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Globalisation and the challenge of needs

The exponential changes in production, distribution of goods across continents, dominance of the world economy over the last thirty years, collapse of beacon institutions of the capitalist world (Bear Stearns, etc) make the analysis of globalisation somewhat of a moving target. This post will clearly not attempt to present a detailed analysis of globalisation — what it seeks to do is identifying the key issues and draw out the political significance in relation to the necessity of reorganising society along the lines of human need instead of profit.

We have to, firstly, make the distinction between globalisation (the global character of production and exchange and the increasing integration of productive forces on a global scale) and global capitalism (the system based on the continued subordination of economic life driven by the pursuit of profit and chained to an outmoded form of political organisation, the nation-state). Having said this, we must hasten to add that this globalisation of production takes place under capitalist social relations, still dominated by profit and resulting in the ever-worsening social conditions of the majority of the planet’s people, both in the so-called first- and developing worlds. [The current conditions where people are made to suffer for the credit crunch across the world are a telling tale of one of globalisation’s consequences].

In the past, global integration took the form of arm’s length transactions (either as trade or as investment). This, we must remind ourselves, was an exclusively market operation. These days things are very different. Global integration of economic processes happens within the framework of multi-national companies as an internal operation — their importance is tied to the growing significance of foreign direct investment.

The second key feature of globalisation is the emergence of a global financial market. Looking at the available average annual outflow provided by the International Bank of Settlements one realises the staggering increase over the last three decades. The expansion in capital flow simply means that the world capitalist markets are no longer a series of interconnected national markets, but a single global entity.

Earlier on we said that globalisation does not merely represent an increase in international economic activity. It is, more than anything else, a fundamental (and qualitative) change to the structure of the world capitalist economy. We had better explain this. Capital exists in three forms: as money capital (used to buy raw materials, machinery and labour power all brought together in the production process), productive capital (the machinery and raw material mentioned) and commodity capital. The things produced (commodities) are then sold and money capital resumes the process of expansion. This is how capital is tied to its self-expansion — this metamorphosis is an ongoing process.

Bourgeois economists cannot explain why there is a qualitative change in all three of these forms of capital, but a quantitative change in only one of them, productive capital into commodity capital. It is here, and only here, that there is an increase in the value of capital and the source of this is the profits squeezed from workers in the production process. The history of capitalist production is therefore the globalisation of these three forms of capital. The increase of international trade since two centuries ago, the development of international investment and the formation of the international banking system and the globalisation of capital in money formed towards the latter part of the 19th century.

None of these changes freed productive capital from its national political form. Raw materials were bought internationally, goods were sold internationally, capital investments were made internationally, but productive capital was not internationally mobile. Look at the mass migration of labour especially at the early part of the 20th century and shortly after WWII (from various European countries to South Africa, to Australia and also to the US). Today productive capital is no longer bound to the nation-state. It is able to move around the globe to minimise its cost structure. Moreover, it has refined the division of labour thanks to revolutionary changes in the fields of technology and communications. Years ago, planning and design had to be located near the manufacturing site. Not any more. They can literally be continents apart, yet with computer-aided design methods and high speed communications they function as though they are on separate floors of the same office block.

The challenge that globalisation presents financial capital with is that, even if each section of capital is confined, in its operations, within a given local, regional or national market, it must return a profit in line with international standards. Companies unable to do so will find shareholders, who are globally mobile, shift away from them. Here we see that the existence of transnational money and markets erode the national ties of capital.

Understanding all this we can now point to the key areas of political significance of the entire globalisation debate. Firstly, it underscores the contradiction of the nation-state as an archaic political form in the context of the forces of production that completely outgrew it. The predatory wars of the last few decades are painful reminders of a system that is simply incapable of resolving this contradiction; instead, it threatens to drag the entire human race into the abyss. The second factor is that globalisation rips apart the historically social, economical and political structures of the capitalist ruling classes that maintained the latter’s rule for all these years and brings the working class and the capitalist class into ever closer confrontation. Objectively, it hastens the moment of denouement. Thirdly, globalisation lays the material foundations for the conscious development of a system based on the needs of people.

With the existence of the world market and globalised production, we have the inter-connection and interdependence in production, consumption and all aspects of each individual with the other. Planning exists on a global scale and so does distribution. The key is to facilitate the disposal of all these systems and mechanisms to serve the needs of people instead of terrorising them with their own creations. That is the task of the international working class under the leadership of a party uncompromising in its championing the objective interests of the class, and therefore the objective interests of society as a whole.