CC BY
27DOI:10.38197/2072-2060-2020-225-5-143-157
НОВОЕ ИНДУСТРИАЛЬНОЕ ГОСУДАРСТВО И КОНВЕРГЕНЦИЯ: ПОИСК ПРЕДПОСЫЛОК В ТЕОРИИ МАРКСА THE NEW INDUSTRIAL STATE AND CONVERGENCE: ANTECEDENTS IN MARX
Идея конвергенции была поставлена под вопрос в связи с распадом СССР, а затем повторно - в контексте расхождений между экономическим развитием США и коммунистического Китая в разгар пандемии. В этой работе я рассматриваю, как Джемс Гэлбрейт и Георгий Цаголов подходили к данному вопросу через призму различных аргументов.
десаи радика
Профессор, директор Центра геополитэкономических исследований Университета Манитобы
radhika desai
Professor, Director at the Geopolitical Economy Research Group, University of Manitoba
АННОТАЦИЯ
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Затем я показываю, что при рассмотрении более глубоких исторических следов идей конвергенции и нового индустриального государства у Маркса и Энгельса мы можем более глубоко и основательно увидеть их обоснованность. ABSTRACT
The idea of convergence took a blow with the demise of the USSR and another with widely diverging economic performance of the US and communist China amid the pandemic. In this short contribution, I explore how James Galbraith and George Tsagolov handle this problem with very different arguments. I then show that, if we were to trace the longer lineage of the ideas of convergence and the new industrial state to Marx and Engels, we can vindicate them more fully and thoroughly than either attempt.
КЛЮЧЕВЫЕ СЛОВА
Георгий Цаголов, Джон Кеннет Гэлбрейт, новое индустриальное государство, конвергенция, геополитическая экономика, Маркс, Энгельс, Гильфердинг. KEYWORDS
George Tsagolov, John Kenneth Galbraith, New Industrial State, Convergence, Geopolitical Economy, Marx, Engels, Hilferding.
When John Kenneth Galbraith's The New Industrial State was published in 1967, its suggestion that, notwithstanding the Cold War and the opposition of capitalism and communism in the popular mind, the US and Soviet economies had similar industrial and planning systems and were convergent, clearly made waves. Amid the Brezhnev economic reforms aiming to revitalise the Soviet Economy, the idea that the apparently superior capitalist system might have much in common with the ailing Soviet system must have been intellectually very stimulating.
It was not, however, an idea that arrived in the Soviet Union entirely de novo. As Galbraith recorded, he met and conversed intensely with Professor Stanislav Menshikov, an expert on both the Soviet and the US economy, upon meeting him in 1964 and it was Menshikov who arranged for Galbraith's New Industrial State to be translated into Russian [1, 1-2]. Moreover, as Professor Tsagolov noted [2, 82-3], the origins of the idea of convergence lay in an earlier connection between Soviet and US intellectual worlds, Pitirim Sorokin, the anti-communist Russian intellectual who was deported on the philosophers' ship in 1922 and went on to become a renowned US sociologist. He wrote of the convergence of the apparently opposed US and Soviet systems and looked forward to their convergence in a mixed society combining both elements.
History appeared to overtake the matter of convergence after the Berlin Wall fell and the Soviet disintegrated into its component national units (so much for the idea that the Soviet Union suppressed nationalities!). At the time, it appeared as though capitalism has triumphed. So great was the feeling of triumph that it emboldened Western philosophers to soar towards Hegelian philosophical heights — previously avoided by an insecure west fear in case Hegel's dialectics induced political vertigo — and proclaim that history had finally arrived at its terminus. The end of history lay in the combination of liberal democracy and capitalism that the West had already arrived at. While the rest of the world would need some time to catch up to it, history neither would nor could unfold further.
What a difference thirty years make! Amid the pandemic, the debility of neoliberal capitalism is on grotesque display. The unaccountable power of corporations, the historically unprecedented levels of inequality, the structural and virulent racism
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and sexism, the bankruptcy of neoliberal political classes and states, all these are thrown into relief. The contrast between them and the singular competence of China's Communist party-state could not be greater. Where do these developments leave convergence?
In this short contribution, I explore how James Galbraith and George Tsagolov handle this problem with very different arguments. I then show that, if we were to trace the longer lineage of the ideas of convergence and the new industrial state to Marx and Engels, we can vindicate them more fully and thoroughly than either attempt.
