 Well, we'll be having this evening a very, very interesting time, as I'm sure you will see. Very interesting debate, discussion between our two guests for this evening. We took advantage of the fact that Leo Panage, Professor Panage, who is, as you know, Senior Canada Researcher and Department of Political Economy, and Distinguished Research Professor of Political Science at York University, the question of radicalism, the Political Science Department at York, and the Northern American Hemisphere. So we took advantage of Leo's presence for the Historical Materials and Conference, based this weekend, and this is my opportunity to remind you of that, to organize this debate between Leo N. and Alex Alex Kalinikos, who also, I'm sure, doesn't really need an introduction here, but for those who don't know, he is Professor of European Studies at King's College in London. Both of them are authors of several books. Leo is also the editor of the Socialist Register, which is very popular here at SOAS, at least in the Department of Development Studies, I think also in economics, in the reading list, and among his recent books we have one topic that we are discussing, American Empire and Political Economy of Global Finance, which even authored, like, pre-newing socialism on a book or edited, and Alex is also the author of very many books. One of his, I mean, his very last one, which is already announcing the next one, so he's a prolific writer, his very last one, and also very much related to the topic of the debate of this evening, the fight against imperialism and global political economy. So this would be definitely a very interesting discussion, because also this is a very interesting topic, I mean, it's a discussion about, let's say, how we characterize the global structure of power, the role, the base of the United States, the status of the United States in this global structure, global power structure. It's a debate in a sense which is not that new. It's a recurrent debate, actually, about the structure of global power and the relation between various imperialist powers, like this major global capitalist powers, a debate that already in some form existed even in the eve of the First World War, but of course it took a very different shape after the Second World War, in assessing the new structure of global power after 1945, and of course the debate became even more, I would say, in a new form, the new shape of the national relations that followed the so-called Cold War with the collapse of the Soviet Union. And that's where we have the re-debate of this evening, of which there is already, I'm not suggesting that this will just be a repetition of it, but you already are at least the first round of this kind of discussion between how to guess from this evening in articles published in 2005-2006. We can find them online, they were published in International Socialism, and this is, as you will see, I'm sure, a very interesting discussion. So the way we will proceed is each of our two speakers for this evening will speak in turn for 20 minutes. We'll start with Alex getting us and then Leo Panich will follow, and then Alex again for 10 minutes and Leo for 10 minutes as a rejoiter through their initial statements. After which we will take questions, interventions from the audience and ask you to do, I mean, not to give a third introduction, but just questions or whatever short remarks within the reasonable limit of, let's say, two minutes so that people can give their opinion. After which we will have two concluding summaries, two summaries, and that will be the end for this debate. Before giving the floor to Alex, I would just point to those who noted the dates for the next globalisation lectures, that there would be a slight change for the next one, which is in January, the lecture by Susan George would take place one week earlier than announced, that would be on the 20th of January instead of the 27th. Thank you all, and Alex, the floor is yours. The starting point in what I want to say is I want to, hang on, I'm just going to retrieve my bottle of water. The first thing I want to say is to insist on the importance of having a theory of imperialism. Now, this may seem obvious, but it is not obvious, because the greatest anti-imperialist of the contemporary age doesn't have a theory of imperialism. By that I mean, no, Chomsky. I attended the first of the two globalisation lectures. He gave it to us a few weeks ago, and it was a magnificent tour of Dorezor and sort of demolition, intellectual demolition of the crimes committed by the powerful. But when you look for a theoretical framework, there was one very striking moment when Chomsky quoted the Melyan dialogues, which are a famous passage of Fusiliy's history in the Peloponnesian War. And he quoted the following, celebrated passage, that strong do what they have the power to do, and the weak accept what they have to accept. And I think it's actually true that the implicit theoretical framework in Chomsky's anti-imperialist analysis are propositions of such trans-historical, both very thin and trans-historical character, that once you have concentrations of power, then you get the kind of behaviour that we see in the case, say, the United States today. And the work of explanation is done mainly by the detailed empirical descriptions of which Chomsky's writings are full. Now, I don't want to knock that approach to understanding imperialism because Chomsky's work is enormously powerful, but I think it's subject to severe limitations, in particular the kind of analyses that he offers lack, they lack relief. There's a kind of relentless narrative of the crimes of the powerful, and the distinctive patterns and shifts in the behaviour of powerful from one historical epoch to another largely disappear. By contrast, the classical Marxist theory of imperialism developed in the early 20th century sought to locate the distinctive patterns of modern imperialism in Marxist theory of the capitalist mode of production, not just left dogmatically on its own, but elaborated and developed by the very contributors to the theory of imperialism. So understanding the, in particular, patterns of geopolitical conflict in the modern world are to be integrated into the rhythms and dynamics of capitalism as an economic system. Now, I say a lot in my book about the strengths of weaknesses of the classical Marxist theory of imperialism, and there are considerable weaknesses, but nevertheless it's a tradition in which I want to build, and in my book I seek to elaborate on an idea formulated independently by David Harvey and me a few