Characterising the period

Issue: 135

Nigel Harris

Editor’s note: Nigel Harris, who succeeded Michael Kidron as editor of International Socialism during the 1960s, made a welcome return to our pages in issue 132. Then he was reviewing Ian Birchall’s biography of Tony Cliff. Here he seeks to sum up the world conjuncture. His basic thesis that the fundamental contradiction today is that between global capitalism and the system of nationstateswas a matter of much debate in International Socialism during the 1980s and 1990s. In this brief but sharp overview Nigel updates his analysis by bringing it to bear on the global economic crisis and the political reactions it is provoking. Readers may disagree with some of what he says (they may doubt, for example, that global capitalism can achieve “the end of world poverty”), but they will also find plentiful food for thoughtAC

It used to be that identifying the central contradiction of a historical period was seen by Marxists as the linchpin of all subsidiary analyses and strategies.1 But the general decay of theoretical concerns has made this unfashionable.

Nonetheless, much of the left falls back on the threadbare term “imperialism” as a substitute for rethinking the period. The concept now, however, lacks the original theoretical underpinnings (Hobson-Hilferding) which anchored imperial expansion in a change in the core of capitalism, and seems to imply that “freeing nations” (usually from Washington domination2) would achieve universal liberation.3 This article tries to suggest an alternative approach in order to open discussion.

Since about 1980 the constituent national parts of the world economy have been dominated by the transition to a single world economy: “economic globalisation”. This increasingly imposes on the world a new changing pattern of territorial specialisation, organised by global markets, not as hitherto believed (rightly or wrongly), by national states. The integration of the separate political territories (“national economies”) into a single economic system has been achieved in stages through the state agreeing to relinquish control of trade, of capital, and finally—albeit partially—of labour.4 The free flow of the factors of production has created a single world economy,5 outside the control of any one national authority.6 The destruction of the old Soviet Union, of apartheid in South Africa as well as the coming final transformation of others (Cuba, Myanmar, North Korea, etc) can be seen as only the more extreme casualties of this inexorable economic globalisation.

The first phase of the current transition has been characterised both by extraordinary levels of prosperity in the heartlands of the system (the Atlantic economy and Japan), and an unprecedented geographical spread of economic growth (most dramatically to China and South East Asia, to Latin America and, latterly, to India). In turn, this process may now be drawing in sub-Saharan Africa. In the first phase, opinion rejoiced that the world had apparently mastered the secret of sustained and spreading growth; in the second, marred at the end by severe economic crisis in the heartlands, there were growing fears that globalisation had disastrously undermined the authority of the state, and imposed on the world a territorial division of labour which made redundant the mass of the labour force in the heartlands, implying long-term mass unemployment. It seemed an existential political crisis of the state coincided with an economic crisis of material survival for the population.7

The current transition is, historically, the second great surge towards economic globalisation.8 The first,9 between, say, 1870 and 1914, ended with two world wars and the Great Slump, in which states not only clawed back the powers they had conceded to global markets, but immensely enhanced and centralised national political power over their respective national economies to an unprecedented degree, epitomised in the extraordinary concentration of power in the state in Nazi Germany and the Soviet Union.10 It took nearly 50 years after the end of the Second World War to resume the drive to globalisation, now with much enhanced vigour and comprehensiveness, and encompassing the whole world, not just the Atlantic economy.

Indeed, never before in the history of capitalism has the ethic of competitive markets—neoliberalism11—penetrated so deeply into the domestic operations of the state, into virtually every cell of the social order. We are now within sight of the reversal of many of the major historical efforts to tame the destructive power of markets—from the New Deal and Great Society legislation in the US (even the right to collective bargaining) to the welfare state and the provision of social and educational services in Europe. Indeed, in the period from the 1950s to the present there has been an almost complete reversal of the dominant statist narrative throughout the world, especially visible in Europe, but most dramatically in what used to be called the developing countries (and the Eastern Bloc).12

In striking contrast to the past, national economic growth (for social prosperity and to fund state coercive power) is now seen as exclusively provided by opening the national economy to global economic integration—allowing domestic economic activity to be determined by global markets rather than state priorities. Such arrangements necessitate domestic reform to open the economy to global capital, to establish transparency and accountability (so all competitors, domestic and foreign, receive the same message). By implication, the state relinquishes any ambition to shape the domestic economy in any particular direction, restricting itself to managing efficiently the accommodation of global forces.

