Top Menu

Don’t believe the hype about the ‘rules-based order’, capitalism is perpetual war

Don’t believe the hype about the ‘rules-based order’, capitalism is perpetual war

Originally published: Red Flag by Ben Heller (August 8, 2019)   | 

Why is war, or the threat of it, a permanent feature of our society? The most common answers point to contingencies–the psychology of particular world leaders, for example, or the specific gains to a company to be made from a conflict. Alternatively, they rely on universal claims that religion causes eternal strife or that conflict is part of our human nature. Battles between groups and states predate capitalism, and the reasons for particular wars are often complex and dependent on specific circumstances. Yet war under capitalism is different from war in previous historical periods; it is an inescapable result of the economic system.

Karl Marx was familiar with colonial oppression, such as the role of the British in India, and the geopolitical competition between states in Europe. But writing when capitalism was established only in small pockets of Western Europe and North America, he spent much of his time focused on the contradictory logic of capitalist economic expansion. He wrote in the Communist Manifesto of cheap commodities being the system’s “heavy artillery” of international conquest, of capitalists as the leaders of “industrial armies” and of workers “organised like soldiers” and “placed under the command of a perfect hierarchy of officers and sergeants” in the production of the commodities.

Yet a new dynamic took hold once capitalism had consolidated across Europe after his death. With the outbreak of the First World War in 1914, workers as privates in industrial armies were turned against each other as real soldiers. The heavy artillery of commodities was replaced with real artillery, not embodying wealth but destroying it. Marx had left a huge body of work analysing the results of economic competition. But amid the barbarism of the “Great War” a generation of socialists had to come to terms with this new phenomenon: imperialism.

The Russian revolutionary Nikolai Bukharin’s 1915 work Imperialism and world economy was one of the most important contributions and remains one of the best places to begin understanding the logic of war. Bukharin extended Marx’s analysis of capitalism to show how the contradictions inherent to economic development are intensified with increasing economic growth, laying the basis for military conflict between states.

**********

Marx had noted that the capitalist economy is ultimately world economy, producers everywhere being subject to the pressures of international markets, even if those producers are not engaged in capitalist enterprise:

The need of a constantly expanding market for its products chases [capitalism] over the entire surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere … It compels all nations, on pain of extinction, to adopt the capitalist mode of production; it compels them to introduce what it calls civilisation into their midst, i.e., to become capitalist themselves. In one word, it creates a world after its own image.

Capitalism, due to its competitive nature, is concerned with the endless accumulation of wealth and is geographically expansionist, superseding and destroying other forms of social organisation. Yet it is also prone to regular economic crises, which destroy wealth and the livelihoods of the people who created it. One of the most important results of competition and crisis, Marx noted, is the concentration and centralisation of capital. (Concentration refers to businesses becoming larger as they invest in machinery and expand production. Centralisation refers to fewer and fewer business owners coming to own larger sections of the economy.)

With greater concentration and centralisation, monopolies develop–companies dominating entire industries–and begin to regulate production and exchange to their advantage, undermining the “pure” economic competition that gave rise to them. The large firms engage in industrial espionage, take control of raw materials so competitors can’t access them, deny rivals access to credit and more. In short, economic competition frequently gives way to “extra-economic” confrontations.

As this economic process played out, a similar dynamic was going on with the development of the capitalist state. “The capitalist class … has agglomerated population, centralised the means of production, and has concentrated property in a few hands”, Marx noted in the Manifesto.

The necessary consequence of this was political centralisation. Independent, or but loosely connected provinces, with separate interests, laws, governments, and systems of taxation, became lumped together into one nation, with one government, one code of laws, one national class-interest, one frontier, and one customs-tariff.

