[porkmarras]

Terms such as "openness" need to be reconsidered away from the distorted meanings assigned to them by neoliberal cultural hegemony. The contradiction between globalizing and territorially based national social and political forces is framed in the context of past, present and future world orders.

The emerging world order has always been, and will again be, the result of a struggle for the direction of structural transformation of the current order, involving economic, political and sociocultural changes. The prevailing trend of the past two decades toward the marketization and commodification of social relations has led to the argument that socialism needs to be redefined away from the total visions associated with Marxism-Leninism, and toward the idea of the self-defense of society and social choice to counter the disintegrating and atomizing effects of globalizing and unregulated market forces. But this is precisely a Marxist-Leninist vision: that under globalization, national sovereignty in the form of nation-states and governments will give way to a pervasive socioeconomic order. In other words - the withering away of the state.

The sole function of government is to protect the weak, because the strong is itself government and needs no other. This truth gave birth to monarchism: the king's function was to protect the peasants from aristocratic abuse. So in modern terms, the government's function is to maintain socialist/populists values in the context of capitalist market fundamentalism. So the withering away of the state prior to the end of economic exploitation is putting the cart before the horse.

The unwitting by-product of the rightist quest to get government off the back of the people is a Marxist dialectic. The only flaw is the economic structure. The right wants the withering away of the state prior to the progressive transformation of capitalism into socialism.

The perpetual boom has not replaced the business cycle, new economy or not. In the age of information and communication, the majority interest will prevail - with luck, without violence. Despite US fixations, majority interest does not necessarily spell capitalism, corporatism or representative democracy. Socialism collapsed in the 1980s not because its economic theories were inoperative, but because in defending the authority to make socialist principles work, socialist governments had to adopt a garrison-state mentality that overshadowed all other potential benefits. On the other hand, capitalist market fundamentalism appeared more desirable as long as this mutation of socialism was posed as a false alternative. Now, as the sole surviving operative system, capitalist market fundamentalism is faced squarely with its own internal contradictions. Unregulated markets have produced the debt bubble and financial manipulation and corporate fraud that impoverish unsuspecting investors and workers who placed their pensions in the shares of the companies that employed them. And the war on terrorism runs the risk of instilling in the United States the same garrison-state mentality that brought about the demise of the Soviet bloc.

Finance capitalism may turn out to be the deadliest enemy of industrial capitalism, and it may well be the last transformation of capitalism. There are clear indications that insufficient demand is caused by the abandonment of the labor theory of value and the wholesale acceptance by neoliberalism of the theory of marginal utility. Lack of demand caused by insufficient wages is more deadly to finance capitalism than the fear of socialism. Technology has finally turned Charlie Chaplin's Modern Times into reality. The rhetoric of the current political debate in the United States on corporate fraud is more populist than those of the New Deal, and the recession has yet to begin in earnest. Socialism, by other names (the Wall Street Journal calls it mass capitalism), is now about to be viewed as the vaccine against a catastrophic implosion of the capitalist system in its home garden.

Globalization is not a new trend. It is the natural policy for all empire building. Globalization under modern capitalism began with the British Empire, marked by the repeal of the Corn Laws in 1846, five years after the Opium War with China (I have written on the historical parallel between the Corn Laws and WTO), and two years before the Revolutions of 1848. Great Britain embarked on a systemic promotion of free trade and chose to depend on imported food, which gave a survivalist justification to empire. France adopted free trade in 1860 and within 10 years was faced with the Paris Commune, which was suppressed ruthlessly by the French bourgeoisie, who put to death 20,000 workers and peasants, including children. Despite a backlash movement toward protective tariffs in Britain, Holland and Belgium, the global economy of the 19th century was characterized by high mobility of goods across political borders. As Europe adopted political nationalism, international economic liberalism developed in parallel, until 1914. Only World War I, the 1929 Depression and World War II caused a temporary halt of free trade.

Like the United States now, Britain was a predominantly importing economy by the close of the 18th century. Despite the Industrial Revolution's expanded export of manufacturing goods, import of raw material, food and consumer amenities grew faster than export of manufacturing goods and coal. The key factor that sustained this imbalance was the predominance of the British pound, as it is today with the US dollar and its impact of the trade deficit. British hegemony of marine transportation and financial services (cross-currency trade finance and insurance) earned Britain vast amounts of foreign currencies that could be sold in the London money markets to importers of Argentine meat and Canadian bacon. International credit and capital markets were centered in London. The export of financial services and capital produced the the returns which serves as hidden surplus to cushioned the trade deficit. To enhance financial hegemony, the British maintain separate dependent currencies in all parts of the empire under pound-sterling hegemony. This financial hegemony is now centered on New York with the dollar as the base currency. When the Asian tigers export to the United States, all they get in return are US Treasury bills, not direct investment in Asia. Asian labor in fact is working at low wages mainly to finance the expansion of the US economy.

Market fundamentalism, a modern euphemism of capitalism, is thus made necessary by the finance architecture imposed on the world by the hegemonic finance power, first 19th-century Great Britain, now the United States. When the developing economies call for a new international finance architecture, this is what they are really driving at. Foreign-exchange markets ensure the endless demand for dollar capital import by the poor exporting nations. John A Hobson and Lenin identified the surplus of capital in the core economies and the need for its export to the impoverished parts of the world as the material basis of imperialism. For neo-imperialism of the 21st century, this remains fundamentally true.

Then and now, the international economy rests on an international money system. Britain adopted the gold standard in 1816, with Western Europe and the US following in the 1870s. Until 1914, the exchange rates of most currencies were highly stable, except in victimized, semi-colonial economies such as Turkey and China. The gold standard, while greatly facilitating free trade, was hard on economies that produced no gold, and the gold-based monetary regime was generally deflationary (until the discovery of new gold deposits in South Africa, California and Alaska), which favored capital. William Jenning Bryan spoke for the world in 1896 when he declared that mankind should not be "crucified upon this cross of gold". But the 50-year lead time of the British gold standard firmly established London as the world's financial center. The world's capital was drawn to London to be redistributed to investment of the highest return around the world. Borrowers around the world were reduced to playing a game of "race to the bottom".

The bulk of economic theories within the context of capitalism were invented to rationalize this global system as natural truth. The fundamental shift from the labor value theory to the marginal utility theory was a circular self-validation of the artificial characteristics of an artificial construct based on the sanctity of capital, despite Karl Marx's dissection that capital cannot exit without labor - until assets are put to use to increase labor productivity, it remains idle assets.

Mergers and acquisitions became rampant. Small business capitalism disappeared between 1880 and 1890. Workers and small businesses found that they were not competing against their neighbors, but those on other sides of the world, operating from structurally different socioeconomic systems. The corporation, first used to facilitate the private ownership of railroads, became the organization of choice for large industries and commerce, issuing stocks and bonds to finance its undertakings that fell beyond the normal financial resources of individual entrepreneurs.