Globalization and the Critique of Political Economy

Lucia Pradella

• Publisher: Routledge
• Year: 2014
• ISBN:
  9781317800712
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The nature of the contemporary global political economy and the significance of the current crisis are a matter of wide-ranging intellectual and political debate, which has contributed to a revival of interest in Marx's critique of political economy. This book interrogates such a critique within the broader framework of the history of political economy, and offers a new appreciation of its contemporary relevance.

A distinctive feature of this study is its use of the new historical critical edition of the writings of Marx and Engels (MEGA²), their partially unpublished notebooks in particular. The sheer volume of this material forces a renewed encounter with Marx. It demonstrates that the international sphere and non-European societies had an increasing importance in his research, which developed the scientific elements elaborated by Marx's predecessors.

This book questions widespread assumptions that the nation-state was the starting point for the analysis of development. It explores the international foundations of political economy, from mercantilism to Adam Smith and David Ricardo and to Hegel, and investigates how the understanding of the international political economy informs the interpretations of history to which it gave rise.

The book then traces the developments of Marx's critique of political economy from the early 1840s to Capital Volume 1 and shows that his deepening understanding of the laws of capitalist uneven and combined development allowed him to recognise the growth of a world working class. Marx's work thus offers the necessary categories to develop an alternative to methodological nationalism and Eurocentrism grounded in a critique of political economy.

This book is essential reading for anyone interested in the development of Marx's thought and in the foundations of International Political Economy.

1
Globalisation

Between economics and politics

1.1 Introduction

The dynamics of emerging capitalism and European expansionism represent the background of the economic and political reflection of the modern age. The ‘discovery’ of America was among the main factors of the crisis of the ontologically structured universe described in Plato’s Timaeus. In America, geographical discoveries proceeded hand in hand with colonisation. Expeditions from Spain and Portugal – who partitioned the continent with the Treaty of Tordesillas in 1494 – were followed by French, Dutch and English expeditions. Between the fifteenth and the eighteenth centuries the American continent was almost entirely colonised, while in Asia and Africa European companies mainly established commercial strongholds. The difficulty of exploiting the Native American populations, decimated by the conquests and by imported diseases, and the indentured servants from Europe necessitated the use of slave labour. An international system of labour division thus emerged in which Africa provided the labour power needed for the production in the Americas.¹ Slave production was the basis of the expansion of trade with Asia, whose balance of trade, in the period before the Industrial Revolution, was constantly favourable (Wallerstein 1974: 162; Wolf 1995; Amin 1998; Potts 1990). Indeed, as various scholars have affirmed, if any region was predominant in the world economy before 1800, it was Asia, China in particular (see Frank 1998: 5).

The pursuit of money was the driving force behind the destruction of pre-Columbian civilisations, the holocaust of the Native Americans, the establishment of the plantation system and the Atlantic slave trade. Within three centuries, the major European states founded empires in which the extortion of wealth no longer primarily occurred through tributes and taxation, as in the main pre-capitalist empires, but through the theft of resources and the direct exploitation of colonised peoples (Carandini 1979; Wood 2003). The seventeenth century, moreover, witnessed a transition from imperium to dominium: the sovereign did not usually own lands overseas, which became the property of the settlers, but just governed them; expansion became a primarily economic process, although closely linked to politics (Giuliani 2006). An organic reading of the modern political economy has to overcome the separation between processes of state- and empire-building.² Modern European states extended their control over territories composed of several regions separated from each other and from the motherland; governmental powers were distributed among a variety of subjects and a multiplicity of hierarchical statuses existed among the populations (Brewer 1989; Wilson 1996b).

The primary importance of the state in the genesis of the capitalist mode of production was reflected in the close tie between economic and political research and the science of administration. The sixteenth century witnessed the first theories focused on the mechanisms of the production of wealth that were distinct from political and moral reflection. The economists of the time were aware of an economic sphere separate from the political and began to apply an empirical – ‘Baconian’ – method to it.³ The central point of reflection shifted from the family and the city to the kingdom, whose predominant aim became the concentration of power and wealth that found expression in a positive balance of trade (Clement 2006: 292). Increasingly, ruling classes’ concerns clashed with the Aristotelian disdain for chrematistics,⁴ while moral judgements against trade and usury disappeared gradually. Private enrichment began to be seen as desirable because it was linked to the enrichment of the kingdom, to be promoted by ruling in accordance with economic laws.

