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Chris Harman


The state
capitalism today

(Part 2)


Beyond state capitalism

The patterns of economic activity that characterised the period of state capitalism began to change during the great boom of the 1950s and 1960s. The state capitals increasingly traded with each other – and as they did so the basis was laid for a new internationalisation of production. World trade grew, on average, at about twice the rate of world output, until by the 1970s trade in manufactures was about the same proportion of world output as it had been in 1900 (and 1930). And trade did not contract with the recessions of the mid-1970s and early 1980s as it had in the inter-war years. Despite a contraction of both world output and world trade in 1982, trade grew faster than output throughout the rest of the 1980s. [42] The trade-output index soared up to 1.4 by the mid-1980s [43] and total world trade grew by 40 percent in six years. [44]

But the bare figures understate the scale of internationalisation in the long boom and after. In the pre-1914 period a considerable amount of trade and a great amount of investment had been between colonial powers and their direct or indirect dependents. In the long boom the greatest growth in trade was between the advanced industrial powers themselves. So whereas about 70 percent of Britain’s trade was with “agricultural countries” before 1914, in the 1960s more than 70 percent was with industrial countries. [45]

There was a similar shift in the character of investment. Whereas in 1913 only 6 percent of British direct overseas investment had been in “industry and trade”, in 1958-61 20 percent was in manufacturing alone. [46]

Trade and investment in the long boom were increasingly between the advanced industrial economies themselves. And so things continued into the 1980s. There had been a flow of trade and investment towards Newly Industrialising Countries and Eastern Europe (especially Poland and Hungary) in the 1970s. In the 1980s the flow virtually ceased except in the case of the handful of countries around the rim of the Pacific (South Korea, Taiwan, Thailand, Singapore, Hong Kong). There was a flow of capital from Africa and Latin America back to the advanced countries. And even the oil rich Middle Eastern states stagnated through that decade.

What was happening was the integration of the economies of the advanced world with each other and with the Pacific NICs. The behaviour of much of the rest of the world economy became of less concern to them. What is particularly important is the form this integration took. There had, of course, always been trade between national capitalisms – this occurred even at the high point of 1930s state capitalism. There had also always been a movement of finance across national borders – the inability of national state governments to control such flows was an important factor in leading them in the direction of state capitalism in the early 1930s. But the direct organisation of production across national boundaries had been very rare indeed. Until the 1950s it was virtually restricted to the integration of extractive industries in Third World countries (oil, palm oil, cocoa, etc) into the manufacturing needs of companies located within colonial powers. [47]

The growth of industry through the long boom, however, broke this pattern. The concentration of industry through takeovers and mergers, often under the tutelage of the state, had led to the emergence in particular countries of huge firms, able to channel resources into innovation and productive investment on a scale undreamt of before. They were not only able to dominate their national market but to carve out huge chunks of the world market for themselves, threatening to drive many of their competitors out of business. These in turn could only survive if they looked to an international mobilisation of resources, if they became multinational, not only when it came to trade but also when it came to production.

Multinational firms (e.g. ITT, Ford, Coca Cola) had existed in the pre-war period. But they were not generally based upon integrated international research and production: the British subsidiary of a US car firm would generally develop and market its own models independently of what happened in Detroit. It was this that began to change in the 1960s and 1970s. The successful firms began to be those who operated international development, production and marketing strategies. Already by the late 1950s IBM (bolstered up by huge contracts for the US military) was able to dominate the new main frame computer industry world wide, Boeing (again bolstered by US military contracts) began to drive rival “national” civil aviation firms into the ground, Ford and General Motors began in the mid-1970s to talk of the “world car”, designed according to a single set of blueprints and assembled from components made in a dozen different countries. Petrochemical production ceased to be confined within individual European countries and came to involve elaborate pipelines carrying materials from plant in one country to plant in others.

A new stage of capitalist production, based upon multinational enterprises, had arrived. This was an outgrowth of the previous, state capitalist, stage. Significantly, many of the most successful enterprises, whose competitive edge pushed others in a multinational direction, were not themselves multinationals but very much typical products of the state capitalist era. The pressure of Japanese firms whose production facilities were still very much nationally based pushed Ford and General Motors to talk of the world car in the late 1970s; the pressure of the US based Boeing forced the European aerospace firms to pool their efforts in the production of the Airbus; the nationally based Korean shipbuilding industry scooped the pool, driving its rivals elsewhere to massive programmes of closure and cutback.

But once the process of internationalisation of production was under way, there was no stopping it. By the late 1980s there was hardly an industry in which firms in one country did not have to work out international strategies, based upon buying up, merging with or establishing strategic alliances with firms in other countries.

In motors, the Japanese car firms established production facilities in the US, turning out more vehicles than the third biggest American firm, Chrysler; the nationalised French firm Renault began a series of acquisitions in the US, beginning with the small fourth US car firm American Motors; Volvo took over General Motors’ heavy truck production in the US; Ford and Volkswagen merged their car production in Brazil; Nissan built an assembly plant in north east England to produce hundreds of thousands of cars a year, while Honda bought a 20 percent stake in Rover. In tyres, the French firm Michelin made itself the world’s biggest producer by taking over Uniroyal-Goodrich in the US in 1988, and Italian firm Pirelli, the world’s sixth biggest, has been attempting to take over the world’s fourth biggest, the German Continental.

In the construction machinery industry, the US firm Caterpillar and the Japanese firm Komatsu, the two firms which dominate internationally with more than half the world market between them, have both forged alliances with smaller firms across the globe – with Komatsu taking over most of the operations of the third largest US firm Dresser, and Caterpillar extending a manufacturing and design agreement with Mitsubushi.

GEC in Britain has merged its heavy engineering production with the Alsthom subsidiary of CUE in France. CGE bought up ITT’s European operations some years ago and has now done a deal with FIAT of Italy under which each gets a large minority shareholding in the other, while GEC has also joined with Siemens of Germany to take over the electronic firm Plessey.

The cost of foreign acquisitions of US companies was 10.9 billion dollars in 1985, 24.5 billion in 1986, 40.4 billion in 1987. Japanese firms owned a total of about 9 billion dollars worth of US firms in 1987, British firms about 24 billion dollars worth. [48] Total French acquisitions in the US rose from FFr 76 billion in 1988 to FFr 108 billion in 1989. [49]

The wave of international takeovers was accompanied by a wave of joint ventures and cross-border alliances. The years 1989-90 saw:

IBM with Siemens, Texas Instruments with both Kobe Stell and Hitachi, Motorola with Toshiba, AT&T with both Mitsubishi Electric and NEC, Volvo with Renault and perhaps Mitsubishi Motors, Pilkington’s with Nippon Sheet Glass, Daimler Benz with Pratt & Whitney, and, grandest of all, Daimler Benz’s (vague) collaboration with the Mitsubishi group. [50]

This “multinationalisation” of production was not confined to the advanced countries. It affected Third World and Newly Industrialising Countries – where statification of industry had previously tended to go even further than in the West.

