The logic of violence and war returns to the core areas of global political economy
What will come next? The task of writing plausible stories of future devel- opments in global political economy and global security would be much easier if we had secure knowledge of large-scale regularities. World-systems analysis has questioned the idea of local or national regularities, but assumes that it is possible to find regularities within the totality of a world-system. By taking a world-system such as the contemporary capitalist world economy as the basic unit of analysis, it is possible to make comparative analyses of the whole, parts of the whole, and different phases, cycles and stages of the whole.
For Immanuel Wallerstein, at least, this is the only real route to true nomo- thetic propositions in social science. Certain phenomena can thus be seen as regular and repetitive although ‘not always absolutely identical in form or in length’ (Wallerstein 2000: 209). There are both cyclical rhythms and secular trends in the capitalist world economy, one of the most important being the Kondratieff cycles. Prices, wages, innovations, volumes of production, and trade and money supply go up and down with the long cycles.1 For Wallerstein, however, the key issue is profit margins and the accumulation of capital. High profit margins and high rates of accumulation tend to be associated with one another.
The Kondratieff cycles are supposed to be either 45–60 or roughly 60 years in length. The upward wave of the fourth long cycle began in 1940–46. The downward wave began in 1973–76 and should have continued until the mid- or late-1990s, or the early twenty-first century. However, given the assumption of general regularities, the problem from the point of view of world-systems analysis is that there does not seem to be any sign of a new upward wave in the early twenty-first century. It is, of course, possible that the fifth upward swing is somewhat delayed. Counting 1946 as the beginning of the fourth cycle, assuming that the length of a cycle is roughly 60 years, and allowing for a further 10 per cent margin in timing, the fifth long cycle may not commence until 2012.
Nonetheless, Wallerstein wrote confidently in 1994 that ‘we should enter, within five to ten years, a new Kondratieff A-phase, based on new monopol- ized leading products, concentrated in new locations’ (the A-phase is up, the B-phase down). He also specified that ‘Japan is the most obvious locus,
Western Europe the second, the United States the third (but what may prove to be a poor third)’ (2000b: 438). This forecast seems all but falsified in 2007.
Warren Wagar’s anticipation, as explained in his A Short History of Future, written originally in the late 1980s, but from the point of view of a future historian, was rather similar:
A further downswing occurred in 1970 and thereafter, with the world economic order touching its lowest point during the recessions of the early 1980s and early 1990s. The last of the great long waves commenced early in the twenty-first century, when the economies of all the core countries recorded vigorous growth for the first time in several years.
Thereafter, with only brief and no less predictable interruptions, capital flourished as never before. The chief engine of its recovery was a series of remarkable breakthroughs in technology, including the new IIRs (intel- ligent industrial robots), critical advances in the exploitation of renewable energy sources, and, after several false starts, biotechnology.
(Wagar 1999: 19–20) This is not merely a matter of verifying or falsifying a simple even if some- what inaccurately presented forecast. What also matters is the explanation offered for the expectation that a new cycle should commence. Moreover, it is also important how our knowledge of the regular patterns in the capitalist market economy is used in the analysis of possible futures. Whereas Wagar refers first and foremost to technological breakthroughs as the key generator of a new upward wave, Wallerstein also talks about the roles of market clearance, political egalitarianism and the rise of a new hegemon. According to Wallerstein, after a shakedown of waste and inefficiency, a new dynamic thrust (including innovations and productive investments) should follow. This part of his explanation would seem to be in line with a functionalist explanation of market dynamics – conceivably along Darwinist-Schumpeterian lines.
Depression and crisis eliminate inefficient actors and create space for the fittest firms to take economic developments to a new level by means of technological and other innovations. ‘In the B-phases one exhales the poisons (elimination of inefficient producers and lines of production and so on), which permits revitalization’ (Wallerstein 2000: 218).
