Transnational Capital and Class Fractions

The Amsterdam School Perspective Reconsidered

Bob Jessop, Henk Overbeek

• Publisher: Routledge
• Year: 2018
• Print ISBN: 9780815369592
• eBook ISBN: 9781351251921
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Political Ideologies
• Index: Politics & International Relations

Emerging in the late 1970s, the Amsterdam School's (AS) most distinctive contribution to international political economy was the systematic incorporation of the Marxian concept of capital fractions into the study of international politics. Contending that politics in advanced capitalist countries takes place in a fundamentally transnationalized space in which the distinction between 'domestic' and 'international' has blurred, it shows how in this space, politics is structured by competing comprehensive concepts of control.

Presenting a concise and instructive introduction to the origins, development and significance of this distinct approach, this book provides a unique overview of the School's contemporary significance for the field. Offering a new generation of critical scholars the opportunity to become acquainted at first hand with some of the contributions that have shaped the work of the AS, the contributions present critical commentaries, discussing the merits and shortcomings of the AS from a variety of perspectives, and undertake a (self-) critical evaluation of the current place and value of the AS framework in the broader landscape of approaches to the study of contemporary capitalism.

Written for scholars and students alike, it will be of interest to those working in international political economy, international relations and political science, political sociology, European studies and branches of academic economics such as regulation theory and institutional economics.

PART I

The Amsterdam School

Key contributions

1

The Dutch bourgeoisie between the two world wars (1979)

Ries Bode

Introduction

This article aims to highlight the changes in domestic and foreign policy orientations within the most important segments of the Dutch ruling class during the interwar period (1918–39).¹ Careful research into such segments is especially relevant because this field has been dominated for too long by a Marxist school of thought influenced by vulgar materialism. The latter holds that bourgeois politicians, as far as they enter politics from specific enterprises, would be directly motivated by the immediate commercial interests of these enterprises. In this view, identifying the personal connections between politicians and corporations suffices to support the thesis that the state has become the instrument of specific monopolies. This so-called Stamokap-theory,² which evolved especially in the German Democratic Republic and France, has been applied to the Dutch situation by Baruch (1962).

Without excluding the possibility of direct intervention, this article assumes that the political currents³ within the bourgeoisie, although exposed to outside influences, cannot be reduced to their importance to specific group interests. Accordingly, the article analyses changes in national and foreign policy orientation against the background of traditions associated with specific segments, because these appear to form the interpretive and calculative framework for leading politicians. The article furthermore attempts to place these changes within a global overview of developments in Dutch capitalism within the interwar period that is the focus of this study. Because, even though they are caught within their own inherited ways of thinking, different currents in the bourgeoisie must always be able, on an ideological level as well, to provide answers to the problems of the day in capital accumulation. After all, the ideational insofar as it is characteristic of a certain segment within the ruling class is an integral part of the mode of production. This does not just change simply through revolutions in production technology. Rather, a continuous process of change takes place, sometimes slow, other times rapid, shaking up the totality of economic, social, and cultural relations. The reorganization of production is accompanied by changes in all other aspects of this totality. This explains why the restructuring of capital must be interpreted ‘not just in logical terms, but as a constant struggle of the bourgeoisie to reorganize this whole complex of social conditions in the interests of continued capital accumulation’ (Holloway and Picciotto 1980: 132). Thus, any treatise on the development of capitalism or on the ideas and actions of the ruling class should allocate a central role to concrete history.

With this in mind, this article is structured as follows. The first part covers some key structural characteristics of the Dutch economic situation after World War I (WWI). The second part discusses possible theoretical distinctions regarding capital and the bourgeoisie, highlighting that between capital fractions and fractions of the bourgeoisie. It then covers various orientations within the bourgeoisie as well as their development in response to the crisis of the 1930s.

Structural changes in Dutch capitalism

War profits and reconstruction credit

WWI proved lucrative for Dutch capital. Already in April 1916, the London Economist estimated Dutch war profits to be around 2.4 billion Dutch guilders, judging this as ‘not unsatisfactory for a nation of six million people’ (cited by Smit 1975: 9).

The profits were vast indeed, especially for agricultural exporters, banks, trading companies, shipping, and colonial capital. Despite their oftentimes sharply conflicting interests, these businesses managed to jointly circumvent the British- and German-imposed limitations on deliveries from the Netherlands to the respective warring states. Food exports to Germany, for example, risked being raised to such an extent that there was a threat of famine within the Netherlands itself (Roland Holst 1971 [1932] II: 118–19).

