The Global Economy and the Nation State
by the Editorial Board of communistcentury.com

The bourgeoisie cannot exist without constantly revolutionizing the instruments of production, and thereby the relations of production, and with them the whole relations of society….Constant revolutionizing of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones. All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air, all that is holy is profaned ….

Introduction

This paper argues two main points. First, that the recent qualitative leap in the global integration of production processes, and economic activity more broadly, represents an advance for the people of the world, and is a necessary condition for Communism.

Second, that the new international, regional and worldwide institutions that have been developed to address economic requirements not served by, or obstructed by, the modern bourgeois state (and to displace the state in certain areas) likewise represent an advance for humanity.

The people of the world need development. We also need socialism. Despite the setbacks for socialism and the dissolution of the socialist economic community, this continues to be the era of socialism - namely, the stage of development of the transition to communism. From the dialectical and historical materialist view this entire epoch is characterized by contention of the basic economic law of socialism with the basic economic law of capitalism.

In Economic Problems of Socialism, Stalin explained:

The basic economic law of modern capitalism might be formulated roughly in this way: the securing of the maximum capitalist profit through the exploitation, ruin and impoverishment of the majority of the population of the given country, through the enslavement and systematic robbery of the peoples of other countries, especially backward countries, and, lastly, through wars and militarization of the national economy, which are utilized for the obtaining of the highest profits.

The basic economic law of socialism might be formulated roughly in this way: the securing of the maximum satisfaction of the constantly rising material and cultural requirements of the whole of society through the continuous expansion and perfection of socialist production on the basis of higher techniques.

Simply said, the basic economic law of capitalism is securing maximum profit, while the basic economic law of socialism is securing maximum satisfaction of society’s needs through the most advanced forms of production.

It is conceivable that even where economic development is being led by Capital, the basic economic law of capitalism is subordinated by the basic economic law of socialism. In other words, the basic economic law of socialism may become dominant even where property or production relations have not been transformed. In any case, the need for continued economic development is paramount whether capitalist or socialist relations are dominant.

Marxists should not have a narrow view of the character of socialist property relations. As Stalin pointed out,

“…. collective … property ... is not public property …. From [that] fact … it by no means follows that it is not socialist property. …

“The fact is that conversion into state property is not the only, nor even the best, form of nationalization …. [T]he state will not exist forever … hence, the heir of public property will not be the state, which will have died away, but society itself in the shape of a central directing economic body.”

The Evolving Relationship of the Nation State and Capital
At an early period of its development Capital called the nation state into existence to help create, define and regulate the home market. (This is not to negate the many repressive functions of the capitalist state, towards the interests of other classes and the ruling classes of other territories.)

The state has been modified as the requirements of Capital have evolved quantitatively over time. With the qualitative leap in global economic integration the needs of capital have been revolutionized and the national state is increasingly unable to meet or serve these needs.

It should not be surprising then, that capital should lose interest in preserving and expanding a national state that does not meet its needs. Nor is it surprising that new forms for insuring and regulating the requirements of capital should be called forth. (WTO, NAFTA, EU, ASEAN+7 or 12, FTAA etc.)

Global integration has been enabled and required by the scientific and technological revolution of the last half-century. The use of computers to control all aspects of production, distribution, and finance makes a worldwide production process possible. In the early 1980’s Ford began manufacturing the “world car”; now we have world ships, world aircraft, world computer systems, world agriculture, world machine tools, … in short, world everything. The advent of “just in time” inventories means that components can be manufactured anywhere in the world and assembled anywhere else. Not long ago, international transfers of payments took weeks, if not months, and required pieces of paper shipped in envelopes; now such transfers take place in nanoseconds, with nothing but electrons, radio waves, or light moving anywhere. High tech manufacturing plants and data processing centers dot the countryside not only of the US, the United Kingdom and Europe, but also Asia, the Indian sub-continent, and to a lessor extent, Latin America and southern Africa. Satellite dishes are as at home in the barrios of Sao Paulo as in suburban St Paul. (This is not to deny the enormous wrenching of human lives that attends such change.)

How should Marxists evaluate such qualitative change in the world economy? Every year millions of people join the working class - a working class that is becoming at the same time progressively less an assemblage of national working classes and more a global working class. The attendant rapid development of productive forces has the potential to lift the entire population of the world out of poverty, and to bring about a state of universal abundance, and thus lays the foundation for communism. Of course, this process would be more rapid and less painful and destructive if it were conducted under the auspices of a conscious socialist world system. For the time being that is not possible, but nevertheless the process is, on a global scale, an advance.

