A progressive capitalization and industrialization of these 'threshold' countries will therefore be pos sible if they can succeed in compensating for the increasing costs of
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reproduction of labour-power and for other costs by increasing the pro ductivity of labour, improving infrastructure and training, mobilizing inter-industry links , raising the quality of output with suitable speciali sation, and shifting to new areas of production at the right times . This is all dependent on the crucial assumption that access to markets remains unhindered and on the condition that early-capitalist living and working conditions continue to dominate the bulk of the population. Or, alternatively (and this applies to all developing countries and not merely the ' threshold' countries), increasing costs of reproduction of labour-power and wages (not to mention political instability, etc .) will worsen the conditions for the valorization of capital because of the absence of compensatory mechanisms and p olicies. In such a situation, once a critical threshold has been reached industrial capital will migrate to another site or at least cease expanding at that particular site. This' form of industrial vagabondage which extends across the entire globe, and in particular between the developing countries , can be compared to shifting cultivation: as soon as the (social) soil is exhausted by the valorization of capital and the despoliation of natural resources , it is left fallow for regeneration through the vegetative powers of non-capi talist or even socialist modes of production - possibly to reassume the role of victim in the future - in the desperate hope that the last extrac tion of the system 's vital forces will not have irreversibly damaged the future recovery of the non-capitalist modes of production and , if neces sary, accompanied by the cynical acceptance of famine, in accordance with the maxim: ' Let nature take its course! ' In addition to these two alternatives, which at most allow the poten tial for industrialization on capitalist terms for a small number of 'threshold ' - countries , the growth of 7Jolitical instability ' in the Third World should not be forgotten . This carries with it the promise of a better future, even if initially it·is only expressed in the form of tempo rary anti-imperialist class alliances or revolts lacking an explicit poli tica1 direction . The revolutions i n China, Cuba, and elsewhere have shown that there are ways of overcoming the material poverty of the population of a developing country in less than a generation. Clearly, for the develop ing countries the mere destruction of peripheral-capitalist relations of production and domination , together with the partial and temporary withdrawal from the capitalist world-market, constitute significant productive forces in themselves . Only the future can say whether these � o� alist transitional societies (given that they have passed through the '. InItIal phase of mass mobilizatio n) can effect a long-term defens e agains t or escape from the economic and military threat and ideological : challenge originati(lg within the capitalist world-system , with its as yet se�mingly �nbroken potential for raising (capitalist) productivity; wIthout havIng to make increas ing use of capitalist principles of s . organization and ideologies .
�
"
THE CURRENT DEVELOPMENT OF THE WORLD-ECONOMY
83
As far as the traditional industrial countries are concerned , capital push ahead with a restructuring of the economy in the next few years on two main fronts . The first is the development of energy saving techno logies, which (po ssibly after a period of forced use of nuclear .. power intended to diversify and allow a reexpansion of energy produc tion) will replace the profligate technologies of the 1 950s and 1 960s . The second is the progress of the combinedprocesses of rationalization . and relocation , above all under the rubric of the ' electronic revolution ' and 'subcontracting' of all kinds , with the main aim being the retention 0/as large a percentage of the work-force aspossible outside the expen sive structure of the �welfare state ', regardless of any shifts of produc tion back to the traditional centers of industrial capitalism . The rate at which labour is discharged will remain high in the industrial countries . The difficulties of keeping frictional unemployment in check because of the large divergences between the skills of those rendered unem ployed and the requirements of new vacancies will be considerable and will inevitably mean serious additional physical andpsychical stress on those affected. At least three differing resp onses can be detected from th ose most affected by these developments. The trade-union organized hard core of the work-force in the technologically most advanced industrial coun tries (typically the male , mobile, aspirant, social-democratic voting, middle-aged skilled worker) adv.ocates a continuation of the policies which characterized the boom (L e . the free enterprise system with free trade externally and productivity-linked wage increases internally) in the expectation that the additional revenue provided by unequal exchange accruing to a country situated at the top of the international hierarchy can be appropriated to secure and increase the material monetary well-being of at least their own social strata ('Modell Deutschland' ) . Those organized in trade unions in the other industrial countries and in those branches most severely affected by structural change in the technologically leading countries will demand protec tionist measures in the industrial countries and social improvements in the world market oriented industry of the developing countries in order to minimize the pressures of relocation and rationalization in their own countries . The so-called unorganized workers, principally women , youth, temporary immigrant workers , and so-called 'marginal �roups ' of all kinds will seek to develop as much autonomy as possible from capital and create ways of living and working which run counter to the process of total commodification. This may have a political and econo mic stabilizing effect in periods of depression, but in the long term could present a danger , not only to the thesis that the capital-relation is indispensable , but to the relation itself. Within the context of the precarious options open to them , states will attempt to plan structural change to meet the necessities imposed by the system which the market itself cannot fulfill because of the temporary
84
TRANSFORMING THE WORLD-ECONOMY?
absence of individual profitability. These will be principally measures to increase the international competitiveness oj their respective national sites, and to reduce the reproduction costs oj labour;'p ower, e.g. standardization of mass consumption and of services (mass transit) , ' flexible' labour-market policies and policy on the family and social questions , and subsidies for · technological development . Als o central i s the attempt to convince the bulk o f the population not only o f the ' necessity o f structural change' but also o f the alleged necessity t o d o without ' no longer affordable' soci al services and other social reforms . lO In this context , the alleged malice of the sheikhs in unleash ing the oil crisis provides a welcome alibi for the structural deficiencies of the capitalist system. A recent report expressed this in the following terms : The energy crisis will emerge more prominently as the central problem of the 1 980' s . The absolute necessity to establish new struc tures in the energy sector could in fact confirm prognoses of a new industrial revolution, an intensification of investment and enterprise and hence growth . The time for utopian discussion is finally, and irrevocably, past . It is action which is now required . However , this also means that after many years of consumer oriented policies we must reset the points of economic and financial policy so that the necessary massive finances needed for the structural reshaping using free enterprise methods are made available . We have lived long enough beyond our means . 1 1 As yet i t i s not politically decided i n the individual industrial coun tries whether this change takes the form of a return to antediluvian models oj accumulation based on the drastic cutting-back oj mass consumption (with increased susceptibility to crises) or a modified revival oj the model oj accumulation based on an expansion oj mass consumption of the post-war period (with a possible increased share of social consumption mediated through the state and financed by taxing receipts from relocations of production). 12 It may be either ; but should the capitalist world-system succeed in reconstituting itself, it is to be hoped that , for the sake of other , alternative perspectives , the interna tional tensions which arise in a period of (quasi-) stagnation and struc tural change d o not , against previous precedent, discharge themselves explosively.
Notes l One indicator often referred to is that the average rate of pro fits has f in a number of large industrial countries since the beginning of the 1 970s However we do not give this aspect any particular consideration he
THE CURRENT DEVELOPMENT OF THE WORLD-ECONOMY
85
because of the notorious di fficulties encountered in trying to obtain a reliable measure of these rates, and the national differences in the timing of changes in rates and levels of profits. Moreover, as will be shown later, the key factor in determining the international reorganization of capital is not so much the absolute level of profit and its change over time, but the diver gence between the profits obtainable in the industrialized countries and those in the developing countries . (Of course, it should also be noted that a fall in the average rate of profit is not incompatible with a constant or even increasing rate of profit for the majority o f large companies) . 2 See Frobel , Heinrichs and Kreye, 1 977. 3 Of co urse this process does n o t mean that capital no longer exploits the possible benefits o f production in countries whose local market is protected by import-controls , import-levies , strictly controlled imposition of 'local content ' provisions, high transport cost s , and other factors . Whatis new i s that at present more and more nationalfactories (production mostly for the local market taking advantage of, and often only viable because o f, the cost-advantages of protection) are also at the same time world market
factories
(production for the world market , including the local market , without protection) . A typical example: Volkswagen produces in Mexico . A part o f its output i s sold o n the protected local domestic market , making use 'o f the cost-advantages of protection (, national factory'). However,
production is not o nly based on the cost-advantages of protection ; another part of the firm ' s output is exported (VW Beetles to Europe, engines to the US subsidiary of Volkswagen, etc. ) , proof of the fact that VW' s produc tion i n Mexico can compete o n the world market without the benefits o f protection (i . e . the world market factory, instead of the classic import-sub stitution industry) . In the final analysis , Volkswagen ' s Mexico productio n facilities are j ust one element in the company 's world-wide integrated production complex (Federal Republic of Germany, Brazil , US , Mexico , Nigeria , etc .) with important international intra-firm flows of compo nent s , and in the near future, with additional inter-company co-production arrangements (Renault , Nissan) . See in this connections the plans for a 'world car ' . See Lall,
1 980.
4 Relocation o f production from industrial countries to developing countries through and within companies from the industrial countries is the most well-known , but by no means the only form which this process takes . 5 See Amin ( 1 972, 1 977), Andreff (1 976) , Arrighi ( 1 978 , 1 979), Boyer ( 1 979) ,
( 1 979), Frank ( 1 978, 1 980) , Hobsbawm ( 1 976, 1 979) , ( 1 973), Le Monde diplomatique ( 1 979). Elsenhans
6
Hymer
A current instance: the firm of Kochs Adler AG, Bielefeld (Federal Repub lic o f Germany), recently announced the development of an automatic sewing machine (, classical sleeve vents - sewing and folding performed in one single automated operation ' ) . Third in the list of the ten points which characterized the machine was ' very short time required for training of
7
unskilled operator' . See Textile Asia
( 1 979, 1 25) .
