The Denationalization Project and the End of Capitalism

In the late 19th and early 20th centuries, in response to popular pressures, nation-states began more deliberately regulating the flow of people and things across their borders. In the United States, the Immigration Act of 1924 (the Johnson-Reed Act) sharply restricted entry into the United States, effecting an 80 percent reduction in volume, incorporating and extending quotas from earlier legislation, and establishing the consular control system. Aliens seeking to enter the US were now required obtain visas from US consular offices outside the United States. These restrictions were not desired by industrialists and the urban elite—the bourgeoisie—and in their resistance to populist sentiment they sought to shape the popular meaning of the nation-state, to move collective sentiment away from the nationalist sense and towards a more cultural-pluralist sensibility, to shift the American creed from “melting pot” to “salad bowl.”

The bourgeoisie had resisted because large numbers of immigrants coming to the US on steam ships had reversed the fall in the rate of profit that marked the post-Civil War period (see below chart). The surplus of low wage labor had successful pushed down wages for industrial workers. The industrialist wanted to keep that going. Moreover, persons from different cultures speaking different languages functioned to disorganize the proletariat. Opposition from powerful sectors of the propertied classes notwithstanding, the restrictive law, enjoying broad popular support, passed Congress by wide margins and was signed into law by President Calvin Coolidge. According to the US Office of the Historian, “In all of its parts, the most basic purpose of the 1924 Immigration Act was to preserve the ideal of U.S. homogeneity.” This is what the people wanted. And so a blow for democracy was struck.

Michael Roberts and Guglielmo Carchedi. 2018. World in Crisis: Marxist Perspectives on Crash & Crisis. Chart from Bruce Lerro’s Marxian Global Analysis of Capitalist Crisis. In Flashpoints, Planning Beyond Capitalism. September 8, 2018.

In back of this development is the dynamic of class struggle. The capitalist’s interest of maximizing surplus value production via the increased exploitation of human labor power, accomplished either by wage repression or by augmenting and replacing workers with machines and efficiency regimes, is opposed to the proletariat’s interest to keep a larger share of the surplus value produced by its labor and, moreover, to enjoy protection from unemployment and economic insecurity. Hence, nation-states are associated with organized proletarian movements seeking to democratize the labor process either through unions and collective bargaining or through the socialist transformation of society.

By 1920, over half of manufacturing workers were immigrants or their immediate offspring, and the standard of living of native-born workers was in decline, as was their political power. However, in the absence of a sophisticated ideological response to unionism and socialism, union density had grown from less than 10 percent in 1910 to nearly 20 percent by the early 1920s (see below chart). Labor was organizing its power, and it targeted the strategy of capitalists to undermine their solidarity through mass immigration. The 1924 immigration law was thus a triumph of democracy over what would become known as globalism. Proletarian victory came in the face of capitalist resistance to labor power. After a decline in union density during the prosperity years of the 1920s, the Great Depression sparked a rapid rise in unionism, reaching one quarter of the workforce in the late 1930s and peaking at a third of labor during the 1940s-late 1950s.

Colin Gordon. “State of the Unions.” Dissent. February 12, 2019.

After the immigration restrictions of the 1920s, industrialists recruited native-born workers from the South, millions of whom where black, enticing them to leave the backwards and violent region of their birth for northeastern and midwestern urban centers (see below chart). In 1920, around 85 percent of blacks lived in the South. By 1970, this figure had fallen to nearly 50 percent (it started to tick up after the 1980s). While industrialists were seeking cheap labor through the strategy of internal migration, black Americans were provided opportunities to improve their lives and escape poverty and racial oppression.

Sources: Gibson, Campbell, and Kay Jung. Historical Census Statistics on Population Totals by Race, 1790 to 1990, and by Hispanic Origin, 1970 to 1990, for the United States, Regions, Divisions, and States. Washington, DC: U.S. Census Bureau, September 2002.

This development necessitated efforts to combat racism among the ranks of workers to build a more unified working class and increase union density. In the Cold War context, this struggle was aided by the perceived advantage among elites of projecting an image of a just America to the world to refute communist propaganda that was spreading through the Third World. Moreover, to gain and deepen popular support for capitalist arrangements and for propagandistic reasons, the nation-state progressively granted civil, political, and social rights to the general population. These developments were accelerated by growing unionization of the workforce and rising expectations among blacks and women for the expansion of rights and greater social opportunity. The result was higher wages, expanded personal liberty, and limited sharing of the social surplus in the form of income support, antipoverty measures, and medical care, as well as a significant degree of industrial democracy, especially in unionized spaces. At the same time, the share of income going to the top 10 percent dropped sharply. tracking the rise of union membership.

