The annual conference of the International Initiative for the Promotion of Political Economy (IIPPE) took place last week in Madrid. The IIPPE conference brings together leftist economists, mainly post-Keynesians and Marxists, from around the world to present papers and panels on a range of subjects. Most of this year’s near 400 attendees are academics, students, researchers or lecturers. Given that the conference was in Madrid, there was a large turnout of Spanish and Portuguese speakers and papers on issues in Latin America.
I was unable to attend at the last minute. Nevertheless, I did participate by zoom in a session and have compiled a number of papers that looked interesting and important to me. So I think there is much that I can convey from the debates on many subjects of interest to readers.
Let me start first with the subject and debate in the session that I participated in. The session was called Imperialism, hegemony and the next war – a grand and ambitious title. I was first in with short slide presentation entitled, Profitability and waves of globalisation.
I argued that globalisation, defined as the expansion of trade and capital flows globally, took place in waves i.e periods of fast expanding trade and capital globally and then periods where trade and capital flows fall off and countries revert to trade and capital barriers. I reckoned that we could distinguish three waves of globalisation, from about 1850-80; from about 1944-70; and the largest from the mid-1980s to end of the 20th century.
What drives these waves? I argued that they could be tied to a change in the profitability of capital. In each of the periods before these waves, the profitability of capital in the major economies fell significantly. In order to counteract this fall in national profit rates, the leading capitalist economies looked to expand foreign trade and capital exports in order to gain extra profit from the less technologically developed and cheaper labour economies of what we now call, in shorthand, the ‘Global South’.
Marx had included foreign trade as one of the counteracting factors to his law of the tendency of the rate of profit to fall in capitalist production. And as Henryk Grossman accurately showed, the fall in profitability during the late 19th century depression was one reason why the major capitalist economies began a significant expansion of capital exports. This boosted the rate of profit, but only for a while because Marx’s law would eventually override the counteracting factors (as Al Campbell at the session prompted me to explain). So, in the decades leading up to WW1, inter-imperialist rivalry hotted up.
This is also the situation in the late 20th century. The wave of globalisation from the mid-1980s was in response to the big fall in the profitability of capital in the major economies from the late 1960s to the early 1980s. Globalisation (among other factors) boosted profitability through the decades of the 1980s and 1990s. But (especially after the Great Recession of 2008-9), the globalisation wave eventually petered out as profitability fell back. Now we have entered a period of trade barriers, protectionism and dangerous rivalry between the major economic powers especially the US and China.
And the decline of the hegemonic US economy relative to the rising economies of China, India and East Asia has increased. This relative decline was taken up in the next paper by Maria Ivanova (Goldsmiths University). She pointed out that the US runs a significant and long-lasting trade deficit with the rest of the world. It is only able to pay for this because of its monopoly issuance of the US dollar, which is the major transaction and reserve currency in the world. However, the dollar’s hegemony is gradually weakening and now there are attempts by other economic powers, like the BRICS group (increasing in size), to reduce their reliance on the dollar and replace it with alternatives.
US current account to GDP %
Sergio Camera from UAM Mexico presented us with a battery of data and analysis to show that the US economy is in a structural crisis, still gradual maybe, but nevertheless showing clear signs that US capital’s ability to expand the productive resources and to sustain profitability is declining. This explains its intensified effort to strangle and contain China’s rising economic strength and so maintain its hegemony in the world economic order.
Sergio’s data showed “a prolonged stagnation” of the US rate of profit in the 21st century. The general rate of profit was 19.3% in the ‘golden age’ of US supremacy in the 1950s and 1960s; but then fell to an average 15.4% in the 1970s; the neoliberal recovery (coinciding with a new globalisation wave – MR), pushed that rate back up to 16.2% in the 1990s. But in the two decades of this century the average rate dropped to just 14.3% – an historic low. That has led to lower investment and productivity growth (especially in the decade of what I have called the Long Depression of the 2010s) so that, to use Sergio’s words, the US “economic base has been seriously debilitated”. This is weakening the hegemonic position of US capitalism in the world.
Sean Starrs from Kings College, London then provided a refreshing counter-balance to the hype that US imperialism and the dollar is soon about to lose its dominance in the world economy. In his presentation, he pointed out that most of China’s key exports were made by foreign companies (70%), not Chinese companies; and that most of the profits from China’s exports were realized in the imperialist bloc, not in China (this is something that G Carchedi and I also found in our work on the economics of modern imperialism).