However, process , site , and labour-force innovations are not carried out
for their own sake in isolation and optimized independently; the object of the optimization technique is rather the undivided complex of process, site, and labour-power innovations . Consequently, the o ften encountered, and politically motivated , view with separates rationalization and relocation
86
TRANSFORMING THE WORLD-ECONOMY?
and which advances the position that sufficient forced rationalization i n the industrial countries could eventually make relocation t o low-wage countries superfluous is misleading . 8 For example, Frobel, Heinrichs and Kreye ( 1 977; 1 74f , 57 1 ff) or Frobel, Heinrichs and Kreye ( 1 980; 1 52 , 3 8 1 ff) ; Textil-Wirtschaft ( 1 977) ; author ' s conversations with Federal German industrialists and purchasing agents of the garment trade during a business trip to Southeast Asia for ' site inspec tion on spot ' (Fall 1 978). 9 Studies on some aspects of the process of reorganization in manufacturing can be found in Frobel, Heinrichs and Kreye ( 1 977) or Frobel, Heinrichs and Kreye ( 1 980) ; van Klaveren ( 1 976) ; studies from the research project ' Industrial Readjustnlent and the International Division of Labor' at the University of Tilburg/Netherlands (including work by Ben Evers , Gerard de Groot, Willy Wagenmans) ; Pacific Research ( 1 978) ; AMPO ( 1 977) ; Edwards ( 1 979) . For studies on agribusiness , see the books and articles by.
Ernest Feder . 1 0 In the Federal Republic of Germany cuts in social services are marketed with the formula ' SUirkung der Eigenverantwortung' . No doubt other industrial-capitalist countries will know equivalent formulas . 1 1 Siiddeutsche Zeitung ( 1 980); see also the quite different analyses in Le Monde diplomatique ( 1 979) . 1 2 See Frobel, Heinrichs and Kreye ( 1 982) .
References Altvater , Elmar , Hoffmann , Jiirgen and Semmler , Willi , Vom Wirt schaftswunder zur Wirtschaftskrise (Berlin: Olle Wolter , 1 979) . Amin , Samir , L 'accumulation a rechelle mondiale (Paris : Editions Anthropos, 1 970) . Amin, Samir, ' Le modele theorique d 'accumulation et de developpe ment dans Ie monde contemporain ' , Revue Tiers-Monde, No . 52, 1 972, 703 -726 . Amin, Samir, Le developpement inegal (Paris : Les Editions de Minuit, 1 973) . Amin , Samir, ' La structure de classe du systeme imperialiste contem porain ' , L 'homme et la SOCiete, Nos . 45-46, 1 977a, 69-8 7 . Anlin , Samir , ' Self-reliance and the New International Economic Order ' , Mon thly Review, XXIX, 3 , 1 977b , 1 -2 1 . AMPO , Special Volume, ' Free Trade Zones and Industrialization of Asia' , AMPO VII I , 4 & IX, 1 -2 , 1 977 ( Series Nos . 30-3 1 ) . Anderson, Perry, Passages from A ntiquity to Feudalism (London : New Left Books, 1 974) . Anderson, Perry, Lineages of the A bsolutist State (London : New Le Books, 1 974) . Andreff, Wladimir, Profits et structures du capitalisme mondial (Pari s : Calmann-Levy, 1 976) . =
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eitsgruppe Bielefelder Entwicklungssoziologen (eds . ) , Subsistenz produktion undA kklfmulation (Saarbriicken: Breitenbach, 1 979) . A . rrighi , Giovanni, 'Towards a Theory of Capitalist Crisis ' , New Left Review, No. 1 1 1 , 1 978 , 3-24 . Arrighi , Giovanni , 'The Class Struggle in Twentieth-Century Europe' , . unpubl. , 1 979 . . Arrighi , Giovanni , ' Hypotheses on the Current Global Crisis � , unpubl. , 1 980. B anaj i , Jairus, ' Modes of Production in a Materialist Conception of History ' , Capital and Class, No . 3 , 1 977, 1 -44 B ois , Guy, Crise du feodalisme (Paris: Presses de la Fondation Nationale. des Sciences Politiques , 1 976) . , Bois Guy, 'Against the Neo-Malthusian Orthodoxy' , Past and Present, No . 79; 1 97 8 , 60-69. Boyer , Robert , ' La crise actuelle: une mise en perspective historique' , Critiques de reconomie politique. Nouvelle serie, Nos . 7-8 , 1 979, )-1 1 3 . Braudel, Fernand, Civilisation materielle, economie et capitalisme, XV-XVIII siecle (Paris : Armand Colin, 1 979) , 3 vols . Brenner, Robert , 'Agrarian Class Structure and Economic Develop ment in Pre-industrial Europe' , Past and Present, No . 70, 1 976 , 30-75 . Edwards , Anthony, The New Industrial Coun tries and their Impact on Western Manufacturing (London : The Economist Intelligence Unit, 1 979) . Elsenhans , Hartmut, ' Grundlagen der Entwicklung der kapitali stischen Weltwirtschaft ' in Senghaas , Dieter (ed. ) , Kapitalistische Weltokonomie (Frankfurt : Suhrkamp , 1 979) , 1 03 - 1 48 . Elwert , Georg , 'Uberleben i n Krisen, kapitalistische Entwicklung und traditionelle SolidariHit . Zur Okonomie und Sozialstruktur eines westafrikanischen B auerndorfes ' , Zeitschrift far · Sozio logie , IX, 4, 1 980, 343-365. Esser , Josef, Fach, Wolfgang & Simonis, Georg , ' Perspektiven des "Modells Deutschland ' ' ' , links, No . 1 22 , 1 980, 6- 1 0. Esser , Josef, Fach, Wolfgang, Schlupp, Frieder & Simonis , Georg, 'Alternative Wirtschaftspolitik? ' , links, No. 1 24, 1 980, 9- 1 2. Faure, Claude, ' L 'inU�gration de l 'agriculture dans la societe indus trielle ' , L 'homme et fa societe, Nos . 55-5 8 , 1 980, 3 9-60 . Foster, John , Class Struggle and the Industrial Revolution (London : Weidenfeld & Nicolson, 1 974) . Fraginals , Manuel Moreno, El Ingenio (La Habana : Editorial de Ciencias Sociales , 1 978), 3 vols . Frank , Andre Gunder , World Accumulation, 1492- 1 789 (New York: Monthly Review Press , 1 978a) . Frank, Andre Gunder , Dependent A ccumulation and Underdevelop ment (London : Macmillan, 1 978b) .
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TRANSFORMING · THE WORLD-ECONOMY?
Frank , Andre Gunder ,
Weltwirtschaft in der Krise (Reinbek bei
Hamburg : Rowohlt, 1 978c) . Frank , Andre Gunder, Crisis: In the World Economy (London: Heine mann, 1 980) . Friedmann , Harriet , ' World Market, State and Family Farm : Social Bases of Household Production in the Era of Wage Labo ur ' ,
Comparative Studies in Society and History , XX, 4 ,
1 978 ,
545-5 86 . Fro bel , Folker , Heinrichs , Jiirgen, Kreye , Otto & Sunkel , O svaldo , ' Internationalisierung von Kapital und Arbeitskraft ' , Leviathan , IV, 1 97 3 , 429-454 . Frobel , Folker , Heinrichs , Jiirgen & Kreye, Otto , Die neue interna tionale Arbeits(eilung (Reinbek bei Hamburg : Rowohlt , 1 97 7) . Frobel , Folker , Heinrichs , Jiirgen & Kreye, Otto , The New In terna tional Division of Labour (Cambridge : Cambridge University Press , 1 980) ( shortened English translation of Frobel , Heinrichs & Kreye ( 1 977) ) . Frobel , Folker , Heinrichs , Jiirgen & Kreye , Otto (eds . ) , Krisen in der kapitalistischen Weltokonomie (Reinbek bei Hamburg : Rowohlt , 1 98 1 ) . Frobel , Folker , Heinrich s , Jiirgen & Kreye , Otto , ' Wege aus der Wirt schaftskrise? ' in Meyer-Abich , Klaus Michael (ed . ) , Physik,
Philosophie und Politik. Festschrift far Carl Friedrich von Weizsacker zum 70. Geburtstag (Munich : Hanser , 1 982) , 1 45 - 1 67 . Geertz, Clifford , Agricultural In volution (Berkeley : University o f Cali fornia Pres s , 1 96 3 ) . Heinsohn , Gunnar , Knieper , Rolf and Steiger , Otto, Menschenpro duktion (Frankfurt : Suhrkamp , 1 979) . Hengstenberg, Johannes and Fay, Margaret, ' Unequal Exchange' , unpub! . , 1 97 8/79 . Hill , Christopher , Reformation to Industrial Revolution (Harmonds worth : Penguin , 1 969) . Hilton, Rodney (ed . ) , The Transition from Feudalism to Capitalism (London : New Left Books , 1 976) . Hobsbawm , Eric J . , The Age of Revolution (London : Weidenfeld . & Nicolson , 1 962) . Hobsbawm , Eric J . , 'The Crisis of the Seventeenth Century' in Aston, Trevor (ed . ) , Crisis in Europe, 1560-1660 (London : Routledge & Kegan P aul, 1 965) , 5 - 5 8 . Hobsbawm, Eric J . , Industry and Empire (Harmondsworth : P enguin , 1 969) . Hobsbawm , Eric J . , The Age of Capital (London : Weidenfeld & Nicolson , 1 975) . Hobsbawm , Eric J . , ' The Crisis of Capitalism in Historical Perspec-: tive' , Socialist Revolution , No . 30, 1 976, 77-96 . Hobsbawnl , Eric J . , ' Capitalisme et - agriculture : Les reformateurs
