Seventeen Contradictions and the End of Capitalism (22 page)

The second sphere in which the powerful forces of centralisation and decentralisation collide is geographical, resulting in uneven geographical development and the projection of economic, political and ultimately military power of class alliances in one space upon those in another. Hence the inner relation between monopoly, centralisation, imperialism and neocolonialism. We will probe further into this angle when we consider uneven geographical development explicitly.

The two ways in which the decentralising and centralising tendencies of capital play out are not independent of each other. The massing of centralised financial powers in the major centres of global finance (New York, London, Tokyo, Shanghai, Frankfurt, São Paulo etc.) is of significance, as is the long history of the flourishing of innovations in new territories like Silicon Valley, Bavaria, the so-called ‘Third Italy’ in the 1980s and so on, where the seeming liberty of manoeuvre and lack of regulatory control allow things to happen that might otherwise get constrained by stifling and dominant powers of state and corporate capital grown obese. So pervasive and palpable has
this tension been that policymakers now seek to capture the possibilities of knowledge-based, cultural and creative economies by centralised initiatives that support the decentralisation and deregulation of economic and political power. This is what the central state’s creation of ‘special economic zones’ in China and India is supposed to be about. Elsewhere, development is left to local initiatives on the part of increasingly entrepreneurial local state or regional metropolitan apparatuses. The hope is to replicate the conditions that sparked the innovations behind the digital revolution and the rise of the so-called ‘new economy’ of the 1990s, which, in spite of the way it crashed and burned at the close of the century, left in its wake a radical reordering of capitalist technologies. This is what the geographical concentration of venture capital in regions such as Silicon Valley is supposed to accomplish. While the chequered success of such policies should give us pause, this is, nevertheless, a fine illustration of how capital seizes upon certain contradictions, like that between centralisation and decentralisation or between monopoly and competition, and turns them to its own advantage.

So what, then, are the political implications of these findings for anti-capitalist politics? We first must recognise how successful capital has generally been in managing the contradictions between monopoly and competition, as well as between centralisation and decentralisation, to its own advantage, even as it uses crises to do so. It is, I think, clear that no feasible alternative future social order will be able to abolish these contradictions. The only interesting question is how to work with them. But we should beware the trap of thinking of the oppositions as being independent rather than contradictory unities. It is false to presume, for example, that decentralisation is democratic and centralisation is not. By pursuing the chimera of pure decentralisation (as some on the left are these days wont to do), there is a strong possibility of opening the way to a hidden centralised monopoly control. By pursuing the other chimera of totally rationalised centralised control, others on the left point the way to an unacceptable and totalitarian stagnation. Capital has organically arrived at a way to balance and rebalance the tendencies towards a
monopolistic centralisation and decentralised competition through the crises that arise out of its imbalances.

It has also learned something else of considerable importance. Capital changes the scale at which it operates in such a way as to locate powers and influence at that scale which are most advantageous for the reproduction of its own powers. When, in the United States, the cities and the states were too strong in the first half of the twentieth century, capital looked mainly to the federal level for support, but by the end of the 1960s when the federal government was proving too interventionist and prone to regulation, capital gradually moved to support state rights and it is in the states that the Republican Party is now most fiercely waging its populist pro-capitalist agenda. In this regard the anti-capitalist left has much to learn from capital at the same time as it combats it. Interestingly, much of the anti-capitalist as opposed to social democratic left prefers in these times to wage its war at the micro scale, where autonomista and anarchist formulations and solutions are most effective, leaving the macro level almost bare of oppositional powers. An inordinate fear of centralisation and of monopolisation predominates in such a way as to hamstring anti-capitalist opposition. The dialectical but contradictory relation between monopoly and competition cannot be effectively mobilised for anti-capitalist struggle.

Capital strives to produce a geographical landscape favourable to its own reproduction and subsequent evolution. There is nothing odd or unnatural about this: after all, ants do it, beavers do it, so why shouldn’t capital do it? The geographical landscape of capitalism is, however, rendered perpetually unstable by various technical, economic, social and political pressures operating in a world of immensely changeable natural variation. Capital must perforce adapt to this wildly evolving world. But capital also has a key role in shaping that world.

The contradictions between capital and labour, competition and monopoly, private property and the state, centralisation and decentralisation, fixity and motion, dynamism and inertia, poverty and wealth, as well as between different scales of activity, are all writ large and given material form in the geographical landscape. Among all these diverse forces, though, priority has to be accorded to a combination of the molecular processes of endless capital accumulation in space and time (the daily ebb and flow of competitive entrepreneurial and corporate activity engaging in the circulation and accumulation of capital) and the attempt to organise the space of the landscape in some systematic way through the exercise of state powers.

The geographical landscape that capital makes is not a mere passive product. It evolves according to certain rough and ready rules which – like those that govern the combinatorial evolution of technologies – have their own autonomous but contradictory logic. How the landscape evolves affects capital accumulation as well as how
the contradictions of capital and of capitalism are manifest in space, place and time. The independent manner in which the geographical landscape evolves plays a key role in crisis formation. Without uneven geographical development and its contradictions, capital would long ago have ossified and fallen into disarray. This is a key means by which capital periodically reinvents itself.

Capital and the capitalist state play a leading role in producing the spaces and places that ground capitalist activity. It takes a lot of capital to build a railway, for example. If the railway is to be profitable, then other capitals must use it, preferably for the lifetime of the investment fixed in it. If this does not happen, then the railway goes bankrupt and the capital invested in it is lost or at least devalued. So capital needs to use the railway once it is built. But why does capital need a railway?

