Economic globalisation versus social justice? Rosa Luxemburg and the 'frontier of control'

The key question facing the world today is the problem of whether justice can be achieved in an era of economic neo-liberalism? This debate is cast in terms of globalisation. If it is true that there has been a major shift of power from governments towards trans-national corporations, then it might follow that the outlook is bleak. Colin Hay insists that we are living through 'a crisis of the state regime'. All over the world, the process of globalisation seems to result in voter apathy. In the 1994 and 1998 US presidential elections, less than half of those eligible voted. The most recent South African elections have been dominated also by the problems of getting people to register, and once registered, getting them to vote. The old ties which bound together leaders and the mass of the people, are loosening. Yet even so a number of writers have contested the relationship between globalisation and injustice. Many globalisation 'believers' suggest that the future belongs to a more equal economic system. Other globalisation 'sceptics' doubt that any profound change has occurred.
The most specific theories of globalisation provide an economic theory of change. Scott Lasch and John Urry have described a new form of 'disorganised capitalism'. In their account, states, tariffs, trade unions are each alike unable to prevent capital from moving wherever it wants. Should workers come into conflict with a multinational industry, then they will always lose, because business huge multinational companies are supposedly capable of moving the means of production at will. Writing in a similar vein, Toby Dodge identifies 'The primary cause of the current wave of globalisation' as being 'the phenomenal expansion in the size and influence of capital markets, and the development of global manufacturing processes.' It is also unclear how much evidence has been provided to back up this description. Dodge is also typical in assuming that these two processed constitute just one factor. Instead, growing stock markets and internationalised production are likely to possess different origins and social implications. One process suggests a change in the relationship between industry and finance, the other implies change within the world of production itself.
Against these arguments, a challenge comes from those writers who are sceptical of globalisation. Paul Hirst and Grahame Thompson's book Globalization in Question suggests that genuine trans-national corporations remain rare. Factories cannot be relocated at will, for the reason that fixed capital is still far too expensive to move recklessly. The world economy is not global. Instead, the distribution of wealth is dominated by just three large blocs, Europe, Japan and North America. The developing world's share of global production is not rising but falling. Sub-Saharan Africa, which controlled 0.6 per cent of world manufacturing output in 1970, controlled only 0.3 per cent 25 years later. 'The fashionable talk about globalisation', writes Chris Harman, 'obscures rather than illuminates'.
Even among those authorities who accept that there has been a process of profound change, 'optimists' debate with 'pessimists' as to the long-term consequences of this change. Many pessimists find it hard to resist the impression that globalisation has coincided with a major shift of initiative from labour to capital. Even Kim Moody, who is otherwise sceptical of 'globaloney' perceives a world in which speed-up and sackings have become the norm. Among the optimists, though, Nigel Harris argues that new methods of flexible-working rely less on fixed means of production, and are consequently easier to move. Thanks to the invisible hand of the free market, industry has already begun to move from the west to the areas where labour is cheapest. The Third World will 'catch up' with the first.
The easiest way to argue for globalisation as an established fact is to return to the more modest claim, simply that the world is getting smaller. According to Ray Kiely and Phil Marfleet, 'Globalisation refers to a world in which societies, cultures, politics and economies have, in some sense, come closer together.' In Anthony Giddens' definition, globalisation means 'the intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa'. Yet if globalisation is defined so loosely then is anything much happening at all?
In its most humble form, globalisation theory states just that more people are logging on to the internet, and that Nike, Pepsi, Adidas and Coke are being sold everywhere. Yet such an argument is hardly immune to the challenge of the sceptics, who find no evidence of significant change. The picture of 'modest' globalisation may well be true, but the notions of internationalised society which underpins it, are not vastly different from the account given by Marx and Engels 150 years ago in the Communist Manifesto, 'The need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere.'
One reason for the divergence of opinion may be that writers have fixed on the wrong aspects of social reality. 'Something' has changed - but the most importance differences are not economic, instead they are political or ideological. In the official versions of globalisation theory which have already been outlined, the problems of world capitalism are blamed on the spread of world trade. This form of 'globalisation' can be annexed easily to that category of explanations in which 'foreigners' are always to blame. Yet as the globalisation sceptics point out, there has not been a major rise in the proportion of the global economy dedicated to foreign trade. For the worst governments of the global south, globalisation provides an excuse for domestic failure, as Philip Nel points out, 'The emphasis on the loss of sovereignty makes it possible to shift some of the blame for domestically unpopular policies to faceless international forces (while convincing) doubters that what is happening is to a large extent inevitable.' Likewise, international production remains the exception and not the rule. Let us assume that something has changed - but if so then what?
The argument of this paper is that the globalisation debate conceals real processes of change. Peter Alexander has already observed the gap between 'sociological theories' (meaning the arguments of time/space compression) and activist consciousness - 'anti-globalisation theory does not so much reject [the theories], as largely ignore them.' Developing his insight, we can say that the term 'globalisation' implies a world changed by its international character - the internationalism of production. But the changes which are experienced by most people are felt differently, in terms of the deep intrusion of new habits into their lives. If it is appropriate to use a spatial metaphor, we need one pointing in a different direction. This notion of 'vertical' globalisation can be more clearly distinguished from 'lateral globalisation', with reference to an old concept, the 'frontier of control'. Rosa Luxemburg first developed this idea in her book The Accumulation of Capital, to argue that the continuous accumulation of profit was only possible if the market continued to expand geographically. What if a similar process is conceived, vertically, in people's lives?