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ecossais au XVI IIe siecle' , A nnales ESC, XXXII I , 3 , 1 978 , 5 80-60 l . bsb awm, Eric J . , 'The development o f the world economy (review ing W.W. Rostow, The World Economy: History and Prospect) ' , Cambridge Journal 0/ Economics, I I I , 4 , 1 979, 305-3 1 8 . Huxle y, Aldous , Brave New World (London: Chatto & Windus , 1 932) . Hymer , Stephen, ' International Politics and International Economics : A Radical Approach' in Hymer, Stephen , The Multinational Cor poration: A Radical Approach (Cambridge: Cambridge Univer sity Press , 1 978) , 25 6-272. Jacobi , Carola and Niess , Thomas , Haus/rauen, Bauern, Margina lisierte: Oberlebensproduktion in 'Dritter ' und 'Erster ' Welt (Saarbrucken : Breitenbach , 1 980) . Kriedte , Peter , Medick , Hans and Schlumbohm, Jurgen, Industrialisie rung vor der Industrialisierung (Gottingen : Vandenhoeck & Ruprecht, 1 977) . Krogbaumker , Beate , 'Subsistenzproduktion und geschlechtliche Arbeitsteilung' , Peripherie, No . 3 , 1 980, 1 4-30 . Kuchenbuch, Ludolf and Michael, Bernd (eds . ) , Feudalismus (Frank furt : Ullstein , 1 977) LalI , Sanj aya, 'The International Automotive Industry and the Devel oping World' , World Development, VII I , 10, o1 980, 789-8 1 2 . Le Bris, Emile, Rey, Pierre-Philippe and Samuel , Michel , Capitalisme negrier (Paris: Maspero , 1 976) . Le Monde diplomatique, No . 309, Dec . 1 979 (with articles b y Marc Anvers , Nicolas Baby, Claude Courlet and Pierre Judet, Joyce Kolko , Jean Roussel) and subsequent issues . Lenz, lIse, 'Oberlegungen zum Verhaltnis von Staat , Subsistenzpro duktion und Sozialbewegungen ' , Peripherie, No . 3 , 1 980, 5- 1 3 . Mandel, Ernest, The Second Slump (London: New Left Book s , 1 9718) . Marx , Karl, Das Kapital. Erster Band (Hamburg : Meissner, 1 867 , 1 873) . Marx , Karl, Grundrisse (Berlin : Dietz, 1 974) . Meillassoux, Claude, Femmes, greniers et capitaux (Paris: Maspero, 1 975) . Menahem , George , ' Les mutations de la famille et les modes de repro duction de la force de travail ' , L 'homme et la societe, Nos . 5 1 -54 , 1 979 , 63 - 1 0 1 . O' Connor, James , 'Accumulation Crisis' , unpubl. , 1 978 . Olle, Werner, ' Internationalisierung der Produktion und Gewerk schaftspolitik ' , unpubl . , 1 980. Pacific Research , Special Volume, ' Philippines : Workers in the Export Industry ' , Pacific Research, IX , 3 & 4, 1 978 . Polanyi, Karl , The Great Trans/ormation ( 1 944) (Boston : Beacon Press , 1 957) . Poni , Carlo , 'Archeologie de la fabrique' , A nnales ESC, XXVII , 6 ,
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1 972, 1 475- 1 496 . Poni , Carlo, ' All'origine del sistema di fabrica', Rivista Storica Ita liana, LXXXVII I , 1 976, 444-497. Preiser, Erich, Die Zukunjt unserer Wirtschajtsordnung (Gottingen: Vandenhoeck & Ruprecht, 1 968) . Reich , Utz-Peter , Sonntag, Philipp and Holub , Hans-Werner, A rbeit Konsum-Rechnung (Koln: Bund-Verlag, 1 977) . Samuel, Raphael , ' Workshop of the World: Steam Power and H and Technology in mid-Victorian Britain' , History Worksh op, No . 3 , 1 977, 6-72 . Schlumbohm , Jurgen, 'Arbeitsproduktivitat, Produktionsprozesse und Produktionsverhaltnisse' , unpubl . , 1 978 . Schwefringhaus, . Judith, Funktionen der Landwirtschajt im Rahmen der neuen Weltwirtschajtsordnung (Saarbriicken: Breitenbach, 1 978) . . Senghaas, Dieter, Weltwirtschajtsordnung und Entwicklungsp olitik (Frankfurt : Suhrkamp , 1 977) . Senghaas-Knobloch , Eva, Reproduktion der A rbeitskrajt in der Welt gesellschajt (Frankfurt: Campus, 1 979) . Slotosch, Walter, ' Der Beginn einer Talfahrt ' , Suddeutsche Zeitung, 1 2- 1 3 Jan . 1 980. Starnberger Studien 4, Strukturveriinderungen in der kapitalistischen . Weltwirtschajt (Frankfurt : Suhrkamp , 1 980) . Textile Asia, Nov . 1 979 . Textil-Wirtschaft (eds .), Schema einer Rentabilitiitsberechnung jur Erstellung eines Bekleidungsbetriebes in Tunesien , mimeo 1 977. Van Klaveren , M . , Internationalisation and the Clothing Industry, unpubl. , 1 976 . Vergopoulos , Kostas , 'La productivite sociale du capital dans l' agricul ture familiale' , L 'homme et la societe; Nos . 45-46, 1 977, 89- 1 1 1 . Wallerstein, Immanuel , The Modern World-System I: Capitalist Agri culture and the Origins oj the European World-Economy in the Sixteenth Century (New York : Academic Press, 1 974) . Wallerstein, Imnlanuel , The Capitalist World-Economy (Cambridge : Cambridge University Press , 1 979a) . Wallerstein, Immanuel , ' Y-a-t-il une crise du XVIIe siecle? ' , A n njr.lLe.�· ; ESC, XXXIV, 1 , 1 979b, 1 26- 1 44. . Wallerstein , Immanuel , The Modern World-System II: Mercantilism and the Consolidation oj the European World-Economy, 1600- 1 750 (New York : Academic Press, 1 980) . Wallerstein, Immanuel , Martin, William G. & Dickinson, Torry, ' Household Structures and �roduction Processes ' , Review, V, 3, 1 98 1 , 43 7-458 . Weber, Max, Gesammelte A ujsiitze zur Sozial sgeschichte (Tubingen: Mohr (Siebeck) , 1 924) .
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Weber , Max, Wirtschaft und Gesellschaft (Tiibingen : Mohr (Siebeck) , 1 972) . Wolf, Eric , Peasants (Englewood Cliffs, N. J . : Prentice-Hall, 1 966) .
Appendix : World industrial production and world tr ade, 1 948- 1 980 Figures for world industrial production and world trade are drawn mainly from data published b y the UN, and converted into table form . The only conclusions presented here are those which relate to the turning-point in the capitalist world-economy at the end of the 1 960s/ beginning of the 1 970s . It is up to the reader to formulate conclusions which may relate to other aspects . The units in which the data are presented are countries and groupings of countries , as most available data relates to these units . However , the analysis often demands that these national categories be supplemented by other units more appropriate to the key aspects of capitalist develop ment (for example , firms , households , states , or modes of ·production and reproduction) . 1 Table 3 . 1 shows the average annual rates of growth in domestic product per capita, industrial production and exports of manufactured products for the traditional industrial countries and the developi ng countries for 5-year periods between 1 948 and 1 978 in ' real ' percentage terms . Short-term economic fluctuations have been ironed out where possible to reveal medium-term trends . The data in Table 3 . 1 shows that average 'real ' rates of growth of domestic product per capita, industrial value-added and exports of manufactured products for the industrial countries rose from the mid-1950s to a historically unique high point in the mid-1960s, and subsequently fell back. The same qualitative pictur� applies to the developing countries: the only difference is that the turning-point in growth-rates was not reached until the early 1970s, and the decline is less pronounced. It is difficult to give these 'real ' figures an unambiguous, economi cally graspable interpretation as volumes - doubly di fficult in periods of rapid depreciation in the US Dollar and marked increases in the price of the most important traded good (oil) (problem of deflating prices) . As a consequence the conclusions drawn from Table 3 . 1 should be confined to the stated structural features of figures which in themselves are somewhat problematic in character . This diachronic comparison of ' real ' magnitudes will be supplemented in later tables by a synchronic analysis of nominal figures of less problematic significap.ce for a number of sample years . Of course, both here and later , the numerical accuracy of such isolated data should not be overestimated (problem of
92
TRANSFORMING THE WORLD-ECONOMY?
data collection) . Consequently, we take only the main trends which can be immediately s een from the tables as the b asis for the further expo si tion of our argument . The fact that these global trends almost without exception fit into the overall picture, to which can be added many other indicators , is the b est proo f that one has not been deceived by statistical illusions . The following specific conclusions can be formulated on the basis of the tables : 1 During the entire period under consideration, the rates of growth of exports of manufactured product s from the industrial countries exceed those o f domestic product and industrial production . The same applies since the beginning of the 1 960s for the production and export o f manufactured goods o f the developing countries (Table 3 . 1 ) . This suggests that world economic interdependency has increased in the sphere of manufacturing industry, particularly s ince the beginning of the 1 960s . This opinion is substantially confirmed by the development of export ratios (exports as a percentage of domestic product) (Tables 3 . 1 9 and 3 . 20) . A similarly high degree of interdependency has prob ably existed only once before - in the years immediately before the First World \Var . This high degree of \vorld economic interdependency i s accentuated b y the fact that a signifi cant and probably growing percentage of world trade is traffic between the various estab lishments o f one and the same company in di fferent countries . 2 The increase in export ratios was especially pro
n ounced in theperiod 1968- 1975
-
an expression of the forced trans
national reorganisation of capitalist production in the initial years o f the depression . 2 The rates o f growth of domestic product and industrial production are clearly higher since the beginning of the 1 970s in the developing countries than in the industrialized countries . Correspondingly ,
since the beginning of the 1970s the share of domestic product and industrial value-added in the market economies accountedfor by the developing countries begins to increase slightly, after two decades in which it had slightly fallen (see Tables 3 . 3 and 3 . 5) . 3 3 The developing countries ' share of world exports, which fell after 1948, began to rise again after the early 1970s. The same appliesfor the sub-group of developing countries without OPEC - although the increase in their share of world exports is less pronounced . Com plementary figures apply for the industrial countries (see Table 3 . 6) .
