‘Climate Emergency’, COVID-19 and the Australian capitalist state

covid-19-4926456_1920Now is the hour of our collective discontent. In order to pursue the agenda set out for this blog post series, namely: ‘to precisely identify the strategic, structural/epochal, or more contingent factors involved in the emergence of particular state–capital hybrids, as well as the specific institutional, organizational, and legal forms that facilitate such emergence’ (Alami & Dixon, 2019) my contribution examines the Australian state over the summer of 2019-20, into the COVID-19 pandemic. I argue that the COVID-19 pandemic highlights the instability and amenability to capital of our present conjuncture in ways that the bushfire crisis did not. Further, the pandemic renders our present conjuncture potentially far less stable and amenable to capital than declaration of a national ‘climate emergency’ could have, and therefore the left should consider how to force deep reorientations of state-led action (and therefore form and function) while it can.

The need for an adequate state theory

Existing scholarship on neo-Marxian theories of the state are the foundations of an appropriate diagnosis of this moment, though in the heart of an historic conjuncture is not the time to attempt a full synthesis or unified theory. Instead we should begin by using our compounding crises to work through our existing analyses and critiques. In keeping with this research agenda, I will begin with a Poulantzean reading of the state – not the blunt Althusserian structuralism of his earlier work, but his later and more nuanced work on the state theorised as an ever-contingent social relation. The state is thus conceived of as a material condensate of the balance of class struggle, meaning it is possible to isolate points of rupture and work upon and through them to alter the balance of power.

Without a reconfiguration of political and economic power, the crises we face will not resolve, but escalate by orders of magnitude. A neo-Marxian theorisation of the state reframes this political moment with a materialist analysis of the issues confronting our societies. The points of possible rupture have now become more apparent and should guide leftist strategy into and through the COVID-19 pandemic.

From ‘climate emergency’ to global pandemic (from theory to praxis)

Over the 2019-20 summer, Australia burned. Vast swathes of the country were covered in marauding fires; communities were evacuated; homes were destroyed; irreplaceable heritage landscapes were lost forever and millions of animals perished. Those physically distant from the fires were nonetheless impacted by the resulting cloaks of particulate matter draped across the country at levels ‘unmatched in terms of severity, duration and extent’ in Australia’s recent memory.

Much of the resulting political jousting focused on whether or not funding had been cut for core services that would have ameliorated the situation. Over the course of the summer, communities mobilised to meet the relentless blazes, with numerous online fundraising campaigns set up to try and resource volunteer fire services. Rolling demonstrations and protests were held across the country, demanding action from state and federal governments.

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The Specter of State Capitalism

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By Adam Dixon and Ilias Alami

Oh, how the righteous have fallen! As the global economy succumbs to COVID-19, we are haunted by the specter of state capitalism. Last week chief economic advisor to the White House, Larry Kudlow, suggested that the US government could take equity stakes in corporations in return for aid. Housing evictions are being postponed. Payroll for employees in some parts of the private sector are to be covered. And the list continues. In the UK, plans are afoot, dare one say, to renationalize the struggling airline sector and other companies.

At the moment, critics of such statist measures are too worried about their own personal health to make a fuss. But as we flatten the curve of the infected and the wheels of the market start turning again, the righteous apostles of the free market will return with a vengeance, and the state capitalists will tumble from their temporary thrones.

As with the last crisis just a decade ago, the state capitalists provided much needed support and took a humble bow (at a profit) when their services were no longer needed. Bailing out General Motors was a good deal for the US taxpayer, as was TARP. Certainly, the same will happen this time around. Or will it?

Since the election of Donald Trump in the US and the Brexit vote in the UK, the prophets of the free market have been decisively pushed out of the halls of power or forced to accept a different religion (typically that of an authoritarian and nationalist form of neoliberalism). National capital comes first!

Without a doubt, Trump and the Brexiteers did not foresee needing state ownership of industry and explicit state direction to achieve their goals. There are plenty of ways the state fosters, guides, and shapes private capital. Capitalism is never without the state, except in some libertarian utopia. State ownership just makes this relationship more explicit.

