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Life After Capitalism 2004 Conference

For the sake of stirring up conversation, I am going to make an argument very different from [fellow panelist Antonia Juhasz]. Corporate globalization as we have known it in the globalization movement has had several really bad years. In the 1990s, trade deals like NAFTA were being passed, the WTO was on the rise, and the IMF/World Bank seemed invincible. Now, in contrast, major trade deals are being scuttled, the WTO is severely deadlocked, and the IMF and World Bank are on the defensive.

Neoliberalism is facing a crisis of legitimacy. By neoliberalism, I'm referring to a specific set of market driven economic policies that have been imposed on the developing world. These include tight monetary policy, privatization of public industries, lowering safeguards for workers, opening markets to foreign investment and competition, and ending government protections for local industry.

Corporate globalization is also facing a crisis. When I talk about globalization, I'm talking about a "rules-based" international order designed for the benefit of multinational corporations, and regulated primarily by a set of multilateral financial institutions. I am going to come back later to the question of how we define "globalization," because it's a very vague term, used in lots of different ways, and I think that oftentimes, this has confused our analysis of the state in global capitalism.

But first I'm going to talk about why things have gone bad for corporate globalization in the last few years. I'm going to talk about this especially in reference to the WTO in Cancún and to the Free Trade Area of the Americas negotiations in Miami last fall.

After that, I'm going to move to the question of the war in Iraq. And here I am going to make an unpopular argument; I'm going to argue in spite of our efforts to make connections between the war in Iraq and corporate globalization, and in spite of the argument that Antonia just made, I am going to argue that these two things are not connected, or at least not in the way that we as activists usually say that they are.

The Crisis of the Globalist Project

First I am going to talk about the crisis of the globalist project.

I started writing about this question in a serious way before the FTAA in Miami. Anyone who had been closely watching the trade debate knew that the FTAA negotiations were going to fail. As a journalist, I've learned that you have to be very careful about any predictions that you put in print, because a lot of the time you're going to end up being wrong about predictions. And I've learned that when you're wrong, it's better not to have it written down in black and white. But before the FTAA in Miami, I was comfortable putting into print that those talks were going to fail. That's not because I have any secret insider knowledge – I'm not even an economist. It is simply because all of the preliminary talks leading up to Miami, as well as the collapse of the WTO talks in Cancún a few months before, indicated that the FTAA was not going to go forward.

But I noticed that within our social movements, we were not really able to acknowledge this fact. We were too used to talking about the WTO as an unstoppable, pro-corporate "free trade" institution. And we were used to talking about the FTAA as "NAFTA on steroids", which was Lori Walloch's description of the agreement, and--don't get me wrong-- this was a very good description, because the FTAA was a bad thing.

But even after the talks in Miami had collapsed, we had a hard time claiming this as a victory in our movements. By the time Miami rolled around, the vision of a comprehensive, unified free trade area for the hemisphere was sunk. It was clear that the major economies of South America, especially Brazil and Venezuela, were not going to participate in the deal in any substantial way.

To save face in Miami, the US cobbled together what it called "FTAA Lite." Governor Jeb Bush, who was desperate for a trade victory, was trying to claim this as a success. And the crazy thing is that a lot of activists were agreeing with him. They were saying that the "FTAA Lite" was just as bad as the FTAA, when in fact it was a very weak shadow of the originally grandiose agreement. And that's when I thought -- if we have the same line about this as Jeb Bush, something has gone seriously wrong.

It was clear to me that we needed to be talking more amongst ourselves about why it was that these agreements were falling apart. So I will say a few words specifically about Cancún and Miami, but first I want to put this question the larger context of the crisis of corporate globalization.

I am only going to give a very rough sketch of this crisis, but one person who gives a brilliant analysis of this is Waldon Bello. His book DeGlobalization is published on Zed Books, and his articles are also widely available online. When it comes to looking at the state of corporate globalization, I think he's really one of the best analysts we have.

Bello identifies three moments that have led up to the current crisis of corporate globalization. The first was the Asian financial crisis of 1997. This crisis revealed that one of the central tenets of globalization, namely the liberalization of capital flows, could be profoundly destabilizing. The fact that some of the major "tiger economies" of East Asia that had followed neoliberal dictates had been laid low in this crisis seriously tarnished the reputation of the previously high-flying IMF and World Bank. It also started a wave of defections by mainstream economists, including Jeffery Sachs and Joseph Stiglitz.

