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The Making of Global Capitalism by Leo Panitch and Sam Gindin

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The Making of Global Capitalism: The Political Economy of American Empire by Leo Panitch and Sam Gindin is one of the best Marxist analyses of the modern epoch published in a long time. The book (Panitch and Gindin 2012: vii) is devoted to understanding “how it came to be that the American state developed the interest and capacity to superintend the making of global capitalism”. It deserves to be widely read and discussed on the international left both for the coherence of its arguments and because it challenges a series of shibboleths – particularly on imperialism – that have hampered the left for decades.

Panitch and Sam Gindin’s central claim is that since the Second World War, the US state has acted as the essential defender of the particular interests of US capital capital-in-general, but also for the general interests of global capital-in-general. They argue (2012: 195): “The ambitious project for the making of global capitalism, imbricated in the American empire and first articulated during World War II, was realised in the last two decades of the twentieth century.” In short, the US state established effectively an informal American empire, where its hegemony is accomplished primarily through economic mechanisms (including through the World Bank, IMF, WTO), while backed by the irreplaceable role of the state, military forces and political coercion (through the G20, the UN, NATO and of course its own armed forces, the CIA and local collaborators).

Panitch and Gindin divide post-war history distinctively: the launch of the project after 1945 until the late 1960s, focused on the revival of Western Europe and Japan; the period of crisis from 1968 until 1982; thereafter the turn known as neoliberalism when growth and profits revived until the 2007 crisis; and the period since the current crisis began. The authors argue that over the course of a half-century, the project for a new type of empire was “largely realised” and by the beginning of the twenty-first century fully capitalist social relations had spread over the entire surface of the globe.

The projection of the US state as the global enforcer was articulated by politicians during the Second World War and propagated in wider circles. Thus in May 1942, Fortune, Time, and Life magazines jointly published a statement entitled “An American Proposal”, which called for “a new American ‘imperialism’”. Panitch and Gindin (2012: 73-4) describe the post-war settlement as grafting “the philosophy, substance and form of the New Deal regulatory state onto the world”. The historic significance of the Bretton Woods agreement was that it “institutionalised the American state’s predominant role in international monetary management as part and parcel of the general acceptance of the US dollar as the foundation currency of the international economy”.

The new relations were most pronounced with Europe. The Marshall plan signalled the US state’s commitment to underwriting the European states as capitalist states. They argue (2012: 112-114) that the US state positively supported the Common Market, which “was not intended to be, and it did not become, the basis for a new inter-imperialist rivalry based on a European super-state”. Rather than trying to limit the penetration of US capital, European governments competed for American investment, offering special treatment for foreign capital. They argue that the stage was set for “the implantation of American capital as a class force inside European social formations”.

The process was not without serious contradictions. The first was “the growing trade competition from Europe and the growth of US private investment in Europe combined to produce severe pressure on the dollar”. A second emerged as US financial capital increasingly strained against the limits of the New Deal framework at home, and also “found new outlets through the overseas expansion of multinational companies (MNCs) and the opportunities this gave to internationalise US banking”. The vast cross border flows of private capital this involved “were bound eventually to undermine the Bretton Woods system of fixed exchange rates”.

Integration of the rest of the world into the US informal empire took a qualitatively different form from Western Europe, not only in Japan but also in the oil-producing states of the Middle East, as well as elsewhere in the ‘Third World’. Although Japan’s integration would become the model for Taiwan and South Korea, no other part of the Third World would be so successfully integrated in this fashion into the American empire. Although Japan was the successfully assimilated, this was also not without contradictions, not least the economic competition of Japanese capital with US capital that emerged in the 1960s.

The initial “golden age” saw the reconstruction of Western capitalism. International trade during the 1960s grew 40% faster than GDP, but this was outstripped by foreign direct investment (FDI), which increased twice as fast as GDP. Panitch and Gindin (2012: 112) point to “a shift over the second half of the twentieth century in capitalism’s international fulcrum from trade linkages across national spaces of accumulation to the development of transnational productive spaces”.

