neil brenner, new state spaces

chapter one, introduction (1-27)

(2): important--"this book is intended to broaden and deepen the geographical imagination of contemporary state theory by investigating the major role of urban regions as key sites of contemporary state institutional and spatial restructuring. rather than treating cities and city-regions as mere subunits of national administrative systems, i suggest that urban policy--broadly defined to encompas all state activities oriented towards the regulation of capitalist urbanization--has become an essential political mechanism through which a profound institutional and geographical transformation of national states has been occurring. my claim is not simply that the institutional infrastructure of urban governance is being re-defined but, more generally, that transformations of urban policy have figured crucially within a fundamental reworking of national statehood since the early 1970s. a geographically attuned and scale-sensitive approach to state theory is required in order to decipher the new state spaces that are being produced under contemporary capitalism."

(2): we are talking about the last three decades, of course, following the decline of "spatial keynesianism." (faced with challenges of urban industrial decline, welfare state retrenchment, european integration, and economic globalization). "as of the early 1980s, national states began to introduce new, post-Keynesian spatial policies intended to reconcentrate productive capacities and specialized, high-performance infrastructural investments into the most globally competitivve city-regions within their territories." -- the need to (a) enhance global competitive advantages and (b) attract mobile capital.

(3): to what extent, though, will we be romanticizing the postwar period, here? "the postwar project of national territorial equalization and sociospatial redistribution has thus been superseded..."

(3): two arguments outlined here:

1. that city-regions "have become key institutional sites in which a major rescaling of national state power has been unfolding."
   
2. that "national state institutions continue to play key roles in formulating, implementing, coordinating, and supervising urban policy initiatives, even as the primacy of the national scale of political-economic life is decentered."
   

(4): let's try and think about this a bit more, particularly wrt to other ways in which the state has been theorized; surely we're not abandoning schematics that do use the state, singular?--"i believe that the generic concept of the state has become increasingly problematic. the notion of statehood seems to me a more precise basis for describing modern political institutions, because it does not ontologically prejudge..."

(5-7): three trends

1. global economic integration--"national territorial economies are becoming more permeable to supranational, continental, and global flows of investment."
   
2. urban and regional resurgence--"a renewed importance for major fractions of industrial, financial, and service capital..." (citing the global city, industrial districts, learning regions, offshore centers, etc.)
3. the consolidation of new supranational and cross border-institutions--EU, NAFTA, APEC, ASEAN, MERCOSUR, IMF, World Bank, G8, etc., etc.
   

(8): three methodological challenges

1. scale as a proccess, rather than fixed thing
2. intrinsic relationality of all scales, and their embeddedness within broader hierarchies (this is emphasized again in box 1.2)
   
3. postdisciplinary challenge

(12-13): definition of uneven geographic development--"the circumstance that social political, and economic processes under capitalism are not distributed uniformly or homogenously across the earth's surface, but are always organized within distinct sociospatial configurations--such as urban agglomeration regional clusters, rural zones, national territories, supranational economic blocs, and so forth--that are characterized by divergent socioeconomic conditions, developmental capacities, and institutional arrangements..."--outlniing the contradictory interplay of equalization and differentiation...

(14-15): important--we will clearly need an account of the interests that move states, for here, so far, we are seeing the state as a hammer--it can be wielded to alleviate or exacerbate uneven geographic development. turning point was the late-1970s.

(16): KEY--"during the fordist-keynesian period, the problem of uneven geographical development was generally construed as a matter of redressing 'insufficient' or 'imbalanced' industrialization on a national scale. the task of state spatial intervention, under these conditions, was to mold the geography of capital investment into a more balanced, cohesive, and integrated locational pattern throughout the national territory. by contrast, with the rescaling of state space and the proliferation of urban locational policies during the post-1970s period, this project of national territorial equalizaiton has been fundamentally inverted. it is no longer capital that is to be molded into the geogrphay of state space, but state space that is to be molded into the geography of capital." [again, though, this formulation sets us up as keynesians, when we would really like to break the chains]

(16-17): why, with post-keynesian, we can expect crises [well, but what about keynesianism?]

(18): state rescaling as 'ideal-type', or 'real abstraction'? setting the theoretical stage.

(18-21): three levels of abstraction (see box on page 19)

1. abstract--capital accumulation, class struggle
   
2. meso--keynesianism, neoliberalism
   
3. concrete--actual policies
   

(21): in this book, mainly concerned with meso level (but of course, involves other levels, too)

(24): citing jessop as postdisciplinary take on the State

chapter two, the globalization debates (27-

(28-29): globalization as an opportunity to bring space back in to analyses of capitalism--and, obviously, an opportunity to dispose of the 'cartesian' notion of the fixed, nation-state--"to challenge the iron-grip of the nation-state on the social imagination'"

(29): KEY--"thus, one of the central intellectual barriers to a more adequate understanding of contemporary global transformations is that we currently lack appropriately historical and dynamic conceptualizations of social space..."

(30): not 'deterritorialization', but 'reterritorialization'

(30): important, the crux of the contention: we need to transcend the imaginary of the nation-state, and move toward an understanding of the new sociospatial configurations. importantly, "the effort to transcend state-centric modes of analysis does not entail a denial of the national state's continued relevance as a major locus of political-economic regulation."

(30): this chapter sets out its stall to critique the 'global territorialist' approach, and the 'deterritorialization' approach

(31): "the notion of globalization is first and foremost a descriptive category denoting, at the most general level, the spatial extension of social interdependencies on a worldwide scale."

(32): "in other words, all aspects of social space under modern capitalism must be understood as presuppositions, arenas, and outcomes of dynamic processes of continual social contestation and transformation." [bringing the 'social' in, but, like harvey, it seems ever-so-abstract...]

(33): important--insofar as we will be thinking about 'causes' behind global transformation, the dynamics seem to be located in capitalism's inherent tendency to see 'every limit... as a barrier to be overcome'. in other words, we need to think carefully about how this will dovetail with the question of shifting state strategy (if the keynesian and then post-keynesian paradigms were indeed driven, in his argument, by the notion that this was what was (a) best for national ecomonic growth, and/or (b) best for labor). how, in other words, to bring the State into a capital-centric account?

(33): we have a deterritorialization-reterritorialization chronology--first, capital annihilates barriers; then, second, it fixes itself in space as a means to extending its orbit.

(34): these spatial configuration as 'forces of production' (now we are wading into knotty theoretical formulations--though this begins with harvey, of course.)

(35): this particular deterritorialization-reterritorialization is part of the "longue duree dynamic of deterritorialization, reterritorializaiton, and uneven geographic development that has underpinned the production of capitliast spatiality throughout the modern era."

(35-36): six implications of this broad theorization

1. global restructuring as a conflictual, uneven, dialectical process
2. global restructuring as both spatial and temporal
3. global restructuring unfolding upon multiple spatial scales
4. not involving total obliteration of sociospatial scales (i.e., the state), but their reconfiguration
5. stems from a diverse range of political-economic causes (reogranization of capital accumulation, consolidation of neoliberalism, financial deregulation, accelerated technological change, new population movements, geopolitical shifts, transformation of global labor force...) [how do we move to a coherent account of what actually happened, as the capital-centric account initially implied? or is this very much a case of overdetermination by all of this?]
6. states as essential geographical arenas

(37-38): important--here begins the section on the epistemology of state-centrism, which has three most essential spatial assumptions (see box 2.1)

1. space as static platform, not social (spatial fetishism)
   
2. social relations organized within containers (methodological territorialism)
   
3. assumption that social relations are organized at a national scale (methodological nationalism)
   

(41): the intellectual plausibility of this frame, he's arguing, was contingent--it can be traced to "the late nineteenth and early twentieth century historical-geographical context in which the social sciences first emerged, during which the territorial state's role in encaging socioeconomic and politicocultural relations within its boundaries dramatically intensified."

(43): and even then, there was a tendency to see what you expected to see, through it--reify it, rather than see a tendency in operation ("to conflate the historical tendency toward the territorialization of social relations on a national scale--which has undoubtedly intensified during much of the twentieth century--with its full historical realization")

(44): important--the two (mistaken) assumptions of the deterritorialization thesis

1. that globalization is non-territorial, borderless, supraterritorial.
2. that globalization entails the contraction of state power, or its erosion.

(45): first mention of 'glocalization' (swyngedouw)

(45): the relativization of scales (jessop)

(47-48): the (nonsense) notion of integration into 'global society'

(48-49): more profound critique of those who see globalization as preconstituted structures, rather than qualitative re-structuring...

(49-52): important, critique of wallerstein as 'state-centric'--"however, considering wallerstein's avowed concern to transcend state-centric models of capitalist modernity, national state territories occupy a surprisingly pivotal theoretical position within his conceptual framework... wallerstein's conceptuion of global space is.. most precisely described as an inter-state division of labor... in this sense, wallerstein's concern to analyze the global scale as a distinctive unit of analysis does not lead to any qualitative modification in the way in which this space is conceptualized... the global and the national scales are viewed as structural analogs of a single spatial form--territoriality... to be sure, wallerstein conceives global space as a complex historical product of capitalist expansion, but he acknowledges its historicity only in a limited sense, in contrast to previous historical systems such as world-empires. for within the cpaitalist historical system, space appears to be frozen into a single geometric crystallization."