years ago, that capitalist imperialism has to be understood as the intersection between two distinctive forms of competition, economic and geopolitical. I don't have time to elaborate on that. The virtue of understanding imperialism as the intersection of economic and geopolitical competition is that it continues the classical Marxist attempt to integrate the understanding of geopolitics into a larger theory of capitalism, but it does so in a non-reductive way. It doesn't just treat what states do as a sort of instrumental consequence of the decisions of particular groups of big business, but the book attempts to substantiate this theory of imperialism, and I don't have time to talk about that now. Leo is a very distinguished contributor to contemporary debates on the radical and revolutionary left about imperialism, and what I want to do to bring our discussion into sharp focus is by considering three important questions that have emerged in these debates, and which I think the contemporary economic crisis has definitively settled. The first is, has the capitalist economics, the capitalism as an economic system lost its moorings in the international state system? Is the international state system, the international system of states now from the perspective of the development of capitalism a historical and aspirinism? This is, of course, something that's been argued on both in the liberal mainstream, but on the left by people like Tony Carter, Michael Nagry. Now I think that actually that question can be settled empirically by what happened after 9-11, and in particular by the way in which the US responded to 9-11 with the assertion of national power as the way of dealing with what happened. But I think in one looks at the economic crisis that has more clearly demonstrated the extent to which capitalism is embedded in the system of nation states. The rescues, the bank rescues, the bailouts, the huge 14 trillion US dollars, the huge amounts of money that have been pumped into the global economy were pumped in by nation states. And it's particularly striking the extent to which the EU's response was compromised and weakened by the fact that the different kind of rescue plans and subsidies for cars and all that kind of thing were implemented by nation states pursuing their own agenda. So it seems to me clear whatever some people thought a few years ago, the kind of peak days of euphoria about globalization, that capitalism remains intertwined indissolubly with the system of states. Now I don't think that's the issue between me and Leo. But I think the next question is and that is, has capitalism succeeded in emerging from the long downturn that's set in, the long economic downturn that's set in in the early 1970s? No. Leo may complain that I'm caricaturing his position but he's here and extremely well equipped to correct the limitations I've made, but I take Leo to be saying that capitalism did succeed in doing that, in particular the historical meaning of neoliberalism was that by shifting the balance of class forces in favor of capital it permitted a new era of economic expansion of capitalism. Also if you look at the work of Leo and his colleagues on financialization the role of finance in contemporary capitalism like the collection American Empowering the Political Economy of Global Finance that they published a couple of years ago a very interesting collection the tendency of their analysis is to stress that financial crises play a functional role particularly from the point of view of entrenching and extending the global dominance of the United States of American Capitalism and in the introduction to their book which we all have problems about timing but the book appeared about a year ago so it must be written finally put together just as the financial crisis was really kicking in they describe the financial crisis as a problem of imperial management now I think it's clear that it's a little more than that and I think also this scene is very clearly demonstrated is the way in which the whole process of financialization the spread in particular credit derivatives the way in which the big investment banks dominated this the whole process of the creation of those derivatives drooling the global banking system aligned themselves with hedge funds and high private equity firms in all the ways that were increasingly beginning to have a profoundly destabilizing role so I think that that's a major problem in our analysis but I think of the analysis of the EOD's colleagues but I think it's a symptom of a deeper problem because I think the severity of the present crisis and it seems to me that the crisis is a very long way from over indicates or I think provides significant support from for those of us such as Bob Renner, Chris Harman, a number of other people I don't have time to cite Alan Freeman, Andrew Freeman all sorts of people who develop an analysis that is sought to locate a long term set of structural problems facing in particular the advanced capitalist economies and arising from a crisis of profitability that develops at the end of the 1960s and one of the last things that Chris Harman wrote before his recent death he pulled together and documented the evidence supporting this analysis of a long term crisis of profitability and I think it's important to see that despite neoliberalism despite the enormous efforts to restructure societies, to force up the rate of exploitation to reorganize the welfare state to reorganize the economic functioning of capitalism all of which are the effect of as I think is agreed by most analysis of forcing out the rate of exploitation that didn't have the effect although it led to a recovery in overall profitability in advanced capitalist countries it didn't bring the level of profitability back to where it was during the long economic boom of the 1950s and 1960s this is reflected in the fact that in the last boom the great boom of the sub-prime speculative bubble in the middle of the present decade levels of investment in the advanced capitalist countries remain relatively low despite a recovery in profits despite all the color gloss and blue of the speculative bubbles that developed in that period and I think the best way of understanding not the global crisis of financialization but the speculative bubbles that on the basis of that process of financialization drove the US and therefore the world economy in the late 90s and in the middle of the present decade is that they functioned as a way of displacing the underlying crisis of profitability and sustaining the expansion of the US and therefore the world