9
Benno Teschke and Christian Heine
Introduction
Two contemporary international relations (IR) orthodoxies – Social Constructivism and Neo-Weberian Historical Sociology (NWHS) – converge in their rejection of historical materialism and their adoption of parts of Max Weber’s philosophy of social science for theorising international politics. Both argue that Marxism’s natural-scientific epistemology stipulates rules for the construction of universally valid deductive-nomological laws that govern social phenomena in an objective fashion. It thus fails to make sense of the inter-subjective and conscious construction of variable rules and norms that are constitutive of international forms of conflict and co-operation (Ruggie 1998: 30). Constructivism and NWHS suggest furthermore that historical materialism’s irremediable economic functionalism has little to offer for conceptualising the role of the state and inter-state relations in the overall development and reproduction of the modern system of states and, a fortiori, international institutional change (Spruyt 1994; Weiss and Hobson 1995; Hobson 1997, 1998). This rejection of historical materialism in contemporary mainstream IR theory reflects a broader consensus in the social sciences that tends to disqualify Marxist contributions on grounds of their inherent techno-determinism, mono-causal class reductionism, historicist and teleological tendencies (Giddens 1987, [1981] 1995; Mann 1986, 1993; Habermas 1984: 144). It is suggested, in contrast, that Constructivism and NWHS offer viable alternatives to the perceived strictures of Marxism by embracing a much wider array of methodologies – research strategies designed to express a pluralist, if not eclectic, stance.1
This chapter re-examines the nature of Marx’s thought and argues that the subsumption of its formal structure under the deductive-nomological protocols of the natural sciences disfigures his dialectically informed philosophy. We suggest in turn that Constructivism and NWHS rely on a selective reading of Weber and have failed to address the limits and contradictions of his philosophy of science. This failure undermines the theoretical basis and substantive empirical claims of both approaches. In contrast, we claim that Marx’s philosophy provides a coherent approach for conceptualising the nexus between conscious agency and institutions on the one hand, and the nexus between political authority and economic forces on the other. His dialectical philosophy also provides a good framework for theorising international change. Employing this dialectical approach, we trace the origins and nature of globalisation and its effect on state-economy relations, understanding it as the outcome of the long economic downturn that has governed the capitalist world economy since the 1970s.
The chapter is divided into three main sections. The first section sets out Constructivism’s central theoretical assumptions, specifies some of its recurring objections against Marx, and introduces one important constructivist approach to globalisation. The second section re-examines core features of dialectical thought with specific regard to its understanding of reality, history and conscious agency. These are contrasted with central Weberian positions. On this basis, the third section seeks to show how a dialectically controlled interpretation of globalisation can provide a viable alternative to both constructivist as well as orthodox international political economy (IPE) stances on globalisation. We argue that a dialectical reading of the current state of the world political economy can arbitrate between one-sided politicist and economistic versions of globalisation, while explaining important consciousness-mediated similarities and variations in state-society responses to the contemporary restructuring of international capitalism.
Constructivism against Marx
Core elements of Constructivism
The core constructivist claim is that historically varying forms of conflict and cooperation are predicated upon inter-subjectively constructed institutions. These institutions lay down the ‘rules of the game’ for international politics (Ruggie 1998; Kratochwil 1989; Wendt 1999).2 Constitutive rules provide systems of meaning that act as frames of reference for collectively binding and norm-governed action. The very possibility of successful international institution-building rests on collective acts of intentionality, that shape converging fundamental norms and values among participating actors. Shared norms and values point to successful processes of communicative agreement that constitute the differentia specifica of the social world. It follows that social scientists – including IR scholars – have to seek interpretive, not observational, access to their object-domain, since their area of research is not objectively given, but pre-constituted by consciousness-driven and communicatively mediated processes of the collective construction of social reality. Interpretive access to the social world also implies the direct involvement of the social sciences in the maintenance and modification of rules and norms. The term ‘epistemic communities’ captures this phenomenon.
As a result, IR seeks to understand the Wertrationalität (rationality of ends), not the Zweckrationalität (instrumental rationality) embodied in international institutions. History is then conceived in terms of a rational reconstruction of a sequence of historically diverse international institutions, which are bound up with underlying value communities. These value communities not only guide the social and political purpose of institutions, but also provide their necessary legitimacy. Hence political authority derives from stable and consensual communities of value. These constitute the basic units of identity. The constructivist research agenda is then defined by identifying value-based legitimate institutions and by theorising their transformations, predicated on changes of value-communities. As a rule, these changes are themselves regarded as norm-governed in so far as they are set in motion by cognitive processes of critique, argumentation, persuasion, and social learning within and between epistemic communities.
Constructivism's critique of historical materialism
To date, Constructivism has failed to produce a systematic critique of historical materialism in general and of Marx-inspired IR literature in particular. Rather, it has tended to trivialise or caricature Marxist theorems in fleeting remarks, while simultaneously incorporating many of their best insights into its core theoretical repertory. Through this strategy of ‘denial or appropriation’, Constructivism has thus largely succeeded to re-invent itself as the main IR rival paradigm to Rationalism (Realism and Liberalism) in a silent process of semantic repackaging.3 Nonetheless, three recurring core criticisms can be identified, revolving around historical materialism’s epistemological status, its theoretical focus, and its philosophical legacy.
John Ruggie claims that Marxist thought, like the positivism of the Austrian Theoretical School (marginal utility theory), ‘sought to reduce problems of social action and social order to material interests, and […] embraced naturalistic monism, that is, the idea that the natural sciences embody the only valid model of science to which the social sciences should […] aspire’ (Ruggie 1998: 30). Marxism is thus irredeemably tied to a positivist and naturalist view of social science, seeking to establish a single transhistorical covering law.
Alexander Wendt argues that Marxism has failed to understand the relational character of social and political phenomena, including capitalism (Wendt 1999: 94–5).4 His distinction between the forces of production, understood as brute material forces, and the economic system-defining relations of production, understood as rules premised on shared ideas, leads him to reject Marxist ‘materialist’ definitions of capitalism in favour of a cultural/ideational conceptualisation. Two possible conclusions can be drawn from Wendt’s observation. Constructivists could redefine the concept of capitalism by theorising the ‘discursive conditions that constitute capitalist relations of production’ as an ideational and, by implication, non-coercive phenomenon (Wendt 1999: 136).5 Alternatively, they could challenge the idea that Marxism defines capitalism materialistically as Wendt asserts, instead recovering the relational-dialectical character of the term ‘relations of production’, and coercive origins and ongoing contradictory history of capitalism as a hierarchical system of exploitation. This is what we shall try to do in the following sections.
