Science and Society - The Transnational Ruling Class Formation Thesis, A Symposium

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Science & Society , Vol. 65, No. 4, Winter 2001–2002, 464–469

The Transnational Ruling ClassFormation Thesis: A Symposium

GLOBALIZATION IS (AMONG OTHER THINGS)TRANSNATIONAL, INTER-NATIONAL AND AMERICAN

Many academics, journalists and businessmen have written enthusiastically inrecent years of the arrival of a truly globalized and transnational economy.Few like to mention social class, however. Some do emphasize globalization’sdownside, focusing on widening inequality in the North, the North–Southdivide and the environmental degradation of the whole. But since the globalcollapse of Marxism, few mention class conflict, and even fewer mention theruling class. Of course, any globalizer with a leftist bent should be quite ready to accept that the process of globalization is to an important degree com-manded by a Transnational Capitalist Class (TCC). After all, this was predictedin the most widely read document of modern times, The Communist Manifesto.Perhaps we had to go through two World Wars plus a Cold War before Marx’sand Engels’ vision of a global capitalist class could begin to be realized. But over the last 20 years or so developments in both industrial and financial capitalhave increased the plausibility that it might be on its way.

It tends to be leftists who have hailed its coming — though, unfortu-nately, not the coming of a global proletariat too. In a book of essays writ-ten almost 20 years ago by British Labour Party members urging the Party to embrace more modern forms of socialism, I myself argued that “ThoughKeynes pretends to rule within the nation-state, Adam Smith still rules with-out — and therefore, to a large degree, within as well” (Mann, 1983, 187).Unfortunately, Tony Blair drew from this the opposite political lesson forthe Party than the one I had intended! He embraced Adam Smith. But re-cent years have seen far more sustained arguments for the existence of a



full or partial TCC by neo-Marxist scholars like Kees van der Pijl, Leslie Sklair,Robert Cox, Barry Gill and others. Robinson and Harris (RH) have now

joined this band. They seem a little ungenerous in their comments on thesecolleagues — except for van der Piji, who is (significantly) the one concernedmost with “theory” and least with evidence.

RH’s theory has obvious plausibility. Of course capitalists possess somedegree of collective economic control over the world’s economy, and they are to an increasing degree organized beyond the level of any single nation-state. Who could doubt this, especially in the realms of finance capital andthe very biggest corporations? The questions are: to what extent is this true?and: how can we evidence the issue?

Proof is intrinsically difficult. Capitalists are secretive and rarely allow us to study them. Moreover, part of their organization is by means of a market

that provides “diffuse power,” which nobody controls and is difficult tomeasure. RH make little attempt to grasp the nature of market power. In-stead they focus on the other face of power, “authoritative power” — that is, on organizations which dispense actual rules for global capitalism. They actually focus on two types of such organizations: a) public organizations of global scope like the World Bank, the WTO, the IMF and all the other“acronymic actors” of the world economy; and b) large private corporationsgenerally described as being either multinational or transnational. In (b)they focus heavily on industrial corporations. They say rather little about banks or finance capital, which is odd because this sector is probably themost transnational part of the entire economy.

They do not present much empirical evidence. Their essay is largely provocative assertion, which is often stimulating but not likely to convince

sceptics. They do bring into center-stage an under-explored acronymic or-ganization, the WEF, the World Economic Forum. But their knowledgeseems confined to its website, which reveals a body trying to get world busi-ness elites to attend conferences and read papers detailing progressive capi-talist ideas (by eminent economists like Sachs and Krugman). The WEF isclearly both novel and intriguing. But to show that the WEF actually orga- nizes the TCC would require a lot more evidence than this.

There is also a lack of engagement with rival arguments. Marxian worldsystems theorists are dismissed because they adhere to the “old view” that capitalism is partially composed of national blocs of capital. Yet RH do not attempt to bring critical data to bear on such rival arguments. Industrialcorporations are asserted to be “transnational” rather than “multinational”on rather limited evidence: they note that 40,000 companies (of what size,out of how many?) have headquarters in more than three countries; cross-border acquisitions have become more frequent (how many to evade na-tional protectionism? what proportion are occurring within the unique

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European Union?); and offer a single quote from the head of Berttelsman.Sklair’s forthcoming book (2000) makes a serious attempt to demonstratethat the top executives of Fortune 500 companies believe they are now moretransnational than multinational. This essay does not. They would not dis-suade me from the view that most larger corporations remain combinationsof the transnational and multinational, though I would concede that theformer quality is growing among them.

There are more obvious problems when RH deal with the second typeof authoritative organization, public ones of global reach. They try to sub-sume them under a TCC. Occasionally this reaches bizarre levels. At onepoint the TCC’s “state apparatus” is said to include “the United Nationssystem”; at another point “the bureaucratic managers and technicians” of “the states of the north and the south” are included in “the global ruling

bloc” “led by the TCC.” I find this over-generalized and reductionist. Is therenothing operating at the global level apart from the TCC?But this also brings into view a major theoretical weakness. The third

and traditionally the most important type of authoritative power organiza-tion of capitalism is the state . States and their “soft geopolitics” still providemost of the regulation of global capitalism. Their influence is strong amongthe global acronyms (IMF, WTO, etc.). Their staff have a dual identity. Most do seem to be bankers, corporate lawyers and economists with very strongbusiness links, as RH would presumably expect. We still lack good researchon this. If it is true, they may be considered members of, or managers orintellectuals for, the capitalist class. But they are also there as representa-tives of national governments, usually in quotas according to the geopoliti-cal/geoeconomic power of their states (clouded by historic lags which en-

sure more British than Japanese) or their historical location (the IMF is inNew York, the WTO in Geneva). The combination makes them protectorsof American, German or Japanese national or national capitalist interests.Being representative of certain nationally confined interests does not meanthat they are not capitalist (though some will be more so than others). It means that they have more than one identity, each qualifying the other,though probably not contradicting it (since class and nation are different,not contradictory, identities).

Globalization also comprises a vast proliferation of what are often called“soft geopolitics,” negotiations between and among states, mostly within theacronymic organizations, over peaceful, mostly economic issues. So, along-side trans national economic globalization has come inter national globaliza-tion, structured according to the geopolitical and geoeconomic power of the individual states and the pattern of alliances among them.

This means we can detect a third aspect of globalization in the main ide-ology circulating among these acronymic organizations. This reflects Ameri-



can quasi-hegemony. It ensures that the American personnel quotas insidethem are by far the largest. RH (like many others) call this ideology “the Wash-ington Consensus.” Why Washington? Because it is the capital city of theUnited States, the world’s geopolitical hegemon. Washington is not the capi-tal of either U. S. or world capitalism, which is New York. The WashingtonConsensus is part of American hegemony. Any TCC represents and reflects

American nationally confined interests better than it does those of other coun-tries. There need be no significant neoliberal pressure on the United States,since it already has “free” labor markets, and more prisons than welfare pro-grams. Neoliberalism (provided it keeps quiet about protected industries likethe military–industrial complex, agriculture and healthcare) seems to be eco-nomic rationality itself, when viewed from Washington. So economic global-ization is not without nationality: it is substantially American.

The best part of RH’s paper qualifies this ideological consensus, in adiscussion of ideological conflict raging within the TCC. Their discussion of conflict among free-market conservatives, neoliberal structuralists, neoliberalregulationists and the “Third Way” is insightful and valuable. It means that their model does not require that neoliberalism remains dominant withincapitalism. Indeed, it seems as if its influence has peaked, as the World Bank’sWorld Development Report 2000/2001reveals. But RH do not mention that thedebates they discuss partly revolve around national and alliance axes. Ameri-can or Anglo-Saxon models of economic rationality compete with continentalEuropean models containing more corporatist, social market or social demo-cratic influences. Their discussion is restricted to debates within the West,but we could add the rather more “statist–regulationist” positions emanat-ing from East Asia — not to mention more individual players, such as the

Indian and Chinese forms of statism. Power struggles are right now being waged within the acronymic organizations among these various models. Thusthe World Development Report ’s approval of states taking measures against short-term capital flows owes much to Asian pressures within the organization(though not to these alone). American or Anglo-Saxon models had beenon the rise in such organizations over the 1980s and 1990s mainly becauseof the way the United States had become the center of global money mar-kets, sucking in the world’s financial surpluses. Fiscal rectitude, not indus-trial development, became seen in the USA as the way to growth, becausethis suited American capitalist interests. But it was not likely that states withstrong infrastructural capacities, like Germany, Japan, Korea, China, etc.

would simply abandon their competing visions of economic rationality. In-stead, they adapted them to new realities, as the East Asian countries havedone in the aftermath of the 1997 crash. Short-term, but not long-term, re-straints on capital flows became one of their responses. The important point here is that policy outcomes are also the result of struggles within these

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regulatory organizations among states and alliances of states. This is lesstransnational than geopolitical struggle.

I do not wish to replace RH’s one-dimensional transnational model witha one-dimensional nation-statist model. Unlike world systems theorists, 1 donot adhere to a systemic theory of the relations between the transnational,the international and American quasi-hegemony. Complex interactionsamong the three produce too many unanticipated consequences for toomany distinct actors for this to resemble a system. RH’s arguments make con-siderable sense, but as an ideal-type — a partial and exaggerated analysis of processes of economic globalization, which is heuristically useful.

Of course, globalization also includes more than just the economy. It comprises treaties among the Powers, the United Nations, nuclear weapons,relations between zones of turmoil and zones of peace, popular culture,

social movements and many other phenomena of global reach. All of theseimpact on the economy. RH cannot analyze everything in one article, and Iaccept that these impacts are outside of their scope. But even within theirscope, I detect one-dimensionality. Perhaps this originates in the recent increases in the power of the capitalist class vis-à-vis other classes (partly because capital has outflanked labor by going global). Since global capitalis largely unchallenged by any other class, it is tempting to see a transnationalcapitalism as the sole ruler of the world economy. Compared to other classes,it substantially does. Capital and labor are to some extent opposed, in adialectical relationship. Capital rules, labor does not. But capital, the nation-state and geopolitics are not opposed in a dialectical relationship. Capitalismrequires regulation. States and geopolitics provide much of this regulation.But states and geopolitics have their own logics aside from their economic

functions. The three are not opposed, but different. Their different logicsrule the world economy, jointly and rather messily.

Will this unstable blend change toward more transnationalism? Wedon’t know, but let me speculate. In the short-term, perhaps yes. But if humanity does confront the looming disaster of the environmental degra-dation of the planet, far greater international, geopolitical regulation of theeconomy will be required. The 21st century will likely present a new versionof the old choice between “Socialism or Barbarism,” though presumably thefirst of these two terms will be replaced by one with greater resonance inthe new century.

Michael Mann

Department of Sociology

University of California 405 Hilgard Avenue Los Angeles, CA 90024–[email protected]



REFERENCES

Mann, Michael. 1983. “Nationalism and Internationalism: A Critique of Economicand Defence Policies.” In J. Griffith, ed., Socialism in a Cold Climate.London:

Allen & Unwin.Robinson, William I., and Jerry Harris. 2000. “Towards a Global Ruling Class? Glo-

balization and the Transnational Capitalist Class.” Science & Society , 64:1 (Spring),11–54.

Sklair, Leslie. 2000. The Transnational Capitalist Class. Oxford, Blackwell. World Bank. 2000. World Development Report 2000/2001. New York.


GLOBAL CAPITALISM AND THE PERSISTENCEOF THE NORTH–SOUTH DIVIDE

Few would deny that over the last 30 years world capitalism has undergonemajor transformations. Yet, there is little agreement on the nature and con-sequences of these transformations. In two articles recently published inScience & Society , William Robinson, Jerry Harris and Roger Burbach advancethe thesis that the transformation constitutes one of those rare “epochalshifts” that revolutionize the way in which world capitalism functions. Fourmain changes are singled out to justify the claim.

The first and apparently most fundamental is what Robinson and Harriscall “the transition from the nation-state phase to a new transnational phaseof capitalism.” As they go on to explain, “In the nation-state phase, the world

was linked together via commodity and financial flows in an integrated inter-national market. In the new phase, the worldwide social linkage is an inter-nal one springing from the globalization of the production process itself andthe supranational integration of national productive structures” (2000, 16).

The second change is the transition from an inter national to a transnational process of class formation. In the earlier, inter national process, the“system of nation-states . . . mediate[d] relations between classes and groups,including [relations among] capitals and national bourgeoisies.” In the new,trans national process “economic and related social, political and culturalprocesses — including class formation — supersede nation-states. . . . result-ing in the accelerated division of the world into a global bourgeoisie [ortransnational capitalist class (TCC)] and a global proletariat” (Robinson andHarris, 2000, 16–17).

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The third change is the declining significance of the geographic divi-sion of the world into North and South, Core and Periphery, First and Third

Worlds.

The concepts of core and periphery, or North and South, are increasingly not geo-graphic per se , as much as they are social class in character, as the global economy creates new variation, specialization and asymmetries that cut across nations andregions. . . . Of course . . . there are still poor and very rich countries. But the trendis one in which there is ever growing poverty and marginalization in the First World,

while the Third World has a large number of nouveau riche who are able to buy andsell in the global economy, creating vast fortunes that match or rival many in theFirst World. (Burbach and Robinson, 1999, 28; see also Robinson, 1996; Robinsonand Harris, 2000, 50.)

Finally, there is the increasing class consciousness of the TCC, as wit-nessed by the “rise of a transnational state (TNS) apparatus.” “A trans-national working class” — we are told — “is increasingly a reality [as] a class-in-itself.” But “it is not yet for-itself.” The TCC, in contrast, “is increasingly aclass-in-itself and for-itself.” It “has become conscious of its transnationality,and has been pursuing a class project of capitalist globalization, as reflectedby the rise of a transnational state under its auspices” (Robinson and Harris2000, 22–23).

In Robinson’s and Harris’ scheme of things, these four transformationsare conceptually distinct but causally interrelated. The main thrust of theirargument is that the transnationalization of production processes has brought about an irreversible mutation in processes of class formation and unevendevelopment. As a result of this mutation, differences of geopolitical location

become less and less significant in segmenting the world bourgeoisie and the world proletariat into separate national/civilizational status groups. Both the world bourgeoisie and world proletariat are thus becoming transnationalclasses. But whereas the transnational proletariat has not yet turned into aclass-for-itself, the transnational bourgeoisie already has, as witnessed by theformation of a TNS apparatus as an instrument of its global rule.

I have no objection to the idea that world capitalism is today integratedin ways qualitatively different than in the past. On the contrary, it is now more than 20 years since I underscored how the spread of multinationalcorporations involved a kind of supranational integration of national pro-ductive structures that was fundamentally different from earlier forms of integration via commodity and financial flows. Focusing specifically on thedifferences between the supra-nationality of high finance and that of multi-national corporations, I drew a distinction between the two that in key re-spects resembles Robinson’s and Harris’ distinction between a “nation-statephase” and a “transnational phase” of capitalism.



Once it enters the phase of “intensive” expansion . . . the big multinational com-pany promotes its own more or less advanced internal division of labor, which tendsto cut across the territorial division of the world into states and nations. High fi-nance and its progenitors . . . far from developing within themselves an interna-tional division of labor, owed their very existence to the division of the world intoseparate entities, each with its internal division of labor. They thereby had an in-fluence upon the way in which the various productive activities were distributed amongthe nations; but it was an indirect influence, exerted through market forces and me-diated . . . by inter-state relations. Finance capitalism and multinational capitalismare thus antithetical concepts, in that the former represents an “anarchical–informal”mode, and the latter a “hierarchical–formal” mode, of co-ordination of the interna-tional division of labor. (Arrighi, 1983 [1978], 143.)

On the basis of this distinction, I went on to argue that the kind of world-

economic integration via direct investment that had developed under U. S.hegemony was less likely to break down and lead to a generalized state of waramong capitalist powers than the kind of world-economic integration via com-modity and financial flows typical of 19th-century British hegemony. Moreover,over time the consolidation of this new form of world-economic integrationcould be expected to weaken nation-states as the primary form of politicalorganization of world capitalism (Arrighi, 1983 [1978], 146–8). It followed fromthis argument that the very theories of “imperialism” that had been most suc-cessful in predicting trends in the first half of the 20th century (most notably,Hobson, 1932 [1902]; Hilferding, 1981 [1910]; and Lenin, 1952 [1916]) hadbecome hopelessly obsolete. They had become obsolete for the simple reasonthat world capitalism as instituted under U. S. hegemony was no longer gener-ating the tendency towards war among capitalist powers that constituted their

specific explanandum. And to the extent that the system of nation-states wasactually ceasing to be the primary form of political organization of world capi-talism, this obsolescence would become permanent (Arrighi, 1983, 149–173).

Although not directed specifically at theories of imperialism, theRobinson-Harris-Burbach diagnosis of on-going transformations of globalcapitalism confirms the validity of these conclusions. Nevertheless, theseauthors go much further than I would even today in inferring from the new forms of integration of world capitalism the emergence of a TCC, a TNSapparatus and a world proletariat as a class-in-itself. It is one thing to main-tain (as I did 20 years ago and still do) that these new forms of integrationhave made wars obsolete means of inter-capitalist competition. But it is analtogether different thing to maintain (as Robinson, Harris and Burbachdo) that the emergence of these new forms have resulted “in the acceler-ated division of the world into a global bourgeoisie and a global proletariat”and in a corresponding declining significance of geopolitical divisions withineach of these two global classes.





This contention rests on no direct evidence. Robinson, Harris andBurbach do not document the formation of transnational classes as such (thesecond and third transformations in my summary of their thesis) but thetransnationalization of capitalism (the first change). Since capitalism hasbecome more transnational — their argument goes — so too must the pro-cess of class formation.

A first problem with this argument is that the evidence of a dramaticincrease in the transnationalization of capitalism in the 1980s and 1990s isnot as strong and unambiguous as Robinson et al . would like us to believe.The data they give for global outflows of foreign direct investment (FDI)start in 1983 (Burbach and Robinson, 1999, 16; Robinson and Harris, 2000,32–33). But 1983 is a very misleading benchmark from which to assess trendsin FDI, because over the preceding four years FDI had collapsed — its value

in 1983 being less than half what it had been in 1979 (Dunning, 1988, 91; Arrighi, 1994, 369). Global flows of FDI did increase in the 1980s and 1990s,but not as rapidly as they had in the 1960s and 1970s and certainly not asrapidly as the data presented by Robinson et al . indicate.

What did increase dramatically in the 1980s and 1990s are financial flowsacross state boundaries and the importance of private high finance in theregulation (and de-stabilization) of processes of capital accumulation on a

world scale. Surprisingly, Robinson and Harris (2000, 24, 36–37) take thisdevelopment as further evidence of the “transnationalization” of capitalism.I say surprisingly because, according to their definition, transnationalizationrefers to integration via FDI as distinct from integration via commodity andfinancial flows. In documenting empirically the trend towards transnationali-zation, however, Robinson et al . abandon the distinction between old and

new forms of integration, thereby exaggerating the extent to which worldcapitalism has entered a qualitatively new stage.