However, the emergence of a national “global state” (that is, a state whose function is to manage the local economy and society in conformity with global, not local, imperatives) profoundly weakens the state compared to the past. It is obliged to relinquish much of what used to be a national agenda, including important instruments of economic policy concerning the management of external trade, capital movements and, in principle, labour. More importantly, politically, it relinquishes powers to bribe the electorate to be loyal and to reward patrons. To put it over-simplistically, the state faces a set of contradictory options—economic growth (through integration with the world economy) but weakened state power (especially relative to economic crisis); or enhanced state power with economic stagnation (which in turn undermines state power). Of course, depending on the specific circumstances of a particular state (including the history of past policies), opening up to the world may not lead to economic growth, in which case, the state has no recourse except to rule by violence. In an existential crisis (such as, for example, faces Assad’s regime in Syria today), the state will not hesitate to sacrifice present and future economic growth—as indeed, the population of the country—to hold on to power.

The threat to state power is also political in a different way—through undermining the domestic social solidarity which has hitherto been identified as the precondition of a stable state. No population is likely to remain loyal indefinitely to a state seen as working exclusively for foreigners (the “world system”). Nowhere is this more painfully apparent than in the field of immigration, since the mobility of labour is also a precondition of economic growth. No advanced economy is any longer self-sufficient in labour (that includes the changing diversity of skills in the labour force as local economies restructure). The solidarity underpinning the old state required levels of xenophobia and sometimes racism which are incompatible with continual immigration, the “churning” of the labour force required for economic growth. Yet everywhere today, certainly in the heartlands of the system, there are increased restrictions on immigration, despite the damage done to economic growth (not to speak of the welfare of the native-born). States are again caught in a contradictory position—the conditions for growth undermine the elements of national closure (zero net migration) supposedly required to make secure state power (and seen most vividly in North Korea and the old Stalinist states).

It is this contradictory position which inhibits states today from copying the reactions to the inter-war Great Depression, ending the first surge of
globalisation—economic closure and domestic authoritarianism. The reaction now is fragmentary and contradictory—some moves to authoritarianism,13 a ballooning prison population,14 attempts to block immigration and demonise “illegals” (and Muslims), along with the continued spread of neoliberal reform, but without systematic protectionism. Of course, since the present crisis might be seen as an existential one for states. The longer the crisis lasts, especially if marked by popular revolts against austerity, the greater the danger states will seek to recover their lost powers—and reverse economic globalisation, sacrificing the welfare of their own and the world’s population to their own survival. The issue of world slump was only settled last time round by resort to world war and a terrible orgy of self-destruction. At the moment world war seems unlikely but one should not underestimate the potential for auto-destruct when one or other state’s existence is threatened—the common ruin of the contending nations/classes.

These trends—if “trends” they are—go with other attempts to
disenfranchise citizens, to isolate government from “politics”, to protect the global system (and states) from popular demands, and install technical or expert administration—through independent central banks and national statistical agencies to reassure “global investors” that mere governments—or “politics”—cannot interfere either with monetary policy or basic data; and in Europe, to institutionalise binding (constitutional) conditions of expert state management. The language betrays the change of emphasis—”citizens” become “clients” or customers for state services, where the criterion of judgement is supposedly the efficiency and cost of service provision, not the right of citizens to exercise popular sovereignty. But the weakening or removal of representation further undermines the state: it is popular democratic
self-government that supposedly legitimises the exercise of sovereignty.

The strict limits imposed on national sovereignty by the new order are becoming clear—that is, on the economic front, the global economic nexus, global markets severely discipline national policy and those constraints are reinforced by the political order of states, the so-called “international community”. The state now appears to become an agent for an economic and political world order, enforcing global imperatives on the domestic population rather than representing it to the world at large (let alone defending it against external threats). If there is no longer the possibility of state sovereignty, will the world’s fascination for two centuries with “national liberation” become undermined? Not while aspirant ruling classes are willing to fight for a place at the top table, and there are no alternative options for popular self-emancipation.