Friedrich Kratochwil, finally, remains sceptical of Marx’s philosophical legacy, claiming that it is inextricably bound up with an optimistic and ideological philosophy of consciousness premised on the idea that Reason and history will come eventually into accord with each other. The charge is that even in its secularised version Marxism cannot divest itself from the pseudo-religious certainties of the ‘last twitches of Enlightenment ideology’ (Kratochwil 1997: 440). While there is, of course, textual evidence – ranging from Marx himself to Lukács – for claiming that Marxism embraces such a philosophy of history by replacing Hegel’s Spirit with the victorious march of respective progressive and ever more universal classes, this interpretation does not do justice to the state of the current Marxist debate. Alternative readings of Marx are available.
To conclude, in the constructivist universe Marxism is equated with the standards of a naturalist science, attacked as a reductionist-economic theory, and dismissed as a teleological philosophy. Before we attempt to rectify this interpretation, we want to introduce an exemplary constructivist reading of globalisation. Thereafter, we can advance an alternative account of globalisation on the basis of a different reading of Marx’s epistemology.
Putting Constructivism to the historical test: Ruggie on globalisation
Ruggie’s core argument centres around domestic state-society relations that generate what he calls ‘social purpose’ expressing an underlying normative consensus on the nature of national relations between authority and the market. He claims that this notion can shed light on the actual content of historically divers international regimes. ‘Power and legitimate social purpose become fused to project political authority into the international system’ (Ruggie 1998: 65).
Two fundamental problems organise his research: first, to identify the ‘generative grammar’ of international political authority; second, to explain the occurrence of regime change not exclusively with reference to variations in power capacities (as Neorealism and Hegemonic Stability Theory (HST)), but in terms of the covariance in the fusion of power and ‘social purpose’ (Ruggie 1998: 64–5). For example, while the decline of British power and the subsequent collapse of international order expressed fundamental divergences in the state-society relations of the system’s constitutive units, the decline of US power did not imply the breakdown of international order due to the cross-national persistence of shared ‘social purpose’. Given that ‘social purpose’ is held constant, adaptations to the new post-1973 international situation do not reflect fundamental power-based discontinuity (either the rise of protectionism or the return to classical liberalism), but reveal norm-governed as opposed to norm-transformative regime changes. The transformation of ‘embedded liberalism’ is henceforth dependent on the ‘inter-subjective’ re-evaluation of welfare/capitalist state-society relations in the face of the resurgent ‘ethos of liberalism’. Therewith Ruggie claims to have made the case not only against HST and Neorealism, but also against neoliberal institutionalism providing the rationale for adopting a Weberian hermeneutical framework, which focuses on intersubjectivity and shared meanings. Let us now turn to his argument on globalisation.
In spite of the decline of US hegemony, ‘embedded liberalism’ persisted after the collapse of Bretton Woods, because ‘social purpose’ was held constant across the major industrialised states (Ruggie 1998: 65). Moving on to the 1990s, Ruggie (1995, 1997) sketched a new situation. Divergences in ‘social purpose’ became more pronounced among the three dominant economic blocks: the pluralist US market economy, the social market economy of Continental Europe, and the corporatist market economy of Japan, while globalisation meant the (re-)disembedding of the world economy from political control. A commitment to international multilateralism remains real, though weak, because competing national policies struggle for stability at home and success abroad. A period of turmoil and disarray is forecast. Theoretically, the assumption of growing divergences of ‘social purpose’ must lead Ruggie to conclude that norm-transformation, not norm-governance, drives current regime transformation. What, then, transforms these norms?
In Ruggie’s scheme, globalisation is a result of the confluence of the success of GATT (and other international regimes), which made national boundaries redundant as expressions of the jurisdictional reach of national economies; and of a series of private sector institutional transformations. These are listed as the liberalisation of international markets in finance, goods, and services, as well as a shift in the patterns of international production from a division of labour among national economies to an international division of labour at the level of firms (multilateral corporations operating within transnational strategic alliances). These developments render traditional public policy goals – controlled economic growth, full employment and social stability – obsolete.
Like Goethe’s Sorcerer’s Apprentice, who could not control the forces that he unleashed, international post-war regime-imposed liberalisation turns out to be no longer compatible with domestic social compacts. But why is it that post-war liberalisation was compatible with domestic social compacts, while post-Bretton Woods liberalisation was not? The simple answer that Ruggie overlooks is that the latter failed to deliver the goods. Capitalism, for reasons stated later, entered a period of long economic downturn. Under conditions of negative economic growth and intensified domestic re-distributional conflicts, domestic social compacts were re-structured while states struggled to enhance their competitiveness. In other words, the domestic and multilateral institutional mechanisms of the ‘Golden Capitalist Age’ entered into a period of contradiction with changing economic fundamentals. While Ruggie wastes little time on these macro-economic changes, he concludes that
The post-war trade regime was intended to achieve and maintain a sustainable balance between the internal and external policy objectives of governments, in keeping with the embedded liberalism compromise. It was not designed to re-structure domestic institutional arrangements. Yet, domestic re-structuring is what the trade policy agenda increasingly has come to be about. Highly politicised trade policy disputes and potential instability in trade relations appeared to be the virtually inevitable consequence of successful liberalisation.
(Ruggie 1995: 516)
While this is a highly acute observation, it is not quite clear why these developments have to be theorised on the basis of changing epistemic communities. As a rule, a huge hiatus yawns between Ruggie’s abstractly articulated basic methodological assumptions – norm-governance, change through social learning, etc. – and his thick descriptions of socio-economic developments. In Ruggie’s idiom, what happened is this: the success of the constitutive rules of GATT had the unintended consequence of destroying the post-war social compact based on welfarism as well as GATT itself. New constitutive rules (WTO) and domestic ‘social purposes’ (neoliberalism) were devised in reaction to liberalisation/globalisation. In other words, a change in socio-economic reality preceded changes in the norms and rules of value communities. National and international regimes are trying to catch up with forces beyond their immediate control. However, why present turmoil is due to ‘epistemic disarray in the community of scholars and policy analysts’ rather than to economic crisis and the end of the era of sustained system-wide growth that generates nationally sharply diverging policy prescriptions, is hard to see (Ruggie 1995: 526, also 1997).
