cj#826.1/2> GRI/I.3 – “Capitalism: the growth imperative, the finite Earth, and the monopoly endgame”

1998-09-02

Richard Moore

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               Globalization and the Revolutionary Imperative

                      Part I - Chapter 3 - preliminary

                     Copyright 1998 by Richard K. Moore
                        2 September 1998 - 5600 words
                    comments to: •••@••.•••
          online book: http://cyberjournal.org/cadre/gri/gri.html


Part I - Corporate globalization: what it is, where it came from, where it
is heading
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Chapter 3 - Capitalism: the growth imperative, the finite Earth, and the
monopoly endgame
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How is it that capitalism has over the past two centuries come to so
totally dominate the world? The answer lies in capitalism's growth
imperative, its need to constantly expand. As necessity is the mother of
invention, so this growth imperative has led to boundless innovation. The
seemingly irresistible power of capitalism arises from its harnessing of
human creativity toward the single-minded objective of increasing
capitalist wealth.

In the previous chapters we've seen how this creativity has manifested
itself in the development of republics, powerful elites, political
corruption, imperialism, Pax Americana, and globalization. In each phase of
capitalism, new varieties of creativity have arisen in response to the
changing requirements of capitalist growth. In order to find out where the
creativity-inspiring growth imperative comes from, and to understand better
the dynamics of capitalism's evolution, we need to look at the processes of
capitalism itself. My American Heritage Dictionary's definition of
capitalism begins with:

     An economic system characterized by open competition in a free
     market...

This definition describes rather well capitalism's earliest phase,
competitive capitalism, which arose in its modern form first in Britain. In
this phase entrepreneurs start businesses, compete with other businesses,
and some succeed and some fail. In this struggle for survival among
businesses, creativity expresses itself as the development of new and
better products, more efficient production techniques, and improved means
of distribution and marketing. But this kind of competition, even though it
already unleashes the power of human creativity, does not explain the
growth imperative.

The necessity of growth is better captured in the dictionary definition of
capitalist:

     An investor of capital in business...

What distinguishes capitalism from earlier forms of private commerce and
trade is the emphasis on external capital investment -- funds which are
invested in an enterprise for the purpose of increasing the value of the
investment. In particular capitalism is characterized by stock
corporations, where ownership shares in a business can be bought and sold.

Stockholders are technically the owners of an enterprise, but the interests
of stockholders are not the same as the interests of an owner who also
operates an enterprise. An owner-operator is concerned with operating a
healthy business and developing it over time. He or she might be interested
in growing the business, or might just as well be happy for it to stabilize
at some manageable size and then bring in a stable ongoing profit. But a
capitalist, an external investor, is interested solely in the growth of the
business, which is what increases the value of the stock investment. A
stable business translates into stagnant stock values; a business which is
merely profitable is not a good place for capital investment.

One can compare a corporation -- or any investment vehicle -- to a taxicab,
and an investor to a rider. The operator of a taxicab is concerned with
keeping the vehicle in good repair and making a regular profit over time. A
rider, on the other hand, is only concerned with his own use of the
vehicle. If the rider gets to his destination on time, he has little
concern over whether the vehicle is destroyed in the process. Similarly a
capital investor uses an investment vehicle. Only a period of growth is
required by the investor. If the vehicle then falters, investors simply
sell their shares and reinvest elsewhere. The history of capitalism is
strewn with the carcasses of boom-and-bust corporations, industries, and
whole economies.

In a capitalist economy there is a pool of capital -- the sum of all the
money investors are making available. Just as water seeks its own level, so
this ever-growing capital pool always seeks the best available growth
opportunities. And just as water over time can wear down the highest
mountain, so the relentless pressure of this growth-seeking capital pool
eventually creates an economy and society in which growth is the dominant
agenda. External ownership -- the separation of ownership from operation --
is the origin of the growth imperative in a capitalist economy.

The evolution of capitalism proceeds according to the following dynamic. In
each phase of its development capitalism operates within a larger societal
regime -- a particular political, cultural, technological, and economic
environment. Within this regime, under the relentless pressure of the
investment pool, the various investment vehicles are developed to the
maximum practical degree. There always comes a point where further growth
of the pool becomes problematic or impossible. When such a societal growth
barrier is encountered, the creative energy of capitalism is unleashed on a
new objective: changing the surrounding societal regime.

There is thus a characteristic rhythm to capitalist evolution. Periods of
growth within a regime are punctuated by changes of regime designed to
create a new period of growth. A new societal regime might be characterized
by technological changes (the Industrial Revolution), by political changes
(creation of republics), or by new societal projects (imperialism.) Driven
by its relentless growth imperative, capitalism has become the driving
force behind societal evolution wherever it has taken hold.

Apologists for capitalism call such societal changes progress and emphasize
whatever real or imagined beneficial qualities might be present. In fact
such changes have been designed by human creativity yoked to the objective
not of societal improvement, but to that of creating new investment
vehicles for the ever-voracious capital pool. In fact the intentional
destruction of societies and economies, particularly but not only in
colonized nations, has been a technique frequently employed to create new
investment vehicles.