The embrace of Singapore as a post-Brexit economic model for the UK is telling in that respect. The government of Singapore continues to be a major shareholder of Singaporean industry and commerce, with no plans to change. Why should it? It owns successful and competitive companies. Indeed, state-owned enterprises the world over are demonstrating their competitive prowess. They aren’t the bureaucratic corporate sloths that we are told necessarily come with state ownership. Capital centralized in the hands of the state is resilient and growing for a reason. State-owned enterprises and state-controlled investment vehicles, such as sovereign wealth funds, are multiplying and growing the world over.

For the British elite, Brexit reflected an underlying lament of the sale of British industry (and finance) to foreign owners, even though many became rich that way. They know that restoring such past glory requires explicit action of the state, likely through more centralization of (national) capital. This is a reason behind the refusal to agree to level playing-field provisions with the EU in the future relationship negotiations. But there is more to this than returning to some past glory. Global capital accumulation is driven increasingly by capital centralized in the hands of the state.

The Trump administration’s battle with China (supported implicitly by other Western powers) is not driven by some desire to protect liberal rules-based international order. Rather, it is a battle of national capital. Afterall, China is capitalist.

China’s shift from assembling goods to also designing them, and doing so competitively, has unsettled the hierarchies of the world economy. But China is unwilling to relinquish its development model and its ownership of large swaths of Chinese industry. That is not in the DNA of the Chinese elite. Large state ownership is both necessary to secure the political dominance of the party state at home, and to expand and consolidate the integration of Chinese firms into global supply chains under favorable terms.

This is met in the US (and to a lesser extent other Western economies) by an increasingly aggressive form of techno-nationalism — a form of economic nationalism in the realms of trade, industrial, and investment policy, that aim at securing exclusive control of key scientific-technological innovations. National elites in the West more generally are realizing that they need state power to compete in the global economy. In reality, they always have. But the cloak of free-market neoliberalism energized their buccaneering self-confidence that they were above it all. That fiction is over.

The extension of state prerogatives by non-Western powers used to fuel all sorts of anxieties among state actors and observers in the West. Now, these very same modalities of state intervention are being called for, if not praised, by commentators across the political spectrum. Some even look with envy at the agility with which non-Western state capitalists are currently managing the crisis. The pace at which this ‘new normal’ is emerging is remarkable. We are all state capitalists now (or we all want to be).

COVID-19 and the generalized economic crisis it has catalyzed may hasten changes toward explicit forms of state capitalism in the West. Yet, a decloaked state at the helm does not necessarily mean a more progressive and just economic system (just like it does not mean a move toward state socialism). Who will bear the brunt of the costs of the current transformations, and who will benefit from the consolidation of the ‘new’ state capitalism, will be the outcome of a tense political process. This much we know.

Adam Dixon is Associate Professor of Globalization and Development at Maastricht University. Ilias Alami is a postdoctoral researcher at Maastricht University.

Photo by Governor Tom Wolf. Pennsylvania Commonwealth microbiologist Kerry Pollard performs a manual extraction of the coronavirus inside the extraction lab at the Pennsylvania Department of Health Bureau of Laboratories on Friday, March 6, 2020.

 

Lean on me: Development financial struggles and national development banks

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National development banks are back in fashion and here to stay. A number of countries benefited from the global economic boom during the 2000s as exports and commodity revenues surged. These countries’ governments stored some of the current and fiscal account surpluses and used the capital to expand state financial institutions. Two prominent types of institutions have grown rapidly, namely sovereign wealth funds (SWFs) and national development banks (NDBs), which often have financial return and development stimulation as their core mandates, respectively. Much attention has been afforded to how these organisations’ activities have turned into a global force. For example, the Norwegian SWF’s investment spans across 73 countries, including shares in more than 9,000 companies, and China’s NDBs have emerged as the developing world’s leading project backer.

