Robert Cox - Production Power and World Order (1987, Columbia University Press) PDF

PRODUCTIO
POWER,
AND WORLD
ORDER
SogialForces.
1n_
the Maklng
of Hlstory
ROBERTw. gox
Volume 1 in the four-volume series

Power and Production
New York ° Columbia University Press - 1987

Columbia University Press
_
New York Guildford, Surrey
Copyright© 1987ColumbiaUniversity Press
All rights reserved
Printed in the United States of America
Library of CongressCatalogingin-Publication
Data
Cox, Robert W., 1926-

Production,power,and world order.
(Powerand production;v. 1) (Thepolitical economy

of international change)
Bibliography: p.
Includes index.
1. Industrial relationsHistory. 2. Power
(Socialsciences)History. 3. Capitalism-History.
4. International economic relations. I. Title.
II. Series: Cox, Robert W., 1926. Power and
production;V. 1. III. Series:Political economyof
international change.
HD6971.C78 1987 337 86-26387
ISBN 0-231-05808-X
This book is Smyth-sewn

Book design by I. S. Roberts
To Jessie,Susan, and Janet
THE POLITICAL ECONOMY
OF INTERNATIONAL CHANGE
John Gerard Ruggie, General Editor
JohnGerardRuggie,Editor, The Antinomies of Interde-

pendence:National Welfareand the International
Division of Labor 1983
David B. Yofe, Power and Protectionism:
Strategiesof the Newly Industrializing Countries 1983
Paul Taylor, The Limits of European Integration 1983
William H. Becker and Samuel F. Wells, ]r., Editors,
Economics and World Power:
An Assessment of American Diplomacy Since 1789 1983
John Ravenhill, Collective Clientelism:
The Lome Conventions and NorthSouth Relations 1985
Robert Pollard, Economic Security and the Origins of the
Cold War 1985
William McNeil, American Money and the Weimar
Republic 1986
Robert O. Keohane, Editor, Neorealism and Its Critics 1986
J.Ann Tickner, SelfRelianceVS.PowerPolitics 1986
Robert W. Cox, Production, Power, and World Order:
Social Forces in the Making of History 1987
JeffreyHarrod,Power,Production,and the
Unprotected Worker 1987
TABLE OF CONTENTS
PREFACE ix
THEME 1
Part 1:
The Social Relations of Production
CHAPTER 1: THE DIMENSIONS OF PRODUCTION
RELATIONS 17
CHAPTER 2: SIMPLE REPRODUCTION 35

CHAPTER 3: CAPITALIST DEVELOPMENT 51
CHAPTER 4: REDISTRIBUTIVE DEVELOPMENT 83
EPILOGUE TO PART 1 99
Part 2:
States, World Orders, and Production Relations
CHAPTER 5: THE COMING OF THE LIBERAL ORDER 111
CHAPTER 6: THE ERA OF RIVAL IMPERIALISMS 151
CHAPTER 7: PAX AMERICANA 211
Part 3:
Production Relations in the Making of the Future
CHAPTER 8: THE WORLD ECONOMIC CRISIS: IMPACT
ON STATE AND WORLD-ORDER STRUCTURES 273
CHAPTER 9: MUTATIONS IN THE SOCIAL
STRUCTURE OF ACCUMULATION 309
viii CONTENTS
CHAPTER 10: THE FORMATION OF CLASSESAND

HISTORIC BLOCS
CONCLUSIONS
NOTES"
355
BIBLIOGRAPHY 399
INDEX
405
463
489
PREFACE
The purpose ofthisbookistocon-

sider the power relationsin societiesand in world politics from
the angleof the powerrelationsin production.Its centralpremise
is that work is a fundamentalactivity that affectsa rangeof other
important human relationshipsand the organizationof society
as a whole. This premise is taken as a guide to inquiryan
injunction to explorethe connectionsbetweenwork and politics
as a basisfor formulating someappropriateconceptsand theo-
retical propositions.In this way, the book suggestsan approach
to the study not only of work but also of forms of state and of
world order.
This is one of a series of four volumes that have been
written as a collaborative effort. Jeffrey Harrod is the author of
two of the four and I am the author of the other two. This book,
which is first in order of the series,dealswith the conceptual
framework used in all four of the volumes. It includes historical
and factual illustrations intendedto bring the key conceptsand
theoreticalpropositionsto life without attemptingto give them
an exhaustive demonstration} It considers the three levels of
production,the state,and world political economyin their inter-
relationships? The book may therefore be read as an overview or
introduction to the study comprisingthe four volumes,highlight-
ing implications of the study for a political economyof the state
and world order.
The study beginsby classifyingthe totality of world pro-
duction into patterns of production relations called modes of
socialrelationsof production.It thenexamines
the dynamicsof
thesemodes,their interrelationships,and how they are affected
X PREFACE
by thenatureandactivityof statesandof international

forces.
The threevolumesthat follow this onegomuch morethoroughly
intothedifferentpatternsof productionrelations.Specicmodes
of socialrelationsof productionaretreatedasLiebnizianmonads,
as self-contained structures each with its own developmental
potentialandits own distinctperspective
on the world.This is
consistentwith the studys approachto the issue of power in
societiesand in world order.It beginswith the arenaof produc-
tion and looks out from it. Of course, such a standpoint is incom-
plete.It canbe completedby consideringformsof statein the
sameway andthenby conceivingstructuresof world orderthat
includebothpatternsof productionrelationsandformsof state.
This study points in that direction.3
Each of the remaining volumes deals with a group of
monad-modes. The second volume, written by Ieffrey Harrod is
entitled Power,Production,and the UnprotectedWorker.It deals
with the subordinatepatternsof productionrelationsin societies
in which the dynamic of developmentis capitalistincluding
countriesboth moreand lessadvancedalongthe capitalistroad.
Workers in these subordinatepatterns are relatively more ex-
ploitedand insecurethanthosein the dominantpatterns.The
third volume, alsoby JeffreyHarrod,tentativelytitled TheEstab-
lished Worker: Corporatist Social Relations.It deals with the
dominant patternsand with workerswho enjoy relatively more
advantageous and morestableconditions,hence,the designation
established. The fourth volume, and the second to be written
by me,will dealwith productionrelationsin noncapitalistde-
velopment, illustrated by the experienceof the Soviet Union,
China, and other countries of what has been called actually
existing socialism.
The groupingby monad-modes,severalof which coexist
9»and interrelatewithin any society,may at first appearunusual
since most studies take countries or national societies as their
framework. It is consistent with the method of this study that the
specic forms of production relations should be the starting
point.Themonad-modes
are,however,presented
in thedifferent
volumessoasto showtheir linkagesin differenttypesof national
societyandalsotheir placein theworld complexof production.
They show societiesfrom different perspectiVesVolumetwo
PREFACE xi
from below, volume three from above. In volume four, noncapi-

talist societies, like capitalist societies in the previous Volumes,
are also viewed from the perspective of the different patterns of a
production relations they contain. Each of the four volumes
stands on its own and can be read independently, but each in
some measure implies all the others.
Jeffrey Harrod and I have worked closely together over a
number of years in developing the concept of social relations of
production and in its application to the variety of modes dis-
cussed in the study. There are also a number of points that each
of us has developed on his own without benet of mutual con-
sultation, though long awarenessof our respective thought pro-
cessesmakes these individual developments broadly consistent
with the common core of ideas. By assuming separateresponsi-
bility for different volumes, we have sought to maintain the
conceptual unity of the study asa whole while allowing ourselves
freedom to elaborate parts of it each in his own manner.
In putting this book into nal form for publication, I am
conscious of my debt, both intellectual and moral, to Jeffrey
Harrod. He is the person with whom I have most consistently
discussed the ideas presented here over a period of some fteen
years. Inevitably, I have absorbed many of his thoughts and in-
sights and integrated them into my ownoften, perhaps, without
being fully aware of what was happening. That is in the nature
of a fruitful intellectual collaboration. Moreover, we have stood
together in some of the most important issues and conicts that
have affected our lives during the sameperiod. Comradeship and
loyalty have reinforced intellectual affinity. Thus, though I bear
the full and nal responsibility for what is written below, it must
in a very real sense be considered as one of the fruits of a joint
endeavor.
Others too have helped by their advice and criticisms,
especially in the nal stages of preparation of this book. I am
indebted particularly to Tchavdar Beyazov, Salvatore Biasco,
Fred L. Block, Robert O. Keohane, Iames H. Mittelman, and
GeorgesSpyropoulos, who all gave a critical reading to an early
draft of the manuscript. Their cogent and at times painfully in-
cisive comments forced me to rethink the way my argument was
presented and, in effect, to rewrite the book in its present form.
xii PREFACE
Theymaybenohappier
withit nowthantheywerethen,
but
theexperience
hasbeensalutory
forme.JohnGerard
Ruggie
has
excelledin his editorstaskof reinforcingValidcriticism of others,
adding
his own,andcajolinga sometimes
reluctantauthorto
exhaustthe full potentialitiesof a book.JessieRankinCoxnot
onlyassisted
in theresearch
forthisprojectovermoreyearsthan
either of us careto rememberand helped to translatemy prose
into morecomprehensible
English;shealsoat somecrucialmo-
ments made me see the virtue in some of my critics comments.
KateWittenbergandLeslieBiallerworkedoverthe manuscript
with aneditorssympatheticunderstanding of anauthorsauton-
omyandmadeit moreaccessible to thereader.
I owea specialdebtto thelateBernardGronert.Heit was
who rst encouragedmeto submitthebookprojectto Columbia
UniversityPressandwholatersuggested to Jeffrey
Harrodand
methattheprojectwastoobigfor a singlevolume.Withouthis
sponsorshipandunderstanding
it isdifficulttoseehowwecould
havesuccessfully
developed
andcompletedthejob.
Several
peoplewhohavehadnothingdirectlyto dowith
this book bear neverthelessa shareof responsibility for having
helpedanerstwhile
international
civil servant
alonganunortho-
dox routeinto academiclife and therebybroughtaboutthe con-
ditions in which such a book could be written. I would like to
mentionin particular
DavidA. Morse,
whoasdirector-general
of
the ILO, understoodthat freedomis beingableat the crucial
moment to act in accordance with an inner necessity; Jacques
FreymondandKennethThompson, who openedthe wayto my
rst f11ll-timeteachingexperienceat the GraduateInstituteof
International Studies,Geneva;William Fox, Leland Goodrich,
and HerbertDeane,who were my sponsorsat ColumbiaUniver-
sity;JohnHolmes,uponwhoseinitiativeI returnedto Canada
aftersomethirty yearsabroad;and,nally, HaroldK. Jacobson,
who has beenfriend, intellectual stimulus, and model of schol-
arlyconduct
thesemanyyears.
I wishto recordherethesense
of
obligationI bearto eachof them.
York University,
Toronto,
THEME
Production creates the material

basis for all forms of social existence, and the ways in which
human efforts are combined in productive processes affect all
other aspectsof sociallife, including the polity. Productiongen-
/,
erates the capacity to exercise power, but power determines the
manner in which production takes place. This study approaches
the understandingof current historical changefrom the stand-
pointof areciprocalrelationshipbetween
powerandproduction.\/
The rst stagein this enterprise is to translate the general
categoryof production into conceptsthat expressconcreteh\is-
torigaglmgforms
of the ways in which production has been orga-
nizedinto modesof socialrelationsof production. This is the
subjectmatterof part 1. The next stageis to examinehistorically
specic formsof powerin stateand world-orderstructureshow
they haveshapedproduction relationsand beenconditionedby
forms of production relations.This is the subjectmatter of part
2.
These historically derived concepts are presented in both
synchronic and diachronic form-synchronically, from the
standpoint of their coherenceas wholes; diachronically, from the
standpoint of the internal contradictions that have led or can lead
to transformations. They focus, in the case of production rela-
tions, on the differentiations among producers that can be the
basis of class formation, and, in the case of states, on the muta-
tions of class congurations that foreshadow the transformation
of state structures.
In part 3, the tools of analysis developed in the rst two
parts are applied to the tendencies and options of the present-
2 THEME
totheconditions
notchosen bythemselves
underwhichpeople
will makethehistoryofthefuture.Tendencies
in thestructural
transformation
of statesthat affectproductionrelationsarecon-
sidered
in relationto theweakening
ofahegemonic
worldorder.
Tendencies
in production
relations
thatsettheconditions
under
whichpolitical
poweris exercised
areconsidered
withinthe
frameworkof the changingstructureof accumulation.
Thesetendenciesare not unidirectional.They contain
theirowncontradictions.
Theworldeconomic
crisisthatbegan
in the1970sis examined
to seewhattransformations
in structures
ofproduction,
states,
andworldorder
theyportend.
Theworld
economiccrisisappears
asa thresholdaphaseof transition
between
thedenablestructures
oftherecentpastandtheasyet
unclearstructures
of theemerging
future.Thosefuturestructures
will bemade
bythehuman
material
ofhistory,
shaped
asit isby
itsownpast.
It istting,then,toendwithalookatthishuman
material
in itscollective
aspectat
classformation
andthepros-
pects
ofpoliticization
ofclass
toward
theformation
ofnewstate
structures.
To assertthe centralityof production,
indeed,leadsdi-
rectlyto thematter
of social
classes.
Production
organization
creates
thedistinctions
of powerbetween
employer
andworker,
lordandpeasant,
thatformthebasis
forclass
differences,
but
otherfactors
enterintotheformation
or nonformation
of real
historical
classes.
Salient
among
thesein recent
historyhavebeen
political
parties
andotheragencies
ofcollective
action
thatcan
evoke and channel class consciousness.
Nowtomakeclassanalysis
aprincipalfeature
ofthestudy
ofhistorical
change
mayseem
oldfashioned.
Most-favored
the-
oriesin thesocialscience
of advanced
capitalist
societies
elimi-
natedclasssometimeago;politics,it wasthought,wasabout
individualactorsandassociations
of individuals,theirpercep-
tionsandinteractions
in decision-making
processes
conditioned
bypolitical
cultures.Some non-Marxists
conceded
thatclass
mighthaveexplained
conflict
andchange
intheearly
industrial
pastbuthadbecome irrelevant
in morerecent
times.
Some
Marxists
haveevenjoinedin theconspiracy
toremove
classfrom
thepanoply
of contemporary
historical
explanation.
Rudolph
Bahro,
a radicalcriticfromwithinEastern
European
socialism,
THEME 3
considers that class has been transcended ever since productive

forces have been able to produce abundance and that the real
social issuesnow turn upon arousingconsciousnessdirected V
toward psychic emancipation? André Gorz, a socialist critic from
within Western European capitalism, perceives the industrial
work force as now totally conditioned by and bound up with the
capitalist organizationof society and completely incapableof
leading a movement to transform that society. The eradication of
capitalism, he argues,can comeonly from areasof societythat
stand outside social classesand pregure their dissolution?
Events also seemto challenge the continuing relevancy of
class.The conventionalwisdom was that massunemployment
had becomepolitically intolerablein advancedcapitalist coun-
tries since the depression of the 19303. Yet Western capitalist
countries experiencedvery high unemployment in the early
1980s and workers remained quiescent, cowed. Why was there
no reaction proportionate to the magnitude of the injury? Does
this not refuteby implication the notion that classstruggleis the
driving force of history? In the Third World, the most notorious
of recent revolutions has raised the banner of Islam, not class.
Only in EasternEurope, where class is supposedlywithering
away (evenif the stateis not) hasa class-based
oppositionarisen
in the Polish Solidarnos'cthough
similar movements have not
becomeapparentin other CommunistParty-ledcountries.
These various grounds for discarding class analysis,
whether arising from theory or practice, each points to some
defector inadequacyin pastuse of classanalysis.They may be
interpreted as calling for a rethinking of class through a devel-
opment of the classical tradition of political economy. That tra-
dition inquired into class formation and dissolution and class
conict; classrelationsprovided the link betweeneconomyand
politics, betweenproduction and power. In that respect,so the
present work argues, the classical tradition remains valid. But
past denitions of class that had some basis in mid-nineteenth-
century European societies cannot just be taken over and applied
mechanically and uncritically to a late twentieth-century world
that manifests a great diversity of social class situations. In order
that classanalysisagainbecomea valid and useful tool for un-
derstandingsociety in such a way as to be able to changeit, a
4 THEME
/fresh approachto the dynamicsof classformationis necessary.

This meansstarting at the beginningwith production so as to
considerhowthediversityofwaysin whichproductionis carried
onandthevarietyof socialrelationships
generated
in production
processes
condition
thesocialforces
thatcanbecome basesof
powerin stateandworldorder.It alsomeansfollowingthe
reversecourseto considerhow powerinstitutionalized
in world
orderand in the stateshapesand controlsthe development of
production relations.
To understandhow and why changestake place in both
theformsof politicalpowerandthe organization
of production,
it is necessary
to nd aconcrete
andspecicwayofgrasping
the
varietyof actualformsof productionandpolity. Persistent
pat-
ternsof productionrelationsandformsof statederivedfrom
historicalexperience
canbeexpressed
asidealtypes.Idealtypes
stopthemovement of history,conceptuallyxing a particular
socialpractice(suchasawayoforganizing productionoraform
of state)sothatit canbecompared with andcontrastedto other
socialpractices} To conceptually arrestmovement in thisway
also facilitates examinationof the points of stressand conict
that existwithin anysocialpracticerepresented by a type.Thus
thereis no incompatibilitybetweenthe useof idealtypesanda
dialecticalview of history.Idealtypesarea partof thetool kit of
historical explanation.
Idealtypesarea wayof representing
historicalstructures.
The term structurehasbeenused in such a variety of ways that
it is useful to be clear at the outsethow it is used in this book.
Some authors have used structure to mean innate ideas or
patterns
of relationship
thatexistindependently
of people;
they
think of peoplemerelyasbearers
of structures.5
Nosuchmeaning
is intendedhere.Thereis, of course,a sensein which structures
areprior to individualsin that childrenareborn into societies
repletewith establishedandaccepted socialpractices.
However,
thesepractices,
whethertakingtheformsoflanguages, legalsys-
tems,production organization,
or politicalinstitutions,
arethe
creationof collectivehumanactivity. Historicalstructures,asthe
term is usedin this book,meanpersistentsocialpractices,made
bycollective
humanactivityandtransformed
throughcollective
human activity.
THEME 5
The system of power that emergesfrom theselinked his-

torical structures begins with the way the worlds work is done
through a series of connected structures of production relations,
each of which is a power relationship, some more dominant and
oppressive, others more equitably balanced. Production not only
takes place through a power relationship, but also creates re-
sources that can be transformed into other forms of power-
nancial, administrative, ideological, military, and police power.
Production has, however, only a certain logical prece-
dence in the sense of providing the material basis for any form
of state. It has no historical precedence; indeed, the principal
structures of production have been, if not actually created by the
state, at least encouragedand sustained by the state.Competitive
capitalism required a liberal state in order to break through the
shackles of mercantilism. Central planning was the creation of
the bolshevik state and state corporatism of the fascist state. In
historical time, production has been more shaped by the state
than shaping of it. Why different forms of state have devised and
imposed specic patterns of production relations and how they
have done so requires explanation.
Each particular society comprises several connected types
of production relations. For example, centralized collective bar-
gaining is anked by nonunion open-labormarket relations, self-
employment, and household production; central planning is
anked by cooperatives, the self-employed, and, again, house-
hold production; the industrial enclavesof Third World countries
are anked by peasant agricultural production, subsistenceagri-
culture, and a variety of informal production relationships in
the urban sector. The state that consecratesone of these types of
production relations as the dominant form, the most legitimate,
the hegemonic form, also structures the relationships among the
different coexisting forms. How the state does this has to be
explained because it in turn explains the structuring of power
within the society.
The hierarchy established among types of production re-
lations (which, as just noted, is one of the tasks undertaken by
the state) constitutes a structure of accumulation. The extraction
of surplus ows from the subordinate and weaker levels of pro-
duction to the dominant and stronger. Peasants,cheap labor, and
6 THEME
housewivesprovideinputsto big industryand feedindust1ys

workers.Centralplannersextractfrom communalagriculture.
There are two main modes of development in contemporary
history:capitalistandredistributive.
Theircommonfeatureis
accumulationand expandedreproduction.Theyhavereplaced
earlier modesthat lackedthe dynamic of expansion.How capi-
talist and redistributive modes accumulatediffers. They have
structureddifferentlythe processof extractingsurplusthrough
differentlinkedpatternsof productionrelations.To explainthe
mechanisms of accumulation in each mode and the crises to
whicheachis subjectdelineates
thephysiologyof powerin these
two kinds of society.
The structure of production in a particular societygives
the basisfor its classstructure.The organizationof production
creates,however, only the potential for class.Whether or not
classesin fact emergedependson factors affecting conscious-
nessin particulartheformtakenby politicalpartyorganization
andits levelof development.
Classandpartyarethechannelsof
encounter betweenproductionandthestate.Theyexplainwhere
the balanceof inuence lies, whether it comesprimarily from
the socialforcesgenerated
in theproductionprocessor fromthe
state.
The nature of the stateis also dened by the class structure
on which the staterests.This is not to saythat dominantclasses
instrumentallyusethe stateto their advantage.
Rather,stateac-
tions are constrainedby knowledge on the part of the states
agentsof whatthe classstructuremakespossible andwhatit
precludes.Thishasnothingto dowith specicmanipulationof
statepoliciesortheactions
ofparticular
actorsbutwithgeneral
understandingsaboutthetasksandlimits of thestate.Thestruc-
ture dening thesetasksand limits, which becomespart and
parcelof the stateitself,is whatAntonioGramscicalledthe
historicbloc.9To lay barethe natureof the particularhistoric
bloc is to demystifythe stateand openthe possibilityof con-
structingan alternativehistoric bloc and thus an alternative
state.
Complexes
ofproduction
relations,
classes,
and
historic
blocs do not exist in isolated national compartments. They are
THEME 7
linked to a world order that bears directly on them, as well as

inuencing themthrough their national states.Therehavebeen
important qualitative and structuraldifferencesbetweensucces-
sive world orders in the modern era. It is a misleading oversim-
plication to regardall interstatesystemsasessentiallythe same
insofarasthey all lack a supremeworld authority.The qualitative
differences between world orders touch the nature and incidence
of wars, the manner of resolving disputes, and the creation and
distribution of wealth and poverty. These differences between
one structure of world order and its successorare shaped by the
forms of state and of production, and stabilized structuresof
world order in turn provide a framework conducive to certain
forms of state and of production.
A principal distinction between structures of world order
lies in whether or not the order is hegemonic. The Pax Britannica
of the mid-nineteenth century and the Pax Americana of the mid-
twentieth century were both hegemonic world orders. The inter-
vening period, which saw two world wars and a great depression
was not. I am using the term hegemony here as meaning more
than the dominance of a single world power. It means dominance
of a particular kind where the dominant statecreatesan order
based ideologically on a broad measure of consent, functioning
accordingto generalprinciples that in fact ensurethe continuing
supremacyof the leadingstateor statesand leadingsocialclasses
but at the sametime offer somemeasureor prospect of satisfaction
to the lesspowerful. In suchan order,production in particular
countries becomesconnected through the mechanisms of a world
economyand linked into world systemsof production.Thesocial
classesof the dominant country nd allies in classeswithin other
countries. The historic blocs underpinning particular states be-
come connected through the mutual interests and ideological
perspectivesof social classesin different countries,and global
classes begin to form. An incipient world society grows up
around the interstate system, and states themselves become in-
ternationalized in that their mechanisms and policies become
adjusted to the rhythms of the world order. In nonhegemonic
phases of world order these tendencies are reversed. Social
classes and the organization of production revolve more exclu-
8 THEME
sively around the state.Statesadvanceand protectthe interests

of particularnationalsocialclassesandproductionorganizations,
using all the political, economic,and military meansat their
disposal as necessary.
The systemof power outlined hereis an opensystem.At
any one time, concentrationsof forcestend to maintain the sys-
temsstructure.Disturbancesin any onepart canbe counteracted
by mobilizing strengthfrom otherpartsof the system.Yet change
is possibleand doeshappen.Changecan occur at all leve1sin
production relations,in classrelations,in the emergenceof new
historic blocs and of alternative forms of state, and in the structure
of world order.Most likely, where changedoesoccur,it will be
through mutually sustainingrelationshipsat all of theselevels.
The main purposeof this enquiry is not to depict an inexorably
self-reinforcing system of power, but to pinpoint the places
within the system where conditions are most propitious for
changetoundertakethe preliminariesnecessaryfor a strategy
of social and political transformation.
It is, of course,important not to underestimatethe forces
for systemmaintenancewhile looking particularly for the op-
portunities contendingforceshave to breakthrough. Forcesfor
changecan be disposedof easily when isolated in particular
countriesand particular classes.Accordingly, the critics atten-
tion will be directed toward the possibilities of building alliances
of opposition forces, not indiscriminately, but having mutual
coherence within the global system.
With this in mind, the book focuses on certain strategic
links in the systemof power outlined above,namely:
0 the effectsof prevailing patternsof production relations
in differentiatingcategoriesof producers(moreand less
powerful) asbasesfor classformation;
- the effects of different forms of state on the structuring
of production relations and on the relative rates of
growth of different patternsof production relationsand
on the balance of power between classes;
0 tendencies at the world-order level affecting both the
organizationof production and forms of state,notably
THEME 9
the international division of labor and the internation-