To conclude, the invocation of Weberian methodological precepts is unable to provide an explanation, as opposed to a mere description, of regime changes because within Ruggie’s epistemic account material outcomes can only be derived from a prior cognitive shift in the relevant value communities. Theoretically, outcomes are always intentional and projected back onto an assumed prior alteration of value consensus. However, Ruggie’s admission that neoliberalism/globalisation is an unintended consequence of the success of GATT jars with Constructivism’s fundamental premise of collective intentionality. This minor logical problem aside, the central constructivist problem is that cognitive shifts have no apparent external referent, but recursively ‘invent’ the new sociomaterial reality out of themselves. The reasons for the ‘resurgent ethos of liberalism’ that drove globalisation in the 1980s and 1990s remain unidentified. In essence, Ruggie wants to explain changes in international economic regimes without economics and changes in international political regimes without politics by smuggling in the formal categories of convergence or divergence in ‘social purpose’. However, an aggregate notion like ‘social purpose’ obscures the social processes and political mechanisms at work that generate conflict and compromise, crisis and successful institutionalisation among individuals, classes, and nations, as it remains silent on the repressive processes that ensure conventionality qua agreement. In other words, there is no extra-ideational explanation of changes in value communities – changes, according to our argument, that react to developments outside the explanatory reach of interpretive methodologies.
Karl Marx: elements of dialectical thinking
This section sets out and defends Marx’s dialectical understanding of reality, history and agency. Our argument is that contrary to the constructivist claim, shared by NWHS and orthodox IPE, Marx’s thought is not only non-naturalistic, non-reductionist and non-teleological, but in principle better able to critically understand international economic and political change. On the basis of the following re-examination of core elements of dialectical thinking, we will be in a position to advance an alternative theoretically controlled and empirically informed interpretation of globalisation.
Reality: human praxis and historical societalisation
What constitutes social reality? According to Marx, social reality is constituted by a contradictory ensemble of social relations that forms a historically specific Vergesellschaftungszusammenhang (context of societalisation) between nature and society. All human phenomena are related to this context. Hence, it must be clearly distinguished from Weber’s ‘vast chaotic stream’ that can be ordered through subjective value-positions (Weber [1904] 1949: 84 and 111). It is also incompatible with the constructivist notion of reality as an inter-subjectively agreed convention, and with the positivist (naturalist) concept of one objective reality whose covering law can be disclosed through ‘trial and error’. The Marxian epistemological principles that capture the nexus between society and nature are Hegelian in origin. However, Marx rejects Hegel’s objective idealism as well as Feuerbach’s objective materialism in favour of a philosophy of historical praxis (subjective materialism) (Heine and Teschke 1996, 1997; Neufeld 1995; Krombach 1997).
Marx argues that through the transformative power of conscious human praxis, both nature as ‘man’s inorganic body’ and human nature are constantly reconstituted. Through this dynamic metabolism, nature is socially transformed into products, being into becoming, timeless essences into contradictory processes. Man is simultaneously the subject and the object of the socio-historical process. However, the triangle man-nature-society is of necessity contradictory. These contradictions are universal and transhistorical, yet appear historically in ever renewed, but definite, manifestations. History, as Hegel stressed, is the resolution of contradictions that interpret themselves (Hegel 1991). Dialectical thinking reflects this contradictory, dynamic, and transformative character of social reality and interferes critically into its reproduction. It avoids therefore the formulation of transhistorical invariants understood as objective laws and a de-politicised notion of conventionality based on learning and the fiction of open debate, and elevates contradictions to the logical status of the driving principle behind historical development.
Yet, in spite of this transitory character of history as process, vergesellschaftete reality is for Marx itself ordered and structured per se, before we impose our cognitive categories on it. Behind the infinite immediacy of subjective experiences, he assumes a temporarily institutionalised and spatially delineated core to reality. We claim that this core, as we will argue in the following section, is defined by historically variable social property relations, constituting the nodal point of intersection between nature, man, and society.
The assumption of an ordered structure of reality diverges not only from Weber’s idea of infinite chaos, it is potentially able to reveal Weber’s position as representative of the cognitive condition of modernity (see Weber [1919 1946a] and [1919] 1946b). For Marx’s notion of the capital relation, institutionalised in capitalist social property relations, contains not only an account of individuation, it also entails an account of why social reality appears as a universe of discrete things. First, individuation results from the making of abstract labour, that is, the transformation of property-possessing, economically independent, but politically dependent labour into disowned, legally and politically free, but economically dependent wage labour. This transformation captures the essence of the transition from feudalism to capitalism. The new capitalist property regime creates the real illusion of civil society as an aggregate of contractual relations between isolated individuals.6 At the same time, the state appears as the Hegelian ethical sphere of public interest now separated from the sphere of private needs constitutive of civil society and the market. Human beings are at once citoyens and bourgeois. Second, the transformation of labour into a commodity that can be bought and sold on the market turns human beings and their produce into abstract things (reification and alienation), while money organises exchange abstractly as the universal equivalent. The primary form of modern inter-subjectivity is thus constituted by money as the pervasive medium of extra-communicative power. Hence, the ‘fetishism of commodities’, that reflects ‘personal independence based upon dependence mediated by things’, constitutes the fundamental cognitive experience of capitalist modernity (Marx [1867] 1976: 163–77; Marx [1857–8] 1993: 158). Third, the historical completion of the market as a universal based on generalised commodification leads to a form of society in which not only individuals, but also their value-positions and interests, are atomised and competing.