The sixteenth century also saw the rise of the absolutist state in Western Europe and the end of a unified Christian Church, which led to a radical rethinking of the foundations of political power. Social contract theory implied an active denial of non-Western sovereignty (Strang 1996) and, focusing on Western Europe, it presented sovereignty as an expression of the general interest. Conflict, however, reappeared both in the domestic and in the international spheres, making measures of forced submission to authority and war necessary (Borrelli 1993; Grovogui 1996: 53–4). In Hobbes’s view, for example, colonies were the children of the state; the pursuit of money was the factor that moved states, making war inevitable (Hobbes [1651] 1991, Chapter 24; Goyard-Fabre 1987: 2; Tuck 1999: 137–9). Locke too presented international relations as a state of nature. In his Second Treatise he discusses colonisation almost exclusively in the chapter on property and never speaks of a British ‘Empire’ but only of ‘Commonwealth’ (Armitage 2011). Differently from Hobbes, he sought to justify colonisation, and did so by having recourse to the Roman law of vacuum domicilium and res nullius (Giuliani 2006). In Locke, private property is not based on the monarch’s assignment, but on labour: God entrusted the world to laborious and reasonable men. The absence of capitalist land appropriation and of state institutions supporting it made the American territories terrae nullius, to be colonised like the European territories at the beginning of human history (Locke [1689] 1980: 29, §49). Locke did not acknowledge native peoples: outside the sovereign model there was no room for other forms of social organisation; society was conceived of as a sum of individuals belonging to the state.

Locke’s philosophy, according to Marx, ‘was the classical expression of bourgeois society’s ideas of right as against feudal society’, and ‘served as the basis for all the ideas of the whole of subsequent English political economy’ (CW34: 89). Indeed, this dichotomous representation of ‘peaceful’ domestic relations and of openly violent colonial relations characterises the liberal tradition in its entirety. Such a distinction reflected a hierarchical world order, based on a fundamental divide between Europe and the rest of the world.⁵ This divide was justified through a representation of non-European peoples as inferior, and led to the formation of a colonial ideology, which is an integral element of modern economic and political thought (Wilson 1996a: 47; Basso 2000: 28). Within liberalism, ‘liberty’ and ‘warfare’ are bound together. ‘A liberal attitude to the rules of civil society […] is both conceptually and historically associated with international aggression’ (Tuck 1999: 231, 196; see also Mehta 1999: 7).⁶

In the light of Marx’s notebooks, Section 2 of this chapter traces the main elements of the mercantilist approach to the international political economy by focusing on England/Britain. From the end of the wars with Holland (1688) until the victory at Waterloo (1815), in fact, England/Britain developed from a fringe international player into the world’s hegemonic power (Canny 2001; Wallerstein 1989: 57; Stone 1994: 5). But England was also ‘to become what Holland had never been, the leading manufacturer of goods’, benefiting from the increased productivity of the new steam-driven machinery (Semmel 1978: 6). Starting from a qualitative representation of the social relations of their time, mercantilists came to formulate abstract categories such as value, money and labour which were the starting point of the reflections of the classical economists. In the following section, the emergence of classical political economy is understood against the backdrop of the economic and political crisis of the First British Empire, based on the old colonial system and centred in the Atlantic, a crisis that coincided with the rise of ‘free trade imperialism’. If various scholars have examined the classics’ investigation of free trade imperialism as a specific question,⁷ in this chapter I seek to understand how classical political economy as a system is related to it.

As recent historiography has shown, the revolutionary processes initiated by the American War of Independence shook the Atlantic system as a whole (Knight 2000: 103; Dominguez 1980). Along with the productivity crisis in the British West Indies plantations, the independence of the US marked the end of the First British Empire and shifted the centre of the formal empire toward Asia, where the British were expanding commercially and territorially (Rose, Newton and Benians 1968; Winks 1999; Marshall 2001). After the East India Company’s conquest of Bengal (1757), British penetration in Asia had changed qualitatively, spreading inland from coastal zones and commercial bases, and from India to the rest of Asia, China in particular.⁸ At the dawn of the Industrial Revolution, the Chinese economy was still so prosperous that Smith described it, not without a certain exaggeration, as ‘a much richer country than any part of Europe’ (WN1: 210). Two years after the outbreak of the French Revolution, moreover, the only successful slave revolt in history began in the French colony of Saint-Domingue, leading to the abolition of slavery and the establishment of the black state of Haiti. The Rights of Man, proclaimed in Paris in favour of the white man – male and proprietor – established themselves in the colony: no human being should be considered the property of another. This principle, along with the echo of the revolutionary experience of the ‘Black Jacobins’, continued to agitate the colonial powers (James [1938] 1989).