(52-53): two general methodological conclusions:

1. emphasis on the global spatial scale does not necessarily lead to the overcoming of state-centrism
2. state-centric conceptions of global space mask the national state's own crucial role as a site and agent of global restructuring.
   

(55): the prospect of 'placelessness' (!)

(56): important--three serious deficiences of deterritorialization approaches

1. historicity of territoriality is an either/or, presence or absence (?)
2. telationship btw global space and national territoriality is a zero-sum game
3. most crucially, "deterritorialization approaches bracket the various forms of spatial fixity, spatial embedding, rescaling, and reterritorialization upon which global flows are premised."
   

(57): important--"a major agenda of this book is to advance an interpretation of contemporary global restructuring as a rescaling of the nationally organized sociospatial configurations that have long served as the underlying geographical scaffolding for capitalist development."

(57): important--remember, two types of deterritorialization under discusssion: of capitalism, and of the state.

1. of capital (57-60): more-or-less asserting that a territorialization moment is unavoidable, still. "we are witnessing, rather, a profoundly uneven rescaling and reterritorialization of the historically entrenched, state-centric geographical infrastructures that underpinned the last century of capitalist industrialization." capital cannot ever enjoy pure placelessness.
   
2. of the state (60-64): the state, also, is most definitely not dead. "national states began actively to facilitate the process of geoeconomic integration through a variety of policy strategies..." as panitch writes, "capitalist globalization... takes place in, through, and under the aegis of states."

(63): and why the urban? well, "as we shall see, large-scale urban regions represent crucial geographical, institutional, and political arenas in which the rescaled geographies of statehood under contemporary capitalism are being forged and contested."

(66-67): in sum, four methodological challenges:

1. historicity of social space--"historically specific character of national state territoriality as a form of sociospatial organization."
   
2. polymorphic geographies--"national state territoriality is today being intertwined with... an immense variety of emergent forms (supranational institutions, etc.)"
   
3. the new political economy of scale--decentering of the national scale of political-economic life
   
4. the remaking of state space--key role of national states in promoting sociospatial transformations.

chapter three, the state spatial process under capitalism (69-113)

(70): "just as a fish is unlikely to discover water, most postwar social scientists viewed national state territories as pregiven natural environments for sociopolitical life." -- the 'territorial trap'

(70): fordist-keynesian period as a period of historically unprecedented attempt at closure [we can interrogate this, since it ought to give us some clue what 'closed' and 'open' denote; not absence of world trade, certainly]

(70): at times, though, there seems to be a simplified periodization (more simplified, in other words, than the harvey narrative)--we have moved from westphalian, to post-westphalian [if we wanted to draw the periodization out, i am worried that it, as abstract narrative, doesn't match the concrete level] -- this is emphatically misleading, though, for he does also went to stress its indeterminacy during the modern period (see 76)

(72): critical--"of particular importance, in this context, is a sustained inquiry into the conditions under which inherited geographies of state space may be transformed from relatively fixed, stabilized settings in which state regulatory operations occur into potentially malleable stakes of sociopolitical contestation. concomitantly, there is an equally urgent need for a more explicit theoretical conceptualization of the determinate social, political, and economic processes through which transformations of state space unfold."

(72): KEY--"i argue that state space is best conceptualized as an arena, medium and outcome of spatially selective political strategies" [how does this work, then, with the argument that it is potentially malleable and open to political contestation? because it is difficult to argue that its rescaling in the neoliberal period was a response to political contestation--it was in the service of capital. so a kind of political influence, but there is no role for understanding it as a tool to be wielded, in this account, correct? in other words, the question is: is it that capital has captured the state, in the neoliberal period? or is it that the state has decided to go with capital?]

(75): citing Ollman on the dialectic, in order to emphasize process over fixity

(76): "while Weber was highly sensitive to the historical specificity of modern state territoriality relative to premodern political geogrphies, he was considerably less interested in its evolution within the modern interstate system."

(77): five functions of the modern state

1. war-making and military defense
2. the containment and enhancement of national wealth
3. the promotion of national identities
4. institutionalization of democratic forms of legitimation
5. the provision of social welfare

(77): spatial scales are tied to "regulatory strategies"

(78-80): important, state space:

1. in the narrow sense--changing configuration of state border, boundaries, frontiers
   
2. in the integral sense--changing substantive ways in which institutions are mobilized to regulate social relations (state inverventions into economic process, etc.)

(81): critical--"the crucial point, therefore, is that the question of which scale of regulatory activity is primary within a given configuration of state power is essentially an empirical-historical one, and not a matter that can be settled on an a priori basis."

(84): important--summarizing his understanding of jessop's notion of strategic-relational theory of the state--"most crucially, neither the state's spatial form nor historically specific forms of state spatiality are ever structurally pregiven; rather, they represent arenas and outcomes of spatially selective political strategies. this conceptualization forms a theoretical linchpin [of this book]" [see also 89]

(84): underdetermined nature of the value form

(85): the state form as analagous

(85): KEY--according to jessop, "the separation of the state from the circuit of capital may seriously constrain its ability to function as an agent of capitalist interests." (the state, then, as a site of contestation). "the state form is an undeteremined condensation of continual strategic interactions regarding the nature of state inteverention, political representation, and ideological hegeony within capitalist society. accordingly, 'there can be no inherent substantive unity to the staet...; its always relative unity must be created...' for jessop, the funcitonal unity and organization coherence of the state are never pregiven, but must be viewed as emergent, contingent, contested... it is only through the mobilization and consolidation of state projects... that the image of the state as a unified organizationl entity can be projected into civil society." (SEE FIGURE 3.4, pg. 86)

(87): state as site of strategies, as generator of strategies, and as product of strategies.

(91-93): important:

1. state spatial form (defined with reference to the principle of territoriality--it is territoriality that underpins the potential autonomy of state institutions from other social forces within civil society)
2. state spatial projects (oriented toward state's institutional structure--initiatives to differentiate state territoriality into a functionally coordinated, coherent regulatory geography)
   
3. and state spatial strategies (oriented towards circuit of capital--influence the geographies of development, reshape geographies of capital accumulation)

(95): two dimensions

1. a scalar dimension (a hierarchy among a variety of scales)
   
2. a territorial dimension (jurisdictional units)

(96): "the relation of state institutions to patterns of uneven spatial development is frequently an object of intense sociopolitical contestation." [but, and i think we would all agree, it is possible to push this to lengths that would be absurd--we are still talking about a state that is in the broad interests of capital, perhaps more in the way althusser specified...]

(104): all of this is becoming frustratingly formal!

chapter four, urban governance and the nationalization of state space ()

(114-115): ok--"state rescaling has emerged as an important political strategy through which diverse governmental coalitions have attempted to manage the disruptive consequences of a deeply rooted socioeconomic crisis." [again, question of response to politics and contestation, or in line with capital's broad interests]

(115): definition of spatial keynesianism--"spatial keynesianism was a multifaceted, multiscalar, and contradictory amalgamation of staet spatial projects and state spatial strategies that were constructed in response to some of the major regulatory dilemmas associated with postwar fordist urban-entrenched patterns of uneven spatial development by spreading urban growth as evenly as possible across the entire surface of each national territory.."

(116): in this chapter, wants to 'get at' the state by looking at the way in which it strove to regulate urban development/urbanization.

(117): key--"I argue that spatial Keynesianism was composed of a variety of spatially selective political strategies through which wester European antional states attempted to manage the distinctive patterns of urbanization and uneven spatial development that crystallized across western Europe during the Fordist-Keynesian period..."

(120): urban development in late nineteenth and early twentieth centuries, evolution of capitalism from liberal-competitive to state-managed; a new industrial geography of the second industrial revolution

(122): fordist period as the high-water mark of national capitalism

(128): see box, "key axes of regulation under fordist-keynesian capitalism"

(130): here, a point at which to ask the question of the place of labor in pushing the State--"the goal of state action, in this context, was less to enhance the productive force of capitalist sociospatial configurations than to spread the industrialization process as evenly as possible across the entire surface of the national territory."

(133): compensatory mechanisms, myrdal -- targeting of peripheralized spaces (136)

(171): "spatial keynesianism was not dismantled through a single, catastrophic rupture. rather, its constitutive elemnts were eroded due to a confluence of distinct processes of restructuring, leading in turn to path dependent, politically contested regulatory realignments and institutional modifications within each national state apparatus."

chapter five, interlocality competition as a state project

(172-173): "in contrast to the redistributive agenda associated with the Kenesian welfare national state, the competition state attempts to promote economic regeneration by enhancing the global competitive advantages of its territory..."

(176): we have seen--

1. state spatial projects--establish customized, place-specific regulatory capacities in major cities, city-regions, and industrial districts and more generally, to decentralize key aspects of economic regulation to subnatinoal institutional levels.
   