This crisis has since been compounded by economic breakdowns in places like Argentina, which before was a poster child for the IMF, and by the general failure of neoliberalism to live up to its own promises of producing economic growth.

The second moment in the crisis of the global project was Seattle. Here several factors came together at once. First, you had a very dramatic expression of wide-spread social movement resistance to corporate globalization. That was the protests outside. Meanwhile, on the inside of the conference, you had resistance from developing countries, who objected to inequalities of previous Uruguay round of trade talks. Finally, you had an ongoing disagreement between the US and the European Union over agricultural policy. These three factors together led to the collapse of the Seattle talks, and they dealt a blow to the WTO from which the institution has yet to fully recover.

The third moment of the crisis that Waldon Bello identifies is the collapse of the stock market and the end of the Clinton boom economy, which occurred in March 2001 and initiated a period of national and international recession.

We saw reflections of each of these three moments become factors in the talks in Cancún and in Miami. We saw an increased level of tension in the trade talks because of the bad economy. We witnessed a greater level of skepticism than in the past about the promises of neoliberalism, and a willingness on the part of developing countries to stand together. This was most dramatically illustrated by the emergence of the "group of 20+" developing countries in Cancún, led by Brazil, China, India and South Africa. Finally, we saw continued social movement pressure in the form of significant demonstrations outside of each event.

To summarize: neoliberlism's own failure, the bad economy, and social movement pressure have each had a part in derailing corporate globalization.

The Fourth Moment of Crisis

But there is fourth factor as well in the crisis of the globalist project, and this is the one our social movements have been slowest to appreciate. When President Bush came into office, many people noted his support for "free trade" agreements and his relationships with corporate CEOs. We argued that he was continuing the economic foreign policy of the Clinton administration. But Bush has since shown he is crafting a different type of economic foreign policy all together. Sometimes I call it "imperial globalization" instead of "corporate globalization." But you could also get rid of the term "globalization" all together and say that Bush has returned to an earlier, bare knuckles model of promoting national economic interest. The key point here is that President Bush is not a multilateralist; he is a nationalist. His militarism and unilateralism represent an important break from the cooperative, "rules-based" capitalist international order of the Clinton era.

One of the biggest differences is that Bush's economic nationalism has put many of the leading institutions of globalization at risk. The IMF and World Bank, which were dominant mechanisms for exercising U.S. power through the 1990s, have really been demoted. Walden Bello predicted that this would happen as soon as Bush was elected.

I quote Bello:

"The Bretton Woods institutions will lose their liberal internationalist protectors -- like Treasury Secretary Larry Summers -- who believe in using the Fund and Bank as central instruments to achieve US foreign economic policy objectives." End of quote.

Instead of using the international financial institutions, the Bush Administration has preferred using packages of direct bilateral aid, which often times have been directly tied to the Administration's political and military goals.

Ok. So the IMF and World Bank have a diminished role under Bush.

Compared with the IMF and World Bank, the much smaller and relatively democratic World Trade Organization never stood a chance. The WTO has a one-vote-per-country structure. This leaves the US with far less power than in the Bank and the IMF, where it holds 17% of the vote and enjoys the support of other wealthy countries.

Since Bush could not control the WTO, he has largely withdrawn. In trade talks in the last couple years, the US has simply not been willing to make the type of compromises -- particularly around issues like agricultural subsidies -- needed to keep the WTO afloat or to keep the FTAA alive.

There's another whole debate about how we should respond to Bush's economic nationalism. I'm not going to have time to go into that debate in any depth right now. But I do want to point out that Bush's shift to economic nationalism has produced some interesting arguments.

George Monbiot, a prominent leftist writer in Britain, has changed his mind about the WTO. He argues that because the institution is relatively democratic, it can be used to constrain unchecked US power. While not going nearly as far as Monbiot, Doug Henwood has argued that we need to reevaluate some of our assumptions about what the WTO is and how it functions. I do not agree with Monbiot that we should turn around and support the WTO or try to reform it, largely because I think that there may well be a return to Clinton-style corporate globalization in the near future, especially if John Kerry wins.

And I think that the return to Clinton-style corporate globalization is something the business elite would applaud. As bad as we think Bush is -- and he is very bad -- I think there is an argument to be made that many capitalists on the world scene would rather have a Clinton in the White House than a Bush.

War In Iraq

All right. I want to keep all of this in mind as I move to the second question: Whether corporate globalization and the war in Iraq are connected.