Often, “state” and “market” appear to be in conflict. But Marx noted their intimate link from the beginning. Their relationship is important for understanding both economic development and the road to war. In the second chapter of Capital, Marx wrote that even the most basic act of economic exchange assumes some sort of law. The owners of commodities must “mutually recognise in each other the rights of private proprietors. This juridical relation, which … expresses itself in a contract, whether such contract be part of a developed legal system or not … is but the reflex of the real economic relation between the two”. Who is to ensure the contract is honoured? Only an external authority with the power of enforcement.

It speaks to the ignorance of some economists and commentators that they say things like “socialists are for the state and capitalist are for the market”. As Marx saw clearly, capitalist markets cannot be separated from state power: they are structured and regulated to ensure the smooth functioning of economic life and a (somewhat) level playing field between businesses: anti-trust laws, labour laws, tax regimes, incorporation procedures, a national currency, shared infrastructure, a judicial system and so on.

This picture of capitalist development was shared by most socialists at the time of the First World War. It was one in which the economy is competitive, expansionist, increasingly integrated and crisis-prone. As business units develop and become larger, a small number come to dominate entire industries, and economic competition frequently spills over into “extra-economic” competition favouring the most powerful and connected firms within increasingly bureaucratic and powerful states.

**********

Bukharin assumed this knowledge when he built his analysis of war and imperialism. Importantly, he noted that the internationalisation of capital (more recently termed globalisation), the growth of “global firms”, was not diminishing the role of the state but resulting in “a reverse tendency towards the nationalisation of capitalist interests” as competition between individual businesses became competition between national industries. He argued that the struggle between them was intensified:

The destruction, from top to bottom, of old, conservative, economic forms that was begun with the initial stages of capitalism, has triumphed all along the line. At the same time, however, this ‘organic’ elimination of weak competitors inside the framework of ‘national economies’ … is now being superseded by the ‘critical’ period of a sharpening struggle among stupendous opponents on the world market.

A contemporary illustration of this is how we rarely talk about the particular companies involved in competition–instead, we talk about “U.S. coal”, “Japanese cars”, “Saudi oil”, “Chinese steel” and so on. At this level of competition, monopoly tendencies only increase because the resources required for success reach their greatest proportions. The massive scope of the world economy and the intensification of competition led to entire blocks of capital competing for access to the markets, raw materials, labourers and spheres of influence that collectively benefited all the capitalists of their own country.

“Just as every individual enterprise is part of the national economy, so every one of these national economies is included in the system of world economy”, Bukharin wrote.

This is why the struggle between modern national economic bodies must be regarded first of all as the struggle of various competing parts of world economy–just as we consider the struggle of individual enterprises to be one of the phenomena of socio-economic life.

And just as big businesses gobbled up small businesses in monopoly formation, countries were incorporating entire regions of the world. By the 20th century, the scramble of the colonial powers had reached its peak, and most of the globe was integrated into one of the empires, which Bukharin viewed as international monopolies of the highest order:

The absorption of small capital units by large ones…is relegated to the rear, and looks like child’s play compared with the absorption of whole countries that are being forcibly torn away from their economic centres and included in the economic system of the victorious ‘nation’…thus on the higher stage of the struggle there is reproduced the same contradiction between the various branches [of production] but on a considerably wider scale.

While the state plays a mediating and disciplining role in relation to businesses within its own borders, this cannot be replicated in the global arena. Once economic competition between firms is displaced to international competition between national blocs, the state becomes a much more partisan actor because the bankruptcy of national industries directly threatens its own integrity.

Today, for example, governments closely monitor their own national economies, contrast them with those of the rest of the world and try to help their own capitalists as best they can. Richer states finance industry research and development through their capacity to mobilise resources and take losses on a scale that most companies can’t. States also manipulate the exchange rate of the national currency, giving their export industries a price advantage in the international market.

Sometimes, when a national industry’s productivity is lower (or its costs higher) than the global average, a government imposes import tariffs, artificially pushing up international competitors’ sales prices, enabling local firms to compete in the domestic market as though they were more efficient than they are. If a state or group of states is powerful enough, they might impose sanctions on a competitor to cripple its economy. Such tariffs and sanctions are acts of economic warfare.