One of the primary functions of the nation state has been to manage the contradictions between the capitalist and working classes primarily in the interests of capital. Over the last three centuries, the democratic variant of the bourgeois nation state has emerged as the most effective form for accomplishing this objective. When we say “democratic,” we mean class society. Democracy is not a variant of socialism or communism. Democracy implies class society - a society that is split - and at odds with itself. We do not see this as the end for which humanity is striving. The era of democracy is coming to an end, because the era of capitalism is coming to an end. Our goal is unity of humanity. That is what is in the offing, what awaits beyond the state.

The development of national commodities markets was a significant advance that powerfully stimulated economic growth. It reflected also the stage of the development of productive forces and of society. For several centuries capital depended on the nation state to provide a stable environment for accumulation. The process of globalization, which includes not only economic integration and the creation of the global working class, but also cultural integration, has burst the bounds of the nation. Capital is compelled to find new ways to maximize the free flow of goods, labor and capital around the world in order to attempt to boost absolute profits in the face of the falling rate of profit.

Future struggles
WTO, NAFTA and EU have made much headway in instituting rules to facilitate freedom of movement of goods, but even in this area protectionist barriers have not fallen completely. Except in the EU, the free movement of labor has not yet been addressed, though it is clearly in the interest of Capital to have workers arrive where they are most needed “just in time”. Migration is equally in the interest of Labor, as it reduces the reserve army of unemployed in home countries and allows for extended capital formation in the destination lands. Thus this issue will surely soon appear on the agendas of some regional and global superstructural formations. The issue of the further lowering of barriers to free investment is due to be taken up, as well.

Most labor unions in developed countries still support protectionist policies. These unions have never been sufficiently supportive of class-wide demands within the nation state. (For example, U.S. unions have not supported the struggle for a system of universal health care in the U.S., choosing instead to fight for health care within their own contracts.) The leap in global economic and social life suggests that global class-wide demands are required now more than ever. These include free trade, not protectionism, free flow of labor, not immigration quotas, and an end to farm and corporate subsidies.

On these questions, Marx and Engels had something to say. In his 1888 introduction to Marx’s 1847 address on free trade, Engels wrote,

“You may easily introduce protection , but ...not get rid of it… so easily. [It goes] disguised as ‘fair trade’ and retaliatory tariffs…. Socialists … must desire the present system of production to develop and expand as quickly as possible. … Marx pronounced, in principle, in favour of free trade.”

In his address Marx had said:

“The protective system is conservative, while the free trade system is destructive. It breaks up old nationalities etc. Free trade hastens the social revolution…In this revolutionary sense … I vote in favor of free trade.”

The diminution of the function and authority of the nation state raises the question whether single-state revolutions will continue to be the primary vehicle of the global transition to communism. Whatever the future role of such revolutions, we must seriously consider whether there are additional paths to communism.

One interesting development in advanced capitalism is that the dissolution of the boundaries between the working class and the bourgeoisie poses a new challenge to the nation state and possibly capitalism itself. This process, that is most pronounced in the advanced capitalist countries, particularly the United States, expresses itself in the wide (though unequal) dispersion of stock ownership in corporations. In the U.S. more than half the population owns stock and depends on the income from dividends or price appreciation to provide security in old age or disability. The boom and bust of stock prices in the U.S., and to some extent in Europe, exposes some deep contradictions within the newly extended segment of the population that are now owners of capital. Some conflict which historically unfolded between classes, occurs now within classes. This fact suggests that the way class conflict formerly defined society may be changing.

It is not entirely clear that this embourgeoisification of the working class has had the effect many of its advocates expected. While it may be true that workers identify with Capital, demands for social control of economic activity are also put on the agenda by this process. Two conservative business consultants in the U.S. have recently suggested that a central agency (Stalin’s “central, directing economic body”? - see quote above) have direct electronic access to the accounting data of major corporations so that audits can be conducted automatically on thousands of enterprises, which is entirely feasible with current technology. Obviously, the object of this effort could be in some way to manage the functioning of these entities. At some point the possibility and necessity of controlling the function of the system as a whole becomes evident. Then the issue of private property would arise, since the complications it introduces into an economy-wide system of control will begin to outweigh its benefits.

We do not know if the shift in power in society will be brought about in these ways, but we Marxists should be open to all possible forms of transition, while being firm on the content of transition - that is, the sellers of labor power become the owners of the means of production and set economic life on the path of creating abundance, by constantly raising the level of production and productivity on the most advanced scientific and technological basis.

Until, at last, the only remnants of the state will be, as Lenin said, “the functions of accounting and control.”