2. state spatial strategies--reconcentration of socioeconomic assets and advanced infrastructural investments within globally competitive city-regions.
   

chapter six, alternative rescaling strategies

(257-261): SUMMARY OF THE ARGUMENT

1. ABSTRACT: A. curret round of global restructuring represents an intensification and re-workign of uneven spatial development / B. state influences this through diverse political strategies / C. towards a processual concpetualization of state spatiality, which calcify into distinct sociospatial configurations
2. MESO-LEVEL: A. post-1980s western europe, which has facilitated transnational corporate accumulation strategies... has produced intense economic dynamism within a select group of powerful, globally interlinked cities... / B. an inverstion of state appraoches to the regulation of uneven development; redistribution abandoned, competetiveness prioritized. / C. patterns of state spatial selectivity have been transformed; new projects and strateiges designed to make major cities competitive. (towards RCSR--rescaled competition state regime)

(261): this configuration, it is argued, is permeated by crisis-tendencies.

(304): from second-cut, to third-cut RCSR?

Under the original Bretton Woods system, IMF loans were aimed at preventing devaluation and propping up demand. U.s. capital accepted these Keynesian measures when the U.S. was the major world exporter, ran large trade surpluses and the rest of the world depended on its currency to pay for those imports. But in the 1980s, the IMF turned all of its previous policies on their heads: It now deliberately imposed devaluation and forced reductions in national income and demand in order to limit imports—all as a means to guarantee repayment of debt to international finance capital.
(...) In the 1980s, 187 structural adjustment loans were negotiated. They were the bitter medicine that only a seemingly objective, nonprofit multilateral organization like the IMF could get away with politically. Structural adjustment led to hunger, malnutrition, poverty, disease and death throughout the Third World. Under IMF surveillance and enforcement, virtually every nation in sub-Saharan Africa entered a structural adjustment program. In every case, they were a disaster for the people of Africa and did nothing to restore growth. In the 1980s, GNP in sub-Saharan Africa fell by 2.2 percent per year, and per capita income fell below pre-independence levels. To pay back the debt, government health expenditures were cut by 50 percent and education by 25 percent. In Tanzania, debt repayment was six times the expenditure for health costs—which is all the explanation one needs to understand why 40 percent of the population of Tanzania dies before age 35.12 Flood-ravaged Mozambique—whose debt was $8.3 billion in 1998—pays $1.4 million per week in debt repayment. It will pay out in less than one year more than it has been promised in flood relief.
(...) In IMF-“adjusted” countries, government spending per capita was reduced yearly from 1980 to 1987 and diverted to ever-increasing payments on debt interest. In Latin America, the portion of government budgets allocated to interest payments increased from 9 percent to 19.3 percent. Under IMF auspices, the 1980s were a lost decade for Latin America. In Chile, IMF loan conditions cut real wages by 40 percent. The IMF loan to Mexico in the debt crisis of 1982 cut real wages in half in the next decade, while investments in health, education and basic physical structure were also halved. Infant deaths in Mexico due to malnutrition nearly tripled in the same period.
(...) Yet, at the end of the decade, the debt of Third World countries was greater than when the structural adjustment programs began. Rather than “saving” these countries, the IMF had enmeshed them in an endless debt trap.
(...) The IMF rationale was that loans would stimulate the economic growth that would allow for debt repayment. In truth, most existing international debts were serviced only by increasing international borrowing. From 1976 to 1982 Latin American foreign borrowing doubled. Seventy percent of new loans went to interest payments on old loans.
(...) The IMF Asian loan conditions went far beyond the needs of stabilizing the situation and repaying debt. The IMF demanded that foreign banks (primarily U.s.) be allowed in immediately—in the depths of the crisis—so that they could acquire existing banks at fire-sale prices. This piece of U.s. robbery was justified in the U.s. press on the grounds that the Asian banking crisis grew out of Asian corruption, or “crony capitalism,” an unholy alliance of corporations, banks and government—something apparently different than the alliance between the U.S. government, U.S. corporations and the IMF.
(...) The human impact of IMF loan conditions on the countries that became its wards was (and continues to be) horrendous. In Korea, the IMF imposed mass layoffs, leading to the joke that IMF stood for “I’M Fired.” Children abandoned by destitute parents were called “IMF orphans.” In Thailand, large numbers of children were thrown into child prostitution. In Indonesia, school enrollment dropped by a quarter. IMF loan conditions for Argentina demanded that labor laws be altered to eliminate national bargaining and grant employers the right to fire workers at will. The IMF program that was imposed on the Suharto dictatorship raised the price of rice by 38 percent, cooking oil by 110 percent and fuel by 70 percent This provoked the rioting that led to Suharto’s fall in 1998. IMF austerity conditions were now becoming dangerous to the health of local ruling classes. The IMF was forced to backtrack; loan conditions had to be less draconian for fear that no local ruling class, no matter how corrupt and subservient to Western capitalism, could carry them out without provoking a major upheaval.

It wasn’t only his desire to restore the health of capitalism that set Keynes apart from Marx. His theory of crisis was also fundamentally different. Where Marx saw the driving force of capitalism as accumulation for accumulation’s sake—the constant drive toward profit—Keynes continued to assume that “consumption…is the sole end and object of all economic activity.” The lack of “effective demand” in Keynes’ theory of crises is another way of saying that capital is not being invested; it does not, however, explain why. In short, whereas for Marx the possibility of the separation of purchase and sale that makes crisis a possibility is the starting point for understanding capitalist crisis, for Keynes it is the endpoint. Keynes’ theory of crisis—the lack of aggregate demand—is merely a description of the effects of crisis, not an explanation of why crises take place.
(...) The appeal for some, then, of Keynesian policy is that it calls for some redistribution of wealth from the top to the bottom, and that he pushes for “full employment.” However, Keynes’ perspective on this was strictly a ruling-class one. He supported not higher wages, but rather “the maintenance of a stable general level of money-wages” in order to maintain “equilibrium.” Keynes also thought it important that wages not become too high. In fact, though Keynes criticized the neoclassical theory of wages, he did not completely reject its premises, writing, for example, that, “A reduction in money-wages is quite capable in certain circumstances of affording a stimulus to output, as the classical theory supposes.”
(...) What Keynes added to this understanding was that at times, capitalists might view all other options as money-losing prospects and no matter how low the state moved interest rates, capitalists may still save. Keynes called this a “liquidity trap” and this is exactly the scenario that befell Japanese capitalism in the 1990s. For this reason, Keynes saw manipulating interest rates as only one tool for encouraging investment. The theory is that interest rates can be used to stimulate investment if real interest rates—that is interest rates adjusted for inflation—are cut to a point that they are negative. However, the Japanese experience illustrates that even if interest rates are negative, capitalists won’t invest if there is not a perceived avenue for investment. A similar dynamic is currently playing out within the U.S. economy. Federal Reserve chairman Ben Bernanke has reduced the target for the Federal Funds rate from 5.25 percent to 1 percent. This has failed to induce lending or investment because there is little for capitalists to invest in that is profitable. Furthermore, central banks only have control of the economic policies within their own countries. It makes the system unstable, because central banks can end up working at cross purposes based on national needs as opposed to having a cohesive view of fiscal policy within the global economy as a whole.
(...) Keynes conceptualized something called the “multiplier” effect. That is, by pumping $100 into the system at the right place, it could generate significantly more activity. Giving $100 to a worker might mean they immediately spend it at the local grocer. The grocer might then turn around and spend $90 of it himself on something else and so on and so on. On the flip side, giving $100 to a billionaire might not accomplish the same thing because the billionaire has no immediate need for the $100 and is only to going to spend if he sees investment opportunities with high rates of return.
(...) Neoliberal ideology, for its part, rejects the role of fiscal stimulus and puts greater emphasis on monetary policy, which accounts for the predominant role of the Federal Reserve Bank over the past thirty years in dealing with economic problems. In practice, however, neoliberals do have a fiscal policy—cutting taxes on the rich and increasing defense spending. As a result, during the neoliberal era government spending as a percent of GDP and per capita has risen, not fallen. Theoretically, neoliberalism is opposed to state intervention. In practice, military spending and corporate welfare are not only accepted but welcome. Now that the system is in crisis, ideology is discarded, and those who may have crowed loudest for the state to leave the market alone demand that the state intervene to save it.
(...) A key linchpin in this agenda was the dollar policy. Coming out of Bretton Woods every currency was pegged to the dollar, which, in turn, was pegged to gold. The fixed exchange rate put a dollar at $35 for an ounce of gold. Currencies would move against the dollar based on whether individual nations had balance of payments problems. If you had a deficit, you had to cut imports or else be forced to devalue. This arrangement more or less held until 1971 when the United States pulled the plug on the gold standard.
(...) The Bretton Woods institutions eventually took on much broader mandates than rebuilding capitalism in Europe and Asia, and after the crisis of the 1970s, adopted neoliberal loan conditions requiring nations to privatize and deregulate their economies. As Joel Geier writes,

Under the original Bretton Woods system, IMF loans were aimed at preventing devaluation and propping up demand. U.S. capital accepted these Keynesian measures when the U.S. was the major world exporter, ran large trade surpluses, and the rest of the world depended on its currency to pay for those imports. But in the 1980s, the IMF turned all of its previous policies on their heads: It now deliberately imposed devaluation and forced reductions in national income and demand in order to limit imports—all as a means to guarantee repayment of debt to international finance capital.

