The Making of Global Capitalism by Leo Panitch and Sam Gindin is an ambitious attempt to understand the economic history of the past 100 years and, in particular, the role of the United States in that history.
Panitch, a York University political scientist, is a well-known figure on the academic left. He’s part of a school that, in opposition to a more traditional Marxist view of government, has tried to come to terms with the fact that the state is a complex beast.
The point out, correctly, that America remains the epicentre of innovative capitalism, and a magnet for foreign investment. The U.S. trade deficit, which to many economists is a sign of weakness, is to these authors a sign of America’s continuing strength, particularly as a safe haven for foreign capital fleeing uncertainty.
China? Panitch and Gindin aren’t impressed. They recall that just 30 years ago, Japan was touted as the country that would eclipse America. That prediction came to naught. The authors are skeptical that current predictions of China dominating the world economy will be any more accurate.
Oddly enough for anti-capitalists, their analysis of U.S. strength is remarkably close to that of those on the right who preach American triumphalism. The U.S., they argue came to its position through a set of historical circumstances unique to that country, which allowed it to take command in a manner unlike that of any previous imperial power.
The DNA of American capitalism, they write, was there from its 18th century beginnings. It gave rise to a state apparatus uniquely qualified to act both as umpire and player in a globalized market economy.
To Panitch and Gindin, the state is central. They side with those who argue that the alleged dichotomy between free markets and “government interference” is largely false — that from the beginning of the American republic, the state has played a key role in assuring the success of business.
What makes these authors different from classic left historians like Charles and Mary Beard is that they say the American state has gone beyond promoting just U.S. business. To Panitch and Gindin, Washington is now the champion of global capital wherever it is domiciled.
The strength of this book lies in the detail of that story. The authors follow the intricacies of American economic and financial policy-making, particularly within the treasury and state departments.
The importance of Franklin Roosevelt’s New Deal, they write, is not that it alleviated the Depression of the 1930s (indeed, to a large extent it didn’t). Rather it is that Roosevelt put in place a set of government institutions dedicated to promoting long-term financial interests, precisely at the time when those interests were about to expand globally.
The focus on finance means that other areas are played down. There is little attention paid to American’s many post-1945 military adventures or to the Cold War. The Soviet Union makes only a cameo appearance, mainly as originator of the Eurodollar market.
So, too, labour plays a strangely minor role. Usually, it is being duped — first by the purveyors of the welfare state, later by the banks who, ironically, use workers’ own pension funds to help foment the very crisis that now threatens to deliver the coup de grace to organized labour.
Overall, however, this is an impressive piece of political economic writing, short on polemics, long on information. The authors are no fans of American-led capitalism. But their book helps to explain its extraordinary resilience.
Thomas Walkom’s column appears Wednesday, Thursday and Saturday.