state & markets

JKSCHW at aol.com JKSCHW at aol.com
Sun Dec 19 20:35:15 PST 1999


Nathan thinks that you don't need multinational institutions to have global capitalism. Au contraire: to the extent that there has been a global capitalism going back "centuries," which is not much--real globalization is a postwar phenomenon--it has depended on multinational institutions such as the law merchant, which I mentioned, and this for very obvious reasons. Trade doesn't flourish except against a background of common ground rules.

Nathan cites the state law basis of American corporations asa counterexample. But this is a confusion. First, there is the fact that American national law has always been bent upon promoting favorable conditions for "economic growth," that is, capitalist expansion: Hamilton and Madison saw this early and it was a chief basis for their arguments for the Constitution in the Federalist and for many features of the Constitution, such as the Contract and Takings clauses.

Promoting capitalist growth and power was also an impetus behind judicial interpretations of the law: first with the old federal common law for state law actions in federal courts. removed in 1938, and of course for the anti-regulatory ideology of the laissez faire court in the Lochner era (1890-1937). And then of course there is the fact that there would be no vast corporate fortunes without the war profiteers of the Civil War on, the federal takeover of the West and the great land giveaways and railroad subsidies of the 19th C. As far as NGOs go, the National Association of Manufacturers, the US Chamber of Commerce, and, internationally, the Council of Foreign Relations (just to namea fgew) have been central in promoting a national capitalism.

To what extent national and internation corporations can be controlled by "smaller" units depends on what you mean by smaller. Geographic size doesn't mean a lot; what matters is power. Ypsilanti or Youingstown City Councils can do little about GM, not because they are physically smaller than it--how "big" is GM anyway?--but because they can't match it for dollars and political clout. New York City or Hong Kong are small, but when their local governments talk, GM has to listen.

--Justin Schwartz

In a message dated 99-12-17 00:18:48 EST, you write:

<< Multinational Organizations like the World Bank, IMF and WTO are of

absolutely recent origin, yet global capitalism has been able to florish for

centuries. Of course, markets are not natural, but they do not need to be

rooted in global or even national government institutions.

In fact, the United States example is a good example of how economic

institutions thrive in political units smaller than that of their economic

scope. Corporations in the US are to this day incorporated not at the

national level but at the state level, in fact overwhelmingly in one of the

smallest states possible - Delaware. Those state-incorporated corporations

were able to go global in the 19th century and early 20th century long

before any hint of global institutional regulation was in place.

Of course, all these corporations need some political unit as a home base

and have to negotiate the politics of each nation; but global institutions

are not required for that. They may simplify the rules, but that does not

necessarily change the power relationships.

The idea that global corporations can more easily be controlled by smaller

political units just makes little sense. Going back to the US example,

while there were some gains made by state regulation of corporations (where

the Supreme Court was not striking them down), the real struggle was to

create national legislation and rights for national unions to rein in those

corporations.

While jumping to the global level is obviously harder, there is a reality

that some form of international political power is ultimately needed to take

on the power of global capital. The IMF, World Bank and WTO are obviously

not the right form of that power and there may be an argument, as Patrick

Bond notes, that the first step to building real democratic global

institutions is to burn the present ones to the ground. But I do believe

that the long-term goal has to be one way or the other building a global

democratic political structure - a global state that is democratically

representative with full human, social and economic rights guaranteed.

>>



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