Abstract
This short article explores the conception of the international relations of the capitalist world embedded in the last section of the Grundrisse, titled ‘Bastiat and Carey’. It shows that, contrary to the widespread tendency to take Marx as a theorist of ‘globalization’, Marx actually took the existence of nation-states and national economies seriously and conceived of their interrelations as arising from the contradictions of capitalism.
Keywords
Geopolitical economy is my term for the properly historical-materialist analysis of international affairs that can successfully comprehend the evolution of the capitalist world order down to the contemporary age of multipolarity (Desai 2013). It is embedded in Karl Marx’s thinking, though not fully developed there. Perhaps its clearest expression can be found in his fragmentary comments on the ‘Yankee’ mercantilist economist, Henry Carey, in the final pages of the Grundrisse (Marx 1973). A considerable part of my writing on geopolitical economy has had to focus on why it is necessary and why existing understandings, including most Marxist ones, will not serve. In this short article, I will limit my critique to the barest outline and reflect more simply and constructively on how geopolitical economy emerges from Marx’s ideas, specifically his comments on Carey, though related points and comments pervade Marx’s writings (Desai 2013, 36–43).
In the last section of the Grundrisse, ‘Bastiat and Carey’, Marx holds up the protectionist, Henry Carey, as an even greater exception to the general decline in political economy after Ricardo than the free-trader Frédéric Bastiat. Having previously criticized Carey for, inter alia, his belief in the harmony of bourgeois class relations and implicit defence of US slavery (Marx & Engels 1975; Perelman 2008), 1 Marx now has quite a different purpose. He sifts through Carey’s discourse, separating the insights from the blind-spots, to place his protectionism in a wider understanding of the international relations of capitalism.
Marx indulges Carey for ‘naturally’ regarding ‘the relations of production within which this enormous new world [Carey’s native United States] has developed so quickly, so surprisingly and so happily’ as the ‘eternal, normal relations of social production’. At the same time, Marx does not fail to point out that, in attributing all ‘disturbances’ in this harmonious order to ‘the excesses, and interferences of the state in bourgeois society’, Carey does not consider ‘to what extent these state influences, public debt, taxes etc. grow out of the bourgeois relations themselves’.
Carey’s aversion to states disrupting of what he considered capitalism’s harmonious processes, Marx goes on to observe, ‘ends with the call for state intervention, so that the pure development of bourgeois relations is not disturbed by external forces’, to wit, ‘the destructive influence of England, with its striving for industrial monopoly, upon the world market’.
2
Here, Marx elaborates on Carey’s inadvertent self-contradiction:
. . . with Carey, the harmony of bourgeois relations of production ends with the most complete disharmony of these relations on the grandest terrain where they appear, the world market, and in their grandest development, as the relations of producing nations. All the relations which appear harmonious to him within specific national boundaries . . . appear as disharmonious to him where they appear in their most developed form – in their world market form – as the international relations which produce English domination on the world market . . . The concentration of capital within a country and the dissolving effect of this concentration present nothing but positive sides to him. But the monopoly of concentrated English capital and its dissolving effect on smaller national capitals of other countries is disharmonious. What Carey has not grasped is that these world-market disharmonies are merely the ultimate adequate expressions of the disharmonies which have become fixed as abstract relations within the economic categories or which have a local existence on the smallest scale . . . This contradiction forms the originality of his writings and gives them their significance.
3
The core elements of what I consider geopolitical economy are contained in this passage. They fly directly in the face of many contemporary understandings that thinkers as diverse as Friedrich List and Antonio Gramsci would have called ‘cosmopolitan’ because they discount the critical role of nations, nation-states and national economies in capitalism.