As a result, the modern incoherence of experience can be explained as reflecting precisely the hieroglyphic character of the capitalist object-world that appears to the naked eye as an inchoate and endless aggregate of discrete entities, individual acts, or preferences. Hegel’s ‘bad infinity’ (‘schlechte Unendlichkeit’) is Weber’s ‘vast chaotic stream’. While Enlightenment philosophy recognises the atomised nature of modernity, Marx unveils its unifying theme. The reified nature of the world of objects assumes a reality – a ‘second nature’ – independent of our own volition and intelligibility. While this world is indeed a world of our own making, it confronts us as something alien, external, and unfathomable. Thus, through a Marxist dialectical approach, we can theorise and demystify institutions that are central to modernity: individuation, the fiction (Realabstraktion) of the ‘selfregulating’ market, civil society as the sphere of private freedom, and the modern state as the sphere of collective reason. This reveals the link between competing private interests, irreconcilable value-positions and Max Weber’s acceptance and promotion of scientific pluralism (Weber [1919] 1946b).
In this sense, Weber’s theory runs two risks. First, his value pluralism exemplifies the fragmented experience of the modern abstract ‘I’ and the wider antinomies of bourgeois thought and culture: the Kantian distinction between noumena (transcendental things-in-themselves) and phenomena, the separation between facts and values, the opposition between free will and necessity, form and content, and subject and object (Weber [1904] 1949: 81). Second, Weber’s causal pluralism reflects the apparent differentiation of the world into multiple petrified spheres, which ‘follow their own laws’ and interact only externally (Weber [1904] 1949: 70). But does the recognition of the fragmented world, both normatively as well as causally, entail necessarily the call for pluralist theories?
History: ‘laws', contradictions, agency
Weber’s theory of history falls into two irreconciled parts: history as the chaotic aggregate of subjectively intended individual acts (methodological individualism), battles with history as a universal process of rationalisation, locking individuals increasingly into iron institutional structures (Weber [1904–5] 1992: 181; Weber [1922] 1968). For Marx, in contrast, history is the resolution of contradictory and competing strategies of reproduction that are bound up with historically institutionalised social property relations and may or may not alter the institutional set-up. Action and structure are dynamically mediated.
From this angle, history has no pre-defined telos, yet it is inherently teleological in so far as each human act is willed and conscious, that is, it strives towards the realisation of a purpose. Yet, purposeful acts are embedded in wider forms of collective action, whose nature is governed for Marx primarily by the proprietary relation of individuals to the means of production. Men enter nolens volens determinate relations of production and operate within them. However, the stress on class relations on the basis of unequal access to and property of the means of production is not an axiom, but merely a research hypothesis whose validity must be corroborated in concrete research. Writing history is thus not a manipulative exercise of fitting facts into the Procrustean bed of a transcendental philosophy of history (Marx [1845] 1994a: 112).
Let us now spell out why social property relations define the core structure of society. Historically, access to property and the means of reproduction is politically established. Politically constituted regimes institutionalise time-bound balances of class forces by fixing social property settlements that set the parameters for purposeful, bounded, but antagonistic forms of social action on both sides of the labour process.7 For example, under capitalism, as a rule, propertyless direct producers are compelled to sell their labour power on a labour market to make a living. Equally, capitalists are compelled to maintain themselves in business through competitive re-investment in the means of production or other measures of cost-cutting (shedding of labour) according to the ‘invisible’ working of the price-mechanism. The logic of collective action works differently under feudal property relations. Here, direct producers are in possession of the means of production. Hence, lords are forced to invest in the means of coercion to guarantee the extra-economic exploitation of a dependent peasantry while simultaneously maintaining themselves militarily over and against rival lords. Equally, peasants are compelled to produce the totality of their produce on their plots and to resist lordly exactions (Brenner 1986; Teschke 1998). In a word, property-mediated relations of exploitation impose limits on the spectrum of action and thought. While the contradictory strategies of reproduction on both sides of the labour-process do not exhaust the complex of consciousness-formation, a theory of the latter cannot dispense with recognising the former. Dominant forms of bounded action (consciousness) know an external referent.
Yet while politically constituted regimes (property regimes, authority-relations) institutionalise social conflicts in time and space, setting the time-bound and norm-mediated absolute limits for contradictory strategies of reproduction, these institutions may turn themselves into the object of contestation during periods of general crisis. Rule-maintenance and rule-negotiation – violent or not – are actively played out processes. The resolution of social conflicts in times of crisis, mediated by a given balance of class forces, is however logically indeterminate, though not wholly contingent, and thus guarantees the non-unilinear, non-inevitabilistic, and open-ended character of history as a process with no fixed terminus (Brenner 1985).8 Still, the resolution of contradictions is retrospectively intelligible through historical research. Historical development is thus neither the circular, contentless, and recursive re-enaction of structures through agency and vice versa (Giddens 1984), nor the result of a ‘messy’ process of complex interaction, nor a necessitous succession of stages, driven by the mechanic contradictions between the development of the forces of production and relations of production. It is the result of agency-driven qualitative transformations of social relations.9 These give rise to new forms of bounded agency. Consequently, the course of history cannot be deduced or even predicted from de-subjectified economic ‘iron laws’, which govern human beings in a determinist and automatic fashion behind their backs. While any specific property regime sets indeed definite parameters for human activity, this determination is never absolute.
Why does this matter? Simply put, while there are ‘laws’ in history – defined by prevailing property relations – there can be no laws of history. Law-like generalisations only apply to spatio-temporal contexts. Therefore, Weber’s naturalistic characterisation of Marx’s notion of law – and Ruggie’s uncritical adoption of Weber’s position – as expressing objective and universal validity is misguided (Weber [1904] 1949: 68–76 and 86–7; clearly demonstrated in Kocka [1966] 1985: 136–40).
Thus a hermeneutical or psychological understanding of the meaning or motivation (mentalité) on the side of individuals, groups, or classes does not provide an exhaustive explanation (Adorno [1969] 1976: 14). The capitalist profit motive cannot be tautologically derived from an ascetic ethics of work, ‘market rationality’, or a naturalised homo oeconomicus. Rather, an entire structure of meanings and motivations (interests or preferences) is ‘objectively’ imposed upon human beings by extra-subjective socio-material relations. Social relations of production and exploitation define entire strategies of action and modes of consciousness, provided the actor wants to survive and be recognised by society. In this sense, ideational phenomena are amenable to theorisation in so far as they express and try to come to terms with a social ‘essence’ hidden from view. From this perspective, Weber’s views of history can be qualified, both with respect to his claim of necessarily plural and indeterminate ultimate value-positions adopted by researchers, as well as with respect to the chaotic appearance of reality itself.