The rhythm of capitalist and hence of societal evolution proceeds with a
slow beat of major changes as well as with a fast beat of minor changes. In
the realm of technology development, which contributes both new products
and more efficient operations to capitalism, change has been systematized
in the form of research institutions and the research-and-development
industry. Innovation in technology under capitalism becomes continuous, and
is focused always on creating investment opportunities. Societal benefits,
such as they are, arise from the need for products to be marketable, not
from any inherent need for them to be useful or beneficial.

The systemization of change, exhibited first in the realm of science and
technology, has been extended by capitalism to all aspects of society.
Today a generic agenda of never-ending change and growth has become the
dominant societal paradigm globally, in essence a universal religion.
Capitalism's growth imperative has manifested itself as a societal
imperative for economic development. In the Middle Ages the answer to every
question was sought in church doctrine; today the solution to every problem
is sought in development.

In retrospect the poverty of Middle-Ages thought seems obvious. But to
those living through it, the intellectual regime was perceived as absolute
God-given truth. For those living in today's capitalist-dominated societies
it is difficult to comprehend how impoverished has become our societal
problem-solving toolkit. For every societal problem we have only the hammer
of development to apply.

The branches of a tree, if they grow up under a strong prevailing wind,
will be warped in a certain direction. Similarly our societies, under the
prevailing pressure of the capital pool, have been evolving in a warped
direction. In Part II, we will examine the rich possibilities opened to
societies by looking beyond the straightjacket of the development paradigm.
In this chapter we will examine how our societies have been warped by that
paradigm.

One of the most important and characteristic societal developments brought
about by capitalism is the rise of capitalist elites. Given that the
evolution of capitalism proceeds through an ongoing series of intentional
societal changes, it is only natural that the mechanisms of societal
control would themselves evolve over time and eventually be consolidated
into political domination by a capitalist elite.

     People of the same trade seldom meet together... but the
     conversation ends in a conspiracy against the publick, or in some
     contrivance to raise prices.
      -- Adam Smith, Wealth of Nations

In every society where capitalism has taken hold, a dominant capitalist
elite has in fact emerged, along with the establishment of institutions
designed to further elite interests in a systematic way. In Chapter 1 we
saw how the United States itself has become a vehicle for managing world
events so as to facilitate investment, to make the world safe for
capitalism. In Chapter 2, we saw how TNC's have evolved into gigantic
engines for generating capital growth, and we saw how TNC-dominated
bureaucracies are being given decision-making power over a wide range of
issues, loosely called economic -- and how those institutions are rapidly
becoming in all but name a world government.

Within the US, which is in many ways the most evolved example of a
capitalist society, the means of elite capitalist domination are also very
highly evolved. What is called "public debate" has become synonymous with
whatever is presented in the mass media, and the mass media is nearly
totally controlled, and mostly owned, by very large corporations. News,
analysis, and entertainment consistently reinforce the dogma of economic
growth and frame issues and events in ways that supports elite agendas.

American political campaigns are conducted via the mass media, and the
ability of the media to present candidates in either a good or bad light
has been honed to a fine art, aided by techniques developed in the
advertising and public-relations industries. Media spin, which is entirely
at the discretion of the owners of the media, can and does determine the
outcomes of elections. Not only can candidates or officials be made to look
like fools by the kinds of questions they're asked on camera, but news
events can be sensationalized by the media so as to bolster support for a
favored candidate or to develop a constituency for an elite-desired
platform agenda.

The boundary between the US government and TNC's has become increasingly
blurred. Top government officials -- people whose "expert" opinion carries
more clout that the wishes of the President -- typically rotate between
government posts and influential positions in the private sector. Corporate
representatives have ready access to Congress and to Administration
officials. Corporate-funded think-tanks produce the studies and analyses
which become, frequently verbatim, the agendas of later administrations.

With neoliberal globalization, the World Trade Organization, and the
explosion of "free trade" zones (NAFTA and its clones), the political
hegemony of the capitalist elite seems to have evolved nearly as far as it
can go. The program has not yet been fully implemented, but we are clearly
in the penultimate stage of its completion.

The civilization-clash system of world order is being implemented at a
break-neck pace. As I write the world is still reeling from the recent US
missile attacks on Sudan and Afghanistan, which seemed all-at-once to make
palpable a sense of chronic clash between the West and the Muslim world.
Desert Storm and the ensuing sanctions, the Western interventions in Bosnia
and Albania, and the settlement process in Northern Ireland -- in these
events one can see the world described by Samuel Huntington being
systematically brought into being. A conflict arises; it is interpreted by
the media as a cultural clash; the West intervenes militarily or otherwise
and "adjudicates" the problem. This is the geopolitical part of the New
World Order which George Bush alluded to upon the completion of Desert
Storm, and which Huntington elaborated under another label.

National sovereignty is coming increasingly under assault by the newly
constituted global regime, and not only by military intervention. Outside
of the West, the IMF is becoming a global autocrat, dictating agendas to
whole nations which further the interests of global capitalism, and which
are devastating to the nations themselves.