Argentina and Brazil were typical. Their industrial base had been established in the 1940s, 1950s and 1960s by the state intervening to direct investment into heavy industry – often into state owned companies. [51] But by the early 1970s it became clear to the more farsighted industrialists – whether in the state or private sector – that they could not get the resources and the access to the most modem technologies needed to keep up with worldwide productivity levels unless they found ways of breaking through the confines of the national economy. They began increasingly to turn to foreign multinationals for licensing agreements, joint production projects and funds – and they began to operate as multinationals in other countries.

A similar process has been at work in Mexico, where the state and the single Institutionalised Revolutionary Party long played a dominant role. In the last two decades there has been a big expansion of US subsidiaries in the northern area, just inside Mexico’s border with the US. A firm like Alfa, the largest industrial group in Mexico, with 109 subsidiaries spanning automotive components, food, petrochemicals and steel, has had a growing number of joint operations with foreign firms. Its director of finance tells, “Three quarters of our non-steel business involves joint ventures. We have the culture of joint ventures.”

Such developments have led some left wingers to see a growth of “neo-colonialism” undermining “national independence”. But at the same time, some Mexican firms have themselves gone multinational, as with the glass maker Vitro which has bought two US companies and become “the world’s leading glass container manufacturer, with its market almost equally split between the US and Mexico.” [52]

The same transition is now beginning to take place in South Korea. lndustrialisation under state direction built up heavy industry controlled by a handful of chaebol conglomerates. These were able to break into certain important world markets like steel and shipbuilding (where Korea overtook Japan 25 years after Japan itself had overtaken Britain). But in the mid-1980s they saw the need to shift to the mass production of cars, electronics and petrochemicals – a step only possible on the basis of a multinational rather than a mainly national scale of operations. Hyundai motors was 10 percent owned by Mitsubishi of Japan and discussed supplying small cars for the US market with Ford, and Hyundai Electronics set up a small subsidiary of its own in California’s Silicon Valley and signed a deal (which the South Korean government vetoed) to assemble IBM computers. Meanwhile, in petrochemicals, both Samsung and Hyundai embarked in 1989-90 on a series of massive investments designed at scooping not just the South Korean market, but that of the whole Pacific basin – in the face of bitter competition from rival firms in Taiwan, Thailand, Singapore, Malaysia and Indonesia. [53]

The pattern of multinationalisation of the advanced Western countries, the Third World and the NICs is now being repeated in the case of Eastern Europe. As I have shown in previous articles, the first link ups between enterprises in the then Eastern Bloc and the West were already taking place in the late 1960s. [54] By the late 1980s the process had a momentum of its own and was one of the factors leading sections of the nomenklatura in Eastern Europe to react to the political events of 1989 by breaking sharply from the command economy and embracing talk of the “free market”. By late 1990 hardly a day went by without some further report of the setting up of joint companies, of takeovers or of new co-operation agreements between Eastern and Western enterprises.



The globalisation of finance

The internationalisation of finance has proceeded much faster than the internationalisation of production. There was always some level of bank lending across national frontiers. But this grew explosively in the late 1960s: foreign currency commitments of West European banks increased eightfold between 1968 and 1974; between 1965 and 1975 the combined debt of 74 less developed countries trebled. The crises of the mid-1970s and early 1980s did not stop the trend: in the course of the 1980s the debt of the less developed countries doubled again; the United States moved from being a creditor nation to becoming a massive debtor; by September 1985 total lending to the world banking system totalled 2,347 billion dollars [55]; the Eurobond market increased 70 percent in size in the single year of 1985, with total issues worth 134 billion dollars.

Parallel with the growth in international banking went an explosive expansion of international currency deals, so that the total turnover was 150 billion dollars a day by 1984, twice the figure five years earlier. The expansion of finance across national frontiers on this scale made attempts by governments to control national banking systems seem increasingly futile. The 1980s saw a wave of deregulation which fed back into the world’s financial systems encouraging further cross-border flows. As the Financial Times noted in the mid-1980s:

As deregulation and technological advance pull the world banking market into a single great pool of capital, bankers are having to map out new strategies which, for most of them, amount to establishing sizeable presences in the major financial centres, London, New York and Tokyo, and some secondary ones as well. [56]

By April 1987 the Financial Times was reporting that:

Visionary phrases such as “globalisation of securities markets” and “serving the customer in a single world market place” are among the public utterances of top international bankers.

Individual capital markets have indeed become more closely related to each other, mainly through innovations such as swaps ... Liberalisation has opened up many domestic markets to new instruments and new participants, often from abroad ... Investment banks have put much emphasis on their ability to provide services globally and have consequently put significant effort into building up co-ordinated presences in the US, London and Tokyo markets as well as elsewhere ... [57]

Like bank lending, share ownership also became internationalised.

The very nature of the cross border market in shares is that nobody knows how big it is. What is clear, however, is that it is growing ...

By the end of last year, US pension funds had 42 billion dollars invested abroad, nearly three times the figure only two years previously.

In the late 1980s it was Japanese institutions which ploughed most into foreign securities. Purchases zoomed from a couple of billion dollars a year in 1982 to 60 billion dollars in 1985 to over 100 billion dollars in 1989. [58]



The state and the internationalisation of capital

The massive intemationalisation of finance, trade and production found its reflection in a tendency for bourgeois ideologists to talk as if the system did not need states. “Globalisation”, “internationalisation” and “privatisation” were the in-words. Typically Business Week could proclaim the age of the “stateless corporation”, insisting “Forget multinationals – today’s giants are really leaping boundaries”. [59]

However, a closer look at reality shows this to be a vastly exaggerated view. The trend to internationalisation is there – but the great majority of manufacturing companies still operate mainly within one national state from which they branch out. Business Week’s own figures show this. It points to 47 companies as belonging to “the stateless world of manufacturing”. But the majority of the shares of each of them are owned within their home country, with only six being more than 30 percent foreign owned. None were majority foreign owned. What is more, only 14 have a majority of their assets abroad – and of these half are based in the relatively small European countries of Switzerland, Holland and Sweden. The great majority of US, French, German and Japanese firms remain overwhelmingly nationally owned and have the majority of their assets concentrated in a single country.

More significant, perhaps, is what companies seek to gain in cross-border mergers and alliances. Alongside the search for access to new markets and to the resources necessary to keep up with the worldwide advance of technology goes the search for access to previously closed nexuses of influence – influence within foreign business communities and influence over foreign governments.

