Monday, September 21, 2009


Harry Targ

Leaders of 20 developed and developing countries, the G20 countries, will meet on September 24-25 in Pittsburgh to continue dialogue on the global economic crisis and financial regulation. One way to think about the G20 is to see it as an emergency response to an emergency situation, not necessarily a byproduct of the long and contradictory development of the global political economy.

Most of us ordinarily would not see the connection between contemporary economic problems and the complex global history that has brought us to where we are. Most importantly, we are not likely to realize that fixing the problems of immediate concern might require addressing the long-term structural developments that have led to the crises of our own time.

Some time ago, L.S. Stavrianos wrote a large history of the global economy, Global Rift: The Third World Comes of Age. In it, the author developed a detailed discussion of the conflictful evolution of the global political economy from the dawn of commercial capitalism to the 1980s. Bringing the story up to the present would entail describing the emergence of neo-liberal globalization, the immediate “cause” of the global, largely financial crisis of our own time.

Stavrianos suggests that we can conceptualize the history of capitalism as the result of the conflict between what he calls “centers” and ‘peripheries.” Center nations have been those that accumulated economic, political, and military power, often aided by technological advances and military prowess. Through these elements center nations gained disproportionately from interactions with most of the world’s nations and peoples. Periphery nations by virtue of their limited power, control, access to technologies, lost from their interaction with the powerful countries of the world. In a sense, much of the value of goods and services and natural resources produced by peoples in the periphery were expropriated by those in the center. The 500 year history of the global economy has been based on the expropriation of value from the periphery to the center.

During the era of commercial capitalism (1400-1770), a rising merchant class, supported by state armaments and mercenaries seeking riches, traversed the globe, trading, investing, and extracting gold and other riches wherever they could. Central to the rise of global capitalism was the trade of commodities made in Europe for African slaves. Kidnapped slaves were brought to recently conquered western hemisphere lands to cut sugar, grow tobacco, cultivate dyes, and produce other agricultural commodities. The products derived from slave labor were brought back to Europe, processed, and sold on the world market. Therefore, the slave system was basic to the development of the global capitalist economy.

As extraction of natural resources, trade, and production advanced, an era of industrial capitalism emerged. In countries such as Great Britain, the industrial revolution occurred. A factory system was created which brought masses of workers together to produce goods more cheaply. This generated more and more goods for sale on the world stage. Center nations experienced an increasing thirst for markets in and resources from the periphery for the production and sale of goods. With industrial capitalism, powerful and wealthy center countries grew and most of the rest of the world experienced arrested development.

The expansion of industrial capitalism led to monopolies, individual or small numbers of corporations controlling larger and larger shares of individual industrial sectors. In addition small numbers of corporations and banks expanded their domination of the global economy at large. During the era of monopoly capitalism, as Stavrianos called it, stretching from the 1870s until today, smaller and smaller numbers of corporations and banks controlled more and more of all production.

Three particular changes shaped the late nineteenth and twentieth century global economy. First, banks became independent and interdependent actors in economic life connected to the corporate sector. Second, corporations and banks (and thus their governments), became increasingly dependent on the export of money capital, direct foreign investment, in comparison with trade in goods and services in prior eras. The seeds of modern financial speculation were planted. Third, from the 1880s until the 1950s, powerful center countries acquired colonies such that by the time of the Spanish American (Cuban) war, 70 percent of the land mass of the world was controlled by European and North American colonial powers.

After World War II, periphery countries won their political independence but remained neo-colonial countries; that is their economies were dominated by traditional center nations. The only exceptions to this continuing center/periphery structure of dominance and subordination was that reflected in the rise of the Socialist bloc, Chinese, Cuban, and Vietnamese revolutions, and countries organizing to pursue a “non-aligned” foreign policy.

As the socialist bloc and the non-aligned movement lost their power, traditional capitalist powers, assisted by international financial institutions such as the International Monetary Fund, the World Bank, the General Agreements on Trade and Tariffs (later the World Trade Organization), demanded a renewed system of center/periphery relations to expand the expropriation of surplus from peripheries to centers. So-called neo-liberal policies were imposed on poor and debt-ridden countries requiring them to downsize their governments, de-regulate their economies, privatize public corporations, and shift their economies from producing goods and services for domestic use to exports.

Part of the economic crisis the G20 leaders and peoples all over the world face is the result of the expropriation of wealth from the periphery to the center (concretely from workers, farmers, and peasants), the excess accumulation of wealth in the center with decreasing capacities to use it to make greater profit, and overproduction and dramatically declining abilities of peoples of the globe to purchase what is produced. The root cause of this economic crisis, like others, results from the accumulation of enormous wealth at one pole, the center, and growing human misery at the other pole, the periphery.

Among the conclusions that can be gleaned from this brief history are the following:

-The contemporary period in global economic/military and political history is the byproduct of historic transformations in world history, from feudalism, to commercial capitalism, and then the industrial revolution, and finally the rise of a monopoly and a financially driven world system.

-Economic transformations have been intimately connected to transformations in military power (access to sea power, land armies, air war, and nuclear weapons) and technological advances.

-Human history, at least since the fifteenth century, has been shaped by the inequitable distribution of power and wealth, creating center and periphery nations and peoples.

-Periphery countries have been shaped economically, politically, and culturally by their connections to center nations.

-This global system of centers and peripheries has stimulated integration (what now is called “globalization”) which has been connected to violence, hunger, disease, and human misery.

While Stavrianos suggests that most of the world’s people have been shaped by their connection with the rich and powerful he also argues that the center/periphery relationship impacts on both actors. Peripheries always have resisted their domination. Sometimes they have achieved significant victories, other times not so much.

It will be interesting to see if voices of change at the G-20 summit can begin to restructure the global economy away from the historic center/periphery structure that has so influenced world history.