Days of Revolt: The Making of Global Capitalism
In this episode of teleSUR’s Days of Revolt, host Chris Hedges sits down with author and professor Leo Panitch to discuss how global imperialism and capitalism are upheld by economic and cultural forces, and debate the roles of ignorance, myth, and malevolence in the perpetuation of systems of inequality.
CHRIS HEDGES, HOST, DAYS OF REVOLT: Hi. I’m Chris Hedges. Welcome to Days of Revolt.
Today we’re going to be speaking with Leo Panitch, the author, with Sam Gindin, of The Making of Global Capitalism, the role of the state, and in particular the American state, in creating a new form of empire that denies that it is empire or is a form of imperialism.
Thank you, Leo.
LEO PANITCH: Good to be here, Chris.
HEDGES: So let’s begin with this concept which you lay out in the book, which I think is correct, that–and I’m going to quote Harold Innis, 1948, which you quote in the book: “American imperialism has been made plausible and attractive in part by the insistence that it is not imperialistic.” And that is a fundamental theme of your book. And maybe you can explain how that happened.
PANITCH: It’s–goes all the way back, I guess, to the American Revolution, which was an anti-imperial revolution. And the United States therefore conceived itself, politically and culturally, as a non-imperial force while engaging in imperial behavior.
HEDGES: Especially to Native Americans.
PANITCH: Especially on this continent, initially. And then, as the most dynamic of modern capitalisms on the face of the earth, it developed within the United States, very much encouraged by the American state at various points of the 19th century. It was never a laissez-faire state. It was always a highly interventionist state.
HEDGES: Well, you talk about the tariffs, which essentially built walls that allowed America to become an industrial giant.
PANITCH: Yes, and through many other direct interventions–the building of infrastructure at public expense, and often as public projects.
HEDGES: And they’re selling it off now.
PANITCH: They’re selling some of it off, or they’re letting some of it–.
HEDGES: Including the U.S. Post Office.
PANITCH: That’s right, or they’re letting a lot of it atrophy.
HEDGES: It’s not funny, actually.
PANITCH: Yeah, and they’re letting a lot of it atrophy.
So it isn’t a formal empire. The United States, even in told Teddy Roosevelt’s time–.
HEDGES: And let me just stop you there. By formal empire, you mean in terms of the physical occupation, like King Leopold in the Congo kind of empire, the British in India.
PANITCH: Yeah, although Argentina and eventually the white dominions, like my own country, Canada, had a different status than India as a colony, despite the development of similar types of companies within the two of them, Argentina after the breakaway from Spain, and Canada in its movement from colony to independent state, to dominion, as they were called, remained very much within the orbit of the British state, but as independent states. And that became the model for how the American empire evolved. People who thought that Teddy Roosevelt was about creating colonies, that what was happening between 1998 (1898) and 1902 was America turning itself into a formal empire, that proved to be the exception much more than the rule.
And that’s not to say that independent states don’t exist within the panoply of this informal American empire. Canadians know very well the extent to which in substantive terms we’ve moved from having been a colony to an independent dominion, to a colony, in substantive terms, if not in formal terms, of the American empire.
HEDGES: Yes, of course. When you talk about the effectiveness of American imperialism, you highlight the fact that part of the reason it’s so effective is because it has been able to be largely invisible, and it has been invisible, you point out, through, I think, two mechanisms, one, that it trains the elites in other countries in order to manage affairs on behalf of American imperialism, and also because it disseminates, through popular media, images of America that in essence–I’m not sure you use this word exactly–indoctrinate or brainwash a population into allowing them to believe that America is instilled with values that in fact it doesn’t have, the ability of imperialistic forces to supposedly give these values to the countries they dominate. I mean, that is a kind of a raison d’être for economic and even military intervention, as we saw in Iraq, in planning democracy in Baghdad and letting it spread out across the Middle East, or going into Afghanistan to liberate the women of Afghanistan. That, as somebody who spent 20 years on the outer edges of empire, is a lie.
PANITCH: It depends how cynical you think they are. And I think it varies depending on the administration in question, and indeed different personnel inside each administration, going back to the types of interventions we were discussing under Teddy Roosevelt. There were some people who quite genuinely and naively believed that by supporting reactionary forces against rebellions in Central America, they nevertheless could establish a liberal democracy in those countries, and they ended up getting in bed with and in cahoots with extremely reactionary and conservative forces that they would have preferred would become like the United States but were unable to make them do so. The imperial power–and the Romans discovered this first of all, of course–is not absolute. And even when the Americans become a very powerful social and political force inside other countries, their ability to make those countries into a image of the United States, which they may naively have thought they were going to do, has always been limited.