But even if we assume that the transnational character of capitalism hasincreased further in the 1980s and 1990s — as to some extent it undoubtedly has — there is a second and more serious problem with the argument that this increase can be taken as evidence of an accelerated division of the worldinto a global bourgeoisie and a global proletariat as classes-in-themselves. Thismore serious problem is that the significance of North–South divisions inthe global social structure has certainly not decreased and has probably increased in the age of so-called globalization. The direct evidence that Robinson et al . provide in support of their contention that conditions of

wealth and poverty in the former First and Third Worlds are converging(Burbach and Robinson, 1999, 28–9) or are already not all that different (Robinson and Harris, 2000, 50) is anecdotal or based on merely local ob-servations. If there actually were any such convergence, it would show up inthe average per capita income (as measured by GDP per capita) of Third



World countries relative to that of First World countries. Unfortunately forThird World peoples, however, all available statistics show no such conver-gence (Arrighi, 1991; Korzeniewicz and Moran, 1997; Milanovic, 1999; Arrighiand Silver, 2000). Suffice it to mention that in 1998 the average per capitaincome of Third World countries (including China) was only 4.8% of theper capita income of First World countries, that is, almost exactly what it

was in 1960 (4.7%) or in 1980 (4.5%). Indeed, if we exclude China fromthe calculation, the percentage shows a steady decrease from 6.7 in 1960,to 6.4 in 1980 and 5.9 in 1998 (calculated from World Bank 1984 and 1999).

In short, in spite of growing individual/local poverty and marginali-zation in the former First World and of old and new indigenous wealth andcorporate power in the Third World, there are no signs of any narrowing of the gap between First World wealth and Third World poverty. The implica-

tions for processes of class formation on a world scale of this remarkablegeopolitical stability of the global hierarchy of wealth are straightforward.The emergence of new forms of global integration of production processes

via direct investment, combined with the reemergence of older forms viafinancial flows, has consolidated rather than undermined the fundamentaldifference in the material conditions of class formation that separates theNorth from the South.

A recognition of the persistence of the North–South divide is essentialto assess accurately the extent and nature of the fourth major change that defines Robinson’s and Harris’ “epochal shift” in the development of worldcapitalism: the rise of a transnational state (TNS) apparatus. Two issues arisein this connection. One is whether a TNS apparatus has actually emerged.

And the other is whether this emergence can be taken as the expression of

a “class project of capitalist globalization” pursued consciously by the TCC,as Robinson and Harris claim.

On the first issue I have no disagreement with the idea that a world stateis indeed in formation and may eventually displace the system of nation-statesas the primary political organization of world capitalism. My disagreement on this issue concerns the temporal scale of the ongoing transition from thenation-state phase to a possible but by no means certain future world-statephase of capitalism. As argued at length elsewhere, world capitalism wasoriginally embedded in a system of city-states and the transition from thecity-state phase to the nation-state phase of capitalism stretched over sev-eral centuries. For at least two centuries in the course of this transition, city-states (most notably Venice) or business diasporas originating in city-states(most notably the Genoese) remained protagonists of the capitalist dynamic,

while the leading agency of the transition itself was a state (the United Prov-inces) that combined characteristics of the declining city-states and of therising nation-states (Arrighi, 1994, 11, 36–47, 82–158; Arrighi and Silver





et al ., 1999, 38–58). It seems to me not just possible but likely that the ongoingtransition from the nation-state to a world-state phase of capitalism may alsotake, if not several centuries, at least most of the present century or more.Equally possible and likely is that at least some nation-states or hybrid forms of nation- and world-state will be the protagonists and leaders of the transition.

These possible futures bring us to the second issue raised by Robinson’sand Harris’ thesis of the rise of a transnational state. Their contention that the rise has occurred under the auspices of the TCC does not stand up totheir own evidence. The evidence they provide (Robinson and Harris, 2000,27–31) consists of a long but heterogeneous list of institutions. Most of theseinstitutions were created by the U. S. government in the immediate post–Second World War period as an expression and instrument of U. S. worldhegemony. These include not just the Bretton Woods and United Nations

institutions but also the original nuclei of what later became the Organiza-tion of Economic Cooperation and Development (OECD), the EuropeanUnion, and the World Trade Organization (WTO). Since all these institu-tions or their original nuclei were in place before the formation of the TCC— a post-1960 phenomenon, by Robinson’s and Harris’ own account — theirrise could not possibly be the expression of the class consciousness of a TCCthat had not yet formed even as a class-in-itself. Far from being created underthe auspices of a TCC, these institutions were put in place by a particularnational government (the United States) in a successful attempt to solve thecontradictions of world capitalism as instituted under British hegemony (Arrighi and Silver, et al ., 1999, 79–94, 202–211). Far from being a creationof a TCC, they were part of the conditions of its subsequent emergence.

The institutions in Robinson’s and Harris’ list that actually came into

existence after a TCC had begun to emerge are a handful. Among them,only the Group of Seven (G-7), the Trilateral Commission and the WorldEconomic Forum (WEF) stand out as truly significant. Morever, since the

WEF has replaced the Trilateral Commission, we are left with only a pair of institutions (the G-7 and the Trilateral Commission at first, the G-7 and the

WEF more recently) as the possible expression of a class-conscious TCC. Inreality, however, both institutions (the G-7 in particular) appear to be farmore the expression and the instrument of the continuing dominance inthe global political economy of the United States and its closest Northernallies than the instrument of rule of a global capitalist class increasingly unified by an allegedly declining significance of the North–South divide.

I am not denying that in key respects the G-7 and the WEF, along withsome of the older institutions such as the International Monetary Fund(IMF) and the World Bank, can be characterized as committees for manag-ing the common affairs of the world bourgeoise — a characterization that Ihave myself used for quite some time (see for example Arrighi, 1991, 64).



But in my view North–South distinctions remain as central as ever, particu-larly in shaping processes of world-state formation. As the implosion of the

WTO talks in Seattle has shown in exemplary fashion, the struggle over thesocial orientation of the emerging world-state is as much a struggle betweenNorth and South as it is between capital and labor (Silver and Arrighi, 2001).Indeed, since the possessors of capital continue to be overwhelmingly con-centrated in the North, while a vast and ever-growing majority of the world’sproletariat is concentrated in the South, the two struggles are in good part obverse sides of the same coin.

GIOVANNI A RRIGHI

Department of Sociology The Johns Hopkins University Baltimore, MD 21218 [email protected]

REFERENCES

Arrighi, Giovanni. 1983 [1978]. The Geometry of Imperialism. The Limits of Hobson’s Paradigm. London: Verso.

———. 1991. “World Income Inequality and the Future of Socialism.” New Left Review , 189, 39–64.

———. 1994. The Long 20th Century: Money, Power, and the Origins of Our Time . Lon-don and New York: Verso.

Arrighi, Giovanni and Beverly Silver, et al. 1999 . Chaos and Governance in the Modern World System.Minneapolis, Minnesota: University of Minnesota Press.

Arrighi, Giovanni and Beverly J. Silver. 2000. “Global Inequalities and ‘Actually Existing Capitalism’.” Paper presented at the conference “Ethics and Global-ization,” Yale University, March 31–April 2.

Burbach, Roger and William I. Robinson. 1999. “The Fin De Siecle Debate: Glo-balization as Epochal Shift.” Science & Society , 63:1, 10–39.

Dunning, John H. 1988. “International Business, the Recession and EconomicRestructuring.” Pp. 84–103 in N. Hood and J.-E. Vahlne, eds., Strategies in Glo- bal Competition.London: Croom and Helm.

Hilferding, Rudolf. 1981 [1910]. Finance Capital: A Study of the Latest Phase of Capi- talist Development.London: Routledge and Kegan Paul.

Hobson, John. 1938 [1902]. Imperialism: A Study.London: George Allen & Unwin.Korzeniewicz, Roberto P. and Timothy Moran. 1997. “World-Economic Trends in

the Distribution of Income, 1965–1992.” American Journal of Sociology,102:4,1000–39.

Lenin, V. I. 1952. [1916]. Imperialism: The Highest Stage of Capitalism. In Selected Works , Vol. I. Moscow: Foreign Languages Publishing House.Milanovic, Branko. 1999. “True World Income Distribution, 1988 and 1993.” Policy

Research Working Paper #2244. Washington, D. C.: World Bank.





Robinson, William I. 1996. “Globalization: Nine Theses of Our Epoch.” Race and Class, 38:2, 13–31.

Robinson, William I. and Jerry Harris. 2000. “Towards a Global Ruling Class? Glo-balization and the Transnational Capitalist Class.” Science & Society,64:1, 11–54.

Silver, Beverly, and Giovanni Arrighi. 2001. “Workers North and South.” The Socialist Register , 2001, 51–74.

World Bank. 1984. World Tables. VoIs. 1 & 2. Washington D. C.: World Bank. World Bank. 2000. World Development Indicators.CD ROM. Washington, D. C.: World

Bank.


CAPITAL, TERRITORY, AND HEGEMONY OVER THE LONGUE DUREE *

We live in an “age of transition” (Hopkins and Wallerstein, 1996). That much is widely agreed. But a transition from what, and much more im-portantly, to what ? In such ages of transition social researchers are easily blinded by the most dramatic aspects of capitalist restructuring. In this re-spect, the turn-of-the-21st-century debate over the future of capitalism re-plays the turn-of-the-20th-century debate over the future of capitalism, withleading intellectuals identifying one or another element of the emergingorder and constructing a general model from it: the growing power of fi-nance capital (Hilferding); the paramount importance of geographicalexpansion into the previously non-capitalist world (Luxemburg); “monopoly capitalism” and the centrality of inter-imperialist rivalry (Lenin); the phe-nomenon of inter-imperialist cooperation, so-called “ultra-imperialism”(Kautsky); “state capitalism” (Bukharin).

Common to all these interpretations is the transformation of contempo-rary events into long-run trends. And so it is with William I. Robinson’s and

Jerry Harris’ thesis on globalization (2000). In their view, the relationshipbetween state and capital that has characterized capitalist development overthe past five centuries is coming unraveled. In its place, multiple “national”states are giving way to a single “transnational state” and multiple “national”bourgeoisies are giving way to a single “transnational capitalist class” (TCC).

* Thanks to Ben Brewer, an anonymous reviewer for Science & Society , and especially DianaCarol Moore Gildea for reviewing this paper in draft.



Yet, Robinson and Harris really lack a methodology to render this ar-gument persuasive. Their contention is that a short-run (so far) and partial(so far) shift in the territorial locus of state power from the “nation” to theglobal economy will become long-run and complete. But this is convincingonly to the extent that they explain why and how a temporary and partialshift will not return to the old state of things, or recenter on a new spatialconfiguration that is rooted neither in “national” nor in global territory.

My critique takes up three broad issues. First, I suggest that Robinson’sand Harris’ theorization of hegemony and stages of capitalism is (at best)incomplete. Second, I argue that their geography of globalization is woe-fully undertheorized. And finally, I contend that the failure to engage in amore systematic historical analysis of the research problem they pose is aserious methodological error.

At the outset, I should express my concerns about this term “globaliza-tion.” Now deeply ingrained in the popular as well as academic discourse,the term is at best descriptive of very general changes. I prefer a more pro-

visional approach, one that guards against reading too much into transitionaldevelopments. I have always liked Lenin’s approach in this regard; contrary to the title of Imperialism: The Highest Stage of Capitalism , Lenin consistently referred to contemporary capitalist developments not as the “highest” stage,but as “the latest epoch of capitalism” (1963, 726, emphasis added). Ratherthan weigh down the discussion with such a precise formulation, however,I will stick to convention and use the term “globalization” in its most genericsense as a new phase of capitalism whose exact contours are still being workedout.

Key Concepts: Hegemony and Phases of Capitalist Development Let us consider first the conception of hegemony and stages of capital-

ism. Robinson and Harris spend a lot of time talking about the TCC as a“new global capitalist historic bloc” (2000, 12). Despite the language, Robin-son and Harris deploy a conception of hegemony that is, in Gramsci’s terms,spectacularly incomplete. In Robinson’s and Harris’ construction, thepresent dominant position of the TCC can be translated into hegemony almost entirely through the construction of a “transnational state” and a new so-cial compact that procures the consent of “middle class” elements and themore globalized layer of the world’s working class (2000, 40, 50). Curiously,the discussion is almost entirely given over to the consensual aspects of theTCC’s hegemonic project, with little consideration of its coercive aspects. Yet for Gramsci, “the supremacy of a social group manifests itself in two ways, as‘domination’ and as ‘intellectual and moral leadership.’ A social groupdominates antagonistic groups, which it tends to ‘liquidate,’ or to subjugate

CAPITAL, TERRITORY AND HEGEMONY 477




perhaps even by armed force ” (1971, 57–58 , emphasis added). While Robinsonand Harris concede at several points that coercion is necessary for global-ization to succeed (2000, 40, 50–51), the role of force in sustaining capitalaccumulation does not really enter into the analysis. It is not clear, for in-stance, how the projected transnational state would exercise military power,or who would pay for it.

The neglect of coercion marks a dramatic break with Robinson’s mas-terful treatment of the subject in Promoting Polyarchy (1996). In this brilliant study of U. S. imperialism and “democracy promotion” in the periphery,Robinson follows Gramsci in arguing that “hegemony is consensus protectedby the ‘armor of coercion.’” Thus conceived, hegemony is “ consensual domination ” (1996, 22, 21).

A more fundamental conceptual problem concerns the stages of capi-

talism argument. We are exposed to only two phases, a “nation-state” and a“global” phase, only one of which is defined with any rigor. In what is now a very familiar argument, the “globalized” era of capitalist development ischaracterized by the transition from national to global production networks,

which at once produce — and are produced by — a global capitalist class, which seeks to establish a global state.

Robinson’s and Harris’ thesis relies heavily on arguments advanced ina recent article by Robinson and Roger Burbach (1999). Burbach andRobinson provide the underlying historical framework for the Robinson–Harris thesis, and the core of this framework is in theoretical disarray. Inthis scheme of things, the first era of capitalist development (1492–1789) isdefined by primitive accumulation and geographical expansion; the secondphase (1789–1900) by industrialization “and the forging of the nation-state”;

the third (1900–1970s) by changes in the structure of competition (“mo-nopoly capitalism”); and the fourth (1970s–cont.) by globalization. EvenBurbach and Robinson confess that this “periodization is somewhat arbitrary”(1999, 11). But it is more than simply arbitrary. For how one periodizescapitalism has an awful lot to do with how one defines it. And Robinson’sdefinition of capitalism changes with each new successive era. This posesbig problems for any attempt to validate propositions about globalizationin comparison with previous eras of capitalist development. Thus, the wholeedifice of the Robinson–Harris argument is constructed upon extremely shaky foundations.

Globalization, Territory, and the Production of Space

The Robinson–Harris conception of globalization pivots on the ques-tion of space. During the era of nation-states, they argue, class and stateformation occurred on a national scale; with globalization, class and state



formation is occurring on a global scale. But their argument goes further:“the nation-state is no longer the organizing principle of capitalism and . . . classdevelopment and social life” (2000, 17, emphasis added). Here territory isreified into an “organizing principle” and the nation-state becomes not only the boundary but the bounding mechanism of class formation and capitalist development.

Robinson and Harris contend that globalization achieves a radical rup-ture with the heretofore existing relationship between capital and space.In this scheme of things, to use Castells’ phrasing (1994), the “space of flows”displaces the “space of places”: “class formation is progressively less tied toterritoriality.” Even more emphatic: “organic class formation is no longertied to territory.” Capital is today “liberated” from previously existing “spa-tial barriers” (Robinson and Harris, 2000, 12, 17; also see Harris, 1998–1999).

But is global capitalism really so placeless? Geographers have empha-sized that globalization depends upon new forms of territorialization suchas the new “global cities” necessary to coordinate global financial markets(Sassen, 1991; Brenner, 1999; Harvey, 2000). The growing importance of such urban formations indicates that capital’s liberation from spatial barri-ers is a partial one at best. Advances in transportation and communica-tions infrastructure have freed capital in certain respects. Yet, these infra-structures involve huge fixed costs, and cannot be easily restructured. Theflexibility and acceleration of turnover time achieved through a “built envi-ronment” favorable to capital in one era becomes a fetter upon accumula-tion in the next. In this way, “environments are created that simultaneously facilitate but imprison the future paths of capitalist development” (Harvey,1991, 218).

I am not so sure that the historical geography of capitalism can be soeasily reduced to a “nation-state” phase and a “global” phase. A longer view is necessary. Capitalism was not born within national economies — these

were largely consequence, not cause, of capital accumulation — howevermuch states may have promoted capitalist development for their own inter-ests (Arrighi, 1994). It is probably more fruitful to view “the phase during

which economic development was integrally linked to the ‘national econo-mies’ of a number of developed territorial states as situated between two essentially transnational eras ” (Hobsbawm, 1992, 25, emphasis added).

Moreover, the idea of a “nation-state phase” of capitalism is derived fromthe experience of a very small number of industrializers. Generalizationsmade on this basis are therefore inherently risky. Take for example theproposition that, by the later 19th century, “capitalist classes developed

within the protective cocoon of nation-states.” This process occurred “worldwide” (Robinson and Harris, 2000, 16–17). The problem is that this did not occur worldwide but only in the United States, Germany, Japan, and a few





other countries. The idea that we are moving from a nation-state to a globalphase of capitalism makes sense only if we limit our representative cases tothe “haves”; with few exceptions, the “have-nots” have not experienced any-thing akin to “national development.”

Even successful “national” economies owed their success to global ac-cumulation strategies. Imperialism was the handmaiden of successful “na-tional” capitalism. Britain, France, the United Provinces, and Japan, inter alia ,relied on imperialism to propel their ascent in the world-economy. Nor wasthe United States an exception. In contrast to its rivals, there was no com-pelling need for American capital to exterminate, extract, and exploit thepeople and resources of distant lands; it could do so in its own backyard(Moore, forthcoming). Proximity rendered such expansionism no lessglobal. Certainly “home markets” existed, but they owed their existence to

global accumulation strategies aimed at protecting and expanding domes-tic and foreign markets, and procuring cheap supplies of land, labor, andresources. From this perspective, “globalization” looks a lot like a transitionfrom one global system to another rather than a rupture with a system of national capitalisms (Harvey, 2000, 61).

I agree that this latest phase of capitalism redefines “the relation be-tween production and territoriality” (Robinson and Harris, 2000, 16–17).But are we really moving from “national” to “global” production systems?From where I sit, the reorganization of industrial production looks less likethe “global assembly line” and a lot more like a new form of regionalization.Some industries are more footloose than others, but all are rooted in —indeed they create — definite industrial regions; industrialization may dif-fuse but it does so in an uneven and regionally specific way. Moreover, the

world economy’s most basic industries — automobile production for ex-ample — are highly capital-intensive, regionally clustered, involve huge fixedcosts, and cannot be easily moved (Moody, 1997).

Robinson and Harris exemplify globalization researchers’ tendency tofocus one-sidedly on global space. But, as Neil Brenner (1999, 44) argues,“globalization unfolds simultaneously upon multiple, intertwined geographi-cal scales — not only within global space, but through the production, dif-ferentiation, reconfiguration, and transformation of sub-global spaces suchas territorial states, regions, cities, and localities,” not to mention the shopfloor and even the human body (Moore, forthcoming; Harvey, 2000, ch. 6).

