sunset and fantasy

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By ELEUTÉRIO FS PRADO*

Considerations about what may arise from the “Ashes of Globalization”

Dani Rodrik is an economist and distinguished professor who works at the School of Government at Havard University. Of Turkish origin, but based in the United States where he obtained his doctorate, he works on the themes of globalization, economic growth and administrative political economy. He recently wrote an outreach article in which he lays out his optimistic belief that out of “the ashes of globalization” – what he now calls hyperglobalization! – “a better globalization can emerge”.[I] Well, suppose that a virtuous globalization can come to overcome a globalization now seen as misguided, supposedly vicious! It will be?

To find an answer to this non-hyperbolic question it is necessary to look safely at the history of the world rate of profit from the post-war period to the present (presented in the figure below by means of a variable proxy, whatever it is, the average profit rate of the G20 countries). It shows, without illusion, that capitalism is on a path of decline at a global level.

Rodrik, however, prefers not to think about this empirical evidence that somehow proves the thesis of classical economists and Marx about the declining tendency of the rate of profit. Now, how does he argue in favor of a “virtuous globalization” seen as possible? Could this happy moment be waiting in the abstract formulas of the “best theory” to be implemented through “correct” economic policies?

As is known, the process of globalization of capital has been blocked and even in retreat since the great collapse of 2007-2008, a phenomenon that resulted, first, from the immanent transformation of accumulation into overaccumulation and, later, into a great financial bubble that burst . With its epicenter in the United States, this economic and financial earthquake – marked in appearance by a collapse in the real estate bond market – sent shock waves across the world, thus generating a blow of global dimensions.

From that moment on, as never before, the hegemony of US imperialism, which had been gradually undermined in recent decades, seemed threatened by the astonishing growth and supremacist pretensions of China. As a result, the growing integration of the world economy, through the third wave of globalization that began in 1980, was interrupted by the initiative of its main beneficiary, the United States. The geopolitical scene was transformed, as a growing industrial, commercial and technological rivalry between these two economic giants came to dominate.

Thus began a process of “deglobalization” whose future course is uncertain and therefore unknown, at least in part. It is known, however, that it will not favor the accumulation of capital in the central countries that sustain the world order in some way. On the contrary, it will certainly exacerbate the social and economic conflict between and within the nations of the world.

Dani Rodrik also lists this contradiction, in addition to others that he also points out, as an internal cause of the reversal of globalization: “the zero-sum logic of national security and geopolitical competition was contradictory in relation to the positive-sum logic of international economic cooperation. With the rise of China as a geopolitical rival of the United States and Russia's invasion of Ukraine, strategic competition reasserted itself on the economy” – that is, on the logic of capital's insatiability.

As a development economist, Dani Rodrik thinks that the recent process of capital expansion has produced a “redistribution of income from losers to winners”, as if this were exceptional in capitalism. He also mentions that this process weakened the States in the face of the power of large transnational commercial, industrial and financial companies. And that, thus, the logic of autonomized world markets ended up undermining the legitimacy of nationally elected governments, which also opened space for the advance of fascism that always thrives spontaneously in societies founded on the capitalist economy and that grows and looms in times of blockade and stagnation of the accumulation process.

Now, the contraction movement of globalization, of the intensification of imperialist conflicts, is now creating a cruel doubt in the minds of economists who lovingly embrace the economic system of the capital ratio: the conditions for survival and prosperity of this system will necessarily worsen or may, eventually improve?

Here's how this economist sees the future scenarios: “With the collapse of hyperglobalization, the scenarios for the world economy go from one extreme to another. The worst result, remembering the 1930s, would be the retreat of countries (or groups of countries) towards self-sufficiency. A less bad but still bad possibility is the supremacy of geopolitics will mean that trade wars and economic sanctions will become a permanent feature of international trade and finance.”

“The first scenario seems unlikely – the world economy is more interdependent than ever, and the economic costs would be enormous – but we certainly cannot rule out the second. However, it is also possible to envisage a positive scenario in which we achieve a better balance between the prerogatives of the nation-state and the requirements of an open economy. Such a rebalancing can enable inclusive prosperity at home and peace and security abroad.”