alizing of the state within a hegemonic world order;
class formation and dissolution and the potential it cre-
ates for transforming production relations, forming new
historic blocs, and generating alternative forms of state
and world order.
Part1
The Social Relations

of Production
The social relationsof production arisein three analyti-

cally distinct ways.
In the rst place,the socialcontextof productiondeter-
mines what kinds of things areproducedand how they are pro-
duced.Thewhat expresses
theprioritiesof a society,whichin
turn reects the socialpowerrelationsof that society;the how
expresses
the prevailingmannerin which established
social
powerorganizesproductioni.e.,theformof dominant-subor-
dinaterelationshipsamongproducers.Somepeoplehavemore
sayin determining
theprioritiesthanothers,whethertheyex-
ercisethat inuence throughthe marketor througha centralplan.
Somepeoplecontroltheproduction
process
andothersarecon-
trolledandperformthetasks,whetherin virtueof propertyown-
ershipor highbureaucratic
status.
Thestructure
of socialpower
is thus the rst aspect.
The secondaspectis internal to the production process,
namely,thecomplementarity
of rolesrequiredin mostproduc-
tion. Eventhe mostprimitivekindsof production,suchassub-
sistencefarming,involvea divisionof laborand a relationship
ofauthoritywithintheproducing
unit,i.e.,thefamily,andin the
caseof moresophisticated
formsof production, thenetworkof
relations
ismuchwiderandmore
complex.
Thecomplementarity
of rolesis boundtogetherby a structureof authoritythatgoverns
the production
process.
Complementarity
is a bettertermthan
12 . SOCIALRELATIONSOF PRODUCTION
cooperation,
because
cooperation
carries
theconnotation
ofhar-
monywhereasthegroupsboundtogetherin the productionpro-
cessmanifestconict at leastas frequently as harmonyin their
relations.
Thethird aspectis the distributionof therewardsof pro-
duction.In part,thisis determined
bycustom, orin otherwords
bythestructureofsocialpower,i.e.,bythefirstaspectmentioned
above,which dictatesthat somerolesaremorerewardedthan
others.In part,thedistributionis determined
by thepowerstrug-
glewithin the productionprocess,
i.e.,by the secondaspect,
throughwhichsomegroups maybeabletoincreasetheirrewards
relative to others.Lookedat over time, both factorsarereducible
to thepowerstruggle,
sincethestructure
of socialpowercanbe
thoughtof asthe cumulativeconsequences,takenas a starting
point,of previousstruggles
amongsocialgroups.
The three aspectsanalytically distinguishedhereaccu-
mulatedsocialpowerthat determines the natureof production,
the structureof authorityasmoldedby the internaldynamicsof
the production process,and the distributive consequencesare
dialecticallyrelatedin a singlehistoricalwhole:the socialrela-
tions of production.Within this whole, contradictionsarise
amongthethreeaspects.A sense of deprivation
in rewardsby
onegroupof producers,
forinstance,
leadsthisgroupto struggle
effectively
forgreater
controloftheproduction process,
andthis
resultsover time in a changein the structureof socialpower.
The termsproductionrelations,socialrelationsof pro-
duction,andpowerrelationsof productionaredifferentwaysof
expressing
thesamerelationshipdifferent
wayseachof which
containsa differentemphasis.
Productionrelationsis thebroad-
estterm,includingtherelationshipbetweenthepeopleinvolved
and the world of nature,i.e., technology,aswell asthe relations
betweenthe variousgroupsof peopleandthe legalandinstitu-
tional formsto which theserelationsgiveriseandwhich structure
them. The term social relations of production focusesattention
morespecicallyon thepatternor congurationof socialgroups
engaged
in theprocess,
andthetermpowerrelations
of produc-
tion focuses on the dominant-subordinate nature of this pattern
of social relations. The three terms all refer essentially to the same
basicrelationshipand areusedin this studynot exactlyinter-
SOCIAL RELATIONS OF PRODUCTION 13
changeablybut to highlight the aspectsof the relationshiprele-

vant to a particular context?
To think through the concept of production relations, it is
useful to begin with the general notion of work in the most
universal, comprehensive, and substantive manner. Work can be
dened as action toward the transformation of nature for the
purpose of satisfying human needs and desires. The direct sat-
isfaction of human needsand desiresis not work, e.g.,eating,
conviviality, sexual activity, and sleep. Work is what is done to
make these direct satisfactions possibleproducing the food,
building the physical structureswithin which actionsto satisfy
human needs take place, creating the symbols that evoke such
activity, and building the social institutions and moral codesthat
channel and regulatethis activity. It is important to underline
here that work produces both the physical conditions and the
social and moral conditions for satisfying human needs. Nature
is transformed in two senses:rst, physical transformations like
the growing of food, i.e., the ordering of nature to meet human
requirements, and the making of tools and utensils; second, the
making of symbols and social institutions that make possible the
cooperation among people required to do the rst. The nature
that is transformed through work is both physical and human
nature. Nature, in this sense, is an artifact. Work takes place in
an articial worlda world made by people~and the articial-
ity of this world is maintained and expanded by work.
Work is sometimes an individual activity, though it is
more frequently a collective activity. Even when work is an in-
dividual activityas in the work of a singlecraftsmanwho pro-
duces a complete productit takes place in a social context.
Production relations are those social relations that govern the
way work is done. Following this line of denition, production
relations govern every kind of work. Production relations exist
in subsistenceagriculture and in domestic housework, as well as
in the large modern factory. Production relations govern the itin-
erant peddler in India, the shoeshine boy in Mexico City, the
pimps and prostitutes of Taipei, the advertising executives of
Madison Avenue, the stockbrokers of Wall Street, the bank em-
ployees of Zurich, and the police, soldiers, and civil servants of
all countries. In respect to their workwhich is how we have
14 SOCIAL RELATIONS OF PRODUCTION
identied peoplein relationto whattheyareall thesedifferent

kindsof peopleact.withindiscernible
patternsof production
relations.Whattheyproducemaybevaluedpositivelyor nega-
tivelyaccordingto differentsocialperspectives,
butthatdoesnot
alter the fact that they producewhateverit is within determinate
relations. These relations include dominance and subordination,
and accordinglythosewho are dominantand thosewho are
subordinateareto be consideredasequallypart of the production
processasproducers
in thesense
of beingparticipants
in this
process.
Thustheemployer,
aswellastheemployee,thelgeneral,
as well as the foot soldier, are encompassed
by production rela-
tions. Those who producefor direct consumption,e.g.,house-
wives,do sowithin productionrelationsassurelyasthosewho
produce
goodsfor saleonthemarkete.g.,
wageworkers.
The
conceptof productionrelationscoversthe whole universeof
work.
To study production relationsin concreteterms,it is nec-
essaryto breakthe generalconceptdowninto a setof specic
typesor patterns.Sucha typology,distinguishing patternsof
productionrelations,will makeit possibleto estimatewhich
forms are growing and which declining, which types are most
frequently
tobefoundalongside
whichothertypes,andsoforth.
Suchtypeswill haveto bedenedempirically,thatis,translating
thegeneralconceptinto a particularformby condensing or sum-
marizingobserved patternsin sucha waythatonesuchconcrete
formis clearlydistinguishablefromanother.Thekindsof models
thatdepictdistincttypesof productionrelationsarein this study
called modes of social relation of production.
Thesemodesare dened as types,structuralmodelsthat
cannotbeexpectedto accountfor everybit of evidence,
but that
should be able to comprehendthe most recurrentand most de-
cisive events.The adequacyof the typology is to be judged by
the following criteria:(1) Is the set of modeslargeenoughto
reect the diversity of production patternson a world scaleat
the presenttime,without biastowardparticularpatterns,such
as thosemost familiar to the author?(2) Is the set small enough
to bemanageable asa research tool andto givetheadvantages
of
parsimony?[3] Are the modessufcientlyclearand distinctto
permittheir usein classifyingandcomparingrealsituations?
SOCIAL
RELATIONS
OFPRODUCTION 15
Amode ofsocial
relations
ofproduction
isnotisolated;
it
exists
inrelationship
toother
contiguous
modesandinasociety
regulated
byastate.
Itmay
have
more
far-reaching
links
inthe
world
economy.Inprinciple,
allofthese
factors
inthebroader
context
areinsomemeasurenecessary
toexplain
anyparticular
modeofsocial
relations
ofproduction.
However,
attheoutset
it
is convenient
totreatthemode
asa monad (see
Preface),
as
something
thatcanbeunderstood
initsownterms
asastructure
thathas
itsownorigins,
history,
anddevelopment.
Adoptingthis
perspective
onthemode,
theeffects
within
themodeofthese
external
factors
canbeseen.
Atthenextstage,
in part2,the
perspectives
ofthestate
and worldorder
willbeadopted,
show-
ingthedetermining
role
ofthestate
intheorigin
and development
ofproduction
modes.Beforethat
demonstration,
it isuseful
to
have
aclear
ideaofwhatthese
modes
areandhowtheyhave
evolved.
Before
proceeding
todiscuss
theexisting
modes
ofsocial
relations
ofproduction,
however,
something
should
besaid
about
thegeneral
characteristics
ofsuch
modes.
What
kind
ofhistorical
structure
arewelooking
for?Whatarethedimensions
orcommon
characteristics
ofamodeofsocial
relations
ofproduction?
CHAPTER ONE
TI-IE DIMENSIONS
OF PRODUCTION
RELATIONS
The threefold natureof produc-

tion relationsnotedabove-the
powerrelations
governingpro-
duction,thetechnicalandhumanorganization
oftheproduction
process,and the distributiveconsequencessuggests
someof
the factorsthat might distinguish different modesof socialrela-
tions of production.The objectivedelineationof eachmode,
takingaccount
of thesefactors,
is matched
byanintersubjective
content,-thecommonunderstandings
sharedby thepeopleem-
braced bythemodein respectto therelationships
andpurposes
in whichtheyareinvolved.Specicinstitutionsembody and
stabilizethismatchbetween
objective andsubjective aspects
of
themode.Thet ofobjective,
subjective, andinstitutional
aspects
denesthe mode.Theactualor potentialdisjunctions among
thesethree aspectspinpoint sourcesof transformation.
POWER RELATIONS
Thesocialandpoliticalpowercontextof productiondetermines
the what and the how of production. In each mode there is a
dominant
andsubordinate
groupofpeople.
Thedominant
group
controlsproduction; the subordinateworksunder its control. To
explainthisbasiccleavage,
it is necessary
to referto factorswhose
18 SOCIAL
RELATIONS
OFPRODUCTION
origins
lieoutside
oftheimmediate
production
process
inthe
ambient society.
_Thedominant
andsubordinate
groups
in aproduction
process
are
drawn
from
thesocial
milieu,
which
includes
social
classes.
Production
takes
place
inapreexisting
context
ofsocial
power.
Thedominant
group
isusually
drawn
predominantly
fromoneclass
andthesubordinate
fromother
classes.
Thisstate-
ment
leads,
ofcourse,
toakindofcircular
reasoning,
because
the
production
process
itself
generates
class
distinctions
andclass
privileges
anddisadvantages.
Thepoint
isthatwhen
onerst
begins
tostudy
amode
ofsocial
relations
ofproduction,
it is
discovered
in anexisting
society
witha class
structure.
The
classes
inthatsociety
arehistorical
realities
produced
bycollec-
tiveexperiences.
Theyoriginated
inproduction
inprevious
his-
torybuttranscended
thespecic
activity
ofproduction
tobecome
human aggregates,
collective
waysoffeeling
andofacting.
The
social
powerofdominant
classes
maybethought
ofasoriginally
grounded
inthecontrol
ofproductionthe
material
basis
ofall
societiesand
asbeingtheaccumulation
of production
power
fromthepast.
Resources
derived
fromproduction
havebeen
translated
overtimeintopositions
ofsocial
inuence
andpres-
tige.
These
dominant
social
groups
draw
upon
resources
of
wealth,
status,
andprestige
thatarenotimmediately
derived
from
theproduction
process.
Thesubordinate
groups,
fortheirpart,
consist
ofmembers
ofclasses
formed
orinformation,
ortheyare
declassed
persons,
e.g.,
former
peasants
turned
wagelaborers.
A
working class
inprocess
offormation
hasagreater
powerpoten-
tialwithwhichtoconfront
thedominant
group
than
anatomized
assemblage
ofdeclassed
peasants
has.
Ontheother
hand,
awork-
ingclass
that
comprises
only
anelite
ofskilled
workers,
separated
intheir
unions
andworking
conditions
fromother
working
people
whohave lessemployment
security
andfromother
subaltern
groups
likeself-employed
farmers,
may
bemore
inclined
toseek
amodus
vivendi
withthedominant
groups.
Theclass
context
of
thesociety, accordingly,
affects
thepower
positions
withinpro-
duction relations.
Political power
isthepowertocontrol
themachinery
of
thestateortoinuence
government
policy.Political
power
may
bederived
directly
frompower
over
production
combined
with
DIMENSIONS OF RELATIONS 19
social power, as, for instance, when the capitalist classesgained

inuence in the states of western Europe during the 18301848
period. On the other hand, seizureof political power may be the
means whereby a new group takes control of production away
from an established class, as in the Bolshevik Revolution. The
struggle of political parties, especially where there are strong
parties based in the working classes,can alter the power context
of production. Nationalization of industries introduces the notion
of accountability of managementto public authority. Labor move-
ments may gain accessto economic policymaking with inuence
over the development of production. The state cannot be consid-
ered as merely the direct instrument of a dominant class. The
state is an arena of class struggle, but it also comes, especially
during periods of relative stability in class struggle, to embody
certain general principles bearing on the regulation of production
that act as a constraint on class interests narrowly conceived.
The personnel of dominant and subordinate groups in the
production process are drawn from existing social classes.In the
past, dominant groups have derived their power from military
control of land, from ideological or religious sanction, from prop-
erty ownership, or from state bureaucratic rank and office. Sub-
ordinate groups have been composed of chattel slaves, serfs
bound to a particular stretch of land, coerced labor of different
kinds such as the encomienda decreedby the Spanish monarchy
for the benet of the overlords in its American possessions,free
unprotected wage labor, and workers protected by law and col-
lective bargaining. These differences in status derive from pre-
vailing social and political power.
THE ORGANIZATION OF PRODUCTION:

LABOR ALLOCATION AND TECHNOLOGY
The internal dynamics of the production processare conditioned,

in addition, by the way in which labor is allocated, and the
struggle for control over the production process is conditioned
bytechnology.
The
means
ofallocating
labor
have
included
direct
coer-
expectedto spendpart of their time tilling the lordselds, but

theyalsohavecertainrightsto grazetheiranimalsonthecom-
mons);administrative
disposition(astateagencyallocates work-
ers-tojobs);andmarkettransaction(thehiring of an individual
worker by an employer].
Thereare still plenty of casesof direct coercion,although
legalsystems
in principleoutlawit. Customary
obligationis less
thanformerlyprominentin peasantagriculturebut maystill be
consideredto be the basisof householdproduction, which rep-
resentsa very substantialpart of total use-plus-exchange
value
produced.Administrativedispositionis associated with redistri-
butive economiesorganizedby central planning. In the Soviet
Union, this has in effectgiven placeto labor marketallocation,
and in China under the Four Modernizations [since about 1979]
growingemphasishasbeengivento waysof introducingmore
exibility in employment,althoughwithout embracingthe
still-repugnantconceptof a labor market.
Althoughthe principleof a freeand openlabormarket
hasformedpart of the ideologyof capitalistsocietiesand was
onceenforcedby law whencombinations in restraintof trade
in the form of tradeunions wereproscribed,all modernsocieties
havereactedagainstthis extreme.As Karl Polanyihasargued,
labor is a fictitious commodity and to treatlabor asa commod-
ity goesagainstthedeepest
tendenciesof all societies
exceptthat
which,in the earlynineteenthcentury,wassubordinated to the
self-regulating
market?To the extentthat workershavegained
collectivestrengthandthe statehasresponded to this strength,
the labor market has become modied, institutionalized, and
regulated.
Consequently,
only theweakestelements
of the labor
forcenow nd themselvesin a pure labormarket.The stronger
are shelteredby collectivebargaining,labor legislationand
administration,and the personnelmanagementpracticesof large
corporations.
Technologyhasthe effectof structuringrelationsin the
work processbetweenthosewho commandandthosewho exe-
cute orders. The transition from a workshop in which a variety
of skilled craftsmenwork togethercooperatively,to an assembly
line in which fragmentedtasksare coordinatedin a continuous
process,to an automatedfactory,is a transitionbetweenthree
different structures of control over work.
DIMENSIONS OF RELATIONS '_21
In a simple, popular view, technology has a natural history

from neolithic through postindustrial times following its own
internal logic of discovery and application. Society, in this view,
adapts to technological progress.It is more realistic to see tech-
nology as being shaped by social forces at least as much as it
shapesthese forces.3Technologyis the means of solving the
practical problems of societies, but what problems are to be
solved and which kinds of solutions are acceptable are deter-
mined by those who hold social power.
To control the production process is often a determining
motive in the direction given to technological development. The
beginning of factory production of textiles, bringing workers to-
gether under one big roof instead of delivering materials to them
in their separatecottages,was motivated by the employers desire
to enforce discipline, to better regulate production, and to avoid
loss and pilfering of materials. Social control, not the invention
of new and bigger machinery, began the movement to factories.
Machineryappropriateto the scaleof productionfollowed. Sim-
ilarly, the scientific management of Taylorism responded to a
specic desire of employers to gain control over the pacing of
work, i.e., onceagaina motive of socialcontrol.5
DISTRIBUTION OF THE PRODUCT
How is the product divided? Two lines of division are important.

There is the division of the product between those who command
and those who execute, between dominant and subordinate
groups, and, of that which is retained by the dominant group, the
division between what is consumed or hoarded and what is
invested. The latter distinction marks the difference between the
simple reproduction of the old regime and the expanded repro-
duction of modes of development that accumulatethe expan-
sive capitalist and redistributive modes.
The same methods apply to determining the shares of
dominant and subordinate groups as apply to the allocation of
labor: brute force, custom, administrative disposition, and market
transaction. These methods seldom if ever apply in a pure form.
Brute force shades into custom. In the fifteenth and six-
teenth centuries, Turkish suzerainty was rather milder in its
22 SOCIALRELATIONS
OFPRODUCTION
exactions
fromBalkanpeasants
thannearbyEuropean
feudalism
was,butby theseventeenthcentury,asthetideturnedagainst
the Ottomanempire,it hadbecomemuchmoreharsh.Force
remade custom.
Custominuences the notionsof relativereturnsto differ-
ent kinds of work underboth administrativedispositionand
markettransaction
systems.
Sophisticated
methods
maybede-
signedfor evaluating
jobcontents,
but peoplearestill much
inuencedby customary
differentials.
Thesecustoms
are,how-
ever,inuencedby differentculturalcontexts.Someentertainers
in present-day
America
andEurope
command
extremely
high
incomes.The market rewardsthem as stars. In China, opera
singers
incomesareverymodest
indeed;theyaremiddle-school
graduates,
situatedin anincomehierarchy
according
to their
educational attainment.
INTERSUBJECTIVEIDEAS:
ETHICS AND RATIONALITIES
OF PRODUCTION
Participants
in a modeofsocialrelations
ofproduction
share
a
mentalpictureofthemodein ideasofwhatisnormal,
expected
behaviorandin howpeoplearrange
theirliveswith regardto
work and income.Peasants
think of their lives differentlythan
wageworkersdo.Casualwagelaborers
thinkoftheirlivesdif-
ferently
fromskilled,
unionized
workers.
Middle-
andupperlevel
bureaucratsin bigpublicorprivatecorporations
haveyetanother
setoflifetimeexpectationsboundupwiththeirwork.Thesesets
of collectiveimagesconstitutethe intersubjective
meanings
of
the different modes.
Of morelimited focusbut closelyrelatedto thesedifferent
intersubjective
meanings
arecharacteristic
attitudes
toward
work
or the ethicsof production relations.
In discussing
this it is usefulto recallsomeof the distinc-
tions that havebeenmadein socialtheory.Onesuchdistinction
is that betweena communityin which socialbondsandobliga-
tionsareregarded
asnaturalandarisingoutofrelationships
that
transcendproduction,
e.g.,family,kinship,andtraditional
hier-
archies, and the more articially constructed association in

which obligations are created by contract and limited to specic
purposes.7The senseof obligation obviously differs between
these two patterns. Obligation has a more nearly absolute quality
in the rst and a more conditional or relative quality in the
second.
Another distinction is that between behavior directed by
external sanctions and behavior governed by internally accepted
norms of conduct. This has a particular application to work,
distinguishing patterns of labor control in which it is assumed
that work will be performed only under threat of punishment or
deprivation from patterns in which it is assumed that workers
are largely self-motivated and require less external control.
Selfmotivation, in turn, can be divided into an instru-
mental type in which work is performed in order to gain some
other reward (income) and an absolute type in which work is its
own reward or the manifestation of ones character, which inci-
dentally may bring material rewards but is not pursued solely for
that purpose. Such an absolute work ethic is what Max Weber
perceivedin the asceticismof the Protestantsects.
Several tendencies in production ethics that take account
of the above-mentioned distinctions can be suggestedfor distin-
guishing within this dimension of production relations.
One such tendency is found in the custom-regulated di-
Vision of labor extending from isolated subsistence-farmingcom-
munities to the modern nuclear family. Work is thought of, not
as the consequence of compulsion, but as an activity owing
naturally from social bonds transcending work.9
Another tendency simply assumes that coercion is nec-
essary in order to compel people to work or more specically to
compel them to work for someone elsesbenet. Forms of direct
personal and legal coercion have been practiced on a wide scale
in the past, e.g., in slavery and the encomienda system, and are
known to exist at present in some peasant production. In the
contemporary world, the impersonal coercion of the market is
also a commonly recognized form.
Clientelism gives rise to a different ethic, one in which
there is an expected exchangeof protection and loyalty between
master and subordinate. The relationship is instrumental and
24 SOCIALRELATIONSOF PRODUCTION
thusconditional(bycontrastto the socialobligationinherentin

thenaturalcommunity
mentioned above),
butit extends
beyond
worktomanyotheraspects
oflife.Dominance
andsubordination
in theproduction
process
becomes
butonemanifestation
of a
statusdifferentiationthatpervades
a broadersocialrelationship.
In thepast,clientelism
hasgenerally
beenofapersonal
kind,of
lordto peasant,masterto servant.
In thecontemporary
world,
increasingly
prevalent
is thebureaucratized
relationship
within
largeinstitutions
andcorporations.
Enterprise
corporatism
thus
purportsto offerakindofcommunity
shielded
fromtheatomi-
zationofthemarketplace,
andonenotwithoutmaterial
rewards
for those who enter into it.
Anotherformof productionethicis mediatedby contract.
Heretherelationship is partialandtheexchange is negotiated
eitherindividuallyor collectively
in specicdetail.Implicitin
the contractualform is a conflictof interests,a conict that be-
comessuspended
andregulated
at leastfor a timeby theterms
of the contract.Contractis associated
with an instrumentalval-
uation of work.
A further form of ethic can be characterizedas inspira-
tional. It is associatedwith historical epochsin which a new
workethicisbeinggenerated
withgoalstranscending
immediate
materialsatisfaction.
Theinspirationalethicderivesfroma claim
over the individual by the new communityto be created.It
arousesa senseof obligationto work largelyunrelatedto imme-
diatematerial
compensationthe
material
rewards
beingunder-
stoodasdeferredto somefuturetimeandaccruingto the collec-
tivityratherthantotheindividuals
whose
efforts
areexpended.
A reasonable
hypothesis
is thattheinspirational
ethicis inher-
entlyunstablethatthecommitment
it evokes
cannot
bemain-
tainedover long periodsof timeand tendsto becometrans-
formed into either a contractualor an institutionalized,
clientelistic ethic.
Ethicsof productioncharacterize
thequalityandintensity
ofproducersparticipation
in theproduction
process.
Thewhole
bodyofintersubjective
meanings associated
withamode
ofsocial
relations
ofproduction
alsoincorporates
abiasfavoring
thedom-
inant groupoverthe subordinate
group,despitean appearance
of reciprocity.
Lordandpeasantaresupposed to beboundto-
getherbyreciprocal
obligations,
yettheonusoftheseobligations
falls more heavily on the peasant.Revolt by the peasantchal-