4 The developing coun tries ' share of world exports ofprimary goods
excluding fuels, which had fallen from the end of the Second World War until- the early 1970s, is beginning to increase slightly once more, whereas their share of world exports of fuels has virtually increased continuously (see Tables 3 . 7 and 3 . 1 0) . 5 Since t h e b eginning of the 1 970s the rate of growth of exp orts of manufactured products in the developing countries has been clearly
THE CURRENT DEVELOPMENT OF THE WORLD-ECO NOMY
93
greater than in the industrial countries . As a result , the share of the developing countries in the world exports of manufactured products has, after a long period of stagflation, doubled since the end of the .1960sfrom 4 per cent to around 9 per cent (Tables 3 . 8 and 3 . 1 0) . 4 A breakdown of exports by commodity groups shows that the develop ing countries ' share in world exports began to increase slowly but steadily towards the end of the 1 960s in nearly all the maj or commo dity groups . This growth and/or share of world exports is parti cularly noticeable in textiles and garments .s Other commodity classes with high rates of increase are office machinery and telecommunica tions equipment (including electronic components) and household goods (including consumer electronics, photographic equipment and watches) (Tables 3 . 1 0) . In contrast to a commonly held view, the share of textiles and garments in the export of manufactured products from developing countries has not increased over the last twenty years but has in fact fallen from around 40 per cent ( 1 955) to around 25 per cent by the end of the 1 970s : marked increases have occurred in this period in the share accounted for by mechanical engineering and electrical engineering (from around 1 0 per cent to around 30 per cent) . In terms of the variety of commodity classes involved , exports from developing countries have become noticeably more diversified (Table 3 . 1 4) . It should not however be forgotten that such exports often (but not always) consist of goods which have already been imported in semi-manufactured form in order to proceed through a few simple steps of further manufacturing such as sewing , soldering, assembly, testing and packing. Exports are con centrated on a relatively small number of countries . In the 1 970s around two-thirds of all the exports of manufactured goods were accounted for by a mere seven countries and half of South Korea, Taiwan and Hong Kong (Table 3 . 9) . 6 In the period under consideration manufactured products have gained in significance compared with primary products in the devel oping countries ' exports ; even the leap in receipts from exports of mineral oil in 1 974 did not change this fact significantly . Whereas in 1 955 primary products (excluding fuels and including non-ferrous metals) accounted for 67 per cent of exports and manufactured products for 8 per cent, by 1 979 the shares were around 23 per cent and 2 1 per cent respectively. If fuels are left out of account this means that the developing countries have shiftedfrom being almost exclusively pure primary product exporters in the 1950s to a position where manufactured products are of almost equal significance in their export trade (Tables 3 . 1 2 and 3 . 1 3 ) . 7 At first glance the regional structure o f world trade has changed little in its basic outline over the past thirty years. For example, almost three quarters of the exports of the developing countries still go to the industrial countries : just as before, around a hal f of world trade
94
TRANSFORMING THE WORLD-ECONOMY?
comprises trade "between the industrial countries , and trade between the members of the European Community on its own accounts for one fifth of world trade. On closer examination it can be seen that exports between industrial countries as a percentage of world exports rose between 1948 until the beginning of the 1970s (41 per cent to around 55per cent), and then fell back again (48 per cent in 1978) . In part this development reflects on one hand the increased earnings of the OPEC countries for oil and the corresponding rise in the export of manufactured products to the OPEC countries , and on the other, the increase in exports of manufactures from other developing coun tries (Tables 3 . 1 5 to 3 . 1 8) . 8 The volume of employment in manufacturing industry expanded faster in the " developing countries than in the industrial countries since the beginning of the 1950s; since the end of the 1960s this diffe rence has increased enormously. The average annual rates of growth of employment in manufacturing industry in the developing coun tries over the last thirty years have been. between + 3 per cent and + 5 per cent; in the industrial countries between + 2 per cent and - 1 per cent, with a tendency to fall (Table 3 . 1 ) Summary
The most general world aggregates show quite unmistakeably that a turning-point was reached in the capitalist world-economy at the end of the 1 960s/beginning of the 1 970s (L e . before the ' oil crisis ' ) . The most notable items of proof for this thesis have been cited above. What are fundamental are not so much the absolute levels of percentage shares with their slight changes , b ut rather the reversal or substantial accelera tion o f certain trends . Of central importance is the doubling in the share of world manufactured exports accounted for by the developing coun tries" in the last decade.
Notes 1
Since our main concern here is with the capitalist world-economy, the tables are concentrated on the market economies (industrial and develop ing), and for the most part exclude the centrally planned economies which comparable data is anyway o ften lacking . The penetration of free market elements into the centrally planned economies and the partial re
integration of these economies into the capitalist world division of labour are important, but not as yet of great quantitative significance in relation to world aggregates .
The data for the industrial and developing countries cover up large diffe rences between individual countries within the overall groupings . Any analysis of the (unequal) development of capitalism must naturally con-
THE CURRENT DEVELOPMENT OF THE WORLD-ECONOMY
4
95
sider such differences : in an attempt to take a first step in this direction some of the tables are dis aggregated into- less all-embracing country group ings and data is also provided for some individual countries . Cf. UN, Transnational Corporations in World Development: A Re-exami nation (New York : UN, 1 978) , p . 43 and Tables 3 , 111- 1 6 , 111- 1 7 . Especially i n the developing countries high rates of growth are primarily expression of the accelerated inclusion of 'traditional' activities into the market . They indicate a more rapid growth of commodity production , not necessarily (or at least not to the same extent) production per see The data from the UN and GATT on which this is based only reveal the lower limit of the developing countries ' share as they do not completely record exports from free production zones: ' In Mexico , for instance , such unreported exports amounted in recent years to some one-and-a-half billion dollars, i . e . nearly 5 per cent of manufactured goods exported by all developing countries . Assessment of this trade is particularly difficult and 110 attempt was made to include it . ' (GATT, Networks oj World Trade by A reas and Commodity Classes, 1955�1976 (Geneva: GATT, 1 978) , p . 6 f.) For example , in 1 977 Mexico ' s exports were given as US$ 4 1 88 millio n , o f which 3 4 5 9 went t o O E C D countries , 2808 of this being to t h e US : in the same year the OECD countries alone reported imports from Mexico of US$5 840 million (US - 4689) . I n 1 977 Mexico ' s reported exports of manu factured goods were US$ 1 452 million: OECD reported imports were 26 1 0 (US - 2 1 93) . (UN , Yearbook oj International Trade Statistics, 1979 (New York : UN, 1 980); OECD , Statistics oj Foreign Trade, Series C, 1977 (Paris : OECD , 1 979) . )
5
Among the major commodity groups of manu factured product s , garments constituted the most important import from the developing countries as far as share of value in the domestic market in the industrialized countries (EEC, US , Canada, Japan) was concerned - garments comprises SITC 6 1 , 83-5 . In 1 974/5 this share was 7 . 2 per cent compared with 1 . 9 per cent in 1 96 8 ; the corresponding shares from imports from other industrial coun tries were, 1 974/5 2 . 6 per cent , 1 968 0 . 7 per cent ; from centrally planned economies , 1 974/5 1 . 1 per cent , 1 968 0 . 2 per cent; thus as a whole the share of 'external ' imports rose from around 2 . 9 per cent in 1 968 to 1 1 . 0 per cent in 1 974/5 , whilst ' external ' exports rose from 2 . 8 per centin 1 968 to 4 . 1 per cent in 1 974/5 (foreign trade between the named industrial countries is excluded). (UNCTAD, Handbook oj International Trade and Develop
ment Statistics, 1979 (New York : UN, 1 979), Table 7 . 1 . ) The correspon
ding drastic fall in employment in the garment industry in the named industrial countries has produced progressively stricter import restrictions which first succeeded in putting a brake on the rising imports of garments from developing countries in 1 977 , and particularly redistributed their points of origin . For manufactured goods as a whole , the developing coun tries ' share in the imports of the industrialized countries amounted to around 9 per cent in 1 978 ; this represented 3 per cent o f the total sales of manufactured products in industrialized countries . (GATT, International
Trade, 197819 (Geneva; GATT, 1 979) , p. 8).
96
TRANSFORMING THE WORLD-ECONOMY?