economy particularly through the mechanism that Bob Brenner has called the acid price canceanism. In other words if you're able to continually lever up the price of different kinds of financial assets, most recently different kinds of real estate the so-called wealth effect kicks in. In other words the owners of these assets feel richer, they borrow more and in further to the great overhaven hang of debt which is such a distinctive feature that it can't be worst effect by the present crisis. People spend more maintaining effective development quite predictably that the bubbles then eventually explode and because of the way in which the most recent one drew in the bulk of the global financial system and its hangers on struck a paralyzing level of the world economy from which it's still seeking to recover. So, I think the underlying problems of global capitalism are much more severe and much more protracted and long-term than Leo and his colleagues have been ready to acknowledge. Have I got about five more minutes left? Yeah, we have six, seven minutes. Six, seven minutes. Excellent. Good. Okay, that brings me to the third question that I want to address, which is is US pygemony in decline? Now, this of course is a very long-standing debate and it's one that has assumed a slightly comic strip form as a result of the global crisis in that now very large sways of establishment of opinion are prepared not simply to answer yes to the question is US pygemony in decline but to announce the end of US pygemony. You know, you look at Newsweek you look at lots of other kind of semi-popular organs of the the Atlantic bourgeoisie whatever warrants call them and they're really saying that US pygemony is over. You know, when Obama went to China really he was portrayed as the you know, rather paradoxically as the head of an old empire going to pay homage to the rulers of the new empire paradoxically because of course China's been in the empire business a lot longer than the United States but and I think that kind of extremely superficial response to the kind of very significant developments that are going on at the present time are still helpful to the to the debate and I suspect that's something that Leo and I would both agree about I should also say that I myself have somewhat changed my views on this question over the past 10 years or so 20 years ago at the end of the Cold War with the collapse of the Soviet Union I expected there to be a fairly rapid return to the kind of inter-periodist rivalries that were characteristic of imperialism in the early decades of the 20th century and I underestimated the extent to which the US was able to maintain its hegemony despite quite powerful counter pressures when one's mistaken it's important to acknowledge that and I think that if we look at the contemporary situation that it's clear despite the kind of cartoon depiction of the situation that I was referring to the US remains and I think will continue to be for decades to come, probably the dominant power in the system if you look at its share of global national income if you look at its centrality to the nexus of international institutions and alliances through which the leading capitalist classes are organized if you look at the US's capabilities, if you also look at the US's despite the blows struck by the financial crisis if you look at the US's position in the global financial system there's a lot of talk that the dollar is about to be supplanted by some unnamed alternative but there's very little evidence or side of that actually happening if you look at all those indices of relative power the US remains the key organizing power of the system now there's a mistake in conclusion that one draw from that which is everything is okay for the US Perry Anderson a few years ago wrote an article in which he presented the US as the conductor of a concert of powers a very 19th century phrase and I would say that what the US actually will find itself and is finding itself doing is orchestrating a great disharmony which wasn't simply produced by the economic crisis but is I think accelerated the disharmony by the economic crisis and it's easy to talk a lot about the US-China relationship but I could say a lot but just to say that up for for later on in the discussion because I get a further bite at the cherry but if one looks at for example the way in which despite the fact the economic crisis has struck the Russian economy quite severely if one looks at the greater confidence of the managers of the Russian state and their willingness to press the United States on questions that they see essential to their security interests that's symptomatic of quite a significant shift I think the Georgian War was a significant sign of the confidence of Russia's rulers that the US global position was weakening it's distracted in Iraq and Afghanistan and therefore they could press to extend their sphere of influence I also think the change the way in which it's no mistake to say that a real axis is developed between Moscow and Berlin it's nothing resembling an alliance but it's still quite interesting the way in which first of all the German government has tended to try and blunt the conflicts between Russia and both the European Union and NATO it's also interesting the extent to which economic links have grown stronger between between Germany and Russia I mean Leo probably knows more about the the fantastic failed attempt to splice together a Canadian parts company and Russian money to buy a general most of these in Europe that blew up when General Motors decided it was okay and could keep hold of its subsidiaries in Europe but that's symptomatic of a longer term nexus of economic links binding Germany it's also interesting the extent to which the Germans have been resistant to the kind of push for a global financial fiscal stimulus that Obama pressed for the 2020 summit in London earlier this year this doesn't represent these kind of tensions and conflicts I can talk about others don't represent a lax bag in full scale inter-imperialist rivalries but what they reflect is the way in which the changing global distribution of economic power makes it increasingly difficult for the U.S. to manage the system that doesn't mean that the U.S. doesn't have strategies and ploys to try and maintain its economy and one should underestimate its ability to achieve at least some of its goals but we're confronted with a situation in which a weakening imperial power is struggling increasingly with a world that it finds hard to manage that in somewhat that this is my final point that creates in certain ways