According to Wallerstein, however, renewed market dynamism and the related technological innovations are not the only explanations. Wallerstein also presents a version of the under-consumption hypothesis. Production does not create its own demand (i.e., Say’s law does not hold). Rising inequalities reduce aggregate demand, since ‘demand is a function of the distribution of surplus . . . [and] the distribution of surplus is primarily determined in the socio-political arena’ (ibid.: 215). One reason for the prevailing length of a cycle (roughly 60 years) is that ‘it takes time to ignite, mobilize, and summar- ize the political struggles in the various parts of the world economy such that the total effect would be to expand global effective demand’ (ibid.: 216). Last
but not least, a new A-phase is also associated with the rise of a new hegemon and its monopolies. A hegemon creates order and sustains openness and free trade. Further, monopolistic profits are conducive to accelerating the accumulation of capital.
In 2007, it is unclear whether there has been any major new technological breakthroughs. The information and communications technology boom (ICT) seems to have already occurred within the fourth downward wave. Moreover, inequalities have continued to rise within most countries and regions – although globally the rise of the Asian tigers and China has lifted hundreds of millions of people out of poverty and changed the balance of worldwide income distribution – and no new hegemon seems in sight. Hence, even in Wallerstein’s own terms, it is hard to see what would cause the commence- ment of a new upswing in the early twenty-first century given the continuous and self-reinforcing process of neoliberalisation and thus growing inequalities.
Indeed, by 2003, Wallerstein seems to have adjusted his forecasts:
On the assumption that this long Kondratieff B-period will come to an end (even if there may still occur a further dramatic drop in the economic arena), what will then determine which of these three arenas will come out ahead in the struggle to be the dominant locus of accumulation in the next thirty years?
(Wallerstein 2003: 276) The way Wallerstein formulates this question would seem to indicate that the end of the B-phase remains uncertain and that it is, in any case, possible that we will ‘see a further dramatic drop in the economic arena’ before a possible new upward turn. This uncertainty may also be read as symptomatic of a fundamental methodological problem of the world-systems analysis. It seems that Wallerstein’s intuition is that the world-system as a whole provides closure – perhaps the only closure that we can have in social science. However, the capitalist world economy, however specified, is not in fact a closed system.
Outside artificially-created existential and causal closures such as the classical laboratory experiments of natural scientists, there are only systems that are open to intrinsic qualitative changes and/or extrinsic interventions by other forces and mechanisms to varying degrees (see Sayer 1992: 121–25). The point of artificial closures in laboratory experiments is to isolate the mechan- isms, laws and explanatory structures that are capable of transfactually pro- ducing outcomes in the open systems. In open systems, which typically also include non-observable components and layers, explanation and prediction are asymmetrical; while meaningful and precise scientific predictions are, in general, impossible – which does not mean that nothing can be anticipated (Bhaskar 1989: 20–36).
The world economy is open since neither the intrinsic nor the extrinsic condition of closure applies to the totality of its mechanisms and complexes. In other words, extrinsic influences are always possible, however the components
of the world economy are specified (whatever is left out is also real); and the constitutive parts are not atomistic or constant in their inner structures but may also change qualitatively, among other things as a consequence of learn- ing and politics. The methodological problem of the world-systems analysis also has major implications regarding any analysis of, and stories about, possible future paths. While Wallerstein occasionally recognises that there may also be qualitative, even causally significant changes within the capitalist world-economy, basically his argument is that things and their relations are likely to remain mostly the same until the entire world-system is transformed into something else (perhaps into a socialist world state, but he stresses that very little can be said of the would-be post-capitalist system).
In contrast to Wallerstein, I maintain that there is more room for world politics than usually allowed for in largely deterministic approaches such as world-systems analysis. The politics of global governance is important because there are real choices. However, in this chapter I focus on the possibil- ity of the re-emergence of the logic of violence and war in the core areas of the world economy, amounting to a move from Kautskyan co-operative ‘ultra- imperialism’ to a Veblenian, Hobsonian or Leninist image of competing imperialisms. If this is the path of the future world history, as there are many plausible reasons to believe, it would not only generate militarism, enemy- construction and an arms race but also a potentially strong likelihood of a catastrophic war.