Tables : World industrial production and world . trade,
1 948- 1 980
Notes Explanation for the tables is kept to the minimum necessary_ Addi tional details can be found in the sources . The country groupings usually follow the UN practice , i . e : Industrial countries Europe excluding Eastern Europe � Canada, USA, Japan , Australia, New Zealand" Israel, South Africa; Centrally planned economies Eastern Europe, China , Mongolia , North Korea, Vietnam ; Developing countries all other countries ISIC International Standard Industrial Classification of All Eco nomic Activities , Rev. 2 ( 1 968) Standard International Trade Classification, Rev. 1 ( 1 96 1 ) SITC =
=
=
�?':: ' Table 3 . 1
A verage annual rates of growth of gross domestic product per capita, value-added by manufacturing industry, employment in manufacturing industry and exports of manufactured products of the industrial and developing countries: 1948/53, 1953/58,
1958/63, 1963/68, 1968/73, 1973/78 in 1948/ 1953
1953 / 1958
1958/ 1963
1963/ 1968
1968/ 1973
3 .51 7 . 02 2.7 1 9.61 • 3
2.5 3 .7 1 .9 6.7
3.3 5.3 2.2 7.2
4.0 6.3 1 .7 1 0.2
3 .0 3.8 0.4 9.8
2.2 1 5 . 52 1 .94 0.55
2.3 6.8 4.86 5 .0
2.3 6. 1 3 .9 8.2
2.9 6.9 3.3 10.6
3.9 8.4 5 .0 13.1
1973/ 1978
Industrial countries Gross domestic product per capita Value-added by manufacturing industry (lSIC 3) Employment i n manufacturing industry (ISIC 3) Exports of manufactured products (SITC 5-8)a
2 . 37 2:8 - 0.47 6.3
Developing countries Gross domestic product per capita Value-added by manufacturing industry (lSIC 3) Employment i n manufacturing industry (ISIC 3 ) Exports of manufactured products (SITC 5-8)b
3 .67 5.9 5 .08 1 1 . 79 , 1 0
Sources: UN, The Growth of World Industry: International A nalyses and Tables, various years; UN, Yearbook of National A ccounts Sta tistics, various years; UN, Statistical Yearbook, various years; UN, Yearbook ofIndustrial Statistics, various years; UN, Yearbook of International Trade Statistics, various years; UNCTAD, Handbook of International Trade and Development Statistics, various years ; UN, Mon thly Bulletin of Statistics, various years; author's calculations .
100 Growth rates are calculated on the basis of the annual volume (quantum) index for each variable (excluding employment, base years 1 958 for 1 948/5 3 , 1 963 1 00 for 1 953/58 and 1 95 8/63 , 1 970 1 00 for 1 963/68 and 1 968/7 3 , 1 975 1 00 for 1 973/78). For any year n, instead of taking the volume index for year n the above takes the geometric mean of the volume indices for years n - 2, n - 1 , n , n + 1 , n + 2 . Growth rates are calculated from these mean-values using the compound interest formula. (For example, the 1 958/63 column gives growth rates for 1 956- 1 960/ 1 96 1 - 1 965 .) Some indices have been obtained by changing bases . a 1 948- 1 973: Exports of EEC(6) , UK,. Sweden, Switzerland, Japan, USA , Canada; also India in the initial years . b Exports to market economies . 3 B ase year 1 95 3 5 1 950/1 95 1 - 1 95 5. 1 1 948, 1 950/ 1 95 1 - 1 955 2 1 948- 1 950/ 1 95 1 -1 955 1 00 4 1948/ 1 953 10 B ase year 1 970 6 195 3 , 1 955/1 95 6- 1960 8 1 97 1 - 1 975/ 1 976, 1 977 9 1 91 1 - 1 975/1 976- 1 979 7 1 97 1 - 1 975/1 976-1 97 8 100 =
=
=
=
� ::r: tr.I (j c: � � tr.I Z � o tTl -< tr.I i;-4 o
'"0
�
tr.I
� o "Tj
� ::r: tTl
��
r
o m
8 z
o �
>
=
=
\0 ......)
Table 3.2
Share of selected countries and country groupings in world population, gross domestic product, exports and exports of manufactured products: 1977 i n per cent
World M arket economies Centrally planned economies Market economies Industrial countries Developing countries (excl. OPEC) OPEC Industrial countries USA EEC (Nine) (incl. W. Germany) Japan Other Developing countries (excl. OPEC) Brazil India South Korea Other Centrally planned economies Centrally planned economies, Europe Centrally planned economies, Asia
Population
GDP
Exports SITC O-9
1 00
1 00
1 00
1 00
68 32
80 20
90 10
91 9
18 42
65 11 5
65 12 13
83
24 21
11 33 ( 1 0) 7 14
12 45 ( 1 6) 12 14
7
5 6 1) 3 4
(
7)
9 11
Exports SITC 5-8
7 o
3 15 1 23
2 1
o
o 7
1 1 1 10
9 24
15 5
9 1
8 1
1 1 5
Sources: UNCTAD, Handbook of International Trade and Development Statistics, Supplement 1980; UN, Yearbook ofInternational Trade Statistics, 1979; author1s calculations . Estimates of GDP for centrally planned economies have a wide margin of error mainly because of problems in deriving the GNP IGDP from net material product, and in converting GNP estimates into US dollarS .
\0 00
...,
� Z
CIl
6� �
�
I-]
::t:
trJ
��
t'""
9
trJ ()
o
a
�
...:>
•
Table 3 . 3
Share o/selected countries and country groupings in the gross domestic product o/ the market economies: 1948, 1953, 1958, 1963, 1968, 1973, 1978 in per cent
Market economies
1948
1953
1958
1963
1968
1973
1978
1 00
1 00
1 00
1 00
1 00
1 00
1 00
82
83
} 18
} 17
83 14 3
84 14 2
85 13 2
85 12 3
81 10
47 24 ( 5) 2 10
47· 24 ( 5) 3
43 25 ( 7) 5 11
42 24 ( 7) 7 12
34 27
29 27
9
46 22 ( 5) 3 n
1 4 0
1 3 0
1 3 0
2 3
1 2 0
...,
:t: tI1 () c:: � �
tI1 Z
...,
Industrial countries Developing countries (excl. OPEC) OPEC Industrial countries USA EEC (Nine) (incl . W. Germany) Japan Other Developing countries (excl. OPEC) Brazil India South Korea Other
9
0
9
9
(
9)
9
(
9)
' 11 13
13 12
2 2 0 8
3 2 1
Sources: UN , The Growth 0/ World Industry, 1938-1961: International A nalyses and Tables; UN , Yearbook 0/National A ccounts Statistics, various years; author's calculations.
0 tI1
5 'i:1 � tI1 Z
...,
0
"l:j ...,
:t: tI1 � 0
� t"'"
0 tI1 I
() 0
Z 0 �
�
\0 \0
I-"
0 0 ..oj � :> z CI.l
Table 3.4
Share of selected industries in the value-added by manufacturing industry of the industrial and dt;veloping countries: 1938, 1948, 1953, 1958, 1963, 1970, 1975 cent in 1938
Manufacturing industry (lSIC 3) Food, beverages! tobacco industries (lSIC 3 1) Textiles (l SIC 32 1 ) Wearing apparel, leather and footwear (ISIC 322-324) Chemicals , petroleum, coal and rubber products (lSIC 35) Metal products (lSIC 38) Other
Industrial countries 1948 1953 1958 1963
1970
1975
1 00
1 00
1 00
1 00
1 00
1 00
100
18 8
14 8
13 6
13 5
12 6
11 5
12 4
6
7
5
5
5
4
10 27 30
9 32 30
10 36 30
11 36 31
14 37 27
14 40 26
1 1938 1 1 00
Developing countries 1948 1953 1958 1963
d � �
Z
0
..oj � 1970
1975
1 00
1 00
1 00
1 00
1 00
100
27 17
28 18
27 16
25 13
27 14
23 12
20 10
4
7
7
6
6
6
6
5
15 39 26
9 11 29
10 10 27
12 12 27
13 15 28
16 15 22
20 18 21
22 22 21
tI1
� 0 � � 0
tI1
()
0 Z 0 � �
Sources: U N , The Growth of World Industry 1938- 1961: International A nalyses and Tables;. UN, Monthly Bulletin of . Statistics, various years; author's calculations.
•
..j
''' ' pri
i-J
::r:: trJ
Table 3.5
Share of developing countries in the value-added by selected industries of the manufacturing industry of the market economies: 1938, 1948, 1953, 1958, 1963, 1970, 1975 cent in
Manufacturing industry (ISIC 3) Food, beverages, tobacco industries (ISIC 3 1 ) Textiles (ISIC 3 2 1 ) Wearing apparel, leather and footwear (ISIC 322-324) Chemicals, petroleum, coal and rubber products (ISIC 35) Metal products (ISIC 38) Other
1938
1948
1953
19581
19582
10 14 19 12 9 4 10
9 17 18 9 10 3 8
8 15 18 9 10 3 7
9 16 22 11 11 4 8
10 17 23 12 12 4 -9
1963
9 19 20 11 10 ' 4 8
1970
1975
10 19 23 14 14 5 8
13 20 26 16 18 8 11
Sources: UN , The Growth of World Industry 1938-1961: International Analyses and Tables ( 1 ); UN, Statistical Yearbook, various years (2); author's calculations .