World-scale developments are but one moment of so-called “globalization.”Riveting our attention to global developments, globalization discourse tendsto blind us to a more complex and slippery conception of capitalism’s his-torical geography. My conception focuses on the always shifting configura-tion and interpenetration of social relations at multiple geographical scales



that characterizes the emergent capitalist order. This means taking seriously the idea that local- and global-scale processes are mutually relational. (Andinbetween scales as well.) For instance, the creation of large-scale produc-tion networks, while reinforcing the capacity of capital to divide and con-quer working-class opposition, allows workers in one locale to disrupt na-tional and even global production systems. Witness recent strikes by GeneralMotors and United Parcel Service workers in the USA. The ever-shifting formof the “local–global dialectic” in historical capitalism suggests that it is how the social relations at multiple geographical scales “fit together” that counts;not simply the power of the global.

Globalization in World-Historical Perspective, Or,Why We Need a World-Historical Method

A wide range of participants in the globalization debate now acknowl-edge remarkable parallels between the later 19th century and today (seeGordon, 1988; Harvey, 2000; Hirst and Thompson, 1996): technologicalinnovations, revolutions in transport and communications, surges in inter-national capital flows, and so forth. I suggest that the logic of world-historicalcomparison embedded in the practice of examining late 20th century glo-balization against the backdrop of late 19th century globalization should beextended to encompass successive “long centuries” of world capitalism, fromthe 16th century to the present (Arrighi, 1994). Only on this basis can weisolate what is actually new.

For Robinson and Harris, globalization is determined partly by a dra-matic shift in territoriality, and partly by the hegemonic ascent of a new de-

territorialized alliance of transnational capital and governing institutions tohegemony. The authors posit a rather simple transition from national capi-talism and associated hegemonic forms to global capitalism and transnationalhegemony. I would like to address two ways that this analysis would be com-plicated if viewed from deeper historical perspective.

First, Robinson and Harris are quite right to argue that theories which view the nation-state as “immanent in capitalist development” run against the grain of historical materialism (2000, 18). The nation-state perspectivedoes, however, possess the virtue of grounding capitalist development inspecific places. I think Robinson and Harris have overstated their case pre-cisely because their conception of globalization overemphasizes the “new”global economy as “abstract space” (Lefebvre, 1991) without explaining how the “global” moment of capital accumulation depends upon very particular

places. In their rush to offer a new historical sociology of global politicaleconomy they have failed to provide a new historical geography.





And a new historical geography of capitalism it would have to be, if the system’s organizers no longer depended upon place, substituting the“space of flows” for cities, empires, and nation-states. Robinson and Har-ris should explain why the organizers of previous global accumulationregimes were, quite literally, centered in a particular place — the Italiancity-states (Genoa above all), Amsterdam–United Provinces, London–United Kingdom, New York–United States, and (perhaps?) Tokyo–Japan/East Asia — while the organizers of globalization are essentially (allegedly)placeless?

One clear pattern that emerges is the growing scale of the organizingcenter in successive phases of capitalism: from city-states to the Americancontinental super-state to, quite possibly, the rise of East Asia as a new “macro-region.” Possibly, the recent changes in capitalism that Robinson and Har-

ris attribute to the global economy — the growth of multinational firms, tradeintegration, and so forth — are really macro-regional processes. So they must explain why “placeless” globalization is rather more likely than “placeful”macro-regionalization.

And then there is the problem of class struggle. The possibilities for anew social compact necessary for consolidating a transnational hegemony appear slim indeed. As the scale of capital accumulation has grown largerover time, so the requisite “social compact” necessary for renewed capitalaccumulation has incorporated a progressively larger layer of the global

working class (Silver and Slater, 1999). But there are definite limits to how far this can proceed. The 19th century saw the rise of working-class powerin the core. The 20th century witnessed the rise of the “dangerous classes”in the periphery and semiperiphery. But incorporating these workers has

proved enormously costly. “One could cut in several-hundred-million West-ern workers and still make the system profitable. But if one cuts in severalbillion Third World workers, there would [be] nothing left for further capi-tal accumulation” (Wallerstein, 1995, 25).

On the one hand, capital faces the problem of incorporating severalhundred million East Asian workers into an enormously expensive new “so-cial compact.” However necessary for renewed capital accumulation, theeconomic weight of the required social compact is probably too great forcapital to bear. On the other hand, there is the problem of reterritorializa-tion. On what geographical basis can capital accumulation be renewed? Orcan it? The steady rise in the scale of capitalist organization and governingorganization over long historical time suggests that some kind of macro-regional formation may become ascendant. But given the persistence of international rivalries, temporarily attenuated by uneven and unstable pros-perity and overwhelming U. S. military power, the prospects for “global”capitalism appear dim indeed.



Conclusion

In the absence of a much more far-reaching world-historical analysis of the relationship between hegemony, territory, and capitalist development,Robinson’s and Harris’ thesis ultimately shores up some of the left’s most backward thinking on globalization. Their treatment of the “nation-state”phase of capitalism suggests a world-system heretofore constituted by asimple agglomeration of putatively “national” capitalisms — what EllenMeiksins Wood (1999) has called, in a singularly unfortunate turn of phrase,the theory of “capitalism in one country.”

Neither a strong globalization thesis nor a strong anti-globalizationthesis will do. We need a world-historical conception of capitalist geogra-phy that allows us to see not just the growing scale of accumulation and

governance. Other socio-spatial realities must factor in: the importance of place and its articulation with global processes, the cyclical emergence of new sub-national territorial organizations, and most importantly, the capi-talist imperative to build environments that at first liberate and then imprisonaccumulation. The question of a transnational hegemonic project is best answered within such a global, historical–geographical framework.

Jason W. Moore

c/o Department of Geography University of California, Berkeley Berkeley, CA 94720

[email protected]

REFERENCES

Arrighi, Giovanni. 1994. The Long Twentieth Century. New York: Verso.Brenner, Neil. 1999. “Beyond State-Centrism? Space, Territoriality, and Geographi-

cal Scale in Globalization Studies.” Theory and Society , 28, 39–78.Burbach, Roger, and William I. Robinson. 1999. “The Fin de Siecle Debate: Glo-

balization as Epochal Shift.” Science & Society , 63:1, 10–39.Castells, Emmanuel. 1994. “European Cities, the Informational Society, and the Glo-

bal Economy.” New Left Review , 204, 18–32.Cox, Robert W. 1987. Production, Power, and the World Order. New York: Columbia

University Press.Gordon, David. 1988. “The Global Economy: New Edifice or Crumbling Founda-

tions?” New Left Review , 168, 24–64.Gramsci, Antonio. 1971. Selections from the Prison Notebooks.New York: International.Harris, Jerry. 1998–1999. “Globalisation and the Technological Transformation of

Capitalism.” Race & Class , 40:2/3, 21–36.





Harvey, David. 1991. “Geography.” Pp. 216–219 in Tom Bottomore, et al., eds., A Dictionary of Marxist Thought. Second edition. Cambridge, Massachusetts: BasilBlackwell.

———. 2000. Spaces of Hope.Berkeley, California: University of California Press.Hirst, Paul and Grahame Thompson. 1996. Globalization in Question. Cambridge,

England: Polity.Hobsbawm, E. J. 1992. Nations and Nationalism since 1780. Second edition. Cam-

bridge, England: Cambridge University Press.Hopkins, Terence K., and Immanuel Wallerstein, coordinators. 1996. Age of Tran-

sition. New York: Zed.Lefebvre, Henri. 1991. The Production of Space.Cambridge, Massachusetts: Blackwell.Lenin, 1963. Imperialism: The Highest Stage of Capitalism.Pp. 667–768 in Selected Works ,

Vol. I. Moscow: Progress.Moody, Kim. 1997. Worker in a Lean World. New York: Verso.Moore, Jason W. Forthcoming. “Remaking Work, Remaking Space: Spaces of Pro-

duction and Accumulation in the Reconstruction of American Capitalism,1865–1920.” Antipode .

Robinson, William I. 1996. Promoting Polyarchy: Globalization, U. S . Intervention, and Hegemony.Cambridge, England: Cambridge University Press.

Robinson, William I., and Jerry Harris. 2000. “Towards a Global Ruling Class? Glo-balization and the Transnational Capitalist Class.” Science & Society , 64:1, 11–54.

Sassen, Saskia. 1991. Global Cities. Princeton, New Jersey: Princeton University Press.

Silver, Beverly J., and Eric Slater. 1999. “The Social Origins of World Hegemonies.”Pp. 151–216 in G. Arrighi, B. J. Silver, et al ., Chaos and Governance in the Modern World System.Minneapolis, Minnesota: University of Minnesota Press.

Wallerstein, Immanuel. 1995. “Response: Declining States, Declining Rights?”International Labor and Working Class History , 47, 25–27.

Wood, Ellen Meiksins. 1999. The Origin of Capitalism. New York: Monthly Review.


GLOBALIZATION: TOWARDS A TRANSNATIONALSTATE? A SKEPTICAL NOTE

The particular set of institutions that led to a global economic expansionafter the Second World War ran out of steam in the mid-1970s. Worldwide,corporate profitability began to decline dramatically from the mid-1960s on,reducing investments and resulting in a sharp decline in GDP growth. Theincreasing internationalization of economies since then is grounded in the



historically unprecedented globalization of all three circuits of capital, exem-plified in the unprecedented trinity of free trade (“ the global market ”), freecapital flows (“ the global casino ”) and globalization of production (“ the global workshop ”).1

Breaking out of national constraints by internationalizing sales, produc-tion, and mergers and acquisitions has turned out to be a pivotal feature of firms’ strategy to increase their profit rates. This plan of action was facili-tated by the collapse of the postwar monetary (Bretton Woods) edifice. Itscollapse gave a strong boost to the globalization of financial markets, a pre-condition for the extreme mobility of capital that is essential to such a strat-egy. This increasing internationalization of capital has not been accompa-nied at all — or only very tentatively — by a comparable globalization of regulation and governance, underlining the point that there is no sponta-

neous symmetry between economic and institutional developments. It istherefore no surprise that initiatives to strengthen or establish regional trad-ing blocs and supranational organizations have multiplied so as to facilitate,counter or stabilize the international concentration and centralization of capital and the internationalization of the three circuits of capital. However,most of these initiatives have fallen far short of the anticipated (or desired)success. The legitimacy of pivotal organizations such as the World Bank, IMFand WTO is increasingly challenged, not least by international social move-ments. Few observers would therefore disagree with the observation that “there does not exist — and will not exist for a long time — a supranationalstate that centralizes and comprises all the functions that were previously served by the various nation-states” (Boyer, 2000a. 296).

This diagnosis leads to two related questions about the role and future of the state. First: will national states continue to be important structures withinthe international economic system, or is the increasing internationalizationof capital making nation-states redundant? Second: is the increasing inter-national concentration and centralization of capital giving way to a reorga-nization of the relationship between dominant capitalist states, resulting insome form of ultra-imperialism or super-imperialism ? Neither question is new;each has been discussed before in different contexts.

The rationale for the first question is what Murray (1971, 105–108) dur-ing a similar debate three decades ago called the “growing territorial non-coincidence between extending capital and its domestic state.” Since thenthis contradiction has become much greater, and many politicians, journal-ists and researchers have in response declared the state (virtually) dead.

TOWARDS A TRANSNATIONAL STATE? 485

1 On the circuits of capital see, e.g., Arthur, 1998; Desai, 1979; Harvey, 1982; Marx, 1884;Palloix, 1975; 1977.




Held, et al . (1999, 3–5) christen this position “the hyperglobalist thesis,” which they summarize as follows:

For the hyperglobalizers, globalization defines a new epoch of human history in which “traditional nation-states have become unnatural, even impossible businessunits in a global economy”. . . . Such a view of globalization generally privileges aneconomic logic and, in its neoliberal variant, celebrates the emergence of a singleglobal market and the principle of global competition as the harbingers of humanprogress.

However, the idea that states can just fade away and leave the func-tioning of capitalism to “the” market is totally untenable. The nation-stateis definitely “an historically specific form of world social organization”

(Robinson, 2000, 1), but it nevertheless fulfills a number of economicfunctions that are indispensable for the reproduction of capitalism. Thesefunctions do not necessarily have to be — nor have they always been —executed by the “mother states” of capital, but they have to be taken careof somehow.

At the time Murray (1971) listed the following six state functions:1) guaranteeing property rights; 2) economic liberalization; 3) economicorchestration; 4) input provision (labor, land, capital, technology, eco-nomic infrastructure); 5) intervention for social consensus; 6) manage-ment of a capitalist system’s external relations. We should now add at least a seventh, to take account of the collapse of the then still functioningBretton Woods system and the immensely increased weight of the finan-cial sector: 7) guarantor of the stability of the banking system (lender of

last resort; supervision).One can discuss whether all these functions still have the same weight

today, but that is not essential for the argument in this short contribution.The point to note is that capital requires a number of public functions tobe performed, but capital’s home government need not necessarily under-take them. The domestic state where capital originates from may do so, but there are alternatives, such as for example foreign state structures, capitalitself either singly or in conjunction with other capitals, or state bodies incooperation with each other.

To make this point more concrete, let us look briefly at the present condi-tion of the global economy from this perspective. With the collapse — andincreasing integration into the capitalist world — of the former COMECONbloc and China’s growing opening to foreign capital, point 6 is not a majorconcern at the moment. The same seems to be the case for point 4, althoughthe structural decrease of public expenses for, e.g., education and transpor-



tation will have negative consequences in the longer term for the quality of labor, physical infrastructure and technological development. On points 1and 2 internationalizing capital has in general strengthened its position sincethe beginning of the 1980s, but increasing discontent with globalization,manifested in the impossibility of implementing the MAI and growing criti-cisms of the WTO, makes clear that these gains are neither unchallengednor irreversible.

There are great difficulties with points 3 and 7, as reflected regularly in debates about the role and functioning of the IMF and in disagreementsand conflicts of interest between the USA, the European Union and Japanover synchronization (or lack of it) of monetary and macroeconomic poli-cies. Murray’s observation (1971, 108) that there is “a tendency for the pro-cess of internationalization to increase the potential economic instability of

the world economy at the same time as decreasing the power of nationalgovernments to control economic activity even within their own borders,”seems more true today than when he made it.

Finally, the lack of legitimacy (point 5) of the current mode of func-tioning of the global economy is a major weakness, because it is indissolu-bly linked to its results and effects. Thirty years ago Mandel (1970, 22–3)invoked the law of uneven and combined development to make the point that imperialism, “although it unites the world economy into a single world mar-ket, . . . does not unify world society into a homogenous capitalist milieu. . . .It maintains and strengthens to the utmost the differences between [these] so-cieties.” Today this is even more the case. Almost no one denies any morethat social differences have grown among countries and almost without excep-tion within countries. 2 Since this increasing di vergence is the opposite of the

benign outcome that proponents of economic globalization hold out to coun-tries and peoples that are willing to go along with the dominant economicprescriptions, the social consensus capitalism calls for is way out of reach.

So while capital is increasingly internationalized, essential state func-tions are currently not being performed either by nation-states or by in-ternational institutions and collaborations of states. A prolonged periodof trial and error so as to shift and reorganize responsibilities and tasksbetween national and international levels is the most likely perspective,

with all sorts of conflicts because interests are divergent. This processhas no predetermined outcome. Nation-states will definitely not disappearin the foreseeable future: “at this point in history, the fading away of the nation-state is a fallacy” (Castells, 1997, 307). But neither will the cur-


2 One not so obvious example is Michalsky, et al . (1999, 9) of the OECD Secretariat, who write : “Inequality within and between nations has, from a number of perspectives,increased.”




rent status quo last forever: “we are not witnessing ‘the death of the na-tion-state,’ but its transformation” (Robinson, 1996, 19). There are pow-erful pressures for mutations. And regional and global reorganizationsahead or already under way, such as the increasing economic integrationof the European Union, will have significant implications for the organi-zation of states.

This brings us to the second question: is the increasing international con-centration and centralization of capital giving way to a reorganization of therelationship between dominant capitalist states, resulting for example inultra-imperialism or super-imperialism ? To begin with, this question is not new.It has been discussed before, at the beginning of the 20th century in de-bates about the character of imperialism (Went, 2002), and at the begin-

ning of the 1970s in a controversy about the future relationship betweenthe USA and Europe (Mandel, 1972; Rowthorn, 1971). This should makeus beware of impressionistic conclusions. In addition, current developmentsare contradictory and have not yet matured, so that sweeping generaliza-tions risk being outdated before they are printed.

For Burbach and Robinson (1999, 27) the “open-ended and unfinished”process of globalization has by now evolved into a configuration where “forthe first time in history . . . we can speak of transnationalization of capital, a

world in which markets are truly global and integrated. Capital ownershipof the leading enterprises is also internationalized, with shareholders orfinancial institutions from various parts of the world being able to move theirstockholdings in and out of any number of corporations and countries.” Theextent to which this is today really the case is certainly open to debate (see,

e.g ., Held, et al ., 1999; Hirst and Thompson, 1996; Ruigrok and van Tulder,1995; Went, 2000), but very few researchers would nowadays deny that thereis a tendency — which is, incidentally, being challenged, and open to rever-sal — in that direction.

Burbach and Robinson go one step further when they argue that “trans-national class formation” is occurring and that a “transnational capitalist class” (TCC) is emerging. Robinson and Harris (2000, 21) follow the logicof this argument to its conclusion with the thesis that economic forums suchas the IMF, World Bank, WTO, G7 and OECD constitute “an incipient TNS(transnational state) apparatus in formation” (see also Van der Pijl, 1999).Since they also register the dominant role of finance capital, 3 their perspec-tive is very reminiscent of ultra-imperialism — a situation in which “the inter-national fusion of capital has advanced so far that all critical differences of

3 Correctly, in my opinion. See also Chesnais, 1997a; 1997b; 1999.



economic interest between the capital owners of different nationalities dis-appear” (Mandel, 1972, 332). 4

These different authors present their arguments for a TCC and TNSas no more than a tendency, and point to many contradictions and conflictsof interest that may block the future evolution of such a global-state-in-the-making. 5 But they do seem certain enough about the coming trajectory of the global economy to exclude other possible international structures ex-plicitly (U. S. dominance) or implicitly (continuing competition amongblocs). I would suggest, however, that events so far do not warrant such achoice. The two other models that were under consideration in past debatesare not only still not excluded but in fact at least as likely.

First there is the case for super-imperialism — a situation in which “a singleimperialist power possesses such hegemony that the other imperialist pow-

ers lose any real independence of it and sink to the status of semi-colonialsmall powers” (Mandel, 1972, 331). Making the case for a form of super-imperialism today means of course arguing that the USA will become sucha hegemonic power. Considering the relative strength of the U. S. economy,the international role of the dollar, the extension of the dominance of share-holder value via globalized financial markets and U. S. global military lead-ership (see Achcar, 1998; Gowan, 1998), it would be unwise to exclude thispossibility.