Will Kimball and Lawrence Michel. “Unions’ Decline and Rise of the Top 10 Percent’s Share of Income.” Economic Policy Institute, February 3, 105.

After World War Two, the trans-Atlantic capitalist elite fashioned a framework for world commerce, finance, and monetary activity, governed by a network of international and transnational institutions in order to entrench capitalist arrangements. Part of the imperative to create this world order was the global struggle between capitalism and socialism, the latter embodied by the Soviet Union and China and their satellites. Global restructuring accelerated the trends of delocalization, regionalization, and globalization. The social democratic developments associated with securing capitalist hegemony appeared to set western society on an evolutionary path to socialism or at least significant degrees of social democracy. Indeed, the rapid development of socialist countries fostered the development of popular democratic ambitions worldwide.

However, the emergence of social democracy was associated with a at first stagnant and then falling rate of profit. Compensation was keeping pace with productivity and public investments were being financed largely by the wealthy. To restore the rate of profit would require weakening organized labor and finding a different way of financing the public sector or a different way of carrying out its functions. Thus, beginning in the 1960s, the capitalist class in the United States collected its energies to undermine organized proletarian movements by changing the structure of taxation to concentrate wealth and income in the upper class, opening the nation to cheap foreign products, and abolishing immigration quotas. These changes came on the heels of Europe’s creation of the common market in the 1950s.

The emergence of containerization, new forms of communication, and other technological innovations increased capital and knowledge exchanges. The world was becoming smaller and the possibility that a global proletariat movement could emerge and exploit a smaller world greatly concerned the capitalist establishment. The means to achieve this lay in national-level union power capable of cooperating with labor worldwide. Union density in the United States was approaching 40 percent in the private sector and the public sector was unionizing. Union power was such that wage gains where tied to production gains leaving little room for surpluses to be used to globalize production. Tax cuts and open borders triggered a downward spiral for labor at home and abroad.

By the 1970s, a trilateral relationship between the US, Europe (Germany primarily), and Japan was directing the transnational capitalist economy and labor unions were under duress. Political realignment in the United States saw conservatives leaving the Democratic Party for the Republican Party and the Democratic Party becoming increasingly subservient to corporate interest over against the interests of labor. With these changes there was a shift in political consciousness. The left abandoned the politics of equality and working class concern for the corporate bureaucratic politics of diversity and identity. Gone was the struggle against capitalist exploitation; it was undermined by a corporate-driven culture industry that splintered the proletariat into sophisticated consumers organized by identitarian marketing.

The promise of making the world smaller was the cultural, economic, and scientific enrichment of the world population. Capitalist globalization was sold as the solution to the world’s problems. International and transnational institutions predicted the eradication of poverty in the 21st century. Of course, this did not happen. Indeed, investment of foreign capital in developing countries and the introduction of new technologies exacerbated local and global inequalities. Open markets facilitated the movement of capital from developed nations to developing countries simultaneously undermining standards of living in both. Open borders facilitated the movement of populations from developing countries to developed nations with the same effects. Austerity, globalization, and neoliberal restructuring did not solve the problems of poverty and economic uncertainty in the developed world. It also did not solve the problem of falling profit rates (see below chart).

Accompanying the spread of capitalism and technology was a rapid increase in world population. Rapid growth in world population over the second half of the 20th century, from 3 billion in 1960 to more than 7 billion by the end of the century, was a harbinger of a growing ecological catastrophe. As noted earlier, the world population is approaching 8 billion people, threatening to exceed the earth’s carrying capacity. Capitalist globalization thus creates the pressures and avenues for large-scale migration of human populations. Open borders have become a mechanism for depressurizing overpopulated regions. This does not fix the problem, but rather moves the problem around. Indeed, it makes the problem worse, as those migrating from underdeveloped parts of the world to the developed parts increase the number of those who consume a disproportionate share of resources and leave a disproportionate share of the waste. Spontaneous migration of large numbers of people affects labor markets, presses public budgets, and undermines social cohesion.

The humanitarian response, shorn of concern for native-born populations, or for environmental sustainability, is to open the borders even more. To the extent that has response has been manifest in policy and practice, disaster has been the result (Europe is the paradigm). The other response is to increase restrictions on the movement of people, increased screening of those seeking to enter countries, vetting flight manifests, more police, more checkpoints, more surveillance, the deployment of biometrics and other human tracking technology, and more border walls and fences. Indeed, the latter response is as much to what the developed world can anticipate as it is to address current problems.

