ICOPEC 2019

10th International Conference of Political Economy

‘If Globalism is Dead — Long Live What?’
June 25-28, 2019, Marmara University / Istanbul

‘De-globalisation and the Return

of the Theory of Imperialism’

Stavros D. Mavroudeas
Professor (Political Economy)
Dept. of Social Policy
Panteion University
Athens
Greece
e-mail: s.mavroudeas@panteion.gr
 Main points of the paper

➢ Debunk ‘Globalisation’: it is a truthlike myth. Confront

critically ‘Globalisation’s’ empirical and analytical
arguments

➢ Argue that the Theory of Imperialism offer a superior

analytical framework in order to comprehend
developments in the world economy
 1. Debunking ‘Globalization’: a truthlike myth
1.1 The ‘Globalization’ thesis
 ‘Globalisation’ was certainly the more popular leitmotif since the
1990s. It dominated not only Political Economy and Economics but
the Social Sciences in general
 Setting aside minor differences, proponents of the ‘Globalisation’
thesis argued that the late 20th century ushered radical socio-
economic transformations that produced a change of epochal
dimension: economic activities burst out of national borders and
organized themselves in worldwide processes and networks.
 This was supposed to be the differentiae specificae of the whole
contemporary era. Many theories assigned it the status of new
stage, era or epoch (depending on the periodization theory
adopted by them)
Different theories attribute this hypothetical historical
rupture to different (seldom combined) factors:
o Techonological change (mainly information
technologies)
o Political reasons (collapse of the Eastern block and a
‘vacuum’)
o Inherent logic of capitalist accumulation
Etc.
Two necessary corollaries:
o End of the national economy
o End of national state’s ability to implement economic
policies
 These economic arguments were supplemented with several
political claims. Most prominent among them:
o Spread of Global Democracy: ‘Through a process of
progressive, incremental change geo-political forces will
come to be socialized into democratic agencies and
practices’, Held, D. and McGrew, A. (1998) ‘The End of the
Old Order? Globalization and the Prospects for World Order’,
Review of International Studies 24(Special Issue): 242).
o Make business not war: ‘Globalisation’ enhances intra-
national entrepreneurship and repels nationalism and militarist
conflicts. This is a renovated version of the utterly disproved by
the 1st WW belief of classical Liberalism.
➢Both of them highly disputable: proliferation of nation-states
(because of the Eastern ‘vacuum’ but not only) and of
regional military conflicts (e.g. Yugoslavia). International
agencies never ceased to be dominated by national interests
and accomplished through power struggles.
Despite these problems, ‘Globalisation’s’ popularity
prevailed till the end of the 20th century.
It was in the beginning of the 21st century that cracks began
to appear. The increasing economic turbulence in world
economy led to the aggravation of geopolitical politico-
economic conflicts before and especially after the 2008
global capitalist crisis (e.g. US-China conflict).
Today, ‘Globalisation’ is considered almost dead by even
several of its more vociferous adherents.
Thus, de-globalization has become the new leitmotif
Behind this blatant failure of a popular thesis lay serious
problems in the theory and analysis of international Political
Economy. These problems affected almost all currents of
economic thought (Mainstream, Heterodox and – to a
lesser extent – Marxism).
Certainly, behind such a failure lay powerful socio-
economic interests: ‘Globalisation’, to a great extent, was a
Western (and especially US) game.
However, this does not explain – at least completely – the
prolonged dominance of such a truthlike myth.
To decipher this: proceed to analyse the Empirical &
Analytical arguments of the ‘Globalisationists’
A first point: The adoption of ‘stylized facts’ (supposedly self-
evident empirical truths) without questioning their analytical
and empirical validity.
Thus,
The main thrust of ‘Globalisation’ Theory was empirical
(‘globalization considered as an irrefutable fact). Theoretical
analyses followed.
1.2 The Empirical claims of ‘Globalisation’
 The ‘Globalisation’ thesis rests upon two main empirical
arguments:
1)‘Globalisation’ constitutes an unforeseen before epochal
change
2)‘Globalisation’ is irreversible