The same is even more true for a third model, continuing competition among blocs.This would mean that, “although the international fusion of capital has proceeded far enough to replace a larger number of indepen-dent big imperialist powers with a smaller number of imperialist super-powers, the counteracting force of the uneven development of capital pre-

vents the formation of an actual global community of interest of capital”(Mandel, 1972, 332–3). Such an outcome can also not at all be excluded, giventhe dynamics of European integration, 6 and uncertainties about future de-

velopments in Asia (a bloc around Japan? what future role for China?).

To conclude, the acceleration of the internationalization of capital that hastaken place since the end of the postwar expansion has not been paralleled


4 A similar perspective is proposed by Castel, 1998, who argues that ultra-imperialism istaking shape, and by Yaghmaian, 1998, who proposes that a “supranational state (thoughtenuous and riddled with contradictions) is in the making, with a mandate to (de)regulatethe conditions of accumulation on a worldwide basis by removing the national regula-tion of accumulation.”

5 Robinson and Harris (2000, 50) stress among others the essential point that “no emer-gent ruling class can stabilize a new order without developing diverse mechanisms of legitimation and securing a social base.”

6 The EU has for example now taken the first steps towards an integrated European army and a rapid intervention force.




by a similar internationalization of state functions. The idea that nation-states will disappear in the foreseeable future is therefore mistaken: states are not dying but changing. But neither will the present situation last. The discon-nection between the increasing globalization of capital and the lukewarminternationalization of states and state functions is a major flaw of today’s glo-bal economy, and attempts at reorganization are therefore inevitable. But sincethere are many conflicts of interest and problems of legitimacy, the outcomeis not predetermined: three models — a transnational state , US dominance , andcontinuing competition among blocs — are for the moment equally (un)likely.

Robert Went

Faculty of Economics and Econometrics Universiteit van Amsterdam Roetersstraat 111018 WB Amsterdam The Netherlands [email protected]

REFERENCES

Achcar, Gilbert. 1998. “The Strategic Triad: The United States, Russia and China.”New Left Review , 228, 91–126.

Arthur, Christopher. 1998. “The Fluidity of Capital and the Logic of the Concept.”In C. Arthur and G. Reuten, The Circulation of Capital: Essays on Volume Two of Marx’s Capital. Houndmills, England: Macmillan.

Boyer, Robert. 2000. “The Political in the Era of Globalization and Finance: Focuson Some Régulation School Research.” International Journal of Urban and Regional Research , 24:2, 274–322.

Burbach, Roger and William Robinson. 1999. “The Fin de Siècle Debate: Global-ization as Epochal Shift.” Science & Society , 63:1, 10–39.

Castel, Odile. 1998. Le processus de mondialisation: la naissance de l‘ultra-imperialisme.Paper.

Castells, Manuel. 1997. The Information Age: Economy, Society and Culture. Volume II:The Power Identity.Boston, Massachusetts and Oxford, England: Blackwell.

Chesnais, François. 1997a. La mondialisation du capital . Nouvelle edition augmentée.Paris: Syros.

———. 1997b. “L’émergence d’un régime d’accumulation mondial à dominatefinancière.” La Pensée , 309, 61–85.

———. 1999. Tobin or not Tobin?: Une taxe internationale sur le capital . Paris: L’Esprit Frappeur.

Desai, Meghnad. 1979. Marxian Economics. Oxford, England: Basil Blackwell.Gowan, Peter. 1998. The Globalization Gamble: The Dollar/Wall Street Regime and Its Consequences.London and New York: Verso.

Harvey, David. 1999 (1982). The Limits to Capital . London and New York: Verso.



Held, David, Anthony McGrew, David Goldblatt and Jonathan Perraton. 1999. Glo- bal Transformations: Politics, Economics and Culture.Stanford, California: StanfordUniversity Press.

Hirst, Paul and Graham Thompson. 1996. Globalization in Question. Cambridge,England: Polity Press.

Mandel, Ernest. 1970. “The Laws of Uneven Development.” New Left Review , 59, 19–38.

———. 1999 (1972). Late Capitalism. Translated by J. de Bres. London and New York: Verso.

Marx, Karl. 1978 (1884). Capital. A Critique of Political Economy. Volume 2, transl. by David Fernbach. Harmondsworth, England: Penguin.

Michaiski, Wolfgang, Riel Miller and Barrie Stevens. 1999. “Anatomy of a LongBoom.” In OECD, The Future of the Global Economy. Towards a Long Boom.Paris:OECD.

Murray, Robin. 1971. “The Internationalization of Capital and the Nation-State.”New Left Review,67, 84–109.

Palloix, Christian. 1975. “The Internationalization of Capital and the Circuits of Social Capital.” In Hugo Radice, ed., International Firms and Modern Imperial- ism. Harmondsworth, England: Penguin.

———. 1977. “The Self-Expansion of Capital on a World Scale.” Review of Radical Political Economics , 9:2, 1–17.

Robinson, William. 1996. “Globalization: Nine Theses on Our Epoch.” Race & Class ,38:2, 13–31.

———. 2000. “Capitalist Globalization and the Transnationalization of the State.”In H. Smith and M. Rupert, eds., The Point is to Change the World: Socialism Through Globalization? London: Routledge, forthcoming.

Robinson, William and Jerry Harris. 2000. “Towards A Global Ruling Class? Glo-balization and the Transnational Capitalist Class.” Science & Society , 64:1, 11–

54.Rowthorn, Bob. 1971. “Imperialism in the Seventies — Unity or Rivalry?” New Left Review , 69, 31–54.

Ruigrok, Winfried and Rob van Tulder. 1995. The Logic of International Restructur- ing. London: Routledge.

Van der Pij l, Kees. 1998. Transnational Classes and International Relations. Londonand New York: Routledge.

Went, Robert. 2000. Globalization: Neo-liberal Challenge, Radical Responses.London:Pluto.

———. 2002. “Globalization in the Perspective of Imperialism.” Science & Society ,forthcoming.

Yaghmaian, Behzad. 1998. “Globalization and the State: The Political Economy of Global Accumulation and Its Emerging Mode of Accumulation.” Science & Society , 62:2, 241–265.






GLOBALIZATION OR CLASS SOCIETY IN TRANSITION?*

In their stimulating and challenging paper, “Towards a Global Ruling Class?,” William Robinson and Jerry Harris claim that the transnational capitalist classhas been emancipated completely from its national state foundations. Theauthors reject the view that the ruling class holds national positions of powerfrom which it then “converges externally with other national classes at thelevel of the international system through the internationalization of capi-

tal.” They argue instead that globalization is establishing coordinates for classformation that are no longer national. “The organic composition, objectiveposition and subjective constitution of these groups are no longer tied tonation-states” (Robinson and Harris, 2000, 14).

While the merits of the paper are many, this central thesis in my view isproblematic. Indeed, by adopting this perspective the argument risks beingdrawn along into a dominant globalization discourse that rejects as retro-grade and reactionary everything that is not global. Forces resisting the dis-cipline of capital then must be global, too. In fact the authors claim, inci-dentally in a footnote, that the working class is engaged in a parallel formativeprocess on the global level ( ibid., 20, note 3). Certainly much of the con-temporary discontent about globalization expresses itself through all kindsof reactionary parochialism, but this is not solved by resurrecting a largely mythical, universal proletarian subject.

I share the view that the transnationalization of the capitalist class is amanifest historical trend. But even so, this trend is contradictory and there-fore limited. Indeed for all its celebration of globalization, the real-life rul-ing class cannot dispense with the national foundations of its power. Class,as a social relation ultimately anchored in humanity’s limited control of theforces of nature, can never be abstracted from the chain of (unequal) in-terdependencies which ties even the most self-consciously transnational,“global” class into a conflictual embrace with lesser, “local” forces. Moreover,resistance to neoliberal globalization, if centered on the defense of nationaldemocracy (as happened for instance in the case of the Danish “no” to in-clusion into the Euro-zone in September, 2000), may contribute to a real

* This comment is based on a talk in a seminar of the Centre for Global Political Economy at the University of Sussex, September 5, 2000. I thank the participants in that meeting,notably Randall Germain and Ronen Palan, for stimulating comments.



and, in my view, necessary planetary unification much more fundamentally than capitalist transnationalization. This sort of resistance may serve to de-fend class compromises achieved within socially protective capitalist states,and extend them to durable compromises among states, so that social pro-tection is transnationalized, too; for instance by certain forms of aid. TheScandinavian states have some experience here, not because of innate pro-gressiveness but because the strength of the domestic working class and theirhighly internationalized economy forced the Nordic ruling classes to opt forthis “niche” of international involvement.

A planetary unification achieved by expanding welfare state capital-ism to the international sphere (roughly along the lines of a New Interna-tional Economic Order as proposed in the 1970s, but this time with thedefense of the biosphere much more in the foreground) cannot be the

project of a single class. Rather, what can be realistically expected is that the resistance of the dispossessed and exploited, on the land and in facto-ries and offices the world over, to an exhaustive neoliberalism will reso-nate (as it did in the 1970s) among a segment of the managerial cadre , theclass that occupies the middle ground in the social structure of advancedcapitalist society. For a variety of reasons, this cadre, active in a range of multilateral and transnational organizations, public and private, is best placed to actually direct a process of equitable and sustainable globaliza-tion, whereas the capitalist class can only “globalize” in a rapacious andpiratical — ultimately self-destructive — way.

Class and the Limits of Capitalist Transnationalization

Let me first, very briefly, sum up how I think classes can be most fruit-fully understood. Humanity has historically existed as class society because itscontrol of the forces of nature, however much it may have advanced, neces-sarily remains limited. The exploitation of nature by human communitiestherefore assumes the form of the exploitation of direct producers by thoseexempt from physical labor. While control of the forces of nature cannot bemade complete, humanity in principle is capable of transcending its internalexploitative predicament into conscious redistribution of the remaining nec-essary labor. Of course, this will never be a project of the ruling class, which is

why it alone has an interest in retaining the key structures of class society.Class society evolves along with new forms of transforming elements of

nature, external as well as in the human species itself, into productive forcesand wealth. With every new turn, new social groups find or fight their way into an ever-more-complex class structure. This structure is wrapped aroundan axis of exploitation which is rooted in external nature, the earth; andrises up from there to those living off the labor of others and ruling the com-

CLASS SOCIETY IN TRANSITION 493




munity at large. But positions along this imaginary axis are necessarily graftedonto pre-existing natural or naturalized differentiations of humanity. There-fore, class awareness, too, is often obscured if not entirely eclipsed by formsof self-consciousness attached to these primordial differentiations. Sincerelations of exploitation and subordination are always gendered and imbri-cated with ethnic and caste or otherwise “ascriptive” social determinations,class consciousness usually crystallizes only when exploitation and subordi-nation are contested on a larger scale. Even where class consciousness istaken for granted, as in the case of the late 19th/early 20th-century Euro-pean and American labor movements, or those of Brazil or South Koreatoday, its inner structure and the collective identities involved are mediatedby ascriptive identities to a much greater extent than is often assumed.

Nationality, too, may be understood with the help of this metaphor. The

nation is a particular historical form of a community “wrapped around anaxis of exploitation” in the above sense. It builds on natural/naturalizedidentities, and at the same time goes beyond them, as a secular form of so-cial organization idealized in the 18th-century notion of a “social contract.”In terms of collective identity, this ambivalence is well captured by Benedict

Anderson’s notion of an “imagined community” (Anderson, 1991). The class we tend to associate with the formation of the nation is the bourgeoisie, orcapitalist class, although the monarchy, the aristocracy and the popularmasses all played their part in the vast historical dramas in which nations

were historically established. Yet the nation demarcated a central territory on account of prior dynastic, language, religious, and other bonds, in whichthe ascendant bourgeoisie in the end found itself most at home. Here wasa structure in which the interdependencies on which market economy and

capital accumulation are predicated could be radically deepened. A nationalmarket economy rationalizes the social division of labor and dissolves pre-national bonds (both the wider civilizational and the personal–local). At thesame time, however, it obfuscates the class structure behind new collectiveidentities bestowed by the bourgeois state on all the nation’s members, most crucially that of the citizen.

In Marxist terms, the nation is a structure of socialized labor, held to-gether by overlapping patterns of division of labor, and by a common nor-mative edifice of loyalties and aspirations, capped by the state. People are“socialized” into this structure in the more narrow, sociological sense of theterm. The nation–state, however, is never a watertight, fully compartmen-talized unit; it is demarcated by relative discontinuities (cf. Deutsch, 1966).Indeed, it is the very existence of a national base that allows the bourgeoi-sie to expand across borders and to appropriate surplus from larger-than-national patterns of socialized labor. In terms of our metaphorical “axis of exploitation,” the class at the top of one axis is in a position to connect to



other axes, and to feed on it along with the indigenous exploitative class(es).But there is no way in which, e.g ., oil exploration in and off Somalia by U. S.oil companies can be embedded in class compromises under the hegemony of the U. S. ruling class the way this can be achieved in, say, Texas.

This reminds us of the fact that the nation, the class compromises it embodies, and the level of cultural development on which it is predicated,have long remained a phenomenon of the European world. National soci-ety can be argued to emerge where and when a contracting/dissolving widercivilization intersects with an expanding material, productive community (Anderson, 1991, 36). In principle the transition from a cosmopolitan, pre-national agricultural empire containing many local productive units towardsthe nation is a universal trend. But the formation of European nations wasaccompanied all along by transnationalization of the bourgeoisie and this

intersected with the development of civilizations such as the Islamic, wherethe wider bond still today impedes the crystallization of national units.The primogeniture of England and the English-speaking world further

specifies European primacy in national and capitalist development. No soci-ety in modern history has achieved a material intercontinental spread as vast as that which occurred from the British Isles by colonization; and the ascen-dancy of the transnational fraction of the capitalist class to this very day re-mains predicated on the spread of English language, custom, and legal/con-stitutional arrangements such as a Lockean state/society configuration,

with its attendant conceptions of individual rights, etc. Even if we now callthis “Americanization,” its antecedents in the Glorious Revolution are clear.Elsewhere (1998), I describe how along with the formation of the Lockeanstate in England, which articulates the relationship between authority and

society most conducive to capital accumulation, the commercial/capitalist classalso transformed itself into an “imagined community,” one separate from thenation. Freemasonry, which served to merge different social elements into abourgeois class at home and abroad, was the most salient expression of thisdevelopment. But the interdependencies and ritualized identity out of whichFreemasonry was constructed were fleeting and ephemeral, compared to thecomprehensive national bond(s) of which it was an excrescence.

The capacity of the bourgeoisie to branch out transnationally is alwaysanchored in the complex interdependencies around which its own nationalsociety is constructed. In all advanced parliamentary–democratic capitalist societies, the “citizen” is a creation that not only brings advantages for accu-mulating capitalists, in terms of defining the free subject on which market transactions rely; it also creates a range of obligations from which the rulingclass cannot simply withdraw, even though today it can be seen experiment-ing with such a withdrawal ( e.g ., in the sphere of social protection). But eventhe capitalist class in Britain, North America and the other areas of English





settlement, while commanding a transnational society with a common lan-guage, customs, and political and legal tradition, has to engage in delicatemaneuvering within each of the separate jurisdictions to maintain a sufficient degree of control of its own national society. In the United States, this is cur-rently illustrated by the need of a new administration to retreat from foreigninvolvement in the face of trying to heal the divisions in American society that surfaced in a stalemated and contested Presidential election.* In the process,

we must expect a quest for finding common denominators that somehow willrestore a degree of unity, and hence will reduce the freedom of maneuver of the transnational fraction of the American capitalist class, perhaps undermin-ing its hegemonic status within the larger social structure but certainly restrict-ing the mobilization of state power to support its further international expan-sion. Likewise, the vacillations of the British ruling class on the doorstep of

the European Union reveal the profound internal divisions between theexport-oriented productive bourgeoisie and the globally active, footloosefinancial fractions, and their respective constituencies among the lesser bour-geoisie in the real economy, and the rentier element. These divisions can beseen at work very strongly within the Conservative party. But here, too, at somepoint the need to restore capital’s domestic foundations will become appar-ent if foreign expansion is to be sustained.

Now if this holds for the bourgeoisie of the most advanced capitalist states, what to expect from the rest? Here, the resistance to, first, the rise of British power in the global political economy, and subsequently, the resis-tance to the discipline of capital contained in Americanization, has rein-forced state-led socialization of labor to a much greater degree. Usually thisoccurred by means of demarcation of quasi-national economies in revolu-

tions from above. Thus, while in the English-speaking heartland and thesmaller commercial economies on its immediate perimeter such as Holland,Belgium, the Scandinavian countries, or Switzerland the transnational seg-ment or fraction of the capitalist class has been prominent if never as freefrom national constraints as it would fancy, the structures for a modern in-dustrial economy elsewhere remain firmly state-contained.

Certainly, as I have indicated for the example of the Islamic world, thegrowth of a modern “imagined community” along national lines has oftenlagged behind the actual formation of such a state-monitored economy. But I cannot see how pre-national allegiances and aspirations would merge straight-away into a new transnational universe, if the only way to withstand the im-pact of Americanization as it emanates from the liberal heartland is to mobi-lize one’s resources under a strong state. After all, the closest contemporary “global” equivalent to the citizen of the era of the French revolution, the con-

*Written before September 2001.—Editor’s Note.



sumer , may be a universal phenomenon abstractly speaking, but its concreteappearance on a meaningful scale is predicated on economic development.History teaches that outside the heartland, this can only be achieved under astrong directive state. France and Prussia–Germany, Soviet Russia, China underthe Communists, or contemporary Japan and South Korea, are the main ex-amples of the different ways in which this more or less state-directed economy has operated in shaping the capacity to withstand the impact of internation-alization of British and Anglo-American capital. The alternative is to lose realsovereignty and pass under foreign tutelage (whether directly or, as usually happens today, mediated by a body like the IMF).

The logic of capital drives societies forward to reconstitute themselves at the wider-than-national level. But the reality of society as constituted aroundan axis of exploitation involving complex compromises along that axis, within

and between classes, has so far proven to be a powerful brake on the tendency of the capitalist class to become really transnational and shed its nationalantecedents. In the nation are contained the deepest sources of the capacity to rule; beyond it, the activities and involvements of the capitalist class, whilecertainly growing in the long run, remain grafted onto their various nationalfoundations. The recruitment of neoliberal elements from all over the worldinto transnational bodies like the World Economic Forum is not enough tocancel out the requirement of a domestic power base. Whether we are speak-ing of Canada or India, Rumania or even the United States, the fate of its rulingclass will be decided in their respective countries and not in the Alpine win-ter resort of Davos, however much the national representatives may bask inthe light of transnational brotherhood.

Transcending Class Society? It is my firm conviction that in light of the creeping exhaustion of the

planet’s capacity to sustain a global society under the discipline of capital,humanity in one way or another has to create a planetary framework to safe-guard its survival. But precisely because the power of the capitalist class tomaintain this suicidal discipline on society and nature is so profoundly an-chored in the national state, we should not be looking first and foremost at the capitalist class properly speaking, and certainly not at its transnationalfraction, to find the concrete historical subject of creating that planetary unity.