Sorting out the X and Y axes

The argument of this paper is that the spatial metaphor which underpins globalisation theory is misplaced. For more people, globalisation is not a horizontal, but a vertical term. The difference of the new economy is not that it intrudes widely, across borders. The distinctiveness is that it intrudes deeply, affecting every aspect of our lives. Work is getting longer and more intense. The end of state protection has meant the decline of welfare in most countries. Public spaces have been annexed by private companies. Producers are compelled to dedicate their lives to their work. Consumers are faced with ever declining choice. There are less and less obstacles to the untrammelled power of the 'free' market.
One reason for preferring this explanation of 'globalisation' is that it seems to connect with the spoken and written accounts of recent change, which can be found especially in the 'anti-capitalist' or 'anti-globalisation' left, which has emerged since the protests at Seattle in winter 1999. We have already seen that most globalisation theory is based on a spatial logic, in which the national state and economy are being diminished by international forces. Surely it would follow that anti-globalisation activists should privilege the national over the foreign? You would expect to find the protesters championing domestic over foreign rights. Far from it, John Charlton's interviews with the activists represented at Seattle suggests that they shared little of the underlying spatial logic of globalisation theory:

Respondents indicated what they believed the pull to Seattle came from. 'Among the rads and youth', wrote Akio, the environment seemed to be the primary concern, followed pretty closely by human rights, especially sweatshop labour ... In my opinion though, more significant than the variety of issues comprising the protest was the general sentiment that democracy is being replaced by corporate oligarchy, Elizabeth from Vancouver put it down to the 'threat to public services, including education, threat to democracy and the ability of governments to regulate and create standards, protect labour rights, and safety and environmental standards, more pressure to privatise and on the global south to give up completely on labour and environmental standards.' Tina saw 'the extraordinary developments of the organised labour movement calling for action in the streets on economic and political issues - first time I remember it happening ever'.

Similar formulations can also be found in many different trade union publications. Bill Jordan, the general secretary of the International Conference of Free Trade Unions, claimed in 2000 that 'Globalisation ... has seen the privatising of power. Massive concentrations of wealth are now in the hands of unaccountable people running multinationals.' Willie Madisha, President of the Congress of South African Trade Unions, has also complained that 'globalisation ... worsens the inequitable distribution of power between the rich and the poor, and between the developed and the developing countries.'
Although the idea of lateral threat exerts little influence on the mind of anti-globalisation activists, by contrast the idea of vertical intrusion forms an important theme. It appears, for example, in Naomi Klein's book, No Logo. Consumer branding is capturing all forms of human activity - gas, electricity and water have already been privatised, now Nike seeks to put its bran label on some of the most basic human desires. Youth, transcendence and hope are all absorbed in its 'swoosh'. In Klein's account, the future belongs to places like Disney's private town, Celebration. 'Though wired with every modern technology and convenience, Celebration is less futurism than homage, an idealized re-creation of the liveable America that existed before malls, big-box sprawl, freeways, amusement parks and mass commercialization.' The devil is in the bargain that citizens make with Disney. The cost of living there give over control of every aspect of your life - health, education, hobbies. 'The families who have chosen to make Celebration their home are living the first branded lives.' It is no longer possible to live for five minutes without the market intruding into you.
There is a similar account in Michael Hardt and Antonio Negri's extraordinary book, Empire. Much of this work is devoted to an examination of US economic and military hegemony. The book is rambling and gargantuan, it feels like the distinct product of two profoundly different cultures, North American literary theory and Italian autonomism, as indeed it is. Empire's critique of race, state, modernity (not in reality but as concepts) falls outside the scope of this article. Yet a different picture emerges when the authors describe the processes of globalisation as they are felt, from below. At this point we encounter a different explanation of change. No matter how literary its phrasing, the theory is economic.