After 1814, while the Restoration was imposing itself on the European continent, the revolution continued throughout South America, where the colonies declared their independence from the Spanish Empire. This allowed Britain to expand its informal empire there, as well as in Asia, where it was supported by formal territorial annexation. In Britain, after Waterloo, free market policies were gaining strength.⁹ Foreign trade acquired an increasingly central importance for industry, given its continuous need for new markets and for sources of labour power, raw materials and food supply. The expansion of trade was closely linked to that of international credit and investment, which went on to form an ‘invisible empire’ (Jenks 1963: 1) tending to extend internationally the division between town and country that was imposing itself in Britain. The progressive dismantling of the mercantile system did not lead, however, to the peaceful and harmonious growth proffered by the classics. On the contrary, industrialisation in Britain and other Western powers led to an unprecedented increase in international inequality. While up to the end of the seventeenth century the developmental gap between the various regions of the world was pretty small, after the Industrial Revolution ‘three-quarters of humanity, who were excluded from [it], suffered the indirect effects of this revolution, mainly because of colonization which gradually spread to almost all the Third World’ (Bairoch 1976: 3–4).

Section 3 argues that Britain’s industrial monopoly allowed classical political economists to begin their analysis from the simple categories developed by the mercantilists and to elaborate the labour theory of value, which laid the premises for the scientific understanding of the process of capital accumulation at the global scale. Focusing on Adam Smith and David Ricardo, Section 3 shows that, because of their class interests, the classical economists ended up by presenting capitalism in harmonious terms as aimed at meeting the needs of the ‘national community’, of all ‘national communities’, and, therefore, humanity as a whole. Section 4 then traces the evolution of European representations of the ‘Orient’ between the sixteenth and the early nineteenth centuries in the context of the broader development of the social sciences. Focusing on the link between political economy and the study of history, it highlights the role of British economists in laying down the basis for a political economy analysis of Asian societies. If Adam Ferguson and Adam Smith saw capitalism as the high point of civilisation, a process of development of civil society made possible by the increase of productive forces, Ricardo allowed understanding of the antagonistic nature of such a process. This scientific approach represented an advance in the study of pre-capitalist societies over that prevailing in the mercantile period, but clashed with the class stand of the classics, which led to a unilinear representation of history.

1.2 Money, state and world market: mercantilism

The first theoretical approach in modern political economy, ‘mercantilism’, is an expression of a period in which capital did not control production, but mainly circulation. Mercantilist scholars focused on the sphere of circulation and its manifestation in the movement of commercial capital, which represented the first form of capital and played a preponderant role in the period of transition from the feudal to the capitalist mode of production. For Marx it is inherent in the concept of capital that it develops from money and that, starting from circulation, it originally appears to be a product of it (G: 505). Seventeenth-century economists focused on the qualitative aspects of the value form, on the form of the equivalent that finds its expression in money as international means of payment. They identified the origin of profit with the sale of commodities at a price above their value. Such an increase in wealth only took place in international exchange, not within the same country where, with regard to total capital, there appeared to be no surplus-value formation. In mercantilism, therefore, surplus value is relative, derives from the loss of one country against another and finds expression in a positive balance of trade (profit upon alienation).

The term ‘mercantile system’ was used by Adam Smith to define the economic and political practice between the end of the Middle Ages and his own time.¹⁰ Smith devoted approximately one-fourth of his great treatise to the system, which, he affirmed, was characterised by policies designed to further the interests of merchants and manufacturers at the expenses of the other members of the ‘national community’ (Winch 1965: 13). This representation, albeit very influential, was polemical and unilateral. As Cosimo Perrotta remarked, European mercantilism aimed at state-building and industrialisation through import-substitution and export-promotion. The central objective of a favourable balance of trade was closely connected to the mercantilists’ interest in promoting the growth of domestic manufacturing and greater overall productive efficiency.¹¹ The quest for money was closely related to the development of the real sources of wealth, which took place, for Marx, ‘as it were behind their backs, as a means of gaining possession of the representatives of wealth’ (G: 225). Mercantilists recognised the then developing industrial form of wage labour and capital only in so far as it produced money (G: 327–8), whose pursuit, however, led to the development of trade and industry.¹²

By analysing the causes of underdevelopment in Spain and the Kingdom of Naples, such founding fathers of mercantilism as Antonio Serra, Antoine de Montchrétien and Thomas Mun identified manufacturing with the core of the process of wealth formation and emphasised the importance of establishing a proper institutional framework for promoting manufacturing production. In his Short Treatise (1613), generally regarded as the first scientific economic treatise in history (Schumpeter 1954: 505), Antonio Serra examines the causes of poverty in the Kingdom of Naples, specialised in primary production, and those of the wealth of Genoese, Florentines and Venetians. Such causes consisted in the nature of economic activiti...