Accounts of mergers and agreements again and again refer, directly or indirectly, to the search for such influence. Thus, for example, talk of an agreement between the German Siemens company and the British ICL (before it was acquired by the Japanese Fujitsu) was in part motivated by “the need to gain access to each other’s geographic market” – with public contracts making up much of that market. [60] The growing number of agreements between Europe’s big power engineering groups is based on the assumption that national barriers will not come down easily:

The strategy of the new groupings is to possess manufacturing plants in the main regional markets in case Europe does not open up, but it does to have the potential to lower costs through rationalisation. There is widespread belief that equipment suppliers can charge up to 30 percent more in protected domestic markets than in open competition. [61]

The aim of a proposed joint telecommunications venture between the French CGE and the American I’fl’ in 1986 was not, complained a Financial Times editorial, “to speed the removal of the impenetrable barriers dividing national markets ...but to circumvent them by securing direct access to ITT’s existing customers, particularly for digital telephone exchanges. Once firmly entrenched behind the ramparts, it could have little commercial interest in seeing the barriers lowered ...” [62]

The alliance between FIAT and the French group CGE is partly motivated by the “fit” between their spheres of influence. [63] The markets each firm brings to the alliance are dependent upon the orders of national governments over which it exercises influence. One of Fujitsu’s motives in taking over the British computer firm ICL was to “gain access to a large installed customer base in the UK, particularly in the public sector”. [64] When the German detergent group Benckiner took over two leading Italian detergent producers, it had to “prepare the ground by ... talking to key politicians”.

A 1990 study by the London Business School’s Centre for Business Strategy complained that in Europe, “few cross-border mergers are prompted by the search for bigger scale economics ... Unlike purely national mergers, the overwhelming motivation has been access to new markets.” [65] An investigation into the reasons for the collapse of a merger between a Dutch and a Belgian bank brings out how much it depended on the ability to exert influence on two different sets of business-state relationships:

It is extremely difficult for a bank to establish itself in a foreign market. Any bank which attempts to do so on its own must break into tight knit local relationships and establish its name to a degree which will cause people to entrust it with some of their most personal matters. [66]

Summing up, we can say that the state-business relationship does not disappear with multinationalisation. The giant company does not end its link with the state, but rather multiplies the number of states – and national capitalist networks – to which it is linked. The successor to state capitalism is not some non-state capitalism (as is implied by expressions such as “multinational” or “transnational capitalism” [67]) but rather a capitalism in which capitals rely on the state as much as ever, but try to spread out beyond it to form links with capitals tied to other states – perhaps best described as “trans-state” capitalism.

But it is not easy to arrive at trans-state capitalism. Attempts by companies linked to different national states and national “business communities” to merge or make agreements with each other often end in failure. This happened to a number of early trans-European mergers in the 1960s and 1970s – for example, Hoesch-Hoogovens in steel, Dunlop-Pirelli in Rubber, VFV-Fokker in aerospace – and it still frequently happens today. This has led the Economist to go so far as to warn that, “while many companies will spend the next few years clearing up the messes left by takeovers in the 1980s, the risk is the rest of the century will be devoted to unravelling a tangle of reckless marriages.” [68] The London Business School study notes that most mergers have not been as successful as expected. [69]

The problems that confront such mergers are sometimes put down to the different “cultures” that permeate the would be partners. [70] What this really amounts to is that firms growing up in different environments develop different internal management structures and different ways of approaching external problems – or, to put it in terms of the analysis presented earlier in this article, growing up within one state capitalist complex leads to a different internal structure to growing up inside another. A certain “national character” is implanted within the organisation of capital itself. The past of a capital makes it difficult for it to reshape itself for the future.

The four functions the state has fulfilled for capital in the past continue to be important to each individual capital – the guaranteeing of supplies of skilled labour power and of some degree of protection of local markets, the orderly regulation of commercial relations with other capitals and the provision of a stable currency, the taking of measures to protect firms against the sudden dangers presented by the collapse of large suppliers and customers, and the provision of military might as a last resort protector of interests.

These functions by no means “wither away”. In fact, some of them grow more important. The existence of floating exchange rates between major currencies means that the value which a government tries to fix for its own currency can have an enormous effect on the international competitiveness of firms operating within its boundaries. Government influenced expenditures play, if anything, an increasingly important role in providing firms with markets for major goods (telecommunications systems, road construction, and above all military purchases). The state (together with the semi-autonomous financial institutions clustered around it, for instance the national banks) remains immensely significant as the one power capable of bailing out large companies which would otherwise go bankrupt and disrupt the rest of the national economy – witness the Bush government’s 500 billion dollar “rescue” of the US Saving and Loan companies.

Firms with productive facilities within a particular state are all too aware of its importance. They know that their continued success depends, to a large extent, on their ability to pressurise the state to manipulate currency rates as they desire, to keep down the cost of labour and the interest rates on loans, to provide them with large public sector contracts, to protect them from what they claim to be “unfair” competition from abroad. The presence of a state which will defend their interests is not, for them, some afterthought based on nostalgia for the past, but an urgent necessity flowing from their present day competitive situation.

The practice of the multinationals proves this. They do not turn their backs on the state. Rather, part of the point for them of becoming multinational is to be able to extend their influence from their home state to other states which are important markets. US and Japanese firms invest in West European countries so as to be able to “jump” national boundaries and so influence the policy of these states and the European Community from within: hence the spectacle of US multinationals like Ford and General Motors lobbying European governments for measures to restrict the import of Japanese cars; hence also the spectacle of Japanese car firms negotiating for subsidies from the British state to set up car assembly plants.

The point is brought home sharply by the behaviour of one of the smaller multinationals which expanded enormously on the tide of deregulation and internationalisation during the 1980s – the Anglo-Turkish conglomerate Polly Peck. As it faced collapse in October 1990, the British government put pressure on the Turkish government to keep it afloat: “A strongly worded British government letter sent to Turkey last Saturday warned that Polly Peck International faced the appointment of administrators unless the Turkish government produced 100 million of rescue money within 48 hours.” [71]

And when the head of the company, Asil Nadir, was arrested by British police: “In remarks on Turkish television, which seem likely to create diplomatic strains between Ankara and Britain, the Turkish prime minister Mr Akbulut, said, ‘It seems they are trying to bring him down’.” [72]

Nadir had established for himself a base within the state capital networks of Turkey and Turkish occupied North Cyprus, and these provided him with support in his moment of trouble. But he had not succeeded in building up anything like the same base within the state and the ruling class in Britain – the “they” of whom Akbulut complained. They abandoned him to his fate. Rarely has the interdependence of multinational capital and the state been so clearly underlined.

The continued dependence of capital on national states is borne out by the behaviour of finance capital in crisis. Historically, as we have seen, finance capital has been less tightly rooted in the national state than productive capital, and in the boom conditions of the mid-1980s it seemed to move very rapidly in the direction of globalisation. However, the financial crisis of October 1987 – the stock exchange crash – and the onset of recession in 1989 both brought home very strongly its need for the state.