Empirical Argument 1: an unforeseen before epochal change

 The initial versions considered ‘Globalisation’ as a totally new
phenomenon
 Critics pointed out that all its main features (rates of international
trade, capital mobility, financial interconnectedness,
transnational politico-economic institutions) have existed in a
previous period (so-called ‘first globalisation’ (1860-1914))
 ‘Globalisationists’ modified their position: this time is different.
Various explanations: different technology, financial
‘globalization’ stronger etc.
 None of the ‘globalisationist’ counter-arguments is very
convincing: international trade to GDP, international capital
flows to GDP etc. ratios were similarly high during the era of
the so-called ‘first globalization’.
 Moreover, although international flows of trade and capital
have increased, they have formed regional blocs rather than
a unified global economy
 Even the expansion of FDIs (from the 1980s and onwards)
have not created a globalized system of production or a
borderless global economy in any meaningful sense. Many
studies have shown that multinational corporations of all the
big capitalist economies exhibit strong ‘home country bias’
linking them to their home economy (P. Hirst & G. Thompson
(1996), Globalization in Question, Cambridge: Polity Press), L.
Tyson (1991), ‘They Are Not Us: Why American Ownership Still
Matters’, The American Prospect, Winter).
Empirical Argument 2: it is irreversible
‘Globalisation’ proponents argued that it is irreversible
However, the existence of a previous ‘globalization’ era
that was subsequently reversed injured critically their
assertion. None of the supposed specificities of the ‘current
globalization’ (mentioned before) heal this wound as they
are highly disputable
Even proponents of ‘globalization’ recognized that there is
nothing inevitable about it: ‘(T)here is a tendency to see
globalization as irreversible. But the political forces that
fragmented the world for 30 years (1914–1944) were
evidently far more powerful than the accretion of
technological progress in transport that went on during
that period. (Frankel J. (2000), ‘Globalization of the
Economy‘, NBER Working Paper No. 7858 pp.6–7)
1.2 The Analytical foundations of ‘Globalisation’

Indisputably, the dominant theory behind the

‘Globalisation’ thesis is the Mainstream Neoclassical
analysis of international economics. This dominated the
public discourse as well as the commanding heights of the
world economy
Heterodoxy (traditional Keynesian, post-Keynesian and
Radical Institutionalist approaches) followed behind.
Despite their partial analytical differences, they
succumbed to the main Mainstream arguments
Even Marxist ‘Globalisation’ theories implicitly accepted
much of the Mainstream discourse.
I will leave aside other versions and concentrate on the
Mainstream one
The foundations of the Mainstream Neoclassical version rest
upon its theory of international economic relations:
• The dogma of the beneficial role of free trade
• Based on the beleaguered Ricardian theory of comparative
advantage (i.e. the notion that free trade between
developed and less developed economies favours both)
• The comparative advantage thesis has been criticized
convincingly both on analytical and empirical terms.
• Its main, and more realistic, alternative: the theory of
absolute advantage (i.e. the developed economy takes it
all) advanced by A.Smith and K.Marx
• Neoclassicals extended the theory of comparative
advantage from international trade to international capital
flows as well: beneficial impact of the combination of free
trade and free capital flows
• However, Ricardo was fully aware that the theory of
comparative advantage will not hold if capital is mobile,
because in that case specialization will be determined by
absolute and not by relative costs
• Despite its ‘heroic’ assumptions and problems, the
Neoclassical approach dominated the intellectual scene.
• Even Radicals succumbed to its charm: ‘argument for
liberalization and open markets as generators of wealth has
been won at both intellectual and evidentiary levels’
Higgott, R. (1999) ‘Economics, politics and (international)
political economy: the need for a balanced diet in an era
of globalization’, New Political Economy, 4(1): 26)
• Based on this, it was pronounced that globalisation (a)
enhances aggregate welfare overall and (b) leads to
convergence between more and less developed
economies
•
 Both arguments have been rejected
 Globalization has not reduced inequality of income and
wealth. Since the early 1980s the world economy has been
characterized by rising inequality and slow growth.
 Despite the spectacular rise of the emerging markets (BRICs
etc.), the neoclassical postulate of convergence has not been
verified. For periods there may be partial convergence within
‘clubs of economies’ but no overall convergence takes place.
Even convergence within ‘clubs’ is not irreversible (e.g. the case
of the euro-periphery economies in the EU)
 Contrary to both these two arguments, Not convergence but
more inequality characterises the ‘globalization’ era.
Divergence in relative productivity levels and living standards is
its principal feature
 2. Theory of Imperialism: a realistic alternative