HEDGES: Well, Graham Greene kind of eviscerated this kind of America. And I think it does break down between those who are very cynical and, for lack of a better word, those who are very stupid. And we saw a lot of stupid people–Wolfowitz, Cheney, Perle, and others–who know nothing about the Middle East, who knew nothing about the instrument of war, and certainly knew nothing about the culture and history of Iraq, believed that they could implant this very naive vision. And what always happens in cases like that is rivers of blood.
PANITCH: Yeah, no. I think that’s true. I think that the American empire is most powerful, actually, not in those regions of the world in which it has intervened militarily, at least in recent decades. It’s more powerful in those regions of the world that have become, if I may use the word, Canadianized, that is, where American capital has penetrated, where economic relations are extremely deep, where American multinational corporations are a social force inside those countries. And therefore I think the strongest linkages are with the former old imperial countries of Europe.
HEDGES: Germany. You write a lot about Germany.
PANITCH: And Germany represents that. So you see the mess in Iran or Iraq, etc.–I mean Iran with the Shah back in the ’70s and Iraq in the current millennium. But the strongest linkages of empire are those amongst the advanced capitalist states, which also operate under the rubric of the American Treasury, the Federal Reserve, etc. Nevertheless, even there, as you see with Germany’s behavior vis-à-vis Greece, which the American administration and the Treasury wouldn’t have wanted, they aren’t able to give them orders. That does show you the relative autonomy that states within an informal empire have as compared to ones that are subjected militarily, as some countries are.
HEDGES: Well, you write a lot about the kind of collapse, because of the war, of European economies after World War II and the re-creation, with the help of the American labor movement, the AFL-CIO, which was going over there working on behalf of the CIA to break what they deemed communist or leftist or socialist unions. And much of the book, I think, makes a very strong argument that especially after World War II we re-created economic political systems in our own image, which wasn’t complete, as you point out correctly vis-à-vis Greece, does not mean that we had iron control. But they work within those imperialistic, capitalist, globalist parameters.
PANITCH: That’s right. The difference is that even the Germans, who are so central to contemporary global capitalism, and especially to European capitalism, have never taken the responsibility upon themselves that the Americans did, trying to do with Wilson at the end of World War I, but then effectively did during the course of World War II, have never taken responsibility on themselves for managing a global capitalism and for all of the headaches that that involves in terms of the difficulties and contradictions of that. The Germans have, primarily in Europe, tried to ensure that the international institutions are replicas of the old German central bank, the Bundesbank. And they’ve primarily oriented the euro, let us say, to play the kind of role that the Deutsche Mark used to play. They’re mainly concerned, in other words, with the competitiveness and status of the German economy.
The Americans have carried a burden. All empires carry a burden. And their burden has been–and it’s an enormous headache, and they screw it up often, as Iraq shows–of trying to manage a global capitalism. And the German state doesn’t do that. It’s an enormous difference.
HEDGES: Right. Well, let’s not feel too sorry for the Americans that killed 3 million Vietnamese and 1 million Iraqis.
PANITCH: The responsibilities of power often go with very, very dirty hands.
HEDGES: Right. I’m not sure I’d use the word responsibility.
PANITCH: I think we have to see it that way. I think we do have–I know that a lot of the left doesn’t like to see it that way, but I think it’s more a structural thing. And I think if you and I were dropped into being head of the Federal Reserve without having the type of political forces behind us that can allow us to transform its utter nature, we wouldn’t be behaving all that differently than the current chair of the Federal Reserve, unfortunately.
HEDGES: Right. Well, they would never asked me to [crosstalk]
PANITCH: Or me. So yeah, exactly.
HEDGES: I mean, capitalism in America has changed from the old Fordism and the Rockefellers, the Carnegie, which produced, manufactured, broke labor unions, as you correctly highlight in your book, broke our radical movements, and it’s shifted into the hands of financiers, into insurance, into real estate, who now virtually control the global economy at the expense of industrial capitalism, and often, I would argue, at the expense of governments.
PANITCH: And I wouldn’t.
HEDGES: I know you wouldn’t.