State intervention – particularly in the US where the state poured tens of billions of dollars into the financial system – was central in preventing the financial crisis spilling over into a crisis of the rest of the system in October 1987. What is more, individual finance capitalists responded to the crisis by rushing back to the relative security of their national states.

There is evidence that the crash has dealt a heavy blow to the development of global equity fund management. In a crisis the first instinct is to return to home base. Many of the funds that experimented with foreign investments- for instance, US pension funds-appear to have been readier to dump their recently acquired holding of foreign stocks than to sell their domestic core investments. [73]

There was an accentuation of this pattern with the beginning of recession three years later:

Chase Manhattan ... Citibank, Bank of America and Chemical have all retreated from overseas markets recently ... Globalisation, once a rallying cry, is now a dirty word. British banks, for example, have lost their appetite for aggressive international expansion, not least because their domestic profit margins are double their foreign ones. Only the Continental European banks are still expanding into foreign markets in a big way. . But Deutsche Bank, one of the most active, has reached a pause. “I think we have enough to digest for the time being,” says the chief executive. [74]

Even Japanese finance, which continued to flow overseas after October 1987, looks set to do so less by the autumn of 1990: “Japanese bankers in London, where Japanese banks have their largest overseas operations, suggest asset growth will fall into single figures, with greater emphasis on profitability.” [75] A deepening of the crisis, one commentator warned, “would further encourage the institutions to take foreign profits, if available, and bring money home to bolster the books”. [76]

Under such circumstances, it is hardly surprising that far from states disappearing when it comes to the regulation of the international economy, what we are witnessing today is regulation on the basis of prolonged and often bitter negotiations between states – the succession of G7 economic summits, the Uruguay Round of long drawn out arguments over restrictions on trade.

The most prominent ideologues of capitalism may preach free trade and an end to state “interference” in international markets. But the component parts of the class they represent do not necessarily agree, even when they themselves are involved increasingly in multinational operations.

Thus, for example, late in 1990 three major European car companies – all operating increasingly on a multinational basis – could call for measures to restrict Japanese imports, key sections of French big business could join a “chorus of complaints” about what they saw as “an unrealistically low value for the dollar” [77], “some UK defence contractors” could express fear lest the appointment of an Australian with “well established contacts to the US arms industry” to head British defence procurement would lead to “tougher competition” [78], and Britain’s four main clearing banks could privately warn the Bank of England “that the growing role of foreign banks in London was making rescue operations more difficult in the present market turndown than they had been in the early 1990s”. [79]

The continued reliance of the largest capitals on the state means they have convergent as well as divergent interests with the state bureaucracy. And this bureaucracy has its own interests in promoting the development of a national integration of capitals. Thus, for instance, when the Pentagon sought in the late 1980s to resuscitate a US microchip industry which had received a drubbing from Japanese competition, its proclaimed goal was to safeguard the national independence of the US’s military capacity. [80] And this goal also fitted in with the desires of some sections of industry:

Many new chip entrepreneurs acknowledge the need for a fundamental change in the relationship between industry and government. “The laissez faire free market, survival of the fittest approach worked well in the 19th and early 20th century because we lived in an island economy. But in today’s global economy some central vision is required,” says Mr Hackworth of Cirus Logic. “Somebody has to have an industrial strategy for this country”, agrees LSI Logic’s Mr Corrigan. [81]

In Britain:

British Aerospace was returned to the private sector in 1981 and 1985. But the umbilical cord linking BAe to the public sector has never been properly severed ...The largest part of BAe’s business in turnover terms is generated by the defence side ... The overseas sales are inextricably linked with government policy. Out of BAe’s turnover of 5.6 billion in 1988, it could be inferred that perhaps just 1 billion could be described as generated independently of the British government. [82]

British Aerospace is a company which increasingly aspires to play a multinational role, but it is a multinational role which could not exist without its very firm roots in the British state. This is just as clearly true in many of the countries of southern Europe, where state owned industries run by political capitalists – the various subsidiaries of IRI and ENI in Italy, the big nationalised French corporations – continue to rely on the support of the state bureaucracy to back up their domination of whole sectors of the national economy while at the same time branching out to take over firms in other countnes.

The beginning of recession in the winter of 1990-1 showed that even a multinational as firmly committed to the ideology of the free market as Rupert Murdoch’s News International still retained a dependence on the state – or rather, in this case, on three states. Direct political pressure was applied on the Australian, British and US governments to ease various regulations seen as obstructing its attempts to rationalise its operations and to unload some of its debt. [83] No doubt political influence was also used to persuade some at least of the 150 banks which had lent News International’s money to agree to a restructuring of the company’s 7 billion dollars of debt. At the same time, however, the fact that News International’s network of creditors were not based mainly within a single national state added its problems. As a Financial Times article noted:

The geographical diversity of lenders had added to the complication. It meant that unlike in other restructurings, there will he no single regulationary authority encouraging banks to join the transaction. In recent restructurings for the UK furnishings and fabrics company Laura Ashley, and for the leisure group, Brent Walker, the Bank of England’s intervention has been important in securing a deal. [84]

Trans-state capitalism does not simply negate state capital. It also preserves it and raises it to a higher level. It is a dialectical transformation of state capitalism, not a cancellation of it. Such a transformation is not easily achieved. And it can make life very difficult for all sections of the ruling class. Each is pulled in contradictory directions by the process of change.



Privatisation and trans-state capitalism

How is the question of privatisation connected with the wider changes in the system? There was a decisive shift towards privatisation in a number of countries in the 1980s, reversing the previous trend for the state owned sector of industry to grow. Now a number of Third World countries and most of the former command economies of Eastern Europe are following this example.

There was always a section of the conservative right who identified with an idealised view of capitalism, based on their reading of Adam Smith. They demanded a “rolling back” of state intervention in industry. Their notions sometimes got into the manifestos of mainstream conservative parties and led to the removal of minor sectors of the economy from state control. But throughout the half century from the early 1930s to the mid-1970s they were swimming against the stream of capitalist development. Then suddenly in the early 1980s their ideas began to be implemented by governments – and not just by conservative ones, but also by social democratic and Labour governments in countries like Spain, Australia and New Zealand.

This sudden implementation of schemes of the traditional right has resulted in considerable disarray on the reformist left. Support for a powerful state sector used to be one of the hail marks of both social democracy and of Stalinism internationally. This meant not only taking it for granted that the Eastern states were somehow, in however deformed a manner, socialist, but also identifying with the state sector in Western and Third World countries. The spread of state ownership within capitalism made it easier for people to claim that it could be peacefully changed into a rational, planned system. The spread of privatisation is then seen as a series of defeats of socialism, and the denationalisation of industry as the hallmark of counter-revolution, by both left and right, East and West.

