Wednesday, April 11, 2012

Capitalism promotes co-operative and conflictual relationships between states


Capitalism is comparatively a new economic system which prevails globally. “The Crystal Palace exhibition was the first great party to celebrate the emergence of this new social and economic system”[1], which has since transformed life and relations between states. Why is it the predominant economic system of the world today? As Robert Gilpin explains, “capitalism distributes wealth more equally than any other known economic system”[2]. To understand this economic system we need to acknowledge three fundamental elements of capitalism which are common throughout its existence; first, capitalism refers to private property. Second, the economy and any activity around this have profit as a final aim. Third, merchandise and services are, as Gilpin accentuates, exchanged on the basis of market prices.


The state remains the core actor in international relations, even under capitalism, which exists in an anarchical system. This system is needed for capitalism to flourish. It depends on the continuation of the state and the regional economic unities, for example the European Union and the North American Free Trade Agreement (NAFTA). However, this is also challenged in “Polanyi’s description of the separation of the economy from the society”[3], with his theory of disembedding. Through this idea Polanyi suggests that economics has the power to enforce its judgement upon politics, which ultimately means that it reduces and damages the political system.  On the contrary politics does not seize to exist, it coexists with the economy.  Callinicos describes how Marx, Engel and Lenin believe that “the state is simply a tool that is used by the economically dominant to advance its interests”[4]. Even though we encounter many theories and opinions on this matter one can see that capitalism prospers in this current system of nation states.
Capitalism, being a new structure of imperialism, requires a global political system which consists of many sovereign states.  Even Marx stresses this point by arguing that “Capital exists and can only exist as many capitals”[5].  This is why global governance will not be able to sustain the capitalist system as we know it, due to the fact that it prospers in a pluralistic geopolitical system.  Even today, where one can identify the prevalence of unions and alliances, the nation state plays a great role. One paradigm of this is the European Union, where the states play an immense part in taking political, economic and military decisions for the Union.


To understand whether capitalism promotes co-operative or conflictual relationships between states we need to empathize how globalization and capitalism coexist. To do this some theories have to be clarified, for example the uneven and combined development, the North and South division, the core and the periphery, as well as the issue of geopolitics.
The first theory, expressed mainly by Marxism, is the uneven and combined development. This is due to the fact that the world is segregated in to regions. Since the Cold War this was primarily capitalist and non-capitalist nations, meaning the USA and its allies and the Soviet Union, the communist bloc, on the other hand. Today one can see the increase of the number of capitalist states. Nevertheless, all of these are ever changing, for example many countries in the South, which are considered Third World countries, are developing rapidly (“The other two ‘worlds’ being Western capitalism and the Soviet bloc”[6]).  
Development is uneven due to variations of culture, economy, geopolitics and power, but on the other hand we observe that they coexist whilst keeping intact their individual societies. The development is uneven in the international anarchical system due to the “multiplicity of its instances”[7].  Capitalism has not yet abolished the uneven development. Trotsky writes: “Capitalism prepares and in a certain sense realises the universality and permanence of man’s development”[8]. He also points out the historical sudden expansion of interconnection, especially since the 19th century, were the external commerce and interaction prevailed. This is attributed to the existence of empires, for example the British Empire, and of the prevalence of imperialism. So now one can understand how capitalism is the continuation of the imperial past taking an imperial character in the modern epoch.  Marx analyses the uneven development by explaining that “capitalism does create and perpetuate considerable economic inequalities between the social classes, but it also raises the living standards of rich and poor alike”[9].
Moreover there is a core-periphery division which explains the modern unevenness of development. The core capitalist states are the industrialized nations of Europe and North America. The periphery consists of actors who belong to the rest of the world, mainly the South, where a common practice is the extraction of wealth via violence and force. Brown explains how the “North and South are in a structural relationship with one another”[10], meaning that there is the element of dependency, not only between capitalist states but also between capitalist and non-capitalist nations; their aspiration being the increase in production, economic wealth, geopolitical security and economic stability. Capitalism needs the weaker states; it needs the non-capitalist actors in order to achieve its objectives. Through these latter it reduces wages and price, increasing profit, which is the ultimate goal. Some paradigms that emphasize the core-periphery theory are, the fact that “the Sub-Saharan Africa’s economic performance has been dire”[11], Latin America has not seem to improve economically from the 1980’s and neither has Eastern Europe advanced. On the other hand South Asia has developed rapidly since the last decade of the 20th century. An excellent example is China. Through this rapid growth of China and India, the two most populous countries in the world, inequality and poverty have reduced. But this does not explain the inequalities within these countries, concerning wages and poverty.  