More recently, NDBs have been identified as important agents in funding domestic development projects in a wide range of developing and advanced countries. The perceived role of NDBs is shifting from a reactive counter-cyclical role towards a proactive patient capitalist role. Popularity in NDBs may appear to be obvious due to the rising interest in pursuing state-designed development planning and industrial strategies over the past decade. While many observations have focused on the growing inclination towards state activism as catalyst to NDBs’ expansion around the world, this piece examines three structural challenges incentivising developing countries to mobilise NDBs. Read More »

Digital Workerism: Technology, Platforms, and the Circulation of Workers’ Struggles

UberTaxiProtestChicagoBy Callum Cant, Sai Englert and Jamie Woodcock

The so-called platform economy – the distribution of, and access to work through websites and apps – continues to grab headlines and the imagination of policy makers, researchers, and journalists the world over. Much attention is given to its rapid expansion, its potential for further growth, and the large amounts of wealth generated through it.

Amongst many others, PWC (2015) published a much-quoted study, if not always critically, which projected global revenues of $335 billion in 2025. If those numbers are potentially inflated, different valuations do point to a significant financial importance. For example, in 2015 ‘17 companies operating in the platform economy were valued at over $1 billion. Of these 17, 12 were based in the US, one in India (Olacabs), one in China (Kuaidi Dache), one in Australia (Freelancer), one in New Zealand (Trademe) and one in the UK (TransferWise)’.

Alongside these macro observations, an equally large amount of ink continues to be spilt about the liberating nature of the platform for the worker (for a particularly excited account see here). The gig worker, we are told, is entering a new reality free of the constraints of oppressive 9-5 employment, far away from the controlling gaze of their manager, able to choose when to work, set their own wages, and whom to work for. A new dawn of democratised entrepreneurialism is supposedly upon us.

Yet the actual evidence is – perhaps unsurprisingly – less rosy. Across the world, platform workers are confronted with the fact that, far from liberating them (or replacing them), new technologies play a disciplining role, deepening many of the characteristics of working conditions in a neoliberal economy: ranging from insecure and precarious employment relations, to greater managerial oversight and debt control. Callum Cant has masterfully documented some of these processes in his recent book on Deliveroo riders, as Jamie Woodcock and Mark Graham have done in their critical introduction to the gig economyRead More »

Indonesia’s State-Led Development: Custodian of the National Interest, or Boondoggle?

industry-4612432_1920Nobel Laureate Esther Duflo once likened the work of economists to that of plumbers – tinkering and adjusting as necessary as they engage with the details of economic policy-making. The implication in this comparison is that economists generally understand economic systems and behaviour how the pipes come together – and that the main work of the discipline is to fiddle with these components – adjusting the pressure, replacing valves – to see what works and what doesn’t.

A critique of this approach was compiled by Ingrid Harvold Kvangraven here. The primary criticism is that the basic premise is flawed – we do not, in fact, have a very complete understanding of how the pipes come together. Often, we don’t even know where they are. The institutional architecture that determines economic outcomes can vary widely from one country to the next. With so much variation at the systemic-level the utility of “tinkering” at the margins is questionable.

This blog series will interrogate some of the prevailing assumptions about the relationship between state and capital and look at why and in what ways some economies are deeply intertwined with the state. The structural conditions that actually exist in developing economies are often ignored in mainstream economic analyses – the prescription for countries with large state-owned sectors is usually some combination of more market liberalization, less protectionism, better enforcement of property rights. This ignores why the economy is structured that way in the first place, and therefore such prescriptions risk being disconnected from the reality on the ground, and thus ineffective.