But once we reject any naive identification of capitalism with private ownership, and socialism with state ownership, we have to look elsewhere for the explanation of what is happening. This is to be found in the more general loss of faith of those who preside over national economies in the ability of state intervention as a way to ward off crisis. The deep recession of the mid-1970s suddenly gave new respectability to those previously marginal right wing ideologues who held to the old pre-1930s notions of the free market – Hayek, Friedman and so on. Denationalisation fitted in with their more general call for ending the strangling of “enterprise” by the state. It was a call which found wide appeal among supporters of the system because it provided them with an inverted reformism: it promised a magical solution to economic crisis that would leave the position of the ruling class untouched.

Sections of the nomenklatura in Eastern Europe have been attracted to the ideology of “the market” – and of privatisation – in much the same way. Leaders like Yeltsin have found they can appeal to managers and workers alike by blaming the economic crisis not on the hierarchies of exploitation inside the enterprises, but on the way in which formal ownership has been in the hands of the state and not private individuals.

Meanwhile, privatisation leaves effective class power in the same hands as before, as the Czechoslovak minister of privatisation, Dusan Triska, recently made clear:

The winners will be the same people who won under the old system ... The directors of the former state companies along with illegal currency dealers and other operators ... We have to be blind to this injustice. [85]

Once privatisation has taken place, it can fulfil yet another ideologically important function for the ruling class as a whole. So long as ownership of capital is centralised through the state, there is a central focus for all the demands of those who suffer under the system. Privatisation helps governments evade responsibility for the suffering caused by economic crisis by blaming everything on impersonal market forces. The free market economist and mayor of Moscow, Gavril Popov, said as much in an article he wrote in the summer of 1990:

If we cannot soon denationalise and privatise property. we will be attacked by waves of workers fighting for their own interests. This will break up the forces of perestroika and put its future in question ... We must speed up changes in the forms of ownership ... We must seek new mechanisms and institutions of political power that depend less on populism. [86]

Another variant on the same theme is found in many justifications for privatisation in Third World and newly industrialising countries. State ownership, it is claimed, creates powerful obstacles to the restructuring and rationalisation of industry, since the state is under pressure both from workers and a section of its own bureaucracy who want their jobs preserved. Privatise industry and the state can stand back, claiming it is in no situation to allow “featherbedding” against the demands of capitalist competition.

Thus in the Ivory Coast after electricity generation was privatised, the prime minister, Alasanne Ouattara, insisted: “You can’t restructure without hurting people ... We’ve got to get the resources to promote growth and make our economy more competitive ... Privatisation will come to all sectors of the economy.” [87] The country’s international donors’ viewed the move with enthusiasm: “The company was regarded as one of the most inefficient and overmanned state enterprises with exorbitant tariffs and a reputation for providing lucrative sinecures to the political elite.” [88]

There is, however, a rather different line of argument in favour of privatisation that connects it directly with the internationalisation of the system. It is said that there cannot be a truly international capitalist system while the ownership of large sections of the system lies in the hands of the most national of institutions, the state. This has to be replaced by ownership by an international class of shareholders.

None of this, however, should lead anyone to believe the trend towards privatisation is remorseless and that opposition to it is always a sign of opposition to capitalism as such. State capitalism remains entrenched in important Western countries like Italy, France and Austria, with the state capitalists fighting hard to defend their corner against their private capitalist rivals. Thus in the European Community as a whole in the 1980s, “smaller private sector steel makers were driven out of business by larger groups backed by hefty state subsidies ...There is little sign that the state is about to retreat from owning most of Europe’s steel companies.” [89]

In France, “Most top posts in government, industry and finance are still dominated by a close knit technocratic elite, schooled in a statist tradition, which remains firmly plugged into the centres of political power.” [90] In Austria, “The government has sold off shares in a number of companies, notably Austrian airlines, the Verbund utility, and OeMV, the oil company. But it still holds the majority.” [91]

The state capitalists have often been able to rely on their states to protect them from the privatisation trend: “Leon Brittan’s ... recent decision to tighten controls on state owned industries has angered Italy [whose government is dominated by the conservative Christian Democrat party – CH] and some other countries, which argue he is exceeding his authority.” [92]

The persistence of powerfully entrenched state capitalist sectors can lead to anomalies such as that of Inmos. Originally established by the late 1970s British Labour government in an attempt to establish a national microchip industry, it was privatised by the Tories in the 1980s. Then in 1989 it was acquired by the Italian-French computer group SGS-Thomson. But:

SGS-Thomson’s controlling shareholders are Thomson CSF, the French electronic company, and IRI/Finmeccanica, the Italian holding company. Both are state owned. The UK government’s determination to find a private buyer for Inmos set in train a sequence of events which led to it being renationalised. [93]

The British government is now “preparing legislation to stop state controlled foreign enterprises taking over British companies” and bringing about “nationalisation through the backdoor”. [94]

It is not only in its old entrenched sectors that state capitalism still plays a vital role for modem capitalism. It is central for the system as a whole – especially during a period of global crisis.

The US state’s reaction to the sudden insolvency of more than a quarter of the country’s Saving and Loan institutions brought that out. Rather than face the economic and political devastation which would have followed if millions of people had lost all their savings, the state effectively took over the bankrupt institutions. It thereby took into state ownership assets such as office blocks, golf courses, country clubs, shopping precincts and hotels – even if the eventual aim was to sell these off again. Estimates suggest that the eventual cost could be as high as 500 billion dollars. [95] Nicholas Bradey, the US Treasury Secretary, noted that the Resolution Trust Corporation, handling the “rescue” was “already bigger than all but one US bank ... You’ve seen the growth of an enormous enterprise in a very short period”. [96]

When, at the end of 1990 and beginning of 1991, it seemed that a financial crisis similar to that which had hit the thrifts could hit the banks as well, commentators took it for granted the state would have to step in again – as it did when the bank of New England went bust early in January. [97]

Governments cannot simply privatise loss making nationalised companies. Even the Thatcher government kept unprofitable firms in state hands until it had succeeded in pushing through closure and redundancies programmes on such a scale as to make them attractive to private capital. And so the speed of privatisation was always much slower than implied by the ideology of the privatisers: it took the Thatcher government 11 years to privatise less than 10 percent of the British economy.

Privatisation is often a cloak used by ruling classes who want to increase the level of exploitation and suffering as they move from nationally based operations to internationally based ones. But that is no reason for socialists anywhere to line up in opposition to it with the old state capitalists – particularly as they still have important functions to fulfil for the system. Instead we have to counterpose genuine social ownership to both.