opportunities for the radical and revolutionary in that clip it has the political capacity to respond to them but it also represents I think quite a dangerous situation for anyone who's concerned for the prospect for long term peace okay on that cheerful note I'll end thank you very much for getting together to continue a debate going on for some years now and I think it's very important that Gilbert has casted as a debate amongst Marxists in the context of the current crisis and debate about Marxists about the nature of crisis and the nature of empire and imperialism because we have become a little popular in the last year or so I've never had so much media in my life and generally it's very superficial but it goes something like well you were right about there still being contradictions in capitalism as opposed to what neoplassical economists told us about the hidden hand in equilibrium and we're getting some satisfaction from that and it's certainly true that as Alex once said to me if you don't believe in crisis kind of a Marxist argument and it's certainly true that one of the cores of a Marxist theorization is understanding that capitalism as it reproduces itself also produces dysfunction produces contradiction which can result in capitalism's crises and there's nothing to do that said I think that Marxists need to take a very deep breath in the context of this crisis and ask themselves whether their theory of crisis and their theory of empire which I think rests on an inadequate theory of the state is really up to scratch and rather than trying to retain rather classical explanations of crises and rather impoverished notions of state and empire I think we need to pull our socks up and try to develop Marxism as best as we can in this context now Alex referred to I must say I should probably go further than that but I'll go back to that 150 years before the current crisis began that is in 1857 as Marx was writing his notebooks for the Brunnery Center pages and pages of those notebooks as well that are both that he was writing for in the New York Herald were full of analyses of the most severe crisis the capitalism had yet seen the one that emerged with the collapse of the American bank in 1857 and Marx expected that this would be a far more disastrous crisis than it turned out to be which would have the expectation of immediate results ten years after the revolutions of 1840 in reviving the revolutionary spirit of Eastern Europe he had to scratch his head in the 1858 and 1859 and say what happened and so I think we really need to try to figure out a little bit what is the place of capitalism's crisis in our theorization okay Alex cited a comment that Martin Conings and I made in the introduction of the conclusion to our book about capitalism and the global economy he quoted us in an article he wrote in March saying that we expressed I should say before introducing the quotation he said we rather unwise expressed some skepticism about strong claims concerning the disastrous outcome of the current liquidity crisis for the global system of finance and America's position in and then we added later the main upshot of the current situations that the American state finds itself with the peculiar and unanticipated problem of empirical management well I would very much stand by I think and it depends what you mean by disastrous I mean as Humpty Dumpty said when I use the word it isn't just what I wanted to mean but I don't think what could be so loose in the term disastrous in introducing that statement Martin and I described the situation of the crisis of the nature of the crisis of the death of the crisis in exactly the same terms that Alex just did in his opening remarks that it's severe indeed he said it was the most severe since the depression the question is what does one mean by disastrous outcomes for the global financial system and for the new place of the American empire and here I think what it has to say that the consequences what is wrong with much Marxist theory about crises is that the consequences of crises need to be examined in terms of whether they overwhelm the capacity of states to respond or adapt to those crises and whether they galvanize forces of radical change in terms of their capacities and in terms of being able to build on the openings that crises create but I think there are two ways of looking at the current crisis if we look at it in terms of there being a lack of state regulation in sufficient state regulation even the state as Alex often puts it in his writings even the state fostering crises through its promotion of bubbles or one can take the nature of capitalist financialization over the last 50, 60 years as inevitably entailing a great deal of volatility a great deal of instability as well as complexity being highly crisis prone and therefore we can look with some marveling at the role that states a plague in keeping the system going from moment of chaos to moment of chaos in a sense you could say you're looking at it one way or another it's the last half of the time and in my view what is remarkable given the degree of financial volatility given the extent of capitalist globalization given the multi-state system that it must perverse given the nature of currencies and flowing currencies over the last 40, 50 years and the multitude of them involved in a vast array of trade and investment and indeed hedging of trade and investment derivatives trade the way the system has been kept going via state intervention now here's I think where one needs to come to an analysis of imperialism and global capitalism which is rather different from that of the Marxist class imperialism when I wrote the first piece I started writing on this in 2000 a new electric view called the new imperial state imperialism except in circles like those of Alex's was not much in favor on the left no one used the word American empire in the first belt of war for the most part imperialism was a polemical word on the left used mostly with regard to global south against the global north or against American geostrategic bullying if it was retained in a classical way it was with regard to the notion of imperial rivalry in a context where the other advanced capitalist states the old empires or the new ones had been integrated into the American empire since 1945 as Alex said he expected after the great power of the Soviet Union that you would see a reassertion of strong imperialism it might be you that needs to start somewhere else one needs to understand the rule of empire not merely in terms of the expression of geostrategic power and the expression