Postmodernization is the economic process that emerges when mechanical and industrial technologies have expanded to invest the entire world, when the modernization process is complete, and when the formal subsumption of the noncapitalist environment has reached its limit. Through the processes of modern technological transformation, all of nature has become capital, or at least has become subject to capital.

Some of this account is undoubtedly exaggerated. To argue that the incorporation of non-capitalism has already reached its limit - is to suggest, in effect, that the full degradation of humanity has already been achieved. But we can accept the direction in which the metaphor works. The total environment is described as constituting two distinct worlds - one 'capitalist' (in the sense that it is dominated by the market), one 'non-capitalist' (in the sense that it displays some resistance to its final incorporation into a market economy). In place of the argument that all nature has 'become capital', we might say that rather that certain of the major limits to this process now seem absent. In the era of globalisation, the potential subsumption of the non-capitalist world is a much greater threat.
We can see a new explanation of the recent changes which have shaped the global economic system. Since 1991, the organisation of the market has gone through one of its periodic changes in style. Alexander describes a common experience, in which most countries have seen 'rising inequality and an undermining of working-class organisations.' The economic transformation of the past dozen years has not been a change as profound as the process which began in the seventeenth century of transformation from rural economies to the industrial market. A better comparison would be the shift in the 1890s, from a free-trade capitalism, to a protectionist, colonial model - what Marxists used to call 'imperialism'. Indeed even within in the life-history of capitalism there have been several such changes - to imperialism in the 1890s, then to a more statified form of capitalism in the 1930s, now to a different system today. The term globalisation is thus seen to capture a new moment in the economic history of capitalism, an era when welfare states have been reduced, and private capitalism has displaced the previous state forms. Yet even this insight still begs more questions. Did any of the classic authors conceive political economic this way? Most important of all, what limits against the power of market relationships remain?

Luxemburg and the Frontier of Control

One useful source is Rosa Luxemburg's The Accumulation of Capital. There are at least two good reasons for mentioning this work. First, Luxemburg's is one of a family of 'classical' left-wing explanations of imperialism, which have set the terms of future debate. Yet the historically-minded left has so far failed to do justice to the breadth of the traditions, with many writers preferring to ground their explanations of globalisation on Marx's Communist Manifesto or Lenin's Imperialism. Of course, both books have much to offer. Marx reminds us that capitalism was always a system based on the restless global accumulation of capital. Lenin suggests that one process of centralisation, the creation of the grand colonial empires, also connected to a second process of centralisation, the merging of banks and industry to form finance capital. This suggests a second point of difference between Luxemburg and previous 'classic' theories of international capitalism - both Marx and Lenin displayed a certain tendency to give the consider the non-capitalist world as a periphery, whose main purpose was to be absorbed by the centre. Meanwhile Luxemburg has a different idea of the relationship, in which the non-capitalist world plays a grander role.
Published in 1913, Luxemburg's book begins with a problem left unresolved in classical economic theory. Where do the funds come which enable the market system to expand indefinitely? It appears to be true that the continuation of capitalism results in an indefinite expansion of fixed capital (machinery) at the expense of variable capital (labour). More goods are produced, but if labour's share of the wealth was static, then who buys the additional products of the factory system? Luxemburg claimed that in order for the surplus value produced by capitalism to realise itself in the form of money, there must be a market external to capitalism, capable of absorbing extra goods. Luxemburg believed that this market existed in the non-capitalist world. Her notion of a frontier between the capitalist and non-capitalist world is an important insight, which can be combined with the idea of vertical 'subsumption' that appears in Hardt and Negri. But we first need to separate Luxemburg's economic theory from the notion of breakdown to which has been attached.
One major problem with using The Accumulation of Capital is that Rosa Luxemburg is widely (mis-) understood to have argued that capitalism would necessarily collapse under the weight of its own contradictions. The roots of this reading lie in the book itself. For Luxemburg did ask, if the future of capitalism depended on its ability to locate new markets, then what would happen when the markets ran out? Although she did not answer her own question, various critics, including notably Leszek Kolakowski have been more than willing to provide a conclusion of their own. Kolakowski suggests that Luxemburg believed in the inevitable and rapid breakdown of the entire capitalist system. He then attaches this claimed belief in capitalism's inevitable collapse - which he terms her 'slavish' dogmatism - to a further political sin, a fatalist disregard for present-day opportunities, and an interest only in the possibilities for working-class spontaneity at the moment of final revolt. 'Rosa Luxemburg us an outstanding example of a type of mind that is often met with in the history of Marxism and appears to be specially attracted by the Marxist outlook. It is characterized by slavish submission to authority, together with a belief that in that submission to the values of scientific thought can be preserved.' Whatever these sentences may say about Kolakowski, they tell us little about the Luxemburg's libertarian Marxism!
To clear up the misconception, we need to say more about The Accumulation of Capital. At the heart of her argument was a contradiction that Luxemburg detected between the first two volumes of Karl Marx's Capital. In his first volume, Marx had argue as if capitalism was faced with the prospect of an inevitable break-down. But in Capital: Volume One, Marx had tended to treat capitalism as a single system. In the second volume, Karl Marx addressed the processes of the reproduction of capital. Here Marx introduced various equations, which seemed to suggest that capitalism could continue indefinitely. Indeed a number of Luxemburg's more reformist-minded contemporaries in Russia, the 'legal Marxists' including the economist Tugan-Baranovsky, had used the equations of Capital Volume Two against the argument of Volume One, to demonstrate to their own satisfaction that the capitalism system could continue indefinitely. Faced with such arguments, Rosa Luxemburg wanted to show that Tugan-Baranovsky's approach was a distortion of Marx.
Rosa Luxemburg's defence of Marxism was more limited than it is sometimes thought. The Accumulation of Capital does not tie its own author (or likewise Marx) to the claim that capitalism was doomed. Luxemburg states only that 'Karl Marx made a contribution of lasting service to the theory of economics when he drew attention to the problem of the entire social capital.' The key question of her book - if production increases continuously, then who is to buy the goods? - can be stated clearly, as indeed can Luxemburg's solution: at some stage, a market must exist outside commodity production.
So what is this non-capitalist environment, and where can we observe the frontier of control? Luxemburg postulated at least two points of division between capitalism and the non-capitalist environment. The first barrier was located within the capitalist world. 'After many centuries of development', she writes, 'The capitalist mode of production still constitutes only a fragment of total world production. Even in the small Continent of Europe, where it now chiefly prevails, it has not yet succeeded in dominating entire branches of production, such as peasant production and the independent handicrafts, the same holds true, further, for large parts of North America.' The second and barrier was between capitalist and non-capitalist economies. Capitalist production 'has hitherto been confined mainly to the countries in the temperate zone whilst it made comparatively little progress in the East, for instance, and the South.' For the most part, Luxemburg conceived the frontier as a genuine border. The frontier was also an important source of trade. The production of raw materials in the South, often under conditions of slave or bond-labour was necessary aspect of the total movement by which goods became capital:

From the aspect of both realising the surplus value and of procuring the material elements of constant capital, international trade is a prime necessity for the historical existence of capitalism - an international trade which under actual conditions is essentially an exchange between capitalistic and non-capitalistic modes of production.

At times, Rosa Luxemburg seemed to suggest that she had identified the weakest point in the capitalist system. But had she? Some of her most basic assumption can be challenged. We have already seen that Luxemburg follows Karl Marx's Capital in conceiving the reproduction of capital as a circuit. But in its simplest form, her model is cruder than the one that appears in Marx. More goods are constantly produced, but labour's share of the wealth is static. What happened to the 'countervailing tendencies' which were patiently listed by Marx? One fair criticism of Luxemburg book The Accumulation of Capital is that it neglected a number of strategies which capitalism could employ, in order to expand, even once all non-capitalism markets had been assimilated. In addition to this potential source of markets, there were other strategies for 'purchase' which Luxemburg did not consider, but have existed in times since. One possibility was that the state could become the prime purchaser of commodities. If a state were to exist in temporary isolation from the world market, then briefly at least, it could solve the problem of under-consumption by purchasing vast quantities of goods with a currency whose paper value was kept down by law. You might even say that this solution was adopted by Russia after 1930.
Alternatively, on a global scale, we might say that the problem of over-production could be temporarily solved by a massive wasted expenditure - on some product like arms that could be purchased by credits, or at all events outside the operation of the law of value. It might be that the customer, purchasing new goods, was themselves a proletarian. How would they secure the money? Most likely, it would be through debt. Certainly one recent feature of the capitalist system has been the success of companies, in inventing new products, which people have bought on credit. Yet Luxemburg argued in her parallel critique of Bernstein, that although such a method might solve a temporary crisis, it only postponed trends towards a crash as the gap between income and expenditure works itself out.
One final possibility might be that the non-capitalist frontier has not existed only horizontally in space (between nations), but also laterally (within our own lives), and that all sorts of production and reproduction (such as state health care, or the family) have existed to some extent outside capitalist relations of production and exchange. It will only be when these process have all been annexed to the market, that the non-capitalist frontier will really have come to an end. Yet such a complete distopia is almost certainly impossible. Although we can say that in the past dozen years, capitalism has intruded ever more deeply into peoples lives - we cannot accept the idea (to be found, as we have seen, in Hardt and Negri) that this process in any way nears completion. For the market to triumph absolutely - we would need to live in a world where there was absolutely nothing that failed to realise profit to capital, in either of its moments of production or consumption. We would need to eat, sleep, drink only commodities, to think them, to breathe then, to become total prisoners capable of nothing else. Capitalism would have to turn even our most basic human attributes - love and laughter and everything - into a constant and continuous drive for profit. Of course, many forms of human conduct have already been annexed - but the final completion of such a process (even were it possible) is still a long way off.
It might be complained that the original structure of Rosa Luxemburg's argument survives here only in a vestigial sense. Yet what this account retains is her most important insight - that the border between capitalism and non-capitalism is a site of control and therefore conflict. Luxemburg's own account describes a relationship in which capitalism first thrives on non-capitalist space, and then having prospered - goes on to destroy its source:

Non-capitalist organisations provide a fertile soil for capitalism; more strictly: capital feeds on the ruins of such organisations, and although the non-capitalist milieu is indispensable for accumulation, the latter proceeds at the cost of this medium ... by eating it up. Historically, the accumulation of capital is a kind of metabolism between capitalist economy and those pre-capitalist methods of production without which it cannot go on and which, in this light, it corrodes and assimilates.

These metaphors of exhausted soils, consumed foodstuffs, and corroded roots take on extra levels of meaning in our exhausted world, where we can see the degradation of non-capitalist nature taking place literally in front of our eyes. If we follow her account of the 'corrosion and assimilation', then we can make sense of facts such as that in Thailand, where rice is bountiful, the UN estimates that some 25 to 30 percent of the population is chronically undernourished. How else can we understand the social processes which compel Chinese women to spray Buzz Lightyear dolls for just 13 cents an hour?

Conclusion

The argument of this paper does not pretend that there has been no economic change, only that the relationship between economics and politics has been ill-described. To a greater or lesser extent most conventional theories of globalisation seem to suggest that the future for democracy is weak. Fixed economic processes are inevitably going to undermine the social power of the state. Yet the most basic explanation of 'globalisation' offered here is not the conversion of productive capital into a free-floating agent - for this has not happened. Instead, what we observe is the willing subordination of political actors into a new social and ideological process in which private capital seeks to annexe the non-capitalist environment, including welfare states, public ownership, private lives and public space. Conceived like this, the source of 'globalisation' is no longer seen to be the all-powerful tyranny of economic inevitability, but the more human failings of a society in which the privileged have prospered, and politicians have fallen under their spell. If we live today in a period of neo-liberalism, then this says more about the choices of our leaders than it does about objective necessity. This argument of this paper accords with the literature concerned to defend the continuing relevance of the state. Where perhaps it differs is in finding more optimism in the emergence of movements outside the state. The Seattle movement critique of intrusive capital has already been cited in this paper. The maturity of that criticism suggests that we witness an impressive campaign, rightly concerned to establish a different kind of internationalism. The implications for social justice are optimistic - the resistance is there.
This paper has also suggested that a 'frontier of control' exists between the capitalist and the non-capitalist world. In Luxemburg's initial formulation, the frontier was conceived almost literally. The character of any one national economy could be hypothesised from the character of the state. Therefore, as colonialism spread, non-capitalist states were annexed into the capitalist economy and society. The suggestion here is rather different. There are no longer such things as 'national' economies. Every single commercial relationship in the world connects - in some way - to a global market. Everyone lives in a situation which is formed and shaped by capitalism, but still only partly annexed by its social relationships.
The overwhelming majority of people find that their lives are directly formed by the capitalist social relations they encounter in their working situation. Yet even if its indirect consequences can be felt long afterwards, the direct intrusion of capitalist productive relations last 'only' for eight or ten hours a day. Likewise the degradation of consumption intrudes directly for 'only' some part of the day. For the moment, peoples lives have not been fully integrated into the machine. We retain a partial freedom to live outside the system, if only in sleep! We also retain the choice of thinking outside or against capitalism - as in a slogan heard at the protests in Genoa in 2001, 'Tous ensemble, tous ensemble, on rêve, on rêve' (All together, all together, we dream, we dream). The definition of globalisation given here is that under particular economic, social and political conditions, the capitalist frontier of control has been pushed forward, so that most people's lives are determined to a much greater extent by market relationships. But the process is not complete, nor will it ever be, so long as non-capitalist spaces exist in our lives, and so long as people struggle to resist.