Capitalism, crisis and American empire

Leo Panitch remembers meeting Sam Gindin during the 1960s when they attended the University of Manitoba in Winnipeg where they grew up.

“We studied Latin and economics in first year university in the same classes [and] became very, very close friends,” Panitch recalled during an interview I conducted with him for the New Books Network in January 2015.

“It was actually to Sam that I whispered, probably in second year university, ‘I think I’m a Marxist.’”

After they left university, they remained close friends even though their professional paths diverged. Panitch pursued a career as a political science professor at Toronto’s York University while Gindin worked as research director for the Canadian arm of the United Auto Workers.

Yet, as Panitch put it, whenever they got together, they realized that “our brains were programmed in the same way” and that they shared the same thoughts.

“We had often said to each other, ‘We’ll write a book together at some point.’” Panitch said, adding that after Gindin retired from the union and joined the faculty at York as Packer Chair in Social Justice, it finally became possible for them to collaborate on The Making of Global Capitalism: The Political Economy of American Empire. Their 456-page book was published in 2012 after more than a decade of research and writing.

Although the book is a history of the rise of global capitalism and not a blueprint for how to overthrow it, Panitch and Gindin clearly see capitalism as an irrational, crisis-prone system based on class subordination, economic inequality and ecological exploitation.

For them, however, capitalism’s global spread was not inevitable. It happened because the United States played a central role in 20th century economic history.

That central American role was made possible, they argue, through the establishment of powerful, financial institutions during the Great Depression of the 1930s and in the aftermath of the Second World War; financial institutions such as the U.S. Treasury and the U.S. Federal Reserve that were needed to manage global capitalism and contain its periodic crises along with American-led international organizations such as the World Bank and the International Monetary Fund.

American empire

In The Making of Global Capitalism, Panitch and Gindin write that the U.S. rules over a distinctly new kind of “informal” empire — one that aims to create favourable conditions for the free movement of capital across the world.

“Instead of aiming for territorial expansion along the lines of the old empires, U.S. military interventions abroad were primarily aimed at preventing the closure of particular places or whole regions of the globe to capital accumulation,” they write.

Their book contends that far from being an imperial power in economic decline, the United States reigns supreme over the integrated, global capitalist system it created over the last century in partnership with other advanced capitalist countries including Canada.

Panitch and Gindin also dismiss the idea that globalization was driven by multi-national corporations, now more powerful than many nation states. They write that states were crucial in the making of global capitalism and that the system evolved in the way it has because of American leadership.

“The reality,” they write, “is that it was the immense strength of U.S. capitalism which made globalization possible, and what continued to make the American state distinctive was its vital role in managing and superintending capitalism on a worldwide plane.”

Neoliberal discipline

Panitch and Gindin divide the history of global capitalism after the Second World War into two golden ages. The first, roughly from 1948 to 1973, featured full employment, sustained economic growth, more generous social programs and a union movement that won substantial gains for workers, but that did not fundamentally challenge the capitalist order, settling instead for higher wages and increased personal consumption.

Inevitably, bust followed boom with the birth in the 1970s of “stagflation,” a crisis that combined stagnant economies and high rates of unemployment with rampant inflation. Politicians responded by imposing neoliberal policies that helped break the power of unions and forced workers to accept the discipline of lower wages and job insecurity. Neoliberalism ushered in a second golden age, from about 1983 to the economic meltdown of 2007-08, during which the wealthy capitalist class prospered.

Panitch says that looking back now, it’s clear that socialists were wrong to think that the first golden age would last and would create “humane, egalitarian capitalism.” He argues that with its reliance on relentless competition instead of careful planning, capitalism is inherently unstable and crisis-prone.

For Panitch, the way ahead lies in the struggle to reassert democratic control over the economy especially in light of climate change.

“(It’s) inconceivable that we could get out of the climate crisis without being able to have a system of economic planning that determines what’s invested, where it’s invested, how it’s invested,” he says.

Panitch points to the struggles of Chinese workers.

“If all of the waves of strikes that are now going on in China are simply about getting more commodities for individual Chinese workers,” he says, “then that working class will be integrated in the same way that Western working classes were.”

But, he’s hoping that working classes everywhere will continue to struggle for democratic planning and collective public services.

Panitch notes, however, that The Making of Global Capitalism, is not a manifesto, but a book that aims to shed light on economic history.

“Our hope has been that if we better understand how we got to where we are, we then will be able to spend more time on figuring out how to get to somewhere better.”

Bruce Wark worked in broadcasting and journalism education for more than 35 years. He was at CBC Radio for nearly 20 years as senior editor of network programs such as The World at Six and World Report. He was the first producer of The House, a Saturday morning program on national politics. He currently resides in Sackville where he publishes Warktimes.