Panitch and Gindin (2012: 164) argue that the way the crisis of the 1970s was resolved “was decisive for realising the project for a global capitalism under leadership in the final two decades of the twentieth century”. They explain four specific transformations. The first was the relationship between industry and finance. “A much larger share of total corporate profits now went to the financial sector. However “it is a mistake to see the dominance of finance in terms of speculation displacing productive activity”. Second, old labour-intensive sectors like shoes, textiles, food and beverage didn’t just ‘decline’ in the US. By the end of the century, a major restructuring had occurred within these industries – in particular their spatial relocation. Third, the shift to high-tech manufacturing production – a new, largely American-led industrial revolution – soon spread globally and encompassed computer and telecommunications equipment, pharmaceuticals, aerospace, and scientific instruments. Fourth, structural transformation involved the growth of a diverse range of “professional and business services” that ranged across consulting, law, accounting, market research, engineering, computer software and systems analysis.

These transformations – the new age of finance, the restructuring of manufacturing, the explosion of high-tech, the ubiquity of business services, as well as the profound weakening of working class organisation and labour identity – reconstituted the material base of the American empire. The global division of labour before the Second World War was rigid: manufacturing was largely concentrated in the former imperial countries and resource extraction in their dependencies. This pattern did not change all that much until the 1980s, when the political conditions were established – in the North as well as increasingly in the South – that laid the grounds for a truly global capitalism.

Panitch and Gindin (2012: 211-12) argue that some states were able to break out of capitalist underdevelopment. The major shift across so many developing counties to export-led manufacturing production “meant that their place in global capitalism was no longer that of mere suppliers of raw materials to the advanced capitalist states”. In fact this transformation in the international division of labour involved “a reconfiguration of social relations in one country after another, yielding not only new capitalist classes which became ever more linked to international capital accumulation, but also a massive expansion of the global proletariat”.

By the new millennium there was clearly a very remarkable, if still highly uneven, process of capitalist development taking place in the global South. But Panitch and Gindin (2012: 211-212, 275) do not exaggerate the extent of the transformation. The integration of these regions of the world into global capitalism has been extremely uneven. At the end of the twentieth century the advanced capitalist countries accounted for 90% of all financial assets, 65% of world GDP and almost 70% of global exports of manufactured goods. Not only did 85% of global FDI emanate from these countries, they were also the recipients of over two-thirds of it. Despite the enormous volume of manufacturing production taking place in developing countries by the first decade of the twenty-first century, the advanced capitalist countries still accounted for over 70% of world manufacturing production by value, and over 60% of the value of manufactured exports. Most MNC production and sales still took place in the developed world, which in 2007 was still the recipient of 70% of FDI. Nor did the increase in global production taking place in the Third World lead to anything near a corresponding convergence in income relative to the advanced capitalist countries, as evidenced not only by conditions in the factories but especially in the slums of most Third World cities.

Much of this analysis is simply reading off the real trends and tendencies in global political economy without flinching or self-deception. One virtue of the book is that it is empirically grounded – starting from reality as it is – and seeking to explain how the current balance of forces emerged. This is neither fatalistic nor pessimistic. Panitch and Gindin constantly emphasise the contested nature of the global order and in particular the efforts of labour movements to come to grips with it. Thus they see that within the drive towards globalised capitalist production increased the power of capital but also the social weight of the working class. The apparent triumph of the American empire only reinforces the global terrain of working class politics and the importance of international working class struggle.

One of the chief contributions made by Panitch and Gindin, not only in this book but in a range of articles they have produced over the last decade in the Socialist Register and New Left Review, is to challenge the “orthodox” left version of imperialism. This view – expressed by the SWP and most of the left in Britain – mechanically transposes Lenin’s view of inter-imperialist rivalry leading to the First World War onto today’s very different conditions. Behind arguments about Israel-Palestine, Syria, Iraq, Iran and a host of other debates lurks an interpretation of imperialism largely inherited from Stalinism. Clearing away the debris is vital to understand the dynamics of current politics.