of their capital's interest you need to begin with it by the way Marxists need to look at the theory of the state that is, capitalist states reproduce the conditions of capital accumulation and the conditions of class relations in a capitalist society and in that sense first, I guess, argued 15 years ago in the aesthetic state of globalization in the socialist register and I must say Alex often identified Perry Anderson's use of mind on this Perry at that time was arguing that capital had gone international and was stuck in the nation's data and I attempted to argue against the theorists of globalization that states were the authors of globalization that they were essential to the making of globalization that international treaties the WTO, NAFTA, the European Union etc. were treaties of states who were engaged in, yes, in removing capital controls but doing much more than removing things they were crucial to the process of codification and legalization which was essential to making globalization in that sense, as with states with the construction of laws upon which contract has to operate upon which property is defended upon which class relations are founded states in the international arena must be seen as playing a similar role now there are states and states and the point of my writings on the American empire has not been to attempt to rely on the rather old worry of Marxist notion of interocural rivalry but rather to attempt to understand the internationalization of the state and the American state in particular but no means alone has, if you like, carried the greatest responsibility they would say carried the greatest burden in terms of making globalization happen the reason for that of course has to do with the centrality of American capitalism in the second half of the 20th century and beyond that in global capitalism and the degree to which American capital is integrated with global capital there's a process of global capital and then sees international banks counting firms this is a question that Marxism has properly addressed itself to although Marx molded over it when he said what are we quite saying when we say capitalism is right for revolution and gold is just being studied in California yes, sensitive what was it about American capitalism that made the state so central to the making of global capitalism in the 20th century and indeed into the 21st is a crucial question certainly in the post-war period, and I think that globalization has been going on since World War II in the sense that we now understand American capital has penetrated the other, that's capitalist states in the sense that when capital moves and only a Canadian community appreciates it it doesn't just move it's foreign direct investment, it moves it's not forced and when General Motors therefore makes demands upon the Canadian state it makes it as an indigenous force inside Canada with which Canadian workers identify we need General Motors jobs and the penetration of the old Empire Empire by American multinationals for which the conditions have to be established in the 1940s and the penetration through this market and through the city of London of American financial capital through the late 50s and 1960s as American merchant bankers switch their allegiance from sterling to stalling to keep the city as a financial center that penetration became very important in the past years but beyond that beyond that the American state has been a crucial coordinator and remains such amongst the advanced capital of the states in terms of the role they play in fostering localization and codifying it and providing legal foundations for it and then thirdly in relation to the crisis pro-nature of localization especially financialization the American state has been the firefighter in chief as a way to address this or if you like it has coordinated as it did in the current crisis the response of finance ministries and central banks providing them the height of the crisis through the swaps that have been arranged all the way back to the 60s when they were trying to save Bretton Wood through the swaps they provided the central banks in America as they needed to deliver their banking systems keeping the interbank market going the core of this crisis was that banks wouldn't lend to each other and banks don't lend to each other just in terms of settling their overnight balance the whole system sees it as that and the central role of the American Treasury and the Federal Reserve was to coordinate and they did so in ways that were remarkably successful given the depth and severity of this crisis to get along the interbank market going now to some extent one needs to stress that this is empire by invitation this is not just a matter of the American state imposing itself on other states or American capital so indeed other states not only ask but demand of the American state that it plays this role and when it doesn't do it that usually is interpreted in terms of class forces in the United States expressing themselves in Congress preventing them from doing it and that is seen and I think that is one of the contradictions in the American empirical role the tension that exists between its role at the center of producing a world capitalism and its role as a state of the domestic social classes in the United States now one of the central questions that Alex has asked as have many others he's answered it I think more soberly and most is whether the material base continues for this central role of the American empire plays in global capitalism Mandel as you know very well and he is Europe was American in 1970 and also late capitalism was predicting in the early 1970s that America wasn't defined on the basis of the challenge to the dollar in the 1970s it was even Vietnam and he was hardly unique in this and generally the last 50 years have been made up of one version or another more sophisticated or less and Alex referred to some of the less sophisticated world art tunas more has been made up of expectations that the American empire was passing there was this period period in history where this incredibly powerful state of capital emerged and then it's been on the decline in a sense and this has gotten mixed up with the profitability crisis pieces I am very much sharing with you that the crisis of the 70s was a crisis of profitability although I think that the working class played a very large role in producing that crisis of productivity in the 1960s and 1970s I don't think it was just competition amongst capitals as well as in Vietnam that said Alex is right that I take to view that profitability