July
21, 2023
Early
U.S. capitalism was centered in New England. After some time, the pursuit of
profit led many capitalists to leave that area and move production to New York
and the mid-Atlantic states. Much of New England was left with abandoned
factory buildings and depressed towns evident to this day. Eventually employers
moved again, abandoning New York and the mid-Atlantic for the Midwest. The same
story kept repeating as capitalism’s center relocated to the Far West, the
South, and the Southwest. Descriptive terms like “Rust Belt,”
“deindustrialization,” and “manufacturing desert” increasingly applied to ever
more portions of U.S. capitalism.
So
long as capitalism’s movements stayed mostly within the U.S., the alarms raised
by its abandoned victims remained regional, not becoming a national issue yet.
Over recent decades, however, many capitalists have moved production facilities
and investments outside the U.S., relocating them to other countries,
especially to China. Ongoing controversies and alarms surround this capitalist
exodus. Even the celebrated hi-tech sectors, arguably U.S. capitalism’s only
remaining robust center, have invested heavily elsewhere.
Since
the 1970s, wages were far lower abroad and markets were growing faster there
too. Ever more U.S. capitalists had to leave or risk losing their competitive
edge over those capitalists (European and Japanese, as well as U.S.) who had
left earlier for China and were showing stunningly improved profit rates.
Beyond China, other Asian, South American, and African countries also provided
incentives of low wages and growing markets, which eventually drew U.S.
capitalists and others to move investments there.
Profits
from those capitalists’ movements stimulated more movements. Rising profits
flowed back to rally U.S. stock markets and produced great gains in income and
wealth. That chiefly benefited the already rich corporate shareholders and top
corporate executives. They in turn promoted and funded ideological claims that
capitalism’s abandonment of the U.S. was actually a great gain for U.S. society
as a whole. Those claims, categorized under the headings of “neoliberalism” and
“globalization” served neatly to hide or obscure one key fact: higher profits
mainly for the richest few was the chief goal and the result of capitalists
abandoning the U.S.
Neoliberalism
was a new version of an old economic theory that justified capitalists’ “free
choices” as the necessary means to achieve optimal efficiency for entire
economies. According to the neoliberal view, governments should minimize any
regulation or other interference in capitalists’ profit-driven decisions.
Neoliberalism celebrated “globalization,” its preferred name for capitalists’
choosing to specifically move production overseas. That “free choice” was said
to enable “more efficient” production of goods and services because capitalists
could tap globally sourced resources. The point and punchline flowing from
exaltations of neoliberalism, capitalists’ free choices, and globalization were
that all citizens benefited when capitalism moved on. Excepting a few
dissenters (including some unions), politicians, mass media, and academicians
largely joined the intense cheerleading for capitalism’s neoliberal
globalization.
The
economic consequences of capitalism’s profit-driven movement out of its old
centers (Western Europe, North America, and Japan) brought capitalism there to
its current crisis. First, real wages stagnated in the old centers. Employers
who could export jobs (especially in manufacturing) did so. Employers who could
not (especially in service sectors) automated them. As U.S. job opportunities
stopped rising, so did wages. Since globalization and automation boosted
corporate profits and stock markets while wages stagnated, capitalism’s old
centers exhibited extreme widening of income and wealth gaps. Deepening social
divisions followed and culminated in capitalism’s crisis now.
Second,
unlike many other poor countries, China possessed the ideology and organization
to make sure that investments made by capitalists served China’s own
development plan and economic strategy. China required the sharing of incoming
capitalists’ advanced technologies (in exchange for those capitalists’ access
to low-wage Chinese labor and rapidly expanding Chinese markets). The
capitalists entering the Beijing markets were also required to facilitate
partnerships between Chinese producers and distribution channels in their home
countries. China’s strategy to prioritize exports meant that it needed to
secure access to distribution systems (and thus distribution networks
controlled by capitalists) in its targeted markets. Mutually profitable
partnerships developed between China and global distributors such as Walmart.