lengesnot just the political and social order but alsothe divine
order.It is heresy,aswell asrebellion.Workerand employerare
represented
associalpartnersin a productiveenterprise:
workers
contract to work and capitalists are expectedto manageefciently
and to invest in expansion. Yet there is a bias in the intersubjec-
tive expectations.Whenworkerscollectivelywithhold their labor
becauseemployersdo not offer high enough wagesto satisfy
them, it is called a labor strike and may be seen as a disturbance
to social order. On the other hand, when capitalists do not invest
becausethey do not seethe likelihood of earning a sufcient
prot, it is not calledan investmentstrike,and it is not considered
to be a disturbance of social order. Governments intervene to
limit and regulatelabor strikes;they aremore likely to takesteps
to raise protability in order to encourageinvestment.
The other aspect of the subjective side of a mode of social
relations of production comprises the common orientations to
action of particular groups. Specic social groups tend to evolve
a collective mentality, that is, a typical way of perceiving and
interpreting the world that provides orientationsto action for
members of the group. The term rationalities is used here to
designatesuchcoherentlyworkedout patternsof thought,which
correspondto practicesin a specic social context. The plural
form indicates that human reason is a practical tool that has in
the course of history provided guidelines for action to advance
the interests of a variety of different social groups in a variety of
material circumstances. Rationalities are the interpretative struc-
tures of thought and mental rules for making decisions that are
characteristic of specic social groups. Thus, the typical mental
processesfollowed by administrators and bureaucrats for reach-
ing decisions of practical consequencediffer from those of busi-
nessentrepreneurs and again from those of elective ofceholders.
Similarly, the trade union leaders of business unions think and
calculate differently than revolutionary syndicalists do. Members
of these different groups tend to look for different kinds of facts,
to process them according to different decision rules, and to
devise different strategiesof action basedon the samefacts. Each
approach is, however, (or can be) coherent and rational in its
own terms.
Remaining strictly within its own terms, a specic type of
rationalitymay perceivecertainactionsthat derivefrom other

rationalitiesas beingdysfunctionalor irrationalor nonlogical,
i.e.,asresultingfrom a misperceptionor miscalculationon the
partof the other.Whatappears
asirrationalto onerationality
can,however,be quiterationalto another.Thebreakingof ma-
chineryappears
asirrationaltothelargerindustrialcapitalist
but
wasrational to the Luddite worker and to somesmall capitalists.
The aim of the social analyst,as distinct from that of the practi-
tioner,maybe denedasan ability to appraisethe relativityof
differentforms of rationality and to showthe connectionof each
with its social context.
INSTITUTIONS
To the congurationsof objectiveand subjectivefactorsconsti-

tutive of each mode there correspondsa typical institutional
complex.
Indeed,
it isbytheinstitutions
thatthemodemayoften
mosteasilybe recognized.
Nevertheless,
we cannotregardthe
institutions as determining the mode. There may, in some cases,
be a hiatus between the formal institutions and the real structure
of relationships.The objectiveand subjectivefactorsjust dis-
cussedin their reciprocalinteractionareto be regardedasthe
determinantsof the real or essentialstructureof relations.The
mode is identied by its real structure.The formal institutions
have,however,an importantfunctionin legitimatingthe real
relationships.
In distinguishinginstitutional aspects,various factors
haveto be considered.One is the degreeof bureaucratizationof
decisionmaking.Bureaucratization canbe eitherexternal(i.e.,
imposedon productionrelationsby the political authority)or
internal(i.e.,arisingwithin the producingunititselfj. In the
mostorganizationally
complex
modes
thereis a combination
of
internal and external bureaucratization. Another important
dimension of the institutional structureis the extent of autono-
mousparticipationencouragedortolerated,
ofwhichaparticular-
ly sensitive
indicator
istheexistence
andtolerance
ofopposition.
Direct domination is a relationship of personalsubordi-
nation.Direct,personaldependent
statusis not modied or me-
diated by any formal organization. One can hardly speak of in-

stitutionalization since institutions imply rules and procedures,
and this is an arbitrary relationship.
Corporatist institutionalization bureaucratizes production
relations and eliminates, coopts, or controls opposition. The fun-
damental notion of corporatism is that common interest should
override separate interests of the participants in the production
process.Corporatistinstitutions havebeencreatedat the national
level, at industry levels, and at the level of individual enterprises.
They all involve formal representation of workers and manage-
ment. In advanced capitalist countries, national wage or incomes
policy boardsare a form of corporatistrepresentation;they are
intended to reach a consensusor social contract between govern-
ment, employers, and unions on wage policy. In Mussolinis Italy
and VargasBrazil the state imposed a form of corporative organ-
ization on industrial employers and workers. Corporatism is in-
stitutionalized within some big enterprises through welfare and
personnelpolicies designedto attractthe loyalties of workersto
the enterprise and through union representation directed to the
enterprise levelpractices pioneered in but by no means con-
ned to Japan.The form of trade union representation character-
istic of redistributive, centrally planned economies is also cor-
porative insofar as it is designed to promote harmony between
workers and management at the workplace and between both
and the central plans goals. The theory underlying corporative
institutions in capitalist and redistributive development is, of
course, different: in the one case, corporatism is intended to
overcome class struggle; in the other, class struggle is supposed
to have been superseded by nonantagonistic or purely technical
contradictions.
Delegated bargaining accepts conflict, and therefore op-
position, and institutionalizes it through organizational relation-
ships (e.g., collective bargaining) that are often very highly bur-
eaucratized. Delegation of representation through bureaucratic
organization can be very remote from the rank and le and in-
directly appointed.In North America,decentralizednegotiations
concerning workers in particular plants are sometimes conducted
on the union side by bargaining agentswho are union bureaucrats
appointed by the central ofcers of the union and who may be
.28 SOCIAL RELATIONS OF PRODUCTION
strangers
to the factoryor the town in which it is located.In
Scandinavia,centralizednegotiationsare conductedwith such
sophisticationby union and managementtechniciansthat the
resultingcollectiveagreements
aresometimesscarcelyintellig-
ible to rank-and-le workers.
Self-management
is a form of institutionalizationthat re-
jectsbothexternalandinternalbureaucratization.
Individualself-
employmentof its verynatureis a nonbureaucraticformof self-
management. Syndicalism,an old tradition within the labor
movement, has in current times attracted renewed interest (most
commonly under the label of workers control) as a reaction
againstbureaucratizationanda demandfor moredirectpartici-
pationof workersin determining
theirownconditions.
Itscurrent
manifestationsvary from the shop stewardsrevolt againstthe
conventionalleadershipof the TradesUnion Congress(TUC)in
Britain, to the demandsfor a self-management
form of socialism
by the~Confédération
frangaisedemocratique
du travail (CFDT)
in France,and also to someof the demandsof Solidarnoscin
Poland.
A hiatus may developbetweenformal institutions and the
real structureof relations.For example,whereformal institutions
suggest
delegated
bargaining,
the realrelationshipcouldtakeon
the characterof corporatismif institutionalizationof union-man-
agementnegotiationbecamestabilizedand routine,if external
bureaucratization increasedwith the inclusion of union and man-
agement
personnelin government-appointed
economiccouncils
and other advisoryboards,and if the conictual elementin the
relationship becamesubordinatedto a doctrine of common or
publicinterest.Conversely,
in lateFrancoSpaintheformalstruc-
turesof corporatismhad begunto operatein sucha mannerasto
provideofcial coverfor unofcial negotiationscarriedon by
illegalworkersinternalfactorycommissions,in fact a form of
delegatedbargaining.In Yugoslavexperience, institutionsthat
are self-managingin form tend in substanceto cloak the reality
of enterprisecorporatism.The important thing is not to accept
institutional structures at their face value but to inquire into the
objective-subjective
natureof socialrelationsunderlyingformal
institutions.
RECIPROCAL
RELATIONS
OF
FACTOR
Figure1 summarizesthe reciprocalrelationshipof the objective,
subjective,and institutional factorsin a mode of socialrelations
of production.Severalexamplesmayhelp to illustrate how these
relationships work dynamically to transform a mode.
One illustration can be provided in the transformation of
peasantproduction under Europeanfeudalism. The objective
powerof thedominantclasswasderivedfromits controlof land.
In theory, the rights in land of the lord were conditional; in
practice,becauseof the fragmentationof political authority,they
became virtually absolute, as they indeed later became in civil
law. Access by the peasantto land was conditional upon service
to the lord, though in practice it became a customary right.
Subjectively, arrangements consecrated by custom were
Objective Factors Subjective Factors
(Relationship of forces] (Forms of consciousness)

Accrued social, i.e., Intersubjective image of
class power the mode
Political power and Ethic of production
role of the state Rationalities of social
Method of allocating groups engagedin the
labor production process
Technology and control (interpretative patterns
over production process of thought and mental
decision rules)
Method of determining
sharesof the product Bias favoring dominant
group
Institutional Forms
Direct domination
(absenceof institutions)
Corporatist
Delegated
bargaining
Selfmanagement
overcast
by religion.Institutionally,
themodewasregulatedby
customarylaw,whichin principlewasto beinterpreted
in con-
formitywith divinelawbutin practice wasadministered
bythe
lord. -
A shift in the relationship of forces came from several
sources.
Demographic declinein thefourteenthcentury[e.g.,the
BlackDeath)reducedthe productivityof land andthusthe in-
come of the lord. Internecinewarfare [e.g.,the Hundred Years
War)weakened
thenobilityasaclassastheystruggled
witheach
other to control land. The growth of towns in westernEurope
offeredan avenueof escapefor peasantsfrom feudal exactions.
Correspondingly, the subjective
sanctionswerealsoweakened
particularly
in thewest.Religious movements incliningintoher-
esychallenged the authorityof the socialorderthe poverty
doctrinesof thespiritualFranciscans,
theDolciniansof northern
Italy,andlatertheAnabaptists
in Germany
andBohemia.
The
existenceof the towns and of free citizenswithin them provided
an alternativeimageof socialorder,displacingthe feudalorder
from the absolute to the relative.
Different results ensued in easternand western Europe. In
thewest,aweakening
of thepowerof thenobilityanda strength-
eningofthepowerofpeasants
ledtoaneasing offeudalexactions
anda growthoffreehold
landtenure,i.e.,in practice
to agrowth
of small-holderfarming.In the east,wheretowns offeredno
alternativelife for absconding
peasants,
the lords successfully
imposed
amoreonerous
serfdom.
In Germany,
midwaybetween
theseextremes,the ProtestantReformationtried to stemthe peas-
anttideby consecrating
thelordsasthescourge
of rebellion[in
thepeasantwarof 1525),butthoughthepeasants
weremilitarily
defeated,
thesubjective
legitimacy
ofthemodewasshattered.
Analogiescanbe drawnto the weakeningof otherland-
basedclassesin the Third World of the late twentieth century.
Theirplacein thestatehasbeenlessened
fromtheriseof other
commercial-industrialclasses,and the subjectivebeliefs under-
pinningtheir traditionalpowerhavewornthin, leavingthis
powerto restuponopenviolence towardwhichcivil authorities
may turn a blind eye.
Another illustration, this one focusing on the factor of

technology and control over the production process, is provided
by Taylorism. In the early manufactories,skilled workers con-
trolled the pace of work; their unions also exercised a degree of
control over the supply of skilled labor. Employers counter-
attackedwith a redesigningof productionprocesses, fragmenting
work so that it could be done by unskilled hands,recombining
the fragments through industrial engineering controlled by man-
agement.This shift in power in favor of employershad conse-
quencesin the subjectiveand institutional sides.Craftunionism
gaveplace to industrial unionism, and pride in craft skill was
displacedby consciousness of socialgoalsmoregearedto security
of income than to the nature of work (social insurance, full em-
ployment)goals that could beattainedthroughpolitical action.
A further illustration is drawn from the redistributive
modeof development.Here industrial workershavebeengiven
the status of the most prestigiousclass.Their ranking on the
subjective side of the register is very high. But this does not
correspond to real power in objective terms. Management of the
central plan and of the major industrial enterprises is in the hands
of ofcials who, in their vast majority, are not of the working
class, and workers, in practice, have a subaltern position. This
hiatus between subjective status and objective power was artic-
ulated by Edward Gierek during the Polish worker revolt against
the ruling bureaucracy in December 1970: You work well, and
we will govern well!15 Crisis in this redistributive mode of social
relations of production has typically come over the determination
of sharesin the product.Onesourceof crisis,latent and building
up over time, is resentment by labor of waste and corruption by
the bureaucracyin the administrationof the social surplus pro-
ducedby labor. Another, more usually the trigger of revolt, has
beena decisionto raiseconsumerprices,in otherwordsto reduce
the workerssharein the product. In the one caseof prolonged
crisisthe creation,ofcial recognition,and subsequentoutlaw-
ing of Solidarnoscin Polandthere was a temporarymovement
in the institutional spherefrom corporativeto delegatedbargain-
ing and self-management forms.
Twelve modesof socialrelationsof production are iden-

tied hereasdifferentiatingproductionrelationsin the latetwen-
tieth centuryworld. Thesetwelve modesare:
5 subsistence
- peasant-lord
- primitive labor market
- household
- self-employment
- enterpriselabor market
° bipartism
- enterprise corporatism
° tripartism
° state corporatism
'
communal
- central planning
This number excludesmodeslike slavery,which havevirtually
ceased
to existon a signicantscale."It alsoexcludesformsthat
maypossiblybe moreextensive
in future,e.g.,self-managed,
autonomous worker collectives. There is nothing sacrosanct
aboutthe numbertwelve. This denominationof modeshasbeen
arrivedat througha longprocessof (1)positingan initial setof
modesby inference frompersonalknowledge andexperience,
(2)confronting
thesedenitionswiththecriticismofpeoplewho
haveexperience of studyingproductionrelationsin different
partsof theworld,(3)considering
deviantandmarginalcases in
regardto whethertheysuggestnewcategories or changes
in the
denitions,and (4)revisingthe setof modedenitions,and so
forth,continuingthe process.
As a result,the twelvemodesde-
ned here seemto cover all signicant patternsof production
relations in the late twentieth-centuryworld of work. But the
taskis nevercomplete.As experience
accumulates
andtheques-
tionssuggested
by it aresharpened,
furtherrevisionwill doubt-
lessbenecessary.
Thatis in thenatureof theconcrete
universals
with which scholarstry to understandsociety:there is a contin-
uingdialoguebetweenexperience
andthedevelopmentof con-
cepts.Thesettingdownofaconcept
is butamomentthough a
critical moment-in the processof understanding.
It has been pointed out above that congurations of pro-

duction relations vary according to modes of reproduction and
development. This can be taken as a guideline for the order of
presentation of the twelve modes. We can begin with those of the
greatest antiquity, which nd their origins in societies of simple
reproduction and then proceed with the modes of social relations
that came into existence through capitalist development and,
nally, with those generatedby redistributive development.
This ordering encounters, however, some problems. The
modes do not appear one at a time successively, in one or more
series. Each of the modes considered here coexists with other
modes and changes through time. Modes once dominant, such
as the peasantlord production of the precapitalist era or the
enterprise labor market of early capitalism, become subordinate
in later congurations. They adapt to their changed position in
the total conguration of which they are a part. Furthermore,
some modes have bifurcated into residual and novel elements.
The residual retain the characteristics of an old conguration
while the novel are more integrated with a new conguration.
The enterprise labor market has a residual element in small non-
unionized businesses;it has a novel form in the widespread use
of semiskilled immigrant labor by large enterprises, for instance,
in the European auto industry. Furthermore, there are some in-
stances where what resembles a well-known mode in the context
of a social formation that is very different from the formation in
which that mode originated leads us to speak of an analogue
rather than an actual instance of the mode. For example, the
inner-city poor of the larger U.S. cities manifest many similarities
to the marginal populations of Third World cities or the reserve
army of labor that Marx and Engelsobserved in mid-nineteenth-
century England. However, the political and institutional context
of the United Statesis sufficiently different in its impact on these A
groups that they are more properly to be regarded as an analogue
to the Third World embodiment of the mode that we call primi-
tive labor market. Another such instance is the survival and
especially revival of individual and small-scale enterprise in the
context of redistributive central planning. The fact that these
socialrelationsof production are in effectregulatedby the plan
and coordinated within it makes them analogous rather than

identical to the enterpriselabor market and self-employment
modes of capitalist development.
- Thus in presentingeach of the twelve modesdiscussed
below as a monad (the term used in the preface), it is necessary
not only to depict it at its origin but also to follow it through as
a historical development,to note the variationsof the modeand
to be able to explain them. The sketchesthat follow can do no
morethan suggestsomethingof this complexity. It is anecessary
steptowardmakinguse of theseconceptsof modesof social
relationsof production in the explanationof changeat the levels
of social formation, state and world order.
CHAPTER TWO
SIl\/[PLE
REPRODUCTION
Taking the historicalprocesses

of reproduction
anddevelop-
ment as the framework for presenting variations in production
relations, the starting point is simple reproduction. Simple re-
production is production that reconstitutesin one cycle the ele-
ments necessaryto continue production in substantially the same
form during the next cycle.Theseelementscomprisethe human
and materialinputs, i.e., the workersand mastersof the produc-
tion processand their skills, the raw materialsand tools they
need in order to be able to produce, and the social relations that
combine them in the production process.In simple reproduction
there is no necessary and cumulative expansion in the scale of
production, though there are variations in output such as, for
example,are attributablein agricultureto the Weatheror natural
calamities, and there is no transformation of the structures of
production. The cycle reproducesitself, especiallywith regard
to social relations, without fundamental change.
Four modes of social relations of production, all originat-
ing in the precapitalist era of simple reproduction, survive in
social formations characterized by dynamic development,
whether of the capitalist or redistributive types. These are sub-
sistenceagriculture,peasant-lordagriculture,the primitive labor
market, and household production. As social formations evolved
fromsimple reproduction to capitalist or redistributive devel-
opment, these four modes of social relations of production be-
camesubordinatedto other modes.Their changedplace in the

totalconguration
of production
relations
wasreectedin dif-
ferentiationswithin eachof thesemodes,thoughthe basicstruc-
tural form remainedconstant.Novel forms adaptedto the dom-
inantpatternsof productionrelationshavecomeinto existence
alongside
theresidual
formsdescending
directlyfromthemodes
origins.
Subsistence
The
subsistence
mode
isthe
oldest
formofsocial
produc-
tion.It comprised
theearliest
formsofhuntingandgathering
and
of settledcultivation in small self-sustainingcommunities.Work
in thesecommunitieswasorderedby kinship. In Polanyissense,
production relations
wereembedded in socialrelations
of a kin-
shipor lineage kind.In suchcommunities,
certainpeoplehave
authorityoverproduction andto anextentoverthedistribution
of the product,but thesepeoplecannotbe held to constitutea
dominantclass.Authority relationsare particularizedwithin
familiesandlineages. Thereareinequalitiesin that somefamily
unitsproducemoreor consume lessthanothers, buttheseine-
qualities
arenotthesystematic
distortions
ofdistribution
effected
byaclassstructure;
theyaretheconsequence ofagedistributions
or theincidenceof ill healthin particularfamiliesor suchcauses.
Themodemay,indeedvery oftendoes,producea surplusthat
is redistributed in some manner within the community, e.g., to
sustainthosewho do not produceenoughfor their ownfamilies
andasgiftsto symbolize
theauthorityofcommunity
leaders,
but
the surplusis not accumulation
for expansion.
The term natural economyhas often beenusedto desig-
nateproduction
systems
of antiquityandof someof themore
isolatedcommunitiesstudiedby anthropologistsin recenttimes.
Thereis little enoughof this naturaleconomyleft in the world
of the latetwentiethcentury.Indeed,a notedanthropologisthas
castigated
hisdisciplinefor contributing
to thenotionthatthere
existpeoples withouthistory,whereas fromthefteenthcen-
turyvirtuallyall peoples,
primitiveor otherwise, havebeenun-
ableto escape theimpactof expansive political,economic,
and
cultural forces?Thoughtouchedby theseglobal currents,some
SIMPLE REPRODUCTION 37
Such residues constitute one part of the production pres-

ently in the subsistence mode. Production here uses primitive
technology. Work is allocated according to customary roles under
the authority of spirit medium or elder. Custom requires com-
munity solidarity in planning production and in sharing the
scarce means of biological survival. Household production is
collectively constrained by taboo and sanctied by ritual. The
social relations and beliefs of the community determine how and
when production activities take place. The political, social, or
religious hierarchyall virtually the same~does not, however,
take a predominantly economic form, separating rich from poor.
All share pretty much the same precarious material conditions.
The term subsistence applied to this kind of production
refers to self-sufficiency of production, not to the level of con-
sumption. Peasantsand other poor people in societies with large
markets may be able to consume only at a subsistence level,
i.e., at a level barely adequateto sustain life, but are not for that
reason considered to be in a subsistence mode of production
relations. The distinguishing characteristicof subsistencepro-
ducers is that they are substantially outside the monetized econ-
omy and the networks of commodity exchange.
One scholar of economic anthropology has described the
hunters and gatherers as the original affluent society, not for
their abundanceof possessionsbut for the extrememodestyof
their needs. In this respect, settled communities of subsistence
cultivators differ only in degree.All such communities tend to
produce less than they are capable of producing and dispose of
more leisure than they would enjoy if they had used their labor
power to the full. The worlds most primitive people have few
possessions,but they are not poor . . . Poverty is a social status.
As such it is the intention of civilization.3
Production by the family unit in practice places limits on
efciency. Tools are of a kind that canbe usedby one personor
a small group, and in general, skill is more important than tools
in productivity. (There are limits to what can be achieved by
greater skill, but no such limits to the potentialities of technol-
ogy.) The more labor available to the family unit, i.e., the higher
the proportion of able-bodiedmembers,the less intensive its
work. Since production is mostly for direct consumption,the
quantity of produce sought by the family unit is determined by
its biologicalneedsfor survivalandreproductionand doesnot

needto exceedthem. Excessproduction makessomecontribu-
tion to the survival of the whole community by providing a
reserveto supplementshortfalls in the less productive family
units. It may also constitutea reserveavailablefor legitimating
leadershipin the community through the practiceof gift giving.
(The economicrelationshipof giver-receiver consolidatesthe
politicalrelationshipof leaderfollower.)4
But by andlargethere
is little incentive to producemuch more than is neededfor the
family itself.
The residuesof natural economyare only one form of
contemporary subsistence production.Anotherform consistsof
family cultivationof plotsthat aretoo smallto providefor the
sustenanceof the family, and so somefamily members,usually
adult males,will have to seekwageemploymentin someother
mode.Theymaymigratetemporarilyto workin minesor indus-
tries or on plantations,bringingbackto the family unit the ad-
ditional income requiredto maintain the family. Subsistenceof
this kind is very largely emptied of the traditional ritual that
contributes so much to the social equilibrium of the natural-
economycommunity.It is thereforeinternally weaker.
An analystof this contemporaryform of subsistencepro-
duction that coexists and interrelates with other modes of social
relationsof production describesthe problemof rational choice
from the perspectiveof the extendedfamily household:
Productive labour on the farm is but one aspectof a multitude
of possiblealternativesthat thehouseholdactivelypursuesfor
its livelihood. The relative importance of direct farming de-
pends,of course,on manylocal circumstances.
The commit-
mentmayrangefrom exclusivededication(whenno otheral-
ternatives are available) to a complementaryactivity (albeit a
strategicone] when other alternativesare present. . . At the
level of subsistenceliving, a mistaken decision may make the
difference between survival and starvation. The . . . households
marginsfor economicmanoeuvreareslim, andthe risksloom
large.5
In the perspectiveof the economyasa whole, subsistence
productionof this contemporary (asdistinctfrom the residual]
typeconstitutesa subsidyto the other,adjacentmodesof social
relations of production in which members of the subsistence

household participate, e.g., as temporary migrant workers. The
subsistence mode constitutes a labor reserve and a cost-free
means of reproducing a labor force for these other modes. Fur-
thermore, such subsistence settlements are also vulnerable to the
land hunger of more powerful outsiders. Subsistencefarmers are
easily displaced with tacit or open ofcial support when others
want to take over land for commercial cultivation.
Peasant-Lord
The peasant-lord mode, by contrast with the subsistence,
is the result of a class structure. A dominant class extracts surplus
from a subordinate class of agricultural producers. This dominant
class looks after the reproduction of the social relations of the
mode but takes no part in agricultural production. The dominant
class acquires its position from military power, religious sanction,
or the power of money through peasant indebtedness. This pat-
tern of production relations was characteristic of precapitalist
civilizations, i.e., collectivities organized on a larger scale than
the small subsistence communities. The existence of some kind
of state is the principal feature distinguishing a class-ordered
from a kin-ordered production system.7
The historical origins of peasant-lord production were
many and various. Power relations in old-regime Chinese agri-
cultural production were basedon a combination of private prop-
erty in land and a state administration supported by taxation.
The Chinese gentry ofcial class had the dual base of land own-
ership plus tax revenues available to those who accededto ofcial
status through the examination system. Gentry-officials owned
most of the productive land closest to the main urban centers
and lived mainly as absentee landlords whose estates were
worked by peasanttenants. The ofcials were not, however, com-
pletely separated from the land but were linked through clan
connections with the rural areas.Tenant farmers working these
estatesconstituted a substantial proportion [perhaps one third)
of the population. More than half of the Chinese population was
composed of small-holding peasants, cultivating the less good
land farthest from the urban centers, and these bore the heaviest
tax burden. Usury was widespread, and so a nominal peasant
owner was often in reality the tenant of a moneylender.Peasant