Such understandings stand in the way of any effective historical-materialist understanding of what drives inter-national relations. They have flowered in good part because, precisely when V.I. Lenin and the Bolsheviks recognized the importance of nation-states in world capitalism, Marxism in Western countries suffered a major blow. Neoclassical economics emerged in the 1870s in direct theoretical, methodological and political opposition to Marxism. This development should have sharpened and deepened Marxism, extending its critique of political economy to the even more problematic and shallow new approach. While some Marxists, preeminently Rudolf Hilferding and Nikolai Bukharin, did contest its claims as late as the early 20th century, with Bukharin famously proclaiming it ‘the economic theory of the leisure class’ (Bukharin 1972; Hilferding et al. 1949), as early as the 1880s, many others, going back at least to the Russian Legal Marxist, Mikhail Tugan Baranovsky, were pursuing what Bukharin criticized as a ‘policy of theoretical conciliation’ towards it (Desai 2020). As more and more intellectuals trained in this bourgeois discipline came to Marxism, instead of criticizing their own training, they sought to fit Marxism into its antithetical framework.
The result was ‘Marxist economics’. Its dominant currents stand in the way of our understanding of Marx’s critique of political economy in its fullness and originality. Neoclassical economics focused on exchange not production, prices not value, and individuals not classes. It was ahistorical and artificially hived of an ‘economy’ from the rest of social reality. Failing to understand capitalism as contradictory value production, Marxist economists have variously rejected Marx’s value analysis of capitalism because, many claimed, it suffered from a ‘transformation problem’. It could not ‘transform’ values into prices in a manner compatible with equal profit rates among capitals employing varying proportions of labour and capital. Many also rejected Marx’s account of capitalism’s major contradictions. In particular, many argued that he did not believe paucity of demand was a, if not the, contradiction of capitalism and many others that he was wrong to think that profits tended to fall. With value analysis and key contradictions of capitalism thus shoved aside, the mainstream of Marxist economics now sported a more or less contradiction-free and ahistorical conception of capitalism (Desai 2016, 2017, 2018). 4
This conception was also cosmopolitan. With the central role states play in managing capitalism’s contradictions through domestic policies (for example, welfarist or repressive) and international ones (usually imperialist and anti-imperialist), the competitive, conflictual and collusive relations between states of the capitalist world are written out of the script. World capitalism can now be conceived in terms of what I call the twin Ricardian fictions, Say’s Law and Comparative Advantage. It appears as a single world economy seamlessly unified by markets, as in Free Trade or globalization discourses, or by a single state, as in US hegemony or empire discourses. The capitalist world’s division into national states becomes a mere ‘cultural’ artefact (Desai 2009). National economies become figments of the imagination and what most Marxist economists have to say about international affairs has very little relation to Marx’s analysis of capitalism as contradictory value production. In its stead, they substitute a Schumpeterian celebration of its allegedly Promethean productive expansion. Marxists in other disciplines have simply accepted this conception of capitalism. For most of them, Marx becomes some sort of prophet of globalization, an ‘empire of civil society’ (Rosenberg 1994, for a critique see Desai 2010).
An entirely different picture emerges when we read Marx without these distorting prisms. The few pages Marx devotes to Carey at the end of the Grundrisse should make this amply clear.
The materiality of nations ‘grows out of the bourgeois relations themselves’
When Marx chides Carey for not understanding that what he considers ‘the excesses, and interferences of the state in bourgeois society . . . grow[ing] out of the bourgeois relations themselves’, he points to the core of a geopolitical economy what I have called the materiality of nations. Contrary to the tendency to conceive of a ‘pure capitalism’ with no need for state action, capitalism’s anarchic and exploitative character means that states are not only involved in establishing capitalism, they remain involved in managing economies thereafter. The claim of some Marxists that the famous Part Eight of Capital, Volume I, depicts state enforced expropriation (what Marx criticized as ‘so-called primitive accumulation’ or original accumulation) as confined to the origins of capitalism is false. It is advanced by all sorts of Marxists labouring under false interpretations of Marx or eager to claim a false originality for themselves.
