The rise and fall of organised capitalism

Submitted by martin on 2 September, 2003 - 1:49

Discussion notes on the working class in "globalised" capitalism

"The End of Organised Capitalism": discussion points 3. The rise and fall of organised capitalism.

The importance of chapters 2 and 3 is in prompting us, or giving us material, to think through an account of the rise of nationally "organised capitalism" alternative to the traditional Marxist one.

That traditional Marxist account was straightforward. Capital tended organically towards concentration and centralisation, the creation of oligopolies, an increasing importance of credit and finance capital.

"Pressure of the productive forces, in their mighty upgrowth, against their character as capital... which forces the capitalist class itself more and more to treat them as social productive forces, in so far as this is at all possible within the framework of capitalist relations.... that form of the socialisation of huge masses of means of production which we find in the various kinds of joint-stock companies... At a certain stage of development... the official representative of capitalist society, the state, is constrained to take over [the] management [of the means of production]... All the social functions of the capitalists are now carried out by salaried employees. The capitalist has no longer any social activity save... gambling on the Stock Exchange..." (Engels, Anti-Duhring).

Marx and Engels had predicted those tendencies. Events had confirmed their predictions. (Events still do confirm their predictions). So, to Kautsky, Luxemburg, Hilferding, Lenin, Bukharin and all the rest of them, it seemed straightforward to read off the increasing "organisation" - statism, militarism, regulation, protectionism - of capitalism at the end of the 19th century and the beginning of the 20th as a direct product of the rise of monopoly capital and finance capital.

A hundred years later, we have vaster-than-ever corporations, and vaster-than-ever finance capital - with states fanatically deregulating, privatising, and free-trading. Obviously the relation is more complicated than it seemed.

It is not that capitalism takes a more international form today just because the technology of communications is improved. Political and economic structures are not determined by technology as simply as that.

The technology of communications certainly has improved in recent decades. But it also improved, maybe more dramatically, between 1882 and 1945, in a period when "organised capitalism", in Lash/Urry's terms, became ever more organised. (Really it was not until 1979-82, or the late 1970s anyway, that the tendency to increasing "organisation", in Lash/Urry's terms, was decisively replaced by different tendencies).

Back in 1882, we are still in the era of sailing ships. The Cutty Sark was the fastest ship in the Australia-to-UK wool trade until 1895. The telephone is an exotic recent invention. Road traffic is still pulled by horses.

By 1945 steam-turbine ships (from 1894) and then diesel-turbine ships sail the oceans. The invention of refrigeration has greatly expanded the variety of goods that can be transported long-distance. The telephone is commonplace. Radio has been invented and become commonplace; public TV broadcasting is nine years old. Lorries, trucks and cars travel a vastly expanded road system. Aircraft have been invented, gone into commercial production, acquired jet engines. (The first viable commercial passenger aircraft, the DC-3, made its first flight in 1935). I don't know about the evolution of the technology of cranes between 1882 and 1945, and the consequent increase of port capacity, but I think it must have been considerable.

Yet through all this period the tendency for capital to be clustered and organised in more-or-less integrated national complexes continued.

So, if it was not simply the concentration of capital which drove "organised capitalism" after 1882, and certainly not simply undevelopment of communications, what did drive it (and has now ceased to drive it)?

Lash and Urry approach this question by analysing five national experiences and identifying different drivers of "organised capitalism" in the different societies. "Organised capitalism", in their account, was not everywhere driven by finance capital or monopoly capital. It was variously driven by large-scale heavy industry (Germany), the state machine (France), the "service class" (USA), or even the labour movement (Sweden).

According to their introduction, later in the book they will go on to argue in more recent decades the "service class", everywhere a product of "organised capitalism" even if it was not everywhere, as in the USA, its driver, has now become the driver of "disorganisation". I do not know how they will argue this turnaround in the drives of the "service class": this is a point to look out for when we study later chapters.

Lash/Urry's account of the different national drivers of "organised capitalism" is interesting and thought-provoking, but begs three questions. Firstly, if the processes in those different countries were driven by such different forces, through what compulsion or structuring did those different forces drive towards even roughly similar or comparable results? Why is the result in every case something that can, with due variation, be called "organised capitalism" according to the quite elaborate 14 point definition they have given in the introduction?

Secondly - or maybe this is the first point rephrased - doesn't a search for national drivers warp analysis from the start? For example, didn't two world wars, and the arms race before World War 1, play a large role in pushing along "organised capitalism"? Creating pressures that cannot neatly be put to the account of this or that particular group in each country? Doesn't the narrative by Lash and Urry rather understate the role of arms races and wars in the development?

Thirdly, no social group acts in a vacuum. An evolution in the organisation of politics and economy may be legislated and administered by one group, for example, but much more out of the exigencies of that group responding to another group which is in struggle against it than out of any innate drive. Bismarck and the German imperial bureaucracy initiated Germany's "organised capitalism" - but they did it in large part in response to the rise of the German workers' movement. Their measures were part of a package with the Anti-Socialist Law. Who was the driver there? On the other hand, the Swedish Social-Democratic governments initiating "organised capitalism" in Sweden were implementing ideas originated by a British bourgeois (Keynes) and easily consented-to by a large part of the Swedish bourgeoisie. Who drove there?