PANITCH: I don’t think that there’s a divorce and an antagonism between industrial and financial capital. I think they’re highly integrated. I think that finance performs an absolutely crucial function for multinational industrial corporations, an essential one in terms of the productive networks around the globe. It isn’t just speculation–although it is speculation, it isn’t just speculation finance. Moreover, I think it isn’t at the expense of states. I think that–.
HEDGES: Well, let me just ask. I mean, they’re hoarding how many trillions of dollars overseas to escape taxation?
PANITCH: Well, whether that’s industrial capital or financial capital is–.
HEDGES: Right, but it is at the expense of states and essentially the migration of manufacturing, first over the border with NAFTA to Mexico, Vietnam, Bangladesh, where people are earning $0.22 an hour. Global capitalism is saying, if you want to be competitive on a global marketplace, you have to be a serf. And we’re seeing that. I mean, you just look at the whole–the nationalization of GM, the renegotiating of contracts, the diminishing of the power of labor within the United States.
PANITCH: Well, you’re using states in an idealistic way, I think. If you understand that, as I think they are, that states are the handmaidens of capital, if one abandons this mistaken conception that comes from neoclassical economics, then one doesn’t have this notion that there’s an opposition between them. Of course where you have democracies, where working classes have won the right to vote, that does at least create a tendency on the part of states to be sensitive to presenting themselves in ways that look democratic and introducing the type of policies that bind working classes more deeply to the capitalist state. Sometimes that involves redistribution. Sometimes it involves benefits to them. But it isn’t–.
HEDGES: You point out in your book that the American working class in particular was bought off. And you quote from–I think it’s a letter that Roosevelt wrote that in essence says to the oligarchic elite–I’m kind of paraphrasing–you better give up some of your money or we’re going to get a revolution and you’re going to lose all of your money. I mean, he spoke–used that word revolution, and so that the whole reforms of the New Deal were not–and I don’t argue with you here–some kind of beneficence on the part of–and Roosevelt came out of the oligarchic class–because of their goodheartedness or because they cared about the suffering, but because of the pressure of radical movements that have now been largely destroyed, but that rose with the breakdown of capitalism.
PANITCH: That’s right. But it also happens when derivatives are used to secure mortgages for black Americans who have been excluded from the New Deal housing reforms for most of the era up to the 1990s. Thereto, politicians encourage the development of derivative markets–and we’re talking about Democratic politicians now. This occurred more in the Clinton era than any other initially. And they took pride in the fact that capitalists around the world were investing in the derivative mortgage markets in the United States. And this was allowing the black poor of Cleveland to buy houses. And that too was represented as meeting democratic pressures.
HEDGES: Right, but until they were repossessed and there were foreclosures, which the banks and financial firms like Goldman Sachs knew were coming. It was a scam.
PANITCH: Of course.
HEDGES: So, I mean, the idea that–at that point I think it’s evidence of a breakdown of democracy, Clinton being the kind of poster child for this, where they spoke in that traditional “feel your pain” language and concern for the poor and the underclass and the working class, and yet rammed through or allowed to go through a series of policies that were completely predatory in terms of the poor.
PANITCH: I think that neither politicians nor businessmen think in such long-run terms. I think insofar as those derivative mortgage markets were growing and were growing for five, ten years, that’s the terms that they think in. Yes, I think you’re right that all of them–none of them take for a moment seriously the notions of neoclassical economists about market equilibrium. They all know that crises happen. They expect them to happen. They just hope they aren’t going to happen on their watch.
HEDGES: Right. But Leo, Goldman Sachs did think in the long term in that it bet against those derivatives and subprime mortgages through AIG. They knew.
HEDGES: They knew they were going to collapse.
PANITCH: Well, of course. Derivatives are all about counter-hedging. And Goldman Sachs was smart enough to counter-hedge earlier. And, heaven’s sake, they had done it during the 1970s, when Goldman Sachs wasn’t a major player. They had done it during the 1970s commercial paper crisis, where they were selling off commercial paper to municipalities and universities, knowing that Penn State was going to go bankrupt.
HEDGES: Right. Well, there’s word for that. It’s called fraud.
PANITCH: Yeah. And they paid off some fines, they were in court in the 1970s, etc.
HEDGES: Well, I mean, the LIBOR, they fixed the–for five years they [fixed] the world currency rates. They make eighty-plus billion dollars profit and they pay a $9 billion fine. That’s not a bad business.