insurrections,suchasthosethat precededthe imposition of Man-
chu rule in the seventeenthcentury, signaledthe effectivelimit
of extractionfrom the rural populationunder this system.
The salient characteristic of the Islamic pattern of the same
periodwasurbandominance basedontheextractionof a surplus
from agriculture.Directlinks betweenlord andpeasantsuchas
existed in China through the absenteegentrysrelationship to
clan and land were lacking.9Nomadic warriors and Arab mer-
chantswere the twin agentsof the expansionof Islam.The war-
rior classdisdainedagricultureasdid the merchants.They were
too turbulent a group to provide a securebasis for the rulers
power,andsoIslamicrulerstypicallyreliedon aneliteguardof
non-Islamicslaveswho acquiredconsiderableprivilegeswithin
the state.Islamic doctrine deniedprivate propertyand vestedall
propertyin the Caliphate,thoughthis theoreticalprinciplewas
neverconsistentlyapplied.Generally,the conquerorsconrmed
the tenureof the peasants,protectedthem againstlocal landlords
(who would be rivals in extraction),and requireddeliveryof
taxes to the state. The tax revenues went in large measure to the
urban-basedmilitary classconsisting of both Arab noblesand
non-Islamic praetorianslaves.The towns were centersfor the
consumption
of whatwasextracted
fromrural production.
Europeanfeudalism was another sourceof the peasant-
lord mode.In somepartsof westernEurope(England,Spain,and
northern France),there had sincethe fourteenthcentury beena
trend toward mediumsizedholdings cultivated by successful,
independent peasants.In southernEurope,wheretherewasless
incentiveto agriculturalspecialization,
the dominanttrendwith
the erosion of feudal services was toward sharecropping (mez-
zadria in Italy and métayagein southern France).In eastern
Europe,thetrendfromthesixteenththroughtheeighteenth
cen-
turies was toward an increasinglyrepressivemanorial serfdom.
More centralized absolutist monarchies in both western and east-
ern Europedisciplined the nobility andbroughtthem into a more
direct dependenceon the statewhile placing the burden of tax-
ation on the peasantry.
In Japan,during the sameera,a ef-type relationshipgov-
erned landholding, in which the obligation of military service
was a condition for enjoying the fruit of the land, as in western

feudalism.The systemwent through evolution in signicant re-
spects,without fundamentallychanging,during succeedingcen-
turies. The warrior class of samurai that clustered about the
magnatesand the Shogunbecameprogressivelybureaucratized,
detachedfrom the land, andeducated[aparallelto the emergence
of the noblessede robe and service nobility in Europe).The
weight borneby the peasantryseemsovertime to havelightened
in the aggregatewhereas sometwo thirds of the peasantproduct
was extractedby the feudal classin the sixteenthcentury, this
seemsto havedeclinedto 30 to 40 percentduring the Tokugawa
period [seventeenthto nineteenthcenturies)
Yet anothersourceof contemporarypeasant-lordproduc-
tion relationswasthe encomienda,the right grantedby the Span-
ish crown to Spanish landowners in Hispanic America (and
comparable arrangementsin Brazil) to extract labor servicesfrom
the indigenouspopulation.This novel form of compulsorylabor
went through various modicationslabor services were re-
placedby the exactionof tribute from the indigenouspeople,or
forced wage labor was substituted for either of these forms. What-
ever the precise form, indigenous labor was not free in the
sense of suffering only the coercion of the market but was com-
pelled by the conquerorslaw with the sanctionof physical or
military force. Originally, this variant of labor control had been
justied as a means of Christianizing the Indians. It had been
applied initially in the mines,whoseproducewasthe main early
exportof the Americancolonies.Laterthe practicewasextended
to securelabor for grain production and cattle raisingtasks
requiring a somewhathigherlevel of skill than for the production
of sugar and cotton. Alongside the encomienda, other forms of
coerced labor also existed in Hispanic America, such as a form
of debt peonageon haciendas. This latter form served the relative
self-sufciencyof a local dominantlandowningclassratherthan
the demands of an overseasmarket, but it was consistent with
the milieu in which the encomienda was the model form.
The salienceof moneypower in peasant-lordproduction
relationsis of more recentorigin, arisingusually in situationsin
whichthere is both a disintegrationof dominancebasedon mil-
itary or religious authority and an impact of national or world
marketson agricultural production. Peasantswho cannot meet

their own needsfor reproductionhaveto borrow,and merchants
who control the trade in the peasantsproducecomeeffectively
to control their land and labor.
Several common featuresrun through these diverse origins
of peasant-lordproduction. The subordinateclassthe peas-
antsare bound legally or in practiceto the land they till. Their
only alternativeis ight with the risks that entails.They haveno
mobility within the mode.Extractionis either directly by or on
behalf of a classthat does not participate itself in agricultural
productiondirectly by in the caseof landlordsor moneylen-
ders,on behalf of in the caseof taxationthat servesprimarily
to sustaina dominantnonagriculturalclass.Membersof the dom-
inant classhaveincentivesto acquirecontrol overmoreland and
labor but have little incentive to produce more efficiently. Con-
sequently,they do not accumulatefor investmentin productive
innovationor if they do, then they shift themselvesand their
land and labor into another mode of production relations.
Today, in the grain-producingregionsof Asia and Latin
America, the produce of peasantcultivation is traded, often at
some distance from its source. Peasantspay taxes and serve as
soldiersin nationalarmies.Theyare,in short,linked into national
and often international exchange relations and political power
structures. A dominant classthe lordscommands the link,
a classfor which peasantlaborprovidesmaterialsupportand the
basis for political power.
In this study, the term peasantis restrictedto agricultural
producerswho producea surplusthat is appropriatedby a dom-
inant class;thesepeasantagricultural producershave accessto
land but not effectivelyto markets,and in practicethey are not
free to move elsewhereor to escapethe domination of their
lords. Subsistence cultivators are excluded from the denition
becausethey do not produce surplus to any signicant extent,
farm laborersbecausethey arewageworkerswho haveno durable
accessto the land they till, smallholdersbecausetheyhaveaccess
to and depend on markets.
In this peasant-lordmode,primitive technologyand low
productivity prevail, as in the subsistencemode, but peasants
and their family units are subjectto an economic-politicalhier-
archy, a direct domination, that is not characteristic of the sub-

sistence mode. The lord extracts a large proportion, often in
excessof half of the peasantsproduction. Not only are peasants
virtually bound generation upon generation to their land (this in
practice is the caseof subsistencefarmers too], but also and more
importantly, they are bound perpetually into their subordinate
relationship to the landlord who extracts the surplus from their
labor.
The economic power of the dominant class can hardly be
distinguished from its political power. The secular state has gen-
erally left the dominance of the landlord class over the peasant
unimpeded. The state does not formally enter into the relation-
ship between lord and peasant except to enforce property rights
[which favor the landlord], to extract some of the product as taxes
[thereby supporting a political structure in which the landlords
inuence has been paramount], and perhaps to inuence the level
of prices (which in practice concerns the landlords power rela-
tions with urban clients and consumers rather than with
peasants).
While
theterm
lord
has
aconnotation
suggestive
ofEu-
ropean or Japanesefeudalism, or of the agrarian bureaucracies of
other past civilizations, it is used here in a wider senseto cover
all forms of domination over peasant producers, many of which
in contemporary times lack any noble quality. It can refer, for
example, to a case where poor peasants deprived of sufcient
land and other resources to ensure their own survival fall under
the control of a large landowner, or of a moneylender, or of 2'
merchant trading at a distance in the peasantsproduce [e.g., ir.
the rice trade). The peasantthen works in conditions determined
by this new lord, who also determines the return the peasant
receives from his labor.
Like the subsistencemode, the peasant-lord mode has also
become vulnerable to external pressures. For long its mainstay
was the social and political power of the lords, which enabled
them to forge alliance with other powerful classes. During the
secondhalf of the twentieth century, this alliance has been weak-
ening and pressuresfrom the peasantry have been growing.
The traditional legitimacy of peasant-lord relations,
vices,hasbeenundermined.
Theauthorityof thelordsandtheir
abilityto extractnowalmosteverywhererestsonviolenceand
repression of peasant
troublemakers
byillegalmethods tolerated
andoverlooked
by the state.Therehas,however,beena growth
of peasant-based
insurgency-latetwentieth-century
revolution-
arymovements havenearlyall beenin peasant
societies,
from
AlgeriathroughsouthernAfrica,to Indochinaand Central
Americawhich manifestly increasedthe coststo statesand
allied classesof supporting landlord dominance.Furthermore,
peasant-lord
cultivationhasbeenchallenged
by capitalistentre-
preneursas beingeconomically
inefcient.Agribusiness
and
commercialfarmerswant to clear lands of peasantsettlementto
cultivate with moderntechnologiesfor regionaland world mar-
kets.Former allies of the landlords havebecomemore inclined
to abandonlandlord claims or to facilitate buying the landlords
outandencouraging
themto investin other,moreefcientforms
of exploitation.
Primitive Labor Market

Theprimitivelabormarket,like thepeasant-lord
mode,is
traceableto the ancien régime.The term labor market in that
historical context is an anticipation, since one cannot speakof
the existenceof a marketfor laborpowerbeforethe capitalistera.
Twophasesmustbecompleted
beforeonecanproperlyspeakof
the existenceof a labor market:rst, somepeoplemust become
detachedfrom the socialrelationsgoverningproduction,suchas
subsistence
or peasant-lord
relations,soastobeavailable
without
attachments,and second,the practiceof exchanginglaborpower
for moneyin such a manneras to providea mechanismfor
determining thepriceof laborpowermustbecome common.The
first phasewasaccomplished in precapitalist
times.Thesecond
wasnot. Hence,one canspeakretrospectivelyof the existenceof
a primitivelabormarketin muchthesamewayasMarxspoke
of primitiveaccumulationof capitalformingthebasisfor later
capitalist development.
FernandBraudel has pointed to a structural constantof
all the preindustrialsocietiesof the old regime,includingall
those mentionedas sourcesof the peasant-lordmode:the exis-
tenceof a whole sectorof populationfor whom societyprovided
no place and who were known variously as the poor, beggars,

and vagabondsthe masterless men of seventeenth-century
England and the boat people of south China. In Europe, the poor
became noticeable from the economic revival of the twelfth cen-
tury and thenceforth remained a factor in the social order. Their
numbers varied but were always considerable, in the England of
the Stuarts being estimated at from one quarter to one half of the
total population. From among these people could emerge a sort
of nonsociety, given to spontaneous violence, arousing fear and
apprehension on the part of the established orders, but in general
controllable with the application of a minimum of force because
they utterly lacked cohesion.
In the world of the old regime, such people on occasion
were caught up in ideological movements of millenarian escha-
tology that challenged prevailing orthodoxies. Where this hap-
pened, it often detonated a violent social and political explosion.
In times when economic changes accelerated misery and inse-
curity, mystical millenarianism could for the disoriented and
uprooted poor become a powerful social myth giving them at
least a momentary cohesion and canalizing their energies in a
revolutionary direction. Such movements severely shook up ex-
isting social structures and undermined their ideological foun-
dations without actually transforming them.
Since the primitive labor market stands outside ordered
society, it remains extralegal. Relations between the mode itself
and the established society that has engendered it are character-
ized by violence or deception, and relations within the mode, by
charisma or domination. There is little scope for institutionali-
zation or for the emergenceof a class structure. To the extent that
attempts are made to establish institutions among people in this
mode, or that class consciousnessand organization appear among
them, these would be indications of a shift out of the primitive-
labor-market mode into another mode.
The primitive labor market today is predominantly a phe-
nomenon of poor and newly industrializing countries of the
Third World. It is peopledby former peasantswho have been
forcedout of or escapedfrom the peasant-lordrelationshipor by
those who have left subsistence cultivation to become landless
laborers.Somemay exist as casualwagelaborersin agriculture,
but mostleavethe rural areasand abandonthe useof agriculture-

related skills. In the urban environment, they are t for only
unskilledjobs,sincewhateverskillstheypossessed
havebecome
irrelevant.Thesupplyof suchlaborfar exceeds
the demandfor
it, which accountsfor mostof the unemployment-open
or dis-
guisedin the Third World.
The numbersin the primitive labor marketrise in propor-
tion to the social dislocations of the country. They are greater in
countriesexperiencing
economicgrowththan in poorer,unde-
velopedcountries.
Thesizeoftheprimitivelabormarketunder-
scores
thepolarizationofrich andpoorin theprocess
of economic
growth.Generallyspeaking,
as subsistence
and peasant-lord
modescontract,the primitive labor marketgrows.
Peoplein theprimitivelabormarketaremobile,butchoice
of employmentandindividualbargainingpowerarein practice
denied,
themby the overabundant supplyof labor.Initially, they
haveno collectivepower.They alsohavelittle cohensionamong
themselves,and typical earningscome from one-timetransac-
tionswith peopleoutsidethe primitivelabormarkethawking
anobject,shiningshoes,
watching
anautomobile.
Relations
that
are not cumulative do not lend themselvesto an adjustmentof
relative power.
Two kinds of relationshipsare characteristicof the pri-
mitive labor market. There is the relationship of the primitive-
labor-market
producerwith someone
outsidethemodewhopur-
chaseshis or her services,and there is the relationship within
the modebetweenthe producerof the serviceand a bosswho
exploits,protects,andensuresaccess to income-earningoppor-
tunity to theproducer.Theprostituteservesasparadigm. Onthe
onehand,thereis theprostitute-clientrelationship,ontheother,
the prostitute-pimprelationship.
The state does not regulatethe work relationship of the
rst type (with a client outsidethe mode),or if it doestry, it is
almost totally ineffective. The state,indeed, intervenesamong
the populationsof the shantytowns,
bidonvilles,favelas,or bar-
rios,wherethemassof primitive-labor-marketworkerslive, only
throughpoliceactionto protectestablished
societyfromcontam-
ination. Occasionally,the most visible evidenceof the primitive
labor marketthe beggarsand streethawkersare rounded up

and expelled from sight, as, for example, when some conference
of foreign dignitaries is in the ofng.
An analogue to the primitive labor market also exists
among the inner city dwellers of the urban centers in some
highly industrialized countries,althoughhere,by contrastwith
the poor countries,the statedoesinterveneto regulatethe poor
and provide a modicum of support for them.
The existence of the primitive labor market offers some
advantagesto establishedsocietychiey cheap domesticser-
vices and the downward pressure on wages that arise from a
massivereservearmy of labor. The visibility of the primitive
labor market is an ever-presentwarning disciplining the em-
ployed worker. This mode also seemsto pose a threat to the
security of establishedsociety,lessin reality than to the awak-
ened fears of the richer and more secure.The consequenceis
repression,legal and illegalthe right-wing military coup and
unrestrained activity of the death squads.
Participantsin the primitive labor market are highly in-
secureand in this lies the origin of the secondtype of relationship
[with an exploiting-protecting bossin the mode]. Primitive-labor-
market producers have lost the protection of such social cohesion
as may have existedin the rural communitieswhencemany of
them came. Often their status is technically illegal in the View of
the establishedsociety within which they exist, since they are
not supposedto be wherethey are.Many areillegal immigrants,
for example.Evenwherethis technicalillegality doesnot apply,
people in the primitive labor market tend to be victimized rather
than protected by law enforcement.
In such conditions, they try to seeto their own security
and defenseoutside the laws of establishedsociety.Frequently
the bonds of tribe, caste,religion, or ethnicity form a basisfor
organizing collective self-defense.The senseof obligation to
membersof the extendedfamily is often appealedto but fre-
quently found wanting. Sometimes security and advancement is
pursued more successfully through newly created families of
gangs and criminal organizations that give their members and
thosethey protecta form of powerat the marginof the alien
48 SOCIAL
RELATIONS
OFPRODUCTION
society
within
which
they
exist
andwithwhich
they
must
come
toterms.
Millenarian
religions
alsooffercompensation
forthe
lossof communitysolidarity.
i Theconsciousness
oftheprimitive
labor
market
oscillates
between
a pragmatic
instrumentalismdoing
anything
topro-
cure
therequisites
ofsurvivaland
aholistic
commitment
tothe
illusion
ofa newcollective
life.Instrumentalist
behavior
iscon-
ducive
toclientelism.
Politicians
cangainvotes
from
them,
and
they,
inturn,
canextract
some
concessions
from
politicians,
e.g.,
tokeepthebulldozers
awayfromtheirlean-tos
ortorunasource
ofelectric
power
intoa squatters
settlement.
Millenarianism,
membership
incriminal
families,orparticipation
inrevolu-
tionary
groups
demand
holistic
commitment
andlead
toultra-
authoritarianism
among
primitive-labor-market
people.
Thisin
turnlends
itself
tomanipulation
ofthemfromoutside.
Thesub-
jective
consciousness
ofthemode
ischaracterized
byambiguity
anddependenceoscillating
between
acceptance
andrevolt,
be-
tweenpassivity
andself-defense.
Household ,
Household
production
gave
a name
toeconomics
[from
theGreek
oeconomia,
meaning
householding
orproduction
for
ones
ownuse).
Initsorigins,
household
production
mergeswith
subsistence
agriculture
in a single
modeofsocial
relations
of
production.
Indeed,
itmay
beconsidered
asderivative
fromsub-
sistence
production.
However,
in thecontemporary
world,
household
production
mustbethought
ofasadistinct
mode
of
social
relations
ofproduction
thatistheprinciple
means
ofsus-
taining
andreproducing
thehuman
species
andthus
thelabor
force.
It survives
alongside
allother
modes,
andbecause
ofits
reproductive
functions
itistheunderpinning
ofallother
forms
of production. "
Thehousehold
modeis thatmostdeeply
embedded
in
social
custom, mostdifficult
toconceptualize
asamode ofpro-
ductionrelations.
Thestressesandchanges
it hasundergone
under
theimpact
ofother
modes
ofproduction
thathave
drawn
offlaborfromthehousehold
areexperienced
astransformations
inthefamily,
aschallenges
todeeply
ingrained
psychological
attitudes and norms of behavior,as crisesof familial authority

and sexual relations, rather than as changesin a mode of pro-
duction. Like the subsistencemode, there is no class structure in
the householdmode.Authority inheresin the socialrelationsof
thepatriarchal
family,andproduction
is determined
byasexual
division of labor consecratedby myth.
Householdproductionincludeschildbearingand child-
rearing,
thepreparation
offood,cleaning
andwashing, themak-
ingofclothingandrepairandmaintenance
ofclothingandhouse-
hold articles,gardeningand smallplot cultivation,etc.It also
includesmanagement of family incomeandresources. All this
isproduction
fordirectconsumption.
Thetoolsandrawmaterials
usedin it arefor the mostpartobtainedandpaidfor outsidethe
household,but no monetaryvalue is placed on householdpro-
duction itself. For this reason, it has been ignored by statisticians
andeconomistsit doesnot getinto thenationalaccounts.Yet
householdproductionis vital to thesurvivalof thefamilyandto
the supportof the othermodesof productionthe household
indirectlyserves.
Householdproductionreproduces the labor
powerexpended
by theseothermodes.
If, in modern societies,collective production processes
havebeenverylargelysubjected to rationalanalysisandnegoti-
ation amongthe interestsinvolved,householdproductionre-
mainsfor mostpeoplegovernedprimarilythroughthe realmof
myth.Theexplanation
doubtless
hastodowiththefactthatmost
of the work is done by women and seemsto involve common
understandings
of the relationshipbetweenthe sexesthat tran-
scend production.
Thetenacityof mythhassustained
an otherwisebattered
andbeleaguered
institution.Full-timehousewives
area small
minority of householdproducersin the world today.Morerep-
resentativeis the woman who works in someother mode, e.g.,
aspeasant
or asenterprise-labor-market
worker,andwhoin ad-
dition is expectedto attendto householdtasksandto bearand
raisechildren.The family of man,wife, and childrenhired as
handsby thenineteenth-centurycottonmill ownerandpaida
familywagesuchthatitssurvivalwasconditional
uponallmem-
bersworkingwasat the sametime a householdproducingunit
in which the wife, already full-time employee, was principal

household producer. Rarely can the energiesavailable for house-
hold production have been so close to extinction.
. In advanced industrial societies, other modes gnaw away
at household production without ever eliminating it. That goes
for socialist, as well as capitalist, societies. Innovations in con-
sumer products reduce the requirements of household produc-
tion or increase its productivity, while opportunities for womens
employmentoutside the householdreducethe amount of time
available for household tasks. These tendencies undermine fur-
ther the valuation of household production, the incentive to
engagein it, and the level of skills conventionally associatedwith
it. In consequence,wage rates paid in commercial activities anal-
ogous to household work (cleaning, food preparation, and the
care and education of children) are among the lowest.
Insofar as the household has been emptied of its produc-
tive function, its often troubled emotional core is left more fully
exposed.The householdremains,however,the producerof last
resort. When unemployment rises, production functions are
forced back upon the household. It becomes the buffer for eco-
nomic crisis to the extent that its emotional resilience can stand
the strain.
CHAPTER THREE
CAPITALIST
DEVELOPMENT
Capitalist development is a
process that was put together gradually over a period of some
ve centuries, beginning in western Europe from the fourteenth
century, before it became,in the nineteenth, a coherent expansive
force on a world scale. This expansive force at the mid-nine-
teenth-century point was in its competitive phase. From the late
nineteenth century, capitalist development entered a new, mo-
nopolistic phase. Each of these phaseswas associatedwith new
modes of social relations of production.
COMPETITIVE CAPITALISM
Debatescontinue about when, during that long period from the

fourteenth to the nineteenth centuries, capitalism actually be-
came the dominant organizing force of economic life. The issues
revolve principally around the question of the essenceof capi-
talism. Those who dene capitalism primarily in terms of ex-
change relations and the accumulation of capital through trade
tend to place the origins of the capitalist era toward the beginning
of the period. Those who consider the essenceof capitalism to
bean organizationof production designedto generatethe expan-
sion of capital have to place it toward the end of the period} The
latterposition is moreconsistentwith the approachof the present
52 SOCIALRELATIONS
OFPRODUCTION
study.In part2,theemergence
ofanewformofstatetheliberal
state~willbe broughtto the fore as the critical factorin the
breakthroughof capitalistdevelopment.
Two modes of social relations of production becameof
specialimportance
in thetransition
fromtheoldregimeof trib-
ute-extracting
land-based
classpowerto an economydrivenfor-
wardby capitalaccumulationin the handsof expandingentre-
preneurs
andinvestors.
These
modes
wereself-employment
and
theenterpriselabormarket.Self-employmentis theconditionof
the independentsmall-scaleproducerusinghis own and his
familyslaborwith meansof productionin his own possession
forthepurpose
of marketing
hisproduce.
Self-employment
thus
went hand in hand with the early progressof commoditytrade.
In theenterprise-labor-market
mode,productionis by wagelabor
unprotected
orunregulated
eitherbythestateorbythecollective
actionof workers.It is productionby workerswho do not possess
the meansof productionandwhoselaborpoweris availableon
an open or pure labor market.
Self-Employment
Small,independentproducersexistedin all the old-re-
gimesocieties,
alongwith a degree
of commodity
tradein basic
necessities.
In old-regimeChinathereweresmallCultivators and
artisans,and in the old-regimeIslamicsocieties,a ourishing
artisanproduction.Merchants accumulatedwealthby tradingin
commoditiesproducedby artisansand farmers,althoughthey
did nothingto change
themethods
andorganization
of produc-
tion, but the accumulation
of mercantilewealthwasrecurrently
checkedby the dominantland-based military andbureaucratic
classesas a possiblerival to their power?It was in western
Europe,
however,
where
thegrowth
ofindependent
farming
and
artisanproduction
reached
a scalesufcienttobecome
thebasis
for an alternativeorganization
of economyandsociety.The de-
terminingfactorin thedevelopment of independentfarmingwas
thesuccess of peasant
resistance
to attempts bythefeudalnobility
to extract more and more of their produce.As a result of this
resistance,
obligations
of personalserviceby peasant
to lordwere
progressively
commuted
to payments
in kind,payments
in kind
to paymentsin cash,andtotal rent paidto the feudalclasswas
CAPITALIST DEVELOPMENT 53
gradually reduced. WesternEurope becamepopulated in the

main by small holders who marketedpart of their production,
some of whom were tenants paying rent and some freeholders,
all of whom paid taxesto a statethat constitutedthe continuing
dominance of the nobility.3 Opportunities for peasant resistance
were enhancedby severalfactors:the demographicdeclineof the
fourteenthcentury devastatedthe peasantryas the most numer-
ous class(the Black Death)and madelabor scarce;autonomous
towns provided a refugeand an alternativelife for peasants;and
mercantilecapital, ensconcedin the towns, counterbalancedthe
land power of the nobility, breakingor limiting their monopoly
of power in society. These factors encouragedthe growth of
independentfarmingand artisanproduction.They led to a trans-
formation from peasant-lordto self-employmentproduction for
a substantialpart of the westernEuropeanrural population.
Today,the self-employedare a largeand varied category
of producers.The categoryincludes the family farm (probably
the largestsinglegroup in it), independentartisans,small shop-
keepersand itinerant peddlers,professionalsand independent
consultants, artists and writers, etc. The term selemployed is
usedin this study to coveronly individuals [or family units) who
are engagedon a fairly regular and stable basis in producing
goodsor servicesfor sale.Excludedare the casualtransactions
that takeplacein the primitive labormarketdiscussedin chapter
2.
Self-employmentis a dependentmode that existswithin
the intersticesof larger scaleproduction. Self-employmentde-
pends in the first instanceon the existenceof a market for the
goodsor servicesprovided,and the existenceand natureof that
marketis conditionedby the dominantmodes.Self-employment
operatesin the residual spacesleft by the dominant modes.It
provides someservicesin a capitalist societythat big organiza-
tions nd too costly,e.g.,the cornervariety storethat staysopen
at night when the supermarketis closed.It hasalsobeenfound
to be a flexible and efficient means of handling the problem of
production and distribution of certain categoriesof consumer
goodsand servicesin redistributivecentral planning. Therehas
been a revival of self-employment activity for this reason in post-
Mao China, and such activities have remained signicant in P0-
land. Self-employment is not a form of capitalist production

insofar as it does not involve the employment of hired labor.
Prot in the market is achieved by self-exploitation on the part
of the self-employed producer rather than by extracting a surplus
from employees. .
The social relations of selfemployment, apart from this
internalization of selfexploitation, are those involved in the mar-
ketwith suppliers of inputs, with customers,and with com-
petitors.The self-employedarealsoand increasinglyinvolved in
relations with the state, which extracts through taxation and
regulatesproduction and markets.Someof the most acute dis-
puteswith the statehaveinvolved taxation,the stateendeavoring
to block tax evasion by ever more detailed reporting requirements
while the self-employed enjoy greater exibility in reporting in-
come than businesses or salaried employees (who are sitting
targets for the tax collector).
Apart from a limited range of highly prestigious occupa-
tions, mainly those in the liberal professions, most forms of self-
employmentare precariousin the long term. For thosewho are
successful, self-employment verges toward the enterprise-labor-
market mode. The successful producer will hire workers and
expand production when he nds a propitious market. More
likely for largenumbersof people,self-employmentdeclinesinto
a form of disguisedwageemployment.The serviceprovidedmay
be of a kind that a big business would nd costly to provide by
itself by laborpaid accordingto its own wagelevelsandprotected
by health, safety, and social security legislation applying to its
own workers, and so it subcontracts to an independent con-
tractor who may have no other client.
Small farming is a particular caseof the precarious status
of the self-employed. Often land reforms have been carried
through with the aim of land to the tiller, i.e., to give small
farmers rm legal title to their land. Very often these reforms
have not been accompanied by measuresto prevent the market
from subsequently undermining this aim. Consequently, small
farmers become indebted and either lose their land or lose control
of production to others. This leads either back to a new form of
peasant-lord control by moneylenders or grain merchants or for-
ward toward consolidation of holdings for capitalist farming with
innovations in technology and use of hired labor. The alternative

course offered by historical example is that of land reform carried
through by a revolutionary regime as in Russia, which passed
through a transitional stageof small farming into total collectiv-
ization of agriculture.
Confronted with this instability, the self-employed have
tried to stabilize their situation by collective action. The steps
taken to defend their prized independent status often mean
adopting some of the features of big organizations. Such forms of
organized defenseinclude cooperative purchasing and marketing
groups,cartelsthat x commonwork-rulesand rates,syndicates
that bargain with suppliers or purchasers, and political and eco-
nomic action directed toward inuencing public opinion or the
state [e.g., shopkeepers strikes, farmers disruption of commer-
cial or tourist trafc by blocking highways, etc.). Organizations
and actions limited to particular occupations are the most typical.
However, with a selfimage of rugged individualism in a society
perceivedto be increasinglybureaucracyridden, the resentments
of the self-employed have exploded at times into rightwing po-
pulist movements of which poujadeisme in France is the typical
instancef
Enterprise Labor Market