To be radical, in the oldest sense of the word, is to go to the root. I think that one strength of truly progressive analysis is that it puts isolated events in a larger context. It tries to make connections between different political issues.

In the post 9/11 era, our instinct as activists has been to demonstrate how the war against terror and the drive for corporate globalization are one and the same. That these two issues are connected, in a fundamental way, is basically an article of faith on the left.

I want to give a little bit of critical scrutiny to this article of faith. I think we have good reason to look again at the neoconservative hawks now in power and to wonder about whether they have outdone the corporate globalists of earlier years, or whether they in fact have betrayed them.

I'm going to start by considering the main arguments that we as activists make about the link between the "war on terror" and corporate globalization. And I'm going to explain why I don't think that these arguments end up being very strong.

As our first argument, we talk about war profiteering. The White House has been eager to make business a partner in the invasion and occupation of Iraq. We see this most prominently in the high-priced reconstruction contracts given to corporations like Halliburton and Bechtel.

The problem with this argument is that while corporations are shamelessly opportunistic in grabbing business opportunities created by US military action, this does not connect war and globalization in a deep way. Along these lines, Robert Jensen made an important critique of Fahrenheit 9/11. Jensen argued that Michael Moore's over-reliance on the war profiteering argument leads to a weak explanation of the causes of war and it lets the Democrats off the hook. Here I quote Robert Jensen:

"A family member of a soldier who died asks, 'for what?' and [Michael] Moore cuts to the subject of war profiteering.... [D]oes Moore really want us to believe that a major war was launched so that Halliburton and other companies could increase its profits for a few years? Yes, war profiteering happens, but it is not the reason nations go to war. This kind of distorted analysis helps keep viewers' attention focused on the Bush administration... not the routine way in which corporate America makes money off the misnamed Department of Defense, no matter who is in the White House."

End of quote.

The problem here is that a focus on profiteering can make us ignore the neoconservatives' stated reason for going to war, which was to reinforce US hegemony in the Middle East and beyond. This is something far more significant than short-term kickbacks to corporations.

Another problem with the war profiteering argument is that it assumes that the interests of specific business like Halliburton and the US arms contractors accurately reflect the general interests of multinational corporations. And I don't believe that that is true. While serving some specific sectors of the US economy – like energy companies and arms contractors -- the White House has rattled the global marketplace where U.S. financial capital and consumer-based industries have to compete.

The second argument that we make to connect the war and globalization is that Bush has used the war on terror to promote a neoliberal agenda domestically. He has cut taxes for the rich, he has attacked unions in the name of national security, and he has worked to criminalize dissent. Of the $87 billion passed by Congress last October for the occupation of Iraq, $8.5 million went to the policing of FTAA protests in Miami. Conservatives attack both antiwar and globalization protesters as unpatriotic and helpful to terrorists.

The problem with this argument is that these actions can also be seen as opportunism, rather than a product of any systematic relationship between war and globalization. Remember that even Republican realists who opposed the invasion of Iraq generally promoted tax cuts and the Patriot Act. And even the officers of the Clinton administration -- who were leaders in promoting corporate globalization -- may join us in fighting some of these domestic measures. We have little reason to think that war in Iraq was a necessary condition for advancing Bush's domestic agenda, even if it provided politically convenient cover.

A third key argument for a connection between war and globalization is the one that Antonia [Juhasz] made, and that Naomi Klein has forcefully presented as well. After the invasion, the U.S. governing authority restructured Iraq's economy based on strict neoliberal principles. The Economist magazine called it a "wish-list that foreign investors and donor agencies dream of for developing markets."

I agree that the forced privatization of Iraq's economy provides the most vivid link between war and neoliberalism. The question is whether the invasion of Iraq represents a new phase of globalization -- in which the "freeing" of markets will be more directly regulated by military power.

I don't think that it is. I do not think that the war in Iraq will be a model for building a new corporate order.

This is where we need to return to the break in globalization policy that I described earlier. We have reason to believe that much of the business elite would prefer Clinton's multilateralist globalization to Bush's imperial actions.

Prior to the war, many corporate leaders feared that the invasion of Iraq would be bad for business. I will read you just one quote from Newsday reporter Laurie Garrett who wrote from the World Economic Forum in Davos, Switzerland in February 2003. Garrett wrote, quote:

"The rich—whether they are French or Chinese or just about anybody—are livid about the Iraq crisis primarily because they believe it will sink their financial fortunes … When Colin Powell gave the speech of his life, trying to win over the non-American delegates, the sharpest attack on his comments came not from Amnesty International or some Islamic representative — it came from the head of the largest bank in the Netherlands!"