(j c:: ::0 ::0 trJ
�
o trJ roducers . The most important manifestation of the transnational reorganization of production is the allocation of parts of the manufacture of a product or a part product to different production sites throughout the world . These processes , relocation of production and the transnational
WESTERN EUROPE'S EC'ONOMIC AND SOCIAL DEVELOPMENT
1 25
re01 rgcin1lzauon of production have been investigated and documented detail by the authors of 'The New International Division of Labour ' . we will simply present two examples - in anticipation of our dis on, which comes later in this paper, of West Europe 's attitude ssi cu to the issues raised by a 'N ew International Economic Order' - to illustrate how these two processes correspond to a growth in the pro duction of underdeveloped countries , particularly in the production of export-oriented manufactures . In the same year - 1 977 - when the output of crude steel in the EC countries fell by 5 . 8 0/0 , the production of cru de steel in the underdeveloped countries (of the Western world) rose by 1 1 .6 0/0 from 3 7 . 6 million tons in 1 976 to 42 million tons in 1 977 .26 The decline in the E C shipbuilding industry during the 1 970's has been matched by a rapid growth in the shipbuilding capacity and production of the underdeveloped countries , and particularly, Brazil , Korea and Taiwan. According to figures issued by the L ondon shipping register of Lloyds, Brazil' s shipbuilding orders, for example, amounted to 3 million registered tons in September 1 977 , while West Germany had received orders totalling only 1 . 48 million tons .27 In 1 970, the 1 8 Third World countries involved in building ships of over 1 00 GRT completed 23 3 , 000 GRT - j ust over 1 % of the world' s output . B y 1 97 7 , the number of countries involved i n shipbuilding had risen to 22 and they completed 1 . 5 million GRT - 5 . 6 0/0 of the world ' s outpUt . 28 We will likewise here restrict ourselves to documenting only two examples of the way in which the pressure to react to the changed condi tions of the world market is being reflected by the West European industrial associations and the business press with their usual out spokenness . Over the past two years the West German constructional engineering industry has made greater efforts to adj ust to the changing competi tive climate: product lines have been reassessed and in particular manufacturing processes unsuited to conditions in the Federal Republic have been relocated to production sites abroad , and those processes in which Germany has a strong tradition of constructional engineering have received special attention.29 The persisting and profound dislocati ons in the international division of labour are revealed in the case of a multinational corpora tion : the number of workers employed by Philips in Europe shrunk by 24, 000 from 1 970 to 1 977, while the number of those employed outside Europe has risen by 49 ,000 . The necessary level of profits , which . the Philips executive board regard as indispensable for survival , can only be achieved , in their j udgement, by transferring labour intensive production processes to countries which, because of
1 26
TRANSFORMING THE WORLD-ECONOMY?
their labour market situation, can be considered favourable in t his respect.30 , The relocation o f production to new production sites , particularly in the underdeveloped countries , has been accompanied by an unprecedented wave of rationalization in . production at the West European sites and throughout the worl d . Rationalization has become the order of the day, both in these branches of industry which are at present most severely affected by relocations and in other branches, including the service sector . These rationalizations affect both the labour process and the product mix ; i n many branches they have taken on the character of almost revolutionary changes of both process technology and product technology. In many West European Industries , announcements have already been made by companies , industrial associations and state institutions that because of anticipated rationalizations over the next two years, further losses o f j obs and consequently massive dismissals are unavoid able in 1 979 and 1 980. These involve especially the West European steel industry, ship-building , mechanical engineering, precision instruments and optics , printing , etc . It is frequently asserted that this wave o f rationalication in West European industries has nothing to do with the changed conditions on the world market and that it is a process that has developed indepen dently of - though admittedly parallel with - the process of relocating production . The fact is , however , that the opportunities and pressures for massive innovations in b oth process and product technology can only be understood in the context of the changed conditions of the world market (and these new conditions , as we have already stated , are themselves to a large extent the result of previous product- and process innovations) and of the relocation process which has been triggered o ff by the changing world market situation. These opportunities and pressures for innovation in turn generate new opportunities and pressures for relocating production. Innovations in processes and products are made necessary firstly by the fact that in the traditional industrial sites of West Europe, profitable use, of the installed production facilities - and this means profitable in comparison with production in the sites where cheap labour is available - can only be achieved by massive rationalization (with the result that relatively highly paid labour can be dismissed) . Herbert Giersch, the highpriest of the prevailing West German orthodoxy on the world economy, presents an accurate picture of this problem : Whoever produces in a high wage country and is hit by the import pressure from t he south , can protect his home site, if he succeeds in reducing his costs and keeping them low by means of process inno va tion and a moderate' wage policy . Another way out is prod uct :
WESTERN EUROPE'S ECONOMIC AND SOCIAL DEVELOPMENT
1 27
innovation: shifting to products which are new and more sophis ticated and which , because of their innovative and human capital content cannot be quickly imitated. Firms which cannot ward off the threat by innovations either in their processes or in their products must go the road of site innovation, L e . they must relocate their production facilities for the goods or intermediary processes which they have hitherto provided to sites with lower wages . 3 1 However , Giersch holds the mistaken belief (expressed in May 1 977) that ' on the basis of what has so far occurred, it is primarily parts of the textile and clothing industry, shoe and leather products , pulp and paper . industry, ceramics and sportsware and the electrical and automobile industry' which are affected .32 All industries , including at present parts of the iron and steel industry, shipbuilding , mechanical engineering and even construction of industrial installations, are affected. This is a point that needs to be repeated, for it is by no means just the consumer goods industries that are involved; the situation in industries producing the means of production is equally critical. A second circumstance compelling innovations in processes and products is the fact that many industries are being offered new processes and components as a result of microelectronics , which permit - and therefore compel - an enormously profitable substitute for traditional processing methods and product groups. But even the wave of rationalization that has been triggered off by microelectronics must be understood in the context of the changing international division of labour . The price per transistor function has dropped in the last years by approximately a thousand times fron1 1 US dollar to 0 . 1 US cent . This cheapening of electronic components and the consequent profitability of substituting electronics for mechanics both inside and outside the electrical engineering industry, for example in the precision instruments industry and the watch and clock industry, is a consequence of the massIve relocation of intermediary processes in the production o f electronic components t o sites with cheap labour i n the underdeveloped countries and hence and opportunity to do without capital intensive investment. This relocation of production has in turn made possible and is making possible the rapid introduction of ever newer generations of electronic components . Let it be n oted, in passing, that the efforts of West European industry to maintain their competitiveness in the world by developing new technologies , of which microelectronics is only one among many, receive massive support from the governments of many West European countries as West European firms are encouraged and assisted by the State in planning and implementing their decisions to invest in the relocation of their production to underdeveloped countries . There is no doubt, however, that relocation and rationalization are
1 28
TRANSFORMING THE WORLD-ECONOMY?
not only intimately linked to the West European labour market situa tion described above, but they are also generating overcapacity in many industrial sectors of Western Europe and throughout the world . The resulting intensification of international competition will mean bankruptcy fo r many companies , or at best an attempt to save their skins by merging . Conversely, companies who are successful in con " ducting their operations , predominantly multinational corporations , are in a position to appropriate enormous surplus profits, as can already be seen in many balance sheets . Further worldwide concentra tion and centralization, or in other words , an extension of oligopoly and monopoly on a global scale are becoming the order of the day. Given the world market context , described above, of West Europe' s social and economic development, there are perhaps only two alterna tives that need to be considered as relatively long-term possibilities : a) the continuation of the developmental trends we have already indicated ; and b) that West Europe increasingly develops along the lines that can currently be observed in the case of the US economy. The second alternative appears to be the more likely, in other words , given the increasing effects of relocation and rationalization , we nlay anticipate a long-term shift in manufacturing conditions that once again favours sites in West Europe. There are three . reasons for anticipating this trend on the basis- of what has already been s aid about the effects of the current changes : 1 As a result of rationlization and relocation , there will be an absolute decline in real, and even perhaps in nominal, wages in West Europe; there will be an absolute increase in the size o f West Europe' s industrial reserve army . 2 I n many cases , technological developments will make it more profitable to operate a capital-intensive, automatic production process , run with virtually no labour, than a predominantly labour intensive process relying on cheap wage labour in underdeveloped countries . 3 In underdeveloped countries , where the obj ectives promised by the relocation of production and the development of export-oriented industry remain unfulfilled , the negative economic and social con sequences will inevitably create political unrest which will ultimately make it impossible to valorize capital at many of to-day' s profitable sites in the Third World countries . The analysis carried out so far allows us to indicate in broad outline which of the so-called issues in the programmatic statements s ubmitted for a ' New International Economic Order' , are meeting resistance - and likewise will meet resistance in the future - from West European firms , trade unions and governments , or conversely, to what extent they coin cide with the interests of these groups and for this reason, as far as West Europe has any say in the matter , will be carried through.
WESTERN EUROPE' S ECONOMIC AND SOCIAL DEVELOPMENT
129
Naturally the reactions of the different power groups will vary from co untry to country depending on the particular political, economic, and historical circumstances of each country; but these variations must h ere be left unexamined . The classification proposed by UNITAR divides the issue areas o f a ' New International Economic Order' into six main groups : develop m ent financing, international trade, industrialization and technology , food and natural resources , institutional and organizational policy, and finally social problems . These six main issue areas may in turn be collapsed into two : on the one hand issues related to the adjustment of the supranational trade and monetary-related political superstructure ·to the structural changes in the world economy, and on the other hand issues which constitute a potential threat to the capitalist structure o f the world economy itself. If we take into account the developmental trends in Western Europe exanlined above, we may anticipate that the firms, trade unions and governments of Western Europe will adopt the following attitudes towards these two broad categories of issues . West European firms (West European capital) will fully support those proposals which are likely to achieve a realignment of the supranational political structure and which facilitate and promote the transnational reorganizatiDn of production and the transnational mobility of the companies . They will be equally adamant about rej ecting out of hand and without discussion any proposal belonging to the second category, namely those that con stitute a threat to the capitalist structure of the world economy itself, and they will do everything they can to stop them . The West European trade unions will in the first instance adopt a positive, though restrained, attitude to the proposals for realigning the supranational political structure, an attitude. which is to be understood in terms of their perception of the power relations. But it is also possible that , as a result of the negative social consequences of continued reloca tion and rationalization, they will become a potential force behind the proposals which constitute a threat to the capitalist structure of the world economy, if - and this is at least a pOSSI bility which should not be excluded - they become politicized . As far as the first category of issue areas is concerned, West European governments and also the European Community Commiss ion will be caught in a dilemma on the one hand, to yield to the pressures to promote the competitiveness of West European firms on the world market and, on the other hand , to pacify social unrest . Their policies will therefore oscillate between restrained endorsement and restrained rej ection. Moreover, whatever policies they adopt , they will be con strained by the fact that their only instruments for coping with the structural changes in the internationally integrated economy and the effects and adj ustment pressures generated by these changes are those of national state policy or at most a regionally coordinated policy (the
1 30
TRANSFORMING THE WORLD-ECONOMY?