This conjuncture exposes the separation of what we might call two ruling classes—a territorial national ruling class, a class whose very existence depends on holding a national territory (composed of the state administration itself, armed forces and security services, crony capitalism, owners of land and infrastructure, etc), and a global ruling class which directs the companies and corporations that constitute the global economy, the mobile global rich, along with the staff of international agencies, NGOs, etc—that is, a global social stratum for whom nationality is a mere contingency, not a matter of overriding loyalty. The two classes are in practice not at all clearly distinguishable and members pass freely between the two. What is distinguishable is interest (for example, between neoliberalism and economic nationalism) and role (national versus international).15

Thus we may be entering a period which combines both the extraordinary potential for the end of world poverty,16 and a possible existential crisis of the fractured political order of the world. The danger is that the territorial ruling class may use its overwhelming control of the powers of physical coercion to reassert national dominance over the global economy—producing domestic authoritarianism with economic stagnation (with possible perpetual warfare on the borderlands to enforce social discipline (a combination so brilliantly described in Orwell’s Nineteen EightyFour). In fact, hopefully, global economic integration is by now already so advanced, it cannot be comprehensively reversed even if components can be qualified (eg immigration), and states will continue to cheat and chisel on the rules. States have an interest in inflating the popular fear that the new international division of labour will render redundant large sections of the labour force to support populist authoritarianism and that will damage economic globalisation—and hence the welfare of the people of the world. Elements of a partial restoration of national capitalisms already exist in the nexus between the national military and crony capital which dominate some important states (Russia, China, Pakistan, Iran, Israel, etc).

Many states are already adjusting their domestic orders to accommodate the new circumstances. Some have initiated national debates on what it is to be a native, the supposed values shared by the natives, often under the spurious pretext of the need to secure the “integration” of non-natives (immigrants, refugees, etc). Of course, what united, say, the British was never “shared values”, but common subordination to one state, so the debate is both risible and vacuous. As so often, Israel in its peculiar circumstances is a pioneer in this adjustment, combining militarised ethno-nationalism, a return to religious orthodoxy with authoritarianism, employing the Israeli Arabs as the anvil to forge unity out of an immigrant diversity and pursuing a perpetual war in the Occupied Territories to sustain popular fear. However, this combination could be suicidal for an economy as globalised as Israel. Hungary in Europe is also distinguished by its innovations (ending an independent central bank and judiciary, and controlling freedom of the press). This last highlights the role of the technical revolution in communication, breaking—at least for the moment—the state’s monopoly of information (many states are seeking means to restore the status quo ante through censoring the internet, mobile phones, etc).

Left to itself, the global system seems unable to resist self-destruction:

markets—and the competitive drive to profit—seem incapable of the self-discipline to escape crash. The global capitalist class shows little potential for political self-government. For that they are for the moment dependent on the existing political order (international and national). Yet the fragmented political order—where real coercive power is vested—appears incapable of overcoming its ferocious rivalries to achieve unified action to avoid self-destruction.

The core problem is, then, in sum, an integrated world economy, driven by global markets, the outcome of which cannot be predicted or determined, and a fractured political order of competing states that is incapable of unified action. The forces of revolt against this order—national liberation in the Arab world to overthrow the local mafia states; the Occupy movements in different countries (from Wall Street and Oakland to Tel Aviv); the mass worker struggles against austerity (Greece, Spain, Portugal); the widespread rash of peasant rebellions and strikes in China—all assume, insofar as they are political, the decisive role of the national state in securing reform or change. After decades of drilling populations to accept the state as the sole saviour of threatened populations, it is hardly surprising. Indeed, many of the rebels start from a demand to be taken as authentic natives and therefore worthy of being treated with dignity, not as if they were foreigners who deserve nothing from “our” state. The creativity of these movements is not in doubt, but intellectually, we cannot even begin to visualise a realistic road map to one world, a world without war, with a unified drive to end world poverty, secure a livelihood for all with security, and render the environment safe and sustainable. Revolutions in one national state can no longer achieve even “national liberation” (that requires breaking the global order), and though revolutions may spread, as we have seen in the Arab Spring (although not now united by an international proletarian class alliance), this merely reiterates the same order of competing states which is itself at the core of the problem.


These notes began with an implied criticism of the left that identifying the contemporary world as “imperialist” was theoretically inadequate. The charge put Washington at the centre of the world system, implying that achieving national self-determination by overthrowing Washington’s domination would achieve the liberation of the world. However, Washington’s power is purely military/political, and does not deliver the power to manage global markets, the underlying reality of contemporary capitalism. Indeed, we could identify Washington’s attempts to control the world’s political order, not as pursuit of empire, but as a misguided attempt to fill the vacuum created by the lack of world government in a global economy—but not in the interests of the world’s people so much as what it sees as its own interests. Meanwhile that global capitalist system has severely damaged, perhaps irreversibly, that conjuncture in global flows that is still called the “US economy”. Globalisation is not the imperialistic instrument of Washington and a clearly identifiable bloc of “US capital”,17 but a phenomenon that also undermines the US state, allowing the corporations that have their home or origin there to be free-floating in world markets with little or no reference to Washington.