Panitch and Gindin (2012: 5) applaud the classical Marxist analysis of the international dimension of capitalism. They regard the insight that the export of capital was transforming the role of the state in both capital-exporting and importing countries as “the most important contribution of theorists of imperialism writing at the beginning of the twentieth century”. However “the link these theorists made between the export of capital and the inter-imperialist rivalry of those years was problematic, and would become even more so over the years from 1945 onwards”. The problem was “not only that classical theories of imperialism saw states as merely acting at the behest of their respective capitalist classes, and thus did not give sufficient weight to the role of pre-capitalist ruling classes in the inter-imperialist rivalry of their own time”. It was also that “they treated the export of capital itself as imperialist, and thus the theories did not really register the differentiation between the economic and political spheres in capitalism, or the significance of informal empire in this respect”.

Panitch and Gindin (2012: 6) do not dismiss the value of these theories at the particular conjuncture of the First World War. However “their tendency to directly associate the new export of capital with the old history of imperialism (as the extension of rule through armed conquest of territories), led them to mistakenly conclude that this fusion defined the historical terminus of a mature capitalism”. Whatever one believes about imperialism, the form it took in 1914 cannot in retrospect be described as the final or highest stage of capitalism. Further, “the notion of finance capital (extrapolated far too generally from the monopoly trusts between industrial and financial firms at the turn of the century in Germany) was a hindrance to understanding the much looser relationship between production and finance that increasingly became the norm, along American lines, through the course of the century”.

But most problematic of all was “the attempt to explain the export of capital in terms of the saturation of domestic markets in the major capitalist countries”. This failed to recognise the long-run implications of the growth of working class organisations for the dynamics of capitalism. In the ‘golden age’ after 1945, “domestic markets were anything but saturated; profits were realised through expanding working class consumption, yet capital exports continued, driven by quite different factors, as the export of capital itself was transformed over the twentieth century in the context of the international integration of production through multinational corporations and the extensive development of international financial markets”.

In short, Marxists cannot understand capitalist development after the Second World War by mechanically extrapolating the tendencies that characterised the period of the First World War. For Panitch and Gindin (2012: 7-8), the most important novelty of the relationship between capitalism and imperialism set in train after 1945 was that “the densest imperial networks and institutional linkages, which had earlier run North-South between imperial states and their formal and informal colonies, now ran between the US and the other capitalist states”. The creation of stable conditions for globalised capital accumulation was accomplished by the American informal empire, which succeeded in integrating all the other capitalist powers into an effective system of coordination under its aegis.

Panitch and Gindin (2012: 11) argue that the interpenetration of capitals “did largely efface the interest and capacity of each ‘national bourgeoisie’ to act as the kind of coherent force that might have supported challenges to the informal American empire”. The new relationship between capitalism and empire established at this time “should not be understood in terms of the old ‘territorial logic of power’ long associated with imperial rule merely becoming fused with the ‘capitalist logic of power’ associated with ‘capital accumulation in space and time’. The US informal empire constituted a distinctly new form of political rule”.

They build on the insight of Marxists such as Ellen Meiksins Wood, about how the separation of the economic and the political that characterises capitalism. This plays out globally as well as within particular states. The prototype for this kind of imperial hegemon was of course Britain, which emerged as the first global capitalist power. Before the late eighteenth century, all empires had combined economic control with military and political control. It was left to Britain, “where the differentiation between economy and state was most advanced, to develop a conception of empire based as much on economic expansion and influence - the ‘imperialism of free trade’ – as on the military and political control of overseas territories”. Of course the Britain empire mixed the old territorial conquest (such as in India) with the more informal methods (such as in Latin America). Panitch and Gindin puncture the conventional notion that free trade and imperialism did not mix, a misconception carried into the twentieth century by Marxists such as Kautsky and Lenin. The British experience and latterly the role of the US decisively refute this juxtaposition.

