III
 
The most significant change that has taken place in world capitalism in recent years is the emergence of a new form of international finance capital, which differs from what writers like Hobson, Lenin and Hilferding had written about in the pre-first war period. The Leninist notion of finance capital for instance was essentially nation-State based, and nation-State aided. It represented a "coalescence" of banking and industrial capital, being presided over by a financial oligarchy that was thrown up by a "personal union" between magnates belonging to the banking and industrial spheres. And it operated in, indeed gave rise to, a universe characterised by intense inter-imperialist rivalry, a belief in the pervasiveness of which underlay the notion of the "general crisis of capitalism" adopted by the Communist International under Lenin's leadership as its theoretical lynch-pin. In contrast, what we have today is finance capital that is "international" in the sense of not necessarily having German, or French or American interests stamped upon it, and not, for that reason, enjoying the backing of only some particular nation-State in the advanced capitalist world. It is a fluid mass that sucks in finance from all over, that breaks barriers to its unfttered movement all over the globe, and that is funadmentally in search of quick profits, and hence speculative in character, rather than having any enduring links with industry. What is more, far from giving rise to inter-imperialist rivalries, it is perhaps an important factor contributing to a recession of such rivalries: since a world broken up by rivalries is not very conducive to the global fluidity of speculative finance in search of quick gains, it exerts pressure for muting rivalries.
 
Three implications of this phenomenon of globalised finance capital are of relevance to us here. First, it undermines the possibility of Keynesian demand management, and indeed of any State intervention for boosting the level of activity. This is not to say that the State "retreats" from the sphere of the economy, but, rather the nature of its intervention undergoes a change. When such intervention in the earlier period invoked the "national" interest, this was not without a rationale. For example, when State intervention in the advanced capitalist countries was directed palpably towards boosting the level of activity and employment, it conferred benefits in varying degrees on virtually all domestic social groups; likewise, when the State intervened in the underdeveloped countries for building up the productive base of the economy through "development planning", it could not be acused objetively of serving only the sectional interest of some particular domestic social group. But State intervention in contemporary capitalism, whether in the advanced or the backward economies, gets increasingly oriented towards serving the narrow sectional interests of globalised finance capital in order to keep up its "confidence" in the economy.
 
There are at least two distinct reasons why Keynesian demand management is undermined by speculative financial flows. First, any boosting of activity to levels close to "full employment", as was the aim in the heyday of Keynesianism, gives rise to expectations of inflation and currency depreciation, so that long before the economy comes anywhere near full employment a flight of finance capital occurs which realises these very expectations (providing a retrospective justification for them), and thereby forces a contraction of the level of activity. Secondly, when this boosting is done under the aegis of the State, especially through higher State spending for purposes other than militarism, this becomes all the more a cause for panic in financial circles, since an activist State of this genre appears too radical for comfort. The only ways then that an advanced capitalist country can achieve high levels of activity and employment in these conditions are: either if it is so decisively the financial centre of the world that the sheer expansion of its financial sector that must necessarily occur in the era of globalised finance is enough to generate high employment; or if its currency is so decisively the lynchpin of the entire system that everyone has confidence in its value even when the economy of the country has high levels of activity. The Anglo-Saxon world would generally be the beneficiary of the first set of considerations, and the US in particular (whose currency is considered "as good as gold" even when not officially decreed to be so as under the Bretton Woods system) of the second. By the same token however the fact that Continental Europe, despite having a string of Socialist or Social Democratic governments, elected to office on the promise of getting rid of unemployment, continues to remain saddled with massive unemployment underscores the impossibility of Keynesian demand management in an economy caught in the vortex of globalised finance. Taking the advanced capitalist world as a whole, this means a lower level of activity on average than during the halcyon days of Keynesianism.I shall come later to what this entails, but let me move now to the second implication of globalised finance, which concerns third world countries.

 
 

Site optimised for 800 x 600 and above for Internet Explorer 5 and above
© MACROSCAN 2001