Real globalization, which builds on democratic achievements obtained within the national states and on new compromises to be struck betweensocieties rich and poor, can only be achieved on the basis of a more struc-tural reordering away from exploitative society. Accordingly, the class we may have to focus on is a different one. Here I share the view of authors such asDuménil and Lévy (1998), Alain Bihr (1989) and others, that the process





of socialization of labor, which weaves ever-more-complex webs of interde-pendence in society, works to gradually crowd out the individual–entrepre-neurial moment that is constitutive of capitalist society. With the growth of social complexity, a new category of mediators of these interdependenciestakes shape. As indicated already, this social stratum may be called, adopt-ing the French term, the “cadre.” It is my claim that during the main crisesof 20th-century capitalism, this cadre stratum developed into a self-consciousclass — that is, in the 1930s and 40s, and again in the 1970s.

In both cases, as I have argued elsewhere, the cadre adopted positionsthat tended, in their attempt to transcend a stalemate between capital andlabor, to drive beyond the limits of capitalist relations of production (seemy 1998, chapter 5). As the cadre represents a more modern social forcethan the bourgeoisie, much of its collective experience is based in the era

of the comprehensive internationalization of capital and the responses toit. Thus in the crisis of the 1970s, an ascendant tendency in the cadre adopteda part-democratic, part-technocratic, “planetary” perspective. This was ex-pressed in its willingness to subscribe to the international class and North–South compromises of the New International Economic Order. True, it didso only under the impact of a powerful left-wing working-class movement,backed up by momentous anti-imperialist struggles of various types in Asia,

Africa, and Latin America. But then, this is the very logic of cadre interven-tion, given its centrality in the class structure of advanced capitalist society.

The cadre are a class of mediators who execute directive tasks for theruling class, but like the workers, they are simultaneously a salaried stratumdependent on the sale of labor power. Its tasks are typically related to up-holding the socialized structure of the labor process, including the over-

arching normative–ideological structure on which both social cohesion andthe hegemony of the capitalist class are predicated. As a result, the cadre,by definition, develop compromises within the space created by the balanceof forces between capital and labor. Hence, where the workers were defeated,as in Weimar Germany, we see the same class of mediators assume a quasi-revolutionary posture that is entirely reactionary. But wherever it is pushedby progressive forces aiming to restrain the exploitative impact of capital onsociety, the drift of the cadre is towards a progressive way out of the crises of the capitalist order. This was one aspect, again under the impact of a strong

working-class movement, of the New Deal under Roosevelt. The experienceof the 1970s remains as yet without an adequate analysis in this light.

Summing up, I think a full transnationalization in the sense describedby Robinson and Harris paradoxically is not to be expected from the trans-national capitalist class, because its power is too intricately entwined withmaintaining a structure of socialized labor which only some form of nationalcohesion can hold together — at least if levels of exploitation such as those



characterizing the 24-hour economy are to be sustained. If national societiesare to achieve anything like a real planetary community, this will require arolling back of the discipline of capital. This in turn will require that peopleresist that discipline, in the specific circumstances under which it is imposedon them. In this process, a fraction of the managerial cadre will have to adopt a directive role easing the exploitative strains on society and nature. As Ihave indicated, the balance of class forces is decisive in steering such amanagerial society towards a democratic format; otherwise, an authoritar-ian solution, too, can be used to find ways out of a crisis of legitimacy of agiven capitalist society. There is no inherent revolutionary spirit hiding inthe stratum of managers and technocrats. The cadre are merely the “new class” taking shape in conditions of late capitalism, one that must be expectedto be central in any historic turn that late-capitalist society will take.

In the contemporary world, the next major crisis must be expected tobe one in which planetary predicaments such as destruction of the biosphereand related migratory pressures become enmeshed in conflicts resultingfrom the over-exploitation of nature and people by capital. In such a crisis,the managerial cadre active in multilateral organizations, transnationally active Non-Governmental Organizations, and even the cadre of transnationalcorporations, may come to adopt a perspective in which existing structuresof democratic community will be welded together into a planetary commu-nity capable of dealing with the challenges it faces. It may at least take cru-cial steps in that direction. The transnational capitalist class cannot possi-bly adopt such a perspective. Even so, it will remain conditional on thestrength and orientation of democratic popular movements for cadreglobalism to develop towards equitability, transparency and emancipation,

and prevent any suspension of neoliberalism from descending into anotherauthoritarian adventure.

Kees van der Pijl

School of European Studies University of Sussex

Falmer, Brighton BN1 9QN England [email protected]

REFERENCES

Anderson, Benedict. 1991 (1983). Imagined Communities: Reflections on the Origin and Spread of Nationalism . London and New York: Verso.

Bihr, Alain. 1989. Entre bourgeoisie et proletariat. L’encadrement capitaliste.Paris:L’Harmattan.





Deutsch, Karl W. 1966 (1953). Nationalism and Social Communication: An Inquiry into the Foundations of Nationality. Cambridge, Massachusetts, and London: MITPress.

Duménil, Gérard, and Dominique Lévy. 1998. Au-delà du capitalisme ? Paris: Pressesuniversitaires de France.

Robinson, William I. and Jerry Harris. 2000. “Towards A Global Ruling Class? Glo-balization and the Transnational Capitalist Class.” Science & Society , 64:1 (Spring),11–54.

Van der Piji, Kees. 1998. Transnational Classes and International Relations . Londonand New York: Routledge.


GLOBAL CAPITALISM AND NATION-STATE–CENTRICTHINKING — WHAT WE DON’T SEE WHEN WE DO SEE

NATION-STATES: RESPONSE TO CRITICS

The excellent commentaries by Arrighi, Mann, Moore, van der Pijl, and Went on essays I have published in Science & Society with Roger Burbach and Jerry Harris and on other work of mine combine welcomed skepticism, insights,and legitimate concerns, with objections based on misrepresentations of what I (we) have put forward, and with arguments that are based on the very underlying assumptions of established ways of thinking, among them,

nation-state–centrism, that I am challenging with my theoretical work onglobalization, transnational class formation, and the rise of a transnationalstate. I have critiqued nation-state–centrism in extant paradigms elsewhere(1996; 1998; 2001b; 2001c). I have now the difficult task of responding tocommentaries on complex and polemical matters in a limited space. My summary responses should be seen as only a prelude to further debate.

Mann notes that we do not present much empirical evidence, while Arrighi observes that we present no direct evidence to document the forma-tion of transnational classes, but rather rely on the transnationalization of capitalism as an indicator of the process of transnational class formation. It is true that we present quite limited empirical evidence. These essays are,on my part, early approximations in an ongoing research agenda into thesetransnational processes, intended to lay out the theoretical argument andmap the direction of further investigation. Certainly it is necessary to re-search more directly the matter of a transnational capitalist class (TCC). But more to the point here, I in fact do presuppose that the transnationalization



of capitalism by definition involves the transnationalization of classes, andtherefore the first is (one) indicator of the second. If we understand capi-talism as a production relation — the capital–labor relation — and the cir-cuit of capital around which political, cultural, and other processes are or-ganized in a mutually conditioning way, then how can capitalism becomeincreasingly transnational without capital and labor becoming so, without capitalists and workers becoming so? Of course there are other conceptionsof capitalism and its social institutions, as in the Weberian approach, to whichI will turn momentarily.

Arrighi goes on to claim that the data presented on global FDI outflowsinvolve a misleading benchmark (1983), since it had been higher in pre-ceding years and then increased again in subsequent years, and therefore“the evidence of a dramatic increase in the transnationalization of capital-

ism in the 1980s and 1990s is not as strong and unambiguous as Robinsonet al . would like us to believe.” But even if we go back to 1960, as the tablebelow indicates, global flows of FDI have indeed been skyrocketing and war-rant the conclusion of a heightened transnationalization of capital. In any event, FDI flows are only one indicator among many. Another dimensionto globalization whose centrality to transnational class formation has not been recognized is the changing character of capitalist production and thelabor process along the lines of global networks of flexible accumulation, asdiscussed, albeit briefly, in the Robinson/Harris essay. The spread of flex-

RESPONSE TO CRITICS 501

Source: UNCTAD, World Investment Report , various years.




ible accumulation networks is best documented not as aggregate data but in grounded studies, an issue explored at considerable length elsewhere(Robinson, forthcoming). The different modalities of flexible accumulation(outsourcing and subcontracting, etc.) integrate capitalists and workers acrossnational borders in a more organic way than the old centralized nationally oriented production systems.

But Arrighi’s principal concern is that the significance of North–Southdivisions in the global social structure has not decreased and may have in-creased. Here his critique appears to be on much more solid ground insofaras the empirical evidence as presented certainly supports the contention. Theproblem is one of deeply embedded nation-state–centrism. First, in Arrighi’sformulation, uneven development is measured along nation-state lines anddevelopment itself is conceived in nation-state terms. Arrighi points to GNP

per capita as an indicator of the continued spatial dimension of global in-equality, with the presumption that such inequality is counter-evidence tothe claim of the accelerated division of the world into a global bourgeoisieand a global proletariat. But GNP per capita is nation-state–centric data that in fact disguises the processes involved in transnational class formation, suchas the rise of new capitalist groups and high consumption sectors that par-ticipate in the global economy in countries where GNP per capita may wellbe in relative decline. And vice-versa: GNP per capita masks rising “third-

worldization” in the North.Second, I have argued at some length elsewhere (Robinson, 1998, 2001c,

forthcoming) for a reconceptualization of development. Global social po-larization, the fragmentation of national economies, and the select integra-tion of social groups into transnational networks suggest that we may rethink

development not as a national process, in which what “develops” is a nation— a category that aggregates social groups experiencing heightening dis-tinctions under globalization and disaggregates social groups experiencingincreased similarity in global society — but in terms of developed, under-developed, and intermediate population groups occupying contradictory orunstable locations in a transnational environment. The focus becomes how accumulation processes that are no longer coextensive with specific nationalterritories determine levels of social development among a globally strati-fied population. As core and periphery come to denote social location ratherthan geography, affluence in global society is coming to rest on a periph-eral social sector that is not necessarily concentrated spatially. But theseemergent global social relations cannot be captured using nation-state dataand nation-state–centric categories.

Third, the notion of the transnational integration of classes does not depend upon the closing of the North–South divide, but upon the penetra-tion of capitalist production relations into regions previously linked only



externally to such relations ( i.e., proletarianization) and the transnationalintegration of production systems cutting across the North–South divide.Certainly the North–South divide reflects a major dimension of stratifica-tion within a global proletariat, but such stratification is also present withincountries of the North and in no way means that national proletariats havenot existed there. Given space constraints, suffice it to note here that col-lective participation under capitalist production relations in an integratedglobal production system rather than the socio-spatial dimensions of theglobal division of labor constitutes in the first instance the objective basisfor the transnationalization of labor.

Mann, meanwhile, raises concerns from the vantage point of his neo- Weberian approach to classes, the state, power, and historical process in theinternational system. 1 But I take issue with the underlying assumptions on the

basis of which Mann critiques my propositions on globalization, namely his Weberian dualism of states and markets (the political and the economic) and Weberian conceptualization of capitalism and classes. The Weberian notionof the state as an independent institution reflecting national geopolitical in-terests reifies states and nation-states, by positing some intrinsic “nationalinterests” by virtue of the existence of nation-states (Robinson, 1996; 1998;2001b). Weberian state theory reduces the state to the state’s apparatus andits cadre. But states are not actors as such. Social classes and groups acting inand out of states (and other institutions) “do” things as collective historicalagents. Geopolitics do not have a life of their own; the geographic or territo-rial determination of the political is a historically contingent one. Movingbeyond this reification means abandoning the notion that states/nation-stateshave “interests,” a notion stemming from the pluralist/consensus theory that

undergirds the realism so ingrained in extant macrosocial paradigms andin Weberian approaches. Social groups have interests. The struggle amonghistorically situated social forces may produce historic configurations within

which “interests” may be identified. Social groups pursue these intereststhrough numerous institutions, among them, the state.

Much of Mann’s commentary is dedicated to my propositions on therise of a transnational state (TNS). He seems to be suggesting that I and my


1 On a side note, Mann claims we are “ungenerous” in our comments on our colleagues.That is not the case. The colleagues discussed who have taken up the issue of transnationalclass formation have done excellent and pioneering work. All we said was that their work(“with the exception of Sklair”) remains couched in nation-state–centrism. I stand by this view; consider, for example, van der Pijl’s tenacious defense of the intractable nationalbasis of the bourgeoisie in his commentary in this symposium. As for Sklair, the draft manuscript of his important new study (2000) arrived on my desk just as the “Towards aGlobal Ruling Class” essay was going to press and could not be cited. But his study rein-

forces , from a distinct theoretical and methodological vantage point, our claim that a TCChas emerged.




co-authors are not concerned with “market power” and instead focus on“authoritative power.” Mann argues that “the most important type of authori-tative power organization is the state” (meaning the national state). He theninsinuates that we are deducing the existence of a TCC on the basis of propo-sitions about the nature of international/transnational organizations whosecharacter is questionable. In fact, there is no line of causality in our argu-ment implying, as Mann wants to suggest, that a TCC is coming into exis-tence because such organizations “organize the TCC.” Instead, what is cen-tral to the rise of a TCC is the transnationalization of the circuit of capital.“Market power” is the defining feature of Weber’s conception of capitalismand of classes, in which capitalism is an exchange relation and classes aredefined in relation to the resources they bring to the market. In the Marx-ist construct such market power, however important, is derivative of capital’s

control over the production process, labor power, and the social product.This is important because central to my arguments on globalization arechanges in the nature of production and in the capital–labor relation world-

wide. The crux of the matter is not the rise of an increasingly globalizedmarket but of transnational capital . Only five pages in the “Towards a GlobalRuling Class” essay are devoted to the issue of a TNS since the central topicis the rise of a TCC. My more complete argument on a TNS is contained inRobinson (2001b) and cannot be addressed here. The issue of “collectiveeconomic control over the world’s economy” and the organization of capi-talists “beyond the level of any single nation-state” that Mann raises are of course important, but conceptually, the argument for the existence of a TCCand a TNS apparatus rests not on the extent to which capitalists have orga-nized themselves beyond the nation-state but the extent to which the cir-

cuit of capital is ever less a geographically bound national circuit linked toother geographically bound national circuits, which was capitalism’s orga-nizational form in the preceding epoch.

But then comes the fatal nation-state–centric flaw in Mann’s reason-ing. If transnational organizations such as the IMF or the WTO are staffedby officials from particular national states, then those officials must neces-sarily protect the “national capitalist interests” of particular countries. They become, asserts Mann,

protectors of American, German or Japanese national or national capitalist inter-ests. Being representatives of certain nationally confined interests does not meanthat they are not capitalist. . . . It means that they have more than one identity, eachqualifying the other, though probably not contradicting it (since class and nationare different, not contradictory identities).

Now, there is absolutely no reason to assume that particular constellationsof social forces that exercise a commanding influence over national states



around the world in the early 21st century are nationally based social forces,that is, social forces whose interests lie in defense of national economies andcapitals in competition with other such economies and capitals. My claim isthat transnational capital has become hegemonic and that transnationalizedfractions have gained a commanding influence over most national statesaround the world. Seen in this light, an official from the American, Germanor Japanese government who staffs the IMF or the WTO may well be pursuingtransnational capitalist interests within these organizations and not (reified)“American,” “German,” or “Japanese” interests. This then becomes an em-pirical question as to state policies and practices and particular and shiftinghistoric constellations of social forces that drive them. There is little evidenceto suggest that U. S. state policies in recent years have advanced the inter-ests of “U. S.” capital over other “national” capitals. Analysis would suggest,

to the contrary, that the U. S. state has advanced transnational capitalist interests (for detailed discussion, see Robinson, 1996, 2001b). 2

This leads to Moore’s comments, which are also concerned chiefly withthe state and which are full of misrepresentations and assumptions about my theses that simply cannot be arrived at on the basis of my actual work.Nowhere have I ever suggested, for instance, that global capitalism is “place-less.” My argument is that the changes involved in globalization compel usto reconsider the relationship between territory, power, and accumulation.It is not that space becomes irrelevant under globalization. Instead, the so-cial configuration of space can no longer be conceived in nation-state termsbut rather as processes of uneven accumulation denoted primarily by socialgroup rather than territorial differentiation. The question is not , does spacestill matter?, but, how may we reconceive space?, and is there any justifica-

tion to continue to privilege nation-state space ? The nature of global capital-ism is such that it will always create uneven spaces, if only because of themapping of functions onto space within the system. The key point is that the local, the regional, and the global as different levels in the configura-tion of space are no longer mediated in the same way by national states andnational production systems. Classes and social groups confront one anotherat these multiple levels in new ways that are less tied to these old nation-state mediations or identities. Moore mentions the concept of global citiesto demonstrate — supposedly in contrast to my (our) view of a “spaceless”capitalism — that geography still matters. But, indeed, the concept of glo-bal cities validates my argument. Here we have a series of urban spaces ( e.g.,


2 I reiterate that space constraints prohibit all but cursory response here. But it is worthnoting that Mann states near the end of his commentary that our “arguments make con-siderable sense, but as an ideal-type — a partial and exaggerated analysis of processes of economic globalization, which is heuristically useful.” With this observation I have littledisagreement.




New York, London, Tokyo) linked not to their nation-state hinterlands but precisely to each other and to other spaces in the global economy that comeunder the command of this transnational geographic–political–economicconfiguration. 3

There are many other such strawmen in Moore’s commentary. He says,“And then there is the problem of class struggle. The possibilities for a new social compact necessary for consolidating a transnational hegemony appearslim indeed.” In fact, Harris and I never suggest that the global capitalist historical bloc will consolidate its hegemony. To the contrary, we empha-size the tenuous nature of global capitalism, rising splits in the TCC, spiral-ing crises immanent to the system, and the centrality of the struggle amongsocial forces and classes in the dynamics of globalization. NotwithstandingMoore’s comments, our arguments on globalization take a long historical

view, seeing globalization as arising from the ongoing and open-ended evo-lution of world capitalism and involving not a rupture but a mutation overtime — although the process itself involves the compression of time itself — of the system into a qualitatively new configuration.

Moore states:

The idea of a “nation-state phase” of capitalism is derived from the experience of a very small number of industrializers. . . . The idea that we are moving from a nation-state to a global phase of capitalism makes sense only if we limit our representativecase to the “haves”; with few exceptions, the “have-nots” have not experienced any thing akin to “national development.”

But I have never argued anywhere that peripheral countries and regions have

become developed! Rather — and although I am forced to simplify here —the transition from the nation-state to a new global phase of capitalism en-tails the transnational integration of national production systems. Expand-ing globalized circuits of accumulation fragment, recombine, incorporateand subordinate what were in earlier epochs more autonomous nationalcircuits, which now become appendages of the global circuit of capital.