Panitch and Gindin (2012: 218, 330) extend this analysis of “the imperialism of free trade” to understand the hegemony the US state has exercised globally since 1945. They also make some wider insights that are valuable. First, those observers who have sought since the 1970s to predict “a recrudescence of inter-imperial rivalry”, in the form of US conflict with either Europe, or Japan, (or latterly with China) have been wrong. The continuing centrality of the American state in the global economy has been reinforced in the current crisis unfolded, “with virtually no trace of such inter-imperial conflict that a century earlier had given rise to world war”. The conflicts that have emerged today in the wake of the greatest capitalist crisis since the 1930s are taking shape, not only in Europe but much more generally, “less as conflicts between capitalist states and their ruling classes than as conflicts within capitalist states”.

There are also implications of their analysis for our understanding of the Cold War and its place in the last half-century of history. Panitch and Gindin (2012: 12), rightly in my view, did not regard USSR as a capitalist state, but rather as a different form of exploiting class society. The USSR was imperialist in the classic, general historical sense i.e. a territorial imperialist, both internally in dominating other people, such as in the Ukraine, and externally in its post-war control over Eastern Europe. The Cold War was undoubtedly a conflict between imperialist blocks, and between different modes of production. There is no doubt about the real threat of global war that it entailed, or its terrible impact on labour movements.

However many on the left made the US-USSR rivalry simply a species of the inter-imperial rivalry thesis, and thus the main dynamic in international relations between 1945 and 1991. If I read Panitch and Gindin right, they regard the Cold War as a secondary phenomenon, subordinate to the global capitalist project of the US state. I think they are right about this. The USSR was never able to mount a systemic challenge to capitalism and Stalinism never caught up with the productivity of capitalism. Stalinism was a blind alley – and for the working class movement a terribly destructive diversion – within an epoch in which capitalism was the dominant mode. The collapse of Stalinism and the endurance of capitalism underline the analytical priority. This is not to render the Cold War irrelevant, but rather to understand it as a sub-plot within a much wider global political economy that emerged after 1945.

Two other insights also make sense. Panitch and Gindin argue that to characterise the US economy a century ago (never mind today) as ‘monopoly’ capitalism is a mistake. In 1900, US firms’ relationship with the financial sector was fundamentally different from that of European companies with centralised banking systems that initially funded and then came to control industrial firms. Similarly, while there is no doubt deeper interpenetration of financial and productive capital in the modern world, to amalgamate it as “monopoly capital” adds little and confuses much.

Finally, Panitch and Gindin not only debunk important presuppositions about relations between the big powers, they also challenge the way “North-South” relations have been framed. They are critical of the way “imperialism” became ever more loosely associated with core-periphery relations, dependency and unequal exchange, with little focus on what distinguished the US from other empires. The world systems, dependency and other third worldist nationalist theories that dominated left thinking, particularly in the 1960s and 1970s, have been crucially undermined by developments over the last generation. Capitalist development has been and will always be highly uneven, but there has been significant combined development, particularly the creation of new centres of accumulation with sub-imperialist states, and crucially the growth of the industrial working class, which has renewed and expanded the objective basis for international socialism. It is on these tendencies that a revived labour movement can arise.

Since the 1970s, much of the international left has claimed that the US is in decline and thus the cannibalised “Leninist” position of inter-imperial rivalry leading to war became operative again. Yet even a superficial familiarity with the real relation of forces challenges this thesis – the US retains absolute superiority in military, economic, technological and cultural matters. For example, the US state had around 400 military bases in the 1960s, while today it has over 700. The US also outspends all its possible rivals put together, never mind its allies, alliances, nuclear and cyber capability, and other advantages. The Making of Global Capitalism (2012: 135, 289-91) shows very clearly that apocalyptic interpretations of US decline are misplaced, the evidence for it scanty and the political conclusions drawn from it hugely problematic. Panitch and Gindin weigh up key decline arguments: growth, technology, trade and rivals, finding them unsatisfactory at present.