In sum then, the period is dominated by the struggle of national political states to recover what was seen as their former power, the absolute and overriding powers of sovereignty, to resolidify the social foundations of political power while simultaneously securing economic growth, and do so while a global economy is constantly eroding their position. For a very long period capital was able to hide behind the state, but now—in the final phases of the completion of the bourgeois revolution (now on a world scale)—it is obliged to step into the limelight, unprotected by political power. It is perhaps the most dangerous conjuncture ever witnessed in the history of world capitalism, and the final outcome is far from clear.


1: I am grateful to Ian Birchall and David Renton for critical appraisal of an earlier version of this-neither is in any way complicit in this outcome.

2: Failing to note that, despite being overwhelmingly dominant in military/political terms, Washington remains mired in an insoluble crisis with world capital.

3: With hindsight, we can see that “national liberation” in practice liberated only a new ruling class (and the security forces to protect it) and licensed entry to the “international community”.

4: Indeed, by now it is doubtful-at least in the developed countries-whether “national economies”-discrete autonomous areas of economic activity, defined by political boundaries-any longer exist as objects of effective state policy. At best, states manage global flows that begin and end beyond their authority or even their knowledge.

5: As occurred earlier in the creation of national economies (territories governed by the free flow of the factors of production within one politically defined territory), in this case, sacrificing economic linkages beyond the territory of the state to those within it.

6: The theme is difficult to discuss because data-and policy discussion-are defined by the current distribution of political power, national states and their interests (and international statistics are assembled from national sources). Thus the distribution of political authority defines our perception of the global economy. Indeed, some tell the story of global capitalism, not with reference to global markets, but as the jousting of competing states and their relative share of activity.

7: In an overheated political climate, the fears were exaggerated. The concentration of high skills, research facilities and infrastructure would give the heartlands of the system an indispensable role far into the future (without this ruling out radical changes in the pecking order of states). This is, of course, no comfort to workers laid off in the here and now. On the other hand, a world social structure is emerging with the rich spatially concentrated for the moment in cities in the West (London, Paris, New York). The “periphery” becomes the site for looting by the local rulers before running to live in the secure environment of Paris, London, New York, etc (witness the Russian oligarchs).

8: An earlier “surge” might be seen, following Kautsky, in the creation of global markets through the spread of colonial empires. See also Roy, 2012.

9: Summed up most presciently in 1914 by Leon Trotsky: “The natural tendency of our economic system is to seek to break through the state boundaries. The whole globe, the land and the sea, the surface as well as the interior, has become one economic workshop, the different parts of which are inseparably connected with each other… The present [First World] war is at bottom a revolt of the forces of production against the political form of nation and state. It means the collapse of the national state as an independent economic unit”-Trotsky, 1971, pvii.

10: The period established an extraordinary faith in the potential of state planning and dominant public sectors; governments everywhere mimicked the imperatives of the war economy, even in peacetime.

11: “Neoliberalism” is the ideological expression of global capital, not the product of a sudden surge of greed (that was always there) or an intellectual error by economists. The neoliberals are the product of the emerging economic system, not its source. They, like everyone else, are not in control of the system. Government reform arises from practical calculations, not ideological commitments.

12: In the developing countries of the 1950s and 1960s accelerated economic growth was seen as exclusively attainable through national economic isolation (even if modified in “import substitution”), excluding foreign capital, etc.

13: In the US the moves to end habeas corpus, institutionalise torture, etc, are well known-but see the 2011 National Defense Authorization Act to allow indefinite detention without charge or trial (and in Britain steps to allow indefinite detention without charge).

14: For the US, put recently at over 6 million, proportionately the largest number in the world (the number for China is not published but may be larger).

15: It could be argued that a global ruling class cannot be said to exist as a “class for itself” without identifiable institutions of self-realisation, world governance. To pursue this theme here would take us too far from the central thread of the argument.

16: The reduction in world poverty since 1980 is a staggering record and has persisted through the world economic crisis-partial estimates for 2010 suggest global poverty has been halved since 1990 and has been replicated in all regions of the world-Economist, 2012.

17: The old agenda that assumed each state had its own bloc of capital loyally working to further the ends of the state was never true, and is now increasingly untrue-for global corporations it is no longer possible to identify a nationality.


Economist, 2012, “A fall to cheer” (3 March).

Roy, Trthhankar, 2012, “Empire, Law and Economic Growth”, Economic and Political Weekly (25 February).

Trotsky, Leon, 1971 (1915), The War and the International (Young Socialist Publications).