Like self-employment, wage labor existed, though on a
small scale, in old-regime societies. In Iapan, for instance, espe-
cially during the eighteenth and early nineteenth centuries, some
independent farmers rose to a position of relative wealth. Less
fortunate peasantswith very small holdings fell under the control
of usurers, often rich peasants;and this new class of rich peasants
brought industry into the villages, sake brewing and silk manu-
facture for example, and thereby escaped the control of guilds
and used the labor of the depressedstratum of poor peasantsthat
had fallen under their control.5
Again, it was in western Europe that wage labor grew to a
scalewhere it could become the basis for a different organization
of the economy. The attraction exerted by the towns drew in a
new category of cheap labor displaced from rural areas, which
enabled manufacturers to locate outside the area over which the
town guilds had jurisdictiona development that heightened
class conict within the extended urban area. The transforma-

tion of wage-labor
commodityproductioninto capitalistdevel-
opmentproceeded alongtwo routes.Ononeroute,thesuccessful
individual producer expandedfrom self-employedartisan pro-
duction to the use of hired labor in larger scale manufacture. On
the otherroute,merchantswho had accumulatedworking capital
and who knew the markets for manufactured goods and raw
materialsput out the manufactureof thesewaresto cottagers
in suburbanand rural areas.7
Thesecottagersshiftedgraduallyin
statusfrom self-employedworkersdealingwith a singleclient to
becomede facto pieceworkersearninga wage.
Duringthe seventeenth
centurythis changein the mode
of manufactureaccompaniedandfacilitateda shift in the location
of industryawayfromtheold industrialcentersof northernItaly
and Germanyand evenfrom Francetowardnewercentersemerg-
ing in England,Sweden,andSwitzerland.
It brokethecontrolof
the old craftsand the guild-dominatedtowns over industry and
madepossiblea rapid increasein industrialproductionunder
more concentrated commercial and nancial control before the
introduction of the factory system.9
Self-employment
andeventheemployment
of wagelabor
are not inherently capitalist in the senseof being necessarily
boundup with or exclusivelyassociated
with thecapitalistmode
of development.As has beenpointed out, they cameinto exis-
tencebeforethe capitalist mode of development.In westernEu-
rope,their existencewas a necessary conditionfor capitalist
development to takeplace.It wasnot,in andof itself,a sufficient
condition. In other places,independent producersand wage-
laborproductionbecamesegments
within an economythat re-
mained dominatedby tributary relationsbetweenpeasantryand
a ruling class.
The conjunctionof four factorsenabledthe transformation
fromsimplereproduction
to capitalistdevelopment
to takeplace
in westernEurope.Thesefour conditionswere [1] accumulation
of capitalin thehandsof peoplewhowouldinvestin theexpan-
sion of production for the market [as distinct from old-regime
statesand ruling classesthat investedin territorial aggrandize-
ment to extend the sphereof feudal agrarianrelations),(2) ex-
pansionof the marketfor basicnecessities
of life to the point
where production for exchangesupplantedproduction for use,

(3)creationof a marketin land by freeing land from entailments
and the whole range of feudal restrictions and concurrent obli-
gations,and (4) enlargementof the marketfor laborby separating
an increasing proportion of workers from the means of produc-
tion and allowing wagesto be determined by supply and demand.
The rst two conditions were attained in England during
the eighteenth century. This was the first country in which a
national market became a reality. Internal barriers to the move-
ment of goods were substantially removed. So were residual
medieval guild-type restrictions on production and obstacles to
the transfer of people from agricultural to industrial pursuits.
Thus grew a broadly based, effective demand for the essentials
of lifefood and textiles for clothing. Market-oriented landown-
ers and industrial entrepreneurs innovated production methods
to meet this demand. Capital accumulated in the West Indian
sugarand slave trade flowed into this development of production
through the expansion of banking facilities, and those in whose
hands capital accumulated acquired the political inuence nec-
essary to ensure that the state through its domestic and foreign
policies maintainedand extendedthe conditions for capital ac-
cumulation. Market-oriented production could now grow on the
basis of an expanding internal market, and industries grounded
in this market expanded even more rapidly as suppliers to the
outside world. (By contrast to the English case, the Dutch mer-
chant oligarchy for long dominated the world market in long-
distance trade and became wealthy commercial and nancial
intermediaries without ever being able to base their economic
growth on a large domestic market and industrial development.
Capital accumulation alone did not give the Dutch sufcient
staying power. Through aggressivetrade wars and protectionism
the English fostered the basis for their ultimate industrial and
commercial triumph.)
There was much greater resistance to the two remaining
conditionscreation of markets in land and in labor. The resis-
tance of established landholding classesto unrestricted sale of
land was overcome in western Europe only in the aftermath of
the French Revolution. But the most difficult condition of all was
the creation of a labor market. The historical experience of the
humanracesuggeststhat a free labormarketwasa mostunusual

andunnaturalphenomenon.
Whatthe classicalliberalpolitical
economists
represented
asconsistent
with thelawsof naturehas
neverbeensoregardedby historical societies.As Polanyiargued,
the freemarketin laborwasa utopia that wasbroughtfor the rst
time into existencein Englandin the early nineteenthcentury
by theinterventionof thestate,whichrevokedthepolicycontin-
uous from Elizabethantimes of supportingthe poor in the rural
areas.It wasonly during the nineteenthcenturyin Englandand
in western Europethat statepolicies contrived to turn the dis-
placedpoorinto a supplyof undifferentiated
laborpower.Thus
was a long-standingpracticeof wagelaborexpandedinto the
mode of social relations of production of the early factory sys-
temthe enterprise-labor-market
mode.Thesocialhistoryof the
periodthatfollowedcanbeseenasthenaturalreactionof social
forcesstriving to counteract,tame,control,and in somemeasure,
to humanize this articial creation. '
By the first half of the nineteenthcentury the four previ-
ouslyspeciedstructuralconditionsfor thetransformationof the
productionrelationscharacteristicof late feudalismin north-
westernEuropehad beensubstantiallycompleted.
Somewhatanalogousdevelopmentshave taken place in
otheragrarian-based societiesin easternEuropeand Mexico
duringtherst partof thetwentiethcentury,andin countriesof
north Africa, Asia, and Latin America during the last half of the
twentieth century. The conjunction of peasantpressures,often
in an organizedpolitical form,with stateenacted
measures
of
land reform has aimed to expand the sphereof self-employed
smallholder cultivation. Typically, such land reforms have re-
sulted in a partial redistribution of land to independentfarmers
through a breakingup of big estates,followed by a reconcentra-
tion of land in the hands of some of the more successful farmers
and the failure of others, who become a labor pool. The mecha-
nism for this reconcentrationhasgenerallybeenindebtedness-
the result, a growth of enterprise-labor-market
production in ag-
riculture and a movement of failed self-employed to seek wage
work in urban areas.
Duringthe rst decadesof thenineteenthcentury,indus-
trial productioncontinuedto growbut still mainlyin the form
of cottageindustry coordinatedby commercialcapitalists
through the putting-out system. Even by 1848, there were still

relatively few real proletarians in Paris in the sense of wage
workers in largescale factory production. The cities of Europe
were still peopledas regardsthe working classesand the poor-
very largely by self-employed, small-scale handicraft producers
and small shopkeepersand by a marginal population of uncertain
and unstable occupations in the primitive labor market. Factory
- production in the enterprise-labor-market
mode had appeared
but was still of limited extent, existing mainly in cotton textiles
in England and to a lesser extent in the north of France and the
Low Countries. In this sector, the traditional craft skills of self-
employed artisans were being steadily undermined both by the
introduction of new machinery and by the increasing employ-
ment of children and women, as well as of unskilled male labor-
ers, as operatives. Both putting-out and early factory production
were carried on in this way with a labor force of increasingly
indeterminate skills recruited through the labor market. The state
protectedthe employersfreedomto contractand penalizedat-
tempts at collective self-defenseby workers.
During this formative phase of the industrial system in
England, it was difficult to distinguish employed from unem-
ployed by any objective and durable characteristics. In Marxs
terms, the proletariat was hardly distinguishable from the reserve
army of labor. Frederick Engels, in his description of the condi-
tion of the working class in England in 1844, wrote:
Thus the working-class of the great cities offers a graduated
scale of conditions in life, in the best cases a temporarily en-
durable existence for hard work and good wages, good and
endurable, that is, from the workers standpoint; in the worst
cases, bitter want, reaching even homelessness and death by
starvation. The average is much nearer the worst case than the
best. And this series does not fall into xed classes, so that one
can say, this fraction of the working class is well off, has always
been so, and remains so. If that is the case here and there, if
single branches of work have in general an advantage over oth-
ers, yet the conditions of the workers in each branch is subject
to such great fluctuations that a single working-man may be so
placed as to pass through the whole range from comparative
comfort to the extremest need, even to death by starvation, while
almost every English working-man can tell a tale of marked
changesof fortune.
Duringthe secondhalf of thenineteenthcentury,by con-

trastwith therst half,a growingdistinctionwithintheworking
classcan be observed with increasingclarity,a distinctionbe-
tween a more established categoryof industrialworkersand
anothercategorylessestablished
ormoreprecariouslyconnected
topermanent industrialemployment.Themoreestablishedgen-
erallypossessed
a higherdegreeofindustrial
skillsandhadmore
stablejobs.The nonestablishedwerelessskilledandhadless
employment stability.
The dramaticgrowthin population
and
thepopulation shiftfromruralto urbanareasthatoccurred
in
latenineteenth-century
Europeaccentuated
thisdifferentiation.
Whenthemigrationcrossed
nationalboundaries,it added
visible ethnic identication to the social differentiationof the
emerging
distinctions
withintheworkingclass.
Workers
of the
older native stock tended to become more established,as the
newerimmigrantsto the townsswelledthe ranksof the nones-
tablished.The migrationof Irishworkersto theindustrialnorth-
westof Englandgavean earlyinstanceof ethnicappearance for
a work-based social differentiation. Subsequently,the United
Statesin the twentiethcenturycameto providethe foremost
example
of overlap
between
theestablished-nonestablished
dif-
ferentiation and successivewaves of migration. Established
workerswere from the older stockof Yankees,German,Scandi-
navian,andIrish,whilerecentimmigrants
fromsouthandcentral
Europeandblacksfromthesouthern
UnitedStatesstaffed
the
newmassproductionindustries
basedonsemiskilled
labor. In
the post-World-War-II
period,moreblacks,Hispanics,and
women enteredthe U.S. labor force as successors
to the earlier
wavesof immigrants.
Todaythereare manyworkersemployedin enterprises
suchas factories,stores,or plantations,
in nearlyall countries,
whoseconditionsof employment arenot materiallyinuenced
bytradeunionsor government
regulation.
Insecurity
ofjobten-
ure, low skills,lowerpay thanthat of established
workers,and
frequently,
membership
in a groupsuffering
adverse
socialdis-
crimination characterizethese nonestablishedenterprise-labor-
market workers situation.
Broadlytherearetwotypesofnonestablished
worker.The
rst typeareempl0yedwhen theyareemployedin medium
to small private enterprises.Theseenterprisesarethe successors

to the small factories that launched the Industrial Revolution in
Britain in the early nineteenthcentury.Latterly,they havebeen
exemplied by the rural textile mill, the Manhattansweatshop
in the needletrades,the Hong Kong electronicscomponentfac-
tory. Small-scale
industriessurviveto form whatJohnKenneth
Galbraithcalled the competitivesectorof industry, which exists
alongsidethe largescalemonopolysectorof advancedcapitalist
countries. They havealsomultiplied in somenewly industrial-
izing countries of the Third World. The lower productivity of
their technicalprocessesis compensatedby the lower wagesand
greatermalleabilityof their workers.Thepracticestill prevalent
in construction in some countries, where a gangbossrecruits and
payshis own workersto carryout a specicjob of work for an
all-in price, alsofalls into this type.
The secondtype of nonestablishedworker is employedin
big industry in semiskilledjobs. (The term semi-skilledwork is
a euphemismdescribingan operationfor which a worker canbe
trained in anything from a couple of daysto a couple of weeks.)
In this form, the entrepriselabor market is included within the
big corporatemonopoly sectorof industry. Hereestablishedand
nonestablished workers are institutionally separatedin a variety
of ways. The established may be unionized and the non-
established lack unions; or the two groups may have different
unions; or where they nominally have the sameunion, it will
protectthe establishedmoreeffectivelythan the nonestablished.
The two groupshave different income levels, different expecta-
tions of job security,different levelsof health and safetyprotec-
tion, often differentlegalstatus[e.g.,gastarbeiterversusnational).
The nonestablished workers in big industry include immigrant
workersemployedon a full-time basis,temporaryworkerssuch
as ofce overload staff, and employeesof enterprisesto which
big industriessubcontractcertaintaskslike cleaningand certain
kinds of maintenance performed on the big industrys premises.
This secondtype does not conform strictly to the pure
labormarket,becausestateregulationsdo impinge somewhaton
the terms of employment affectingsome jobs. The distinction
holds,however,in that protectionis alwayslesseffectivefor the
nonestablished worker. His or her employment is more precar-
ionsin everyway.Poorprotectionshadesinto no protectionfor

the manynonestablished
workerswho arein black, illegal,or
undeclaredwork entirely outside the statesofcial cognizance
orregulation.
Thissecond
typeofenterprise-labor-market
mode
is becomingmoreimportantthanthe rst type,especiallyin the
industrially more developedcountries.
The social relationsof the small enterprisehave an ideo-
logicalimportance
beyondtheireconomicsignicance.
Theyare
represented
asembodying
theidealsofentrepreneurship
andfree
enterprise.Small-enterprise
employersalsosometimes
claimto
have a close, nonconictual, sometimespaternal relationship
with their workers.In somecases,enterprisesdo maintainsteady
jobsfor at leasta coreof oldhands.Highturnoverandunstable
employment is,however, endemic
in smallenterprises
because
of fluctuations in their markets.This very narrowly limits the
realpossibilityof longtenure,whichwouldbe the aspectof
paternalismmost meaningfulto workers.
Effortsby the stateto extendmoreimpersonalformsof
protectioninto the employment
situationof nonestablished
workersmaybe thwartedby employerswho aresuspiciousof,
and hostileto, tradeunion growth,and theseemployersmay also
enjoythe complicity of someworkersfor whom maximizing
individualearningsis a moresalientgoalthanclasssolidarity.If
theparticipant
in theprimitivelabormarketis a lumpenprole-
tarian,the small-enterprise
workeris oftena proletarianwhohas
yetto makecollective
effortsto improvethings.Individualsur-
vival ratherthan classsolidarity is uppermostin his or her mind.
In the secondand growing type of enterpriselabor mar-
ketthe nonestablishedworker within big industrythe ideo-
logicalrationales
of smallindustryaretotallyirrelevant.
The
milieu of big industryis a powerfulstimulusto theawarenessof
relativedeprivation.Sincethe basisfor institutionalsegregation
of the nonestablishedis often in nonproduction-relatedcharac-
teristicsprincipallyethnicityandsexit is not surprisingthat
thesecharacteristicsbecomethe focusof protest.The civil rights
movementfor black peoplein the United Statesand the feminist
movementsin many countrieshavetaken up the causeof these
groupsof nonestablished workers.Suchactionhassometimes
spilledoverinto tradeunions,transforming
aninitial hostilityor
aloofnesstowards nonestablished workers into efforts to organize

them and to promote solidarity between established and non-
established. Such efforts are, however, very largely dependent
on a favorable economic environment and are placed under con-
siderable strain or reversed by large and growing unemployment,
which hits the nonestablished most severely while encouraging
a more self-protective attitude on the part of the established.
Enterprise-labor-market production, and self-employment
relations, have also not only continued to exist but have also been
actively revived and encouraged in the redistributive develop-
ment of centrally planned economies. This fact underlines that
there is nothing inherently or exclusively capitalist in these
modes of social relations of production. During early phases of
redistributive planning there was, indeed, a tendency to regard
these forms of production relations as residues of capitalism to
be superseded by largescale collective organization of produc-
tion. This attitude has generally been set aside with the accu-
mulation of experience in planning. Small, independent enter-
prises, both individual self-employed and those employing a few
wageworkers, have becomemore prized by planners asrelatively
efcient and exible ways of meeting many basic needs of the
population. Planners then turned from discouraging and restrict-
ing these modes of production relations to regulating them and
including them in their planning as regards both allocations of
inputs and anticipated outputs.
Bipartism
A third mode of social relations of production appeared
with the consolidation of the capitalist mode of development in
industrybipartite relations between organized workers and em-
ployers. Its emergence has to be situated in the context of the
changesin the nature of the labor force mentioned in connection
with the enterprise-labormarket mode-the differentiation be-
tween established and nonestablished workers.
Trade unions took root among the established workers,
basedusually upon the skilled occupations,and unions werebut
the centerpiecesof a broaderlabor movementthat included pol-
itical partiessupportedby workers in the main industrialized
countries. The new political importance of this upper layer
amongthe working classbroughta responsefrom politicians and

the state in the form of legislation extendingthe vote to them,
conferringlegal statusupon tradeunions, requiring certainmin- M
imum standards in conditions of industrial employment, and
introducing socialinsurance.
Union recognition was securedfirst by the early estab-
lished workers in the form of craft-based organizations. Succes-
sivewavesenteringthe laborforceassemiskilled,nonestablished
workerscreatedpressuresfor the extensionof bipartite relations
to thesegroups.The advantagesof possessinggreaterresources
gaveskilledworkerstheedgein developing
effectivetradeunion
organizations.The semiskilledfollowed behind.As they in turn
developed
organizational
capacitytheyalteredtheorganizational
basis,the strategy,and the aims of tradeunionism. The work on
which these later waves of workers were employed was of a
different characterfragmentedtaskscoordinatedby an indus-
trially engineeredprocess.The skilled trade gaveway gradually
to the industry as a basisfor union organization.Control of jobs
(which made sensefor skilled workers] took secondplace to
wagesand working conditions asbargainingissues.Political ac-
tion becamea more salient part of union strategy.
An ideological and an organizationaldistinction accom-
paniedthis gradualseparationbetweenthe two categories
of
labor. The ideological distinction was symbolizedby the break
between Marx and Bakunin. Orthodox Marxists thenceforth saw
in the establishedworker the proletariantype who embodiedthe
contradiction to the highest developmentof productive forces
under capitalism.They often disdainedthe nonestablishedand
marginalsas a lumpenproletariat
unsuitableto be the basisfor
revolutionary action. Bakunin and his emulators,up to and in-
cluding Frantz Fanon, on the contrary, saw the marginals as
amongthe most exploited, les damnésde la terre, and for this
very reasonmoredisposedto befully committedto revolutionary
action than what they perceivedto be a cooptedaristocracyof
labor.Lenin in attackingthe labor aristocracyasthe betrayersof
the working class,inclined moreto Bakuninthan to Marx. Tiers-
mondistepopulism continuesthe samecurrent of revolutionary
ideology,while radical Marxists like RosaLuxemburgand An-
tonio Gramsciremainedmoreconsistentwith MarxsViewof the

working class.2°
Organizationally, the distinction was between trades
unionism, initially craft-basedunionism, and the larger,looser
forms of organization associatedwith semiskilled, nonestab-
lished workers. In North American experience, the Knights of
Labor and the Industrial Workers of the World appealed to the
nonestablished workers, as did the industrial unionism of the
Congressof Industrial Organizationsat its origins in the 19303.
The trade unionism of established workers became the preemi-
nent form of working-classorganization in northern Europe,
whereas a form of syndicalisrn took root in southern Europe
(especiallyItaly and Spain)in areasof lesserindustrialdevel-
opmentwherean established workingclasshadnot yetbecome
so fully formed and so clearly differentiatedfrom the more mar-
ginalor nonestablished
workers.
Craft-basedtrades unionism and forms of political action
leading in the direction of social democracywere dual expres-
sions of the institutionalization of conflict achieved by estab-
lished workers through the evolution of bipartite social relations
of production in the industrially most advancedareasfrom the
late nineteenth century. Worker-employer conict became insti-
tutionalized when the trade unions of established workers were
recognizedand acceptedas legitimateand cameto perform reg-
ular functions in industrial relations. Institutionalization of con-
ict is the product of hegemony-concessions
can be made to
the unions within bipartism without disturbing the ultimate con-
trol of the hegemonicclass.
By contrast, syndicalism never acquired such legitimacy.
ideologically, it remained as a challenge to the foundations of
social dominance and organizationally it never acquired the pos-
itions of strength and leveragewithin industry that would enable
it to become a stable bargaining partner with management. Syn-
dicalism and anarcho-syndicalism remained forms of conscious-
ness of workers in an enterprise-labormarket mode of social
relationsof productiona challengeto the continuanceof this
mode but not of itself an adequate force to transform the mode.
Wherever, as in the case of the CIO, an essentially syndicalist
movement,using syndicalistweaponslike the sitdown strike or

plant occupation,did acquirepositionsof strengthwithin indus-
try, it tendedto embracebipartite socialrelationsof production,
to work toward establishedstatusfor its members,and to change'
its ideology in the process.
A condition for bipartism is a rough balance of strength
between labor and management.Too great an imbalance favoring
managementwould removethe incentive to negotiateand pre-
sagea return to enterprise-labor-market
conditions.Historically,
how has such a balance come about? By a combination of work-
ing-classpressurethroughthe formationof effectivetradeunions
and action by the stateboth to encourageunion organizationand
provide it with a legal framework.The further questionis: why
should the state have taken such action? The answer: because
the people in control of the stateperceivedthe opportunity of
strengthening their political base by attracting worker support
without antagonizing other politically important elements.
Working-class pressure became effective rst during the
nineteenth century in western Europe in the form of craft-based
associations that could inuence the supply of skills in the labor
market. These were local groups linked in loose national net-
works built up through the movement of craftsmen in the practice
of their trades. The importance of the working class as a political
force is associated especially with the emergence of industrial
unionism from the late nineteenth century. Industrial unions
tended to be more centralized, with larger top-level bureaucratic
structures. They had a greater propensity to exert pressure on the
state both directly and through political parties controlled or
inuenced by labor.
Government responsesto legalize union activities and en-
courage collective bargaining came in Britain in 1867, in France
in 1884.23The new legislation resulted during the following dec-
ades in substantial increasesof union membership. The counter-
part to acceptanceby the state of the legitimacy of trade unionism
and collective bargaining was acceptanceby labor of the capitalist
social order asthe legitimate framework within which labor could
act to advance its own interests.
Worker organization, in turn, tended to stimulate em-
ployer organization, leading to the creation of employer associ-
ations for purposes of negotiations with unions, or at a minimum,