EC). These dilemmas were articulated by the Chancellor of the Federal Republic of Germany , Helmut Schmidt , in a speech deliver�d i n London i n September 1 977 . According to a repo.rt i n the Financial Times, he succinctly summarized the situation as follows : Nations , he .said, had lost their autononlY in economic policy . 33 AS far as the second category of issue areas is concerned , . all proposals containing even the merest hint of a threat to the capitalist structure of the world economy have so far been rejected by the states of Western Europe , even those with social democratic governments . The official reason given is always ' concern for the free market economy' . Of the j 3 issue areas of a 'New International Economic Order ' included in the UNITAR classification , the following five in particular belong to the first broad category, namely those that aim at adj usting the supranational trade policy superstructure to the structural changes in the world economy: 9) Appropriate adjustments in international trade, so as to facilitate the expansion and diversification of Third World exports ; 1 0) Lowering of tariffs and non-tariff barriers on the exports of manufactures from the Third World; 1 2) Promoting the par ticipation of Third World countries in world invisible trade; 1 7) The negotiated redeploYlnent of certain productive capacities from deve loped to developing countries and the creation o f-new industrial facili ties in developing countries ; 20) Elimination of restrictive business practices adversely affecting international trade especially the market share of developing countries . Of these five issue areas , the first four are regarded by West European firms themselves , with certain exceptions, as desireable, for they involve improvements in the international trade structure and measures to 'adj ust' national developments to the changing structure o f the world economy, that i s now a fact o f life . Consequently we may therefore anticipate that the removal of the industrialized countries ' tariff barriers and even, on a selective basis , their non-tariff barriers on exports from underdeveloped countries will find support among West European firms . This also means that all measures which facilitate the relocation o f production facilities to underdeveloped countries wil l receive support . Thus there is n o doubt that i n this case support will be forthcoming from West European firms for those measures which will in the last resort have no effect in general on the export of · manu factured products from underdeveloped countries to industrialized countries , but which will remove restrictions on the export o f goods which West European firms are themselves producing in the underdeve loped countries . The same is true of the support for measures aimed at developing new industrial facilities in the underdeveloped countries . Here, too , it is not a question of new industrial capacities for the under developed countries in general, but of new facilities (production installations) controlled by West European firms in underdeveloped countries . 34 We can readily assume that the creation o f these facilities
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will b e encouraged since they are precisely in the interests of the firms thems elves , but not in the interests of the underdeveloped countries . All rh etorical commitments uttered on behalf of the firms · against the proposition that 25 070 of world industrial production should fall t o the Third World in the year 2000 are for this very reason scarcely t o be taken seriously . Li kewise we may also safely anticipate that protec tionist policies in Europe and throughout the world will in general b e rejected b y the firms , apart from certain exceptions . As far as other issues are concerned, restrictive business practices serve the functio n o f ensuring that control o f production in underdeveloped countries and correspondingly the control over technology, management, marketing , turnover , and in particular p rofits remain securely in the hands o f the firms . All proposals which would mean for the firms a weakening in the efficacy of these instruments of control will therefore· meet with their resistance . The attitude of the trade unions o f Western Europe up to now suggests that they are more or less aware o f the changed conditions o f capital valorization and , unlike the U S trade unions , they are making hardly any attempt to halt the trend towards a n ew international division of labour by demanding a protectionist policy . Instead the demands coming from the trade unions urge that b oth national and supranational organization provide ' adjustment measures ' for employees who are affected by relocations and that b oth n ational and supranational measures be taken to promote the establishment of new, technically superior industries in West Europ e , thereby creating more j ob s . What this means for the development o f the Third World, h owever, i s nothing more than the fact that the demands articulated by the West European trade unions presuppose the continued techno logical leadership of the traditional industrialized countries and the further dependency of the underdeveloped countries on modern technology . The demand made b y West European trade unions , i n particular t o the E C Commission, t o negotiate t h e abolishment o f obstacles to exports from underdeveloped countries only in those cases where the so-called ' social clauses ' are contractually guaranteed i s at least the first indication of a proposal which , if implemented , would contribute to the improvement o f the working conditions of employees throughout the world . The social clauses are intended to guarantee that the minimum standards set by the I LO for working conditions and wages be instituted with the help of the supranational apparatus even in underdeveloped countries. The fluctuating attitude o f West European states and o f the EC Commi ssion t owards particular proposals for a removal o f interna tional trade barriers and for the construction of industrial facilities in underdeveloped countries , an attitude that is shaped by the dilemmas mentioned above , b ecomes evident from the following reports :
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TRANSFORMING THE WORLD-ECONOMY?
The German Federal Government requests its . partners in the European Community to commit themselves unambiguously to the free enterprise system . On Tuesday, the Minister of Economic Affairs , Otto Graf Lambsdorff, submitted a German memorandum on the BC 's structural policy to the Council of Ministers meeting in Brussels . The Council 's Danish President proposed that the memorandum be used to introduce a debate on basic issues in June, but already initial reservations have been provoked by the memorandum . .. . . In making his plea for a free enterprise system, the Federal Minister had taken as his starting-point a request from Ireland to restrict imports of footwear from Poland . According to Vice-President Wilhelm Haferkamp, the Community is also currently holding talks with South Korea and Hong Kong on the problem of footwear i mports . It was suggested that efforts be made on the basis of a regulation issued by the Commission to monitor imports by means of previous notification , efforts which in Germany's view could provoke excessive pessimism . . . . Lambsdorf informed the Council of Ministers that the Federal Government had not vetoed exceptional branch provisions, in special cases such as steel and textiles . Any accumulation of such special branch provisions, however , would impair the overall efficiency of the economy . Many branch problems stem from cyclical rather than structural causes , he said. Lambsdorff admitted that inflation caused distortions , exchange rate imbalances , price increases of raw mterials and energy, import pressures originating in developing countries , wage costs , technological progress , shifts in demand structure , and industrial capacities in excess of market demand necessitate far-reaching structural adaptations of vast areas of the economy . But Germany is convinced that it is primarily up to business to master these problems . The most important stimulus for transforming outdated structures , he asserted, is market competi tion . Therefore, further markets throughout the world n1ust be opened up . Community funds as well as financial assistance by individual member states of the Community should be channeled into proj ects enhancing structural change rather than measure s stabilizing traditi onal structures . The growing pessimism that is extending to the whole world would be strengthened should the Ee (an important trading partner) opt for protectionist devices . Reactions to Lambsdorff' s . statement were fairly mixed . The British Secretary of State for Foreign Affairs , David Owen, was not prepared to separate the protectionist issue from the difficulties in the fields of economic structure, labour market , balance of payments, and currency problems . The French Minister for Externa l Trade , J ean-Fran�ois Deniau , reacted in a similar vein . Italy an d Denmark strongly committed themselves to the free enterprise system . The member of the EC Commission, Vicomte Etienne
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Davignon, stresses that the EC's structural problems are intimately connected in their external and internal aspects . Speaking on behalf of Belgium , which has to struggle with extraordinary structural problems , Foreign Minister Henri Simonet cast doubts on Germany' s stand on questions of economic policy, suggesting that it was somewhat out of date. 3S While national leaders are still vowing to avert all-out protec tionism, it is rapidly becoming the overriding long-term worry . Unless slow economic growth and the res sort to protectionism are reversed, U . K . Foreign Secretary David Owen cautions , these trends will frustrate development of the poor countries , which are counting on heavy exports of manufactured goods· to rich nations to make it feasible for the poor to build factories big enough to be efficient . If the poor countries are held down, he predicts , 'we shall face anarchy and chaos by the end of the century. ' He is confident this danger can be averted by a sensible balance between free trade and protectionism.36 Thus the policy adopted by West European governments and the EC Commission towards the influx of imports from developing countries will probably continue to reduce tariff barriers where these barriers adversely affect imports originating from West European production plants in developing countries . On the other hand , however, it is equally likely that there will be increasingly a selective application of various types of non-tariff barriers in order to keep out imports that are regarded as undesireable, particularly in terms of their possible adverse social consequences . 37 As far as the proposals contained in issue area no . 1 1 are concerned, there seems to be no likelihood at all that the governments of the West European countries will be willing to enter into negotiations for the reimbursement of monies derived from duties and taxes imposed on imports from underdeveloped countries . On the contrary, there is reason to expect that the governments of the industrialized countries will impose taxes on the turnover of imports on the domestic markets , by introducing and extending import turnover taxes , value-added taxes , etc. , in an attempt to absorb an everincreasing share of the economic surplus produced in the developing countries . These and other state revenues will then be used by the West European govern ments to finance a massive endeavour to improve the site conditions in their own countries in the hopes of influencing the firms ' decisions to maintain or expand production at home . The issue areas which deal with raw materials and indebtedness raise several proposals for the adaptation of the supranational superstructure. These proposals are at present viewed by the West European governments exclusively from the standpoint of the need to secure, firstly, supplies of raw materials to be processed and consumed
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TRANSFORMING THE WORLD-ECONOMY?
