Analysing International Relations 5 - Capitalism PDF

Analysing International Relations 5 – Capitalism Prof. dr. Daniel Thomas  The international system: A set of incentives and expectations that shape the identities and the behaviour of actors in international politics. 4 faces (concepts)...

Analysing International Relations 5 – Capitalism Prof. dr. Daniel Thomas  The international system: A set of incentives and expectations that shape the identities and the behaviour of actors in international politics. 4 faces (concepts): Step 1: Think about each face separately. Anarchy (5 Nov) Step 2: Compare Hierarchy (7 Nov) various conceptions of each face. Interdependence (12 Nov) Step 3: Think about how the various Capitalism (14 Nov) faces connect and interact.  Today Introduction Early theorists of capitalism Capitalism and global governance Capitalism and global inequality Conclusions  Introduction 2 ways to interpret the global capitalist economy as an international system: As a market. As a capitalist world system.  Global economy as a market A global market in which sovereign states and private actors make choices to manage their interdependence based on prices and regulations at national and int’l levels. Generally assumes that market-based cooperation produces joint gains (outcomes that benefit all participants). See IRO courses on economics, international political economy.  Global economy as a capitalist world system. Focus on structures of power and exploitation… not on the choices of states, firms, IOs, others. Focus on conflicts of interest at national level (between social classes) and global level (between core and periphery states & economies)… not on ‘joint gains’. Various versions -- some drawing on Karl Marx, some not  Early theorists of capitalism as a national and int’l system Marx Hobson Lenin Gramsci  Karl Marx Das Kapital (1867) and other works ‘Historical Materialist’ analysis of society: Society is based on the mode of production (how wealth is created) changes over time: slave -> feudal -> capitalist -> communist (predicted) shapes the identity and interests of social classes, dominated by a ruling class Class / Mode Slave Feudal Capitalist Ruling class Nobility Lords Bourgeoisie (owners of capital) Under-class Slaves Serfs Proletariat (workers, owners of labour) Interests of ruling class  government, religion, morality, ideas (‘superstructure’)  Marx, continued Theory of history: Contradictions in mode of production  class struggle  social change. Expectation for capitalism: Capitalism maximizes profits by paying minimum wages  impoverishment of workers  reduced demand for products  loss of profits  economic crisis  revolt by working classes  end of capitalism, rise of communism.  John A. Hobson * Imperialism (1902) Capitalism produces great concentrations of wealth. Capitalist elites manipulate the power of the state to advance their own interests. When a capitalist society’s production capacity is greater than consumer demand, elites (the owners of capital) have two options: Redistribution: increase demand at home by redistributing wealth to the poor Imperialism: acquire foreign lands for profitable investment opportunities. * Not a ‘Marxist’ – not focused on historical materialism, class struggle, revolution, etc. A cartoon from the time of Hobson  Vladimir Lenin Imperialism – The Highest Stage of Capitalism (1917) Combined ideas of Marx and Hobson Capitalism will eventually end in communist revolution, but this hasn’t happened (yet) because capitalist states pursue imperialism. Dynamics: Falling profits  capitalists seek new investment opportunities and markets abroad  imperial competition between capitalist states  war.  Antonio Gramsci The Prison Notebooks (written in prison 1929-1935) Agreed with Marx that a bourgeois social class dominates capitalist society. Rejected Marx’s economic determinism & Lenin’s expectation of upcoming communist revolution. Emphasised cultural hegemony: ruling class uses ideas & ideology to sustain capitalism and maintain power. Social change requires counter-hegemony: the promotion of alternative, critical values & norms.  Capitalism and global governance How does global capitalism shape global governance? Cammack 2003 Chimni 2004  ‘Transnational capitalist class’ supports and benefits from an ‘imperial global state’ B.S. Chimni (2004). International Institutions Today: An Imperial Global State in the Making. European Journal of International Law 15:1, 1-37 A transnational capitalist class bridges first world and third world. First world states have established a network of international institutions (a decentralised “imperial global state”) that benefits the transnational capitalist class and disadvantages dominated, marginalised classes in first and third worlds.  These institutions legitimate particular policies, reduce the policy autonomy of sovereign states, resist the democratization of global decision- making.  Global governance serves global capitalism Paul Cammack (2003). The Governance of Global Capitalism: A New Materialist Perspective. Historical Materialism 11:2, 37–59 Uses 2 concepts from Marx Capitalist accumulation: Existence of reserve labour (i.e. people who reasonably healthy and skilled but willing to accept low wages if employed workers quit or are fired)  low wages  extraction of profits from labour. Relative autonomy of institutions: Int’l institutions serve capitalism, but not particular groups of capitalists or capitalist states. Argument: World Bank & IMF promote and sustain the conditions of global capitalism. WB’s ‘anti-poverty’ agenda ensures reserve labour pool (minimally healthy and educated workforce). IMF oversight of national budgets ensures manageability of Break time  Capitalism and global inequality Why is wealth distributed so unevenly around the world? Prebisch 1950 Rodney 1972 Wallerstein 1974 Philipps 2017 Baker 2005 & 2023  Dependent development (‘dependency theory’) Raúl Prebisch (1950). The Economic Development of Latin America and its Principal Problems Rejects David Ricardo’s theory of mutual development via ‘gains from trade’. In contemporary world system, periphery exports raw materials to centre, while centre exports finished products to periphery. Over time, two factors  concentration of wealth in the centre: ‘Declining terms of trade’ – raw materials get cheaper, finished products get more expensive. Centre is powerful so retains profits; periphery is weak so easily exploited. Result: centre gets richer while periphery gets ‘dependent  Imperialism and ‘under-development’ Walter Rodney (1972). How Europe Underdeveloped Africa Imperialism is an integrated global system in which wealthy capitalist states dominate and exploit less-powerful regions of the world. Poor countries are not ‘developing’... they are ‘under-developed.’ Under-development = global capitalism restructures the societies and infrastructure of less-powerful countries and regions in order to exploit their resources for the benefit of more-powerful countries and regions Africa developed Europe while Europe under-developed Africa.  The infrastructure of ‘under-development’ Africa’s railways at. independence in the early 1960s Except for South Africa, all railways run to coastal ports.. Good for exporting raw materials… but bad for developing integrated national economies!  The ‘modern world system’ Immanuel Wallerstein. The Modern World-System (4 books, 1974-2011) The ‘modern world system’ (since 16th century) is a global capitalist economy characterised by a division of labour that systematically benefits certain economies and states more than others. Core: advanced tech, strong states, tightly inter-connected to each other & to periphery Semi-periphery: middle tech, semi-strong states, semi- connected to core & periphery Periphery: raw materials, weak states, connected to core but not to each other  The dynamics of the ‘modern world system’ Wallerstein, 1974-2011 Economic exchange on unequal terms  redistribution and concentration of wealth in ‘core’ economies  uneven political development. Capitalist elites control the policies of core states; elites in periphery and semi-periphery share interests & values with elites in core states. Semi-periphery reduces polarization  less resistance to the system.  The effects of the ‘modern world system’ Rob Clark and Jason Beckfield (2009). A New Trichotomous Measure of World-system Position Using the International Trade Network. Int’l Jnl of Comparative Sociology 50(1): 5-38 Question: Is the development experience of states shaped by their position in the core, semi-periphery, and periphery zones of the world system? Method: (1) Use trade data 1980-1990 to position states in core, semi- periphery, and periphery zones. (2) Statistical analysis of relationship between position and growth in GDP per capita. (3) Control variable: levels of secondary education. Findings: 1. Divergence between zones: Core states grow faster than semi-periphery; core & semi-periphery states grow much faster than periphery. 2. Secondary education affects growth in all 3 zones. 3. Position affects growth, even when controlling for education.  How does this system work today? 2 mechanisms that receive little attention: Global value chains Financial secrecy  Capitalism and global value chains Nicola Phillips (2017). Power and inequality in the global political economy. International Affairs 93(2), 429–444 Global economy is dominated by transnational corporations (TNCs) working through global value chains (GVCs). Functional fragmentation: Trade is dominated by the exchange of intermediate goods & services, not the exchange of finished products. Geographic fragmentation: Lead firms out-source specialized production to other firms in multiple countries. 1 of 5 jobs worldwide is linked to production in GVCs. GVCs are “the world economy’s backbone and central nervous system” (World Bank, 2010) Example: iPhone production & sales, 2010 (Phillips 2017) Material costs: 21.9% Labor costs: 5.3% Corporate profits: 72.8%  Interaction of 3 power asymetries drives global inequality (Phillips 2017) Market power: Oligopoly of lead firms +. competition among suppliers  low wages & job insecurity for workers, high profits for TNCs. Social power: Expansion of global labour supply & weakening of social protections  workers have less bargaining power to improve their conditions. Political power: TNCs press governments to reduce social & environmental protections and to deregulate cross- border movement of capital.  GVCs and global inequality (Phillips 2017) The global capitalist system, especially the GVC system, produces a massive concentration of wealth, power and advantage. “The current vast and expanding extent of global inequality is not a ‘bug in the system’ of a GVC world, but is rather foundational to the functioning of a global political economy built around the form of industrial organization associated with GVCs – an outcome that arises from the interactions of market, social and political power in underpinning this global economic order.”  Global capitalism and financial secrecy Raymond W. Baker (2005). Capitalism’s Achilles Heal Raymond W. Baker (2023). Invisible Trillions: How Financial Secrecy Is Imperiling Capitalism and Democracy and the Way to Renew Our Broken System Global financial secrecy (tax havens, shell companies, anonymous trust accounts, fake foundations, digitized money laundering, falsified trade) accounts for half of global economic activity. It is facilitated by laws (and banks, lawyers, accountants) in rich countries. It contributes massively to global inequality, both within and between countries. Africa loses more than US$50 billion per year = total development aid 1965- 2015 See also: Illicit Financial Flow: Report of the High Level Panel on Illicit Financial Flows from Africa (2005)  In brief… 4 concepts of the international system ( and how it shapes IR) International anarchy: The absence of effective central authority above states. Security dilemma or the possibility of aggression or states’ identification with/against each other  IR. International hierarchy: Vertical relationships of authority and domination. Authority relationships based on power differences or voluntary contracts or deep social structures  IR. Interdependence: Cross-border relationships with uneven reciprocal effects. Cross-border processes and institutions  IR. Capitalism: Integrated world system produces inequality among states and social classes. Dynamics of capitalism and interests of transnational capitalist class IR.  For further reflection Each of the 4 concepts of the international system -- anarchy, hierarchy, interdependence, capitalism – generates expectations about the dynamics of IR. What expectations does each concept generate? Which expectations do you find most insightful for explaining which aspect of IR? Which aspect(s) of IR is each concept not good at explaining? Overall, which concept do you find most insightful? Least insightful? Why? How do the dynamics of one concept interact with other, and to what effect?  Coming up… Today, 15.00-16.00: Office hour, WH 2.14A Tuesday: International cooperation