to a coordination of bargaining strategiesamong individual em-
ployersconfrontinga singletradeunion. Nationalpracticevaried
in regard to the level at which negotiations would take place.
In the United States,the enterprise remained the bargaining unit,
whereas in European countries, the practice of industry-level and
national-level negotiations developed between strongly central-
ized worker and employer organizations. Even where bargaining
was at the enterprise level, however, the goal of the trade union
was to establish a precedent for subsequent application in other
enterprises in the trade or industry. Some countries have recog-
nized this in their legislation, which provides for the extension
of collective agreementsto enterprises other than those directly
covered by negotiations. Bipartism thus has a built-in spread
effect toward equalizing conditions in the occupations covered
by its negotiations. This, in turn, facilitates mobility of workers
within the same occupation. Unions gain control over accessto
jobs, over the supply side of the labor market, and to some extent
over the workplace. The worker, for his part [and in bipartism is
has usually been a him and not a her], identies primarily
with his skill or occupation and with his union rather than with
the enterprise. In the course of a working lifetime, he may be
employed in a number of enterprises, conserving all the time his
status in his occupation.
The role of the state in the creation of bipartism cannot be
underestimated. The state did not merely respond to worker
pressures.The state often facilitated trade union organization and
put pressure upon employers to come to terms with unions.
Nowhere was this clearer than in the United States, the last of
the major industrial countries to equip itself with trade union
legislation. The 1930s New Deal administration of Franklin Roo-
sevelt was the turning point for bipartism in the United States.
The craft-based trade unions of the American Federation of Labor
(AFL) had been much weakened by the depression, and the AFL
leaders had been consistent supporters of the Republican Party.
Through section 7A of the National Industrial Recovery Act and
especially through the Wagner National Labor Relations Act of
1935; the government placed the weight of legality behind the
union movement and behind collective bargaining as the manner
of settling disputes, and it protectedunion organizersagainst

harassment
by employers.
A newunionmovement,
theindustrial
unions of the Congressof Industrial Organizations[C10], pro-
ceededto organizethe largelyimmigrant semiskilledworkersof
the mass-production
industries,longignoredby the established
native-stockcraft-union leadershipof the American Federation
of Labor.In the yearsthat followed, the union movementgrew
from less than 3 million members in 1933 to more than 8 million
in 1939and becamepart of the political coalition put togetherby
the Roosevelt Democrats.
Under bipartism,the statesrole, thoughfundamental,has
neverthelessbeenlimited. It hassoughtto bring abouta balance
of forces in industry betweenworkers and employersand to
ensurethat peacefulmeansareusedfor the settlementof indus-
trial disputes. The statehas sought,in other words, to institu-
tionalize labor-management conict. It has not itself intervened
directlyas a partywith an interestin the specicoutcomesof
thesedisputes.[Wherethe statedoesthis, it transformsbipartism
intotripartism.)In thebipartitemode,thestatetypicallyprovides
a legalframeworkfor negotiations,and it administersminimum
laborstandards,which areof direct consequence mainly to work-
ers outside the bipartite sphere.Indirectly, statelabor adminis-
tration safeguardsthe bargainingstrengthof unions. Stateregu-
lation puts a floor under conditionsof unorganizedworkers
outside the bipartite sector,sometimesextendingto them the
minimum conditions gainedby workersthroughbipartite nego-
tiation. Laborlegislationtherebylimits the impact that a pool of
unorganizedworkersmight otherwisehavein enhancingthe
powerof employersin thebipartitesector.Legislationmayalso
requireemployers
to negotiate
with unionsin goodfaith.
Agreements
reached
between
unions
andemployers
do
not systematically
takeaccountof interestsbeyondthoseof the
partiesdirectlyconcerned.
Theyarenot concerned with public
policy and public policy is not concernedwith them.
Although createdby capitalistdevelopment,bipartite pro-
duction relations need not be considered to be necessarily con-
ned to that mode of development.Of course,the fact that no
casecanbe cited of bipartism within redistributivedevelopment
createsa certain presumptionagainstthis possibility. However,
somecritics from within redistributivesystemshaveforeseenthe

possibilityof the growthof moretransactional,
bargaining
types
of relationshipsin thesesystems
withouttheirbecomingcapital-
ist. The possibility must remainopen;bipartismcould conceiv-
ablybecomepart of the panoplyof redistributivedevelopment
just asself-employment
andenterprise-labor-marketproduction
relationshavenow found an acceptedplacethere.
MON OPOLY CAPITALISM
The monopoly phaseof capitalist developmentbeginswith the

long depression of 1873-96. Its salient characteristics have been
[1] the concentrationof capital into largecorporateunits; (2) the
growth of a dual structureof economyin the industrializedcoun-
tries distinguishinglarge-scale
and small-scaleenterprises,
or
monopoly and competitivesectors;(3) increasedimportanceof
the role of bankingconsortiaandstatesin bringingtogetherthe
amountsof capitalnecessary to fund large-scale
industries;(4)
increasedconcern of statesnot only for raising the capital for
industry but alsofor ensuringthe conditionsin which production
and capital accumulationcancontinuewithout disruptions,i.e.,
specically concern for maintaining adequatelevels of invest-
mentandemploymentandfor thebalanceof payments;
and[5]
an international division of labor broughtaboutby capital in the
most industrialized countries investing in complimentary and
subsidiary production in less industrialized countries.
This phase has brought into existence several new modes
of socialrelationsof production.Theemergence of a monopoly
sectormadeit possiblefor someof thelargerenterprises
to spon-
sor enterprisecorporatistrelationsfor a relatively privileged seg-
mentof their laborforces,thosefor whom it becamecapitals
interest to provide quasipermanenttenure. Such favored em-
ployeescameto enjoyconditionsof employmentanalogous
to
those of civil servants.The new role of the state as an active
agencyof economic policy in liberal, parliamentary,pluralist
polities also led toward tripartismin which the statetakeson
theroleof consensusshaper,
associating
capitalandorganized
laborin theframingandexecution
of economic policy.In late
industrializingcountriesthatdid nothavearm liberal,pluralist

foundationof polity,the stateassumed a moreauthoritarianrole
andimposeda framework
of collaboration
uponcapitaland
laborstatecorporatism.Thesetendenciescan be perceived
clearlyfromthe 1920s.Theyrevivedandbecame morewide-
spread duringtheyearsofeconomic
expansion
followingWorld
War II. Whereverthey appeared,enterprisecorporatism,tripar-
tism, and statecorporatismcoexistedwith other,oldermodes,
the enterpriselabor market,self-employment,householdpro-
duction,andbipartism.Thenewmodesassociated with monop-
oly capitalistdevelopment
became,
however,
dominantwithin
the socialformationswherethey appearedin the sensethat they
characterized
the leadingsectorsof the economy,andthe other
modes assumed a subordinate relationship to them.
Enterprise Corporatism
A primaryconditionfor the existenceof enterprisecor-
poratismwasthelarge-scale
undertaking.
Thelongdepression
beginning
in 1873broughtaboutthebankruptcy
of innumerable
smallenterprises
and setin motiona processof industrialcon-
centration in all the countries of advancedindustrialism. The
corporation
emerged
asthedominant
formoforganization
ofthe
meansof production.With the corporationwentthe bureaucra-
tizationof management,
thedevelopment of whatReinhardBen-
dix calls internal bureaucratizationto distinguish it from the
external bureaucratizationthat representsan extensionof state
controloverindustry. Internalbureaucratization
involveddel-
egationof authority,andtechnical
andadministrative
speciali-
zation of functions,the distinction of staff and line, and the
emergence
of what John KennethGalbraithcalled the
technostructure/29
The corporateform of organizationand its internalbu-
reaucracy
cameto adopta distinctiveformof ideology.Its essen-
tial feature is the social integration of the corporation as a pro-
ductive community. In its Japanese
form, this ideologyappears
asa continuousdevelopment
within a nonconictualconceptof
production relations.
In the1920s,thelargestcompaniesin the
heavyindustries, the zaibatsu,
offereda stableandprivileged
positionto theirpermanent employees,andthismodelof rela-
tions was reconstructed during the Korean War boom of the 1950s
to provide the bureaucratizedcorporatewelfareof lifetime com-
mitment employment to the established industrial workforce in
Japan.InitsAmerican-European
form,theideology
ofenterprise
corporatismappearedasan alternativeto bipartismissuingfrom
theinitiativeof employers.
Thescienticmanagement
of Taylor
was one critical step in a processof eliminating the workers
residualautonomyin productionand concentrating
controlof
workperformancewith management.Theindustrialpsychology
of Mayo, following Taylorism,attemptedto reconcilethe semi-
skilled workers to the diminished condition in which scientic
management had placed them.
Bipartismmoderatedandregulatedconict by institution-
alizingit. Enterprisecorporatismdeniedthe legitimacyof con-
ict, representingit as a meremisperceptionof interestson the
part of workers(who mistakenlythoughtthey wantedmore
money when what they really neededwas more satisfactionin
theirwork)anda deciencyof manipulativeskillson thepartof
management.The doctrine of Mayo and his followers has been
of practicalbenet to numerousexponentsof industrialpsy-
chologywho have becomeconsultantsto managements and or-
ganizersof training programsfor middle management;
asBendix
pointsout, it has foundonly limited acceptance in managerial
practice,but . . . its contributionto managerial
ideologyhasbeen
pervasive/31
The American-European
ideologyof enterprisecorpora-
tism, originating as an antiunion reactionto bipartism,moveda
stagefurtherin thelatertwentiethcenturytowardattractingtrade
unionsawayfrom bipartisminto a symbioticrelationshipwith
corporate management.The ability of largescaleenterprises,
publicor private,to granta privileged
positionto preferred
seg-
mentsof the workforceexertsa power of attractionon unions.A
tendencytoward plant-levelnegotiations,
reinforcedby tech-
niqueslike productivitybargaining,
wherebymanagement gains
backfromunionscontrolovertheproduction
process
in return
forwageconcessions,
andalsobyformsof workerparticipation
in management
that encourage
an enterprise
consciousness,
can
allattractworkers
awayfromsolidarities
based
onoccupation
or
industry or the labormovementasa whole,in orderto focustheir
interestsandloyaltiesonthecorporation,
thesourceoftheirwell-
being.Thus,througha differenthistoricalroute,a structuresim-
ilar to the enterpriseunionismof Japantook shape.Both are
encompassed within the twentieth-century
modeof enterprise
corporatism.
Enterprise
corporatism
maintainsstableemployment
con-
ditions for establishedemployees.The central core of IBM em-
ployees,
civil servants
ofmodern
states
orinternational
agencies,
and lifetime employees
of big Japanese
industrialand banking
groupsarenotmuchconcerned oraffected
byuctuations
in the
supplyof anddemandfor laborontheopenmarket.Theircon-
cernsarecareerprospects,
seniorityrights,fringebenets,and
pensionentitlements.
In the enterprisecorporatistmode,the enterpriseis the
basicunit of employer-worker
relations,asin theenterprise
labor
market,but the employmentinstabilityof the enterpriselabor
markethasbeenreduced,and employmentsecurityand the wel-
fare of workers and their families is ensuredby the employer.
Thecorporatistconceptimpliesa contrivedharmonyof interests
between workers and managementor at least attitudes and
behavioron the part of boththat areconsistentwith this notion
of harmony.Management orientstheloyaltiesof established
em-
ployees
totheenterprise.
Ofcourse,
bigcorporations
alsoemploy
nonestablishedworkers who are excluded from the regime of
enterprise corporatism.
Theprimaryconditionfor enterprise-corporatist
relations
is a substantialconcentrationof industry into large-scaleunits
privateor publiccorporations.
Thequasimonopolistic
position
enjoyedby the corporationenablesthe employerto guarantee
securityof tenureto the employeeandto introducemeasures
to
gaintheemployees
personalidentication
withthegoalsof the
enterprise.
Thehighcostof capitalequipment
andrisk of loss
from stoppagesof work makeit in the employersinterestto
providethefavorableconditions.Thelargecorporationcanmas-
ter its own environmentand plan for a long time span,and this
allowsit to gaincontroloverproductmarkets
andoverits labor
force.
Enterprise corporatistmanagement is professional
in all
aspects.
In laborrelationsit establishes
animpersonal,bureau-
cratizedinternal welfare managementthat is innitely more ef-

fective than the personalpseudopaternalismclaimed by some
small enterprises.Personnelmanagementgivesemphasisto the
psychological,family, and social aspectsof the workerslife in
respondingto pressuresfor improvementsin wagesand working
conditions.Its targetis the workerasa whole person,and it forges
a multiplicity of links binding him or her to the enterprise
health benets, privileges that come with seniority, pension
rights, and so for .32
Corporate management and the political elite are close to
one another,and corporateand statepolicy are closely aligned
on trade, nancial, and industrial questions, but the state does
not intervenesignicantly in labor matterswithin the corpora-
tion. State intervention in the labor eld rather concerns workers
in other modes whose material conditions are less favorable than
those of workers under enterprisecorporatism.Enterprisecor-
poratismtendsto outbid stateregulationasregardsemployment
conditions. In countries where enterprisecorporatismis well
established,the stateleavescorporationstheir full autonomyin
dealing with labor matters.
In some cases,the security and welfare provided by the
corporation act as a deterrent to the formation of unions. In others,
unions or staff associationscomplementmanagementby per-
forming personneland welfarefunctions and by handling indi-
vidual grievances.Trade unions, where they exist in enterprise
corporatism,function primarily as enterpriseunions. They con-
centrate on protecting and enlarging the advantagesof established
workers within the large undertakings. They ignore in substance
the issues of concern to nonestablished workers or to the unem-
ployed outside the corporation.
The union-managementrelationshipin enterprisecorpo-
ratism is symbiotic rather than adversary. Symbiosis does not
exclude conict about some issues of concern to workers in the
enterprise,but it is a conict carried on within an overriding
commoninterest in the well-being of the enterprise.Enterprise
corporatist unions may, for example, dispute with management
over the size of employercontributionsto a supplementaryun-
employmentbenet fund but adopta commonfront with the
employerin resistingthe imposition by the stateof antipollution
devicesor health hazardwarningsto protectthe public. Corpo-

rationsareto bethoughtof ascoalitionsof interests,amongwhich
unions and staff associations are included, engagedin playing a
positive-sum
gamewith eachother.Theotherfaceof this mod-
erated rivalry within the corporation is exclusivity toward
outsiders.
Tripartism
In the most industrially advancedcountries,wherebipar-
tism had already developedin the late nineteenth and early
twentieth centurieswith solidly organizedmovementsof estab-
lished workers,the increasedinterventionof the statein national
economicmanagementtendedto transformbipartite relationsin
the direction of tripartism. The statenow was not merely con-
cernedto providea frameworkfor orderlysettlementof issues
betweenemployersand workersbut alsotook a hand in shaping
these settlementsand bringing about more cooperativelabor-
management
relations.Tripartismwasa furtherdevelopment
in
the same hegemonythat had generatedbipartism. The states
denition of national economicpolicy conformedto the concep-
tions and interests of the dominant employer class while it en-
couraged
concessions
suchaswould retainthe acquiescence
of
the articulate class of established workers. But the increased
complexities
of nationaleconomicmanagement
afterWorldWar
I now required greaterstateintervention.Governmentswere no
longer preparedto leave wagesand employmentquestionsen-
tirely to the interactionof employersand unions.
As a consequence, corporatiststructuresgrew within the
state,and the line betweenstateand economy,stateand civil
society,becameblurred.Ministriesof industryencouraged
the
developmentof industry organizationsand establishedregular
links with them; ministries of labor did the same with trade
unions.Regularcontactsandthe performanceof functionswithin
an expandedstatemachinerybound employer and worker or-
ganizationsmore closelyinto the state.Suchdevelopmentswere
taking place in the industrialized countries of westernEurope
from the earlypostwarperiod. In the United States,initial tend-
encies can be observed in the Hoover administrations move to
CAPITALISTDEVELOPMENT 75
bring businessinto closerconsultationwith governmentand

were accelerated with the New Deal.
The origins of tripartism lay in the mobilization of labor
andcapitalforwareffortin allthemajorindustrialpowers
during
World WarI. In England,the oldestindustrialpower,the tem-
porarytruce in classconict so impressedsomeleadingcivil
servants
thattheydrewup plansfor aninternationalorganization
to perpetuateand promotethe association
of laborwith capital
and governmenta proposal that became the International
LabourOrganization
underPartXIII of theTreatyof Versaillesin
1919.This reecteda recognitionon the part of government
leadersthat union contributionsto the war effort earnedlabor a
rightto beconsulted
by thestateon policymatters
concerning
labor,a right that corresponded
to laborseffectivepositionof
collective
powerin society.
It alsoreected
aconcern that,lacking
suchhegemonicconsciousness onthepartofthestateleadership,
Bolshevism wouldprovideanalternative andmorethreatening
modelfor labor.As theleadingtradingnation,Britainmighthave
beendisadvantaged
in worldmarkets
if apeacetime
prolongation
of tripartismwereto havetheeffectof raisinglaborcosts.Hence
the concern of British ofcials to internationalize the
experiment.
Tripartism in the interwar period was a mixed success.
British practicein fact revertedto bipartite confrontation.It was
in Germanythatthe impactof earlytripartismwasgreatest.
The
war economypersistedinto the postwarperiod mostof all in this
countrybecauseof the twin pressuresof the burdenplacedon
Germanindustryby reparations obligationsandthe closeprox-
imity of theBolshevik
menace.
Employers
in bigindustryper-
ceivedthe utility of allying with unionsto securegovernment
defense of the interests of their industries. The alliance
preempteda moreradicalrevolutionarydevelopmentin the labor
movementandwon industrialistsgovernment
supportduringa
phase of politicalpreeminenceoftheSocialDemocraticPartyin
theimmediate postwaryears.It alsofueledgalloping
ination,
for bothcapitalandunionizedworkershadthejoint powerto
protecttheir prots andearningsthroughgovernment operation
of the printing pressesfor money,while otherelementsof the
76 SOCIALRELATIONS
OFPRODUCTION
population,
thefutureclientele
ofNaziism,
lostout.Labors
rel-
ativestrength
wanedin thelate1920s,
to collapse
altogether
in
the 1930swith the arrivalof the Naziregime.Tripartismhad
servedto conne laborsdemandsto what was acceptable to
capitalduringthepostwar
crisiswhenlaborhadpoliticaland
economic
opportunity,
butit hadnotdelivered
anylastinggains
to labor.
In the United States,the early New Dealwas inspired by
thetripartite
concept.
General
HughJohnson,
President
Franklin
Roosevelts
NationalRecovery
Act administrator,
wasmuchin-
uencedby hisWorldWarI experiencein mobilizingindustry.
Schlesinger
(1960)cites]ohnsons
reectionafterthe war:If
cooperation
cando somuch,maybethereis something wrong
with the old competitivesystem.37
The NRA achieveda tem-
porarymobilization
ofAmericans
foreconomic
recovery
in the
élan of a new administrationduring the crisis years1933-34. Its
impactfaltered
before
thehostilityof employer
interests.
The
lastingstructuraleffectof theNewDealwastheerectionwith
governmental
support
oftradeunioncountervailing
power.A
transitory
tripartismrelapsed
intoa strengthened
bipartism.
Tri-
partismreceived
furtherimpetus
duringWorldWarII in the
Western
powers,
whereorganized
laborwasbroughtintoaVari-
etyofboards
andagencies
whose
aimswerethemaintenance
of
productionfortheeffective
prosecution
ofthewareffort.Wartime
experiencewasconsolidatedin thepost-World
WarII institutions
setup in WesternEuropean countries
to associate
theeconomic
interestswith national economicpolicymakingnational eco-
nomic and social councils advisory to governments,planning
commissions, and so forth.
When,duringthe 19603,concernto limit ination took
theplaceofanearlier
preoccupation
withreconstruction
in the
prioritiesof thesecountriesgovernments,
the incentiveto
strengthen
tripartite
structures
wasincreased.
EvenintheUnited
Statesand Canada,
whereorganizedlaborwaspoliticallyweak
relative to labor in northern Europeancountriesand free-enter-
priseideology
wasmoreresistant
to market-constricting
collab-
oration,tripartismwasinvokedas an instrument
for putting
incomespolicies into practice.
Thus, through this whole period beginning after World

War I and continuing into the aftermathof World War H, tripar-
tism made appearancesin the industrially advancedcapitalist
countries. It became a signicant mode of social relations of
production,moresignicant at sometimesand in somecountries
than others. Tripartism coexisted with other industrial modes,
principally enterprisecorporatism,bipartism,and the enterprise
labor market, where and when it appearedas the overarching
modeof dealingwith limited but crucial issues.Tripartism thus
became an option in advanced capitalist countries, sometimes
practiced,sometimesadvocatedasa way out of crisis.
In the tripartite mode, governmentplays an active role
interacting with industrial management and trade unions.
Whereasin the bipartite form, governmentconnes itself largely
to facilitating and encouragingunion-management
bargaining,in
the tripartite form, government is directly interested in inuenc-
ing the outcomeof this bargainingand so becomesa party to it.
This substantive concern of government arises for two main rea-
sons.One is that governmentis itself a largeemployer,and the
termsof employmentin the statesectorareboundto be inu-
encedby decisionsof unions and managementsin the private
sector.The secondreasonis that wagesettlementsin the private
sectoraffect the attainmentof the economicand social goalsof
public policy.
Tripartism attempts to institutionalize decision making
amongthe most powerful groupinterestsin thoseareasof public
policy upon which labor relations have a bearing,e.g.,prices,
incomes, investment, the level of employment, and the balance
of payments.Tripartism flows from a recognitionby government
that public policy in theseareascanwork only with the compli-
ance of the powerful corporate and union interests, and it arises
only in a political culturethat rulesout directgovernmentcontrol
over these interest groups and requiresthat compliancebe se-
cured by persuasion.
A certain kind of political culture is, indeed, a condition
for tripartism,one in which the stateis regardedboth as the
instrumentof civil societyand at the sametime asthe agencyfor
harmonizingcivil societysdivergentinterests.Government
is
78 SOGIALRELATIONSOF PRODUCTION
thoughtof bothas the channelfor procuringsatisfaction

for
separate
interestsand asa forceconstraining
theseintereststo-
ward reconciliation.
Thereare,however,conflicting principles of interestrep-
resentationwithin the state.The more traditional principle is
territoriallybasedrepresentation
of electorsthroughparliament.
Thealternativeprincipleis oneof economicinterestgroupsthat
cut across the territorial subdivisions of the state. Tripartism
erectsthe secondof theseprincipleswhich is the lesslegitimate
of the two in the Westernliberal political traditioninto a more
or less institutionalized decision-making process. Tripartism
thus contradictsthe conventionalnotion that public policy is to
be denedby representatives
of the peopleratherthanby inter-
action of economicinterests.However,the incapacity of parlia-
ments to deal effectively with the complex issuesof economic
policyin amodernstatehasgenerated
legitimacy
forthesectoral
interestbargaining
approach.Electedlegislaturesnevertheless
remain in the background,and the executiveof governmentcan
alwaysappealto thepublicanditsrepresentatives
asameans
of
discipliningrecalcitranteconomicinterestsand thus can exert
pressureontheseinterests
towardreconciliation
andconformity.
Tripartism,
accordingly,
canberegarded
asacorporatist
formof
decisionmakingwithin a polity that retainsat leastthe poten-
tiality of parliamentary
controlandaccountability.
Tripartitecorporatism
presupposes
two politicalcondi-
tions. One is a certain level of strength of the working class
expressedboththroughstrongtradeunionsandastrongpolitical
party.Theothercondition
istheexistence
ofcapitalist
hegemony,
i.e.,an acquiescence
by organizedlaborin the continuedorgan-
izationof the economythroughthe capitalistmodeof develop-
mentand recognitionby capitalthat this acquiescence
mustbe
acquiredthroughsomeconcessionsto labor.Wherelaborhas
beenpoliticallyweakandinarticulate,
tripartismhashadno
durablebasis,as in North America.Wherecapitalist hegemony
hasnot beenacceptedby majorlabororganizations,
e.g.,in the
casesof the French CGT and the Italian CGIL and the Communist
partiesof bothcountries,
tripartismhasperforce
beenlimitedto
thoselaborelementswho do,with correspondinglylimited effect.
CAPITALISTDEVELOPMENT 79
State
Corporatism
State
corporatism
was
the
other
new
mode
toappear
fol-
lowingWorldWarI, rst with fascismin Italy andsubsequently
in other countriesof relatively late industrial developmentin
Portugal,Brazil,and Spainduringthe 19303.Statecorporatism
is an attempt by political leadersto createthe organizationof a
modern industrial statein conditions where the organizational
baseamongemployersand workershasnot successfullyevolved
in the direction of bipartism. This has been characteristic of late
industrializingcountriesin whichthe dominantemployerclass
in industryhasnot beenableto achievea socialhegemony. In
such cases,workers organizationstypically are either weak or
areof the syndicalisttype. They representa prise de conscience
on the part of workers who in terms of their actual production
relations remain in the enterprise-labor-marketmode of social
relations.
The
Italian
case
was
the
rstand
illustrates
the
principa
characteristics of state corporatism. As Antonio Gramsci re-
ected, the northernItalian industrial bourgeoisiehad neverbeen
ableto establishits hegemonyoverthe whole of Italy. In placeof
hegemony,there was the trasformismoof Giolitti and the Liber-
als,the constructionof coalitionsof sociopoliticalforces.When
the bourgeoisorder was threatenedduring the aftermathof war
by factory occupationsin the north, land occupationsin the
south,andtherevoltof agriculturalwagelaborers in thePovalley,
trasformismo did bringaboutatemporizing trucebutonethrough
which the dominantclasseslost condencein the regime.In-
dustrialistsin particularsawin theviolenceof thefascistsquads
the meansof putting in placea statethat would discipline
the workers.The Liberalssharedthe aim but lackedthe means,
i.e., the ability to use force. Liberals and industrialists eased
Mussolinis way to power and sought to ensure that fascism
would in fact serve the goal they both had in mind. For this
Mussoliniwouldhaveto suppress
themoredisruptiveelements
communistunionsratherthan the fascistsyndicalists.Mussolini,