Moreover, China is not yet a serious contender to the US in the technology industries globally, despite the hype. The US remains the dominant techno power and also holds most of the personal wealth in the world (45% unchanged in the last two decades).
The discussion in the session revolved round how to balance these trends. Is the US losing its hegemonic power or not? Are the BRICS+ in a position to replace US hegemony in the next decade or so? Will these rivalries lead to major military conflicts?
In my view, while there has been a relative decline in US economic and political hegemony since the golden days of the 1950s and 1960s, from the 1970s onwards that decline has been gradual and possible challenges to US hegemony eg: Japan in the 1970s; Europe in the 1990s; and now China (+BRICS); have not and will not succeed in replacing it.
I likened the situation using the analogy of the decline and collapse of the ancient Roman Empire in the 3rd century ACE. Some scholars argue that the Roman Empire collapsed because of outside forces ie invasions and rising contender states (ie BRICS?). But others argue, rightly in my view, that the real cause was the economic disintegration of the dominant slave economy within Rome. Roman conquests had ended in the late 2nd century ACE and there were not enough slaves to sustain the economy so that productivity dropped off and eventually weakened financial support for the military. Rising and extreme inequality in Rome was a symptom of this decline and eventual collapse.
In the 21st century, globalisation has fallen away and regionalisation is emerging. Inequality of wealth and income in the US and the G7 is at extremes. But above all, the profitability of capital in the imperialist bloc is near all-time lows. The collapse of the Roman Empire also ended the dominance of the slave-owning mode of production, to be eventually replaced by a feudal system. The increased internal disintegration of the US economy could not only end its global hegemony, but also usher in a new mode of production.
In the second part of my account of IIPPE 2023, I shall cover many of the papers I collected from presenters at the conference.
Michael Roberts Blog 
Interesting to read 70% of Chinas key exports are not made in China? These are Broadcasting Equipment ($231B), Computers ($192B), Integrated Circuits ($158B), Office Machine Parts ($101B), and Telephones ($53.9B)
Top exports in world include: Telephones ($14.5B), Computers ($13.2B), Integrated Circuits ($11.3B), Cars ($5.68B), and Semiconductor Devices ($5.63B) so all related to chip manufacturing.
Not sure if Taiwan is included as part of China in this? Because that would make that 70% number much different, correct?
Yes, Starrs considers Taiwanese companies as foreign
Do you mean that this material was manufactured in China by foreign (US) companies that doesn’t leave any profit behind in China when this stuff is exported?
Well, I think Starr argues that most (not all) of the profit made from Chinese workers in foreign-owned exporters ends up in the parent company’s coffers abroad.
Is there more to come?
A comment from Patrick Bond
Hi comrade,
In your IIPPE presentation, to make the case there isn’t (yet) a proper multipolar BRICS challenge to imperialism – with which I entirely agree – have you gone far enough, to make the case as firmly as possible? For example, in some BRICS economies, especially primary product producers South Africa, Brazil and Russia, there is ongoing natural wealth depletion, uncompensated for by reinvestment in productive capital and education (the ‘Hartwick Rule’ mandate). GDP is useless for our purposes since depletion and pollution (including CO2 emissions) are not included. So the per-capita GDP measure to the right which you cite, is quite an underestimate of the extent to which capital accumulation is occurring, corrected for pollution, emissions and depletion.
To make those corrections, one simple database (albeit with terribly important flaws such as not measuring platinum, diamonds and other important minerals) is the World Bank’s Changing Wealth of Nations natural capital accounts. As seen below, what the ‘adjusted net savings’ (a correction to Gross National Income) shows is not that the BRICS are ‘rising’ but the opposite, since the 2008 financial melt.
Given bourgeois economists’ tendency to pass an eraser over pollution, emissions and depletion – won’t you do more to help raise consciousness?
Keep strong,
Patrick
This debate is important not only to Economics, but also to History.