The case of Rwanda is particularly poignant. Rwanda had a reasonably
healthy economy which was divided into two primary parts. One part was a
general agricultural economy, supplying food for domestic consumption. The
other part of the economy was the coffee-exportation business, bringing in
needed foreign exchange. In 19xx, when Rwanda needed funding from the IMF,
two ominous conditions were laid down. It was decreed by the IMF that
payments to coffee growers be reduced to a certain figure -- a figure which
was less than the cost of production. It was also decreed that the retail
price of petrol be raised to a certain figure -- a figure at which farmers
could no longer afford to deliver their goods to consumers. The conditions
of credit completely and systematically destroyed the Rwandan economy.

The IMF is in fact the ultimate capitalist vehicle for engineering societal
evolution. Once a nation is in need of IMF credit, and this is already the
fate of xxx nations, the power of the IMF to dictate small and large
societal changes is total and arbitrary. There is no government nor agency
that has official power over the IMF, and those nations which have the most
influence over the IMF are as dominated by the capitalist elite as is the
IMF itself.

One might ask what global capitalism gains from destroying economies as it
has done in Rwanda, Southeast Asia, the former Soviet Union, and elsewhere.
One way to answer this question is to look at the history of colonialism,
where the destruction of economies and societies has historically served to
"clear the land" for the development of dependent colonial economies. In
today's global economy there are additional reasons for the selective
destruction of national economies, additional investment vehicles that can
be created.

Global capitalism today is coming up against several constraints, and
globalization, in its full dimensionality, can be seen as the very creative
attempt by very competent, corporate-funded planners to overcome those
constraints. One of the constraints comes from the very global success of
capitalism -- there is no longer any possibility of growth through
territorial expansion. Other means of growth -- and many have been
perfected over the years -- must be deployed.

The capitalist benefits of an IMF intervention such as that in Rwanda
become obvious when one looks at the balance sheet of the "transaction"
from the perspective of global capital. Before the intervention, Rwanda was
not importing much food from TNC agribusiness operators, and it was
increasing the supply of coffee on the global market, exerting a downward
pressure on coffee prices. After the intervention, Rwanda's coffee was
removed from the market, and Rwanda was forced to import most of its food,
creating growth opportunities for corporate agribusiness.

Furthermore, the agricultural land and coffee plantations, being largely
put out of business, became available for bargain purchase by TNC's if by
any chance they fit into some development scheme or the other. In addition,
the people formerly employed in agriculture and coffee became in need of
employment, and without much bargaining power, in case their labor was
needed in some development scheme. All in all, the intervention was a good
deal for global capital, even while being a complete failure if the goal of
the IMF had been to recoup its loans to Rwanda.

In Southeast Asia the collapse scenario was a variation on this same theme.
One can debate the process by which the financial collapse came to pass,
and one must acknowledge the power of large (capitalist) financial
institutions to influence the value of currencies and the expectations of
speculators. But there can be little debate about the consequences of the
ensuing IMF edicts, consequences which were immanently predictable by any
reasonable person in possession of the facts. As in Rwanda, Korea and
others were forced to import what they formerly exported; their export
products were taken off the global markets; their domestic assets became
available at bargain prices to global investors.

An additional growth vehicle, and one which benefits from the boom-and-bust
policies of the IMF, is the international currency and securities market.
Ingenious derivative schemes, exemplifying the human creativity
characteristically harnessed by capitalist necessity, have leveraged this
marketplace to the point where only xx% of daily transactions are related
to the real economy -- that part dealing with goods and services.
Fluctuations in the global economy are transformed by derivative markets
into capital growth. This particular growth vehicle is known from history
to be unstable, an over-tuned pyramid-scheme race car, and dealing in some
way with its ultimate crash is an elite problem to be discussed later in
this chapter.

One of the barriers currently being faced by capitalism is called the
crisis of over-production. The efficiency and size of TNC producers have
evolved to the degree where much more can be produced than can possibly be
consumed. In automobiles, electronics, and many other industries there are
simply too many producers chasing too few consumers. IMF interventions such
as those described above have become a systematic mechanism to selectively
cull global competitors, thus creating growth room for those that remain.

By this means and others, ownership of global commerce and wealth is being
highly concentrated in a relatively small number of ultra-large TNC
operators. In food, transport, communications, aircraft production,
banking, pharmaceuticals, and entertainment -- in nearly every business
sector -- a handful of operators are coming to dominate on a global basis.
As long as this concentration process can be continued, the dominant and
growing TNC's provide a vehicle-of-convenience for the global capital pool.

There is a limit to this shakeout phase, a point where further
concentration becomes impractical and the monopoly phase begins. Although
the dominance of a single operator is one of the possibilities (Microsoft),
the more typical outcome seems to be a clique of large operators who learn
to collaborate with one another in a fraternal way, allocating markets
amongst themselves, avoiding price competition, and generally managing the
industry to their mutual benefit. The classic example of this paradigm is
the Seven Sister petroleum majors.

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(continued...)


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