PANITCH: Well, there’s always been a phenomenon of double agents in the American political system. Corporate lawyers who have worked for the major corporations taught them how to get around regulations, gone into the state, and then written the regulations that they told them how to get around.
HEDGES: Right. Well, you make that point in the book, that it has become a symbiotic, incestuous relationship, where the very people who are gaming the system then go into the system. And I think in the book you actually say that they go into the system to essentially fight the entities that they come out of. I’m not sure I would agree with that. I mean, you can look at Liz Fowler, the person who wrote the disastrous for-profit health care bill in the United States known as Obamacare, where she worked on–I think these people work on behalf of essentially writing regulations into a kind of a two-tiered system, where corporations like Goldman Sachs can write laws and regulations that allow them to carry out fraud. And then these people like Fowler are funneled right back into the system and amply rewarded for their work.
PANITCH: Yes. But the private health agencies don’t have to worry about the types of popular pressures that produce this ersatz public health system in the United States. So when she’s brought in, she’s brought in to do something that she doesn’t have to do when she’s working for these private corporations. Similarly, when Robert Rubin leaves Goldman Sachs and becomes the secretary of Treasury, he is performing a function that is about reproducing Goldman Sachs and reproducing Wall Street, but nevertheless using his knowledge to engage in the management of global capitalism, which is an entirely different set of responsibilities than he occupies with Goldman Sachs. And that often involves him calling in the principals of Wall Street and telling them to do things that they otherwise wouldn’t do, and which they do in order to reproduce the system, but wouldn’t do it on their own.
HEDGES: Right. But if there is a single figure who’s–you know, if we had to pick one–responsible for the 2008 meltdown, it’s Robert Rubin.
PANITCH: Yes. I mean–.
HEDGES: So, I mean, it’s not knowledge; it’s idiocy.
PANITCH: Well, is it idiocy? What do you mean? American capitalism continues to thrive in relative terms.
HEDGES: Well, because it loots the U.S. Treasury to the tune of trillions of dollars,–
HEDGES: –and because the Fed gives it virtually zero percent interest rate on money.
HEDGES: But that’s not capitalism. It’s extortion.
PANITCH: No. Well, if you want to call it extortion–it’s not merely extortion. It’s accumulation. I don’t see how it’s extortion insofar as the state legalizes this. And–.
HEDGES: It’s extortion of the taxpayer, because the average citizen gets austerity rammed down their throat to pay for it.
PANITCH: And the average citizen, for a period, and for a long period, was able to thrive on financial markets.
I mean, the point is we are all integrated into this system. We are all dependent on it. Had radical journalists like Michael Moore gotten their way and let Wall Street collapse instead of being bailed out by the TARP program, which of course was designed to save the banks, who would have suffered most? The point is that we are all dependent. And why we need to be really radical in trying to change this system is precisely because we need to recognize the extent to which we are all embedded in it.
HEDGES: Right. But there was an alternative to bailing out the banks, and it wasn’t letting it collapse. It was creating regional banks, capitalizing them at $10 billion, leveraging them ten to one, helping people deal with their mortgages, rather than giving this money to zombie banks. There was alternatives, and that was never discussed.
PANITCH: Well, that would have involved, of course–and I’ve been advocating this for a very long time–turning the American banking system, and above all the principals of the American banking system, the big commercial investment banks–into public utilities.
HEDGES: Well, that’s what we should do.
PANITCH: Of course. And it isn’t just a matter of creating a regional bank like the Bank of North Dakota. Where do they put their surpluses every night? They put them into Wall Street. So it’s a matter of taking the whole system and nationalizing it.
PANITCH: And I think that’s an old-fashioned term, in fact, because that does imply something that I would not like to imply about the type of state we would like to have. But it does involve turning them into democratic public utilities as part of a democratic economic planning system.
Now, for that, you need to change not only the bourgeoisie. You need to change the way in which the working class is integrated into the system, the way even unemployed black people are integrated into the system and are so embedded in it, are so dependent on it for the house over their heads, for the roof over their heads.
HEDGES: The word that is called socialism.
PANITCH: Yeah, it’s a word called socialism, which we’re both happy to use.
HEDGES: Now we agree.
Thank you very much, Leo.
PANITCH: Happy to talk to you, Chris.
HEDGES: And thank you for watching Days of Revolt.
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