Behind the façade of profitable neutrality, however, the government clashed with the supervising bodies that were created at the instigation of the warring parties: the Dutch Oversea Trust Society (Nederlandse Overzee Trustmaatschappij, NOT) and the Dutch Export Society (Nederlandse Uitvoermaatschappij, NUM). Within the government, an intense struggle took place over the control of the NUM between the ministers Treub and Posthuma. The former represented the pro-English shipping interests, while the latter represented the major agricultural exporters and was supported by the powerful grain trader Kröller. When Treub managed to centralize exports to Germany in the NUM, with the purpose of imposing stricter controls, Posthuma responded by redirecting control of export policies into the hands of the so-called ‘Commission of Assistance to Execution of the Distribution Law 1916’ (Commissie van Bijstand tot Uitvoering van de Distributiewet 1916) – and thus into the hands of none other than Kröller (Smit 1975: 33). In contrast, the NOT predominantly favoured the Allies.

The most explosive clash between pro-English and pro-German elements followed the seizure of Dutch merchant ships by the United States, which had only recently joined the war. Heldring recounts how the Cabinet, in the absence of Treub, had decided to declare war on the Allies. When Treub found out, his threats to step down combined with the unfavourable news reports about the progress of the German war effort tipped the scales towards revoking the decision (Heldring 1970: 682–3; cf. Smit 1975: 144).

After the war, the capital accumulated during it was invested primarily in defeated Germany. Class solidarity with the worn-out German bourgeoisie played a part here:

The other neutrals are only interested in receiving recognition for their claims on Germany and do not consider extending the new credit that we, the Dutch, deem necessary to enable Germany to make the investments to get its industry back on the rails, thus putting a stop to Bolshevism.

(Heldring 1970: 328–9)

The only difference of opinion concerned whether the credit extensions to Germany should be bilateral or occur in the context of an international arrangement (Heldring 1970: 345).

Hardly any conditions were attached to these credits. Thus, Dutch industry could hardly reap any benefits from export advantages, which, according to Bosch (1948: 648), indicated weak ties between bankers and industrialists. This occurred even though, during the war, the Germans had imposed tight conditions on, for example, the delivery of steel. This had been one of the reasons for trade and shipping capitalists to support the creation of the leading Dutch iron and steel works, Hoogovens⁴ (see van der Pijl 1978: 13). Industrialists, on the other hand, severely criticized these credit policies, such as the May 1920 Credit and Coal Agreement, which was intended to finance raw material supply to German industry (Blaisse 1952: 79).

Dutch credits to Germany amounted to around 200 billion Marks. The significance of this number becomes apparent when one considers the total value of outstanding loans of the four largest German banks in 1922: 269 billion marks (Blaisse 1952: 79). The generous credit extension to Germany even culminated in a situation in 1920 that obliged several Dutch enterprises to turn to the American capital market (Bosch 1948: 294). Reinforced by the fact that the government was also resorting to the capital market, interest rates in the Netherlands quickly rose to an unprecedented level. In contrast, German profit rates dropped sharply after 1920 because of social unrest, a global crisis, and runaway inflation – which rendered a large chunk of the Dutch investments worthless.

Industrialization and economic cycles

A familiar situation was now developing in the Netherlands. The low profit rates from overseas investments redirected the interest of bank capital to financing national industry. This had also occurred during the period of the long, stagnating wave from 1873 to 1890. As then, the Rotterdam Bank took the lead.

Of course, Dutch industrialization after WWI must be seen against the backdrop of international conjunctural developments. These can be periodized as follows:

1. A boom from the beginning of 1919 until the end of 1920, which was primarily due to reconstruction efforts in the war-damaged countries. As far as Dutch domestic investments are concerned, the boom can be ascribed to attempts to reduce the dependency on the import of strategically important raw materials, as well as to the massive expansion of the merchant fleet (Bosch 1948: 290).

2. A downturn from 1920 until the summer of 1923, caused by economic and social developments in Germany. Dutch exports were troubled by so-called currency competition, and large losses were incurred on the capital transferred from the Dutch East Indies to Germany.