James Galbraith's Resolution
J.K. Galbraith's son and in some ways his intellectual executor, James Galbraith, seeks to salvage the idea of the new industrial state, on which ideas of convergence rested, by focusing not on the fall of the Berlin wall and the disintegration of the USSR. Instead, he tackles the charge against Galbraith's The New Industrial State that
...it did not anticipate the thrashing that American business received over the decades since 1970. This thrashing came in four phases. First, there was the Japanese challenge, especially in autos and steel. Then came the industrial collapse of the 1980s. In the 1990s, there was the technology bubble, which (it is said) reasserted the controlling role of the owner capitalist, personified by Bill Gates or Steve Jobs. Finally, there came the corporate scandals, involving Enron, Tyco, and WorldCom, among other corporate giants.
In re-focussing on the failures of US business, he reaches deeper than the West's 'victory' in the Cold War to realities which show that victory up to have been a pyrrhic one. The fact was that the Soviet Union did not lose to the West, not
did it collapse from western economic, political or military pressure. As David Kotz [3] showed, the demise of the Soviet Union was the result of a 'revolution from above' conducted by a leadership no longer confident of or identified with, Communism's purpose. The decades that followed were witness to a growing economic debility of the West and its leading power, the US.
Thus James Galbraith's defence of the theses of the new industrial states points out that 'The Japanese challenge of the late 1970s did not prove that competitive markets rule' only that the Japanese planning system proved superior to the US's and the Reagan government, notwithstanding its free market rhetoric, engineered a politically managed defeat[4, 14-15]. So far so good. However, this is where the problems begin.
The industrial crisis of the 1980s, explains James Galbraith, is also easily explicable in terms that his father would have recognised. After all, he witnessed it and considered it 'Quixotic': an attempt to run the new industrial state on free market principles that it had antiquated. The results were financializa-tion and deindustrialization. They weakened the US industrial corporation.
The parts of the technostructure associated especially with electronic computing broke away from the big industrial firm. Unlike, say, wind tunnels, microprocessors and software have applications across many fields. Their potential was greater if production was not tied to any particular platform, such as IBM's mainframe computer division. And their profitability would be much higher if they could be freed of the debts, pensions, and the like built up by the large corporations in the days when unions were strong and capital was cheap.
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Here, James Galbraith is arguing that the 'thrashing' was associated with a change in the technostructure. However, given how central the technostructure is to the modern industrial firm, given that it is dictated by technology and therefore common to firms in environments as different as the US and the Soviet Union[5], proposing that it changed is surely tantamount to saying that J.K. Galbraith's arguments about the new industrial state were no longer relevant.
According to James Galbraith, moreover, the change in the technostructure continues to unfold further. During the technology bubble of the 1990s, this new techostructure evinced 'a different shape and a different balance of power, with a renewed role for the investment banker and the financial raider, and therefore less stability than had been true in the 1960s.' It engineered a 'bi-coastal prosperity, dominated by its financial and engineering elites, while the vast industrial regions decayed and were opened to forms of corporate predation not unfamiliar in the post-Soviet space'[4, 16].
In James Galbraith treatment of the last 'thrashing', we find, moreover, a new problem. He appears to contradict himself when he says that the last phase of the 'thrashing' of US business, the corporate scandals of the Enron variety, were rooted in 'the subversion of social and legal norms' and that such subversion scaled new heights after 2008:
More than one thousand felony convictions followed the S&L fiasco; after Enron, the top executives were eventually indicted and convicted. Alas, following an even larger wave of financial frauds in the run-up to the Great Financial Crisis of 2007-2009, the government took a more lenient view. They tried and convicted no one, and — as a result — confidence in the financial system was never restored.
One would normally expect any deviation to be explained as either a change or a subversion. If the argument is that it is a combination of the two, one needs to know exactly how the subversion is related to the change.
Having made these points about James Galbraith's attempt to defend the basis of convergence theory in the theory of the new industrial state, we must now turn to George Tsagolov's very different attempt before proposing our alternative, which also reconciles the two to a considerable extent.
