Richard Wolff: "old centers of capitalism are suffering the effects of capitalism’s withdrawal"

[marmar]

by Richard Wolff.
Published on October 27, 2013

This article originally appeared at e-International Relations


After 200 years of concentrating its centers in western Europe, north America, and Japan, capitalism is moving most of its centers elsewhere and especially to China, India, Brazil and so on. This movement poses immense problems of transition at both poles. The classic problems of early, rapid capitalist industrialization are obvious daily in the new centers. What we learn about early capitalism when we read Charles Dickens, Emile Zola, Maxim Gorky and Jack London, we see now again in the new centers.

What the October 2013 shutdown of the US government teaches us are new lessons about what is happening to the increasingly abandoned old centers of capitalism. Similar lessons flow from the long, painful economic crises now besetting western Europe and Japan. In simplest terms, these old centers of capitalism are suffering the effects of capitalism’s withdrawal.

The causes of withdrawal are well known. In the century before 1970, it became quite clear that the long history of class struggles inside the old centers of capitalism had produced a basic compromise. Capitalists retained their nearly total control over enterprise decisions: what to produce, how to produce, where to produce, and what to do with the profits. Employees, in exchange for ceding that control, obtained rising real wages. Over the same period, capitalists reorganized the world economy (via formal and informal colonialisms) to serve as the “hinterland” for the capitalist centers in western Europe, north America, and Japan. That hinterland provided the food, raw materials, migrant laborers and part of the market for those old capitalist centers. Real wages in that hinterland stagnated or fell.

In the 1970s, the gap between real wages in the old capitalist centers and those in the hinterland had become enormous. At the same time, the development of jet engines and modern telecommunications opened new opportunities for capitalists in the old centers. Their response is transforming the world. Those capitalists realized that they could manage production and distribution facilities almost anywhere in the world as easily as before they had managed facilities within their town, cities, and countries. The more competitive among them moved quickly to take advantage of the much lower real wages in the hinterland by moving old facilities or establishing new facilities there. The laggards are quickly following to avoid competitive destruction. .....................(more)

The complete piece is at: http://rdwolff.com/content/us-political-dysfunction-and-capitalism%E2%80%99s-withdrawal