(...) The Great Depression played out in two acts. There was an initial drop to the depths in 1932, a recovery from 1933 to 1936, and then a second drop in 1937 and 1938, even after the initial Keynesian salves had been applied. The economy only decisively recovered in 1939, when the United States began war production for the Allies.
(...) The war effort created the rise in effective demand—in reality, government war spending, not consumer demand—that Keynesian measures failed to produce. As a result, employment and production, especially of arms, helped stimulate economic growth and an end of the Depression. Keynes himself saw the stimulating effects of the war effort as a vindication of his theories, having commented before the outbreak of war, “It is, it seems, politically impossible for a capitalist democracy to organize expenditure on the scale necessary to make the grand experiment that would prove my case—except in war conditions.”29 Of course, the cost of this method of recovery—fifty-five million dead—was a brutal price to pay. Moreover, the war played an important role in helping to wipe out and devalue capital and drastically reduce wages, both of which contributed to the restoration of profit rates after the war, but which were not part of Keynes’ remedies for crisis.
(...) Moreover, in adopting these state-led measures, nations were simply returning to the same policies of “war socialism”—“forced savings, controls on money, credit, prices and labor, priorities, rationing, government-borrowings”—that they had put in place during World War I, “despite the ‘orthodox’ approach to economics that prevailed at that time.”30 It was a sleight of hand for Keynes to now promote war—a product of the unplanned, competitive character of the world system—as proof of his theories.
(...) Yet there was never a point, except during the war itself, where the United States, or any European country, reached full employment. Though the term full employment was thrown around, in practice it was adjusted to mean, in the words of the American Economic Association in a 1950 report, the “absence of mass unemployment.” Proceedings of the British Royal Institute for International Affairs in 1946 defined full employment as “avoiding that level of unemployment, whatever it may happen to be, which there is good reason to fear may provoke an inconvenient restlessness among the electorate.”
(...) It was only well into the 1960s that they started to face competitive pressures that unearthed the contradictions. The U.S. was spending huge sums on its arms industry while its most dynamic competitors—Germany and Japan—were reinvesting in new plant and equipment. Those competitors began to outpace the U.S. in the 1970s. In order to retain economic power, the U.S. needed to lower its labor costs relative to Japan and Germany, a difficult task especially important given that it was saddled with heavy arms expenditures when those nations were not. It was this crisis, in which stagnation was accompanied by inflation, that ultimately paved the way for the neoliberal restructuring of capitalism.

(...) In practice, neoliberalism did not produce a full break from Keynesianism; and in some important respects the limitations of a return to full Keynesian economic policy are already clear. First of all, interest rate reductions—the first line of defense recommended by Keynes—have already been used under the Fed chair Alan Greenspan (when the economy was in boom) and now by Ben Bernanke (in response to the financial crisis). In the first instance, easy money helped create the housing bubble that formed the basis of the current crisis; and the more recent cuts aimed at lifting the financial crisis have not unfrozen bank lending. Second, the government has already run up large deficits for the past two decades—the federal debt now stands at $10.6 trillion, and the current deficit is set to go up to a $1 trillion next year as new stimulus plans are brought on line. The question is how far can this go? The government can print more money, as it has already begun to do now that the dollar has rebounded; but there is a long-term danger of runaway inflation, which could force them to raise interest rates that put a halt to growth.

(...) It is a sign of just how much the economic literacy of the left has deteriorated that Keynesianism—born as a reforming ruling-class economic program—today may become the default position when calling for an alternative to neoliberalism. Yet socialists must make a distinction between those measures of state intervention—such as the bank bailouts—that are measures of state monopoly capitalism designed to save the bankers to the detriment of the working-class taxpayer; and those measures of state intervention that will come as a result of popular demands. Socialists are not indifferent to the reforms—or the struggles to achieve them—that will be necessary to reverse the three decades of capitalist assault on the working class.

Today figures like Krugman are seen as partly challenging these conclusions, and as representing the return of Keynesian economics. But this is not a return to Keynes in the sense of his general theoretical critique of capitalism’s fundamental flaws. Rather it is a return to Keynesianism as a “special case” of “depression economics”, where monetary policy is ineffective and expansive fiscal policy needs to be given priority.12 The ascendancy of neoclassical economics, which bastardised and subordinated Keynes’s mildly critical view of capitalism, is not itself challenged. Nor is capitalism questioned. Rather it is assumed that mistakes were made in monetary policy and in regulatory systems that have pulled the economy back down into the “special case” of Keynesian “depression economics”.
(...) Hence, what Keynes called the “outstanding faults” of the capitalist economy are hardly addressed as such. Keynes, is presented, by his most publicised (and reactionary) biographer, as the great “remedist” and little else.13 The resulting policy emphasis is on fiscal stimulus, a mild redistribution of income, renewed financial regulations, and international reforms in currency trading. The crisis is treated as a kind of external shock (or, as Krugman says, the spread of an unknown virus).14 The severity of the downturn would suggest that long-term forces (more than the normal business cycle factors) are concerned. Yet, the fact that capitalism is an inherently contradictory historical system, which displays increasing irrationality in its later stages is off limits within the economics mainstream, even among its supposedly left of centre theorists, such as Krugman and Joseph Stiglitz.
(...) Part of the problem is that although Keynes’s thinking was too radical for the system he was trying to defend, it was at the same time not radical enough. It did not fully explain the core contradictions of capitalism. For a truly general theory of accumulation and crisis under capitalism Marx together with later Marxian political economy remain critical. For Marx the essence of capitalism lay, according to his famous shorthand, in the relation M-C-M’. Capitalism was a system in which money capital (M) was exchanged for commodities (C) that were transformed into new commodities through production, which were then sold again for more money M’ (or M + ∆m, i.e., surplus value). The nature of this process was such that it was unending. The M’ was then reinvested in the next period of production, with the object of getting M’’ at the end, and so on, ad infinitum.15 Any interruption in the unending accumulation of capital in this sense pointed to a crisis. Moreover, the very existence of a system organised in this way made it possible for a crisis to occur through a shortage of effective demand. For Marx, there was never any doubt about the root cause of capitalist economic crises. “The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces as though only the absolute consuming power of society constituted their limit”.16
(...)With respect to financial expansion and crisis, Marx wrote in volume 3 of Capital that the whole “sphere of production may be saturated with capital”, with the result that profits increasingly enter into the sphere of speculation. “If...new accumulation”, he wrote,
meets with difficulties in its employment, through a lack of spheres for investment,

i.e., due to a surplus in the branches of production and an over-supply of loan capital, this plethora of loanable money-capital merely shows the limitations of capitalist production. The subsequent credit swindle proves that no real obstacle stands in the way of the employment of this surplus-capital. However, an obstacle is indeed immanent in its laws of expansion, i.e., in the limits in which capital can realise itself as capital.17