George Tsagolov's Resolution
According to Tsagolov, developments since the end of the Soviet Union have either resolved the 'resolved the historical dispute between capitalism and socialism', nor rendered a final verdict on convergence particularly given that
China pursuing its socialist development with a 1.5 billion population became the main driver of the economic development, while Russia, which rushed under the opposite capitalist banners, faced so many challenges and disappointments that we now wish we had not been so rash in our curvets and metamorphoses and are considering finding another way. [2, 84].
The disasters of 'Shock Therapy' and the continuing difficulties of capitalist Russia show that there is 'not only the possibility but also imperative to a have a new system, which would combine previous systems and minimize their vices' [2, 85]. China is, for Tsagolov, Exhibit A:
China enjoys a profitable symbiosis of the planning and market systems, socialism and capitalism. It has a convergent, or integral state in place, which provides it with synergies. Deng Xiaoping and his followers did not destroy the planning economy but applied democratic transformations and added market regulators. In the result
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the country has not had a single recession for 39 years and has the highest growth rates. With the GDP calculated based on the purchasing power parity, the Celestial Empire outdid the United States and was first in the rating as early as in 2014. The expectancy of life exceeded 75 years. [2, 86}.
However, Tsagolov also adduces Vietnam's Chinese-style flexible planning, India's planned development and post-Soviet republics such as Belarus and Kazakhstan in evidence and looks forward to such ' integration of socialist and capitalist strengths' in 'a transition to a new integral state" [2, 86].
Marx and Engels's Anticipations
In a sense, it would have been surprising, given that the theories of the new industrial state and convergence rely on trends in industrial structure, if they had not been anticipated so some extent at least, by Marx and Engels. Certainly, Sergey Bodrunov notes how the widening of the gap between owner and manager was anticipated not only by Thorstein Veblen, Adolf Berle, Gardiner Means and Stuart Chase in the early twentieth century but also by Marx in his ideas about 'the division of joint stock capital into equity capital and functioning capital'[6, 25-26]. This deserve further exploration.
In chapter 27 of Capital Vol. III, Marx had seen in the emergence of joint stock companies as a huge advance in the socialization of the economy, and of capital as its principal agent. Formerly individual private capital
now receives the form of social capital (capital of directly associated individuals) in contrast to private capital, and its enterprises appear as social enterprises as opposed to private ones. This is the abolition of capital and private property within the confines of the capitalist mode of production itself [7, 567]
Now the old style individual capitalist is replaced. On the one hand, there is the manager paid for a particular kind of skilled labour. On the other, there is the 'mere money capitalist' whose profit 'is still drawn only in the form of interest, i.e. as a mere reward for capital ownership which is now completely separated from its function in the actual production process'[7, 567-8].
The result is a historical, rather than merely conceptual, clarification of the essential functions of production from the inessential, incidental ones that were laden onto production by capitalism. In this historical process of clarification, it become clearer than it ever was before that profit is
...simply the appropriation of other people's surplus labour, arising from the transformation of means of production into capital; i.e. from their estrangement vis-à-vis the actual producer; from their opposition, as the property of another, vis-à-vis all individuals really active in production from the manager down to the lowest day-labourer. [7, 568]
This historical clarification has another effect. It transforms such 'capitalist production in its highest development' into a ...necessary point of transition towards the transformation of capital back into the property of the producers, though no longer as the private property of individual producers but rather as their property as associated producers, as directly social property. It is furthermore a point of transition towards the transformation of all functions formerly bound up with capital ownership in the reproduction process into simple functions of the associated producers, into social functions.[7, 568]
The highest form of capitalist production, by carrying the socialisation of labour to its highest level, brings production the point where production can lose its capitalist form and becomes production of common, highly and intricately socialised labour.
Engels's observed here that tendencies toward cartelization and toward concentrating 'the entire production of the branch of industry in question into one big joint-stock company with a unified management' prepared 'in the most pleasing fashion its future expropriation by society as a whole, by the nation'[7, 569]. Finally, Hilferding famously proposed that 'taking possession of six large Berlin banks would ... greatly facilitate the initial phases of socialist policy during the transition period'.