Indonesia’s economic trajectory helps to illustrate this point. Despite a long history of sometimes violent anti-communist sentiment, massive portions of the economy are either partially or directly controlled by state-owned enterprises. According to Kyunghoon Kim in 2016 there were148 SOEs in Indonesia, and their total assets were equivalent to 56.9% of the country’s GDP.This includes the state-owned oil and gas company Pertamina, three of the four largest banks, the state-owned electric utility PLN which owns the entire national grid, airport operators Angkasa Pura I and II which operate every major commercial airport, the telecom giant PT Telekomunikasi Indonesia and the largest toll road operator Jasa Marga, to name just a few. Read More »

The local state origins of national economic development

Korea_busan_pusan_harbour_cargo_container_terminal.jpegDuring the high period of global neoliberalism (1980-2008) the international development community essentially banned the heterodox concept of the ‘developmental state’ from polite discussion. One of the reactions to the global financial crisis and the Great Recession that ensued after 2008, however, was a growing call for the partial revival of the developmental state model. Most attention in this revival of interest has predictably followed the line that began with Chalmers Johnson’s pioneering work on Japan’s developmental state; which is to say that the discussion has overwhelmingly centred on the purpose and role of national-level developmental state institutions. This discussion is somewhat incomplete, I would argue, if not a little misleading. This is because a great part of the historic economic development success attributed to the ‘top down’ developmental state model since 1945 is actually success brought about thanks to the innovative and determined activities of sub-national ‘bottom-up’ developmental state institutions, which we can term the ‘local developmental state’ (LDS) model. Read More »

NEW BLOG SERIES: State capitalism(s) – Interrogating the ‘return’ of the state in development

6a00d83452719d69e2014e86055c29970d-800wi.jpgFrom Quantitative Easing to neo-mercantilist policies, the renewal of industrial policy, the multiplication of sovereign wealth funds and marketized state-owned enterprises, increased state participation in global value chains and global networks of corporate ownership, the state seems to be ‘back in business’ everywhere. This raises a series of questions:

  • Are we witnessing a shift to state-led development? A return of ‘state capitalism’ under a globalised and financialized form? Are these processes challenging market ascendance and/or neoliberalism as a global development regime?
  • Has there been a transformation of the developmental state and of the logics and instruments of ‘catch-up’ development? New tools of state intervention for industrial and innovation policy?
  • What are the implications of the resurgence of ‘state-capital hybrids’ (state-sponsored investment funds, state-owned enterprises, development banks, etc.) as key actors in development? Are these transforming the global development finance architecture? What is the relationship between, on the one hand, state-owned, state-controlled, and state-directed capital, and on the other hand, private capital?
  • What are the wider geopolitical and geo-economic shifts in which the rise of the new state capitalism is embedded? What is new about the recent ‘wave’ of state capitalism across the global economy? What are the strategic, structural/epochal, and contingent drivers of its emergence?
  • What is the progressive potential of these developments, both in the global South and in the global North? What are the limits to the new state capitalism, and the various forms of resistance to it?

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State Capitalism Redux?

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By Ilias Alami and Adam Dixon

Recent transformations in the global economy have sparked renewed interest in the role of the state in capital accumulation. Such transformations include a ‘return’ to various forms of state-led development across the global South since the early 2000s (in China, Russia, and other large emerging economies), extensive state intervention following the 2008 global financial crisis in the global North, and the multiplication of various forms of state-capital entanglements such as sovereign wealth funds (SWFs) and state-owned enterprises (SOEs). For instance, the number of SWFs increased from 50 to 92 between 2005 and 2017, while assets under management grew to over $7.5 trillion worth of assets, which is more than hedge funds and private equity firms combined. According to a recent study, ‘SOEs generate approximately one tenth of world gross domestic product and represent approximately 20% of global equity market value’. SOEs now dwarf even the largest privately-owned transnational corporations, with PetroChina currently leading the list with a market value of more than $1 trillion. Three of the top five companies in the 2018 Fortune Global 500 are Chinese SOEs (State Grid, Sinopec Group, and China National Petroleum Corp). Significantly, these state-capital hybrids have also become increasingly integrated into transnational circuits of capital, including global networks of production, trade, finance, infrastructure and corporate ownership. Does this renewed state activism – and its remarkably outward orientation – indicate a changing role of the state in capital accumulation and the emergence of new political geographies of capital?Read More »