But ultimately, military might is decisive for international success. “When competition has finally reached its highest stage … then the use of state power, and the possibilities connected with it, begin to play a very large part”, Bukharin wrote.

War in capitalist society is only one of the methods of capitalist competition, when the latter extends to the sphere of world economy. This is why war is an immanent law of a society producing goods under the pressure of the blind laws of a spontaneously developing world market.

Once most of the world had been carved up and a global system of production and trade established by the end of the 19th century, a state without many territorial possessions was at a distinct disadvantage unless it was endowed with abundant natural resources and a large domestic labour pool to feed industrialisation. That posed the question of a forcible re-division of resources, which could occur only through war. That was the situation Germany faced heading into 1914.

There was hope in some quarters, however, that conflict could be averted because of the mutual interests of the capitalists, who would unite into a world monopoly, eliminating the conflict between states. Karl Kautsky, a leader of the German Social Democratic Party and probably the most influential Marxist of the time, argued in his 1914 pamphlet Imperialism and the War:

There is no economic necessity for the continuation of the great competition in the production of armaments after the close of the present war. At best such a continuation would serve the interests of only a few capitalist groups. On the contrary capitalist industry is threatened by the conflicts between the various governments. Every far-sighted capitalist must call out to his associates: Capitalists of all lands unite! From a purely economic point of view, therefore, it is not impossible that capitalism is now to enter upon a new phase, a phase marked by the transfer of trust methods to international politics.

By contrast, Bukharin noted that, at the level of world economy, competition results in a constant contest over and re-division of resources and spheres of influence. While local competition can be displaced to regional and national competition, once we arrive at imperialist rivalry, with national blocs of capital “armed to the teeth and ready to hurl themselves at one another any moment”, there is nowhere else for the competition and contradictions to be displaced. An international state or world government would be plausible only if international competition were displaced higher again, to inter-planetary competition. Kautsky’s idea of a peaceful concert of states acting with shared interests is a utopia.

**********

Bukharin’s argument is important, given the great lamentations for the so-called rules-based world order that is now being superseded with China’s rise and U.S. president Donald Trump’s bellicose rhetoric and economic sanctions.

It is true that world powers have often set up global institutions and treaties that entrench existing power relationships, mediate competition and deal with questions such as how trade is carried out between countries with different national currencies, to ensure a functioning international regime of exchange and production and to manage geopolitical conflicts. But while these have lasted for shorter or longer periods, their eventual breakdown is guaranteed with the rise and fall of the influence and power of different states within the world system.

Indeed, the first attempt among the European powers came 100 years before Bukharin wrote his book, with the Concert of Europe, founded at the 1814-15 Congress of Vienna by Austria, Prussia, Russia and the United Kingdom after the defeat of France in the Napoleonic wars. It soon fell apart under the pressure of growing economic and political rivalries. In the aftermath of the First World War, the League of Nations was founded by Allied powers in another attempt to bring order. But, ultimately, it could not tame the wild drive to war in the imperialist era. As Italian dictator Benito Mussolini reportedly quipped a few years before the Second World War: “The League is very well when sparrows shout, but no good at all when eagles fall out”. It was a similar situation when the United States saw an opportunity to reshape the Middle East by invading and occupying Iraq from 2003. It simply ignored all the talk about international law and United Nations approval, knowing full well that no state was powerful enough to stop it.

We are now in a new moment of rising imperialist tensions. And while some of what Bukharin wrote is out of date, and some of his predictions were off the mark, his basic argument is sound: war is the highest stage of capitalist competition. It flows logically from the development of the global economy and cannot be avoided indefinitely. His book remains one of the clearest explanations of the basic relationship between capitalism and interstate conflict. Despite it being more than 100 years old, anyone wanting to come to grips with the emerging 21st century world order should take it as an indispensable starting point.

Comments are closed.