With more than 320 million people, the U.S. is already the third largest country in the world. Many of its citizens consume resources at levels necessary for a rewarding yet modest life. Globalization has imperiled these, but the United States remains an affluent country. At the same time, millions of its citizens are living in poverty and without work. The possibility of raising everybody out of poverty and providing them with the dignity of work, while avoiding overshoot and collapse, is rapidly receding. If the nation were smaller population-wise, then more people could consume at the level of a comfortable family without increasing human environmental impact. If the US population were half of what it currently is, and resources were equitably redistributed across the population, standards of living would dramatically improve while reducing the nation’s ecological footprint. For the sake of progress towards these goals, we should promote negative fertility rates simultaneous with sharp reductions in immigration, including legal immigration.

It is no accident that an article would appear in the midst of the current border crisis with this title: “US fertility rate is below level needed to replace population, study says.” It has been advanced by capitalist establishments throughout the West that immigration is necessary to provide the necessary support for aging populations in societies with low fertility rates. Or this article: “These U.S. industries can’t work without illegal immigrants.” It’s as if inner-city blacks and Appalachian whites and the desperate situations so many of them find themselves don’t exist. It’s as if everybody who should know better has forgotten that when immigration was restricted in 1924 millions of black people left the backwards and violent South for northeastern and midwestern urban centers. It’s as if a national effort to help connect millions of unemployed Americans with jobs in America is something that is inconceivable—so inconceivable that it doesn’t even occur to most minds. It’s as if the nation has accepted that there should be a permanently unemployed/underemployed segment of the population, disproportionately black, living in desperate conditions. Could it be that economic empowerment of black Americans might bring with it rising expectations and renewed political movements of the character that emerged from the Great Migration? We know it is an economic strategy, but is it also a political strategy to super-exploit illegal immigrants rather than tap the labor of black America?

The evidence suggests that the answer is yes. Tragically, the transformation of leftwing consciousness from rational class-based politics to irrational postmodern paralysis, a transformation shaped by cultural managers in the academy and the media working at the behest of the capitalist establishment, precludes a genuinely progressive vision, let alone the realization of this vision in a workable politics. At this point, the socialist dream is dead. The left is no longer capable of recognizing the paramount necessity of organizing the proletariat at a national level and raising standard of living to the point where expectations are high enough and consciousness is deep enough to see the benefit to transcending capital.

Still, objectively, we must transcend capital. For here is the problem we face: The tendency of the rate of profit to fall requires expansion of capitalist markets to restore the volume of profit. Barriers to expansion result in crisis. Overcoming crisis requires innovation. Innovation itself becomes a source of crisis. Thus capitalism must expand and innovate to overcome (but not transcend) contradictions that result in periodic crises of various sorts (e.g. realization). Innovation is driven by desire for efficiency. Efficiency means progressive elimination of jobs. Capitalism means that the efficiency gains are not popularly shared. Global capitalism is not a system that will provide for people displaced by automation. At best, capitalists are only interested in meeting the needs of people to extent that doing so perpetuates their hegemony—and they don’t need to elevate all the people to do that. Moreover, wage gains and productively gains are decoupled in the current phase of globalization via the war on labor. Capital seeks to eliminate necessary labor in production in order to maximize surplus value. What are people going to do to earn a living when robots and automated systems produce most things? They are going to be looking for food and other necessities of life. And they will take from those who have them.

Capitalism is ultimately incapable of solving the problem of its internal and external contradictions. A market-based system with an imperative to maximize surplus value will always in the end disemploy the vast majority of the population. That we can see no technological limits to achieving this, we can be absolutely certain of the conclusion. A system that requires growth to overcome crisis is a cancer to the planet. Only replacing capitalism with a rational mode of production that simultaneously meets the needs of the people and insists on a sustainable ecological footprint can transcend these contradictions.

Capitalism will end in one of three possible ways: (1) it will eliminate the very basis of commodity markets through the end of work (though automation and robotization); (2) it will exhaust the planet’s carrying capacity; or (3) it will be overthrown in a proletarian revolution. (2) may come first at the current pace of environmental calamity. (3) seems hopeless with a left obsessed with and paralyzed by identity. (1) is inevitable—if (2) doesn’t come first. Thus globalization has reached a terminal point in the capitalist epoch and misplaced humanitarian concern and postmodern anti-class politics have negated the socialist possibility. Socialism was our only way out. And the left abandoned it.

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Andrew Austin

Andrew Austin is on the faculty of Democracy and Justice Studies and Sociology at the University of Wisconsin—Green Bay. He has published numerous articles, essays, and reviews in books, encyclopedia, journals, and newspapers.

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