Hilferding developed Marx and Engels's historical distinction between small firms in competitive capitalism and large monopoly forms in which capital became concentrated with the onset of the Second Industrial Revolution in his Finance Capital [8]. As is well-known, he associated the more mature form of capitalism with 'finance capital', a form of capitalism with new, more advanced finance-industry relations capable of providing the vast sums that the initial investment of capital now needed and capable of waiting through the long gestation periods before such investment bore return. What is less well known, as I have argued [9], is that in doing so, he did two other things. He developed Marx's distinction between the archaic financial system capitalism inherited from the past, which was based on short-term predatory lending and the more mature form of finance which capitalism's development would force into being and which suited the specific needs of capitalism as a mode of production. This mature form, which Hilferding called 'finance capital', was associated with the most advanced forms of concentrated monopoly capital. Secondly, Hilferding also transformed these originally historical distinctions between competitive and monopoly capital and between archaic financial capital and finance capital into a historico-geograph-ical distinction. It was between the old English competitive
free trade capital with its archaic financial sector that made the First Industrial Revolution and the new continental, principally German (though he also put the US in this category) mature capitalisms of the Second Industrial Revolution. That this distinction was an instance of the theory of uneven and combined development that is usually attributed to Trotsky demonstrated that it was also shared more widely among Marxists of that generation [and, as I have shown, is also apparent in the works of Marx and Engels, 10, 11].
These capitalisms were also imperial and their imperial competition led to the First World War and the Thirty Years' Crisis of 1914 to 1945 that it inaugurated. Bookended by the Russian and Chinese Revolutions, it transformed the world and vastly accelerated the transition to what are variously termed 'finance', 'monopoly', 'Crustacean' [12, 13] and 'organised' capitalisms, or what Galbraith would theorise as the new industrial state. Where Marx, Engels and Hilferding saw stepping-stones to socialism, Galbraith saw convergence. Both Karl Polanyi [12, 14] hoped and Hayek feared [15] that this would come to pass and they were at least partially vindicated the end of the Thirty Years' Crisis witnessed the formation of welfare capitalisms, socialisms and developmental states in the First, Second and Third Worlds respectively.
Whatever Happened to Convergence?
The reason why neither the transition to socialism nor convergence took place in the homelands of capitalism lies in the resurrection of a version of the old archaic British model of finance, which had last seen its heyday before 1914 in late twentieth century US. It occurred when that country embarked on a second, far more volatile and dangerous, attempt to install the
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dollar as the world's money after its first attempt had failed in 1971. It is a twist of history I first traced in my in Geopolitical Economy [10] and have elaborated since [13, 16].
In short, since the early twentieth century, US political and business elites had nursed the ambition to take over the task of being 'the managing segment of the world economy' [17]. The idea was to provide its capital and commodities the same access to an open world economy that Britain had enjoyed in the nineteenth centuries, particularly as the hub of the international gold-sterling system. Knowing they could never match the British Empire in the prevailing circumstances, they settled for the ambition of making the dollar the world's money.
Even this watered down ambition hit snags, however. After all, the British Empire was the foundation of Britain's ability to operate the gold-sterling standard [18, 19]. Worse, instead of the imperial world in which dominant powers could force open colonies and semi-colonies, if to other powers, to their capital and commodities, the US faced world of 'organised capitalisms', not to mention socialisms and developmentalisms. No wonder the dollar's world role careened from crisis to crisis until 1971. Only then did the US organise a capitalist counteroffensive that has re-created in the US British-style archaic finance: unconnected with production, preying on all productive sector incomes in the US as the core of the effort to give the dollar, now bereft of the gold link, a basis in international financial activity. The results were the financialization(s) and deindustrialization noted by James Galbraith. They have gone furthest in the US and the UK, the new and the old homes of archaic financial capital.
While it is not possible to provide more than the above outline, we can now return to James Galbraith and George Tsagolov's attempt reconcile the idea of the new industrial state and convergence with
late twentieth and early twenty-first century realities. In the case of Galbraith, we may saw that rather than taking refuge in changes in the technostructure, it is better to understand the evolution of US capitalism over the past four decades as an instance of a political attempt to turn the historical clock backwards, something that can only be done at great cost, as the US has understood. The cost has been as much to US economic performance, as so starkly revealed amid the pandemic, as to its legal structures.
While Tsagolov's vision of the still remaining possibilities for convergence particularly in relation to China's success, as well as those of other economies that retain elements of planning remains valid provided one understands that neoliberal-ism and financialization did not affect all economies equally but were strongest in their Anglo-American homelands. Beyond them, the pressures towards convergence continue to operate, not least by demonstrating the productive superiority of planned economies.