The first argument concerning world production shares is simplistic. The US share of global GDP did shrink from 35% in 1950 to 27% in 1970 and has reduced since then to around 20%. However the US state’s project for a global capitalism was always predicated on reviving the other capitalist economies and their capitalist classes. The period since the 1970s has seen the further integration of European, Japanese and American capital, as well as intensive cooperation between the European and Japanese states and the American state. The US economy has not stagnated compared with other advanced states. The average annual real rate of growth of the American economy in the quarter-century after the resolution of the crisis of the 1970s (from 1983 to 2007) was 3.5%. This was higher than in any similar period from 1830 to 1950, and only marginally less than during the post-war ‘golden age’. US GDP growth in the quarter-century after 1983 surpassed that of all other advanced capitalist countries.

The second argument concerns the growth of the US trade deficit, which some observers claim threatens the dollar and ultimately US hegemony. Panitch and Gindin (2012: 291) argue that “the US trade deficit was not an adequate measure of the overall productive power of American capital; rather, it indicated its place in global capitalism”. The growth in the volume of US exports in the two decades up to 2007 – even as the trade deficit accumulated – averaged a very robust 6.6%, leaving it only marginally behind Germany and China, the world’s largest exporters. It was “the relative expansion of US imports that was the source of the growing deficit. The deficit in other words, primarily came from increased US consumption”. A more rounded picture is gleaned from looking at overall flows. Total US trade (exports plus imports) equalled 30% of GDP in 2007, whereas it had still been under 10% four decades earlier. But “perhaps the best measure of the intertwining of US and global capital was foreign capital’s increased presence inside the US”. Foreign direct investment into the US, which was still under 5% of US non-residential investment until the mid-1980s, exploded in the following two decades; by 2007 FDI to the US was running at 20% of US non-residential investment.

The third argument concerns technological leadership, which US capital continues to dominate. Panitch and Gindin (2012: 190-1, 202) point out that in the 1970s, US expenditure on research and development was about four times that of the countries of Western Europe combined. By the 1990s American IT corporations such as Apple, Hewlett-Packard, IBM and Microsoft were supplying over 80% of Europe’s software and computer market. By the end of the century, of the top dozen global firms by sector, the US accounted for 77% of the world’s aerospace sales, 75% of all sales of computers and office equipment, 91% of computer software sales, and 62% of pharmaceuticals. The US share of global high-tech sectors (aerospace, pharmaceuticals, computers and office machinery, communications equipment, and scientific – medical, precision, and optical - instruments) remained relatively steady at 32% between 1980 and 2001, whereas that of Germany was halved (to 5%) and that of Japan fell by a third (to 13%), and China’s and South Korea’s shares were still only 9% and 7% respectively.

Panitch and Gindin (2012: 289, 291) argue that the ‘commanding heights’ of global accumulation has shifted to these high-tech sectors, and to a range of business services. As of 2007, the top three or four firms in such diverse sectors as technological hardware and equipment, software and computers, aerospace/military, and oil equipment and services were American, as were fourteen of the sixteen top global firms in healthcare equipment and services. Nine of the top ten corporations in global financial services were American – a dominance that went beyond that in any other sector. By 2007, five US investment banks accounted for 35% of world revenue generated by underwriting bond issues, organising IPOs, equity trading, syndicated loans, and over-the-counter derivatives. More than half the world’s pension, insurance, and mutual funds were under the management of US financial firms, as were two-thirds of hedge funds and private equity funds. Yet the US was still producing more manufactured goods and receiving more foreign investment in 2007 than all the BRICS (Brazil, Russia, India and China) combined.

The final argument, which has probably the most substance, concerns the rise of China. The size of Chinese economy is expected to surpass the US economy in the next decade, although in per capita terms it remains far behind. However by 2050 (if not before) China may become the centre of gravity of global capital accumulation, and by that stage the Chinese armed forces may present a more serious rival to the US. China is already an imperialist power, in the traditional sense of territorial suzerainty over oppressed peoples and in the modern capitalist sense involving the export of capital, the role of financial capital and in the relationship between the Chinese state and particular states.