crisis was resolved and I think it was resolved in good part by the capital of the states facing the crisis together in the 1970s and in the 1980s coordinating the opening up of capital markets the shifting of petro knowledge to third world debt and above all coordinating the defeat of industrial military of trade union strength through prominent overall strategies which were developed through the G7 and BIS etc but the profitability crisis has spilled over to the client of the material base of the American empire and it's often difficult to discern where the line is drawn because often the profitability crisis pieces the argument that it has continued has never been resolved and the current crisis needs to be understood in terms of the prices that began with the profitability of corporations in 1965 to 1966 which is the view that Alex hold I think is a mistake I think it's been empirically proven to be a mistake if you look at 1983 to 1989 there was a recovery of profits here looking at the recent insurance and well historical material and the kind of confusion one gets into is the kind that I think let me say Alex just referred to in his opening remarks when profits began to turn down actually they were declining through the 50s from the very high rates in the late 40s in the late 1960s especially the American profits and then a very rapid decline and Alex has pointed out that there was high profitability as there indeed was in the run up to the 2007 crisis but that there was relatively low investment well in the late 1960s as promised applying rapidly there was very high investment on the part of corporations it wasn't until after 1973-74 that we were at the point of investment so it needs to be extremely careful with what one is doing with these kinds of statistics if one's making a profitability crisis argument that's one argument if one's making a lack of investment crisis that's another argument what really works here is the old Marxist motion that you have to explain prices in terms of the falling rate of profit whether one wants to do it as Alex still does in terms of Marxist tendency the rate of profit to fall because the centralization of capital displacing labor and capital lives after all by supplicating surplus of living workers or whether you do it if rendered does it rejects that view and does it in terms of competition amongst capitals and not pushing profits to a negative level and therefore firms that should be driven out of the market don't exit to do it. Any crisis that occurs in the financial system that is triggered in the financial system and then has a knock on the fat throughout the economy has to be explained on the basis of a deeper crisis in the productive sector and I think this is simply a mistake there's no reason for it that Marxist would follow it and I think it's going to hold on to a view that is I think leading us to a mistake in direction in terms of very material capacity yes there's been enormous overcapacity in the auto industry but let that extend and restructuring and in some of the other core industrial sectors like steel that's an old story but let's remember that there's been enormous foreign direct investment inside the United States by auto firm above all the Japanese auto firm that is entailed tremendous suffering for workers in the North that's created all kinds of jobs for workers in the South many of them not unionized which is very important in terms of measuring the class struggle of the United States in its capacity those who like Mandel were thinking of the decline of the United States in 1970 were doing so just as a computer in the street just as the biotechnical revolution, the biological revolution was emerging and the United States to this day has greater R&D than all the other G7 countries combined but perhaps most important is that what this misses is the way in which industry and finance are integrated you know when we speak of derivatives Dick Bryant's here he knows better than anyone else in Australia for the H&C comments as well derivatives aren't just undertaken by financial stakeholders of course they're at the center 20% of derivatives trading is done by non-financial institutions mainly the corporation and much of the other trading is done by banks or other financial agents acting as majorities for corporations a lot of it has to do with hedging your bets on what exchange rates will be and interest rates will be 3 months 1 week or 6 months down the road one of the people the groups have been complaining most loudly about regulation of derivatives has been industrial capital multinational capital engaged in derivative trading in recent years on a new thing in 1970 the three largest industrial corporations in the United States the three largest retail companies in the United States both of them offered more consumer credit due to the three largest commercial banks the first really severe crisis of the financialization era which occurred long before the regulation was the crisis brought about by the Fed attempting to stand inflation for the first time in 1969 when the question interest rates up to 90% by 1970 and caused the bankruptcy the eighth largest bank in the United States corporation in the United States and central which was the largest owner of real estate in the United States that was a crisis not a bank crisis but a crisis in what was known as the commercial paper market the market of corporations putting out bonds through investment banks in order to raise money for investment when you push interest rates to 9% on treasury bills you then created a crisis in the commercial paper market insofar as you can hold U.S. state backed absolutely guaranteed paper rather than corporate paper and then central went bankrupt the fear was I.D.M. and Chrysler wouldn't be able to turn over the debt in 1970 it was at that point that you saw that the Nixon Russian offended the bailout of those corporations and they did so by providing the banks open access to the discount window so they would lend money to the corporations and they did now I stress this because you see there the essential role of the state not in terms of projecting American capital's power externally but the central role of the state in creating the conditions for continued capital evolution and that's the way we need to understand empire in terms of the internationalization of the state as well I'll just finish with this leaving aside the question of the interpretation of prices I certainly think that a price that actually triggered prices can be a very severe price and I think this one has posed to the agencies and