The diversity of phenomena does not simply ‘reveal’ a core structure (the logic of capital), but is mediated by it and lends it a definite form. Phenomena cannot be reduced to capital, nor can capital be dissolved in appearances. Yet capital does not exist in the singular, but is politically mediated in a system of states with their own distinct, but not fully independent, historical trajectories. Thus the concrete analysis of capitalist societies must understand how the pressures exerted by capital are broken and deflected through the conscious actions of classes within and between capitalist societies.10 Hence, politics and geopolitics, among other ‘moments’, enter immediately the determination of the course and nature of capitalist societies. Yet this does not imply the plea for a series of incommensurable national Sonderwege (special paths), since capitalism – in a historically sequenced form which is itself co-constitutive of their relative uniqueness brought about in a pattern of geographically combined yet socially uneven development – is common to all of them. The logic of process has to replace the logic of structure. Historical variations among capitalist societies can be controlled by, but not reduced to, their identical core structure. In this sense, historical research has to establish this unity-in-diversity. However, there is no unmediated access to the facts without and ideas within (Krombach 1997). The crucial question is how we can best control this process of interpretation that is, of necessity, always a process of abstraction, even for archival workers. This is the task of metatheory. This is the task of dialectic.
Theorising globalisation
This outline of dialectical elements will now help us to set out an alternative explanation of globalisation that transcends the insufficiencies of constructivist accounts. To recapitulate, Ruggie theorised the end of ‘embedded liberalism’ in terms of epistemic disarray subsequent to divergences in national ‘social purposes’ as a result of successful liberalisation. We criticised this account because it treated ‘social purpose’ as a domestic black box, failed to relate globalisation to capitalist crisis, and underspecified the fundamental relation between states and markets under capitalism. However, the wider debate on globalisation is precisely defined by an attempt to understand the changing configuration of this relation. A widely held ‘strong’ version on globalisation suggests that greater openness in matters of trade, finance, services, and investment as well as the flexible transnational operations of footloose corporations drastically reduce the macro-economic steering capacity of the state in unprecedented ways (Ohmae [1990] 1999; Reich 1991; Horsman and Marshall 1994; compare Hirst and Thompson 1996). The assumption is that a globally integrated world economy exerts identical pressure on policy choices in different national contexts, imposing a similarity, if not uniformity, in public policy outcomes. In extremis, these developments amount to a self-cancellation of the state as a meaningful economic entity itself and the rise of a borderless world.
Furthermore, the standard liberal explanation tends to start with a description of a series of private sector economic and technological innovations and/or the observation of a quantitative increase in global transaction flows (sometimes described as the independent variable), followed by an assessment of their effects on state capacities (the dependent variable).11 Problems of causality are here compounded by problems of evaluation. First, causality is inherently functional, going from the economic to the political. Second, globalisation is conceived as a zero-sum relation between states and markets: Keynesianism is equated with a strong state, while neoliberalism stands for a weak state. Third, uniformity in outcomes is proposed.
In contrast to the constructivist and liberal accounts sketched above, our core argument is that globalisation refers to a conscious re-structuration of state-society and inter-state relations in response to the onset of the long economic downturn during the 1970s. Globalisation is neither a techno-economically induced, nor a purely politically driven, phenomenon, but the result of a dialectical, that is class-contested and consciously mediated, re-formulation of private and public strategies of reproduction under conditions of long-term negative growth.12 We argue that capitalist state power has not undergone a quantifiable reduction, but a qualitative shift in purpose, which may be broadly defined as a shift from the welfare state to the competition state (Wettbewerbsstaat). This thesis is premised on the assumption that success and failure in the market are never exclusively determined by the market, but depend always on the political conditions of capital-accumulation. However, while it is suggestive to argue that the world market constitutes today a Sachzwang (objective compulsion) (Altvater and Mahnkopf 1997), this compulsion was politically assisted, remains politically regulated, and is potentially politically reversible. Furthermore, while the state’s main function today is to directly support the competitiveness of its firms on a world-wide scale, important national divergences in public policy responses to globalisation are discernible (Streeck 1998). Thus, states are not the victims or losers of globalisation, but have both nolens volens facilitated and eventually benefited from the internationalisation of capital. If anything is withering away today, it is not the state as such, but rather its democratic legitimacy.
In order to support our argument, we will first have to restate the basic relation between the economic and the political under capitalism. In a second step, we will provide an account of the origins of globalisation as an outcome of the international profitability crisis. In a third step, we will set out divergences in state responses to the long downturn of the world-economy, that validate our dialectical claim that while globalisation entails a historically unprecedented shrinkage of policy choices, states constitute still the main relays for the reproduction of capitalism.
The fundamental relation between the economic and the political under capitalism
The core premise of a historical materialist approach to globalisation is that the differentiation between the economic and the political is unique to capitalism.13 In pre-capitalist societies, the economic remains always embedded in social, cultural, or political processes that regulate production, exchange, distribution, and consumption.14 The process of the disembedding of the market from socio-political norms allows in principle for economic self-regulation through the ‘invisible hand’ of the price-setting market. This is correctly observed, but inadequately theorised, in Polanyi’s work on The Great Transformation (Polanyi [1944] 1957).
Marx characterises this transformation as a shift from forms of ‘extra-economic compulsion’ under pre-capitalist social property relations to forms of economic exploitation instituted in the capital relation, theorised by the law of value (Marx [1867] 1976). Capitalism refers to a form of society predicated on the separation of the direct producers from their means of reproduction – the making of ‘free’ labour – so that generalised market-dependency translates into the disembedding of economic processes of production and exchange from direct political power. Henceforth, dispossessed and commodified direct producers are economically forced to make a living by entering into private economic contracts without direct political interference, as capitalists are compelled to compete in the market to maximise profits. Inter-capitalist competition necessitates specialisation and the out-pricing of competitors, predicated on product-innovation and the reduction of production costs. Cost cutting results either in the lowering of wages, the intensification of labour, or the replacement of labour by dint of technological rationalisation, based on competitive re-investment. A theory of technological innovation, leading to productivity gains and general growth, is thus built into capitalism itself. At the same time, profit-maximisation and inter-capitalist competition generate also a territorially expansive tendency towards the opening up of markets via trade.