Panitch and Gindin (2012: 297-8, 336) do not discount the long term possibility of rivalry, but are sanguine about the exaggerated claims of China’s growing economic dominance, given that Chinese capital is still catching up technologically to Korea and Taiwan, let alone the US. They point to Chinese-US interdependence, with China reliant on the US as an export market and as the holder of huge dollar reserves, while US capital is now producing much more in China itself. They believe that since China’s admission to the WTO in 2001, it has been integrated into global capitalism. However the crucial question about rivalry concerns whether the Chinese state has the capacity to take on extensive responsibilities for managing global capitalism. Their view is that China is “manifestly still a very long way from being able to do so”. There are international institutional ties, from the UN to the G20, which at present bond the Chinese state to the current global order.

The situation of Chinese workers is perhaps the biggest factor in shaping the type of state China becomes in the coming decades. The number of manufacturing workers in China alone is now double the ten leading developed countries combined and its total labour force is larger than that of the US, Europe, Japan and all Latin America combined. Panitch and Gindin (2012: 337) say “it cannot be known in advance whether working class struggles in China will lead to the emulation of the West’s individualised consumerism, or whether they lead to the new collectivist claims”. What is known, based on the bitter experience of the last two decades, is that there will be more class struggle in China and there are opportunities for workers to organise as they did spectacularly in 1989. The role of international working class solidarity, in which Marxists can play an irreplaceable role, will also be vital for the emergence of an independent Chinese workers’ movement.

Panitch and Gindin (2012: 15, 97) provide an interesting account of the most recent phase of capitalism since 1982, although they are not keen on the term “neoliberalism”. First, they believe (rightly) that capitalist states remain central to the reproduction of capitalist social relations of production and have not been displaced by market mechanisms. Second, they argue that to demarcate the period since 1982 as neoliberalism “misses the continuities between their prescriptions for free markets and the long term goals already articulated by the American state at the time of the relaunching of global capitalism into the post-war era”. They quote Per Jacobson, who ran the Bank of International Settlements (and later the IMF) reassuring American policymakers in 1948 that something he called “neo-Liberalism… has begun to gain ground” in Europe. Third, they believe that neoliberalism was essentially “a political response to the democratic gains that had been previous achieved by working classes”.

These are valid insights, but their description does in fact (and for good reasons) feed the idea of that the past three decades have been significantly different from what went on for a generation before. Panitch and Gindin (2012: 150, 159, 172) state that the derivatives revolution was “crucial to the stabilisation of currency markets in the wake of the end of fixed exchange rates, and was also intimately linked to the internationalisation of the US bond market”. The significance of the triumph of monetarism in Britain in the late 1970s was “the class alignment that went with it”. In accepting the need to give priority to fighting inflation, “industrial capital accepted that a finance-led accumulation strategy was in its interests too”. The way in which this was achieved – high interest rates, a deep recession, and the liberalisation of markets – also laid the basis not only for the new age of finance, but also for the restructuring of US industry.

Between 1980 and 2007, global GDP doubled, trade grew twice as fast as GDP, and FDI grew twice as fast as trade. Panitch and Gindin (2012: 284, 286) believe that this “accelerated capitalist globalisation” entailed major changes everywhere. This could been seen in three interrelated areas: a) the massive expansion of finance in global accumulation; b) the impact of networks of integrated production on the global division of labour; and c) the novel aspects of US economic centrality in global capitalism. The scale of global financialisation “was especially stunning”. While in the years 1990-2007 world trade grew at an impressive annual rate of 8.7%, cross border financial flows grew at 14.4%, exploding over those years from $1.1 trillion to over $11 trillion. Financialisation in the global South also “facilitated the outward flow of capital from developing countries”. Capital flows between the developing countries increased significantly, and this came “not only from the foreign banks operating there, but also from local capitalists who were expanding their horizons beyond their home base”.

