Movement for a Socialist Future

Robert Silver examines the arguments that a transnational capitalist class is emerging to drive forward globalisation and creating a crisis for the nation state

Powerful new economic and political forces have emerged from the globalisation process to challenge the whole basis of the state in capitalist society. An understanding of what this means is central to any plan for fundamental social change.

Analysis of the new relationship between economics and politics reveals deep contradictions within the globalisation project now dominated by powerful transnational corporations (TNCs).

The use of foreign direct investment in the 1990s has had a paradoxical effect. When states began to open up their economies to foreign companies, they facilitated the creation of TNCs and then a transnational capitalist class in many ways opposed to their own national capitalist classes.

Evidence for this is presented in a compelling way by Leslie Sklair, in his new book.*

Sklair contrasts the structures and outlook of the TNCs and the emerging transnational capitalist class with the preceding period of capitalism, which he calls internationalisation. This was characterised by cross-border practices working through national institutions to achieve clearly articulated objectives of "national interest".

He explains: "The behaviour of international or multinational corporations could thus be largely predicted in terms of the ‘national’ interests of the governments they served. The most popular version of this argument in the 20th century, particularly on the left, was that US multinationals and the US state went hand in hand overseas to exploit the rest of the world."

What he calls a "global shift" has resulted in transnational practices in which "corporate agencies and actors...strive to maximise private profits globally for those who own and control the corporations. TNCs seek profits without special reference to the interests (real or imagined) of their countries of citizenship".

This new phenomenon is the necessary product of the expansion of capital. Its interests are in conflict with the capitalist classes whose existence, historically, is bound up with the nation state. When capitalism first emerged in the 17th century, two new classes came into existence. The capitalists who owned these new means of production – the bourgeoisie; and labourers who had been driven from the land, and separated even from their tools to become free, but only to sell their labour to the capitalist.

The interests of the bourgeoisie came to be represented and furthered by the nation state with its legal powers based on the rights of private property and armed forces deployed against those who challenged it. But capitalist production then outgrew the nation state. The self-development of capitalist production led to the age of imperialism and, at the beginning of the 20th century, to the emergence of the world economy.

This inevitable contradiction was famously analysed, in 1848, by Karl Marx in the Communist Manifesto in section I:

"The need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere.

"The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. To the great chagrin of reactionaries, it has drawn from under the feet of industry the national ground upon which it stood. All old-established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilised nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones; industries whose products are consumed, not only at home, but in every quarter of the globe."

The First World War was, in essence, an expression of these inner-tensions. According to Leon Trotsky, writing in 1915: "The present war is at bottom a revolt of the forces of production against the political form of nation and state. It means the collapse of the national state as an independent economic unit." He added: "The real, objective significance of the War is the breakdown of the present national economic centres, and the substitution of a world economy in its stead."

The development of capitalist production in the final decades of the 20th century was characterised by the emergence of trans-replacing multinational corporations. At the core of the globalisation process now are 60,000 parent companies with 500,000 foreign affiliates. The value of the output of TNCs (parents and affiliates) amounts to 25% of global output.

The world’s largest 100 non-financial TNCs employ six million people in their foreign affiliates. These TNCs represent a qualitative break with the older, nationally-based companies, which had established units in foreign countries during the age of imperialism.

TNCs such as General Motors, Mitsubishi and Unilever are now owned by shareholders and controlled by boards of directors who can be citizens of any country. The prime responsibility of these boards is to make the company as profitable as possible with no specific privileges extended to their states of origin.

Parts of the processes of research, production and distribution are now, typically, distributed among facilities under contract to the many TNCs, which control operations through communications networks connecting the world. This spiralling revolution in production methods is intertwined with the technological revolution.

Now that the export of finance capital to wherever the best conditions exist for the extraction of profit predominate over the export of goods, the role of governments is to facilitate the work of the TNCs and mobilise their state apparatus against the working class.

As Sklair, who is a senior figure at the prestigious London School of Economics, puts it: "The truly fundamental change that capitalist globalisation has introduced into the state-class argument is that, for the first time in human history, there is indeed a material and ideological shift towards selling business as such as the only real business of the planet and its inhabitants. So, in the global capitalist system, agents and agencies of the state (among other institutions) fulfil the role of facilitators of the global capitalist project."