References
1. Galbraith, John Kenneth and Stanislav Menshikov. 1988. Capitalism, Communism and Coexistence. London: Hamish Hamilton.
2. Tsagolov, George. 2017. 'Galbraith's Revolution and Convergence Theory Development'. Sergey Bodrunov (ed). Galbraith Restored. St. Petersburg: S.Y. Witte Institute for New Industrial Development, 2017.
3. Kotz, David M. 1997. Revolution from Above: The Demise of the Soviet System. London: Routledge.
4. Galbraith James. 2017. 'The New Industrial State: Relevance for the Twenty-first Century'. Sergey Bodrunov (ed). Galbraith Restored. St. Petersburg: S.Y. Witte Institute for New Industrial Development, 2017.
5. Galbraith, John Kenneth. 2007. The New Industrial State, with a new Foreword by James Galbraith. Princeton: Princeton University Press.
6. Bodrunov, Sergey. 2017. The New Industrial Society of the Second Generation: Rethinking Galbraith. Sergey Bodrunov (ed). Galbriath Restored. St. Petersburg: S.Y. Witte Institute for New Industrial Development, 2017.
7. Marx, Karl. 1894/1981. Capital (Vol. III). London: Penguin.
8. Hilferding, Rudolf. 1910/1981. Finance Capital: A Study of the Latest Phase of Capitalist Development. Edited with an Introduction by Tom Bottomore, Tr. Morris Watnick and Sam Gordon, London: Routledge.
9. Desai, Radhika. 2021. 'Finance Capital and Contemporary Financialization'. Judith Dellheim and Frieder Otto Wolf (eds). Hilferding. London: Macmillan Palgrave.
10. Desai, Radhika. 2013. Geopolitical Economy: After US Hegemony, Globalization and Empire. London: Pluto. Future of World Capitalism Series, translated into Russian as Десаи, Радика. Геополитическая экономия: после американской гегемонии, глобализации и империи: [монография] / Р. Десаи; науч. ред. российского издания С.Д. Бодрунов; пер. с англ. — М. : ИНИР им. С.Ю. Витте : Центрката-лог, 2020. - 328 с. — (серия «Современная экономическая мысль»). ISBN 978-5-00020-067-4
11. Desai, Radhika. 2015. E2015. Geopolitical Economy: The Discipline of Multipolarity, Valdai Club Paper #24, 22 July 2015. http://valdaiclub. com/a/valdai-papers/valdai_paper_24_geopolitical_economy_the_ discipline_of_multipolarity/, Translated into Russian as Геополитическая экономия - предмет для изучения многополярного мира, a translation into Russian of Geopolitical Economy: The Discipline of Multipolarity, Valdai Club Paper #24, 22 July 2015. http://ru.valdaiclub. com/a/valdai-papers/valdayskaya-zapiska-24/
12. Polanyi, Karl. 1944/1957. The Great Transformation: the political and economic origins of our time. Boston: Beacon Press.
13. Desai, Radhika. 2020. The Future of Capitalism hangs in the balance of International Power. Canadian Dimension, 15 October. https:// canadiandimension.com/articles/author/radhika-desai
14. Polanyi, Karl. 1945. 'Universal Capitalism or Regional Planning?', The London Quarterly of World Affairs, January, pp. 86-91.
15. Hayek, Friedrich August von. 1944. The Road to Serfdom. London: George Routledge and Sons.
16. Desai, Radhika. 2021. 'Finance Capital and Contemporary Financialization'. Judith Dellheim and Frieder Otto Wolf (eds). Hilferding. London: Macmillan Palgrave.
17. Parrini, Carl P. 1969. Heir to Empire: United States Economic Diplomacy, 1916-1923. Pittsburgh: University of Pittsburg Press.
18. De Cecco, Marcello. 1984. The International Gold Standard: Money and Empire. 2nd ed. London: Pinter.
19. Desai, Radhika. 2018.'John Maynard Pangloss: Indian Currency and Finance in Imperial Context' in Sheila Dow, Jesper Jespersen & Geoff Tily (eds), The General Theory and Keynes for the 21st Century, Cheltenham: Edward Elgar Publishing Ltd, 2018, pages 116-131.
Contact information
Geopolitical Economy Research Group, University of Manitoba
66 Chancellors Cir, Winnipeg, MB R3T 2N2, Canada
Radhika Desai
+1 800-432-1960 / [email protected]