The crisis in the East and trans-state capitalism

I have attempted in earlier writings to situate the crises in the Eastern states in terms of world developments. [98] It suffices here to repeat that the crisis in the Eastern states is part of the overall crisis in the relations between the state and capital as capital increasingly extends beyond national state boundaries. But the crisis in the East has an added sharpness for two reasons: first, because there was usually a delay in restructuring along international lines until ten or 15 years after a similar restructuring began in the West; second, because there was a quantitatively higher level of integration between industrial ownership and the state in these countries than in the West, so increasing the level of political disruption involved in attempting to restructure.

These greater difficulties do not mean that there is nothing to learn from the West and the Third World about the course Eastern European restructuring is going to take, or about the deep contradictions in the whole process.

The central contradiction is between the need to transcend the limits of the national state – to restructure according to criteria of worldwide competition – and the continued interdependence of any process of capitalist production and exploitation with the national state.

The ideologists of restructuring in the East often talk as if successful enterprises in the West are those that have broken away from any such interdependence with the state. They get their inspiration from the most anti-state exponents of the pro-market ideology in the West, from groups like the Adam Smith Institute or the Harvard economists who advised first the governments of Chile and Bolivia and then the government of Poland. Yet that ideology does not correspond at all to the real practice of modern capitalism in the West or the Third World – and cannot so correspond. The 1980s, the decade associated with privatisation, was in fact a decade in which state spending grew internationally:

OECD figures show that among the Group of Seven countries only Britain and Germany managed to cut general government outlays as a percentage of gross domestic product between 1979 and 1989. In the OECD as a whole, the percentage of general government spending in GDP rose to 39.8 percent from 37. 2 percent over the ten years. [99]

What is more, there are already signs that the 1990s have begun with “a splurge of spending”, with the overall budget deficit of the Group of Seven rising from 1.8 percent to 3 percent in 1989 and continuing to rise in 1990 as a result of the US thrifts rescue, the cost of unifying Germany and a shift to higher public expenditure in Britain. [100]

This is not an accidental trend. The very size of the dominant capitals within any country means that if any of them is threatened with bankruptcy, the capitalist state is forced to intervene lest their collapse pulls other big capitals down as well. Nowhere in the West or the Third World has the state been willing simply to sit back and see a huge chunk of domestic production destroyed in the vain hope that this will eventually lead to a resumption of profitable accumulation by the remaining fragments. The state – or the central bank connected to the state – sees its job as being to carry out lifeboat operations designed to forestall such collapse.

If this is true in the West, complete privatisation is impossible in Eastern Europe. The state is going to have to hang on to major unprofitable industries – for the time being at least – if only because there will be no private bidders for them. The Czechoslovak privatisation minister, Dusan Triska, admitted, “He did not expect a rush by potential investors – Czechoslovak or foreign – to buy into Czechoslovak companies. For one thing, a substantial number of them were not expected to survive.” [101]

The result has been that even the governments most adamant on privatisation have not been able to proceed with it as rapidly as they hoped. The first post-Stalinist Polish government was able to privatise less than 20 percent of industry in its 11 months in office. Towards the end of 1991 the first privatisation of selected big enterprises took place. There was “a media saturated share issue”, but “weeks after the shares had not been sold ... The handpicked companies were honest about their prospects. Kable announced it expected a fall in profitability this year and Krosno admitted that restricted supplies of gas from the Soviet Union threatened a breakdown in production.” [102]

Meanwhile, “apart from the explosion in numbers of boutiques, sex shops, currency exchanges and back of the lorry markets (literally), the number of small businesses in production has actually declined since more are going bust than starting up.” [103]

Privatisation went ahead at a greater speed in eastern Germany because the German state believed its massive funds would be able to prevent a complete collapse of the economy as firms which were too unprofitable to be sold off went bust. But in fact the government has been forced to backtrack on its more grandiose schemes in the face of the likelihood of more than 50 percent of east German industry closing down.

These realities mean the most likely outcome in the former “Communist” countries is not 100 percent privatisation, but rather the continued existence of state ownership of large scale, loss making industry, alongside private ownership of small scale enterprises in commerce and retailing – with the “private owners’ often being the managers of the large nationalised plants. [104]



The state, regional blocs, and the world system

The anti-interventionist, deregulationist “return to Adam Smith” notions of the last 15 years are an ideological expression of the expansion of the operational units of capital beyond the bounds of the national state. If they could actually be implemented they would lead to a stateless, “wild capitalism”. But this ideology can never more than partially correspond to the actual practice of those who run parts of the system. Capitalism needs states -to maintain the local monopolies of armed forces that prevent some capitals using direct, Mafia style violence against others, to impose regulations that prevent some capitalists defrauding others, to organise labour markets and to prevent recession turning into economic collapse. The greater the threat of crisis, the greater the need for the state. And yet the international scale of capitalist operations means they continually escape from any possibility of control by states.

This explains the emergence of a second ideological current that runs alongside the first, occasionally intermingling with it but more often standing in complete antagonism to it-the current which extols the creation of regional blocs of states, or even regional states. The drive for economic and political unity within the European Community is the most prominent example, but parallel with it, in a less developed form, are ideologies which look to an all American bloc (with US hegemony over Canada and Latin America) and a Pacific bloc (under Japanese hegemony).

The drive to the creation of regional superstates often seems to have a remorseless logic to it. As early as 1962 Mike Kidron, as editor of International Socialism, saw the rise of the European Community in this way. [105] But in reality the creation of a European capitalism, as opposed to a Common Market within which rival nationally based capitals compete, has been a very slow process.

Certainly, the internationalisation of capital has forced competing capitals to merge into ever bigger units – but until recently, this has not necessarily meant trans-European units. In fact, in the 1960s and 1970s the tendency was for the concentration of capital to take place within national state structures, with the assistance of national states. Between 1961 and 1969 there were 1,896 significant mergers between firms within individual countries, as against only 257 between firms in different European Community countries. [106] As one 1970 study showed:

The continental EEC economies were not integrated as a group, and the German economy in particular tended to have few interlocks. Those German enterprises that were internationally connected had intense links with a small number of Dutch enterprises. [107]

The restructuring of the 1970s gave a much more powerful push towards international mergers. But these were as likely to be mergers between firms based in individual European Community countries with US firms as with firms in other EC countries. So the main multinationals operating across European frontiers were mainly from America in key industries like autos (Ford and General Motors), oil (although the British BP and the Anglo-Dutch Shell were among the biggest) and computers (IBM). Meanwhile, many of the early trans-European mergers fell apart.

This began to change in the mid-1980s, but only slowly. In 19824 there were 67 significant “intra-EC” acquisitions and mergers, as against 45 “international” ones – but both were still overshadowed by the 160 national deals. [108] In 1987-8 the number of intra-EC deals was again narrowly ahead of international deals, but still only three quarters of the number of national deals. It was not until 1988-9 that intra-EC deals narrowly overtook national deals. [109] And most of the links which were established were not all-European, but bilateral, connecting firms in neighbouring countries – especially Belgium/France and Germany/Netherlands. [110] Meanwhile, links with non-European firms could still be all important in particular industries, as was shown when the British computer finn ICL merged with the Japanese firm Fujitsu, British Aerospace increased the level of co-operation between its Rover car group and Japan’s Honda, and major French firms went on a spending spree buying up US companies.