The unevenness that exists, not only in economic terms but also politically, has a purpose, the mutual value of products and labour. Capitalist states and companies rely on cheap labour, which can be mainly found in Southern nations. This has shifted the way the political and economic systems have worked during the last decades and especially after the end of the Cold War. Industries move around and take with them state interests. Even Trotsky elaborates saying that “capitalism did not just change the world: it actually changed the overall nature of historical change itself”[12].  So we see that capital and capitalism have formed world history.
Foreign Direct Investments (FDI), meaning companies and factories which exist and employ overseas have risen in the last decade of the 20th century. Corporations have invested all around the globe, uniting the world, bringing nations and economies closer.  Even companies from China have begun making investments in other parts of the world, looking for new resources. The FDI has also the power to change locations when it wishes or when negotiations with, for example the workforce, do not favour their interests. This pressurises mostly the rich, First World countries, which have higher wages and more rights than the workers in Third World countries or non-capitalist states.      
The uneven development can be explained when we see the historical process of capitalism, its expansion to new states. Many political actors entered the sphere of capitalism later than others, giving them a disadvantage. Many states, for example Britain, France, Germany, Japan, were once empires and colonial powers and have kept this in their politics and political agendas, still holding on to crucial and important political relations which have helped them during the course of time to expand not only economically and politically but also culturally. Also not all the states are capitalist. Especially in the South, the so called Third World Nations, non-capitalist regimes exist and succeed. This is a key point to the existence of the uneven development in the international anarchical system. Marx reflects on the Russian development where he argues that “the asynchronous concurrency of Russian society with its more industrialized neighbours could be of decisive significance not just for Russia, but for the course of world development as a whole”[13]. This is not a derivative of international relations in the modern era but a fact of capitalism.
North and South division is considered anachronistic, although we still see scarcely its existence. Brown describes that “contrary to expectations, capital has moved to (some) Southern countries”[14]. This archaic view has today changed due to the fact that many states in the South are not developing or underdeveloped countries but developed. Some paradigms are Taiwan, Singapore and Hong Kong. Their growth rate is even higher than capitalist North countries. Anthony Payne believes that “the favoured bifurcation of the moment has become ‘The West versus the Rest’”[15].  He also states that not even the distinction between core and periphery truly exist. However, we acknowledge many of today’s policies and politics that concern economy are driven by this exact peculiarity. Sometimes westernization has imposed itself violently, imperialistically, to the non-western world making Payne’s point pragmatic. Evidently, we observe that “globalization and westernization have had interconnections”[16] associating them to a common development.    
 The capitalist states are the core and most of the non-capitalist political actors are the periphery. This is how capitalism has worked since its birth in England. But we do understand why Payne would believe that it is between the West, which consists of hegemonic (especially after the Cold War) and imperial powers, for example the USA, UK, Germany, France, and the Rest which are no match for the above. Even though things are going to change shortly as a result of the development of new economies in the East, mainly China’s and India’s, China will soon surpass the USA which was the predominant hegemonic power of the last period of the 20th century.         
States are today driven by economic wealth and growth. One of Saunder’s titles is “The Growth Machine”[17]. This Growth Machine explains what capitalism is ontologically and its objective is the accumulation of profit. To achieve this goal it constantly needs to expand to new markets. There is an “increased openness of national economies”[18]. Free markets and the economy will establish economic interactions. This empowers primarily the industries and the international companies, leaving aside the political anarchical system. Economy will drive politics and not vice versa. 
Subsequently, it is easily identifiable up to now that capitalism does not promote conflict between states since each state has economic and political interests in many other countries and regions, whether these are capitalist or not. Cooperation predominates in the global system of our time because each state, through its companies and industries which exist abroad, has global interests. Peace is what capitalism needs to prosper. Rivalry occurs on an economic level today not between capitalism and communism but between “capitalism and social systems represented in regional economic blocks”[19], such as the European Union, the North American bloc and the Asian Pacific bloc. Another reason why we do not observe conflict between states is the demographic revolution which capitalism has introduced in a vast scale. This has political and economic repercussions. 
One can observe that, historically, capitalist states have never gone to war with each other due to the fact that they have interests not only inside their borders but also abroad. This is clarified best by liberalists. On the other hand capitalist and non-capitalist states, mainly communist, have gone to war, since their interests differ, not only politically and economically but also idealistically and culturally.   
Geopolitics plays, again, a massive role in understanding economic growth and stability. For example we have regions such as East Asia which are privileged in the international economic system, as a result of its geographical, political and economic importance for other capitalist imperial powers. One modern paradigm is the economic interdependence between the USA and China, between the first and the second economy in the world. Through this relationship China will statistically surpass, as said constantly on the news and the media, the United State’s economy.