In reality, throughout the life of capitalism, states must manage the consequences of capitalism’s contradictions. In doing so, they must walk a fine line. On the one hand, they must be sufficiently effective to ensure the continuance of capitalism. On the other, they must be either sufficiently restrained or sufficiently surreptitious in their interventions so as not to provoke popular questioning of the utility of maintaining the capitalist order. They cannot afford to permit people to realize that public action can replace that of private capital. If such questioning went far enough, it would reach the legitimacy of leaving the reins of ‘the economy’ (in reality control over the possibilities for profit) in the hands of capitalists. For instance, the inequality capitalism generates must be managed by promoting class compromises while preventing them from curtailing capitalist prerogatives to an extent as to call capitalism’s existence into question.
Second, contrary to the Schumpeterian tendency of Marxists to attribute to capitalism a Promethean capacity for growth and development, in which the system simply repairs its own contradictions so that the solution to crisis simply ‘comes of itself’ (Schumpeter 1934), capitalism has historically tended to stagnation. States have, therefore, had to play a critical role in organizing its expansion: imperialism in the 19th and early 20th centuries and, after the West’s imperial power declined with decolonization, through Keynesian demand management, and, in the case of the more successful capitalist powers, through industrial policy throughout the history of capitalism.
Geopolitical economy thus connects Marxism with the vast literature on developmental states in modern times, a veritable ‘other cannon’ (Reinert & Daastøl 2004), opposed to neoclassical economics, going back to the Antonio Serra, through Friedrich List and Henry Carey to contemporary figures such as Alice Amsden, Robert Wade, Ilene Grabel or Ha-Joon Chang. All have emphasized the centrality of states in managing the development of capitalism.
Finally, states must manage capitalism’s endogenous crisis tendencies. While there are reasons to believe that Marx considered some of these, preeminently the paucity of demand and, arguably, the tendency of profit rates to fall, more fundamental crisis tendencies dog every sphere of capitalism and can take intra-capitalist class forms arising from competition between capitals or inter-class forms, arising from class struggle. 5
The materiality of nations implies uneven and combined development
Most Marxists never refer to uneven and combined development. Among those few who do, most confine themselves to speaking of uneven development, referring to an unchanging Western dominance, a tendency most fully developed among geographers (Smith 2010). For the even smaller number who speak of combined development, it refers only to the passive combination of archaic and modern forms in developing countries (Davidson 2016) or the global co-existence of societies at various stages of development (Rosenberg 2016). An even smaller number speak of it as an active project of states but only of backward socialist countries (Löwy 1981). My Geopolitical Economy is the only work I know of which interprets combined development in a way that also includes the capitalist combined development of the United States, Germany or Japan in the late-19th and early 20th centuries and through the ‘communist’ combined development of the Union of Soviet Socialist Republics to the People’s Republic of China and the emerging economies of today.
Although the idea of uneven and combined development is usually traced to Leon Trotsky and its locus classicus is considered to be the first chapter of his History of the Russian Revolution, its essential ideas are already embedded in the thinking of Marx and Engels as well as many later Marxists 6 and we see this clearly in Marx’s comments on Carey. He considers the contradiction which Carey inadvertently reveals – that between ‘England’s striving for monopoly on the world market’ and the need for the US economy to be protected against it – to be Carey’s great original contribution. In striving to maintain its monopoly, England is seeking to perpetuate unevenness while, in striving to challenge it, the United States is engaged in combined development. Such struggles constitute one of the two key motors of the international relations of the capitalist world (the other being competition between major capitalist states). The early 20th-century Marxist writings on imperialism that saw this clearly should be considered the first proper theories of capitalist international relations. These theories were the first to propose that the
International relations of the capitalist world are essentially bourgeois relations
Only when uneven and combined development is conceived this way does it permit us to understand what is at stake in international struggles. They consist of dominant nations seeking to preserve or intensify the unevenness that privileges them. When successful, they would consign the rest of the world to a relation of complementarity, where dominant nations monopolize high-value production and the rest specialize in low-value production. Contender nations reject this state of affairs and seek, through the state-directed development recommended by Friedrich List or Henry Carey 7 and pursued by a long line of successful developers beginning with Germany, the United States and Japan, to establish relations of similarity. By the 1930s, this lineage had acquired a new branch – that of non-capitalist or ‘communist’ combined development and its importance was underlined by the economic success of the Union of Soviet Socialist Republics earlier and by that of the People’s Republic of China today.
