Globalization or Empire?

Jan Nederveen Pieterse

• Publisher: Routledge
• Year: 2004
• eBook ISBN: 9781135934798
• Topic: Politics & International Relations
• Subtopic: Political Economy
• Index: Politics & International Relations

In this smart and concise examination of the trends driving contemporary globalization, Jan Nederveen Pieterse argues that the United States' pursuit of global primacy is based upon a complex melding of neoliberal economics and hegemonic politics. Do alternate capitalisms offer viable alternatives to the American way? Globalization or Empire? looks at globalization with acuity and thoughtfulness and uncovers its underlying dramas.

CHAPTER 1
Neoliberal Globalization

During the past two decades the dominant approach in policy has been neoliberal globalization, not in the sense that it is all there is to globalization, but in the sense that it became a global regime. Most protest against globalization concerns neoliberal globalization, and arguably this is the actual problem, rather than globalization per se. Contemporary globalization can be described as a package deal that includes informatization (applications of information technology), flexibilization (destandardization in the organization of production and labor), and various changes such as regionalization and the reconfiguration of states. Since the 1980s, the growing impact of neoliberal policies add to the globalization package, deregulation (liberalization, privatization), marketization (unleashing market forces), financialization and securitization (conversion of assets into tradable financial instruments), and the ideology of lean government. This chapter considers how this has come about and focuses on the economic and political shift within the United States to the South, the connection between the cold war and neoliberalism, and the Washington consensus.

Studies generally explain the onset of neoliberalism as the confluence of the economic ideas of the Chicago school and the policies of Ronald Reagan and Margaret Thatcher. A further strand is the Washington consensus, the economic orthodoxy that guided the IMF and World Bank in their policies through the 1990s and turned neoliberalism into global policy.

Adding detail to this account, Adam Tickell and Jamie Peck discuss the development of neoliberalism in three phases: an early phase of proto-neoliberalism from the 1940s to the 70s in which the main ideas took shape; a phase of roll-back neoliberalism in the 1980s when it became government policy in the United States and United Kingdom; and roll-out neoliberalism in the 1990s when it became hegemonic in multilateral institutions.¹

Like many accounts this focuses on economic ideas (of the Mont Pèlerin Society, Friedrich von Hayek, and Milton Friedman) and the policies of Reagan and Thatcher. But by locating the origins of neoliberalism in the realm of ideas and the theories of the Chicago school, this overlooks the actual economic policies that shaped “real neoliberalism” already before the Reagan era. The low-taxes, low-services regime envisioned by free market advocates already existed in the American South. Real neoliberalism in the United States in the 1970s and 80s meant the implementation of the low-wage, low-tax model of Southern economics. The political muscle of the Southern conservatives and the welcome mat of the anti-union South for corporations fleeing the Northeast is what gave the “Reagan revolution” its depth and punch. Eventually this led to the rollback of the regulatory and social functions of the state as a national trend.

The material matrix of real neoliberalism is the American South. This is worth considering for several reasons. Just as we don’t analyze Soviet society by reading the texts of Marx but by examining real existing socialism, we should look at the material political economy of neoliberalism and not just its theoretical claims. Had the American South with its low wages, high exploitation, and reactionary culture been upheld as the model of economic growth, it would never have exercised the glossy appeal that the “free market” did in theory. The Chicago school provided an economic rationale and intellectual gloss to what was, and remains for the majority, a backward, conservative and impoverished economic condition. Revisiting Chicago economics in order to understand neoliberalism is, in effect, revisiting smoke and mirrors (though neoclassical economists would not agree). A further omission in most accounts of neoliberalism is that it ignores the setting of the cold war and glosses over the affinities between neoliberalism and cold war strategies. Both these elements are fundamental to understanding the actual character of neoliberal globalization and its subsequent metamorphoses.

Dixie Capitalism

American politics has undergone a long conservative trend that has recently taken an aggressive turn; to understand this trend we must go back several decades in American history. When in response to stagflation in the 1970s the U.S. Federal Reserve raised interest rates, it prompted the onset of the debt crisis in the global South, which led to the IMF imposing its financial discipline and eventually the regime of structural reform. Meanwhile in the United States, corporations sought to retain their profitability by moving to low-wage areas of operation, which they found first in the American South.