Time is money for capital. Traversing space takes both time and money. Economy of time and money is a key to profitability. A premium is therefore placed on innovations – technical, organisational and logistical – that reduce the costs and time of spatial movement. The producers of new technologies are well aware of this. They concentrate a lot of their autonomous effort upon developing new ways to reduce costs or time of capital circulation. Technologies that accomplish these goals will command a ready market. What Marx called the ‘annihilation of space through time’ is one of the holy grails of capital’s endeavours.

Cost and time reductions can be accomplished in two ways. The first entails continuous innovations in transport and communications technologies. The history of such innovations under capitalism (from canals to jet aircraft) has been outstanding. The impacts depend, however, on the kind of capital being moved around. Money in its credit form now flits around the world instantaneously. It was not always so. Our own era is marked by the far superior mobility of money capital due to information technologies. Commodities are generally less mobile. There is a huge difference between, say, the live transmission of a World Cup football match and lugging around bottled water, steel girders, furniture or perishable items like soft fruit, hot pork pies, milk and bread. Commodities are variably
mobile depending upon their qualities and transportability. Production, with some exceptions like transportation itself, is the least mobile form of capital. It is usually locked down in place for a time (in some instances, like shipbuilding, the time may be considerable). But the sewing machines used in sweatshop shirt production are more easily moved around than a steel or car plant. The locational constraints in primary sectors like agriculture, forestry, mining and fishing are very special for obvious reasons.

Lower costs in transport and communications can facilitate dispersal and decentralisation of activity across larger and larger geographical spaces. The near-elimination of transport costs and times as a factor in location decisions permits capital to explore differential profit opportunities in widely disparate places. Divisions of labour within a firm can be decentralised to different locations. Offshoring becomes possible and the monopolistic element in competition is reduced. Regional specialisations and divisions of labour become even more marked because small differences in costs (such as local taxes) translate into higher profits for capital.

New geographical patterns to production typically arise out of the sharpened spatial competition facilitated by cheaper and more efficient transport and communications. Start-ups in, say, South Korea – where steel production is much cheaper because of lower-cost labour, easier access to raw materials and markets, and the like – drive out the more costly and the less efficient industries in older regions such as Pittsburgh and Sheffield. In the car industry it was not only the introduction of foreign competition that undermined Detroit, but also the setting up of new plants in Tennessee and Alabama, where labour costs were lower and trade union power weaker. In the nineteenth century cheap food grains from North America inflicted severe damage on UK and European agricultural interests. This happened because the newly minted railways and steam ships greatly reduced the cost and time of movement of agricultural commodities after 1850 or so, much as containerisation did for world trade after 1970. Deindustrialisation (the nether side of geographical expansion) has been going on for a very long time.

The second way to reduce the time and cost of movement is for capitalists to locate so as to minimise their costs of procuring means of production (including raw materials) and labour supplies and of getting to market. What are called ‘agglomeration economies’ arise when many different capitals cluster together (for example, the car parts and tyre industries locate close to car plants). Different firms and industries can share facilities, access to labour skills, information and infrastructures. Positive benefits arise which all firms can take advantage of (one firm trains workers that other firms can then hire right away without having to train them first, for example). Labour is likewise drawn to the opportunities of dynamic centres, even in the absence of the forces that push them off the land. Urban agglomerations are in effect constructed spatial environments favourable to collectively sustaining particular sets of productive activities.

Agglomeration produces geographical centralisation. The molecular processes of capital accumulation converge, as it were, on the production of economic regions. The boundaries are always fuzzy and porous, yet the interlocking flows within a territory produce enough structured coherence to mark the geographical area off as somehow distinctive. In the nineteenth century cotton meant Lancashire (Manchester), wool meant Yorkshire (Leeds), stainless steel meant Sheffield and metalworking meant Birmingham. Structured coherence usually extends well beyond economic exchanges to encompass attitudes, cultural values, beliefs and even religious and political affiliations. The necessity to produce and maintain collective goods requires that some system of governance be brought into existence and preferably formalised into systems of administration within the region. If the state did not already exist, then capital would have to create something like it to facilitate and manage its own collective conditions of production and consumption. Dominant classes and hegemonic class alliances can form and lend a specific character to political as well as to economic activity within the region.

Regional economies form a loosely connected mosaic of uneven geographical development within which some regions tend to become richer while poor regions get poorer. This happens because
of what Gunnar Myrdal calls circular and cumulative causation.
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Advanced regions draw new activity to themselves because of the vibrancy of their markets, the greater strength of their physical and social infrastructures and the ease with which they can procure their necessary means of production and labour supplies. Resources exist (in the form of an increasing tax base) to invest further in physical and social infrastructures (such as public education) and these attract even more capital and labour to come to the region. Transport routes are created that focus on the region because this is where the traffic is. As a result, even more capital is attracted. Other regions, by contrast, are underserved if not increasingly bereft of activities. They get caught in a downward spiral of depression and decay. The result is uneven regional concentrations of wealth, power and influence.

There are, however, limits to continuous centralisation through agglomeration. Overcrowding and rising pollution, administrative and maintenance costs (rising tax rates and user fees) take a toll. Rising local costs of living lead to wage demands that may ultimately make a region uncompetitive. Labour may become better organised in its struggles against exploitation because of its regional concentration. Land and property prices escalate as a rentier class cashes in on their command over increasingly scarce land. New York City and San Francisco are dynamic but high-cost locations, while Detroit and Pittsburgh now are not. Labour is better organised in Los Angeles now than it is in Detroit (in the 1960s it was the other way round).