3. The stabilization of international capitalism from 1923 onwards resulted in another boom, which lasted for six years. Backed by American and (as a good second) Dutch capital, large investments were made in Germany. The speculative character of this boom expressed itself in the 1929 Wall Street crash. The European banks were in rough waters as well, either because they had used short-term credits as a basis for medium- and long-term industrial financing or because they were caught up in bankruptcies elsewhere as a result of the internationalization of credit relations. An example of the latter was Hope & Co., which had a large claim on a Dutch daughter company of the failing Österreichische Kredit Anstalt (Austrian Credit Institution) (Heldring 1970: 928).

4. The crisis at the start of the 1930s. Its absolute low for the Netherlands can be placed around 1933, although the crisis continued unevenly across various industries, and stagnation lasted in certain respects until 1936 (de Graaff 1952: 27; Keesing 1952: 303).

The two booms were marked by large-scale industrialization. From 1923 onwards, the expanded investments by existing enterprises became especially important in this respect (Bosch 1948: 299; de Graaff 1952: 24). Directly after WWI, and in some cases even before its end, many new enterprises were established in industrial raw materials and basic products sectors (such as Hoogovens, Koninklijke Zout, and Limburg coal mining). As far as financing was concerned, these projects copied the old tradition of the Dutch East India Company (Vereenigde Oost-Indische Compagnie) and the Dutch Trading Company (Nederlandsche Handel-Maatschappij, NHM): several lenders undertake a joint project and minimize the risk by means of state participation.

The need for an independent supply of raw materials was broadly acknowledged in the light of the dependency that had become apparent during the war. So, the founding of Hoogovens dovetailed with the interests of ‘capital in general’, although the breadth of the initiative would lead to sharp contradictions within its leadership. These contradictions, in turn, were exploited by foreign interests. The most important point remained, however, that in contrast to the situation in England, Germany, or the United States, no autonomous fraction of capital developed within the heavy industries sector (Bode 1978: 148 and 63; van der Pijl 1978: 151–9). Apart from this specifically Dutch development of the – preferably state-backed – founding of an independent raw materials and semi-finished goods production base, another element in the industrialization of the Netherlands during this period was the ‘catching up’ with the so-called second industrial revolution, which involved the generalized application of mechanically produced electric and combustion engines (Mandel 1972: 120–1).

This especially applies to the 1923–29 boom. As far as new technologically advanced production picked up steam, it did so in industrial branches that had already been developed in other capitalist countries in the 20 years before WWI. Opportunities for Dutch industry opened up mainly as a result of international political developments that had disrupted the traditional division of labour between Dutch and German capital. The long-term difficulties of German capitalism enabled companies like Philips to capture a fair market share from the German electro-technical industry – albeit temporarily (Teulings 1975: 71, 74).

We should now consider the consequences of two aspects of this emerging situation on the relations between Dutch industrial capital and international capital: on the one hand, the political-strategic background to industrialization in the raw materials sector and, on the other, the fact that a large part of industrialization was occurring in areas that had already been exploited abroad for some time. Two outcomes are significant.

First, a lack of effective state protection forced Dutch industrialists to produce on the same technical level and scale at which their foreign competitors were operating. Where this was not achieved, technological backwardness had to be compensated through a relatively stronger exploitation of labour. This also explains why, in this modern industry, you would find relatively few medium-sized enterprises, apart from several enterprises in sectors characteristic of the second industrial revolution that were huge for Dutch standards (Klein 1975: 156).

Second, it puts the early internationalization of the Netherlands in perspective. The participation of a company like Philips in international cartel agreements resulted not from a position of power, but because it was tolerated and exploited by the major American, British, and German electro-technical conglomerates (Teulings 1975: 21). Similarly, one can only explain the international character of multinational companies like Unilever and Royal Shell (including their binational ownership structure, which remained unique right up to the 1970s) by the relative weakness of their Dutch constituents. This weakness resulted from technological limitations but especially from the incapability of the Dutch state to protect the longer-term colonial interests of these enterprises.

The development from 1929 until 1940

Despite the general malaise of the ‘crisis years’, industrialization continued in the 1930s. This time it did not concern extensive investment but involved two new forms of intensive development: a redirection of the industrialization process and, notably, the mechanization of production. Another difference from the 1920s was that, instead of being concentrated in upturns, investments we...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• List of illustrations
• Notes on contributors
• Foreword by Gerd Junne
• Original sources and acknowledgements
• List of abbreviations
• Introduction – political economy, capital fractions, transnational class formation: revisiting the Amsterdam School
• PART I: The Amsterdam School: key contributions
• PART II: Critical commentaries
• PART III: The Amsterdam School and the political economy of contemporary capitalism
• Index