This nicely sums up the role of the New Labour government, of course, whose most eminent advisor Dr Anthony Giddens, happens to be the director of the LSE. Even here there is inner conflict!

As capital has continued its expansion, trade and currency barriers, which are an integral part of the system of nation-states, have become increasingly untenable.

The power of the state in each country to influence economic processes is now weaker than at any time since the beginning of capitalism.

The state’s post-war role of maintaining a class peace through social spending and other policies is coming to an end. Heading these changes in most countries are former Social Democratic parties (Democrats in America), who have abandoned reform politics in the face of these pressures.

The role of the modern capitalist state is now to facilitate the process of globalisation – a process known as "liberalisation". There were 145 regulatory changes in 1997 relating to FDI (Foreign Direct Investment) by 60 countries, with 94% creating more favourable conditions. Treaties for the avoidance of double taxation had reached 1,871 in 1997. Since 1991, the number of annual changes had gone up from 82 to well into three figures and the number of countries affected from around 30 each year to more than 60.

The national state has ceded power to international bodies like the World Trade Organisation (WTO) to facilitate globalisation and the European Union to protect Europe’s interests. The TNCs have taken over bodies like the UN. Corporations now dominate political processes to an unprecedented degree. They are directly represented in government (e.g. Sainsbury) and dominate key ministries through Task Forces etc. As a consequence, the state is more divided and in crisis than ever before. The authority of the police, monarchy, courts system, parliament is at an all time low.

The rules operated by the WTO subordinate the economic interests of nation-states to the stringent demands of the world market. National systems of legislation are subordinated to international law. In the new century, GATS, the General Agreement on Trade in Services is being used to pry open the remaining protected areas, such as education, social services and health for exploitation.

Sklair writes: "Insofar as globalisation is changing the structure and dynamic of the capitalist class, it is necessary to start to explore in addition to capitalist classes in separate countries, the possibility of the emergence of a transnational capitalist class (TCC).

"The members of a TCC will have specific relations with national actors, agencies and institutions in separate countries as well as actors, agencies, and institutions that cannot sensibly be described as ‘national’." He adds: "In the global context, the transnational capitalist class plays the central role in the struggle to commodify everything, the goal of the culture-ideology of consumerism."

Acknowledging that some of these capitalists and their allies find themselves in conflict from time to time, he nevertheless insists: "...What binds the members of the class together globally [is] their common interest in the protection of private property and the rights of private individuals to accumulate it with as little interference as possible."

Sklair tracks the development of transnational corporations from multinationals, the growing power of the globalisers and the emergence of the transnational capitalist class using a wide range of sources. Not least is direct evidence provided by interviews with leading representatives of 80 of the major transnational corporations such as British American Tobacco, Ford, General Motors, Mitsubishi, Nestlé, Bank of America, HSBC, BP, Shell, ABB, AT&T, Apple, Intel, Motorola, NEC, Sony – to name but a few.

The impact of globalising bureaucrats on the changing role of international organisations provides equally important evidence. The "Global Sustainable Development Facility – 2B2M: 2 Billion People to the Market by 2020" was an initiative promoted by the United Nations Development Program (UNDP) in 1998, supposedly to assist the two billion poorest people in the world.

The aim was to establish an agency outside the UNDP but closely related to it through which the TNCs prepared to contribute a fee of $50,000 would have access to and benefit from association with the UNDP. By 1999, 16 TNCs including Rio Tinto, ABB, Novartis and Dow Chemical had signed up, and more were considering it. This shift in favour of the TNCs followed when the former public relations director of the World Bank became UNDP administrator.

At the core of the transnational capitalist class is a central inner circle that makes system-wide decisions, and connects in a variety of ways with subsidiary members in communities, cities, countries, and supranational regions. Despite real geographical and sectoral conflicts, the whole of the transnational capitalist class (TCC) shares a fundamental interest in the continued accumulation of private profit.

"What the inner circle of the TCC does is to give a unity to the diverse economic interests, political organisations, and cultural and ideological formations of those who make up the class as a whole."