End of quote.

After the war effort went forward, corporations continued to worry. Significant elements of global capital have been furious at the Bush Administration over its protectionist moves on issues like steel and agricultural subsidies. They have been shaken to see US bullying lead to the collapse of trade negotiations in Cancún and Miami. And European corporations, which have always been seen as important junior partners in the expansion of corporate power globally, have been furious at being shut out of Iraq.

So what we have in Bush's occupation of Iraq is an action that broke from the multilateralist model of corporate globalization, and an action that a good part of the world thinks is simply bad capitalism.

Now it is true that, as Antonia argues, the U.S. occupying authority has opportunistically used its power to impose "free market" reforms in Iraq. But the wider assumption that Bush's militarism represents the new face of corporate globalization has led to some wobbly analysis on the left.

For example, Arundhati Roy argued at the World Social Forum in 2003 that it was international grassroots pressure against corporate globalization that forced those in power to adopt a more militaristic posture. I quote:

"We may not have stopped [Empire] in its tracks—yet—but we have stripped it down. We have made it drop its mask. We have forced it into the open. It now stands before us on the world's stage in all its brutish nakedness."

End of quote.

I have tremendous respect for Arundhati Roy, and I thought that, overall, the speech that gave was beautiful. But I think that this point is bad analysis.

There are several problems with it. First, Roy changes the definition of globalization that is usually used in the global justice movement – and that definition of globalization is a "rules-based" international order designed for the benefit of multinational corporations, and regulated primarily by a set of multilateral financial institutions. Instead, she equates "Empire" and corporate globalization with something much closer to traditional imperialism. In Roy's creeping definition of globalization we are now talking about anything done in the pursuit of US national interests, even if they contradict the wider interests of global capitalism.

Second, Roy's analysis leaves little room for business people who argue that Bush's nationalism and his war-mongering are bad capitalism, and that global corporations would be better off with a Clinton- or Kerry-style multilateralist in office.

Roy's argument that the globalization movement has forced a militaristic stance contradicts the very sensible anti-war argument that Iraq was an "elective" war, and that it was waged in pursuit of an extreme neoconservative agenda that is out of step not just with the left, but even with the policies favored by most business and foreign policy elites.

If anything, social movement pressure is probably forcing "Empire" back into its closet rather than drawing it out into the open. In recent months, the Bush Administration has scrambled to internationalize the occupation of Iraq and to tone down its nationalism in trade talks. He is now trying to bring institutions like the UN and IMF back onto center stage in his foreign policy. If John Kerry is elected in November, he will no doubt push even further in a multilateralist direction. This move will comfort many businesspeople.

My point is that Bush's militarism as expressed in Iraq is not a continuation of the same policies that we have criticized in the globalization movement. The arguments that we're currently making to connect the movements miss some really important policy changes that Bush has pursued. I don't think that our movements have really had time to think through these changes and to think about what they might mean for our activism. v Part of the confusion here comes from sloppy use of the term globalization. I think that this is a case where if we get rid of the term all together, and talk instead about the connection between war and capitalism, we force ourselves to make a much deeper level of connection.

First, there is an ongoing need to develop coherent theories of how the control of limited oil reserves will shape the future of capitalist economics. The war in Iraq is related to this -- not because it was an effort to seize ownership of Iraq's oilfields, as many have suggested -- but because it was another step in the United States' long-term attempt to manipulate and control Middle Eastern politics. Second, it is also important for us to consider how war plays into the boom-and-bust business cycle that has long affected capitalism in the U.S. and beyond.

To summarize, these are my conclusions:

-- The war in Iraq is not a continuation of Clinton-era corporate globalization.

-- I do not think the US went to war to privatize Iraq's economy, nor to provide big reconstruction contracts to Bush's corporate contributors, nor to seize Iraq's oil fields.

-- I believe the US went to war to project its hegemony in the Middle East.

--The Iraq war was an elective war; it was a highly ideological war; and it represented a break with the type of capitalist multilateralism promoted by previous administrations.

-- With regard to globalization, the crass neoconservative hawks of the Bush Administration --as bad as they are in their own right -- are not our toughest opponents.

-- Our toughest opponents are the multilateral globalists like Clinton and like Kerry.

-- Is there a connection between war, oil, and capitalism? Yes. Yet the war in Iraq can still be bad capitalism.

I look forward to your responses. Thank you for the opportunity to be here.

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