in their own countries , and , secondly, repayment of debts originating from private lendings to underdeveloped countries . I n summary it may be said that many of the proposals for the adapta tion of international trade and monetary structures raised by the dis cussion of the need for a ' New International Economic Order' find widespread support in Western Europe ; from the West European firms , which are clearly taking the initiative; from the West European trade unions , which are acquiescing from a sense of powerlessness ; and from the West European governments , whose ambiguous attitude i s manifested in their contradictory policies . But i t i s j ust as clear, on the other hand , that the realization of these proposals , although allegedly in the interests of the underdeveloped countries , do not correspond to the interests of the peoples of the underdeveloped countries but in fact serve the interests of capital valorization . The obj ectives of a ' New International Economic Order' , which point towards a changing of the capitalist structure of the world economy itself, are especially evident in issue areas no . 1 9) Regulation and supervision of the activities of transnational corporations in promoting economic development of the Third World ; 2 1 ) The right o f State t o nationalize foreign property in accordance with their own laws ; 23) The right of States to full permanent sovereignty over their natural resources ; and 28) Free choice of States of their economic, social and political system and of their foreign economic relations . It follows from the analysis w e presented earlier that at present there is no prospective whatsoever that West Europe will be receptive to any of these proposals , they will not even be discussed, let alone find political support . There is no need to explain why these proposals for changing the capitalist structure of the international economic order are being dismissed without further discussion by the companies , L e . b y capital itself. Not only will they continue t o b e dismissed, but they will also be challenged by counterproposals for a stabilization of the capitalist structure of the world economy. There is already a compre hensive catalogue of such counter-proposals , which go under such names as reprivatization, free investment zones , cancellation of labour legislation, etc . As for the West European trade unions , their response t o the proposals for changing the capitalist structure of the international economic order' has hitherto been confined to announcing the need for new strategies , should the social problems that have already resulted from the recent structural changes in the world economy continue to increase . However , so far there is no indication what the content of such strategies could or will be. On the other hand, we must not overlook the fact that it is precisely the West European working class and their organizations , the West European trade unions, who will be increasingly compelled by current developments in the world economy to take note of the demands for a change in the capitalist structure of
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international economic order . The attitude of the· West European governments towards the '-J' u...., oJ ' for a change in the capitalist structure of the international econo mic order is, as we have already demonstrated , at present a nega . tive one, even among the social democratic governments . What their attitude in the future will be, will depend , at least as far as the social democratic governments are concerned, on the future balance of power between West European firms and West European trade unions . The analysis we have so far carried out leads us to the conclusion to the extent that the West European powers are in a position to at, th influence the course of international development, a change in the fundamental structures of the international economic order is not · on the cards. Social international development will therefore continue to be shaped primarily by the forces of the existing ' order' , who se consequences have been well described in plain and unadorned language by UNITAR·: .....LoJ .
The existing international economic order is unsatisfactory for all members of the international community. It produces widening gaps between rich and poor nations , and between wealthy and marginal populations within nations ; it fails to assure a life free of alienation and unemployment in industrialized countries and free from hunger and deprivation in developing countries , and it makes the pro gressive achievement o f self-reliance difficult or impossible for the maj ority of nations and peoples . If continued unchanged , the present internationai economic order would create more injustice , suffering , and conflict . 3 8 The existing international economic order is the capitalist order and disorder of the world economy. The proposals which have so far arisen in the international discussion of a new international economic order, although they hint at the necessity of overcoming the existing structure, offer hardly any ideas for an alternative structure of the world economy. The discussion has not yet revealed any suggestions for a concrete utopia o f a socialist structure and a socialist development of the world economy. For those who are advocating the necessity of a New International Economic Order to serve the interests o f the people all over the world , the task of outlining, and struggling for , such a concrete socialist utopia of the international economy still remains .
Notes 1 A detailed exposition of the structural changes in the world economy and their effects outlined here is given in Folker Frobel, JUrgen Heinrichs , Otto Kreye, Die neue internationale Arbeitsteilung. Rowohlt Taschenbuch Verla.g, Reinbek bei Ha.mburg, 1 977.
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TRANSFORMING THE WORLD-ECONOMY?
2 See Ernst Feder, Stra wberry Imperialism: An Inquiry into the Mechanisms of Dependency in Mexician Agriculture, Editorial Compesinas , Mexico City, 1 978; and by the same author, The New Agrarian and Agricultural Trends in the Underdeveloped A gricultures, manus'cript, 1 97 8 . 3 Frankfurter A llgemeine Zeitung, Blick durch die Wirtschaft, 1 9 December 1 978 . 4 United Nations , Secretariat of the Economic Commission for Europe, Economic Survey of Europe in 1977. Part
1977, New York, 1 978 , p . 1 . 5 Ibid . , p. 3 .
/,
The European Economy in
6 Ibid. , pp. 1 3 arid 1 5 . 7 Austria, Belgium, Federal Republic o f Germany, Finland , France, Great Britain, Holland , Ireland , Italy, Norway, Spain, Sweden Switzerland, Yugoslavia, 8 Cf. ILO , Die Welt der A rbeit und der Entwicklung. Informationen und A rtikelfur die Presse, Geneva, August 1 978, pp. 12 and 1 3 . 9 These are the figures give by Helmut Minta (Vice-president o f the Federal Department for Labour, NOrnbetg) . Cf Helmut Minta, Rationalisierung und Arbeitsmarkt. Lecture delivered at the RKW-Congress , ' R ationalis ierung und Arbeitskrafte' , 2 November 1 978 , Munich. 9a 1 billion 1 ,000 million (translator's note) . 1 0 Handelsblatt, 24 September 1 97 8 . 1 1 See for example the reports of the Federal B ank of Germany, November 1 97 7 : the total amount of fixed capital investment in 1 975 was 66 .8 billion marks, of which 62 billion mark� , or approximately 94070 , were replace ments of capital assets , including investments for rationalization. 12 Cf. Handelsbatt, 6 January 1 978 . 1 3 Cf. Frankfurter A llgemeine Zeitung, Blick durch die Wirtsch aft , 24 October 1 97 8 . Cf. Frankfurter A llgemeine Zeitung, Blick durch die Wirtschaft, 1 2 July 14 1 97 8 . 1 5 Cf. Fran kfurter A llgemeine Zeitung, 8 November 1 978 . 1 6 Cf. Nachrichten fur A ussenhandel, 1 3 July 1 97 8 . 1 7 Cf. Metall, Zeitung der Industriegewerkschaft Metall, 1 0 March 1 97 8 . 1 8 C f. Nachrichten fur A ussen h andel, 6 March 1 978 . 1 9 Cf. Handelsblatt, 6/7 January 1 978 . 20 Cf. Handelsblatt, 1 9 April 1 97 8 . 2 1 C f . Die Zeit, 28 April 1 97 8 . 22 C f. Frankfurter A llgemeine Zeitung, 22 March 1 978. 23 Cf. Handelsblatt, 26 October 1 978 . 24 C f. Handelsblatt, 1 6/ 1 7 December 1 977. 25 C f. Handelsblatt, 30 January 1 97 8 . 26 Cf. Nachrichten fur A ussenhandel, 20 January 1 978. 27 Cf. Nachrichten fur A ussenhandel, 24 November 1 977. 28 H . P . Drewry (Shippi ng Consultants) Ltd , The Emergence of Third World Shipbuilding: A n Economic Study, London 1 97 8 . 2 9 Handelsblatt, 2 5 April 1 978 . 30 Frankfurter A llgemeine Zeitung, 1 3 April 1 97 8 . 3 1 Herbert Giersch , Z u den Forderungen nach einer neuen Weltwirtschaftsor dnung. In B . Schiemenz (ed .), Weltwirtschaftsordnung und Wirtsch aft=
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s wissensch aft: Vortriige der Festveranstaltung des Fachbereichs Wirts chaftswissenschaften der Philipps- Universitiit Marburg aus A nlass des 450-jiihrigen Jubiliiums am 26. Mai 1977. Gustav Fischer Verlag, Stuttgart
and New York, 1 978 , p . 27 . 32 Ibid . 33 Financial Times, 29 October 1 977 . 34 What both of these measures ultimately entail for underdeveloped countries cannot perhaps be more clearly expressed than the following evaluation of the economic situation of Taiwan, a paradignatic case for export-oriented industrialization, by the US�Department of Commerce: �Dependent on world economy Taiwan will continue to be a small factor in the world economy, extraordinatily sensitive to the vicissitudes in the economies of its leading trading partners, the United States and Japan, which together account for 54 per cent of its total foreign trade. The prospects for continued rapid growth in 1 979 and beyond hinge large, therefore, on conditions in the import markets of the developed countries, particularly in the United States . In this regard, many observers foresee some deceleration of the export growth rate and this of the GNP real growth rate in 1 979. ' (Business America, 1 ( 1 978), p. 26.) 35 Cf. Suddeutsche Zeitung, 3 /4 May 1 978 . 36 Cf. In ternaiional Herald Tribune, 7 July 1 978. 37 See for example a documentation by the ' Bundesverband des deutschen Gross- und Aussenhandels' , released in June 1 978. 38 UNITAR, Progress in the Establishment of a New International of a New International Economic Order: Obstacles and Strategies. A Joint Project of UNITA R and the Centerfor the Economic and Social Study of the Third World. Project OulUne, 1 978.
5 The Non-Aligned Movement and the New International Economic Order * Timothy M . Shaw
' The " new international order" is , at one and the same time, a program and an analysis . It is a progr