The struggles prompted by the stark choice between complementarity and poverty on the one hand and similarity and prosperity on the other take place, Marx says, ‘on the grandest terrain where [bourgeois relations] appear, the world market, and in their grandest development, as the relations of producing nations’. Note here the use of the words ‘producing’, rather than capitalist. On one hand, Marx is clearly speaking of capitalist relations. On the other, he leaves open the possibility that one of the parties to this struggle may not be capitalist. He likely had in mind the possibility that they could be pre-capitalist, though today they could also be post-capitalist. And understanding the interaction requires us not only to draw on the vast literature on pre-capitalist societies and their ‘articulation’ with capitalist ones to understand their international relations but also to develop an historical-materialist understanding of how post-capitalist and capitalist societies relate to one another. A very interesting sub-branch of that would also involve reflecting on how reformed social democratic capitalist societies relate to all the others.
Capitalism’s contradictions on the world stage
In the remarks on Carey, Marx also points out that the ‘world-market disharmonies’ Carey complains about are ‘merely the ultimate adequate expressions of the disharmonies which have become fixed as abstract relations within the economic categories or which have a local existence on the smallest scale’. What Marx is saying here, what he criticizes Carey for not realizing, is that the international disharmonies or contradictions Carey complains about are nothing more than the ‘ultimate adequate expressions’ of capitalism’s domestic contradictions that ‘have a local existence on the smallest scale’ on the world stage.
The critical implication is that these domestic contradictions are the drivers of capitalism’s international relations as well as of its domestic evolution, creating the imperatives for, and establishing the limits of, state actions. It is, therefore, the task of geopolitical economy to develop an understanding of how states act to resolve capitalism’s contradictions. Do they seek to resolve them at the expense of domestic working classes or poorer or less powerful countries abroad or through a combination of the two? What factors dictate this choice and the balance between the alternatives? Such an analysis should include the characteristic forms state actions take domestically and internationally. The understanding of the range of these actions should be historical, not abstract.
I should end here but not before noting that this list of points is inevitably partial. Other factors to be included in a more developed discussion would be
How combined development has begun limiting imperialism.
Whether the further advance of multipolarity in the 21st century will have less lethal results today than it did before when it led to the First World War and if so, why.
The role of cosmopolitan theories as the dominant ideologies of the capitalist world. At the very least, the following might be said.
The internationally dominant ideology thesis
It is said that the ruling ideas of any society are the ideas of the ruling classes, ideas that serve their interests and maintain their power. If so, the ruling ideas about the world order would understandably tend to be those of the dominant powers. And we could expect that these ideas dominate not because they are right but because they are useful in perpetuating the dominance of the dominant powers, chiefly by mystifying the real sources of national wealth and power. This was, as it happens, the nub of the case made by protectionist thinkers like Carey and List, and Marx is clearly endorsing it in the passages discussed here.
It bears pointing out here that Marx criticized both the Ricardian fictions that lie at the heart of the cosmopolitan views of the world order undergirded by neoclassical economics from which they have also entered Marxist economics: Say’s Law and Comparative Advantage. Marx’s critique of Say’s Law for pretending that exchange is not mediated by money and conceiving of it falsely as barter, is well-known, though it is not often appreciated that Keynes, who updated the critique of Say’s Law, also admired Marx’s critique of Say’s Law as a stroke of genius and even adopted Marx’s general formula of capital distinguishing the circuit of capital from the circuit of commodities in working out an early version of his own analysis (Claudio Sardoni 1997). Marx’s critique of comparative advantage is comparatively unknown. Nevertheless, his discussion of foreign trade as one of the mechanisms counteracting the falling rate of profit rejects the main premises of Ricardian comparative advantage theory, while his treatment of international value relations points to conditions of unequal exchange (imperial rent). More generally, Marx and Engels were quite aware that free trade was the self-serving discourse of the English. One wishes more Marxists today followed Marx rather than Ricardo and became less credulous towards free trade and its 20th-century avatars, US hegemony, globalization and empire.