Interests and ideologies is one chapter in Callinico’s book which expands on what states truly want. He quotes Wendt who “celebrated differentiation between three kinds of international anarchy”[20] according to how states visualize other states. Hobesian is the first, which sees the other state with no trust, as an enemy, and complies due to force. Lockean is the second which pictures the other state as a rival, but not as an enemy. The state complies because of its interests which are important. Finally is the Kantian, which visualizes the other political actor in a friendly manner and where the norms of the international order are followed and believed. Today we live in a Lockean world. This is extensively explained by social constructivism.  Relations are important to keep capital and capitalist states together.
All of the above are part of each state’s “national interests”[21] which are needed to secure the political actor. These are: survival, as nation states but also in the international anarchical scene, economic wealth and growth, sovereignty and self respect. This is the basis needed in the modern era for the state and for capitalism to thrive.
Cooperation between states is also achieved through the “‘free market policies’ which have constituted ‘global policy’”[22] during the past years, improving relations and commerce between political actors and industries from all around the world. Even Karl Marx supports Free Trade declaring: “we are for Free Trade, because by Free Trade all economical laws, with their most astounding contradictions, will act upon a larger scale, upon the territory of the whole earth”[23]. Trade has increased due to this factor, “world exports have grown faster than world production”[24] and this is the result of the increasing interaction between states in a globalized anarchical world.
The term Global is very important in understanding how capitalism truly promotes co-operative relationships between states. “Global communications, global travel, global production and global markets have all promoted and been facilitated by global money”[25], as Scholte describes. Strong currency, for instance the British pound, the US dollar, the Euro and the Japanese yen, can be used not only in the country of origin but also around the globe. Finance is not a local, regional matter but a global one. Production has an international affect not only economically but also politically. Global union under capitalism is a reality in the modern era.
Economic activities between states are driven by the national interests of each international actor. Politics is the main factor that determines the economic actions of each state. Today it is not relatively easy to identify the separation of economics and politics, since the interests of the first are the interests of the latter and vice versa. Stability in the capitalist international arena will be established by the relations on a political and economic level, between the great powers, meaning the USA, Europe, China, Japan and Russia.
Reading the above it is now clear that capitalism promotes co-operative and not conflictual relationships between states. However, it does, on the other hand, elevate tension between capitalist and non-capitalist states. Competition explains the uneven development, the North and South division, the core and the periphery and geopolitics which accentuate how capitalism has and continues to develop in the international anarchical system, where national interests and economic wealth coexist. Capitalism spreads to new nations trying to obtain new markets, to increase its profit. With this in mind it is understandable why cooperation is needed and promoted.


[1]  Saunders P., Capitalism: A Social Audit (1995), chapter 1, p. 1
[2] Gilpin R., The Challenge of Global Capitalism: The World Economy in the 21st Century, Princeton and Oxford, Princeton University Press, 2000, p.3
[3] Alvater E., and Mahnkopf B., The World Market Unbound, REVIEW OF INTERNATIONAL POLITICAL ECONOMY 4/3, Berlin, Free University Berlin and School of Economic, 1997, p. 452
[4]  Callinicos A., Imperialism and Global Political Economy, 2009, p. 70
[5] ibid., p. 70
[6] Brown C. And Ainley K., Understanding International Relations, London, Palgrave Macmillan, 2005, p. 163
[7] Rosenberg J., International Relations- The ‘Higher Bullshit’: A Reply to the Globalization Debate, p. 453
[8] ibid., p. 455
[9] Gilpin R., The Challenge of Global Capitalism: The World Economy in the 21st Century, Princeton and Oxford, Princeton University Press, 2000, p.13
[10] Brown C. And Ainley K., Understanding International Relations, London, Palgrave Macmillan, 2005, p. 164
[11] Ravenhill J., Global Political Economy, Oxford, Oxford University Press, 2005, p. 378
[12] Rosenberg J., International Relations- The ‘Higher Bullshit’: A Reply to the Globalization Debate, p. 456
[13] Rosenberg J., International Relations- The ‘Higher Bullshit’: A Reply to the Globalization Debate, p. 479
[14] Brown C. And Ainley K., Understanding International Relations, London, Palgrave Macmillan, 2005, p. 173
[15] Payne A., The Global Politics of Unequal Development, London, Palgrave Macmillan, 2006, p. 231
[16] Scholte J., Globalization: A Critical Introduction, New York, Palgrave Macmillan, 2005, p. 58
[17] Saunders P., Capitalism: A Social Audit (1995), chapter 1, p. 1
[18] Gilpin R., The Challenge of Global Capitalism: The World Economy in the 21st Century, Princeton and Oxford,    Princeton University Press, 2000, p.25
[19] ibid., p.25
[20] Callinicos A., Imperialism and Global Political Economy, 2009, p. 93
[21] ibid., p. 98
[22] Ravenhill J., Global Political Economy, Oxford, Oxford University Press,2005, p. 404
[23] Glyn A. Caitalism Unleashed: Finance, Globalization and Welfare, Oxford, Oxford University Press, 2007, p.77
[24] Glyn A. Caitalism Unleashed: Finance, Globalization and Welfare, Oxford, Oxford University Press, 2007, p.96
[25] Scholte J., Globalization: A Critical Introduction, New York, Palgrave Macmillan, 2005, p. 69

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