The new that always emerges both frightens and inspires the fading old. History testifies to the unity of its opposites. A sharp rejection of something new collides with an enthusiastic admiration for something new.
While bitter denials of that reality proliferate, the old ones are pushed aside. The emerging new global economy presents just such a contradiction.
Four major developments can explain them and highlight their interactions.
Transition to economic nationalism
First, the neoliberal globalization paradigm is now obsolete. Economic nationalism is new.
This is another reversal of their previous position. Driven by the famous profit motive, capitalism in its old centers (Western Europe, North America, Japan) increased investment elsewhere where labor was much cheaper. The market was growing faster. Ecological constraints were weak or nonexistent. and the government better facilitated the rapid accumulation of capital.
These investments brought huge profits to the old centers of capitalism, the stock market boomed, and as a result, income and wealth inequality widened (the richest owned large amounts of securities). For).
After the 1960s, regions that quickly became new centers of capitalism (China, India, Brazil) experienced even more rapid economic growth. Its growth was further facilitated by the arrival of the capital, which was relocated from the old center.
Capitalist dynamics had previously shifted its production base from England to continental Europe, and then to North America and Japan. The same profit-driven dynamics spread to mainland Asia and other regions in the late 20th and early 21st centuries.
Neoliberal globalization in theory and practice reflected and legitimized this capitalist transfer. We celebrated the gains and growth accruing to both private and state-owned/operated companies around the world.
It downplayed or ignored other aspects of globalization. (1) Growing income and wealth inequality in most countries. (2) the transition of production from old centers of capitalism to new ones; (3) Newer centers have faster production and market growth than older centers.
These changes shook the society of the old heartland. As quality jobs increasingly moved to new centers of capitalism, the middle class there atrophied and shrank.
The employing class of the old center used power and wealth to maintain their social status. In fact, they became richer by reaping the large profits rolling in from the new centers.
But neoliberal globalization has had dire consequences for most workers in capitalism's old centers. In the latter, the employing class not only reaped increasing profits, but also forced employees to bear the costs of the decline of the old centers of capitalism.
Tax cuts for corporations and the wealthy, stagnant or declining real wages (due to immigration), “austerity” cuts to public services, and neglect of infrastructure have all contributed to widening inequality.
The working classes of the capitalist West have been shocked out of the delusion that neoliberal globalization is the best policy for them. The rise of labor movements across the United States, including large-scale riots in France and Greece and left-wing political shifts across the Global South, is accompanied by a rejection of neoliberal globalization and its political and ideological leaders. .
Beyond that, capitalism itself is being shaken, questioned, and challenged. Despite the status quo's efforts to go beyond capitalism, the project of going beyond capitalism in new ways is once again on the historical agenda.
Expansion of state power
Second, over recent decades, capitalism has been forced to adjust as the problems of neoliberal globalization have intensified. As neoliberal globalization lost popular support in capitalism's old centers, governments seized power and made further economic interventions to maintain the capitalist system.
In other words, economic nationalism has replaced neoliberalism. In place of the old laissez-faire ideology and policies, statist capitalism rationalized the expansion of state power.
In the new centers of capitalism, the consolidation of state power led to economic development that significantly exceeded that of the old centers. The recipe for the new center was to create a system in which a large private sector (owned and operated by individuals) coexisted with a large state-owned sector owned by the state and run by its officials. .
Instead of a predominantly private capitalist system (like the US or UK) or a predominantly state capitalist system (like the USSR), countries such as China and India have created hybrids. Strong national governments presided over large private and state sectors that coexisted to maximize economic growth.
Both private and state-owned enterprises and their coexistence deserve the label “capitalism”. That's because both are organized around the employer-employee relationship. In both private and state-owned enterprises/systems, a small number of employers dominate and control the majority of employees.
After all, in slavery, private and state-owned enterprises often coexisted, sharing a definitive master-servant relationship. Similarly, feudalism had private and state-owned enterprises with the same lord-serf relationship.
Capitalism does not disappear when private and state-owned enterprises coexist, organized around the same employer-employee relationship. Therefore, we do not confuse state capitalism with socialism.
In the latter, different non-capitalist economic systems replace workplace employer and employee organizations in favor of democratic workplace community organizations such as worker cooperatives. A transition to socialism in this sense could also occur as a result of today's confusion over the formation of a new world economy.
China's state-private hybrid has achieved significantly higher and sustained GDP and real wage growth rates, which have continued over the past three decades. Its success has deeply influenced economic nationalism everywhere, starting to move towards hybridity as a model.
In the United States, too, competition with China has become the primary excuse for large-scale government intervention. Tariff wars that raise domestic taxes can be enthusiastically supported by politicians who preach laissez-faire ideology.
The same was true of many anti-China economic strategies, including government-led trade wars, governments punishing or banning specific companies, and government subsidies for entire industries.
decline of empire
Third, over recent decades, the American empire reached its peak and began to decline. It thus follows the classical pattern of birth, evolution, decline, and fall of all other empires (Greek, Roman, Persian, British).
The American Empire emerged from and replaced the British Empire over the past century, especially after World War II. Previously, in her 1776 and her 1812, the British Empire had attempted militarily to halt or prevent the development of independent capitalism in America, but had failed.
After these failures, Britain took a different path in its relations with the United States. After wars and competing colonialism in the 19th and 20th centuries, the British Empire is now extinct.
The question is whether the United States has learned, or can learn, the important lessons of the decline of the British empire. Or will it continue to attempt ever more desperate and dangerous military measures to maintain its inexorably declining position of global hegemony?
After all, America's wars in Korea, Vietnam, Afghanistan, and Iraq were all lost. China has now replaced the United States as the main peacemaker in the Middle East. Gone are the days when the US dollar existed as the best global currency. America's advantages in high-tech industries should already be shared with China's high-tech industries.
Even CEOs of major U.S. companies like Apple's Tim Cook and the U.S. Chamber of Commerce hope to benefit from increased trade and investment flows between the U.S. and China. They view with dismay the Joe Biden administration's increasingly politically-driven hostility toward China.
What will the future hold?
Fourth, the decline of the American empire raises the question of what happens next as decline deepens.
Is China becoming a new hegemon? Will the United States inherit the mantle of empire from the United States, as it usurped it from the United Kingdom? Or will a new multinational world order emerge and form a new global economy?
The most interesting possibility, and perhaps the most likely, is that China and the entire BRICS (Brazil, Russia, India, China, South Africa) group of nations work to build and sustain a new global economy.
The Ukraine war has already made such an outcome more likely by strengthening the BRICS alliance. Many other countries have applied or will soon apply to join her BRICS framework.
Together, they have the population, resources, productive capacity, connections, and collective solidarity that will become the new pillars of global economic development. If they play that role, the rest of the world, from Australia and New Zealand to Africa, Europe and South America, will need to rethink its foreign economic and political policies.
Their economic future depends in part on how they navigate competition between old and new global economic organizations. Their future will likewise depend on how the critics and victims of both neoliberal/globalizing capitalism and nationalist capitalism interact within all countries.
This article was produced by Economy for All, a project of the Independent Media Institute, and provided to Asia Times.