Since the end of the (1st) Cold War (1945-1989/1991), we’re observing the rise of the so-called Postmodern school/method in History. Postmodernism states that we’re in the End of History in the sense that there is no more “long duration” events, that is, “totalitarianism” (Marxism, Nazifascism, Positivism, any idea of progress etc. etc.) is decisively defeated. History is thus proven to be just a pure random succession of micro-events, done by fully independent individuals who interact with each other by pure accident (i.e. there is no “fate” in History). Postmodern historians value biographies above all genres of History, and claim tiny events have the same value as the “big” events. They consider History to be a form of literature and not a science, purely relativistic (no hierarchy between events).
In my opinion, there’s still a way to “save” Marxist History and disprove Postmodernism. If the Marxist theory of History is correct, then the period that started in 1991 is just an interwar period between the First and the coming Second Cold Wars, a la the 1920s-1930s. If this theory is correct, then the End of History was just a small interregnum, characterized by an unprecedented euphoria by the capitalist elites and their middle class managers. In my opinion, this End of History era ended in September 2008, with the great catastrophic financial crisis of New York.
The advantage of the Marxist hypothesis is that it is testable: if the Second Cold War really is observed, it is proved. The Postmodern theory refuted, by logic, any possibility of a Second Cold War ever happening.
The only weapon the postmodern would have in this case is claiming China is capitalist and not socialist, therefore this being not a Second Cold War, but a Second WWI — the textbook capitalist imperialist total war. But that would only save Postmodernism in the ideological front, not the social-economic one: after all, they refuted all forms of totalitarianism, not only the ideological one. The very fact the ideological anarchy of the End of History gave way to the so-called political polarization (that means 2 ideologies) already proves them wrong in my opinion. In this scenario, the postmodern can only resort to apocalyptic fatalism/nihilism, i.e. nuclear annihilation that would throw humanity to a dystopian future, cleansed of all totalitarianism, where humans would live by eating fungi.
The USA has certainly declined — specially in relation to the euphoric era of the High End of History Era (1993-2000 or 2001). If we read the historical documentation of that era, we can clearly see people had no doubt the USA would be the proverbial 1,000-year empire. George W. Bush was literally elected with a political platform that claimed to plan for the next century (PNAC); that meant the American elite had, the most humble scenario, considered at least the 21st Century as theirs by default, guaranteed. That this all turned to dust in just 8 years is the historically interesting fact, not the fact that the American Empire started to decline (all empires decline and fall; this is a tautology).
This blog mentioned the Roman Empire as a parallel to the American Empire. The fateful fact of this comparison is that, after the Diocletian Reforms, the surviving remnants of the Roman elite praised them as the full restoration of the Roman Empire, in all its glory. They didn’t realize emperor Diocletian had, in fact, destroyed the Roman Empire, and essentially founded feudalism. The Diocletian Reforms are considered to be textbook case of a single episode of transition of two modes of production. The absence of a “Diocletian Reforms” episode in the case of feudalism to capitalism makes the study of this transition much more difficult and contentious.
Micheal looking at the share price reaction by Apple and Qualcomm to the debut of Huawei’s Mate P60 5G satellite phone I think your view on the prowess of Yankee tech is overblown. The Kirin 9000S chipset designed by Hisilicon and manufactured by SMIC is world class. The assassination of the archduke in Sarajevo may have triggered WW1, this phone could trigger WW3.
One comment about the fall of Rome remarks: The previously sustainable Italian agriculture was supplanted by slave plantations, and the soil deteriorated. Slaves don’t care about preserving soil fertility. Peter Heather reports the Visigoths conquered the Iberian peninsula, then the North African farms that were feeding Rome. Starving Romans opened their gates wide for the barbarians then.
Huge inequalities — e.g. master/slave — lead to ecological disaster!
China vs US Technology
I see a problem in Michael’s assessment of the relative strengths of the US and Chinese economies, relating to the field of technology.
In particular, Michael writes: “Moreover, China is not yet a serious contender to the US in the technology industries globally, despite the hype. ” Unfortunately, no facts are given to back this controversial statement up.
The most obvious question that immediately arises is if China was not mounting an increasingly serious challenge to the US in the technology sector, there would be no need for American sanctions against a growing number of technology areas in China and against Chinese companies. Nor any need for the latest restrictions on the right of US companies to invest in them.
I remember not so long ago that Michael made similar comments in a review of a book on ‘The Chip Wars’. In questioning his assessment, I predicted that the outcome of US sanctions on Chinese semi-conductors would be to wake the sleeping giant with China being forced from being the largest importer of chips at $350 million per year, to becoming the world’s largest chip producer. Well, this process is now well under way.