institutions that engage in trying to stick their finger in the dam the greatest challenge that they've yet faced amongst the 139 financial prices that have been counted since 1973 but remember there were also some 40 of them between 1945 and 1971 this has been a long process not one that suddenly emerged and the American state and the multinational capital was involved really heavily in making it happen but apart from that there is I think and this comes on more in the very interesting book that on imperialism and global political economy I'll say one more way here that Alex has written or produced this year I'm going to do it last year Alex reasserts the old Marxist theory of imperialism he says it's mistaken anyways by attempting to use his and David Harvey's notion that one needs to see imperialism as an intertwining of economic competition and geostrategic competition in my state and unlike those who would say geostrategic competition surely in so far as it takes place amongst capitalist states that's also economic competition and economic competition can't be understood narrowly in terms of nearly being competition over what profits, market shares the state is always involved in that economic competition internationally so what are you getting at here and Alex says well what I'm really getting at international capital is not highly concentrated in central life to such an extent that there are not many capital entirely agree with and he criticizes rightly Hilpert and his theory of finance capital and the effect it had on lending of the card and so on in terms of thinking that there was this unity of capital under the imprint of finance and financial olivary that are already being created in the early part of the 12th century it didn't even apply to the United States then although it applied to Germany he says there are many capital but he tries to hold on to this I think by thinking of these many capital as equivalent to many states he tends to think of the conflict the competition that exists geostrategically still in terms of a state representing its capital or its capitalism now there's this I do think there is not one gross international bourgeoisie capital has retained national identities as fortunately or in most cases unfortunately working working but the degree of interpenetration of capital their codependence in globalization the institutionalized ways in which they interact with one another are such that they are strong supporters even in the third world of the processes of globalization it isn't only the Chinese that hold American dollars it's also Chinese capitalists who hold American assets and that reflects the fact that they have greatest confidence in the American state as the guarantor of property internationally this is something that goes back to the pressure of all the gold in the world in the 1930s and in pork dollars because bourgeoisies who could get their money out of the capital controls that were installed in the 1930s moved their money to New York even while the New York Wall Street bankers were calling yours both associates upon too long I think the point is clear one part is not to do with class struggle and how they help you get out of this what surprised me most about Alex's very interesting book and it's very limited was that it ends with as he ended tonight with a prediction of an increased competition most of the geo-strategic why did Russia go into Georgia rather than increase economic coordination but that it said nothing about class struggle what would be the conditions for the kind of challenges to American empire that would be progressive rather than regressive and I've always seen what we're doing here in terms of the need to stress that unless the class and state structures of Europe and Japan and indeed China are fundamentally changed they do not have the type of inter-imperial challenges that are likely to be progressive and I think this is really the crucial point that the bourgeoisies and the states of the rest of the world are integrated into an American empire in a way that can only be disassembled by a re-assertion of socialist revolutionary strategy yes this is a really friendly debate I should say that you had 50% over time for 10 minutes and it's such a Jewish yes, quite a lot to reply to that let me say first of all talk about Leo's sort of arguments about crisis theory and so on and so forth it's a slightly it's a bit cheap just to point to how over enthusiastic Marx and Engels got about the financial crisis of 1857-18 it's true that Engels writes letters to Marx saying he was in the Manchester Stock Exchange all the prices tumble no one can understand why he's so cheerful and it tells Marx he's having writing lessons to be ready for a resulsion and the revolutionary struggle and so on and so forth but you know what the most important thing from a Marxist perspective the most important thing about the 1857-58 financial crisis was it stipulated Marx to start his major work on the critique of the political economy started he wrote the Grundrisse in this period but that's the beginning of a much more sustained and intense series of texts in which Marx works and reworks his concepts culminating in the capital and the manuscripts for it which involve an attempt to create a rigorous area of crisis now for Marx he never finished capital, he never got there but he has a much more profound understanding of the complexity different dimensions of capital's crisis by the time he finishes his economic writings that he had when he started them in the late 1850s and David Harvey in his book The Limits to Capital brings out very well the complexity and the multi-dimension the multi-dimensionality of Marx's theory of crisis in particular his notions of the financial fix and the spatial fix and so on and so forth so I think there's a bit more to Marx's own understanding of crisis than Leo Leo suggests secondly I think also Leo says of course there's volatility in capitalism and crises happen and so on but there's a bit more than just another flash of volatility I mean the East Asian crisis of the late 90s was a very serious priority regionally concentrated crisis although with the threat to drawing the whole financial system what we are talking now is a crisis that has really broken the major patterns that has precipitated on the fingers that's not rhetoric if you look at the figures that's what's happened which has produced a situation in which the major states have had to intervene to prop up in particular the financial system but to a large extent economic activity more generally now is that a disaster