Furthermore, a theory of the modern state is built into capitalist social property relations. Generalised market dependency, displacing pre-capitalist forms of direct political exploitation, allows for the pooling of political power in a sovereign state abstracted from civil society. The conflict-ridden and geopolitically mediated generalisation of the capital-relation allows for the conceptual and historical differentiation between an un-coercive ‘economic economy’ and a ‘political state’, monopolising the means of violence in a specific territory.15 Henceforth, the state’s minimal aims are to enforce private contracts and to defend private property internally and externally so as to keep the private profit-accumulation cycle intact. Capitalism thus understood allows us to conceptualise the structural and institutional differentiation between state and economy/civil society as an internal relation. In other words, this separation of the economic and the political is unique to capitalism as a totality. On this basis, changes in the configuration between the economic and the political within capitalist societies never transcend this structural differentiation, but are always changes internal to capitalism.
These changes generate crisis. Crisis is built into the capitalist accumulation cycle in so far as capital–labour relations contain, as a rule, a structural conflict of interests and as inter-capitalist rivalry, both nationally and internationally, tends to drive profit margins down. The state is thus permanently involved in the mediation and resolution of domestic and international social and economic crises through political regulation, economic intervention, diplomatic accommodation and war (Mayer 1971). However, the conflict-resolving power of the state depends primarily on those institutions that express and reproduce the capital-labour compromise, while being structurally limited by its fiscal dependency on the capital circuit. Therefore, the crisis-ridden historical development of capitalism remains central for an explanation of variations of state-economy relations and inter-state relations. In a very real sense, therefore, capitalist markets remain at a certain level of abstraction always de-politicised as long as the self-regulation of the market through the price mechanism is not fundamentally challenged. In other words, there can be no re-embedding of the economic into the political, only greater or lesser degrees of political management. Historically diverse capitalist state-society relations – the classical liberal, the corporatist, the interventionist-welfare, and the neoliberal state – simply represent variations in the degree of re-politicisation and de-politicisation (but no re-embedding) of the economy in what are essentially capitalist totalities.
It follows that we cannot adopt a Weber-inspired multi-causal approach towards the external and contingent interaction between institutionally separated spheres that display their endogenous logics (configuration analysis/types of state-society relations), as orthodox IPE and NWHS tend to do.16 The orthodox Weber-informed view of a zero-sum relation between states and markets rests on an erroneous dichotomy.17 It imparts a false sense of institutional identity and operative autonomy to what are preconceived as two discrete entities displaying competing collective wills. A reified power-based logic of bureaucratic rationality is here opposed to an independent profit-based logic of economic rationality. We suggest therefore that a dialectical philosophy of internal relations provides the necessary epistemological rationale for understanding the changing domestic and international relations between states and markets.
The origins of globalisation as a result of capitalist crisis
The post-war historical compromise in the advanced capitalist world between labour and capital was designed and internationally successfully institutionalised during a period of US hegemony, unprecedented and sustained economic growth, and system-competition between East and West. ‘Embedded liberalism’ and welfare programmes were predicated on the post-war boom.
However, between 1965 and 1973, that is before the onset of the oil shocks, a series of world-economic crisis symptoms interlocked (Brenner 1998: 93–234). At the core of the onset of crisis was an uneven but system-wide aggregate fall in the rate of profit predicated on falling rates of productivity in the G-7 countries. According to Robert Brenner, this profit-squeeze cannot be attributed to vertical class conflicts and excessive wage-growth but results from intensified international inter-capitalist competition, exerting downward pressure on prices due to over-capacity and over-production and a failure of re-adjustment at the level of the firm (Brenner 1998). Falling profits translated into decreasing levels of investments and rising unemployment. Intense pressure on the welfare state, due to a falling rate of tax returns, accelerating inflation, skyrocketing interest rates, and drastic rises in public debts, led to a downwards spiral in overall economic performance that challenged the viability of the post-war compromise.
Governments first responded by trying to sustain the welfare compromise by re-mobilising formerly successful Keynesian policies of demand-led counter-cyclical macro-economic management during the 1970s to stimulate growth. Yet the expansion of credit, while preventing the slide of a series of recessions (1970–71, 1974–75, 1979–82) into a full-blown depression, also impeded and delayed market exit by under-performing firms so as to prolong the profitability crisis that remained fundamentally determined by over-production and overcapacity. The net effect was a massive surge of public debts that failed to jump start economies and to reinvigorate growth. For example, the US military public spending programme of the early 1980s and general tax cuts, through a combination of high interest rates and a massive dollar revaluation (Reaganomics), proved a massive disaster for the US economy. Mitterrand’s return to public planning was severely punished by international capital markets. Under conditions of system-wide negative economic growth and the failure of export-led recovery through a series of competitive currency devaluations, Keynesianism failed.
Within this context of economic downturn and political crisis, major shifts in private economic strategies for restoring the conditions of successful capitalist accumulation eroded the post-war model. Falling rates of profit made re-investment into production less attractive. Capital, in its liquid money form, was increasingly diverted into financial markets that promised higher short-term rates of return. Thus, the first step associated with globalisation implied the deregulation of international money markets (O’Brien 1992). Simultaneously, capital interests pushed for the liberalisation and widening of markets for goods and services, pressed for a re-definition of industrial relations, the flexibilisation of labour markets, tax cuts and the reduction of indirect labour costs, while intensifying the re-structuration of intra-firm organisation of production in a transnational direction. Rationalisation involved the shedding and/or intensification of labour, as well as the introduction of new technologies. Business policies aimed for the general reduction of production costs and the loosening of the structural dependence by firms on ‘business-unfriendly’ national policy-contexts. In extremis, big firms used threats of investment strikes, capital flight and the dislocation of their sites of production.
This catalogue of business strategies set the parameters for public policy options and gradually de-legitimised the corporatist triangle between government, employers, and unions (Streeck 1998). It followed a massive system-wide shift in the balance of class forces in favour of capital, assisted by growing levels of unemployment that undermined labour’s structural bargaining power. However, in spite of the success of the employers’ offensive, the global profitability crisis persisted.18 The accumulation of crisis symptoms inaugurated a critical historical conjuncture, composed of a period of transition (1965–79/82) and a period of neoliberal consolidation (1979/82–2000). Yet, while states faced the same economic crisis symptoms across the board, variations in state responses are discernible that vitiate the fashionable thesis of the end of the sovereign state.