Last month exports from South Korea to China fell by 30% mainly because of falling chip exports. As I forecast, Chinese companies are ramping up production of the less advanced chips which make up 80% of the market. A result of this was seen by the exclusion of US maker Micron from China recently. ~
Meanwhile, the US chip manufacturers held a meeting with Biden six weeks ago to try to get him to stop the chip sanctions on China before it was too late. It turns out that Intel may cancel its plan for a $20 billion plant in Ohio, potentially the largest chip making facility in the world, because of the loss of its market in China. Much of the funding for the new plant was to come from Biden’s so-called Chips Act which looks like it will fail to achieve its aim of creating an effective US chip making industry. Even its much trumpeted construction of TSMC Plants in Arizona are running into serious problems with construction delayed until 2025 and serious staff shortages threatening its future operation.
More recently, we now have the release of a new 5G mobile phone from Huawei which has demonstrated its ability to rapidly overcome the sanctions. Instead of being limited to 28nm size chips for decades as intended by the US sanctions (actually 28nm is small enough for most uses) China has been already been able to go down two generations to 7nm chips for mobile phones in just three years.
Looking ahead, according to an in-depth study produced by the rabidly anti-China Australia Strategic Policy Institute, China is now ahead of the world in 37 of the 44 most advanced technology sectors. And not just in applied technology aspects but in basic science too.
As it happens, most of the research labs in the US are staffed by Chinese scientists but many of them are returning to China to escape the rising anti-Chinese racism that is an inevitable outcome of the increasing pro-war propaganda in the US media. Accordingly, 20,00 Chinese researchers have returned to China in recent years.
I think that contrary to the impression created in Michael’s blog, it is reasonable to say that in many fields China is already level with the US and to expect that China will become the leading technology country by the end of this decade. Just as it has become the leader in shipbuilding, high speed trains, solar panels, electric cars, small nuclear reactors, electronic products etc. etc.
I agree, and it’s not much of an analysis if we pretend that Taiwan is not part of China. These metrics are completely based on geopolitical divisions, and obviously the official doctrine of the “reform and opening up” era produced a Détente between China and the US in terms of China agreeing to leave the development to Taiwan as the US industrialized their chip production.
Now the race is on to try and claim to “catch up” to Taiwan and both countries are spending billions. China’s track record and ability to industrialize and invest in industrialization bodes well, as well as their universal world consensus that Taiwan is China, despite the usual western color revolution efforts to the contrary.
Interesting to read about Intel questioning the Ohio plant, I predict more or less all of the US investments will not pan out.
“What drives these waves? I argued that they could be tied to a change in the profitability of capital.” -> Very good, but then what drives changes in profitability? Easy to answer. Being ENERGY the economy:
“… the fall in profitability during the late 19th century …” [Coal falling rate of energy obtained on energy invested, William S. Jevons’ The Coal Question; An Inquiry Concerning the Progress of the Nation, and the Probable Exhaustion of Our Coal Mines 1865] “… US supremacy during the roaring 20s …” [US coal to oil transition, FIRST economy to do so and to develop a massive automobile industry] “… supremacy in the 1950s and 1960s …” [GLOBAL coal to oil transition] “… fell to an average 15.4% in the 1970s …” [1970 US peak oil that triggered the 1973 oil crisis] “… boosted profitability through the decades of the 1980s and 1990s …” [Alaskan North Slope, Gulf of Mexico and North Sea new oil plays began production but … AT A HIGHER PRICE, Jean Lahèrrere and Colin Campbell Scientific American 1998 article END OF CHEAP OIL] “… Great Recession of 2008-9 …” “… But in the two decades of this century the average rate dropped to just 14.3% …” [2008 global peak conventional oil] ¿And today? Well, sixty percent of US oil comes from fracking, i.e. billions invested in a technological process to obtain millions worth in oil, and for how long? Top tier plays are already depleted except for the Permian Basin, the sole increasing output and only in the New Mexico sector. Depleting fossil fuels are our nowadays roman slaves. Unless a new high densitiy easy to obtain (cheap) environmentally friendly source of energy is discovered soon … you may kiss profitability goodbye. ¿And China? ¿What explains its forty years of astounding development? Being ENERGY the economy: etcetera …
Thanks for the report!