Beijing’s
“socialism with Chinese characteristics” included a powerful
development-focused political party and state. Conjointly they supervised and
controlled an economy that mixed private with state capitalism. In that model
private employers and state employers each direct masses of employees in their
respective enterprises. Both sets of employers function subject to the
strategic interventions of a party and government determined to achieve its economic
goals. As a result of how it defined and operated its socialism, China’s
economy gained more (especially in GDP growth) from neoliberal globalization
than Western Europe, North America, and Japan did. China grew fast enough to
compete now with capitalism’s old centers. The decline of the U.S. within a
changing world economy has contributed to the crisis of U.S. capitalism. For
the U.S. empire that arose out of World War II, China and its BRICS allies
represent its first serious, sustained economic challenge. The official U.S.
reaction to these changes so far has been a mix of resentment, provocation, and
denial. Those are neither solutions to the crisis nor successful adjustments to
a changed reality.
Third,
the Ukraine war has exposed key effects of capitalism’s geographic movements
and the accelerated economic decline of the U.S. relative to the economic rise
of China. Thus the U.S.-led sanctions war against Russia has failed to crush
the ruble or collapse the Russian economy. That failure has followed in good
part because Russia obtained crucial support from the alliances (BRICS) already
built around China. Those alliances, enriched by both foreign and domestic
capitalists’ investments, especially in China and India, provided alternative
markets when sanctions closed off Western markets to Russian exports.
Earlier
income and wealth gaps in the U.S., worsened by the export and automation of
high-paying jobs, undermined the economic basis of that “vast middle class”
that so many employees believed themselves to be part of. Over recent decades,
workers who expected to enjoy “the American dream” found that increased costs
of goods and services led to the dream being beyond their reach. Their
children, especially those forced to borrow for college, found themselves in a
similar situation or in a worse one. Resistances of all sorts arose
(unionization drives, strikes, left and right “populisms”) as working-class
living conditions kept deteriorating. Making matters worse, mass media
celebrated the stupefying wealth of those few who profited most from neoliberal
globalization. In the U.S., phenomena like former President Donald Trump,
Vermont’s independent Senator Bernie Sanders, white supremacy, unionization,
strikes, explicit anti-capitalism, “culture” wars, and frequently bizarre
political extremism reflect deepening social divisions. Many in the U.S. feel
betrayed after being abandoned by capitalism. Their differing explanations for
the betrayal exacerbate the widely held sense of crisis in the nation.
Capitalism’s
global relocation helped raise the total GDP of the BRICS nations (China +
allies) well above that of the G7 (U.S. + allies). For all the countries of the
Global South, their appeals for development assistance can now be directed to
two possible respondents (China and the U.S.), not just the one in the West.
When Chinese entities invest in Africa, of course their investments are
structured to help both donors and recipients. Whether the relationship between
them is imperialist or not depends on the specifics of the relationship, and
its balance of net gains. Those gains for the BRICS will likely be substantial.
Russia’s adjustment to Ukraine-related sanctions against it not only led it to
lean more on BRICS but likewise intensified the economic interactions among
BRICS members. Existing economic links and conjoint projects among them grew.
New ones are fast emerging. Unsurprisingly, additional countries in the Global
South have recently requested BRICS membership.
Capitalism
has moved on, abandoning its old centers and thereby pushing its problems and
divisions to crisis levels. Because profits still flow back to the old centers,
those there gathering the profits delude their countries and themselves into
thinking all is well in and for global capitalism. Because those profits
sharply aggravate economic inequalities, social crises there deepen. For
example, the wave of labor militancy sweeping across nearly all U.S. industries
reflects anger and resentment against those inequalities. The hysterical
scapegoating of various minorities by right-wing demagogues and movements is
another reflection of the worsening difficulties. Yet another is the growing
realization that the problem, at its root, is the capitalist system. All of
these are components of today’s crisis.
Even
in capitalism’s new dynamic centers, a critical socialist question returns to
agitate people’s minds. Is the new centers’ organization of
workplaces—retaining the old capitalist model of employers vs. employees in
both private and state enterprises—desirable or sustainable? Is it acceptable
for a small group, employers, exclusively and unaccountably to make most key
workplace decisions (what, where, and how to produce and what to do with the
profits)? That is clearly undemocratic. Employees in capitalism’s new centers
already question the system; some have begun to challenge and move against it.
Where those new centers celebrate some variety of socialism, employees will
more likely (and sooner) resist subordination to the residues of capitalism in
their workplaces.
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