The “credit swindle”, arising with the turn to money capital (represented by Marx as M to M’) as the basis of the amassing of wealth, inevitably precedes a bust. “Business always appears excessively sound right on the eve of a crash”. For Marx nothing was more natural than a liquidity crisis in an economic slowdown, where capital hungered insatiably for cash. Mimicking the 42nd Psalm, he wrote that the capitalist desires and hordes money in every form: “As the hart pants after fresh water, so pants his soul after money, the only wealth”.18
(...) Yet, if Marx constitutes the starting point for a general theory of capitalism and crises, his analysis doesn’t encompass many of the specific problems of today, given the historical evolution of the system since his time. For Marxists, beginning with Hilferding, Lenin and Luxemburg, the historical evolution of the system in the early twentieth century was understood primarily in terms of the development of a new stage of capitalism, often referred to as monopoly capitalism. This reflected the fact that the most significant change in the structure of capitalism in the twentieth century arose out of what Marx called the concentration and centralisation of production, resulting in the rise of the giant firm and the modern credit system.
(...) Their work was extended into an analysis of the role of the state and popularised in Paul Baran and Paul Sweezy’s Monopoly Capital: An Essay on the American Economic Order (1966).20 This theoretical perspective was later applied to the world economy and the creeping stagnation of the 1970s, ’80s and ’90s, in a series of works by Sweezy and Magdoff. These thinkers argued that the capitalist economy did not naturally tend toward rapid growth.21 Rather specific historical “developmental factors” were necessary for strong growth to appear for any length of time.22 This was particularly the case for a system dominated by monopoly capital, in which monopolistic price formation and profits were associated with certain restraints on accumulation. The main problem of accumulation for monopolistic corporations was to find sufficient investment outlets for the enormous and rising surplus at their disposal. Short of new historical factors that increased investment outlets, absorbing surplus capital, the accumulation system tended to sputter out. Hence, “the normal state of the monopoly capitalist economy”, Baran and Sweezy argued, was “stagnation”.23
(...) In the decades immediately after the Second World War the United States and the other advanced capitalist economies experienced a period of prosperity, subsequently described as the “Golden Age”. This was based on the stimulus from special historical factors such as (1) a high level of consumer liquidity immediately after the war; (2) the rebuilding of the war-devastated European and Japanese economies; (3) a second great wave of automobilisation (which included the impetus to the rubber, steel, and glass industries, the building of the interstate highway system, and the suburbanisation of the country); (4) the growth of the sales effort in the form of the expansion of advertising and other forms of sales-related waste; and (5) high military spending associated with two regional wars in Asia. But by the 1970s these countervailing factors to the tendency to stagnation were mostly on the wane. The result was a rapid slowing down of the economy. Net investment in the United States declined, with the investment that was taking place being fed largely out of corporate depreciation funds. In this situation, a new outlet for the surplus (profits) of corporations was needed.
(...) Magdoff and Sweezy argued, as early as 1970, that there was a “long-run decline in liquidity” arising from the putative “‘success’ in controlling the business cycle”. The result was that the US economy was faced with the growing problem of a major “debt-squeeze out”, requiring that real and paper values be brought back into accord, sometime in the future. The longer that debt ballooned without a major contraction the bigger the problem would become.25 Incredibly, this process of financial expansion continued over the decades, with only relatively minor credit adjustments or “credit crunches”, until the Great Financial Crisis of 2007–09.
(...) Total debt in relation to GDP in the US economy rose from 151 percent in 1959 to 373 percent in 2007, with the quality of debt decreasing as its quantity expanded. But the real economy showed an increasing addictive toleration—the need for more to get even a decreasing effect—to the expansion of debt. In the 1970s the increase in US GDP was about sixty cents for ever dollar of new debt, by the early 2000s this had decreased to around twenty cents for every dollar of new debt.27
(...) In 1997, Paul Sweezy declared that globalisation was a very long-term trend of capitalism, traceable to its very origins in the fifteenth and sixteenth centuries. This globalising trend had major effects in some periods such as the rise of China as a major force in the world economy. Nevertheless, the dominant phenomena governing world accumulation at the end of the twentieth century, he argued, were the trio of “(1) the slowing down of the overall rate of growth, (2) the worldwide proliferation of monopolistic (or oligopolistic) multinational corporations, and (3) what may be called the financialisation of the capital accumulation process”.29 It was clearly financialisation that was the most startling and unstable development. If the financialisation process were to go into reverse or even to slow, Sweezy suggested, the result would be a deep stagnation. There was no telling when this would happen. Financialisation, Magdoff and Sweezy argued, could continue for some time. Still, at some point the rising mountain of debt would grow beyond the capacity of capitalist governments to intervene effectively as the lender of last resort, and a financial avalanche would result in an unprecedented crisis. Such a major, historic crisis of capitalism, arising out of conditions that were equally unprecedented, would pose not merely the “return of depression economics” as this was understood, in a very limited fashion, by orthodox economists, but would mean the collapse of an entire financialised regime of accumulation with lasting real world repercussions. The most likely long-term result was a deep slowdown in the trend-rate of growth. With the Great Financial Crisis of 2007–09 and the advent of the most serious economic downturn since the Great Depression these expectations based on an understanding of the historical development of the system have come true. In terms of the conditions that are to be experienced by working populations around the globe as a result of this unprecedented downturn (comparable only to the 1930s) the worst is clearly still to come.
(...) Already, emerging economies, where the crisis may turn out to be most wrenching, are finding their export markets drying up. For China, with exports in 2001–06 amounting to over 30 percent of GDP, and net exports close to 4 percent of GDP, the shrinking of markets in the United States, Europe, and Japan constitutes a serious threat. China currently is experiencing the sharpest deceleration in economic growth in thirty years. Chinese exports have dropped, auto sales have plummeted, and jobs are shrinking in the cities. House prices are now falling in major urban areas and there is a drastic decline in real estate investment, which spells a much bigger financial crisis. Millions of China’s “floating population” of migrant workers who fueled industrialisation are unemployed and are returning to rural areas. The sharp drop in economic growth and looming signs of deflation in China, it is feared, will pull world economic growth down to close to zero.30 To the not inconsiderable extent that the US generated global financial explosion has contributed to the growth in the Chinese real economy the US generated global financial implosion shall contribute to its contraction. Economic crises are endemic to capitalism, but the level of economic disaster affecting the system, as shown by conditions in the United States, on the one hand, and China, on the other, is now without precedent in the post-Second World War period, and the end is not yet in sight.
(...) The most serious ecological threat is of course global warming, which is inducing widespread, multi-faceted climate change, with disastrous implications for life on earth. But in a wider sense, the global environmental crisis involves manifold problems and cannot be reduced to global warming alone. These multiple hazards have a common source in the world economy, including: the extinction of species, loss of tropical forests (as well as forest ecosystems generally), contamination of and destruction of ocean ecology, loss of coral reefs, overfishing, disappearing supplies of fresh water resources, the despoliation of lakes and rivers, desertification, toxic wastes, pollution, acid rain, the approaching exhaustion of easily available crude oil resources, urban congestion, the detrimental effects of large dams, world hunger, overpopulation, etc. Together these threats constitute the greatest challenge to the survival of humanity since its prehistory.
(...) James Hansen, director of NASA’s Goddard Institute of Space Studies, and other climatologists, now claim that the goal must be to reduce the atmospheric carbon level below the present 387 ppm, to 350 ppm or less. This means that net CO2 emissions must “approach zero”. It also necessitates major changes in energy and land use, requiring massive social reorganisation. According to Hansen and his colleagues, “if the present overshoot of this [350 ppm] target CO2 is not brief, there is the possibility of seeding irreversible catastrophic effects”. Indeed, “continued growth of greenhouse gas emissions, for just another decade, practically eliminates the possibility of near-term return of atmospheric composition beneath the tipping level for catastrophic effects”. The world is now facing the prospect of irrevocably leaving the mild, protective climate of the Holocene, which has defined the environmental conditions for the entire duration of human civilisation.
(...) Indeed, there is only one way of accounting for the fact that orthodox economists constitute the leading ideological opponents of aggressive reductions in greenhouse gas emissions, even at the risk of a planetary inferno—and that is their primary role as ideological defenders of the capitalist system and promoters of its drive for profits and accumulation at any cost. Nothing so clearly demonstrates what John Kenneth Galbraith characterised (in the title to his last book) as The Economics of Innocent Fraud. “Capitalism, as we know it today”, James Gustave Speth, former head of the United Nations Development Programme, has written, “is incapable of sustaining the environment”.36 To turn to mainstream economics for answers is therefore a serious, perhaps fatal, error of current policy.
(...) From an ecological perspective, of course, this system of growth at any cost, synonymous with capitalism, places the world economy in direct conflict with environmental sustainability. China’s rapid growth in recent decades has also led to record rates of environmental degradation on its part. China is now close to the United States in annual carbon dioxide emissions, though far below the latter in emissions per capita. Yet, despite the seriousness of this contradiction between the capitalist economy and the planet, establishment economists generally argue against any major attempt to avert climate change, i.e., to bailout nature. At the same time they do not hesitate to advocate spending trillions of dollars to bailout banks. President-elect Obama’s chief economic advisor, Larry Summers, is notorious for his anti-environmental diatribes. He has said, on more than one occasion, that it makes as much economic sense in terms of future welfare to spend on various non-environmental factors—for example, to rebuild infrastructure (roads, bridges, etc.)—as to seek to preserve the environment, say, tropical forests. In addressing the global warming problem, Summers naively stated in 1992, that under “the most pessimistic estimates yet prepared...global warming reduces growth over the next two centuries by less than 0.1 percent a year”.39 Yet, under the most pessimistic estimates of climatologists at that time—now proving accurate—global warming under business as usual threatened both life on the planet and human civilisation itself. Indeed, nothing is more deranged than the notion of Summers and other orthodox economists that the planet as we know it can be destroyed, while the capitalist economy can continue as before.
(...) The growing scale of the capitalist economy and the weight that it is imposing on a limited biosphere are not everything. More important, ultimately, is the actual integrity of ecosystems and the basic biogeochemical processes of the earth system. Here Marx’s theory of the metabolic rift helps us understand capitalism’s intensive, not merely extensive, destruction of the environment. Marx’s vision had included an ecological element from the beginning. In his Economic and Philosophic Manuscripts of 1844 he wrote of the environmental damage wrought by industrial capitalism, in the form of the “universal pollution to be found in large towns”. For Marx, “Man lives from nature, i.e. nature is his body, and he must maintain a continuing dialogue with it if he is not to die”.40 But Marx’s ecological critique of capitalism crystallised only with the publication of Capital, volume 1 in 1867. He was influenced by the critique of British industrial agriculture developed by Justus von Liebig, the leading German chemist of the day. Building on Liebig, Marx pointed to the fact that by shipping food and fiber hundreds and even thousands of miles to new urban centres (a reflection of the growing division between town and country) industrialised capitalist agriculture was in fact depleting the soil of basic nutrients (such as nitrogen, potassium, and phosphorus), which were no longer recirculated to the earth. This created a major crisis of the soil in Europe and the United States in the nineteenth century. Marx described this as an “irreparable rift in the interdependent process of social metabolism, a metabolism prescribed by the natural laws of life itself”. He argued that society demanded the “restoration” of a sustainable human metabolism with nature, which however could only be accomplished under a society of associated producers.41 In the most radical conception of sustainability ever developed, Marx wrote:

From the standpoint of a higher socio-economic formation, the private property of individuals in the earth will appear just as absurd as the private property of one man in other men. Even an entire society, a nation, or all simultaneously existing societies taken together, are not owners of the earth. They are simply its possessors, its beneficiaries, and have to bequeath it in an improved state to succeeding generations, as boni patres familias [good heads of the household].42

(...) Confronted with ecological crises, no attempt is made by the system to go to the root of the problem in the social relations that are undermining what Marx called “the vital conditions of existence”. Rather the problem is shifted around, with capitalism continuing “to play out the same failed strategy again and again”.45 The result is a compounding of ecological disaster. The solution that capitalism provided to the nineteenth century soil crisis that Liebig and Marx addressed was not to restore the human metabolism with the soil, but rather to develop synthetic, particularly nitrogen-based, fertilizers, which marked the beginning of modern agribusiness, and which (because of the high petroleum use) is a major source of global warming, as well as contributing to ocean dead zones. Capitalism’s solution to world agricultural production in the form of modern agribusiness has resulted in a further polarisation of wealth and hunger. Of the more than six billion people in the world today, the United Nation indicates that around one billion are hungry, and their numbers (both relative and absolute) are growing. In the United States itself over 36 million people, about 12 percent of the population, were “food insecure” in 2007.46
(...) Yet, globalisation taken in itself is not a very useful way of understanding the accumulation dynamic of the system at this specific stage of its development, which is better characterised, as Sweezy argued, in terms of the three elements of slow growth (in the centre and in the world economy as a whole), monopolisation via multinational corporations, and financialisation. Continuing globalisation, coupled with financialisation, has created the illusion, propagated by some ideologues of the system, that “the world is flat”.47 Yet, capitalism remains a world economic system divided into separate nation states with differing power resources—a contradiction that is impossible to transcend within the system. Meanwhile, the growth of multinational corporations based in the centre countries has served historically to channel global surpluses away from the peripheries toward the centres. The concentration of power (economic, military, financial, communications) at the centre is intrinsic to capitalism as a world system, although the specific nations that constitute the centre and periphery (and semi-periphery) may change. The world economy is therefore disproportionately focused on the needs of accumulation at the core. The capitalist world system is most stable when governed by a single hegemonic power, such as Britain for most of the nineteenth century, and the United States for most of the twentieth. In periods of hegemonic instability and world economic crisis the system approaches conditions of total crisis, as witnessed by the First and Second World Wars.
(...) At present there are very palpable fears in Washington’s higher circles regarding the continuing—and from their perspective necessary and non-negotiable—role of the dollar as trade settlement and reserve currency, even in the face of current Chinese support for the dollar system. Washington understands that China’s blind support for the dollar is problematic, especially in the event of a rapid devaluation of all existing dollar obligations resulting from Federal Reserve policy. China holds $652 billion in US Treasury debt (an increase from $459 billion at the end of 2007). Altogether it owns 10 percent of the US public debt. A rapid devaluation of the dollar would only be seen in China as an expropriation. An ensuing movement of China away from the dollar, however limited—and none but limited moves are immediately possible—could drastically destabilize the entire US dominated world economic order.52
(...) The fault lines are most obvious in terms of the peril to the planet. As Evo Morales, president of Bolivia, has recently stated: “Under capitalism we are not human beings but consumers. Under capitalism mother earth does not exist, instead there are raw materials”. In reality, “the earth is much more important than [the] stock exchanges of Wall Street and the world. [Yet,] while the United States and the European Union allocate 4,100 billion dollars to save the bankers from a financial crisis that they themselves have caused, programs on climate change get 313 times less, that is to say, only 13 billion dollars”.55

(...) What exactly this something else is we do not know, and cannot know at this point: because it depends on the responses not just of states and corporations, but more importantly the response of the world’s populations. On top of the intense class alienation, exploitation, and inequality endemic to capitalism at every level, we are now faced with widening global fractures. So far, on a continental level, leadership in recognising that the only answer is the revolutionary one—a new socialism for the twenty-first century—has been taken by the peoples of Latin America, in Cuba, Venezuela, Bolivia, Ecuador, and is also manifest in struggles taking place in Brazil, Mexico, Nicaragua, and elsewhere.58 Latin America, which was the first continent to feel the full brunt of neoliberal globalisation, the hardest hit region outside of the Middle East in terms military interventions in the last quarter-century, and the region that was the initial basis of US international hegemony, is now showing the way to the world—not only in relation to the struggle for substantive equality, which is essential, but also in relation to saving the planet from capitalism. As Morales has stated, “Humankind is capable of saving the earth if we recover the principles of solidarity, complementarity, and harmony with nature, in contraposition to the reign of competition, profits, and rampant consumption of natural resources” that distinguishes the failed system of capitalism.59

from "the darker nations: a people's history of the third world" by vijay prashad (part II)