A crucial component of the integration of the TCC is that most of the senior members of its inner circle occupy a variety of interlocking positions. The core of this is the network of corporate directorships. Those in the core frequently have extensive connections outside the direct ambit of the corporate sector, to the extent that the civil society services the state-like structures of the corporations.

Leading capitalists and corporate executives serve on the boards of think-tanks, charities, scientific, sports, arts and culture bodies, universities, medical foundations, and similar institutions, just as leaders of these institutions often occupy places on corporate boards.

In seeking global solutions to the drive for profit-maximisation, the TNCs have accelerated environmental and ecological degradation. Yet even on this front they have managed to incorporate most of their opponents. The emerging transnational capitalist class acts in a co-ordinated way to resist the pressures to treat the crisis as a global ecological crisis.

Instead, as Sklair demonstrates, they have brought much of the environmental movement round to the view of "sustainable development" and "sustainable growth".

In this way, the TNCs select a few high profile problems which can be addressed piecemeal, ignoring the global crisis itself. This is the TNCs’ answer to those who insisted there were limits on resources and thus continued expansion.

So business suddenly supports recycled products, green products and other "pro-environment" activities. Greenpeace and Friends of the Earth get top status at international conferences where the corporations block all serious attempts to tackle global warming. Lord Melchett leaves Friends of the Earth to work for the supermarket chain Iceland because the company favours "green" ways of working.

Detailed examples from Proctor and Gamble, Mitsubishi, Monsanto, Intel, Dow, Rio Tinto and others provide evidence to show how the TNCs consciously hide major environmental damage and destruction, rape, torture and murder of opponents from indigenous communities behind ideological clouds of ‘green’ publicity.

The Local Agenda 21 agreement at the Rio Earth Summit, and targets on global climate change from Tokyo have been hijacked by big business as part of the cause of ‘sustainable growth’ and ‘sustainable development’. Analysis of the evidence shows clearly that the ecological crisis cannot be resolved within the global capitalist system.

The emergence of the transnational capitalist class, in conflict with national governments and the world system of nation states, has profound revolutionary implications.

All those who come up sharply against the activities of the corporations, whether in factories, office, on the land, in shops, in public services, in the field of culture – in fact, just about in any social situation – are forced to think about their experiences differently.

It is increasingly self-evident that the global TNCs dominate the planet and that they have governments like New Labour in their pockets. With traditional political activity like general (and presidential) elections rendered ineffective, the turn away from traditional politics grows and independent, mass activity becomes the only means of expression.

Globalisation has created an international working class of unprecedented proportions, drawing in hundreds of millions of former peasants in many regions of the developing world. They are fighting back against super-exploitation, forcing the TNCs on the defensive.

New movements spring up in country after country, taking action on different issues. In Seattle in 1999 they came together briefly in a powerful challenge to the WTO. The capitalist state has returned to use of force, surveillance and intimidation to try to thwart the anti-capitalist movement.

The use of the Internet to organise global protests against the effects of capitalist globalisation reveals the creative power that is developing. But even the most radical of protest movements remains just that – an attempt to influence, reform or improve the WTO and world leaders.

Similarly, campaigns in support of "healthy" or "green" products – which the TNCs will support – leaves the basic questions of social structure untouched. It also penalises the poor, who cannot afford the organic of the "green" products because they are higher priced.

On the other hand, the undermining of the capitalist nation state by the development of capitalism itself opens the way for the building of new movements internationally that bring all the issues together and set a single goal: the social ownership and mass control of the TNCs. This coincides with the task of replacing the nation-state and its institutions by first seizing political power.

The technology and productive capacity is there to solve the needs of humanity in a thoughtful way, free from the manic drive for profit that determines just about every social activity. But immediately danger lies ahead. The crisis of overproduction is in turn driving the world economy and financial systems into slump and disarray. The danger here is not that transnational corporations will overthrow the nation state and set up a global fascist super-state. Clearly they cannot.

The issue is that unless workers and professional people organise to overthrow the existing political and social structures and take control of production on an international scale, we face a combination of wars and global environmental destruction.

*The Transnational Capital Class by Leslie Sklair. Blackwell. £15.99

This article first appeared in Socialist Future magazine