The new division of labour corresponded to something equally crucial to a globalised capitalism: the development of new networks of integrated production. The result was a more interdependent global capitalism that required more than ever the consolidation of ‘free trade’ to facilitate borderless production. Again, the process has not been without contradictions. No less than seventy-two financial crises broke out in the 1990s. The crisis that began in 2007 also indicates the state of the global power relations, including the neoliberal continuities with the previous period.

The current crisis is a crucial test for theories of imperialism and capitalist development. Panitch and Gindin (2012: 300, 311) argue that the first global crisis of the twenty-first century “would not be caused by the build-up of external imbalances, such as the US trade deficit and indebtedness to China, triggering collapse of the dollar”. On the contrary, “it was caused by the build-up of domestic contradictions in US society’s own envelopment in the volatility of finance. It was a crisis made in America”. The American crisis that started in 2007 “was not caused either by domestic industrial ‘overaccumulation’ or international trade and capital imbalances, but rather by the volatility of capitalist finance”. It was because “US finance had become so integral to the functioning of twenty-first century global capitalism that the ultimate impact of this crisis throughout the international economy was so profound”.

Panitch and Gindin (2012: 20, 329) oppose efforts to subsume the explanation for all crises to one universal, such as the tendency of the rate of profit to fall. They oppose attempts to go back to the theories of imperialism a century earlier, which suggested that “overaccumulation is the source of all capitalist crises”. There are fundamental differences between the 1970s crisis and the present one: for example “it was only after the financial meltdown in 2007-08 that profits and investment declined”. The stagnant growth and employment since are not due to falling profits – corporate profits quickly recovered after the 2009 downturn, and by mid-2011 were not only 23% above the mid-2007 level but even 16% above their record peak in mid-2006.

For Panitch and Gindin (2012: 313, 318, 326) the US Federal Reserve “has acted as the world central bank during the crisis, trying to ensure thereby that interbank rates would decrease and normal mechanisms for access to dollar funding would be restored”. Although many commentators predicted widespread “delinking” from the US-centred global order, remarkably “the crisis actually had the effect of strengthening the global role of the dollar”. Quantitative easing essentially involved “an audacious printing of US dollars”, and thus relied on “the willingness of foreign investors and central banks to continue to hold dollars; it served as the strongest reminder to date of the special ongoing attractiveness of the dollar”.

Of course the process has not been without contradictions. The confrontations between the Treasury and Congress starkly revealed the tensions the American state experienced between “the governance of its own social formation and its imperial responsibilities for the reproduction of global capitalism” (2012: 330). But thus far the US economy has survived the impact of the crisis and the US state remains central to the existing global political economy.

Panitch and Gindin’s account of the current era of capitalist development, superintended by the US state and sucking almost all social formations into the vortex of capitalist social relations of production, is essentially sound. At one point (2012: 115) they describe the way national bourgeoisies forged ties with American capitalists and were integrated into American imperial hegemony as “Canadianised”. This is an apt description and no accident. The authors have observed the pattern of US-Canadian relations first-hand during their lives, and those relations have served as a model for the global order.

Panitch and Gindin (2012: 338, 340) make some pertinent points for the future, which should be assimilated by sober Marxist analysis. First, the belief that there is a way back to a supposed post-war “real economy” from finance-led capitalism is “illusionary”. Second, “there is no real possibility of going back to the largely mythical ‘mixed economy’ the New Deal and Keynesian welfare state are imagined to have represented”. Third, “a revival of progressive economic nationalism in most developing states today is ruled out by the absence of anything like a national bourgeoisie for popular classes to ally with”. Instead they look to the organised labour movement for the social agency capable and willing to take on the forces of capital.

It would be churlish as some reviewers have done to emphasis the gaps and limitations of the picture. Methodologically, Panitch and Gindin chose to examine the construction of global capitalism through the analysis of a single state, which inevitably means some global relations are not discussed fully. Of course further analysis is needed of global flows of surplus value, anomalies such as many regimes in the Middle East and Africa, and no doubt other problems. But these can be reconstructed on the firm foundations established by the book. This is an immense contribution to understanding the nature of contemporary capitalism, which socialists should study in order to rearm the labour movement.

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