So there is not any simple trend of concentration of capital, but rather an interaction between three trends – towards bigger nationally based firms, towards European firms and partnerships, and towards mergers and linkages between firms in individual European countries and those in the Pacific and North America. [111] To add to the complication, a large nationally based firm may well be allied in one sector of production with another European firm, in another sector with a US or Japanese firm.

Economic complexity is accompanied by political complexity. Each firm puts pressure on the state to adopt policies which fit with its own approach to mergers and alliances. The threefold split in the pattern of capital concentration is matched by a threefold division between different policies for the capitalist state – between policies that stress the consolidation of national blocs of capital, those that look to the formation of European blocs of capital, and those that strive for the ideal of a world in which multinational capitals compete without the impediment of national state barriers. Hence the complexity of the political arguments over the development of the European Community – there are those who reject Europeanism in order to defend what they see as national capitalist interests and those who reject it as an obstacle to what they see as a true internationalisation of the system, just as there are those who support Europeanism as leading to the creation of a European state capitalism and those who support it as a stepping stone to internationalisation. What is more, many individual capitalists and capitalist politicians will play on one ideological theme so long as it suits their immediate interests and then switch without a thought to another, with only a minority of visionaries pushing consistently in one direction or another.

The fact that there is not one clear trend but three intersecting trends was shown very clearly in the Uruguay Round of negotiations over tariffs and trade, which climaxed in December 1990. Many commentators, believing one trend or the other must predominate immediately, presented the negotiations as an all or nothing affair: either there would be agreement leading to a new era of unrestricted free trade, or there would be a breakdown leading to immediate trade wars between Europe, the US and Japan. In fact, there was neither an agreement on an expansion of free trade nor a collapse into trade wars.

The old national ties of capitals and the emergent regional ties were important enough to block any new era of free trade, but the internationalisation had gone far enough to block any simple relapse into trade wars. For the time being, capitalists are forced to compete in a messy half world which has begun to go beyond the era of national state capitalism but which has not yet reached a new era either of regional state capitalism or of full internationalisation. It is a world in which there is free trade and protectionism, reliance on the state and cutting loose from the state, peaceful competition between multinational firms and military conflicts between states to which some of them are connected.

Yet in all this confusion, certain things can be said. No capitalist wants to face alone a world of bitter, unregulated competition between giant multinational enterprises, with frenzied international booms followed by desperate slumps which political intervention can no longer prevent. Such a world of “wild capitalism”, untamed by state controls, would be a world in which even powerful capitals could suddenly face obliteration at the hands of more powerful competitors. Therefore, capitals will still turn to the state for support. And so there still exists a strong overlap of interest (and of personnel) between those who control productive, commercial or finance capitals and those who run the bureaucracies of the state.

If the existing state provides too narrow a base for the activities of capitals, there will necessarily be an attempt to widen that base by alliances and mergers with other states. Therefore, in the long run the trend towards regional blocs is likely to be the predominate one. But, as J.M. Keynes once said, in the long run we are all dead: the world system will have to endure many convulsions and crises, some possibly fatal, before its arrival at a global political reorganisation can be completed. The interaction of the three contradictory trends means there can be no smooth, peaceful road from the present to the future.



Trans-state capitalism and the new imperialism

Those who see international capitalism as simply negating the old national capitalisms draw the logical conclusion that imperialism – the use of the armed force of the state for economic ends – is a thing of the past. So, for instance, Nigel Harris tells us:

One of the sources for optimism is the weakening of the drive to war; as capital and states become slightly dissociated, the pressures to world war are slightly weakened. Furthermore there promises to be some decrease in the belief that killing foreigners is a good thing. [112]

Lash and Urry go even further: [113] Their account of what they see as the “postmodern” world of “disorganised capitalism” does not contain any mention of military expenditure or war! Yet the might of the state continues to be seen as important not merely by bureaucrats and generals, but also by those who manage the capitals that are based within it. This was shown vividly in 1989-90 when a wave of euphoria swept through the West German ruling class as it was faced with the historical chance to extend its state’s borders peacefully by incorporating the territory of East Germany. Expanding German state boundaries was recognised by the bourgeoisie internationally as opening the way to an expansion of the capitals which resided within that state.

A peaceful expansion of boundaries is not an option for most states. They can only increase their geographic influence – and the openings available to the capitals located within them – by applying pressure to other states. And, when it comes to applying such pressure, the deployment of large bodies of armed men, backed up by a prodigious expenditure on military hardware, has a role to play – alongside such “non-violent” methods as economic aid, offers of privileged trading relationships and crude bribery.

Much of the time the role is passive rather than active. The force that sustains a certain level of influence does not need to be used so long as no one dares challenge it – as with the “balance of terror” between the USSR and the US which prevented either moving into the other’s sphere of influence in Europe during the Cold War. Again force can play an indirect rather than a direct role – as with the implicit US threat to the West European powers and Japan not to help them militarily unless they accede to US objectives. But the violence of the state remains a vital background factor in both cases.

The key role of military power is only shown clearly when someone does disturb the existing patterns of influence. We saw what happens then in the Middle East in 1990-1. Saddam Hussein of Iraq tried to escape from economic problems at home by seizing the oil rich statelet of Kuwait. The US ruling class saw a threat to the whole network of influence that enabled it to exercise leverage over the world’s number one commodity, oil. It undertook a massive deployment of military force which culminated in the bombing and the physical destruction of half the Iraqi armed forces.

There were arguments within the US ruling class over the tactics needed to deal with Saddani Hussein – especially over whether to use force simply to blockade Iraq or to move to all out war. But hardly anyone inside the ruling class challenged the assumption that it had to take concerted action to protect the networks of influence built up by its state. And the arguments certainly were not, as analyses like Nigel Harris’s suggest they should be, between the representatives of state power and the representatives of a capitalism which no longer needed its links to a national state.

Capitalist interests in different parts of the world certainly expected the outcome of the war to increase the ability of US-based firms to get their way in international trade negotiations. They saw it as enhancing the possibilities for US capital, just as they had seen German unification as giving a big boost to German capital. So, while sections of US capital expected to benefit from their increased influence over Saudi Arabia and their virtual monopoly over contracts to rebuild Kuwait, an editorial in the leading Japanese business daily could warn that “Japan should not stand idly by while the Anglo-Saxons create a new world order ... Japan should take note of the anti-American, anti- colonial and pro-Islamic sentiments expressed in many Asian countries.” [114]

The gains from military victory may well not be as great as expected – certainly, German capital is having trouble reaping any great gains from unification. The point, however, is that the overwhelming majority of capitalists still see their state as essential to their chances of success.