(62): After centuries of imperialism, the new nations had been left with economies that relied on the sale of raw material and the import of finished goods. This fundamental imbalance meant that countries like Argentina had to export vast amounts of raw materials at relatively low prices, whereas their import bills would be inflated with the high prices commanded by industrially manufactured goods.
(62-63): Until the early decades of the twentieth century, the dominant classes in Argentina had no brief for nation building. The oligarchs... ran the country with an iron fist and held their own wealth in European banks (which mean that they preferred fiscal policies that favored Europe's currencies against Argentina's economic strength). This detachment of the elite fueled the growth of a socialist movement... Argentina's industrialization grew in the breach, when European and US capital neglected the region for the period between the Depression of the 1920s and the wars of the 1940s... British capital owned most of Argentina's railroads and the Swiss, the United States, and the British owned almost half of its industries. The authoritarian populist Juan Peron bought the railroads from the British...
(63-64): A combination of technological advantages, unionization, and the vagaries of the prices of primary products meant that the core enjoyed a sizable gain in the "terms of trade."
(66): Why is India poor, asked Dadabhai Naoroji? It is not the pitiless operation of economic laws, but it is the thoughtless and pitiless action of the British policy; it is the pitiless eating of India's substance in India, and the further pitiless drain to England; in short, it is the pitiless perversion of economic laws by the sad bleeding to which India is subjected, that is destroying India." The Third World bled to make Europe grow. Modernization theory avoided this, and rather sought to "Protestantize" the cultures of the world to seed capitalist culture.
(66): Colonialism ravaged the world, and left more than half of it bereft of capital and with a surfeit of poverty. In 1500, the average per capita income in Europe ran only three times more than that in Africa and Asia, whereas in 1960, it was ten times greater.
(67): Prebisch rejected the theory of comparative advantage, because he demonstrated that each region of the world could enjoy the fruits of modernity as much as the others. [T]rade is crucial because some regions have smaller markets than otehrs, and raw materials and agricultural lands are not evenly distributed along national lines. But the basis of trade had to be altered. It could not be premised on the idea that some states are naturally good at being harvesters of low-value raw materials and others are naturally proficient at being producers of high-value-added finished products. The theory of comparative advantage, Prebisch claimed, stifles genuine economic development.
(68): The contempt of the First World's economists was palpable. John Maynard Keynes, for instance, complained to the English government about the invitations being sent out to the darker nations for the Bretton Woods Conference. Those that had been invited from Colombia to Venezuela, from Liberia to the Philippines, he noted, "clearly have nothing to contribute and will merely encumber the ground." For Keynes, this is "the most monstrous monkey-house assembled for years." Only technocrats from the advanced industrial states should be allowed to formulate the rules, because otherwise thsoe from the raw material states would begin to make unbearable demands.
(71): The US president of the World Bank, Eugene Black, quite forthrightly remarked, "Our foreign aid programs constitute a distinct benefit to American business. The three major benefits are (1) foreign aid provides a substantial and immediate market for United States goods and services, (2) foreign aid stimulates the development of new overseas markets for United States' companies, (3) foreign aid orients national economies toward a free enterprise system in which United States' firms can prosper.
(73): [BARAN'S CRITIQUE OF ISI] Paul Baran published The Political Economy of Growth in which he demonstrated the futility of foreign aid and the import-substitution industrialization strategy... While Baran might have overstated his thesis and the role of monopoly capitalism within the darker nations, his critique on the reliance on the growth strategy was on point. The aid from outside (whether capitalist or socialist) purchased time for the dominant elites, who used that money to prevent necessary social transformation. A more substantial way for development would be the destruction of feudal social relations, band by the socialization of production. These parasitic elites acceded to the Prebisch logic in order to benefit their own class interests, rather than move their societies to socialism. The cominant classes in each of these societies purchased third-rate, out-of-date plants and machinery from the advanced industrial states, and paid top dollar for them... Prebisch recognized this major limitation in the Third World order: "We thought that an acceleration of the rate of growth would solve all problems. This was our great mistake." What was needed alongside growth were "changes in the social structure," indeed "a complete social transformation."
(74): It had already become sufficient to be critical of the First World alone, which became a shield that protected the national bourgeoisie from criticism for its own lack of imagination and self-sacrifice. In other words, development theory and public policy emphasized economic growth as an end in itself without a built-in consideration for equity.
(75): One million dollars. That's all it took in 1953 for the CIA to overthrow a nationalist government. Langley's man in Tehran was Kermit "Kim" Roosevelt, the grandson of Teddy Roosevelt. Ordered to take out the democratically elected National Front government led by Muhammed Mosaddeq and restore the Shah of Iran, Roosevelt spread the cash and waited for it to do its magic...
(76): The Tudeh Party (heir to the Communist Party founded in 1920) had a cadre of 25,000, while its union federation boasted a membership of 335,000. The influence of the Tudeh angered the US establishment, which offered the National Front leader a choice: either crush the Communists, take US aid and remain in power, or else fall under Soviet-Communist influence. On May 2, 1953, Mosaddeq revealed the shallowness fo his class, whose investment in nationalism and national sovereignty only went as far as it would guarantee its rule and luxury; he wrote a letter to President Dwight D. Eisenhower, in which he cowered, "Please accept, Mr. President, the assurances of my highest consideration." Afraid of the Soviets, Mosaddeq crushed the Tudeh Party, thereby destroying the most organized defenders of Iranian sovereignty, and then fell before a coup engineered by the CIA's representative and a far more reliable US ally, the Shah.
(76-77): The Shah exiled tens of thousands of National Party members and Communists, and killed thousands of both... The Tudeh was paralyzed by the coup. The USSR paid it little heed, preferring to make every concession to the Shah in hopes of pacifying a border state and gaining access to the oil--all this despite the close relationship between the United States and the Shah.
(80): Although Iran had never been formerly colonized, it belonged with the hungry.... English oil firms... had dominated Iran's oil fields since 1901... Iran's government paid for the infrastructure to remove the oil, and earned a pittance from the oil company cartel. Not for nothing did Mossadeq's struggle over oil earn him the affection of the masses.
(97): Whereas when the Bolshevik Revolution took Russia out of World War I in an anti-imperialist flourish (the new government revealed the hidden imperialist correspondence of the European regimes), the Soviet state under Stalin had a much more cautious approach toward the new postcolonial states. The Soviet Union had been battered by the war... The USSR could neither afford to rest easy nor antagonize the hoards that gathered on its borders. In this vise, the USSR's principle leadership offered two contrary theses: that any entente between the United States and the USSR was "perfectly feasible" (as Stalin put it in December 1946), and that the United States and its allies were "rapacious imperialists" who were on the verge of defeat by the tide of socialism... Zhadanov's two-camp theory privileged the national Communist parties at the same time as the USSR's commissars made arrangements with bourgeois forces within the postcolonial states at the expense of the local Communists. This vacillation manifested itself in the ambiguity over the Soviet position regarding the Third World and peaceful co-existence. After the demise of Stalin, the new leadership led by Khruschchev and Bulganin adopted peaceful co-existence and pledged their support to the bourgeois nationalist regimes (often against the domestic Communists). The unclear situation suggested that the USSR seemed keener to push its own national interests than those of the national Communist parties to which it pledged verbal fealty.
(98): Secretary of State Dulles traveled to both Egypt and India in 1953. In South Asia, Dulles found Nehru "utterly impractical," whereas he enjoyed the "martial and religious qualities of the Pakistanis."
(100-101): In 1961, the other big three welcomed the representatives of twenty-two states from Africa, Asia, Latin America and Europe to Belgrade to create NAM, an institution that gre in stregnth from conference to conference, within and without the UN, and lumbers on today. The nature of the regimes that participated in the NAM meeting reflects its limitations. With their pageantry came the monarchs... This was a mixed crowd, and its sheer political diversity made an ideologically coherent and unified stance by NAM almost impossible. NAM would remain a political platform, a sub-United Nations, but it would only be able to act in concert on two broad issues: to champion global nuclear disarmament, and to democratize the United Nations.
(103): Cabral acknowledged that while PAIGC's struggle is also the struggle "for peaceful co-existence and for peace," he made it clear that "to co-exist one must first of all exist, so the imperialists and the colonists must be forced to retreat so that we can make a contribution to human civilization, based on the work, the dynamic personality and the culture of our peoples."
(104): In early December 1964, Che Guevara took this message to the floor of the UN General Assembly: "We should like to wake up this Assembly. Imperialism wants to convert this meeting into a useless oratorical tournament instead of solving the serious problems of the world. We must prevent them from doing this... As Marxists we maintain that peaceful co-existence does not include co-existence between exploiters and exploited."
(106): Between 1900 and 1933, the US military intervened to scuttle the national hopes of the people of Cuba (four times), the Dominican Republic (four times, including an eight-year occupation), Guatemala (once), Haiti (twice, including a nineteen-year occupation), Honduras (seven times), Nicaragua (twice), and Panama (six times).
(106): For Castro, part of the problem lay in the new doctrine that had been developed by the Third World project and adopted by the Soviets, the "strange concept of peaceful co-existence for some and war for others." Castro expected NAM and the USSR to do something concrete for Vietnam as well as other colonized people.
(108): In a letter to the Tricontinental, Che asked the hardest question of all: What is the value of solidarity when the imperialist guns were not challenged? "The solidarity of the progressive forces of the world towards the people of Vietnam today," he wrote, "is similar to the bitter irony of the plebians coaxing on the gladiators in the Roman arena. It is not a matter of wishing success to the victims of aggression, but of sharing his fate; one must accompany him to his death or to victory."
(110): Nehru and Sukarno had been ruthless against the Communist movements in their own countries, and they were incapable of a genuine challenge to finance capital. Like Nehru and Sukarno, Nkrumah of Ghana enjoyed the momentum of a successful freedom struggle and disliked any opposition. His Preventive Detention Act and use of the state apparatus against the rail workers in 1961 led inexorably to the creation of a one-party state in 1964 with Nkrumah as Osagyefo or Redeemer... Nkrumah's populatrity plummeted along with world cocoa prices, and in 1966, the CIA encouraged his opposition to conduct a coup against him.
(120): The FLN's gambit succeeded politically, even if the military cost was enormous. During the course of the war, from 1954 to 1962, between three hundred thousand and a million people lost their lives. It was a heavy price to pay. All the factions within Algeria, even the liberals, lined up behind the FLN.
(123): The 1963 Constitution of Algeria abolished all political parties except the FLN, and elevated the president of the FLN to the sole formulator of state policy. The energy of the Algerian Revolution would now be concentrated in the body of the president, who for the moment was Ben Bella. The 1964 Charter of Algiers defended the abolishment of parties other than FLN. "The multiparty system allows all particular interests to organize into different pressure groups. It frustrated the general interest, that is, the workers' interest," and therefore, in the workers' name, there should only be one party, the "vanguard party."
(125): The seven-and-a-half year war and the long period of colonial rule (1830-1962) had drained Algerian society. The FLN inherited the desiccated earth... Algeria's wealth had been siphoned off by the First World... Few factories, few schools, and few hospitals--the emblems of modernity had been built around the colonial maintenance of "tradition."...Of the twelve million Algerians, four and a half million lived in poverty, and two million had been locked in concentration camps, from which they went to abandoned herds and overgrown lands.
(127): National liberation parties that came to power without a well-honed class analysis opened themselves up to pressure from the newly confident mercantile and industrial classes, whose own position was greatly enhanced by the national liberation agenda for the domestic creation of industry, for the creation of a national economy. Although the national liberation party remained largely beholden to the bureaucratic-managerial-intellectual (sometimes military) elite, it did build close ties to the industrial class. Import-substitution type projects opened some space for institutional reform and social-development projects, but in most cases they simply protected domestic industrialists who had no long-term commitment to the Third World agenda.
(128): [IMPORTANT] Algeria followed a tradition already established and defended in large parts of postcolonial Africa, whether ruled by governments of the "Right" or the "Left"--in Guinea (1958), Congo (1960), Ivory Coast (1961), Tanzania (1963), Malawi (1963), and Kenya (1964). The defenders of the "one-party staet" argued that rival parties "have generally little interest for the great majority of the people."...The one party vision is one of fear of the people, fear that any devolution of power would lead to antinational activity... A state that acted bureaucratically on a population had a built-in tendency to rely on congealed, traditional sources of social power and control. Older forms of association returned to the fore, such as tribal and class loyalties. These power bases became indispensable for elections or the implementation of the state's development agenda. The national liberation state that came into being as the instrument of popular power now turned to the very agents who had often not supported it to enact its policies.
(129) [ATTEMPTS AT FIGHTING THE BUREAUCRACY] At the 1961 Second Congress of the Vietnam Workers' Party, Ho Chi Minh warned his party and nation about the tendency toward bureaucratization and commandism, for the bureaucratic attitude "shows in fondness for red tape, divorce from the masses of the people and reluctance to learn the experiences of the masses," while commandism did not allow the people to "work on their own initiative and own accord tand to use compulsion to do unexplained tasks." ... Che's lyrical esays on volunteerism and Communist morality come from and engendered the "work councils" that continue to be a feature of Cuban social life. Cabral's speeches on the duty of the Communist address the problem. Within a year of Guniea-Bissau's freedom from Portuguese rule, Cabral's government invited the renowned Brazilian educator Paolo Freire to visit the country, study its educational system, and provide assistance on a popular pedagogy for the creation of a nonbureaucratic society.
(132): By the late 1960s, Algeria had moved from an attempt to create a socialist state to a state capitalist one, with a parasitic bourgeoisie confident beside the strong arms of the military.
(136) : [BOLIVIA] The second reform came in 1953, when the MNR conducted farily extensive land redistribution on behalf of the landless labor, the campesinos. The 6 percent of the landowners who owned more than a thousand hectares, the hacendados, controlled 92 percent of the land, and they had not more than 1.5 percent of that land under cultivation... Despite the drawbacks of the revolution, Bolivia in the early 1950s was in the same sort of social ferment as Algeria a decade later. For a few years, Bolivia trod a path unfamiliar to most Third World states... From 1952 until the late 1950s, the MNR attempted to dismantle the military and hand over the power of the gun to the militias of the campesions and the tin miners, and the MNR's own grupos de honor. Its 1951 experience with the military led the MNR to shut down the Colegio Militar, dismiss a fifth of the officer corps, drastically cut the expenditure for the army from 22 percent in 1952 to 7 percent in 1957), and even consider the complete elimination of the armed forces...
(137-138) [ALAS]... the MNR had by the late 1950s already begun to build up the military and had ceaed to rely on its central allies for popular support... [Coup in 1964].
(138): The events in Bolivia replicated those elsewhere in the darker nations, from its neighbor Paraguay's 1954 coup led by General Alfredo Stroessner to the distant Thailand's 1957 coup led by Army Chief Sarit Tanarat. From the end of World War II to the early 1970s, one scholar estimates that at the most two hundred coups took place in Africa and Asia as well as Central and South America.
(138-139): [THE ARMY] Where every other instituion had been batttered by colonialism and neocolonialism, the military stood out as efficient and disciplined. The bureaucracy is often poorly trained and prone to corruption, whereas the political parties are frequently, even in South America, better at the struggle for freedom or the creation of manifestos than governance. In this situation, and with the general demobilization and disarmament of the population, the military is an obvious actor for social order. Fanon has a prescrption to prevent the golpe. "The only way to avoid this menace," he writes, "is to educate the army politically, in other words to nationalize it."... Indeed, Third World states that did not disarm the population, and that created citizens' militias and retained the population in a general political mobilization, did not succumb to coups or easy intervention by imperialism. The classic case is revolutionary Cuba.
(140): Most new nations that demobilized and disarmed their populations fell prey to military intervention, often driven by imperialist pressure.... The US-engineered coup in Iran (1953) is an early example... Whereas the evidence of US involvement is unclear in most of the coups in the Third World, the footprint of the CIA and the US military intelligence has been clearly documented in the coups in the Dominican Republic (1963), Ecuador (1963), Brazil (1964), Indonesia (1965), Congo (1965), Greece (1967), Cambodia (1970), Bolivia again (1971), and most famously Chile (1973). This is the short, uncontroversial list.
(146-148): I want to distinguish betwen at least two kinds of coups: the generals' coups and the colonel's coups. All coups are structurally reactionary, because they adorn the military with the solitary role for social change... Some coups are, however, more reactionary than others. Coups that are conducted in countries that have had either a national liberation struggle... or an electoral victory against the oligarchs tend to be reacitonary. The military frequently takes power to reverse the gains... The generals often lead these goups... To the rank and file, the generals say that the revolutionary government wanted to cut back on the role of the military in social life... The aggreived military brass in Algeria (1965), Dahomey (1965), Ghana (1966), Togo (1967), Uganda (1971), and Chad (1975) [and Pakistan (1958, 1977), Chile (1973)]. (...) For states where there is no national liberation movement, and where there is no hope for social reform, the coup d'etat is often the means for aggrieved social classes within the military to asser the rule not so much of the military as for their social class. These are the colonels' coups.... The modular form of this coup is the Egyptian overthrow of the monarchy in 1952... The latest variant of the colonels' coup comes from Colonel Hugo Chavez of Venezuela in 1999. The colonels' coups succumbed to their authoritarian roots in military culture... Even if the colonels' cop comes with tremendous promise, it can only momentarily deliver the administrative apparatus to energetic officers.... The military in power, as Frist shows, regardless of its motivations, freezes the political process and cuts down the ability of social movements to move the historical process in a progressive direction. Nothing good comes from a military dictatorship.
(152): Unhappy with the nationalist negotiations with the Dutch, the Indonesian Communist Party (PKI) urged a popular uprising agaisnt both the Dutch and the newly emergent bourgeoisie in Indonesia... The army killed many of the PKI's leaders, jailed about 36,000 people, and crushed the party into relative insignificance. The "adventure of 1948" ended swiftly. President Sukarno's rise to power came with the blood of the Communists on his hands. His fall, in 1965, would be accompanied by the murder of one or perhaps two million Communists and sympathizers. [in 1965... the party commanded the oloyalty of more than 20 million Indonesians, in a country of 110 million]
(153): The PKI followed a well-hewed analysis among Marxists across the Third World: that a relatively nonindustrial society cannot have a proletarian revolution, and so the Communist Party must work alongside progressive sections of the bourgeoisie to create democratic capitalism. When the conditions of industry are more developed, the Communists can come to state power.