it's not the end of capitalism it's not total economic collapse there's beginnings of recovery but Leo and I have talked before this session started about financial times and I've got the analysis is in the financial times and so on if you read the financial times they're extremely uncertain about all sorts of questions whether the recovery will be sustained how great the financial burdens that the major states have acquired will be whether they're sustainable collapse the whole series of questions that are open ones and that are produced by this crisis so I don't think it's good enough just to say this is just a bit of volatility on the crisis of profitability well it's boring it's really boring to say oh you didn't notice that the rate of profit recovered in the 1980s it's obvious on any set of figures the rate of profit recovered in the 1980s so I think and again I'd recommend to you a piece by Chris Herlin which is available on the International Socialism website that looks seriously at a whole summarizes the result of a whole series of different studies of profitability and that shows that there has not in the advanced capitalist economies been a recovery of profitability to the levels of the 1950s and 1960s and I think part of the difficulty is that because Leo sees crisis as caused by shifts in the balance of class forces crisis and recoveries he's unable to get a measure of the debt of the problems that I think the system has faced which is despite bashing workers as hard as they have despite the fact that in the last so-called boom the real median household income in the United States fell by $2,000 despite this amount of squeezing of the working class they were not able to restore the rate of profit to the levels that supported the boom of the 1950s and 1960s and I think that that partly reflects theoretical problems that collapse for the minority congress among you collapsing the rate of surplus or collapsing the rate of profit into the rate of surplus value and therefore not taking into account the huge problem of over accumulation that capitalism faces and the bailiates if anything have increased questions about the relationship between financialization and crisis and I think it's perfectly possible for a financial crash if sufficiently severe to produce a recession a broad economic recession but I think that simply to assert that this was a financial crash that produced a recession doesn't address sufficiently the extent to which we can see very clearly in the policy pursued by the Fed from the late 1990s onwards that there's measures are taken to encourage rises in asset prices in order to sustain borrowing and effective demand I'm not saying it's a plot or anything like that but there's a it seems to me that there's a definite shift towards tolerating financial bubbles as a way of sustaining economic expansion now of course there's much more to be said about financialization I think Brian Rafty's book on derivatives is terribly interesting and it shows how functional derivatives are, how it's not just a matter of a few bags of speculating them and so on and so forth but I think it's a criticism of that book that reading that book you wouldn't guess that the enormous kind of palace, not palace but mounting of credit derivatives that the banks and the shadow banks developed in the middle years of this decade would blow up the financial system and therefore part of the complexity of a serious financial system company is grasping basically the functionality of the kind of things that happen in the financial system as elsewhere but also that potential to destabilize and one part of the power of Marx's own analysis of financial market or however chaotic and unfinished is that he does have an understanding of both both sides just a few I feel I have to say a few things about the state I'm astonished when Leo says that I think states are just instruments of capital since I pedantically spent a lot of time trying to explain that they're not and that state managers have it's not a particularly original idea but nevertheless the idea is that state managers have their own interests but in order to pursue their interests they find themselves more often than not ending up in alliance with capital the capitals based in their economy and promoting their interests maybe a bad theory is instrumentalist because it sees the drivers to state action as being more as involving more than the interests of capital and in a way Leo's own arguments are interests about what states do and so are interesting but they're entirely concerned between the interface between states and capitals not really capitals actually there's not that much differentiation among capitals because they're all increasingly integrated and co-dependent and I think that that doesn't capture the extent to which interstate rivalries of different kinds not necessarily at all taking the form of full pudded into imperialist conflicts and so on remain a reality when Leo says the US penetration of Europe was empire by invitation I mean, you know, read the documents read the studies that have been made about, I mean he has read them but he cites them the studies of the extent of the conflict between Britain and the US in the post war period and the extent to which the British governments fight having control over their economy and over their enemy against the pressures from the United States the British lose there's no question about that for all sorts of reasons but this wasn't, it's absolutely not a picture British just, you know, rolling over letting the US take them over one shouldn't read the puppy-dog-ness of Tony Blair back into history but it does seem to me that unless you take into account the dimensions of both economic and geopolitical boundaries and the way in which they interweave and overlap in all sorts of ways which is partly captured by Leo's analysis but not sufficiently you fail to take into account something that I think he denies which there are still distinct centres of capitalist power in the world which is at the centre of which is the United States it's impossible to explain the behaviour say of German capital and the German state if you simply see them as co-dependent in a subordinated way to the United States that doesn't mean that we're about to see a return to interfere with rival release but we simply will not grasp what is going to happen to the world in the next decades if we don't acknowledge the existence of different centres of capitalist power in the world and it's a weakness of Leo's analysis that he doesn't sufficiently acknowledge that but I'll stop there