Around this process classes and the state are transnationalizing.Now, to demonstrate this proposition we need not even mention core

countries. Almost every country in Latin America, for example — from themost advanced ( e.g., Mexico, Brazil), to the least developed ( e.g., Central

America) — organized for much of the 20th century projects of national

3 Moore believes that space within global capitalism is becoming reconfigured along thelines of competing macro-regions. This notion of a triad (U. S., Europe, and East Asia) incompetition with each other over hegemonic succession, and the projected rise of an “East Asia hegemon,” is a well-worn thesis, advanced most insistently by Arrighi and Beverly Silver, and here by their pupil, Moore. For critique, see my review (Robinson, 2001a) of Arrighi and Silver (1999).



accumulation, largely along the lines of import-substitution industrialization(ISI) and inward-oriented regional markets, as expressed politically in national populist coalitions. These national production systems were linkedexternally to the capitalist world economy. They have become fragmented,reorganized, and incorporated into what is increasingly a singular global pro-duction system. The old populist political projects have given way to neo-liberal politics and economics under the hegemony of new transnationalizedfractions of local capitalist classes and elite strata. This same process tookplace throughout the 1980s and 1990s in Africa and in much of Asia. Hence,these countries and regions are caught up in a new transnational phase of capitalism.

For his part, Went makes a number of interesting and important points,most of which concur with my own views, and none of which, ironically,

contest or contradict my theses on globalization. My only difference with Went is his tenacious nation-state–centric conception of inter-capitalist con-flict as expressed in his revisitation of earlier concepts of ultra-imperialism and super-imperialism . Went’s concern reflects a typical misperception of my thesis; it is assumed that since I argue that global political dynamics in thecurrent epoch are no longer characterized by the old rivalries among com-peting national bourgeosies and national states, I therefore believe that com-petition and conflict among capitalists is coming to an end. I suggest noth-ing of the sort. In fact, in the epoch of globalization, competition amongrival capitals is just as fierce as it has ever been under capitalism. But thiscompetition takes on new forms. Inter-capitalist conflict is no longer coter-minous with inter-state conflict, given the transnational interpenetration of

what were formerly national capitals. Elsewhere I have argued that the

transnational bourgeoisie is not a unified group. . . . fierce competition amongoligopolist clusters, conflicting pressures, and differences over tactics and strategy of maintaining class domination and addressing the crisis and contradictions of global capitalism make any real internal unity in the global ruling class impossible.(Robinson, 200lb, 19.)

I do not believe we will see either an ultra-imperialism or a super-imperialism.Rather, I foresee a situation in which splits, tensions, and disunity in the TCCare the order of the day, yet in which conflict among capitals is not expressedalong nation-state lines.

Finally, van der Piji’s commentary combines a dogmatic defense of es-tablished nation-state–centric assumptions with political prescriptions cen-tered around an ill-conceived “new class” of managerial cadre. This notionof a new technocratic elite or a “controller class” as a third class has beenraised by commentators as diverse as John Galbraith, Daniel Bell, Noam





Chomsky and Barbara Ehrenreich, among others, and is associated withsystems theory in that this managerial elite is seen to perform the functionof system coordination. But I have never been very convinced by such ap-proaches. Managerial cadre do not constitute a class and are not free-floating. They form a stratum dependent for its legitimacy and material exis-tence on: 1) attaching itself to capital by performing vital technical andideological functions for capitalism; 2) accruing organizational and cul-tural resources by attaching itself to (and leading) resistance to capitalist exploitation and diverse forms of oppression that accompany it; 3) medi-ating projects of class compromise. In other words, what van der Pijl con-siders to be a managerial cadre class is best seen as organic intellectuals inthe Gramscian sense. The TCC has gathered around it troops of organicintellectuals in recent years; emergent forces of resistance to global capi-

talism need to pull as many of these as possible over to their side as part of the development of a global counter-hegemony.

William I. Robinson

Department of Sociology University of California at Santa Barbara Santa Barbara, CA 93106 [email protected]

REFERENCES

Arrighi, Giovanni, and Beverly Silver, et al . 1999. Chaos and Governance in the Mod- ern World System . Minneapolis, Minnesota: University of Minnesota Press.

Robinson, William, I. 1996. Promoting Polyarchy: Globalization, U. S. Intervention, and Hegemony . Cambridge, England: Cambridge University Press.

———. 1998. “Beyond Nation-State Paradigms: Globalization, Sociology, and theChallenge of Transnational Studies.” Sociological Forum , 13:4, 561–594.

———. 2001a. Review of Arrighi and Silver (1999). Journal of World System Research , VII:1, 112–115.

———. 2001b. “Social Theory and Globalization: The Rise of a Transnational State.”Theory and Society , 30:2.

———. 2001c. “Transnational Processes, Development Studies, and ChangingSocial Hierarchies in the World System: A Central America Case Study.” Third World Quarterly , 22:4, 529–563.

———. Forthcoming. Maldevelopment in Central America: Globalization and Social Change .



ON TEMPORALITY, SIMULTANEITY AND TSS: A REPLY TO LAIBMAN

Laibman’s review of the TSS (temporal single system) approach ( Science & Society , Fall 2000, 310–332) while purportedly addressing the broad range of analyses associated with it, focuses almost exclusively on the works of Freemanand Kliman, thus practically ignoring the contributions made by other tempo-ral writers, notably Carchedi, Giussani and Ramos. Kliman and Freeman haveanswered on a number of occasions. In this short note I will restate briefly my own theoretical position and argue that Laibman’s appraisal not only ignoresits gist and substance but also is based on serious misunderstandings.

To begin with, the transformation process is nothing else than the redis-tribution of surplus value inherent in the formation of prices due to capitalmovement across branches. Tendentially, this redistribution (and thus prices)is determined by the equalization of profit rates across branches (but only

for modal capitals; see Carchedi, 1991, ch. 3). This is a condition for, but isnot , simple or expanded reproduction. These two processes can be dealt with jointly (see below) but this presupposes, to begin with, clarity on the quan-titative redistribution of value inherent in price formation.

Consider first commodities as outputs . Within the context of the trans-formation process, given a period, say t 1–t 2, individual, or non-transformed,

values are the value of the outputs before their sale; production prices, ortransformed or social values, are the tendential values those outputs realizeat the moment of sale. The transformation of individual values, i.e., theirredistribution, is the result of capitalist competition and should thus bemodeled on it. In other words, at t 2, capitalists will tendentially realize a

value for their outputs not necessarily equal to the value incorporated inthose outputs (the individual values). All sectors will tendentially realize anequalized, and thus the average, rate of profit due to capital movement acrosssectors. This if we disregard technological competition within sectors. If thiselement is introduced, the unit value realized by the commodities (outputs)

TEMPORALITY, SIMULTANEITY AND TSS 509


Time, Logic, and Structurein Value Theory: A Debate




in any single sector will be tendentially equal to the unit value of the out-puts of the producers with average productivity. It is they who produce thebulk of the commodities so that the price at which they sell them determinesthe price of all other commodities (produced with above or below averageproductivity). This is also the price at which the average productivity pro-ducers realize the average rate of profit (Carchedi, 1991, ch. 3). 1

This being so, what about the individual (non-transformed) and social(transformed) value of the inputs which have been used to produce thoseoutputs? Two orders of critique have been moved to Marx’s procedure. Thefirst is the infinite regression critique. It argues that, to compute the valueof the inputs of this period, we must compute the value of the outputs of the previous period and thus of the inputs of the previous periods, in anendless backward movement in time. The answer to this is straightforward.

In all sciences, and thus also in economics and in the transformation proce-dure, there is a point of departure in the inquiry that must be taken asgranted. To deny this is to deny the possibility to engage in any type of sci-ence, including history. Given t 1–t 2, the price of the inputs at t 1 is taken asgiven, whether they are transformed or not , so that we can compute the produc-tion prices at t 2. But once we move to t 2–t 3, the price of the inputs at t 2(the initial point of t 2–t 3) is not taken as given any more but has been cal-culated on the basis of our knowledge of the t 1–t 2 period. It is the price of production of those same commodities as outputs of t 1–t 2 (the end point of t 1–t 2). In short, the transformed value (price of production) of the out-puts of t 1–t 2 becomes the non-transformed value of the same commoditiesas inputs of t 2–t 3. If we wanted to compute the price of the inputs of t 1–t 2,

we would have to go back to t 0–t 1. Or, to compute the price of the inputs of

a certain period it is sufficient to go back only one period in time. To hold tothe infinite regression critique is to regress to Stone Age methodology.

The second critique is based on the charge of circularity. This is basedon the assertion that in Marx “the capital goods and wage goods appear withtwo different prices, on the input and output sides of the calculation”(Laibman, 2000, 321). But this stance rests on the notion that the value of the outputs of a period and of the inputs of the same period must be com-puted via the same set of simultaneous equations. Thus, the implicit assump-tion is that the value of the inputs of a certain period is determined at the same time as the value of the outputs of the same period . This is tantamount to be-lieving that the outputs of a certain period are the same as the inputs of thesame period (see Laibman’s discussion of the numerical example at 320)rather than of the inputs of the next period. If this view is accepted, the samecommodities must or can be valued at their non-transformed value as inputs

1 There is thus nothing obscure about “the transformation of values into prices” as if they were two qualitatively different entities.



and at their transformed value as outputs. This is, supposedly, Marx’s mistake.Clearly, the critique holds if and only if time is cancelled, a hypothesis whicherases any relation between economic theory and the real world. This counter-argument is fundamental and has been at the center of my counter-critiquesince my 1984 article. Yet, regrettably, Laibman does not address it.

To (re)introduce time in value analysis does not mean to deny simulta-neity in price determination. Before tackling this point, however, let us point out a common confusion, that the transformation process must be dealt with

within the frame of the reproduction schemes. But this is not so. One has todeal with transformation before introducing reproduction. In other words,in Marx’s procedure no account is taken of the demand side. The focus isexclusively on the redistribution of surplus value and on how this affects pricesof production. Once we have clarified this point, we can introduce the repro-

duction schemes. By doing this, we introduce a further constraint on priceformation: the quantity produced and sold at prices such that the rates of profit are equalized should be equal to the quantity demanded at those prices.

But this is a different question than that concerning the transforma-tion. If demand does not match supply, for example in sector I, this sector

will adjust its prices, capital will exit (or flow into) sector I and the tendency towards the equalization of the rates of profit will re-establish itself on thebasis of a new production structure .2 The redistribution of surplus value inher-ent in the transformation process (price formation) takes the structure of production as given and assumes D = S, i.e ., that all commodities can be soldat a price at which all (modal) producers realize the average rate of profit.The reproduction requirements, on the contrary, leave open the possibility that D ≠ S, that this discrepancy causes price changes, and that these latter

cause a change in the structure of production. Given this new situation, thetransformation process resumes its course.

Thus, in Table I, Laibman starts with the following structure of produc-tion in period 1 (the following are percentages of the total value producedin each sector)

I 70c + 18v + 12sII 33c + 40v + 27sIII 25c + 45v + 30s

and ends up with a new structure in period 10

I 70c + 14v + 16sII 44d + 40v + 16sIII 35c + 49v + 16s


2 We assume non–self-correcting price changes.




Notice that this example implies immobility of labor, since the rates of exploitation differ across sectors. But the real point of critique is different.Laibman’s numerical example retains the absurd notion, criticized above,that the price of the outputs of the present period are determined throughthe same set of simultaneous equations determining the price of the inputsalso of the present period, and thus that the outputs and the inputs of thepresent period are the same. In other words, he retains the notion of a time-less reality. His example would make sense only if we assumed that in theprevious period capitalists produced that many means of production whichthey sold for 229.780 (they thus became the inputs of the present period at those values), that in the present period those means of production areinvested in the three sectors as shown in the column under C, and that ineach sector that much labor power is invested at those rates of exploitation.

But this is exactly the assumption Laibman cannot make because, by accept-ing the circularity critique, he hangs on to the notion of a timeless reality.This in spite of statements such as: “Many processes in capitalism are sequen-tial. . . . But . . . there is also simultaneous determination” (328).

Let us then return to the transformation procedure and introduce time.This will provide an opportunity to discuss simultaneity versus temporality.First, given the period t 1–t 2, the production prices (transformed values) of the outputs of all sectors are determined simultaneously at t 2. The individual(non-transformed) values of the inputs (different use values than the out-puts) are also determined simultaneously but at t 1, given that it is the trans-formed value of those same commodities sold at t 1 as outputs of the previ-ous period, t 0–t 1. There is thus not one simultaneous determination of boththe inputs and the outputs of the same period and thus of the inputs as the

outputs of the same period. Rather, there are two simultaneous determi-nations at different time periods, at t 1 of the inputs of t 1–t 2 and at t 2 of the outputs of the same period. There is thus no reason whatsoever to as-sume that these prices should be the same. There is thus no transformationproblem.

Second, consider a period t 1–t 2 during which commodity X is made with input Y. The price of the input, Y, acquired by the producers of X, might change due to technological innovations in the production of Y in the timeinterval t 1–t 2, i.e ., before X is ready. Or, the price at which Y is sold at t 2 by its producers might differ from the price paid for it by the producers of Xat t 1. Suppose further that between t 1 and t 2 the production techniques havechanged in such a way that, at t 2 , X could be produced, on average , with thecheaper Y. Then, at t 2, the producers of X who have acquired the moreexpensive Y at t 1 cannot charge those higher prices of Y as a component part of the price of X but, due to price competition, must charge a price of X lower by the price differential of Y between t 1 and t 2 . In short, competi-



tion forces them to charge the replacement price at t 2.3 In this case, thenotation t 2 becomes insufficient. It should be split into two temporally dis-tinct moments, t 2(1) and t 2(2). In t 2(1) we compute the replacement priceof the inputs. This price is then subsequently used to compute, in t 2(2), theprice of the outputs. Again, there is no reason to assume that these two setsof values are the same. Again, there is no transformation problem.

The gist of the above is that there is nothing inherently wrong in usingsimultaneous equations as long as simultaneous determination is placed

within a temporal approach. It is the temporal approach that gives mean-ing to simultaneous equation. Once this is done, there is not a single set of equations determining the price of both inputs and outputs of a certainperiod (in which case there would be a transformation problem). Rather,there are two sets of equations, one for the inputs, at t 1, and one for the

outputs, at t 2.4

This remains the case even when, due to widespread tech-nological innovations, the replacement price of the inputs must be first calculated in order subsequently to calculate the price of the outputs. Theformer calculation, at t 2(1), must temporally precede the latter, at t 2(2).The assumption that the two sets of equations should produce the samequantitative results has no reason to exist and the so-called transformationproblem melts like snow in the sun.

How does this all relate to non-equilibrium? The link is in the notionthat production prices are not equilibrium prices. It could be argued that even if all rates of profit were to be actually equal, technological innovations

would upset this state of affairs thus causing a new hierarchy of profit ratesand a new wave of capital movements. This is true but, it does not go farenough. On this basis one could argue that the tendency would be towards

equilibrium prices (equal rates of profit) and that this tendency manifestsitself through oscillations around constantly changing equilibrium prices.However, each time a technological innovation causes a movement towardsa new production price it reinforces the tendency towards crises, since it replaces people with machines (Carchedi, 1991, ch. 5). In other words, thetendency under capitalism (abstraction being made from the counter-


3 Thus, changes in techniques bring about not only a change in the (surplus) value pro-duced due to the altered percentage weight between constant and variable capital. They can also cause a change in the replacement value of the inputs at t 2 (which is a change inthe redistribution of that value). In case of constant techniques (a sub-case of technologicalinnovations) the inputs’ price paid at t 1 and their replacement price (which should bepaid) at t 2 are the same.

4 It is sometimes asserted that the only difference between a simultaneist and a temporalist approach is that the latter assigns time indices to different sets of simultaneous equations.This is wide of the mark. A given set of simultaneous equations can be given a certaintime index and yet the absurd notion can be retained that the outputs and the inputs of that period are the same so that their price should be the same ( i.e ., determined by thesame set of simultaneous equations).




tendencies) is towards crises and there is no way a system can tend towardscrises, disruptions, unemployment, etc. while at the same time tending to-

wards a state of stasis, of equilibrium. But if the system tends towards crises,equilibrium can at most be a fortuitous situation of no theoretical value.Consequently, production prices are not equilibrium prices. 5 Laibman’sinconsistency is that, if he accepts that capitalism tends towards crises (aproposition one would be hard put to deny), there is no way “equilibriumpaths” can be “the necessary ground for the study of disequilibrium dynam-ics” (329). This would imply a research method in which what is theoreti-cally irrelevant (equilibrium) becomes the building stone of theorization.

Also, the assertion that, in non-equilibrium economics, “nothing can be saidabout the price of the inputs” and that any measurement becomes prob-lematic is simply gratuitous.

As has been pointed out several times by TSS authors, this approach isanything but dogmatic. It could be asked, in answering this charge: who isdogmatic, those who, contrary to observation, cling to the idea that reality is timeless and that the economy tends towards equilibrium or those whohold the contrary view? But these charges and counter-charges would only lead to a sterile debate. 6 It is more important to point out, as in the pagesabove, that, by re-introducing time into economic analysis, the TSS schoolshows that Marx’s transformation procedure is correct, i.e ., it produces re-sults consonant with Marx’s own. But this is still not the core of the matter.

What really matters is that TSS, by casting off a timeless and static view of reality, liberates Marx’s body of thought from its supposed logical contra-dictions. By freeing it from those false constraints, this approach allows usto use Marxism’s unrivalled power as a tool to understand, and hopefully

change, capitalist reality.

GUGLIELMO C ARCHEDI

FEE Universiteit van Amsterdam Roetersstraat 111018 WB Amsterdam The Netherlands [email protected]

5 For the same reason, the tendency of the rates of exploitation towards equalization doesnot imply a movement towards equilibrium (contrary to Laibman’s note 7).

6 The characterization “New Orthodox Marxists” not only is indicative of a debating style which serves little purposes but also, and much more importantly, lacks any heuristiccontent.



REFERENCES

Carchedi, Guglielmo. 1984. “The Logic of Prices as Values.” Economy and Society , 13:4.———. 1991. Frontiers of Political Economy.London: Verso.Laibman, David. 2000. “Rhetoric and Substance in Value Theory: An Appraisal of

the New Orthodox Marxism.” Science & Society , 64:3 (Fall), 310–333.


MARX’S ALLEGED LOGICAL ERROR: A COMMENT

I welcome David Laibman’s critical evaluation of what he calls “new ortho-dox Marxists” (myself included), who argue (among other things) that Marxdid not make a logical error in his determination of prices of production inPart 2 of Volume 3 of Capital. The logical error that Marx allegedly made,according to Laibman and the standard critique of Marx, is of course that he failed to transform the inputs of constant capital and variable capital from

values to prices of production. Correction of this error, according to thestandard critique, leads to a different rate of profit and different prices of production. It also implies that only one of Marx’s two aggregate equalities(sum of prices of production equal to sum of values and sum of profits equalto sum of surplus-values) can be true at a given time.

One of the important points in Laibman’s critique is the oft-repeatedclaim that Marx himself explicitly acknowledged that he had made this logi-cal error. Laibman argues:

It should be mentioned that Marx himself repeatedly referred to the “possibility of error” in disregarding the effect of prices of production on the valuation of inputs(see, e.g., Marx, 1982, 261, 265). Marx is therefore the first 20th century Marxist,despite strenuous, and admirable, efforts by some of the NOMists to discount andexplain away those passages. (Laibman, 2000, 315; emphasis added.)