First, I outline the main reasons why a new upward swing in the world economy looks unlikely in the early twenty-first century. This provides the background context for scenarios of and explanatory stories about possible futures. Second, I specify five mechanisms of global political economy that can and are likely to contribute to reciprocal securitisation and enemy- construction. These mechanisms already exist and have real causal effects.
Third, on the basis of the background context and these mechanisms I propose three related scenarios of possible paths leading towards a global military catastrophe. These scenarios should be read as global early warning indicators that aim at emancipation in the sense of peace research: to act consistently to prevent a transformation from world politics to violence and to promote a transformation towards peaceful, democratic world politics instead (see Patomäki 2001b: 734). In this spirit, and following a discussion on cases of success and failure in conflict prevention and how to learn from them, Hayward Alker, Ted Gurr and Kumar Rupesinghe propose a research design that should be able to reveal the key determinants of alternative pathways to violent conflicts and their prevention:
The Conflict Early Warning Systems coordinators anticipate that both past (since 1918) and future possible violent conflicts will be the focus of attention. If oriented towards the past, the study should contain a brief but analytical history of the chosen conflict or conflicts; for a future possible conflict, alternative scenarios should be developed as to how the
conflict in question might be expected to evolve, with or without various preventive interventions. The most important, case specific conclusions from the case studies should be about what kinds of long-term and short- term preventive actions by conflict parties or third parties would most likely make (or have made) a difference.
(Alker, Gurr and Rupesignhe 2001: 17) In this chapter, the focus is on how a major global conflict might be expected to evolve in the absence of various preventive causal interventions and emancipatory transformations. The point is practical, however, in the sense of identifying those causes that would most likely make a difference.
From the point of view of preventive intervention, the crucial determinants of success and failure are timing and agency. Timing of preventive interventions and emancipatory transformations of the background context matter a great deal because many geo-historical processes are increasingly difficult to reverse over time. Preventive and transformative agency will be the explicit theme of the scenarios developed in chapter 8.
Why a new upward swing looks unlikely in the early twenty-first century
As part of the self-reinforcing process of neoliberalisation (see chapter 6), and under the leadership of the United States, a worldwide framework of institutional arrangements has been created that, among other things, has a tendency to prevent a turn to a new genuinely upward phase in the world economy (as explained in chapter 5). The era of relatively slow average per capita growth accompanied by growing inequalities in many or most con- texts, is also likely to persist (cf. similar conclusion of O’Hara 2006). Key elements of the geo-historical global complex that has produced the long downward phase of the last quarter of the twentieth and the early twenty-first century include:
• knowledge of neoclassical economics and policies of free market economic liberalism that rose in the 1970s in part as a response to the perceived problems of the Bretton Woods system, in part in the aftermath of its partial collapse, constituting a key component of the self-reinforcing loops of feedback characteristic of the process of neoliberalisation;
• tendencies towards rising inequalities and, consequently, also towards under-consumption and overproduction;
• rise in the uncertainty and risks co-caused by global finance;
• and consequent decline in the marginal productivity of capital.
However, attempts to impose free market economic policies have been con- tradictory, and a number of quasi-automatic Keynesian mechanisms created during the Bretton Woods era have remained in place at least within the
OECD area. Moreover, not all countries have abandoned the possibility of Keynesian demand management, and the world economy has also been reflex- ively regulated to prevent major crises from occurring. For these reasons, the decrease in global aggregate demand has been gradual and contradictory, rather than assuming the form of a great crash or depression. Economic growth has slowed down in most parts of the world economy and some qualitative economists (such as Robertson 1999) argue that aggregate welfare has also been in decline for a quarter of century in the OECD world. Yet the OECD world remains mostly affluent by historical world standards and some Asian countries have grown and developed. Nothing resembling the Great Depression of the 1930s has thus far occurred in the core areas.