General crisis: the dialectic of converging business strategies and diverging state responses
The logic of the market set absolute limits to private strategies for re-establishing the conditions of successful capital accumulation. A falling average rate of profit prompted similar private sector strategies in the advanced capitalist world. Variations within these limits do not refute the general objective of regaining profitability. The new situation came to be characterised by the persistence of economic crisis and a general diversification, intensification, and internationalisation of private strategies of capital accumulation: globalisation unbound. Yet the uneven spread of crisis, non-synchronous national and sectoral business cycles, nationally diverging balances of class forces, and historically different institutional contexts of industrial relations, translated into palpable divergences in political management strategies that do not follow an exclusive economic rationality (Weiss 1999). These state variations reflect consciously adopted public policies that call for a dialectical theorisation.
While in the 1980s monetarism (tight money, fiscal austerity, balanced budgets) became the watchword of the day in states that were most severely challenged by negative growth and public debts, it neither meant the end of the state, nor the system-wide and chronologically simultaneous adoption of identical public policies. With the parameters for public policy choices set by the general economic downturn, governments devised diverse counter-strategies of state-supported macro-economic management. This diversity is evidenced in the respective configuration of the components of national-economic policy matrices that determine macro-economic regulation, including fiscal and monetary policy, industrial relations, social security and education systems, as well as industrial and sectoral policy The new situation is characterised by diversity-in-identity.
In the early 1980s, the ‘German model’ that was traditionally based on export-led growth, currency undervaluation, consensual corporatism, high-skilled labour, anti-inflationary and tight monetary policies, high taxes and a relatively strong commitment to welfarism did not immediately follow the path of radical liberalisation. Rather, the CDU/FDP coalition, while profiting from the record US budget deficit and a strong dollar, pursued a policy of modest macro-economic deficit spending and gradual state-supervised privatisation to counter economic recession combined with an active policy of wage moderation while continuing to subsidise exports. In the mid-1980s, after the Plaza Accord between the USA, Germany and Japan, Germany managed to avoid recession in spite of DM revaluation due to productivity increases, wage concessions, and the rationalisation of industries as a result of an active ‘national-economic’ industrial policy. However, unemployment rose to unprecedented levels. With the onset of unification, the full turn towards neoliberalism was postponed once again. Deficit spending, easy money, extra levies on taxes and state-controlled privatisation in the East led to a short-lived boom, the massive long-term accumulation of public debts, and inflationary pressure that has become the policy-restraining legacy left to the incoming SPD/Grüne government. The current policy follows a peculiarly contradictory path. On the one hand, Germany is committed to the implementation of austerity programmes, combined with tax reform, tight money and flexibilisation of labour markets, broadly in line with neoliberal prescriptions.19 On the other hand, continuing financial transfers to the New Länder and a strategy for European regionalisation and enlargement run directly counter to the strong globalisation thesis that equates neoliberalism with the loss of state capacity.20 Contrary to the globalisation thesis of a retreating state, the German state acts as the main circuit of transmission between domestic capital interests and regional and international institutions.
After the failure of the greatest Keynesian experiment in American history under Reagan and the accumulation of the highest US deficit ever, successive US governments made it their political objective to devalue the dollar and to reestablish the competitiveness of American commodities. The state adopted a neoliberal strategy of leaving the economy to market forces to re-establish competitiveness the hard way, since it was structurally unable to do anything else. From the mid-1980s onwards, the USA witnessed massive industrial shakeouts, rising unemployment, the intensified flexibilisation of labour markets, a downward spiral in wages, and the creation of a massive low-wage sector. Austerity programmes translated into tight money, corporate tax cuts, balanced budgets, and the declining growth of welfare spending. The creation of a regional free trade area (NAFTA) offered additional opportunities for relocating labour-intensive low-cost production sites abroad, while driving the American workforce into submission. In spite of an attempt by the incoming Clinton administration to revive public spending, Congress rebuffed even this modest trial of Keynesian demand-management (Brenner 1998: 194).
While the current US boom seems to vitiate any notion of capitalist crisis, huge economic imbalances have accumulated that carry all the signs of a bubble economy.21 From the mid-1990s consumer debts have reached unprecedented levels since consumers buy on the back of spiralling stock market values.22 However, stock markets have over-valued real increases in company profits by about three times. Consequently, the current account deficit approaches 5 per cent of US GDP while net foreign debts stand at over $2,000 billion (Atkinson 2000). Sooner or later the dollar will have to de-value punctuated by a series of interest rate rises that will throttle growth and may lead to a massive depreciation in stocks. Even if the US trajectory approximates the neoliberal model, we still have to note that neoliberalism is a conscious state policy that is not to be confused with the self-cancellation of the state. The more active side of the US neoliberal state is clearly displayed in its fiscal and monetary policies and its unilateral attempts to dominate the agenda of multilateral institutions (WTO, IMF, World Bank Group), while holding the UN hostage to its unpaid debts.
Turning to Asia, Japanese state-economy relations present another structural variant over and against the Anglo-American and European models, constituting perhaps the strongest case against the ‘strong’ globalisation thesis (Murphy 2000). The Japanese political economy is characterised by distinctive corporate structures and strategic alliances between state, banks, and sectoral business interests. However, as in the German case, the Japanese state promotes export-led growth through currency under-valuations and continuous re-investment into the domestic innovation cycle. High levels of savings and restrictions on foreign investment assist this process. During the 1980s, in an effort to make Japanese production cost-effective, the state actively encouraged Japanese firms to move labour-intensive production sites abroad, while providing incentives to concentrate high-tech production facilities at home (Weiss 1997: 21–2). The strategy was recently updated in that MITI embarked upon a programme of relocating the entire production of older generations of produce in order to ensure domestic ‘high engineering’ (Ehrke 1997). However, after the Plaza Accord in 1985, the Japanese state tried to stem declining exports after the yen revaluation by providing ultra-easy money. Yet the expected investment boom failed to materialise, throwing the economy into a long and deep recession in 1991–5. In spite of this economic under-performance, the state failed to embrace neoliberal standard measures (de-regulation, privatisation), while trying to revive the economy through a mixed strategy of major public spending programmes and decreases in interest rates. After the Reverse Plaza Accord in 1995 and the ensuing devaluation of the currency, massive rounds of public spending had to be counterbalanced by major tax increases.23 While unemployment rose within limits, wage growth was drastically reduced.24 Overall, the Japanese state did not succumb to neoliberal prescriptions, but is constantly required to re-structure its capacities to ensure international economic competitiveness.