The Gulf War will not be the last military confrontation between capitalist states. As John Rees and Alex Callinicos have both pointed out previously in this journal, the weakening of the geopolitical influence of the Soviet ruling class increases the instability of important areas of the world and the chances of small states inadvertently treading on the toes of stronger ones – leading them to use the force they previously only threatened to use. It is difficult to imagine either the Middle East or Eastern Europe stabilising sufficiently to reduce the chances of intra-regional conflicts which might well then draw in bigger powers. Hardly was the Gulf War over than George Bush was warning the Iranians not to intervene in Southern Iraq and, in “an unprecedented intervention”, telling the leaders of Croatia and Serbia not to overthrow the federal government of Yugoslavia. [115] Meanwhile the disproportion between the USSR’s present economic weakness and its continued military strength may well prompt its rulers to begin to intervene again in regional conflicts close to their own borders.

The world may no longer be made up of capitals fused one hundred percent to states. But it is not, and cannot be, a world in which capitals float free of states. It is a hybrid world, in which each capital increasingly spreads beyond state boundaries but at the same time depends as much as ever on its state (or, sometimes, its states). This is a world in which capitals look to both economic competition and political influence for obtaining the resources for accumulation. It is a world in which the jostling for position between capitals involves not only peaceful competition for markets but also the carving out of political alliances, not only arguments over trading arrangements but also the reinforcement of these arguments through the deployment of military force. It is a world which has gone beyond the stage of state capitalism, but which can neither slide backwards into a pure market system nor evolve gently forward into a new order of regional states. It is a world, in short, beset by a multitude of contradictory pressures and compelled, therefore, to experience one convulsive political crisis after another.




42. See GATT figures, Financial Times, 28 February 1989.

43. A. Winters, op. cit.

44. Financial Times, 28 February 1989.

45. Figures given in E. Hobsbawm, Diagram 28, Industry and Empire, London 1969.

46. E. Hobsbawm, Industry and Empire, Diagram 34.

47. For an account on how one of these early “multinationals” operated, see the Counter Information Services, Report on Unilever, 1972.

48. Figures from Financial Times, 12 April 1988.

49. Financial Times, 9 May 1990.

50. Economist, 5 May 1990.

51. For accounts of this process, see P. Emergenti, Citta Futura, Rome 1973, and Brasile, Citta Futura, Rome 1973, for a summary of the arguments see my Poland and the Crisis of State Capitalism, International Socialism (old series).

52. Financial Times, 13 July 1990.

53. Financial Times, 20 September 1990.

54. Poland and the Crisis of State Capitalism, International Socialism (old series) 94 & 95 (1977) and The Storm Breaks, lnternational Socialism 2:46.

55. Financial Times, Survey, World Banking, 22 May 1986.

56. Financial Times, Survey, World Banking, 22 May 1986.

57. Financial Times Survey, International Capital Markets, 21 April 1987.

58. Figures given in Financial Times, 21 September 1990.

59. Business Week, 14 May 1990.

60. Financial Times, 4 December 1989.

61. Financial Times, 20 January 1989.

62. Financial Times, 13 October 1986.

63. Financial Times, 5 October 1990.

64. Financial Times, 19 July 1990.

65. Summary in Financial Times, 24 September 1990.

66. Financial Times, 19 September 1989.

67. The expressions used in the previous article, The Storm Breaks, op. cit.

68. Economist, 5 May 1990.

69. Summary in Financial Times, 24 September 1990.

70. See, for instance, Financial Times on problems facing the GEC-Alsthom joint venture, 19 March 1990.

71. Financial Times, 5 October 1990.

72. Financial Times, 20 December 1990.

73. Financial Times survey, International Fund Management, 16 November 1987.

74. Financial Times, 24 September 1990.

75. Financial Times, 24 September 1990.

76. Financial Times, 21 September 1990.

77. Report in Financial Times, 29 November 1990.

78. Financial Times, 20 December 1990.

79. Financial Times, 4 September 1990.

80. See Pentagon Takes Initiative in War against Chip Imports, Financial Times, 27 January 1987.

81. Financial Times, 12 September 1990.

82. Independent, 1 December 1989.

83. For example, Murdoch phoned then prime minister Margaret Thatcher in November 1990 to inform her, long before the market knew, of his takeover of the rival satellite TV station, BSB.

84. Financial Times, 3 January 1991.

85. Financial Times, 12 November 1990.

86. Gavril Popov, Dangers of Democracy, New York Review of Books, 16 August 1990.

87. Financial Times, 12 November 1990.

88. Financial Times, 12 November 1990.

89. Financial Times, 31 August 1990.

90. Financial Times, 17 January 1990.

91. Financial Times, 25 June 1990.

92. Financial Times, 22 October 1990.

93. Financial Times, 11 May 1990.

94. Independent on Sunday, 3 February 1991.

95. See, for example, Financial Times, 8 May 1990, and M.M. Thomas, The Greatest American Shambles, New York Review of Books, 31 January 1991.

96. Quoted in Financial Times, 8 May 1990.

97. Financial Times, 7 January 1991.

98. See Poland and the Crisis of State Capitalism, op. cit.; Class Struggles in Eastern Europe, London 1983; Glasnost Before the Storm, International Socialism 2:39 and The Storm Breaks, International Socialism 2:46.

99. Financial Times, 4 February 1991.

100. Financial Times, 4 February 1991.

101. Financial Times, 12 November 1990.

102. P. Kedzierski and A. Zebrowski, Hollow Victory, Socialist Worker Review, January 1991.

103. Ibid.

104. This, for instance, is the aim of the managers of the big state owned plants in Leningrad, who have set up a bank of their own through their Industrialists’ Association to provide themselves with funds to buy smaller firms that are privatised.

105. Labour and the Common Market, International Socialism (old series):8.

106. Layton, Cross frontiers in Europe, p.3, Quoted in C. Harman, The Common Market, International Socialism (old scries) 49.

107. J. Scott, Corporations, Classes and Capitalism, p.210.

108. EC Commission figures, quoted in Financial Times, 5 October 1987.

109. EC Commission figures given in Financial Times, 21 September 1990.

110. J. Scott, op. cit.

111. For the sake of simplicity I ignore here a further set of linkages, between European firms outside the EC, in Austria, Scandinavia and Switzerland, and those inside, as well as linkages between EC firms and East European enterprises.

112. N. Harris, The End of the Third World, Harmondsworth 1987, p.202.

113. Lash and Urry, The End of Organised Capitalism, London 1987.

114. Report of article in Nihon Keizai Shimbun, in Financial Times, 7 March 1991.

115. Independent, 29 March 1991.


Last updated on 27.10.2002