The economic strategy of the American South was “based on low-wage, labor-intensive, high-exploitation production, and hostility to unions” and has its roots in the period after Reconstruction. During the New Deal the agricultural South and West had been modernized through vast state-capitalist projects of which the Tennessee Valley Authority is best known. But its tax structures, labor laws, and institutions did not change and remained as conservative and illiberal as during the days of post-Reconstruction. In the 1970s its industrial policy consisted of providing “a safe haven for ‘footloose’ capital seeking refuge from the regulatory and industrial relations regime and tax structures of the Northeast and Midwest.” The South was committed to low taxes on capital and limited social services and also had “a long tradition of using the law as a tool to build and protect a racialized political and economic order.”²

During the liberal sixties and in the wake of the 1964 Civil Rights Act, the expectation was that Fordism would spread southward and this would result in the “Americanization of Dixie.”What happened instead was the “Dixiefication of America.” The Southern model not only survived but became the way out of the 1970s economic crisis and the template for the Reagan revolution: “the economic development policies that we have implemented in the United States over the past three decades have taken on the characteristics of an up-to-date, modified version of those that have been in effect in the American South for decades.”³ Southern economics has its roots in plantation economics with rural oligarchies and a low-cost workforce that performs manual labor—slaves, segregated blacks, rightless migrant workers from Mexico under the Bracero program, and after 1964, many illegal immigrants. According to the economist Stephen Cummings, it is “the export of Southern and Republican conservative economic values to the nation that replaced the northern liberal values of the New Deal and the Great Society programs that set the country on the path to economic insecurity.” “The South has been a political greenhouse for conservative economic ideas from colonial times.”⁴

The Reagan reforms attacked the labor and civil rights movements, weakened workplace and environmental regulations, and cut back public services. This economic restructuring came with an antidemocratic cultural and racial backlash that had its beginnings in the 1960s with George Wallace in the South: “it was no accident that the groups Wallace attacked were the least powerful in society, such as welfare mothers and aliens—easy targets to scapegoat.”⁵ In 1971 the prison population in the South was 220 percent higher than in the Northeast; now nationwide incarceration rates began to approximate those that had long prevailed in the South.Within corporations management became punitive—all elements that feed into a low-wage, high-exploitation accumulation strategy. Adopting these strategies offered a way out of economic crisis and over time became the U.S. standard.

If the American South provided the material template, Chicago school economics provided the intellectual sheen. At a time of rapid technological change, a return to neoclassical economics offered a gloss of modernist minimalism. Hayek added a cybernetic twist by claiming that market forces provide superior circulation of information. Friedman’s monetarism attacked Fordism and New Deal capitalism. The Laffer curve (fewer taxes stimulate the economy and will yield more tax revenue) provided a rationale for rolling back government. Deregulation and tax cuts became bywords for achieving “competitiveness” and “flexibility,” while in effect these changes converged on creating a low-wage, high-exploitation regime.

The period from 1921 to 1933 may be considered as “the first conservative era” in the United States: “a period like the present characterized by the neo-liberal model that dominated the South: tax cuts, anti-unionism, income polarization, and so on. . . . A combination of democratic rebellion, economic crisis and globalization in the last three decades of the twentieth century created the conditions that permitted the nationalization of the Southern accumulation strategy and its associated racial political ideology and reasserted the neo-liberal nexus of ‘free economy, strong state.’ ”⁶ As the British economist Will Hutton points out, the origin of what became the Washington consensus lies in a Southern conservative campaign.

By 1979, when the Business Roundtable published its manifesto, essentially arguing for what was later to be dubbed the ‘Washington consensus’ (balanced budgets, tax cuts, tight money, deregulation, anti-union laws), with the Moral Majority and the NRA campaigning hard on conservative social issues, the conservatives . . . were on the move. . . . The center of political and economic gravity was moving to the south and west.⁷

While this goes some way to explain the profound conservative turn in American capitalism and society, another variable is Wall Street, which had played a destructive role in the 1920s, leading to the 1929 crash. The Reagan administration dismantled the New Deal regulatory structure that had been put in place precisely to counteract the speculative financial practices of the 1920s, and unleashed the financial sector. As Will Hutton explains in a detailed study comparing American and European capitalisms, with the institutional restraints gone, the Wall Street–driven preoccupation with short-term stock value gradually transformed the character of American corporations. Since corporations needed to show profits at the end of each quarter, the organizational weight within firms shifted to the financial department and elevated the status of financial over productive operations. The obsession with earnings led to fraud and eventually culminated in Enron and the cascade of related scandals.⁸ Both forms of capitalism, the high-exploitation capitalism of the South and Wall Street financial engineering, are essentially predatory and profoundly different from the productive capitalism that had been the basis of American economic success.