There is a far more realistic alternative to the Mainstream

theory: the Theory of Imperialism
It is based on the exactly opposite fundamental premise:

the international economy is not a competitive environment

which leads to a win-win situation
BUT
a ‘battlefield’ with winners and losers

The gains of the former are the losses of the latter

 The Theory of Imperialism was born in a similar to the current
historical period (after the first global capitalist crisis of 1873
and while the ‘first globalization’ was disintegrating)
 Pioneering thesis of J.A.Hobson with it problems and lacunae
 Suis generis theory of J.Schumpeter
 The theory was spectacularly developed and shot to fame
after its adoption by the Marxist tradition (Hilferding,
Luxemburg and especially Lenin).
 During the ‘globalization’ era its appeal receded but not its
analytical and empirical competence
 ‘De-globalization’ brings the Theory of Imperialism again to the
fore as a credible (if not the credible) approach to
comprehend international politico-economic relations and
conflicts.
 International Economics:
Orthodoxy vs Heterodoxy vs Marxism

Capitalism’s
international
system

Orthodoxy: Heterodoxy: Marxism:

inherently Non-beneficial because of
mid-term policy deformations,
mutually requires regulation to become
beneficial mutually beneficial
Inherently conflictual
and non-mutually
beneficial
 International Economics:
Orthodoxy vs Heterodoxy vs Marxism
 The capitalist system from its very birth was a highly international system
(proto-capitalist activities, Mercantilism etc.)
 The study of capitalism’s international political-economic system has
been a hot issue
 Mercantilist theory during the era of transition to capitalism: this system is
a ‘battlefield’ with winners and losers. The rationale behind it: the
nascent capitalist accumulation needed support from abroad (in the
sense of trade surpluses) and also protection from foreign competitors.
 Since the solid establishment of capitalism in several pioneering
economies (e.g. Britain) the big majority of the economists changed
view: free international trade is mutually beneficial.
This became the Orthodoxy that held almost uninterruptedly since then.
The motivation behind this: since capitalism was firmly established in
some pioneering countries the latter were not afraid of the competition
from less developed and pre-capitalist economies and, on the contrary,
wanted these economies open to their exports.
 International Economics:
Orthodoxy vs Heterodoxy vs Marxism

Heterodoxy: only dissenting views within Mainstream

Economics disputed the beneficial role of free international
econ. activities. These voices became more vociferous at
particular historical conjunctures:
➢At the beginning of the 20th century and after the first
global capitalist crisis of 1873-5: various bourgeois theories
of imperialism (e.g. Hobson (1902), Schumpeter (1919)).
➢After the 2nd WW with the collapse of Western colonial
empires: the Singer-Prebisch thesis, Latin American
Structuralism and sections of the Dependency tradition.
➢After the 2008 global crisis and the subsequent Eurozone
crisis, several new analyses accusing the European
Monetary Union (EMU) for being neo-Mercantilist
 International Economics:
Orthodoxy vs Heterodoxy vs Marxism

Heterodoxy:
➢A heresy that shared much common ground with the
Orthodoxy
➢Common argument: for some structural (historically
conjunctural) but not systemic ) reason (pertaining to
capitalism’s DNA) free international economic activities
become not mutually beneficial. A humane and wise
regulatory management of capitalism’s international
system is required to sav the system from itself.
• e.g. Hobson, Schumpeter
• nb. Keynes’ rehabilitation of Mercantilism
 International Economics:
Orthodoxy vs Heterodoxy vs Marxism