in puttinginto placetheMinistryof Corporations,
did in fact
eliminatethe syndicalist
elements,just ashe sidetracked the
violence-pronesquadristelements.Fascistcorporatismim-
posed
thestates
orderuponlarge-scale
industry,
anorderwithin
which the statecededauthority in the enterpriseto management.
In the depression
yearsof the 19305,the statesorder-preserving
function extendedto the creationof a largeparapublicindustrial
sector.The statethroughfascismassumed the tasksthat a non-
hegemonic bourgeoisiecouldnot performon its own.
Statecorporatism hasbeenanalternativeroute,divergent
frombipartism,
in thetransformation
oftheenterprise
labormar-
ket.With bipartism,anemerging
proceduralconsensusallows
for theinstitutionalizingof industrialconflict,butwhereno such
consensusis attainable,and conflict remainsacuteandpolarized,
thestate,throughanimposedcorporatism, usesits forceto com-
pensatefor societyslackof hegemonicconsensus.
Understatecorporatism, thestateimposesauthoritatively
uponindustryanorganization
of formalrepresentation
for em-
ployers
andworkers
intended
tomaintain
order,
toregulate
work-
ing conditions,
to promotesocialharmony,andto eliminate
conict. In Bendixsterminology,this is a form of external
bureaucratization.
Thenamestatecorporatismhasnottraveled
widelysinceWorldWarII, no doubtbecause
of its erstwhile
association
with fascism,but theessence
of thetypehasbecome
prevalent
in manyof thelateindustrializing
countries
ofAsia,
Africa, and Latin America.
Statecorporatismmightbedenedasthatformof corpo-
ratismin production
relations in whichthepowerof thestate,
in thehandsof a politicalleadership,
predominates
overboth
managementandlaborwithouttheirbeingfany
effective
counter-
weightthroughparliamentarycontrolor accountability.
This
modeof socialrelationsof productionaccordingly is to befound
in countrieswhereliberalpoliticalinstitutionsandcompetitive
partypoliticshave
been
suppressed
orareonlyformal
andwhere
semiautonomous
organizations
of employersandworkersexist
or are createdunder statetutelage.Leadershipin theseorgani-
zations
is usuallyconditional
uponloyaltytotherulingpolitical
partyor thegovernment
leaders.
There is no effective delegatedbargaining under state cor-

poratism. Both worker and employer organizations seeksatisfac-
tion mainly through direct relations with ofcials either of the
state bureaucracyor of the ruling political party. Ideologiesof
state corporatism place high value on peaceful labor relations as
being in the national interest. Although industrial conflicts some-
times arise,they can be and usually are limited or repressedby
the political leadership.
State corporatism has never been extended to the whole
of a national economy.Usuallyit hasbeenconfinedto large-scale
industry. Statecorporatismhastypically beenconceivedby the
political leadershipasa controlmechanismto preventopposition
to its authority from arising within industry, not as a meansof
mobilizing the working class.Statecorporatismis signicant for
what it excludes: usually most of the national workforce in the
enterprise labor market, small farming self-employment,and
peasant-lord agriculture. State corporatism is essentially a
preemptive political form of social control.
The three modescharacteristicof the monopolisticphase

of capitalist developmententerprise corporatism,tripartism,
and state corporatismare peculiar to that phaseof develop-
ment. They are meansof organizingthe commandingheightsof
the economy in the hierarchical ordering of modes of social
relations of production characteristicof that phaseof capitalist
development. All three imply signicant involvement of the state
in leading the developmentalprocess.Enterprisecorporatism
appearsto excludethe state,sincerelationsat the point of pro-
duction arebetweenenterprisemanagement anda relativelypriv-
ileged cadreof employees.Yet enterprisecorporatisminvolves a
closerelationshipbetweencorporatemanagementand stateeco-
nomic agencies in the organization of the economy. It is this
relationshipthat createsthe conditionsin which corporateplan-
ning is motivated to stabilize employment conditions for these
employees.Enterprisecorporatismimplies a pyramidalstructure
of economyand societyin which corporatemanagementrelates
to stateeconomicpolicy at the top level, key employeeshave a
specialrelationship to corporatemanagementat the next level,
and subordinatemodesof socialrelationsof production service
82 SOCIALRELATIONS
OFPRODUCTION
thecorporations
at thelowestlevel.In bothtripartiteandstate
formsof corporatism
the stateparticipates
directlyandthemore
favored segments
ofthelaborforcehaveaccess
to decisionmak-
ing-atthepeakin theonecasethroughpluralisticbargaining,
in the otherthrougha bureaucratically
imposedsubordination.
But neithertripartismnor statecorporatismtouchesthe whole
economy
directly.Botharesuperstructures
underwhichsubor-
dinatemodesenterpriselabormarket,selfemployment, house-
hold, in particularperformsubordinate
functions,transferring
surplus to the dominantmodes.
CHAPTER FOUR
REDISTRIBUTIVE
DEVELOPl\/[ENT
Theredistributive mode
ofdevelopment
cameintoexistence
throughthe secondRussianrevolution,duringthe 1930s.The
rst, or Bolshevik,Revolutionof 1917standshistoricallyin line
with the Europeanupheavalsbeginningwith the FrenchRevo-
lution of 1789that overthrewpolitical structuresof the old re-
gime.In the yearsfollowing 1917,the Bolsheviksstruggledto
maintain and consolidatetheir political hold over the territories
formerlyruled by the Czarsand to protecttheir powerfrom
foreign intervention. They had no clear programfor the recon-
struction of society and economy.They reactedto situations
createdby revolutionarydevelopments while carryingon a de-
bateabouttheproperpoliciesfor a socialistrevolution.Theyrst
supportedworkersovietsthat took controlof enterprises, then
broughtthemunderpartyand statecontrol.Theynationalized
industrial
propertytoforestall
speculative
transfers
ofownership
andthenplacedtheformerownersin charge.
Theytriedtosatisfy
peasantdemandsthroughredistributionof land,then imposed
compulsory
deliveriesof agriculturalproduceasa warmeasure,
andsubsequently,
whenthewarcrisisdiminished,
encouraged
privatefarming and marketingthrough the New Economic
Policy}
It was only in the late 1920sand during the 19303that the
newmodeof redistributivedevelopment
tookshapein the sec-
ond or Stalinist revolution. Its concertedfeatureswere collectiv-
84 SOCIAL
RELATIONS
OFPRODUCTION
ization
ofagriculture
andadriveforrapidindustrialization
di-
rectedand coordinated by centralplanning.Two distinctive
modesof socialrelations
of productionweregenerated
through
thisdevelopmental
effort:thecommunal
mode,
applied
in agri-
culturalproduction,
andthecentral
planning
modethrough
whichindustrial
production
wasorganized.
Central
planning,
in
this historicalcontext,hastwo meanings:
oneis the xing of
priorities
andproduction
strategies
andtheallocation
ofproduc-
tionmeans
forsociety
asawhole;theotherisawayoforganizing
production
through
a hierarchical
command structure
thatin
practice
applied
mainlyinlarge-scale
industry.
Intherstsense,
central
planning
istheformoforganization
oftheredistributive
mode
ofdevelopment.
I shallhenceforth
callthisaspect
redistrib-
utiveplanning.
Inthesecond
sense,
central
planning
isamode
of socialrelations
of production,
andI shallhenceforth
conne
the term to that meaning.
Themodeof development
pioneered
by the SovietUnion
in the19303
wassubsequently
appliedwithvariations in China,
whentheChinese CommunistPartyestablishedits controlover
themainlandafterWorldWarII, andin NorthKoreaandcoun-
triesof eastern
Europe
thatfellwithintheSoviet
sphere
in the
same
periodand
subsequently
in Cuba
andVietnam.
Where
redistributive
development
practices
havebeentransplanted,
it
is oftendifficultto distinguish
practices
thatareinherentin the
mode
ofdevelopment
persefromthose
thatarederived
speci-
callyfromthecircumstances
oftheSoviet
experiment
in the
1930s.
Thecoercive-repressive
features
associated
withthecol-
lectivization
driveandmobilization
against
perceived
military
threat,whichareto beranged
in thelattercategory,
lefttheir
imprintupontheinstitution
andpractices
ofredistribution
in
the SovietUnionandtherefore
upontheformin whichthese
institutions were exportedto other countries.
Theredistributive
modeofdevelopment
hasnotbeenlim-
ited to thetwo modesof socialrelationsof productionjustmen-
tionedthecommunal
andcentralplanningmodes.
At various
phases
andin different
countries,
other
social
relations
ofpro-
ductionhavebeeneithertolerated
orencouraged
asadjuncts
of
redistribution.
Self-employment
hascontinued
ona substantial
scale
in farming,
crafts,
anddistribution.
Georgian
farmers
bring
REDISTRIBUTIVE DEVELOPMENT 85
their produce to Moscow to sell on the free market. China in the

19803has made it a national policy to encouragefarming by
contractswith individual households,bringing self-employment
within the framework of redistributive planning. Similarly in
countries of eastern Europe that have moved far in the direction
of large-scaleorganizationof agricultural production for grain
and other major crops,intensivehouseholdagricultureremains
moreeffectivefor vegetableand poultry productionand hasbeen
encouragedand incorporatedwithin nationalredistributiveplan-
ning. In someredistributive formations,e.g.,Poland and Yugo-
slavia, the enterprise labor market continues to exist both in
farming and in small enterprises such as hotels and restaurants;
andin post-MaoChinathe revival of smallenterprisesemploying
a few workers has becomenational policy as a meansboth of
expanding employment and providing more effectively some
basicnecessitiesto the population.Thereis no necessarycontra-
diction betweenindividual enterprise,whether in self-employ-
ment or enterpriselabor market form, and redistributive plan-
ning. Indeed, planning has incorporatedindividual enterprise
within its calculations.
In addition to theselegally recognizedactivities are the
extralegal or illegal operations of go-betweensand xers who are
ableto circumvent the bottlenecksarisingwithin the redistribu-
tive planning processby securingneededinputs for enterprises
or procuring other favorswithin the dispositionalpowersof the
redistributors.
Altogether,theseofcially encouraged, tolerated,and out-
right illegal but persistentforms of individual enterpriseconsti-
tute what has been called a second economy of considerable
proportionsthat coexistssymbioticallywith centralplanningand
communalsocialrelationsand may be regardedasa supportfor
andlubricantof redistributivedevelopment?
It wouldbewrong
to seethis as resurgentor incipient capitalism.There is no ex-
pandedreproductionwithin thesecollateralself-employment
and enterprise-labor-market forms of social relations and no ac-
cumulationof the capitalisttype. They provide an outlet for the
enterprise of some individuals and help to overcome some of the
administrative
inadequacies
of thecentralplanningsystem.
The distinction betweencommunaland centralplanning
modesof socialrelationsof productionarisesfromthekeyinitial

problem
confrontedbyredistributive
development:
howto over-
cometheagricultural
gap.Redistribution
hasnotevolved
outof
capitalistdevelopmentit is historicallyan alternativerouteto
expanded
reproduction.
Capitalist
development,
whichemerged
rst, confrontedthe sameproblemat an earlierstageit raised
productivity
in agriculture
andthereby
bothdisplaced
partofthe
agricultural
workforceandproduced enough foodto sustaina
growingurbanandindustrialpopulation.
In England,theagri-
culturalgapwasbridgedby a sequence
of events,
fromtheen-
closuresof commonsand the innovations of improving land-
ownersin theeighteenth
centuryto therepealof thecornlaws
of 1846,which consecrated
a policyof cheapandabundantfood
supply.
Redistributivedevelopmentwasadoptedby revolutionary
regimes
seeking
tocatchupwiththisearlycapitalist
development
byovercoming
theagricultural
gapmore
rapidlythrough
planned
measures. Theywouldusethecoerciveforceof thestatewhere
capitalistdevelopmentwasbornof the coerciveforceof the
marketandpropertylaw.Themethodadopted wascollectivi-
zationof agriculture
throughwhichthestateenvisaged
it would
havemorecontroloverproductionandcouldintroducechanges
in thetechnology
andscaleof productionon themodelof the
mostdevelopedcapitalist
formsofagriculture,
e.g.,thebigfarms
of the midwesternplainsof NorthAmerica.Sinceredistributive
development wasundertaken
in poorcountries
lackingagricul-
tural capitalequipment,
therewouldhaveto be a transition
periodduringwhichlabor-intensive
cultivation
wouldproceed
withinlargerscaleorganizational
formsofacollective
kindpend-
ingthegradualmechanization of production.Duringthistran-
sitionalphase,it wouldnot be possible
to redistribute
on the
scale of society as a whole.
The theoryof socialistprimitive accumulationassoci-
ated(in a relativelybenignform]with theSovieteconomist
E.
Preobrazhensky andpracticed (in a muchmorecoercive
form)
by Stalinist
collectivization,
recognized
thatduringtheinitial
stageof redistributive
development,
agriculture
wouldhaveto
supplythesurplusfor development,
thatagriculture
wouldbe
relativelymoreexploited.
Accordingly,
duringthisstage,
redis-
tribution in agriculture would take place within the collectivized

producingunits (collectivefarms),which would in addition be
required to deliver a surplus to the state for the sustenanceof the
nonagriculturalpopulation and for generalaccumulation.Sup-
posedly,this extractedsurpluswould be graduallycompensated
by anincreasingsupply of manufacturedgoodsand capitalequip-
ment for the agricultural collectives.In the long run, it was en-
visaged that conditions for agriculture would be assimilated to
thoseof industry; the duality of productionorganizationbetween
centralplanning (industrial)and communal[agricultural]modes
would be eliminated and with it the distinction between workers
and peasants.The communal mode was thus in concept
transitional.
Both communaland centralplanning modesof socialre-
lations of production containtwo categoriesof personnel:direct
producers and redistributors. Within the subordinate communal
mode,redistributorsorganizeproduction within eachunit [col-
lective farm, commune,or villagewhichever is the accepted
accounting entity], are responsible for deliveries to the central
redistributorsin the central planning mode and arrangefor dis-
tribution of the residual product within the unit accordingto
acceptedprinciples (somuch reservedfor seedfor the new crop
year and for general purposes and the rest distributed to individ-
uals or families accordingto establishedcriteria). Within the
dominant central planning mode, redistributors attempt to in-
creasethe amount of product that can be redistributed for the
social formation as a whole by extractingfrom the communal
mode, as well as by increasingthe surplus produced directly
within the centralplanningmodeitself. Somewill gointo general
accumulation,some will be returned to the communal mode,
somewill be madeavailablefor generalconsumption.
Communal
Communal forms of production in centuries past have
precededSoviet and Chineserevolutions.They resulted in en-
claveswithin societiesconstitutedin regardto their production
relationson quite differentbases.Communalexperimentsin
thesecontextstook the forms either of Withdrawal and antici-
pationof an alternativeform of societycontrastingto the ambient
societyor elseof ahigherformof socialexperience

to whichall
couldnot aspirebut whichembodied idealsthatall couldin
somelessermeasureaccept.Various millenarian cults, utopian
communities,and hippie communesareexamplesof the rst.
Medievalmonasticismand the Israelikibbutzim areinstancesof
the second. Sometimes enclave communalism became an ante-
cedentandprototype
for communal
agriculture
introduced
by
the stateasan aspectof redistributivedevelopment
strategyfor
awholesocietythe kind of communalsocialrelationsthathave
madethegreatest impactduringthetwentiethcentury.In Bul-
garia,for instance,
a smallpartof thenationsagriculture
was
organized in cooperatives
beforetheCommunist takeoverafter
World War II, and thesecooperatives
provideda precedentfor
the introduction of collectivization on a national scale.Such a
transition from enclaveto society-widecommunalismhas,how-
ever,beena rarephenomenon
andoneentirelydependent
on a
politicalrevolution
throughwhichredistributive
development
is
institutedasnationalpolicy.Onits own,enclavecommunalism
has not had notable results in transformingsocieties.The pro-
duction featuresof enclavecommunalismhave more generally
eitherdisappeared
or adjustedto thenormsof society.
Collectivization of agriculture, through which the com-
munal mode was instituted in the Soviet Union, China, and
Eastern
European
countries,
cameasa second
phaseof agricul-
tural revolution, succeedinga land reformphasedirectedagainst
formerlandlords,which led initially to a redistributionof hold-
ingsratherthanto collective
ownership. Subsequent
collectivi-
zationrequireda combination of coercion
andideological
con-
versionand involved a disturbanceof routinesof cultivation that
adverselyaffectedoutputfor sometime.Thepreviouslyexisting
dominant modesof socialrelationsof production in agriculture
weredisplaced by the two phases
of revolution:peasant-lord
relationsby the rst landreformphase,andenterprise-labor-
marketrelations(prosperous
independent
farmersor kulaksem-
ployingwagelabor)by the secondcollectivization
phase.As
noted,however,someelementsof the self-employment
mode
continuedto exist ashandicraftworkersand artisans,both xed
anditinerant;farmingof privateplotsby collective-farm
families;
and local freemarketsfor itemsof popular consumption.Indeed,
a very substantial part of the vegetables,poultry, and pork con-

sumed by both rural and urban populations in redistributive
formations was produced and distributed through the self-em-
ploymentmode.Officialtolerationof its continuedexistence
was
in some measure a recognition by the redistributors of the trauma
causedthe rural population by collectivization.3 The survival of
self-employment was a fallback position for rural people who
had become at least partially dependent on commodity exchange
but who had not acquired condence in the ability of collectiv-
ized agriculture to satisfy their basic needs.
Chinese communalism, like its Soviet predecessor, was
imposed upon the rural villages from without by a victorious
revolutionary movement. In the Chinese case,by contrast to the
Soviet, this movement had a care to build support within the
villages by mobilizing more deprived elements of the village
under the tutelage of the Party. Collectivization could thus pro-
ceedby a dual pressure from without and from within the village,
both coordinated by the Party cadres. Chinese collectivization
was thus more reliant upon the use of ideology and persuasion
and less exclusively reliant upon direct coercion than Soviet
collectivization was. Furthermore, extraction by the state during
the process of collectivization was relatively less heavy than in
the Soviet case. These factors may have in large part accounted
for the greater speed with which collectivization occurred in
China and the lesser degreeof open violence associatedwith it.
Collectivization took all of ten years in the Soviet Union, from
1929 to 1939, by which time independent farmers and unorga-
nized domestic workers had been reduced to only 2.6 percent of
the population. In China, 90 percent of all rural households were
incorporated within advanced or higher level agricultural pro-
ducers cooperatives [APCS] during the space of only two years,
1955~56.4It would be difficult, however, to differentiate the
human costs of the two transformations. Millions died in the
Soviet Union, some in the massive transportation of kulak fami-
liesto northernSiberiaandthe Eastand manymorein the famine
of 1933-34. Millions more died in China in the famine yearsof
1959-62 brought about by the combination of natural disaster
with the human disorganizationwroughtby the excessivespeed
and incompetenceof cadresduring the GreatLeapForward.
The long-termgambleof the revolutionaryleadershipin

initiating collectivizationwas that the creationof largerunits
would makeit possibleto producemoreefficientlywith fewer
workers.In China,an inspirationalethic was viewedby the
Maoist leadershipand cadresasa substitutefor nonexistentcap-
italthe opportunityto investa surplusof humaneffortover
whatwasrequiredforbaresurvivalin theconstruction
ofworks
that would resultin long-termproductivitygains.In the short
run, however,communalproduction,becauseof the organiza-
tional confusion and coercion involved in its introduction,
proved
to belessefcient.In theSoviet
Union,theleadership
maintainedthe coercivecourse.In China,the communalexper-
iment oscillatedbetweenextremesof collectivismpropagatedby
massmobilization campaignsand retreatsto relianceupon ma-
terial incentives. It was difficult to maintain the inspirational
ethicoverlongperiods,
especially
in cases
of poorlocalleader-
ship and organization.
The revolutionary leadership is confronted by a major
dilemmain the pursuit of its aim of usingcommunalism
as a
transitional meansof accumulationintendedto raisethe general
productive
levelofsociety.
If theyextract
toomuch,theyriskthe
destructionof agriculture.If theyextracttoolittle andgiveprec-
edence totheproblems
posed
in theagricultural
milieu,theyrisk
inabilitytopursue
accumulation
forindustrialdevelopment.The
Sovietleadershipchosethe rst horn of this dilemma;the
Chinese, the second.
The communal mode, given precedencein state policy,
maytendto become stabilized
andto develop a socialstructure
thatimpedes its transcendence
by a universalized centralplan-
ningmode.Theproblemof accumulation is attheheartof this
tendency. Thelogicof communalism is redistributionof the
producing unitsproduceamong members of theunit.If a large
partof theproductis extracted
by thestatewithoutappreciable
compensation, communalorganization will be perceivedas
merelya formof exploitationandwill acquire nolegitimacy. If,
however,alargepartofthelocalproductis notextracted,
socialist
primitiveaccumulation (tousePreobrazhenskys term)will not
occur.In apredominantly ruralsocialformation
in whichindus-
try by itselfcancontribute
onlymodestly to accumulation,the
goal of economicand socialtransformationwill indenitely re-

cede. A formation in which the communal mode became domi-
nant in policy, as well as large in size, might come to resemble
the preindustrial agrarianbureaucratic formations of the old re-
gime.Socialgroupswould emergewithin them with an interest
in preservingthe communalstructures.The revolutionaryParty
would either defeat these groups and maintain the thrust of trans-
formation or be itself transformedinto somethinglike the old-
regime type of bureaucracy.
The inequalities inherent in communal production abet
this tendencyto stabilizationof the mode.Thoseproducingunits
with the bestland and the mostproductivelaborgetricher while
those poorer in land and quality of labor get poorer. Within
producingunits, families with more healthy working-agemem-
bers thrive better than those with more dependentsand less
healthymembers.Thosein chargeof organizinga units produc-
tion aremost likely to give opportunitiesto the most productive
teamsor family work groups,with consequentiallyincreased
returns to thesegroups.Such tendenciestoward increasingin-
equalitiescould be counteractedonly by determined,conscious
policy on the part of the redistributors,which implies the main-
tenance of a revolutionary tension in the relations between re-
distributors and the most efficient producers.Theserelations
tend, however, to becomestabilized at the local level by the
developmentof patternsof reciprocity within the redistributive
systemexchanges of favors, services,and loyaltiesthat main-
tain a redistributive pattern creative of inequalities. The back
door is the Chineseexpressionfor such extralegalbut wide-
spreadinequality-maintainingrelationsof reciprocity.
The tendency toward a conservative stabilization of the
communal mode would be offset if the mode were maintained
in effective subordination to central planning. Political and ideo-
logical direction from the center would have to keep up the
struggle against the practices mentioned and prevent their insti-
tutionalization. Parallel tendencies develop, however, at the cen-
ter, giving rise to a struggle between the revolutionary Partys
cadresand the administratorsof redistribution,the plannersand
bureaucrats.The latter are by their functions inclined to favor
methodsthat enhanceproductionand output and to be skeptical
92 SOCIALRELATIONS
OFPRODUCTION
aboutideological
mobilization
thatisdisruptive
ofworkroutines.
The former,in line with their revolutionaryrole,havestressed
equalitarianism,
evenwhenit becamedetrimental
to incentives
toproduce.Maofoughttokeepthetendency
towardbureaucratic
stabilizationin checkand to maintainthe supremecontrolof
revolutionary
ideologues.
Underhis successors,
therevolution-
arymobilization
associated
with theCulturalRevolution
has
beencondemned,
andthe two components
of the centrallead-
ershippolitical
eliteandeconomic
managersachieved
abal-
ance in statusand inuence. Both componentsagreein main-
tainingthedirecting
function
ofcentral
planning
overthesocial
formationandthe long-termgoalof transforming
the communal
mode.
Duringthe19803,
thecommunal
modehasbeenin retreat
in all the redistributiveformations.In the SovietUnion and
countriesofEastern Europe,thestageoftranscendenceis athand.
Fewpractical
differences
remainbetween
agricultural
andin-
dustrialconditionsof employment, althoughagriculturalwork-
ersand their familiesstill generallyhavesomewhatfewerop-
portunitiesfor mobilityand advancement.
Production
is
increasingly
organized
on a largescalein agroindustrial
com-
plexes
encompassed
withinthecentral
planning
modeofsocial
relations.In China,wherelegaldistinctionsbetween
workersand
peasants
remainsignicant
[e.g.,workers
areentitled
to subsi-
dizedricewhilepeasants,
manyofwhomareworkingin rural
industriesandnot in the elds, arenot),agriculturalproduction
is now for the mostpart achievedundera systemof contracts
with individual households.The household-contract
systemis a
wayofincorporating
selfemployment
andsome formsofenter-
prise-labor-market
employment
withinredistributive
planning.
An individualmaycontractwith thelocaleconomic
unit [bri-
gade]to produce
a certain
quantity
of a croponlandprovided
bythebrigade.
Certaininputsandservices,eg, fertilizers,
har-
vestingequipment,
andhelp,maybeprovided bythebrigade.
The contractorbearsthe risk and can sell surplus product at a
preferentialrate.
The incidenceof the communalmodein Chinahasshifted
awayfrom agriculture(nowmainlyin the self-employment
mode)towardsomeformsof small-scale
industrialproduction
and servicesthat are organizedin collectives or cooperatives.