Isn't it better to analyse such developments as shaped by two-sided, or many-sided, class struggle, rather than just being driven by one social group?

The key question, then: if the trend to "organised capitalism" was not driven simply by the rise of oligopolo-financial forms of capital; and if tracing the particular groups which played headline roles in that trend in different countries, while interesting, cannot be a full account; then, what was the general driving mechanism?

Is it that the traditional Marxist linkage between the high imperialism of rival colonial empire-building and "organised capitalism" is valid, but that it operates more the other way round - high imperialism shaping "organised capitalism" - than in the direction usually discussed, "organised capitalism" shaping high imperialism?

How could we investigate this hypothesis empirically? Firstly, by timelines. Which came first, the scramble to divide the world into colonial empires, or the rise of oligopolo-financial capital and "organised capitalism"? I think the scramble came first.

Secondly, by investigating the role of military contracts and military-strategic policy (policy to ensure each state's independence, so far as possible, in military procurement) in the rise of "organised capitalism". For example, by seeing whether those states which devoted large energies to empire-building and the arms race also tended to show a quicker and fuller trend towards "organised capitalism". I think yes: for example, Germany.

If that is so, then we are pushed back to another question: what drove the trend towards high imperialism?

A possible answer runs as follows. In the heyday of the mid-19th century "imperialism of free trade", the dominant power, Britain, already had a large colonial empire. That empire had been built up in the previous period of commercial capitalism, through drives characteristic of commercial capitalism (fundamentally, desire to plunder, desire to acquire the profits available from controlling the trade in hard-to-find commodities). In India and the settler colonies, it was beginning to acquire an industrial-capitalist character, with the export of capital. Even those people in the British ruling class most hostile to the acquisition of new colonies (and the majority of the ruling class was "anti-imperialist" in that sense, to one degree or another) did not contemplate the speedy abandonment of the existing ones.

One reason was inertia. The Liberal Party went over to Home Rule for Ireland after 1885; Canada acquired extensive autonomy after 1867; but large vested interests stood in the way of faster movement. Another reason was what Robinson and Gallagher call the "non-European roots of European imperialism". If, maybe, the British government had seen a reliable Indian government-in-waiting which could be relied on to take over the administration of India and keep integrated into a free-trade world market, then they would have seen it as cheaper and less risky to hand over to it than to continue to rule India directly. But they did not. The acids of capitalist penetration had eaten away at the traditional hierarchies in India, but not yet completed the series of social reactions necessary to create a solid Indian bourgeois ruling class.

In fact, the difficulty of holding together countries whose structures were being eroded and decomposed by the acids of a predatory world market led to imperial-colonial expansion. The turning point was with Egypt in 1882. The British ruling class, both Tory and Liberal, did not want to rule Egypt. Sincerely they did not. The Tories told each other, in private correspondence, not just in statements for public opinion, that taking on the administration of Egypt would be risky and costly. The Liberals agreed and considered it immoral, too. Yet when the Khedive defaulted on his debts, and all lesser measures to gain a restart of payments failed, a Liberal government in Britain found itself, step by step, drawn into establishing de facto British rule in Egypt. Britain would stay there for 70 years.

In the same period, and through broadly the same process, the burgeoning of the capitalist world market, other countries, Germany, the USA, etc. were becoming industrial rivals to Britain. Or, rather, capitalists based in those countries were becoming rivals to capitalists based in Britain. Maybe in principle that rivalry could have been played out through market competition in a world of free trade. Even in the actual development, it is hard to find cases where imperial military-colonial ventures were directly motivated by the interests of individual corporations.

In actual fact, the rising capitalist powers faced incumbent leading states which had large colonial empires (the Netherlands, France, Russia, Austria, Spain and Portugal, as well as Britain). And they saw those empires expanding (France's, in fact, more than Britain's). Their choice: either jump in and grab something for themselves, or be closed out. Obviously they chose to jump in.

The rise of oligopolo-financial capital played a central role - but in this sense, that it required the "organisation" of the capitalist world in one way or another. As we now know, "organisation" through a more-or-less free-trade world, regulated by cartels of leading states, with each individual state regulating its own economy in order to best to integrate it into the world market, is in principle an option. It was not then. The only option was for each state to strive to organise its own integrated industrial-military complex, in order to hold its own in the high-imperialist world.

Organisation/ disorganisation misdescribes the options. The real options are intra-organised capitalism, and extra-organised capitalism - the first being the 1900 option, the second the 2000 option.

If so, the comments by Lash and Urry on Britain's lack of vertical integration in industry suggests that Marx's comments in a preface to Capital on Britain showing the future to other capitalist economies were more true than might first appear. Lash and Urry say that British companies did not go for the level of vertical integration adopted by companies in Germany (for example) because the better development of markets within Britain, and Britain's role within the world market, made it better for them to buy their inputs on the market rather than organising them directly. In the early 20th century this feature of British capitalism looked like backwardness, the product of gentlemanly management and an insufficiently technological culture. From the viewpoint of 2003, perhaps the apparent backwardness was premature "forwardness" - a prefiguration of the 21st century world of maximum contracting-out.