In much of the Western world the rate of profit of non-financial corporations fell steeply between 1950–73 and 2000–06—in the US, by roughly a quarter. In response, firms ‘invested’ increasingly in financial speculation, and the us government helped offset the resulting shortfall of non-residential private investment by boosting military spending (the Pentagon’s annual budget happens to be around the same as the figure put on the Treasury’s recent rescue plan).


(...) For a decade, the combined tails of the housing market and financial sector have wagged the dog of the British economy. As in the us, consumption grew much faster than gdp, financed by rising debt, thanks to booming house prices. A grateful electorate returned the Labour government to office twice in a row.

Lord Keynes held forth (his wife, the prima donna ballerina Lydia Lopolava was the rage at Bretton Woods). He had not wanted to invite the rest of the world, as it were. They, he wrote acidly, “clearly have nothing to contribute and will merely encumber the ground.” If they were allowed, the Bretton Woods conference would be “the most monstrous monkey-house assembled for years.” There was only one woman at the table, Mabel Newcomer (a Vassar Professor of Economics). The delegates from the darker nations could not help set the agenda, for the few that came where were there at the sufferance of their colonial masters (such as the Indians and the Filipinos) , while the free people (such as some Latin Americans and the Chinese) were shown the door when the real deliberations began. The Chinese delegate, to be fair, was Dr. H. H. Kung, a descendant of Confucius and husband of Ailing (“Pleasant”) Soong (whose sisters had married Dr. Sun Yat Sen and Generalissimo Chiang Kai-shek). The richest man in China at that time, Kung didn’t seem to do much to pave the way for the reconstruction of a devastated Chinese mainland.
(...) The delegates from afar had to be there in the Gold Room to put their impressions on the final communiqué. No surprise then that the two major institutions that came out of Bretton Woods, the International Monetary Fund (IMF) and the World Bank (WB), had to be run by an European or an American respectively. No-one else would have a turn. Keynes’ disdain for those not like himself was shared by others, and it was this that moved them to disenfranchise the world from the governance of the IMF and the WB (the main votes on their Boards of Executive Directors are held by the U. S. and Europe). The silence of the colonized and semi-colonized meant that the new monetary policies favored those who had already seized the world’s wealth, and the trade policies that followed set inequality in stone. Chastened by the economic warfare of the 1920s and 1930s that not only brought on the hostilities of World War II, but also contributed to the prolongation of the Depression, the major powers now created a currency regime that would be less volatile. The WB was created to help manage the reconstruction of war ravaged Europe (not Asia, nor Africa, both also burnt to the crisp by European ambitions). The IMF emerged as an institution to tide over countries that had a balance of payments or short-term liquidity problem. There is no mandate to poverty reduction or to the elimination of the vast global inequalities that marked the end of the colonial era. The IMF and the WB were institutions for the maintenance of colonial domination by other means.