We can see that, although Laibman says that Marx “repeatedly” acknowl-edged his error he cites only two passages, both from Chapter 9 of Volume3. This comment reexamines these two passages, in order to better under-stand their meaning. I will first very briefly summarize my “macro-monetary”

interpretation of Marx’s theory.1

MARX’S ALLEGED ERROR 515

1 I have already responded to other points in Laibman’s critique in a separate comment (Moseley, 2001).




1. The Determination of Constant Capital and Variable Capital 2

The standard interpretation of Marx’s theory assumes that the fundamen-tal givens of Marx’s theory are the physical quantities of the means of pro-duction and the means of subsistence, and that constant capital and variablecapital are derived from these given physical quantities, first as the values of these given bundles of goods (in Volume 1) and then as the prices of produc-tion of these same given bundles of goods (in Volume 3). According to thisinterpretation, Marx’s theory of prices of production in Part 2 of Volume 3 islogically incomplete and contradictory because Marx failed to transform theinputs of constant capital and variable capital in each industry from valuemagnitudes to price magnitudes (which has well-known consequences: theprice rate of profit is not equal to the value rate of profit, the trends of the

two rates of profit might be different, values are “redundant,” etc.).I argue, to the contrary, that constant capital and variable capital aretaken as given in terms of the quantities of money-capital invested to purchasethe means of production and labor-power. In other words, the initial givens

with which Marx’s theory begins are these quantities of money invested asconstant capital and variable capital, not the physical quantities of meansof production and means of subsistence.

According to Marx’s logical method, it is not possible at the beginningof the theory to provide a full explanation of the magnitudes of constant capital and variable capital. Constant capital and variable capital (understoodas the magnitudes of money-capital invested in the real capitalist economy to purchase means of production and labor-power) are identically equal tothe price of production of the means of production and means of subsis-

tence, respectively. Therefore, an explanation of constant capital and vari-able capital requires an explanation of prices of production. However, pricesof production involve the equalization of profit rates across industries. Ac-cording to Marx’s method, it is not possible at this early stage of the theory to explain the equalization of profit rates, which is an aspect of the distribu-tion of surplus value. Before the distribution of surplus value can be ana-lyzed, the total amount of surplus value to be distributed must first be de-termined in Volume 1.

Furthermore, I argue that the same quantities of constant capital and variable capital are taken as given both in the determination of the total surplus valuein Volume 1 and in the determination of prices of production in Volume 3.The only difference is that in Volume 1 the aggregate amounts of constant capital and variable capital for the economy as a whole are taken as given,

2 Please see Moseley, 1993 and 1999, for a more complete explanation of my “macro-monetary”interpretation of Marx’s theory.



and in Volume 3 the disaggregated amounts for each industry are also takenas given. The sums of the individual amounts taken as given in Volume 3 areby definition equal to the aggregate amounts taken as given in Volume 1.Therefore, these amounts of constant capital and variable capital remain “in-

variant” in the transition from Volume 1 to Volume 3 — because the sameamounts of constant capital and variable capital are taken as given at bothstages of the theory. This is the reason why constant capital and variable capi-tal do not change, or do not have to be transformed, in the transition fromthe theory of the total surplus value in Volume 1 to the theory of prices of production in Volume 3: because the same quantities of constant capital and variable capital are taken as given in both of these stages of the theory.In Volume 1, Marxprovisionally assumed that the given magnitudes of constant capital and vari-able capital are equal to the values of the means of production and means of

subsistence, respectively. This is the only assumption consistent with the labortheory of value at this early stage of the analysis because prices of productionhave not yet been explained. However, this provisional assumption plays norole in the determination of the total surplus value, which is the main ques-tion of Volume 1. The given constant capital is the transferred value compo-nent of the price of the output, and the given variable capital is subtractedfrom the new value produced to determine the total surplus value, whetheror not the given constant capital and variable capital are equal to the value of the means of production and means of subsistence.

Then in Volume 3, prices of production are determined, and the givenconstant capital and variable capital can be more fully explained, as equalto the prices of production of the means of production and means of sub-sistence. However, this more complete explanation does not change the

magnitudes of constant capital and variable capital. The magnitudes of con-stant capital and variable capital remain the same — as the quantities of money-capital advanced to purchase means of production and labor-power.But now these given magnitudes are more fully explained.

Therefore, according to this interpretation of Marx’s logical method,Marx did not make a logical error in his determination of prices of produc-tion in Volume 3. He did not forget to transform the inputs of constant capital and variable capital, because these inputs do not have to be trans-formed. The same quantities of the inputs of constant capital and variablecapital are taken as given (in terms of money-capital advanced) in the de-termination of both values and prices of production.

2. Laibman’s Passages

2.1 Laibman’s first passage . I turn now to the two references cited by Laibman to support his interpretation that Marx himself explicitly acknowl-





edged that he had made a logical error in his determination of prices of production. The first passage is on page 261. Before examining this passage,I will first briefly review the opening pages of Chapter 9 of Volume 3 priorto page 261. I will pay special attention to the concept of cost price (the sumof consumed constant capital and variable capital), and the role this con-cept plays in Marx’s theory of prices of production. My disagreement withLaibman (and with the standard interpretation in general) can be expressedas follows: is the cost price the same or is it different in the determination of

values and the determination of prices of production? In other words, is thereone set of cost prices, or two?

As is well known, in the opening pages of Chapter 9 Marx first explainedthe determination of prices of production, and illustrated this determina-tion with three tables (pp. 254–58). The first table makes no distinction

between fixed and circulating capital, but the second and third tables domake this distinction. The second table determines the value of each of thefive commodities as the sum of the cost price and the surplus value producedin each industry. The third table then determines the prices of production of the five commodities as the sum of the same cost prices and the profit appro-priated in each industry. The point I wish to emphasize is that the cost price is the same for the determination of both values and prices of production.The only difference between the values and the prices of production pre-sented in these tables is the difference between the surplus value producedand the profit appropriated in each industry. Of course, the standard inter-pretation (including Laibman) argues that this is a mistake by Marx; i.e ., that Marx should have transformed the cost prices from values to prices of pro-duction. In other words, according to the standard interpretation, there are

(or should be) two sets of cost prices in Marx’s theory, one set for the determi-nation of values and another set for the determination of prices of produc-tion. We shall consider below whether or not this standard criticism of Marxis correct. But at least it should be clear that Marx himself stated and as-sumed in his numerical examples that the cost price is the same for the deter-mination of both values and prices of production. Whether or not this is amistake remains to be seen.

On page 258, Marx states that “the cost price is completely governed by the outlay within each respective sphere of production” (emphasis added).I interpret “completely governed by” to mean “determined by.” As I under-stand it, Marx is saying here that the cost price is determined by the capitaloutlay, which is taken as given. There is no mention here of two cost prices,one determined by the values of the means of production and the means of subsistence and the other determined by the prices of production of thesebundles of goods. There is only one cost price mentioned (“the” cost price)and this one cost price is determined by the capital outlay, which is taken as



given. If the cost price is determined by the capital outlay, then there can-not be two cost prices, because there is only one capital outlay.

On page 259, Marx states the important aggregate equality that the sumof prices of production is equal to the sum of values: “And in the samemanner, the sum of prices of production for the commodities produced insociety as a whole — taking the totality of all branches of production — isequal to the sum of their values.” This aggregate equality follows from thefollowing assumptions in Marx’s theory of prices of production: (1) the cost

prices are the same in the determination of both values and prices of produc-tion, and (2) the sum of profits is equal to the sum of surplus values. Thestandard interpretation argues that (1) is another mistake by Marx, whichfollows from the first mistake (the failure to transform the cost prices from

values to prices of production). Marx’s critics argue that, since the cost prices

are not the same in the determination of values and prices of production, it does not follow that the sum of prices of production is equal to the sum of values. Thus we can see that whether or not this important aggregate equal-ity holds depends on whether or not the cost prices are the same in thedetermination of values and prices of production. But we can also see that Marx himself continued to assume that the cost prices are the same, and todraw important conclusions from this assumption.

Two pages later, Marx clarified what he meant by the key concept of cost price, or the sum of constant capital and variable capital. This passageis the first reference cited by Laibman to support his interpretation. Thispassage is as follows:

Apart from the fact that the price of the product of capital B, for example, diverges

from its value, because the surplus-value realized in B is greater or less than theprofit added in the price of the products of B, the same situation also holds for thecommodities that form the constant part of capital B, and indirectly, also, its vari-able capital, as means of subsistence for the workers. As far as the constant portionof capital is concerned, it is itself equal to cost price plus surplus-value, i.e. now equal to cost price plus profit, and this profit can again be greater or less than thesurplus-value whose place it has taken. As for the variable capital, the average daily

wage is certainly always equal to the value product of the number of hours that the worker must work in order to produce his necessary means of subsistence; but thisnumber of hours is itself distorted by the fact that the production prices of thenecessary means of subsistence diverge from their values. However, this is alwaysreducible to the situation that whenever too much surplus-value goes into onecommodity, too little goes into another, and that the divergences from value that obtain in the production prices of commodities therefore cancel each other out.

Notice that in this passage Marx does not state that he failed to trans-form the constant capital and variable capital ( i.e., the cost price) from values





to prices of production in his tables presented earlier in Chapter 9, nor that these tables need to be corrected. Nor does Marx state that there are twosets of constant capital and variable capital, one for the determination of

values and another for the determination of prices of production. Rather,Marx clarifies that the constant capital and variable capital (that are takenas given) are now understood to be equal to the prices of production of themeans of production and means of subsistence, rather than equal to the

values of the means of production and the means of subsistence. I have ar-gued above that the magnitudes of constant capital and variable capital donot change between Volume I and Volume 3. Rather, the same magnitudesof constant capital and variable capital are taken as given in both Volume 1and Volume 3. As discussed above, Marx provisionally assumed in Volume1 that the given magnitudes of constant capital and variable capital are equal

to the values of the means of production and the means of subsistence. Then,after explaining prices of production in Volume 3, Marx provided a morecomplete explanation of the given magnitudes of constant capital and vari-able capital. However, this more complete explanation does not change thegiven magnitudes themselves. Marx does not say anything in this passageabout the need to change the magnitudes of constant capital and variablecapital in his earlier tables. He just says that the explanation of these givenmagnitudes is more complete than before.

The standard interpretation jumps to the conclusion that, because themagnitudes of constant and variable capital are now explained as equal toprices of production, this means that the magnitudes of constant capital and

variable capital must change, and must be different in the determinationof prices of production than in the determination of values. But Marx does

not say this. Marx discusses only one set of magnitudes for constant capitaland variable capital, which are now seen to be equal to prices of produc-tion, rather than to values. The fact that the given magnitudes of constant capital and variable capital are now understood to be equal to prices of pro-duction, rather than to values, does not mean that there must be two sets of magnitudes of constant capital and variable capital.

Furthermore, at the end of this very same paragraph, Marx states againthe conclusion that the divergences between profits and surplus values forindividual commodities cancel each other out, so that the aggregate equal-ity between the sum of prices of production and the sum of values contin-ues to be true. We have seen above that this conclusion requires as a logicalprecondition that constant capital and variable capital be the same for thedetermination of both values and prices of production.

Therefore, I conclude that this passage does not support Laibman’scritique ( i.e., the standard critique) of Marx’s theory of prices of produc-tion. It is certainly not a clear statement that Marx made a mistake in his



earlier presentation and that his tables need to be corrected. Nor is it a clearstatement that there are two sets of the inputs of constant capital and vari-able capital, and that these inputs need to be transformed from values to pricesof production. Furthermore, the standard interpretation contradicts the twoaggregate equalities that Marx emphasizes in surrounding paragraphs. Onthe other hand, this passage can be interpreted in an alternative way (that there is only one set of inputs of constant capital and variable capital whichare now understood to be determined in a different way) which is consistent

with the tables presented earlier and also with Marx’s two aggregate equali-ties. This alternative interpretation leads to the conclusion that Marx did not make a mistake in his determination of prices of production, i.e ., that Marxdid not forget to transform the values of the inputs from values to prices of production, because these inputs do not need to be transformed.

In the next section, we will continue our review of Chapter 9, and see what else Marx had to say about the relation between the key concepts of value, cost price, and price of production in his theory. This will also bringus to the second passage cited by Laibman, which comes four pages later inthe text.

2.2 Laibman’s second passage . After a discussion of the determination of the general rate of profit and its dependence on the distribution of capitalbetween industries with high and low compositions of capital (261–63), Marxreturned to the subject of the relation between the concepts of value , cost

price , and price of production in five important paragraphs (263–65). Of spe-cial importance in these paragraphs is whether the cost price is the same oris different in the determination of value and price of production. We will

reexamine these crucial paragraphs and see what Marx had to say about themagnitude of the cost price in the determination of values and prices of production. The last of these five paragraphs is the second passage cited by Laibman to support his interpretation.

The first of these five paragraphs introduces the subject:

In Volumes 1 and 2 we were only concerned with the value of commodities. Now apart of this value has split away as the cost price , on the one hand, while on the other,the production price of the commodity has also developed, as a transformed form of

value. (Emphasis in the original.)

The next paragraph is a bit of a mystery. In Marx’s Manuscript of 1864– 65 , from which Engels edited what we know as Volume 3, the next paragraphis an extremely important one, in which Marx defined the value of commodi-ties and stated the relation between value, cost price, and price of produc-tion in clear unambiguous algebraic formulations (Marx’s original manu-





script has recently been published in full in German for the first time, but unfortunately has not yet been translated into English). However, for someinexplicable reason, Engels left out this crucial paragraph in his edition of

Volume 3. This “missing paragraph” has recently been discovered by Alejandro Ramos (1998). This crucial paragraph is as follows (translatedby Jens Christiansen):

The cost price is, as we see, always smaller than the value of the commodity. Theprice of production can be smaller, bigger, or equal to the value of the commod-ity. The value of the commodity = the value of the capital consumed in the production of the commodity plus the surplus-value.If we take, as in the original development of the cost price (Chapter 1), cost price = value of the capital advanced in the production of the commodities, we have the following equations:

value = cost price + surplus-value V = K + S

or profit as identical with surplus-value or = K + pcost price = value – surplus-value or K = V – sprice of production = cost price + profit P = K + p'calculated according to the general rate of profit = p'.

Because K = V – s and V = K + s, the value of the commodity is always > than the cost price. Depending on whether s or p' of each special production sphere is bigger orsmaller or equal, > < or = to the average profit determined by the general rate of profit, then P > < or = V. Because V = K + s or p, and P = K + p', V = P when s = p',> P when p' < s, and < P when p' > s. (Emphasis added.)

Notice that in this extremely interesting paragraph that there is only one cost price mentioned (K). There are not two cost prices, one a component of

value and the other a component of price of production. The same cost priceis a component of both the value and the price of production of the com-modity. The value of the commodity is equal to the cost price (or the “capi-tal consumed”) plus surplus value (V = K + s), and the price of productionis equal to the same cost price plus the average profit (P = K + p'). The K is thesame in both equations. Since K is the same, whether price of production isequal to, greater than, or less than, value depends solely on whether theaverage profit is equal to, greater than, or less than the surplus value. Allthis is clearly and unambiguously stated, and all this assumes that there isonly one cost price.

Marx continued in the next paragraph to repeat and elaborate thesesame points, again with algebraic formulations and numerical examples.Especially interesting is the case of commodities produced with capital of average composition , in which case price of production is equal to value.

If we take it that the composition of the average social capital is 80c + 20v, and theannual rate of surplus-value s' = 100 per cent, the average annual profit for a capi-tal of 100 is 20 and the average annual rate of profit is 20 per cent. For any cost



price k of the commodities annually produced by a capital of 100, their price of production will be k + 20. In those spheres of production where the compositionof capital is (80 – x)c + (20 + x)v, the surplus-value actually created within this sphere,or the annual profit produced, is 20 + x, i.e. more than 20, and the commodity

value produced is k + 20 + x, more than k + 20, or more than the price of produc-tion. In those spheres of production where the composition of capital is (80 + x)c+ (20 – x)v, the surplus-value or profit annually created is 20 – x, i.e. less than 20,and the commodity value therefore is k + 20 – x, less than the price of production,

which is k + 20. Leaving aside any variation in turnover times, the production prices of commodities would be equal to their values only in cases where the composition of capital was by chance precisely 80c + 20v.(Emphasis added.)

It seems to me that this is a very clear statement that the cost price is the same in the determination of both value and price of production. In these

examples, the cost price k is always equal to 100, both in the determinationof value and in the determination of price of production of the different commodities. The cost price k does not change from one magnitude in thedetermination of value to another magnitude in the determination of priceof production. The only difference between values and prices of produc-tion is whether surplus value or average profit is added to the same identi-cal cost price.

We can also see that Marx concludes that for average commodities (andfor average commodities alone), the price of production is equal to their value.Since the cost price k is the same for both value and price of production,and since for these average commodities average profit = surplus value, it follows that price of production of these average commodities is equal totheir value. This conclusion of the equality between the price of produc-tion and the value of average commodities, which is emphasized by Marx, is

valid if and only if the cost price is the same in the determination of both theprice of production and the value of these commodities. Either Marx is talk-ing nonsense here about the value and price of production of average com-modities, or the cost price is the same in the determination of both valueand price of production.

In the next paragraph, Marx again divides the total social capital intothree groups of average, higher than average, and lower than average com-position of capital. According to Ramos (63–64), the last half of this para-graph in the Engels edition of Volume 3 was completed by Engels. The part of this paragraph added by Engels is as follows:

How these capitals function after the average rate of profit is established, on theassumption of one turnover in the year, is shown by the following table, in whichcapital I represents the average composition, with an average rate of profit of 20 percent.





I. 80c + 20v + 20s. Rate of profit = 20 per cent.Price of the product = 120. Value = 120.

II. 90c + 10v + 10s. Rate of profit = 20 per cent.Price of the product = 120. Value = 110.

III. 70c + 30v + 30s. Rate of profit = 20 per cent.Price of the product = 120. Value = 130.

Commodities produced by capital II thus have a value less than their price of pro-duction, and those produced by capital III have a price of production that is lessthan their value. Only for capitals such as I, in branches of production whose com-position chanced to coincide with the social average would the value and the priceof production be the same.

Engels’ addition seems to be an accurate interpretation of Marx’s para-graph immediately preceding. The cost price is the same for both values and

prices of production for all three types of commodities. As a result, the priceof production of the commodity produced with capital of average composi-tion is equal to its value.

We come now to the fifth and final paragraph in Marx’s discussion of the relation between value, cost price, and price of production. This paragraphis the second passage cited by Laibman and is the source of Laibman’s quotedphrase about the “possibility of error” (a slightly different translation than theone below). The standard interpretation of this paragraph generally empha-sizes the following sentences at the beginning of the paragraph:

The development given above also involves a modification in the determination of commodity’s cost price.It was originally assumed that the cost price of a commodity equaled the value of the commodities consumed in production. But for the buyer

of a commodity, it is the price of production that constitutes its cost price and canthus enter into forming the price of another commodity. As the price of produc-tion of a commodity can diverge from its value, so the cost price of a commodity,in which the price of production of other commodities is involved, can also standabove or below the portion of its total value that is formed by the value of the meansof production going into it. It is necessary to bear in mind this modified significance of the cost price , and therefore to bear in mind too that if the cost price of a com-modity is equated with the value of the means of production used up in producingit, it is always possible to go wrong.(Emphasis added.)