The Bush II administration adds a Texan chapter to the Southern magnolia model and reflects an ethos unlike any previous administration. The Texan approach is an aggressive strain of Southern conservatism; backed by oil wealth, it has more swagger than generic Southern conservatism. George W. Bush is the first Southern conservative and the first Texan conservative to be elected president: “thanks to rural over-representation in the electoral college, the alliance of the country church and the country club had captured Washington,D.C.” Michael Lind further describes this culture thus:

Although Bush’s ancestors were Northeastern, the culture that shaped him was made in Texas—a culture that combines Protestant fundamentalism and Southern militarism with an approach to economics that favors primitive commodity capitalist enterprises like cotton and oil production over high-tech manufacturing and scientific R&D. . . .⁹

While this sheds light on the Bush II administration, Lind easily lapses into schematic judgments, at times essentializes the South, assumes sweeping continuities over time, dichotomizes Texas elites into modern and premodern factions, and treats the attitude of part of the Southern elite as premodern (for instance, “the mentality of the traditional Texan businessman is that of the premodern ‘seigneurial’ elite”¹⁰). The historian Peter Applebome notes that “the South’s stock in trade has been the myth and reality of its distinctiveness: the only part of the nation with institutionalized apartheid; the only part of the nation to know the crushing burden of losing a war.”¹¹

There is an American “Dixie industry” that produces a “Southern mystique,” which operates as an “internal orientalism” within the United States. This comes with the usual North-South dichotomies of modern-traditional, rational-irrational, secular-fundamentalist, urban-rural, tolerant-racist that are familiar from other regions of the world.¹² So while there is a “Southern exceptionalism” tucked within American exceptionalism, this is not a straightforward matter. The South is internally differentiated and quite dynamic; for decades it has led the United States in population and economic growth. (“Between 1950 and 1970, the share of traditional manufacturing activity in the Northeastern core declined by 3 percent and grew in the Sunbelt by a factor of 56 percent.”)¹³

Traditional Southern elites represent a different political economy, but to classify it as “premodern,” as Lind does, is too easy; it may well be considered an alternative modernity. This means to acknowledge that it has dynamics of its own and is not simply locked in a premodern pattern. So assessing the significance of the American South is not simply a matter of adding up stereotypes and indicators of uneven regional development, but a matter of navigating representations and deciding what kernels to keep.

While avoiding the trap of “internal orientalism,” a few points stand out when we seek to understand the ongoing changes in American policies. One is the empirical circumstance of the American South as a low-tax zone; as in the boast of a Texan politician, “We are a low-tax, low-service state.”¹⁴ The second is the leadership of Southern conservatives in American politics virtually since the 1970s. While Republicans also lead in the West and Northwest, the demographic center of the GOP is the much more densely populated South. The third circumstance is that over a long period Southern conservatives have consistently resisted the politics of the New Deal; they resisted the New Deal, the Fair Deal, and the Great Society, and their current politics should be seen in this light. “The Bush II administration,” notes Lind, “was also the culmination of seventy years of a counter-revolution against the New Deal, in both domestic policy and foreign policy.”¹⁵

It may be an essentializing exaggeration to say, as Lind does, that the Southern view of economic progress is rooted in the late-medieval plantation economies of Britain and Spain. Yet today the American South “has the largest concentration of low-wage jobs, its economy is dominated by externally owned branch plants . . . and is still dependent on natural resources, particularly oil and gas, just as it was a century ago.”¹⁶ According to Lind, “What might be called ‘Southernomics’ is based, like pre-industrial agrarian economics, on extensive development, not intensive development.”¹⁷ This is an economy geared to ample resources and cheap surplus labor, and its traditional response to crisis, rather than innovation or improving production methods, is to add either resources or manpower.

The United States has been subject to three decades of nonstop conservative onslaught coming from multiple sources. Southern conservatives pushed for dismantling social government and the New Deal, bringing the country to the low-taxes, low-wages, and low productivity level of the South. Chicago economics advocated the virtues of free markets and deregulation. Both agree on the conservative equation that “less regulation = more growth = more employment.”¹⁸ These socially reactionary changes were pushed through at a time of rapid technological change and presented as progressive measures, in keeping with the information society. New technologies were harnessed to achieve a fundamental change in the balance of forces between capital and labor, duly amplified by the spin of business media, The Economist and The Wall Street Journal.

In Britain during the Thatcher years, the neoliberal package was welcomed as an attack on trade union power, and New Labor continued this realignment. New Democrats in the United States accepted the tenets of the postindustrial and information society, flexibility and the new economy, abandoned the commitment to Fordism and the New Deal and went post-Fordist.¹⁹ The Democratic Party moved to the center right and, albeit for different reasons than the Southern conservatives, accepted major parts of Reaganomic...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Introduction
• Acknowledgments
• References
• Chapter 1: Neoliberal Globalization
• Chapter 2: Scenarios of Power
• Chapter 3: Empire as Metaphor
• Chapter 4: Neoliberal Empire
• Chapter 5: Global Inequality
• Chapter 6: Conflict
• Chapter 7: Globalization North and South
• Chapter 8: Hyperpower Exceptionalism
• Chapter 9: Capitalisms
• Notes
• Bibliography