According to this author, this third possibility, although difficult, is viable as long as “policy makers fix the damage caused by hyperglobalization” in terms of geopolitical balance of forces, income distribution, political legitimacy, etc. with the aim of obtaining “prosperity and justice”. Beautiful words, beautiful wording. In the sphere of fantasy, as is known, it is always possible to suppress the contradictions of the real world by rethinking things in an irenic way, that is, in terms of equilibrium, consensus, cooperation, rationality, etc.

Returning, therefore, to the chart initially exposed is essential. Dani Rodrik, however, wants to do another lap; he wants to return in another way to the postwar conditions in which Keynesian policies seemed successful in promoting the welfare state.

Like many other progressive economists, he thinks that it is still possible to reproduce under current conditions something similar to what happened in the “golden age”, that is, the pattern of capitalism that lasted from 1945 to the mid-1970s. capitalism was only possible because of the high rates of profit then prevailing. The optimist discussed here, like the others in the “salvation army” of capitalism, believes, however, in the power of economic policy: “if the dystopian scenario actually materializes, it will not be thanks to systemic forces… it will only be because of wrong choices were made"!

Methodological individualism – which places the individual as a full subject – produces miracles in the sphere of thought, but not, evidently, in the really existing world. Theories that abstract the alienations that affect the social “subjects” and suppress the contradictions abound in the main stream in which most economists travel. Possible states of equilibrium and re-equilibrium can be thought of at will by them as non-existent solutions to effectively existing problems.

From the perspective of the critique of political economy, however, the peaks of the expansion process, as well as the crises and periods of stagnation, generally have a structural foundation. Behold, they are generated by the very contradictory process of capital accumulation. This, as you know, creates barriers, tends to overcome these barriers, to resume the historical movement in which its own rise takes place. In search of better performance, the intervention capacity of economic policy, therefore, is quite limited – in fact, it is only complementary.

But why can one now speak of the decline of capitalism? And why has the belief in the effectiveness of economic policy become concomitantly more hyperbolic? As Murray Smith has argued, capitalism now faces barriers it can no longer overcome.[ii] The resolution of overaccumulation crises requires the physical and “moral” destruction (devaluation) of capital, but contemporary capitalism based on the collective ownership of capital – due, for example, to the enormous importance of share capital and funds in general – cannot allow it to happen anymore. As a result, as Wolfgang Streeck has pointed out, capitalism ceased to conquer the future as in the past and began to buy survival time.

With the advancement of the globalization process, many events associated with the so-called economic development assume the character of global problems; however, the capacity to address them continues to reside at the national level. How, for example, to face the pollution of the seas? As there is a lack of coordination at this level and as there are conflicts of interests between nations – wars, for example, continue to thrive, being encouraged even by the great powers – nothing important is done to solve these problems, some of which threaten the very existence of society. humanity.

The inability to solve the problems that capital accumulation has created is clearly shown in the de facto immobility regarding the climate crisis. World conference after world conference creates modest goals to curb global warming, but even so, they are not met. And this is just one aspect of the growing “metabolic rift” between the growing intensity of the appropriation of nature and the ecological underpinnings of social production and human civilization.

But that is not all, as is well known. The very rise of neo-fascism – with its load of existential despair that takes the form of criminal paranoia – shows, in the current political scenario, an inability to rationally face the problems that loom. In any case, the set of these contradictions, insurmountable within the current mode of production, suggests, according to Murray Smith, that humanity has already entered the “age of the sunset of capitalism”. Either, he says, "human society finds ways to create a more rational social and economic order or the slow death of capitalism will bring in its catastrophic course the destruction of human civilization."

* Eleutério FS Prado is a full and senior professor at the Department of Economics at USP. Author, among other books, of From the logic of the critique of political economy (Ed. anti-capital fights).

 

Notes


[I] Rodrik, Dani. “A better globalization can rise from the ashes of hyperglobalization”. Project Syndicate, May 9, 2022.

[ii] Smith, Murray EG Invisible Leviathan: Marx's law of value in the twilight of capitalism. Haymarket, 2019.

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