In sum, the state has not seen its competencies and steering-power reduced. Rather, what has occurred during the course of the last twenty years is a structural incapacity by democratically legitimated collective actors to harness the power of the state to any other purposes than those in the interest of capital. The reason for this is that capitalism entered a prolonged period of crisis and states are structurally tied to the power of capital. This does not imply the mutual cancelling out of state capacities, but their re-structuration and mobilisation for the establishment of competitive advantages in favour of domestic and international capital.
Conclusion
This chapter has challenged Constructivism’s objections to historical materialism on three counts. It rejects the notion that Marx embraces a naturalist deductive-nomological form of science, an economic reductionist theory of society, and a teleological philosophy of history. We have furthermore argued that Constructivism’s theoretical programme is in itself deficient and ill equipped to theorise international political and economic change. A re-examination of the dialectical nature of Marxian thought provided an alternative starting point for thinking about the state/economy nexus, international relations in general and about globalisation in particular. We made three substantive claims. First, the origins of globalisation are rooted in the crisis of the capitalist world economy beginning in the 1970s. Second, the power of capitalist states has not been reduced. Rather, it has been transformed in favour of reconstructing the national and international conditions of growth and capital accumulation under massive, if unevenly successful, pressure from respective capitalist classes. While the conjunctural re-configuration of the relation between states and markets cannot be dissociated from the long economic downturn, we do not witness the end of the state and the rise of a borderless world, but a temporally and regionally uneven redefinition of state functions in the direction of the competition state. Third, although the capitalist crisis imposed identical pressures on states, variations in state responses can be explained with regard to differences in the structural bargaining power of social forces in nationally diverging institutional contexts.
Notes
1. Constructivism draws on an increasingly heterogeneous array of literatures. While the more proximate impulses came from the work of Berger and Luckmann 1966; Giddens 1984; Searle 1995; and the later Habermas 1984 and 1987, its classical roots are now associated with Max Weber, Emile Durkheim, and even Karl Marx himself. Cf. Kratochwil 1996: 217; Onuf 1989; Wendt 1992, 1999; Ruggie 1998.
2. Following Adler’s classification our outline of Constructivism refers to its ‘modernist’ camp (Adler 1997).
3. Kratochwil 1997: 437. Katzenstein, Keohane and Krasner distinguish today only between Rationalism and Constructivism (Katzenstein et al. 1999: 6).
4. Similarly, by misappropriating the work of Robert Brenner, Ruggie also claims that capitalism is essentially a constitutive rule (Ruggie 1998: 23).
5. How Wendt can repeatedly invoke the master-slave dialectic to exemplify the nature of ‘constitutive relationships’ without acknowledging its centrality for Hegelian Marxism is quite an achievement (Wendt 1999: 25).
6. Kratochwil concedes as much, but argues that law and formal organisations ‘are analytically independent of the issue of ownership of the means of production’ (Kratochwil 1993: 78). However is law also independent from the institutionalisation of class conflicts between capital and labour, pre-structured by property?
7. The nature of the political can be based on class, religion, gender, race, kinship. In principle, however, the political is constitutive of social production, appropriation, redistribution, and consumption.
8. Let us note that Marx foresaw the resolution of class struggle in either ‘a revolutionary re-constitution of society at large, or in the common ruin of the contending classes’ (Marx [1848] 1994b: 159).
9. On Marx’s ill-fated 1859 Preface cf Printz 1969.
10. For the relation between the classical tradition of Geopolitik and Marxism compare Teschke 2001.
11. Cf. the contributions in Keohane and Milner 1996 and Strange 1996. On the ‘dependent and independent variable’ syndrome cf. Keohane and Milner 1996: 3–5 and Frieden and Rogowski 1996: 26–8.
12. For a techo-economic account cf. Castells 1996–8, for a politicist account cf. Weiss 1997: 23 and 1999.
13. The idea of a differentiation between the political and the economic under capitalism has been argued, by Wood 1981; Brenner 1986; Rosenberg 1994; Boyle 1994; Burnham 1994; Bromley 1995 and 1999.
14. The implications of this insight for IR are drawn out in Teschke 1998.
15. However, multiple state territories are not a function of capitalism, but a legacy of pre-capitalist territory-formation (compare Teschke 2002: 30–38)
16. Mann 1986, 1993; Hobson 1997, 1998. An entire discipline (IPE) is based on the assumption that the modern international system is constituted by a complex layer-cake of ‘ontologically’ separate but interrelated structures that follow their own independent logic. See Strange 1996: 26. ‘State and market, whatever their respective origins, have independent existences, have logics of their own, and interact with one another’ (Gilpin 1987: 10).
17. Strange 1996 argues for the retreat of the state, while Mann 1997 argues for the rise and rise of the nation-state.
18. Brenner suggests that manufacturing accepted lower rates of return because fixed capital sunk in plant and machinery posed a structural disincentive to swiftly change lines, preventing a rapid re-adjustment through massive industrial shakeouts. Insufficient exit and increased entry through intensified international competition blocked the creative destruction of capital, generating a series of recessions and prolonging the economic downturn (Brenner 1998).
19. OECD Observer, No. 214, Oct./Nov. 1998. See http://www.oecd.org/publications/observer/214/e-toc.htm.
20. OECD Economic Surveys, Germany, Nov. 1999.
21. OECD Observer, No. 217/18, Summer 1999. See http://www.oecd.org/publicaions/observer/217/e-toc.htm.
22. OECD Economic Surveys, United States, May 1999.
23. OECD Observer, No. 219, Dec. 1999. See http://www.oecd.org/publications/observer/219/e-toc.htm.
24. OECD Economic Surveys, Japan, Nov. 1999.
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