The standard interpretation of these sentences is that the “modifiedsignificance of the cost price” means that the cost price is two different magnitudes for the determination of value and the determination of priceof production, i.e ., that the magnitude of the cost price changes from thedetermination of value in Volume 1 to the determination of prices of pro-duction in Volume 3. According to the standard interpretation, Marx wasacknowledging in this passage that in his own determination of prices of



production earlier in the chapter, he had failed to make this transforma-tion, and that his earlier presentation needs to be corrected.

However, such an interpretation of these sentences is contradicted by the preceding four paragraphs, which we have just reviewed, and in whichMarx clearly stated that the cost price is the same in the determination of boththe value and the price of production of commodities. These earlier para-graphs are generally ignored by the proponents of the standard interpreta-tion. If the sentences just quoted are to be consistent with these earlier para-graphs, then the standard interpretation of these sentences must be wrong.

Furthermore, the standard interpretation of these sentences is also con-tradicted by the rest of the very same paragraph, which is also generally ig-nored by its proponents. The rest of this paragraph is as follows:

Our present investigation does not require us to go into further detail on this point.The cost price of a commodity is a given precondition , independent of his, the capi-talist’s, production, while the result of his production is a commodity that containssurplus-value, and therefore an excess value over an above its cost price. As a gen-eral rule, the principle that the cost price of a commodity is less than its value hasbeen transformed in practice into the principle that its cost price is less than theprice of production. For the total social capital, where price of production equals

value, this assertion is identical with the earlier one that the cost price is less thanthe value. Even though it has a different meaning for the particular spheres of production, the basic fact remains that, taking the social capital as a whole, the cost price of the commodities that this produces is less than their value, or than theprice of production which is identical with this value for the total mass of commodi-ties. (Emphasis added.)

We see that in the rest of this paragraph Marx states that, even thoughthe cost price is not equal to the value of the inputs, it is still nonethelesstrue that surplus value = value – cost price, from which it follows that value= cost price + surplus-value, as in the preceding paragraphs. The same cost

price is a component of both the value and the price of production of com-modities. There is only one magnitude of cost price mentioned here. No-tice how many times Marx says “the” cost price or “its” cost price. Nothing issaid about two magnitudes of cost price, one as a component of value andthe other as a component of price of production. The same cost price is takenas a “given precondition” in the determination of both the value and theprice of production of commodities. Therefore, the standard interpretationof the beginning of this paragraph is also contradicted by the rest of the

very same paragraph.There is another interpretation of the beginning sentences of this para-

graph that is not contradicted by the preceding four paragraphs and by therest of the same paragraph. According to this alternative interpretation, the





“modified significance of the cost price” does not mean that the magnitudeof the cost price changes. Rather, it means that the same cost price that is takenas given in the determination of both value and price of production (dis-cussed in previous paragraphs) is itself explained more fully than in Volume 1.Marx originally assumed in Volume 1 that the cost price is equal to the valueof the inputs. However, after the determination of prices of production in

Volume 3, Marx now provides a more complete explanation of the givencost price. But this more complete explanation of the given cost price does not change the magnitude of the given cost price itself . The same cost price continues to betaken as given in the determination of both the value and the price of pro-duction of commodities.

Marx is not acknowledging in this passage that he failed to transformthe cost prices from values to prices of production earlier in the chapter,

and that his earlier presentation needs to be corrected. Rather, this passagesays that we can now understand that the given cost prices (which remainthe same for the determination of both values and prices of production)are themselves equal to the prices of production of the inputs, rather thanto the values of the inputs. This alternative interpretation of these sentences,unlike the standard interpretation, is consistent with the preceding para-graphs and with the rest of the same paragraph, in which Marx clearly statedthat the cost price is the same in the determination of both value and price of production.

3. Conclusion

I conclude from the above review of these two important passages from

Chapter 9 of Volume 3 that these passages do not support Laibman’s inter-pretation that Marx explicitly acknowledged that the inputs of constant capital and variable capital have to be transformed from values to prices of production and that he (Marx) had failed to carry out this transformationin his determination of prices of production. Rather, the overall weight of these passages and surrounding paragraphs supports the alternative inter-pretation that the inputs of constant capital and variable capital do not haveto be transformed because these inputs are the same in the determination of both values and prices of production. Marx did not fail to transform theinputs, because the inputs do not have to be transformed. This standard al-legation against Marx is false. The standard interpretation ignores what Marxsaid in surrounding paragraphs, and therefore misinterprets the few sen-tences that it focuses on. The crucial “missing paragraph” no doubt contrib-uted to this misinterpretation. But now that the missing interpretation hasbeen discovered and we can see the whole context of these paragraphs moreclearly, there is less justification for this continuing misinterpretation.



Contrary to Laibman’s claim, Marx was not the first “20th century Marx-ist,” in the sense of recognizing that he had made a logical mistake in hisdetermination of prices of production. Marx was Marx and 20th century Marxism has been something very different and has falsely accused Marx of making this logical error. The standard interpretation is based on a misin-terpretation of Marx’s method of determination of the inputs of constant capital and variable capital. If Marx’s method is understood, then thesepassages suggest that Marx did not forget to transform the inputs of con-stant capital and variable capital, because the same quantities of constant capital and variable capital are taken as given in the determination of both

values and prices of production.

Fred Moseley

Department of Economics Mt. Holyoke College South Hadley, MA 01075–1481

[email protected]

REFERENCES

Laibman, David. 2000. “Rhetoric and Substance in Value Theory: An Appraisal of the New Orthodox Marxism.” Science & Society , 64:3 (Fall), 310–32.

Marx, Karl. 1981. Capital , Volume 3. New York: Random House.Moseley, Fred. 1993. “Marx’s Logical Method and the Transformation Problems.”

In Fred Moseley, ed., Marx’s Method in ‘Capital’: A Reexamination. Atlantic High-lands, New Jersey: Humanities Press.

———. 1999. “The ‘New Solution’ to the Transformation Problem: A SympatheticCritique.” Review of Radical Political Economics , 32:2, 282–316.———. 2001. ”The Return to Marx: Advance or Retreat?” In Alan Freeman, Andrew

Kliman and Julian Wells, eds., The New Value Controversy and the Foundations of Economics . Aldershot, United Kingdom: Edward Elgar.

Ramos, Alejandro. 1998. “Value and Price of Production: New Evidence on Marx’sTransformation Procedure.” International Journal of Political Economy, 28:4, 55–81.






TEMPORALISM AND TEXTUALISMIN VALUE THEORY: REJOINDER

The statements by Guglielmo Carchedi and Fred Moseley are welcome, andclarifying, but I believe they lend support to my original characterization of their position as “new orthodox Marxist,” and fail fundamentally to cometo terms with the argument put forward in Laibman, 2000. I will discuss themin combination, beginning with Moseley.

Despite his promise to separate the task of establishing Marx’s own view — to the extent this can be done on the basis of existing texts — from that

of proving its correctness, Moseley again (as in much of his previous workon this topic) confounds the two. He states repeatedly that Marx positedonly one cost price, not two; that in Marx value is cost price plus surplus

value, whereas price of production is the same cost price plus profit. Thisground is covered at great length and in exquisite detail. Moseley even res-urrects, with the scholarly assistance of our friends Alejandro Ramos and

Jens Christiansen, a passage that Engels chose not to include in Capital 3.This passage, despite Moseley’s dramatic claims concerning it, says the samething yet again — which suggests that Engels may have been justified inomitting it after all.

I could have saved Moseley all this trouble. Let me stipulate: most of the time ( i.e., apart from one or two passages that convey a different impression),Marx treats cost price as (quantitatively) given and constant in his descrip-tion of the redistribution of surplus value and formation of a uniform rateof profit and prices of production. 1

Marx’s analysis carries a rich imagery:of “brother–enemy” capitalists forced through competition to redistributeproduced surplus value in proportion to capital advanced. This is the mate-rial base for the conflictual unity of many capitals as capital-in-general. At any given moment (in both the temporal and Hegelian senses of this word);the imagery is clearly valid — and this would be the case even if Marx hadnot said so.

1 May I freely confess error, or at least inaccuracy, in my choice of words in the originalarticle? In “Marx himself repeatedly referred to the possibility of error,” “occasionally” wouldhave been more appropriate. I know of the two instances that I cited, plus a few morepassages whose interpretation is by no means clear. Let there be no doubt: the main trunk of Marx’s thinking on this posits a constant cost price. I should add, however, that Ido not find convincing Moseley’s attempt to re-interpret “modification in the determina-tion of a commodity’s cost price” to mean a change in interpretation without quantita-tive alteration.



The question is: is this enough? Or is there more to the process of valueformation? Moseley appears to be captive to an enormous methodologicaltautology: by definition Marx’s own method, as revealed through detailedanalysis of his texts, can be evaluated in no terms other than those definedby that method itself. If what Marx did is by definition what Marx did, thenMarx can have done no other! Moreover, we are implicitly constrained todo precisely that, and only that. I find this to be not a defense of Marx against “his critics” (note that in this paradigm one either attacks Marx or defendshim; no one does Marxist political economy, no one pursues the Marxist project), but rather a textualist reification of Marx, a confession of weak-ness in the stream of scientific investigation and debate. In this period of recovery of confidence on the left, we can and should, I think, have consid-erably more confidence than what is implied by a “defense” that cannot move

beyond the letter of Marx’s texts.2

So we come back to the matter of price of production — what I preferto call capitalistically determined value .3 We have the reallocation of surplus

value enforcing the equal power of equal amounts of capital through com-petition. Does this fully capture the social relations expressed through value?

We need to answer this question for ourselves. Even if an unambiguousanswer were to be found in Marx’s texts, we would still have to examine that answer using our own tests of validity: logic, descriptive power, fruitfulnessfor social practice.

The problem emerges when we consider the need to capture in theory not only the conflictual alignment of many capitals in a given conjuncture,but also the reproduction of that alignment as well as of the structure of domi-nation/exploitation between capitalists and workers. Value formation must

be grounded in an ongoing process of production/reproduction. This is thepolitical-economic foundation for “economic” inquiry. Immediately thepassage of time becomes important. We must think of time as inherent inreproduction, and yet value formation must reveal a given structure of so-cial relations, as embodied both in the existing balance of class forces andin the existing technical forces of production.

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2 Moseley and Carchedi represent, respectively, textualism and temporalism: two of six “falsetrails” hampering progress in value theory identified in Laibman, “Value and the Quest for the Core of Capitalism,” Review of Radical Political Economics , forthcoming. The others,for the record, are: empiricism, formalism, mathematicism, and monetarism.

3 The latest version of my own work on value theory will be found in Laibman, forthcom-ing. I believe it is free of the dualist sins attributed to it by Moseley. I also regret Moseley’spractice of indiscriminately grouping me with other adherents of some “standard inter-pretation.” Even if one were to isolate the common ground among writers on value theory as diverse as, say, Dobb, Meek, Sweezy, Anwar Shaikh, Duncan Foley and myself, there iscertainly nothing “standard” about it.




The TSS (“Temporal Single System”) authors have urged me to name my point of view in value theory (as they have 4). I clearly can not call it “Marxist”: this would be arrogant and question-begging. (Everyone par-ticipating in this discussion is “Marxist.”) So I have come up with the fol-lowing: TT/CS (“Theoretical Time/Consistent Structure”). Let me explain.

In general, and despite Carchedi’s tendency to de-emphasize this point,the outputs resulting from production are the same as the inputs: raw ma-terials, machinery and equipment, wage goods. (Luxury goods constitutea small exception to this, and require separate treatment.) As Carchedi’sexamples indicate, production/distribution/consumption/production onan enlarged scale — in short, the circuit of capital — is inherently tempo-ral, a sequence of stages. Let us all agree — despite Carchedi’s bizarre char-acterization of my position as involving a “timeless and static” view of reality

— that outputs inherently follow inputs in time, and that the social and tech-nical conditions of production are constantly changing. 5 We still must tellthe story of what happens in the next round of production, when today’soutputs become tomorrow’s inputs. At this point, they enter the new roundat production prices determined by the pooling and redistribution of sur-plus value in the period just gone by. Everything now depends on the as-sumption made about production in the new period. As I indicated inLaibman, 2000, we have basically two choices.

The technical–social conditions may change, as they undoubtedly doin reality. Then the second round of reallocation of surplus value, result-ing in still newer prices of production, reflects not only the existing input

valuation and the existing pool of surplus available for redistribution, but also the new techniques, productivities, wage rates, demand conditions,

etc. In these circumstances the redistribution is likely to be incompleteand imperfect, and the resulting prices more like market prices. They arethe expression of a historical sequence of events, and therefore have afortuitous and accidental quality. They most certainly bear no clear rela-tion to the underlying structure of social relations. Can that underlyingstructure be revealed by value formation, if it (the structure) itself is con-stantly changing?

4 Moseley’s position has sometimes been called “simultaneous single system,” as he stressesthe common root of value and production price in order to vindicate Marx’s Volume 3calculations, but does not emphasize temporal processes. His own preferred designation,as stated in his contribution to this discussion, is “macro-monetary.”

5 Carchedi complains that my paper refers to the more recent work of Freeman, Kliman,and Kliman & McGlone rather than to his own earlier contributions. I apologize for this;it is because the paper originated in discussions in the mid-1990s at the annual sessionsof the International Working Group in Value Theory, at which Carchedi was not present.In addition to Carchedi’s 1984 paper and other writings, the paper by John Ernst (1982)should be mentioned among early exemplars of the TSS position.



I believe the answer is “yes,” if we follow the second route mentionedabove. This requires a theoretical intervention in time: we let time pass,in one sense, so that a sequence of stages of production, surplus forma-tion and redistribution can occur. But in this sequence we hold the social– technical foundation constant . We ask: what would value formation look likeif we let an entire series of Marx’s Volume 3/Chapter 9 processes takes placein sequence, but on the basis of unchanged techniques of production, de-mand structure, and rates of exploitation — so that the value process canbe isolated from fortuitous and accidental influences? Need I mention that this is the heart of Marx’s method in Capital , right from the start? Value isabout nothing if it is not about laying bare the deep structures underlyingthe apparently aimless and orderless surface phenomena available to im-mediate experience.

If we do this, we find that the sequential prices of production establishedat each given moment, and well captured in Marx’s presentation, convergeto a stable endpoint: input and output prices progressively move closer to-gether and ultimately coincide (see Shaikh, 1977). These are, of course, themuch-reviled prices that result from a system of simultaneous equationsexpressing given social–technical conditions. They could be called “long-term” prices of production (as distinct from the “short-term” ones exam-ined by Marx and dutifully reproduced by Moseley and Carchedi), as longas we are clear that by “long-term” we do not imply that we think that social–technical conditions are in fact constant over time. The analytical separationof time into two levels and the revelation thereby of an underlying consis-tent structure of capitalism-formed values (“prices of production”) links theshort-term sequential process with its structural determinants, and brings

us to the point where we can ask: what does the value dimension reveal about capitalist social relations as such, that is not apparent otherwise? Thus: theo-retical time/consistent structure (TT/CS).

Of course, in a sequence of stages in which the output prices of oneperiod become the input prices of the next, input prices are transformed . Thisis inherent in the very structure of the problem; it does not depend on meth-odological choice, and no one’s method — not even Marx’s — can precludeit. Moseley’s insistence to the contrary amounts to taking Marx’s short-termproblematic as the only one that we are allowed to discuss.

What, then, of “logical error”? The ultimate logical error — andMoseley’s insistence on excluding transformation of input prices at any methodological level comes dangerously close to it — is the assertion that a given commodity is simultaneously purchased and sold at two different prices, as Steedman long ago pointed out. Does the progressive transfor-mation of input prices result in logical error, on the part of Marx or any-one else, as those who truly deserve to be called critics of Marx such as

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Bortkiewicz (and perhaps Steedman himself) believe? In particular, how should we interpret the violation of the “twin equalities” — total surplus

value = total profit; total value = total price — that is a consequence of input value transformation?

The new orthodox Marxists have a genuine love affair with the twinequalities: through all of the temporalist, non-equilibrium sturm-und -drang ,these equalities shine as the beacon of logical rectitude. My own view is that the whole problem is illusory. Capitalist value exists as value transformed by profit-rate equalization. Once it is seen that value in its precapitalist quantita- tive form does not appear directly in capitalist value formation, the entireproblem of the “twin equalities” (and indeed of other related equalities that are not mentioned by Moseley and Carchedi) disappears (for details, seeLaibman, forthcoming).

Is the TT/CS position overly burdened with “equilibrium”? Carchediquotes me to the effect that “equilibrium paths” are “the necessary groundfor the study of disequilibrium dynamics,” but fails to note that in this pas-sage I was talking about the distinction between methodological and onto- logical equilibrium: “As a methodological tool, equilibrium paths are . . .”(Laibman, 2000, 329, emphasis in original). I continue to think that thisdistinction is essential. Carchedi argues that only non -equilibrium analysisis capable of grasping the contradictory nature of capitalist accumulationand crisis. He fails, however, to answer my charge that “non-equilibrium”theory, by refusing to separate the necessary and structural from the con-tingent and superficial, winds up aping the institutionalism and empiri-cism of capitalist social science and reducing explanation to description.(I would also point out that “non-equilibrium,” or “anti-equilibrium”

views are common to many schools of thought across the political spec-trum, from the Austrians to Schumpeter, from Frank Knight to Keynes to

Janos Kornai.)So. Marx did not make “logical errors,” at least not any fatal ones. He

did leave some tasks incomplete . I think that is fine; in fact, it would be very strange, from the standpoint of materialism and science, if this were not thecase. It should not give Marxists — people building the theory and practiceof revolutionary, critical and humanist alternatives to capitalist society in the21st century — much cause for concern.

David Laibman

Program in Economics

Graduate School / CUNY 356 Fifth Avenue New York NY 10016 [email protected]



REFERENCES

Carchedi, Guglielmo. 1984. “The Logic of Prices as Values.” Economy and Society ,12:4.

———. 2001–02. “On Temporality, Simultaneity and TSS: A Reply to Laibman.”Science & Society , 65:4, 509–515.

Ernst, John. 1982. “Simultaneous Valuation Extirpated: A Contribution to the Cri-tique of the Neo-Ricardian Concept of Value.” Review of Radical Political Eco- nomics , 14:2.

Foley, Duncan. 2000. “Recent Developments in the Labor Theory of Value.” Re- view of Radical Political Economics , 32:1, 1–39.

Laibman, David. 2000. “Rhetoric and Substance in Value Theory: An Appraisal of the New Orthodox Marxism.” Science & Society , 64:3 (Fall), 310–333.

———. Forthcoming. “Value and the Quest for the Core of Capitalism.” Review of

Radical Political Economics .Moseley, Fred. 2001–02. “Marx’s Alleged Logical Error: A Comment.” Science & Society , 65:4, 515–527.

Shaikh, Anwar. 1977. “Marx’s Theory of Value and the ‘Transformation Problem.’”In Jesse Schwartz, ed., The Subtle Anatomy of Capitalism . Santa Monica, Califor-nia: Goodyear.

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