Wallerstein, for instance, leaves only little room for the causal role of knowledge and economic policies (under his assumptions, they matter only to the extent that they have effects on income distribution). In contrast, my key hypothesis is that once dominant, free market economic policies start to repress economic growth through various mechanisms, which are efficacious in different ways in various historical contexts. There is a general tendency towards gradually deepening deflation, i.e., a downward phase involving under-consumption/overproduction, unemployment, declining prices, social problems and political reactions to them. Orthodox free market monetary and fiscal policy produces certain effects directly (immediate and, in part, intended consequences). These economic policies also give rise to, trigger, strengthen and/or release those contradictory and crisis-prone mechanisms (e.g., by means of de- and re-regulation) that are characteristic of a capitalist market economy, including the development and maturation of finance.
One typical consequence of free market economic policies is the con- centration of incomes and wealth among a relatively few while many either lag increasingly behind or, particularly during a downward wave, become impoverished in absolute terms. This causes decline in aggregate demand (‘under-consumption’). This was also Hobson’s explanation of nineteenth- century poverty, recessions and imperialism. Although the context is differ- ent a hundred years later, a somewhat altered combination of many of the same mechanisms would seem to be once again causally efficacious. However, consumption explains economic cycles only in part; the determination of investment and their basis – horizons of expectations, prices and interest rates – are equally important. The marginal productivity of capital depends not only on the price of capital goods but also on expectations about future revenues. The development of financial markets makes the dynamics of savings, investment and interest rates more complicated and contradictory.
Speculative activities sensitise actors to alterations in expectations about the future, whereas no-one can predict the future because the development of asset values is always uncertain in open systems and is significantly deter- mined by the actors’ expectations and anticipations. When speculation in this sense prevails, financial markets become increasingly volatile and crisis-prone.
Increased uncertainty as well as the likelihood of crises affect anticipations of
the future and tend to decrease the marginal productivity of capital and thereby genuinely productive investment.
Although there are also countervailing tendencies, the mechanisms cre- ated, strengthened or released by neoliberalism often reinforce each other.
Apart from direct links, they have an impact on both the tax revenues and expenditure of states. In a context where free market orthodoxy prevails, states compete for transnational investment by means of lowering taxes and various neoliberal reforms that should, presumably, make the country more friendly to business and attractive to capital; however, this is contradictory in the sense of the Prisoner’s Dilemma game (see Appendix 1), since if every- body does the same no-one increases his relative competitiveness but everyone loses tax revenues and other desired things. Because national expenditures constitute such a key part of global aggregate demand, these developments tend to reduce demand and heighten inequalities, thereby strengthening other downward tendencies.
Powerful interests in capitalist market societies tend to prefer free market economic policies, universalising their particular short-term interests. Yet, from a critical political economy perspective, the prevalence of those eco- nomic policies seems negative for both the world economy as a whole and also for large parts of the world citizenry. At the end of the first decade of the twenty-first century, the world economy is vacillating between, low per cap- ita growth and deepening deflation and recession. Many signs point towards the latter. Of course, as I have emphasised, not all countries and regions are in precisely the same situation. A long downward wave has been compatible with a sustained period of very high growth in some countries, such as China.
Growth is also thus uneven, and uneven economic growth has cumulative effects that, given prevailing rules and practices, also translate into changes in diplomatic and security relations. ‘Through a complex network of relation- ships, differential technological, economic and population growth can spur expansion, collisions of activities and interests, competition, military rivalry, confrontations and crises’ (Ashley 1980: 1). The downward wave is also com- patible with short and weak booms outside the high-growth areas, including the US, stimulated for instance by debt-financing of military spending and the private consumption of the wealthy strata of American society. This form of Keynesianism can stimulate economic growth for a while in some places.
Mechanisms increasing the potential of mutual securitisation
Since the Bretton Woods era, the world has in some ways returned to an orthodox free market version of the capitalist market economy. The self- reinforcing process of neoliberalisation has been accompanied by a new wave of economic globalisation, heightening the sense of worldwide interdepend- ence. However, the contradictions and crisis tendencies characteristic of the private market economy have re-emerged or been strengthened in the process.