Marxism: a different conception of capitalism’s international

system: a systemic ‘battlefield’ with winners at the expense of
losers
▪ It is exploitative from its very nature and not for some
transient characteristics
▪ Exploitation at the international level is also based on
classes but it acquires additional dimensions: a country’s
bourgeoisie exploits its workers but at the same time it can
be exploited by another country’s bourgeoisie
 The long course of the
Marxist theory of Imperialism
 The return of the theory of Imperialism (2000 and onwards): the
increasing problems of the ‘globalization’/post-imperialism thesis led to a
rebirth of the Marxist theory of Imperialism
 However, several problems persisted:
❑ ‘New Imperialism’ (D.Harvey): emphasis on expropriation (modern
imperialism is based on (violent) direct extraction (expropriation)of
surplus-value rather than on indirect economic exploitation)
❑ He unwarrantedly equates capitalist imperialism with pre-capitalist
imperialism. Pre-capitalist imperialism operated within pre-capitalist
modes of production. The latter were systems of exploitation based on
relations of violence and power; that is on the direct forceful obligation
of the exploited classes. A serf was not asked if he wanted to be one; he
was obliged to be. On the contrary, capitalism is a system of exploitation
based on the economy; that is on indirect economic exploitation. No
capitalist obliges a labourer to become his employee (and thus be
exploited by the capitalist). The only thing that obliges the latter is his
inability to sustain himself otherwise.
 The long course of the
Marxist theory of Imperialism
❑Inability to substantiate empirically the ‘New Imperialism’ thesis
❑Because it is a ‘political power’ approach it fails to propose an
economic th. of imperialism
❑Its overt emphasis on politics and its marked lack of an
economic mechanism makes the ‘New Imperialism’ thesis akin
to the Heterodox (post-Keynesian etc.) theories of neo-
Mercantilism
❑The latter – despite its vociferous ‘anti-imperialist’ cries for
barbarism – makes it prone to neo-reformist solutions (new
Bretton Woods etc.)
A Redefinition of the Marxist theory of Imperialism
 Imperialism is primarily an economic mechanism and not a
political mechanism. Its aim is not political dominance but
economic exploitation. The former is a means to achieve the
latter and not a cause.
 Imperialism is not a particular stage of capitalism (although it
flourishes in some of them) but the mode through which
capitalism organizes its international system from its very birth.
Thus, imperialism should not be associated with some form of
capitalist competition (e.g. monopolies) – although some of
them enhance imperialist relations more than others – but it is a
general attribute of the system.
 Its economic exploitation mechanism (international value
transfers) works via normal capitalist competition and not only in
monopolist competition (i.e. imperialist surplus-value extraction
exists irrespectively of the existence of monopolist super-profits).
A Redefinition of the Marxist theory of Imperialism
 The global system of imperialism is a complex pyramid-like structure
comprised not by two groups (imperialist and not imperialist
economies) but by more (e.g. the emergence, since the middle 20th
century, of several economies that can be at the same time victims
of imperialist exploitation by some economies and imperialist
exploiters of others). The middle-level economies belong to the
category of sub-imperialism.
 Imperialism is not identical with the notion of finance capital
 The basic unit of the imperialist pyramid remains the national
economy. Bucharin (1976) accurate depicted capitalism’s inherent
contradiction between nationalization and internationalization). This is
expressed in tidal waves of internationalization and re-nationalisation.
On the basis of this contradiction antagonistic blocs of capitalist
economies are being formed.
A Redefinition of the Marxist theory of Imperialism
 the primary task for a modern redefinition of the Marxist theory of
imperialism is to designate the economic mechanism of imperialist
exploitation.
 It must cover the three basic areas of international econ. activities:
1) International Transfers of Value due to Trade: The Absolute
Advantage (A.Smith, K.Marx, Shaikh 1980a, 1980b, 2016 ) thesis grasps
accurately the existence of persistent disequilibria in international
trade, uneven development and geopolitical antagonisms in stark
contrast to the fictional world of free trade liberalism.: any individual
country that holds advantages in production costs at the beginning
of the trade transactions will seek to maintain them in the same way
as an individual capital struggles to prevail over its competitors in the
domestic market
The Absolute Advantage thesis implies the existence of a mechanism of
unequal exchange. The proper mechanism is that of ‘broad UE’
(Carchedi (1991)).
A Redefinition of the Marxist theory of Imperialism
2) International Transfers of Value due to Foreign Direct Investment:
Although existing from the very beginning of capitalism, it increased
significantly from the middle 20th century and onwards.
Contrary to Dependency Theory’s empirical flawed empirical belief, FDI
does not flow only from developed to less developed economies but
also within these two broad categories.
FDI means that a national capital makes a productive investment in
another economy in order to extract surplus value.
The predominant form of such investment is through multinational
corporations (MNCs) which however has distinct national bases
(metropole).
Profits from an FDI can either be re-invested in the recipient economy or
repatriated to the metropole. Only in the latter case they do constitute
an international transfer of value. Both practices are common although
there are characterized by significant historical variations.
A Redefinition of the Marxist theory of Imperialism
3)International Transfers of Value due to Portfolio Investment
International Portfolio Investment involves financial
transactions through banks (international loans) and capital
markets (playing in foreign stock exchanges).
In the case of international loans, the international value
transfer from the debtor to the lender is obvious: loans are
repaid plus interest.
In the case of stock exchange gains the case is less obvious
(as they can be ‘played’ again in the same capital market),
but a usual practice – particularly since global financial
deregulation - is to move them around the world.
A Redefinition of the Marxist theory of Imperialism
Conclusions
Subsequent requirements:
❖An analysis for the formation of economic blocs
❖An analysis of the way capitalist states are implicated in
imperialist antagonisms