Generally speaking, two kinds of collectives now exist. There are
bureau collectives or enterprisesdirectly responsibleto the
bureausor departmentsof provincial and municipal govern-
mentsin which conditionsof employmentarebecomingincreas-
ingly similarto thoseof stateenterprises.
In otherwords,they
havebecomeassimilatedto the centralplanningmode.Thereare
also smaller and more informal collectives that retain more of the
featuresof the communalmode,especiallyin redistributingto
membersthe resultsof the units production.Thesesmall collec-
tivesarebeingencouragedto give employmentto school-leavers
in urbanareasawaitingjob assignment
in the centralplanning
sector.Similar collectivesof the communaltype organizerural
industries intended to facilitate a shift from agricultural to in-
dustrial occupations without precipitating population move-
ments.The communalmode thus remainsas a signicant aux-
iliary to the centralplanning mode,althoughthe extentto which
surplusis extractedfrom it by the centralplanning mode is less
clear than formerly.
Central Planning
Central planning represented a transformation, not of the
evolved modes of production relations such as existed in north-
westernEurope and North America (bipartism and enterprise
labormarket],but of a quite distinctive patternthat still borethe
marks of eastern European manorial serfdom. The Russian in-
dustrial bourgeoisiewas a subordinateclass,dependenton the
supportof the Czaristadministrationand controlledby the Czar-
ist bureaucracy,a caseof what Bendix calls external bureaucra-
tization.5Peterthe Greathad allowed ascription of serfsto in-
dustrialenterprisesaspartof his policyof promotingindustries
usefulto thestate.Thistransplantingof serfdomfromagriculture
to industryhadbeendesigned to overcome a prevailingshortage
of labor.Althoughby the nineteenthcentury,factoryworkers
hadbecome nominallyfree,theycontinuedto existin conditions
reminiscentof the manor.Employersfrequentlybuilt barracksto
housethemandattemptedto regulateall aspectsof their life in
E1quasi-militarypattern~necessity
andtraditiongaveto labor
relationsthe character
of a householddiscipline."
94 SOCIAL
RELATIONS
OFPRODUCTION
Nothingliketheestablished
laborforceofwestern
Europe
hademerged
in Russia;
thefactory
workerremained
semirural,
movedto andfrobetween
townandcountry,andmaintained
a
familylinktotheruralscene
whilebeingin urbanemployment.
Thegovernment
wastheabsoluteauthority
overindustry,
and
government
used
thisposition
togrant
theemployer
withinthe
factoryanabsolute
controlovertheworker.
Whenamorepermanent category
ofworkers
began
totake
shapeinthe1880s,
andthusformedabody
receptive
todoctrines
ofprotest,
nascent
organizations
amongthese
permanent
workers
werepenetrated
byCzarist
policeagents
whosepolicesocial-
ismcompeted
withthesocialism
of opponents
of theregime,
though
it wasabletoattract
littlein thewayofconcession
from
thepolitical
authorities.
Thusexternal bureaucracy
controlled
or
attempted
to controlbothmanagement
andworkers
in Russian
industry.Centralplanningunder the Sovietstatecameas a
change
in external
bureaucracies
andin theaimsof external
bureaucracy
rather
thanasanovelimposition
ofexternal
control
over industry.
Central
planning
didbringaboutonemorefundamental
change,
andthiswasintheworkethic.
Thecoercedlabor
tradi-
tion derivedfrom manorialserfdomassumed
no positivemoti-
vationonthepartoftheworker,
whose
efforts
werethought
to
beprovoked
byfearofexternal
sanctions.
[Bycontrast,
thecon-
sciousness
of atleastthemoreestablished
segment
oftheBritish
working
class
wasinuenced
bythelegacies
ofcraftpride,
the
Puritannotionof individualresponsibility,
andthe prevailing
nineteenth-century
ideaofindividualstrivingforsuccess.)
Lenin
clearly
seized
thepointthatarequirement
forthesuccess
ofa
revolutionary
state
wouldbetoencourage
aninternalizing
ofthe
workethiconthepartof theRussian
massesthe
peoplemust
learnto work andthe Sovietgovernment
mustteachthem.
Hence
theapotheosis
of workin earlySovietliterature.7
The
people
wouldlearntoworkif theyunderstood
thatthegoalof
the externalbureaucracy
wastheirownwelfarethatthe bu-
reaucracy wasthevirtualagency of theircollective
self.This
ideological
revolution
joinedaninnerforcetotheexternaldirec-
tiveof planning
to make thisafundamentallynewformofpro-
duction relations.
Successful central planning depends on the existence of

a large, technically sophisticated,and competentbureaucracy.
These conditions are fullled only in societies that have carried
through a political and social revolution to the stageof rmly
establishinga new stateandthat havea sufciently broadlybased
educational system and adequatescientic and technical cadres.
It is hardto imaginecentralplanningin a lessdeveloped
society.
Stalins revolution put in place a new elite of administrators and
planners,a new intelligentsia of working classorigins loyal to
Stalinsleadership,displacingboth bourgeoisexpertsand old
bolsheviks of the generation that had made the revolution. This
new elite learnedon the job, makingsomehorrendousmistakes
but graduallyconsolidatingtheir positions.With time, the Soviet
educational system selected and trained their successors.If So-
viet-styleplanning falteredafter a few yearsin the ChinesePeo-
plesRepublic,it was in part due to a suspicionthat the Chinese
planners,especiallythose in the Manchurian region,had links
of loyalty to the SovietUnion and in part alsoto Maosperference
for ideologicalover administrativemethodsof control,but it was
in large part due to the lack of a sufcient breadth of scientic
andtechnicalcadresin Chinaduringthe decades
followingthe
installation of the PeoplesRepublic.9
There is a question of whether or not labor markets exist
under central planning. The concept of a labor market is, of
course,anathemato Marxism.It would be more tting to speak
of greaterand lesserdegreesof occupationalmobility. Workers
in the Soviet Union, since the labor law reforms of 1956,have
beenfreeto changejobs,andenterprises
arefreeto competefor
labor.Wagedifferentialsratherthanadministrativeassignment
becamethe principalmethodof laborallocation.Enterprise-re-
latedbenets and workersacquiredrights are,however,a deter-
rent to movement,and managersmay have great difculty in
dismissingworkers.High mobility and high employmentturn-
over are characteristicof the lowest skilledthe Soviet equiva-
lent of nonestablished workersbut not so much of skilled work-
ers.Indeed,it is frownedupon as a sign of irresponsibility.
(Flitters arein the samecategory
ashabitualdrunkards.)
The
Sovietproblem has been one of efcient allocation of skilled
manpower in a condition of overall shortage.Enterprisesare
temptedto hoardlabor.All-unionagencies
to organize
labor
allocation on the style of Westernnational employmentservices
werecreatedonlyin the1960s.
In China,thedispositionto regard
employmentaspermanent
fora lifetimeis evenmoreingrained,
thoughthepost-Mao
leadership
hasbeenconcerned tointroduce
moreexibility into laborallocation.The iron rice bowl or
permanency
of job tenurehasmetincreasing
criticismin the
officialmediaandyetendorsementofthegoalofgreaterexibility
in manningrecoilsbeforethe prospectof dismissals
for redun-
dancy.Workerscanstill be removedonlyfor gravefaultof a
Virtuallycriminalkind.Employees
in thestateenterprises
still
expectto enjoythe right to transmittheir job on retirementto a
suitably qualied family member.
Accumulationorganizedthroughredistributiveplanning
hasgonethroughtwohistorical
phases.
These
arecloselyrelated
to the external links of the redistributive social formation. The
rst phasewasthatof theindustrialization
drive,theStalinist
phaseofthe1930s,in whichthegoalofrapidaccumulation was
reinforced
bytheperceptionofimminentexternalmilitarythreat.
Heavyindustryanddefensewerethepriorities.
These werebuilt
on the only availablemodelexistingcapitalistindustry.Con-
sequently,
theorganization
of production
andthehierarchy
of
commandwithin capitalistproductionwerereproduced within
the socialrelationsof centralplanning,althoughtherewaslittle
directeconomicrelationshipthroughexchange of productsbe-
tween capitalist and redistributive economies.
The secondphasecamewhen the limits to the initial
accumulation
process
werereached,
i.e.,whencapital-broaden-
ingortheextensive
pattern
of adding
newproductive
unitsof
the samekind with the samelabor-outputratios ran up against
laborshortages
andtechnological
backwardness.
Fromthelate
1950sandearly1960s,the searchfor capital-deepening
or more
technology-intensive
development beganin the SovietUnion.
This has involved an increasein the scopeand volume of eco-
nomic links with the externalworld both to acquireandintroduce
new technologiesdevelopedin advancedcapitalistformations
andto earnthe foreignexchangerequiredto payfor thesetech-
nologies.
A furtherfactoraccentuating
theexpansion
ofexternal
economiclinks hasbeenthe inadequaciesof agriculture,in which
a proportionally largepart of the working population [morethan

25 percent] is engagedbut which has been decient in grain
production,necessitatinglargeforeigngrain purchases.This sec-
ondphasein theaccumulation
process
of redistributiveplanning
has,if anything,strengthenedthe resemblance
in the organization
and hierarchy of production betweenadvancedcapitalist and
redistributive social formations.
The developmentof the productive apparatusof central
planningproducesa form of social straticationbasedvery
largely on economic status and education.At the top are the
redistributors,
dividedbetweenpoliticaleliteandplanningtech-
nicians.Next down is the level of direct economicmanagement
(directionof enterprisesand enterprisetradeunion and Party
sections).Belowthem is a layerof middle management and lower
level supervision,expandingunder central planning, just as it
hasalsoexpandedin the capitalistmodesof socialrelations.Next
are skilled engineeringand technical workers;and below them
arethe semiskilledand unskilled. Thereare differencesin pres-
tige and statusin the last category;workers in distribution are
lesswell regardedthan thosein industry, and agriculturalwork-
ersremain relatively underprivileged.
A central and critical question about redistributive social
formationsis whether this social stratication has produced a
classstructure.The stratication producedby the organization
of productionunder centralplanningis not in and of itself a class
structure.It is rather a hierarchy of commanddetermining dif-
ferential accessto resources that, if it were to become stabilized
andreproducedamongthe samesocialgroups,could turn into a
classstructureor structureof statusgroups.Thiswould happen
if peoplefromthe samesocialgroups,in successivegenerations,
wereto occupythe samepositionsin the hierarchythe children
of agriculturalworkershavinglittle optionbutto becomeagri-
culturalworkersandthoseof top management becoming,more
thanlikely, membersof top management. Sucha tendencyis
offset
byamerit-based
educational
system,
whichistheprincipal
mediumfor reproducingthe commandhierarchy.Theopenness
of educational
opportunityis counteracted
by two factors:oneis
ideological
conformity,
a characteristic
of mosteducational
sys-
tems, which tends to exclude or sidetrack those with deviant
opinions,
butprobably
moreeffectively
soin formations
domi-
nated
byanideologically
sensitive
Party
leadership;
theother
is
theskewing
of educational
opportunity
in favorofthechildren
of the moreeducated
andhigherplaced,whichcomesabout
partlythrough
themotivation
andsupport
ofeducated
parents
andpartlyfromtheadvantages
highlyplaced
parents
canprocure
fortheirchildrenthroughtheinformalexchanging
offavorschar-
acteristic
of redistributive
systems.
Thusthereis a potentiality
forthereproduction
ofsocial
groups
having
different
degrees
of
social power.
Whatthesegroupsare,wherethe linesof cleavageare
drawnbetween
them,andwhatpossibilitiesof alliances
exist
amonggroupsaremoredifficultquestions
ofasubjective
kind
touching
attitudes
andbehaviors.It wouldseem
thatduring
the
mostrecent
phase
of development,
atechnological
andhuman-
isticelitewith astatuslegitimated
byeducation
hasachieved
an
identity
distinct
fromtheParty
political
elite.Withinindustry,
theofficialtradeunionshavepromoted
acorporative
association
ofmanagement
andskilled
workers
based
onenterprise-relate
benets
andloyalties.
Thelineofcleavage
hascome
between
the
skilledandunskilledworkerstheformermorecloselylinked
totheenterprise
bylength
oftenure,
fringe
benets,
andsocial
activities (including
participation
in tradeunionandrelated
ac-
tivities],andthelattermorefrequently changing
jobs,nonparti-
cipantinenterprise
andcommunity
activities,
andincluding
thoseofficiallyfrowned
uponassocialdeviants.
Thiscleavage
corresponds
tothatintheadvanced
capitalist
formations
between
establishedand nonestablishedworkers.
Thestrategy
ofthepoliticalelitehasbeen[1]toneutralize
thetechnological
elitebyaccordingit recognized
statusandpriv-
ileges,
(2)toobstruct
acoalescence
oftechnological
andhuman-
isticelitesandto marginalize
thoseelements
of thehumanistic
elitewhomanifest
dissidence,
and(3)to courttheloyaltyof
skilledworkersandthe intermediate
layerof supervisors
by
emphasizing
thecorporative
aspects
ofindustrial
organization
andextending
privileges
andbenets
to theupperstratumof
manual workers.
EPILOGUE TO PART I
Part 1 hasfocusedon existing

modes
ofsocial
relations
ofproduction
astheyoriginated
within
differentdevelopmentprocessescapitalistandredistributive
andastheysubsequently
evolved.
It hasdealtonlybyimplication
with the congurations of modes,in which some modes are
dominant
andotherssubordinate,
thathavebeentypicalof dif-
ferent phasesof these developmentprocesses.The outlines of
somesuchcongurationscannowbriey beindicated.
Competitivecapitalism,asit emergedin mid-nineteenth-
centuryBritain, wascharacterizedby the enterpriselabormarket
in factoryproduction,
ankedbya substantial
self-employment
modein farming,craftproduction,andsmallshops.Theself-
employment modewasnotdirectlysubordinate
totheenterprise
labormarketbut contributedto the growth of the latter insofaras
pricesforwagegoods produced
byself-employed
werekeptlow,
thereby helpingto keepwages
lowandenhancingtheprotsof
enterprise-labor-market
employers.More directly subordinate
werethe laborreserveconstitutedby theprimitivelabormarket
(withits downward
pressure
on wagesin theenterprise
labor
market]andthehousehold
modethatsustainedandreplacedthe
wageworkersof the enterpriselabor market.
Whenlaborlaterbecame
moredifferentiated
byskill,the
bipartitemodeemergedamongestablished
workersin the new
engineering
industries
thatledthesecond
waveof capitalisms
advance.
Higherprot margins
in thesenewerindustries
plus
laborsgainsin relativesocialpowerthroughunionization
en-
suredbetterconditions forworkers
thanin theenterprise-labor-
market
industries
oftheearlier
phase,
which
were
experiencing
decliningprot margins.
100 EPILOGUE
TO PART1
With the advent of monopoly capitalist development,

economiesbifurcated into monopoly and competitive sectors,
the lattertakingon a subordinate
anddependent
role.Thenew
modesof socialrelationsof production characteristicof the mo-
nopoly sectorenterprisecorporatismand tripartismoccu-
pieddominantstatusalongwith thebipartitemode.Theenter-
priselabormarketnowtooktwoforms:aresidualsmallbusiness
form and the novel form of nonestablishedlabor employedin
monopolysectorenterprises
alongside
theestablished
laborof
the dominantmodes.Theprimitivelabormarketdiminishedin
importance within advanced capitalistsocialformations, al-
thoughit gainedrenewed importanceasa laborreserve in late
industrializing
countries.
Thisinternational
availability
ofcheap
labor could be an incentive to shift certain labor-intensive man-
ufacturing
processes
awayfromtheadvancedformations
or al-
ternatively
to employimmigrant
workers.
Self-employment
also
diminished in relative importanceand becamean alternativeto
the residual smallbusinessenterpriselabor market as a subor-
dinatemodeprovidingservices
forthepersonnel
of thedominant
modesand someinputsto dominant-mode production.House-
holdproduction
continued
itsreproduction
ofthelaborforce.
Redistributive
development
beganwith adualityofcentral
planningandcommunal
modesthelatterbeingplacedin a
plannedsubordinate
relationship,
transferring
surplustothe
dominant mode.Thenceforth,different patternsof changehave
characterizedthe SovietUnion and EasternEurope,on the one
hand,andChina,on the other.In the rst, the communalmode
has becomeassimilatedprogressively to the centralplanning
mode;in the second,the communalmodehasbeenlargelydis-
mantledin agriculture
andreplaced
by a formof self-employ-
ment.Self-employment
hasbeenahealthysurvivalin theSoviet-
typeformations,
andformsof enterprise
labormarkethavealso
been revived in China within the framework of redistributive
planning.
Congurations
in late-industrializing
capitalistformations
have differed from the competitive-to-monopolycapitalist pat-
ternof development
in thenow advanced
formations.Bipartism
neverstruck rm roots.The initial effectsof the forcible creation
of labor marketsin what is now calledthe Third World hasbeen
the phenomenal growth of marginalitywhat in this study is

called the primitive-labor-marketmodeand also the appear-
ance of enterpriselabor-marketconditionswhere industry has
been established.The enterpriselabor market has rarely been a
stableand durablemodeof socialrelationsof productionin Third
World countries,at any rate in the largersectorsof industry. In
the longerterm, the developmentof productionrelationsin the
Third World hasbeendeterminedlargelyby two factors:one,the
reproductionof advancedcapitalistmodelsunder the inuence
of the agenciesof externaleconomicpenetration;the other, the
efforts of local political elites to gain greatercontrol over local
economicgrowth.
Enterprise corporatismwas brought into the industrial
enclavesof the Third World by the multinational corporations
that had pioneeredits formationin Japan,WesternEurope,and
the United States.It presentedto the corporationsthe advantages
of cultivating a privileged, permanentlabor force, and of main-
taining a relatively secureand steady supply of raw materials
and other inputs for nal processing.
State corporatismhas been the characteristicresponseof
Third World political elitesto foreigneconomicpenetration.By
taking control over local industrial labor,theseelites both limit
the risks of oppositionto their rule amonga stragegicallyplaced
elementin the local populationand alsogain leveragein relation
to foreign investors.Tripartism has been preachedby interna-
tional agencies(like the ILO] that havebeenunderthe substantive
controlof advancedcapitalistcountries,and its formshave been
adoptedby a number of Third World countries,but the inade-
quacy and lack of effectiveautonomyof the existing organiza-
tional basein both labor and managementmean that in practice
formal tripartism often becomessubstantivestate corporatism.
Thus, under late twentieth-centuryconditions, the enterprise
labor market in Third World countries, while substantial in mid-
dle- and smallscale production,has tended to becomesubordi-
nated either to statecorporatismor to an enterprisecorporatism
importedby multinationalmanagementand unionsin the larger
production units.
Turning from congurations of modesto the overalltrends
in the growth and decline of individual modes on the world
102 EPILOGUE TO PART 1
scale, I nd it difcult to arrive at quantitative estimates of

changes.Trends may be hypothesized from evidence about
events, in the absenceof reliable aggregategures. A long-term
decline in the peasant-lordmode may be assumed.Indeed,the
incidence of violence on the world scale since the mid-twentieth
century has been in areasof peasantagricultureevidence in
part of the strugglesaccompanyingthe break-upof the mode.
Subsistencein relatively isolated communities has virtually
ceasedto exist and now takes the adapted form of labor reserves
and householdcultiVationsproviding an off-seasonsupportfor
migrant wageworkers,especiallyin Africa. The primitive labor
market,as noted, has grown to largeproportionsin someThird
World countries. A plausible hypothesis is that the primitive
labor marketor its equivalent,often calledmarginalitygrows
mostrapidly with the early stagesof capitalistdevelopment.It is
largestas a proportion of the total labor force,not in the poorest
or in the richest countries, but in those simultaneously undergo-
ing transformationsin agriculture [consolidation of medium-
scalemarket-orientedfarming and large-scaleagribusiness)and
expansionof industrial production. The combinationof contin-
uing increasesin the size of the working-agepopulation,reduc-
tion of employmentin agriculture,and slowercreationof jobsin
industry and modern-sectorservicesyields a growing pool of
unemployedand underemployed.
Centralplanning has grown steadily in the redistributive
formations; and in the more advanced capitalist formations, en-
terprisecorporatism,
togetherwith the new formsof enterprise
labor market (migrant workers,temporaryand parttime casual
employment,and extralegalundergroundwork),hasled the
pace.In late industrializing Third World formations,statecor-
poratismand the enterpriselabormarkethaveexpanded.Self-
employmentis also thriving, most of all, ironically perhaps,in
the redistributive formations. Household production, though de-
privedof muchof its traditionalcontentin someof theadvanced
capitalistformationswith the progressivecommodicationof the
household,remains everywherethe basis for reproducing the
work
force.
Insummary,
part
1hasconsidered
the
characteris
of
in the world today and the distinctive capitalist and redistributive

development processes, each associated with particular se-
quencesof congurations of production modes in dominant-
subordinate relationship to one another. Causal questions have
so far not been raised: What occasionedparticular modes of social
relations of production to come into existence? What explains
the manner in which specic combinations of modes are put
together and maintained in relationship to one another?
To be sure, the notion of distinctive development pro-
cessescapitalist and redistributivesuggests a functional logic
in the interrelationships of production modes. Functional logic
describes the t among the modes, their mutual adaptation and
reinforcement. But functional logic does not explain origins or
transformations. When we ask such questions, we are led to
examine the role of the state. Different forms of state have been
the creators of new modes of social relations of production and
have acted as coordinators and regulators of congurations of
modes. Stateshave chosen or endorsed developmental processes
and created the conditions in which these processescould un-
fold. Statesare not, of course,all-powerful. In production matters,
as in political-strategic matters, states are limited by the world
system,by the structure of world political economy. It is to these
matters that I turn in part 2.
Part 2
.
States,
World Orders,
and Production
Relations
New modes of socialrelations

of production
become
establishedthroughthe exerciseof statepower. Statesalsomake
the choicesfor societiesin regardto their modesof development.
The actions of a state in these matters are, in turn, conditioned
by the mannerin which the world orderimpingesupon the state.
Thus any attempt to explain the transformationsof production
relations must refer to states and world orders. These are the
propositionsto be examinedin part 2.
It has already been suggestedthat the generalconceptof
the stateis of limited usefulnessin accountingfor stateactions
and that in order to comprehendthe real historicalworld it is
necessaryto considerdistinctiveforms of state. The principal
distinguishingfeaturesof such forms are the characteristicsof
theirhistoricblocs,i.e., the congurationsof socialforcesupon
which statepower ultimately rests.A particularconguration of
socialforcesdenes in practicethe limits or parametersof state
purposes,and the modus operandi of state action, denes, in
otherwords,the raisondétat for a particularstate.The notion
of a form of stateimpliesthat duringcertainperiodsof history
somestatesare basedon comparable congurationsof social
forcesandanimatedby a similarraisondé-tat.
106 STATES, WORLD ORDERS, AND PRODUCTION
My concernis principally with the ways in which states

determinethe organizationof production,if not directly then by
xing the frameworkof laws, institutions, practices,and policies
affecting production. In various ways, statesgive preeminence to
particular modes of social relations of production. They also
facilitate the formation of dominantsubordinate congurations
of modesof socialrelationsof production and therebyinuence
the processof accumulationthat takesplacethroughtransfersof
surplus from subordinateto dominantmodes.
The stateis the agencythat can activateand channelthe
potentialitiesof a socialformationeither toward maintainingthe
existingsocialorder or toward bringing abouta new order.Once
an equilibrium betweenstateand societyhas been established,
the state draws resources from the society and uses these re-
sourcesto maintain and reproducethe society.During periodsof
upheaval or social revolution, when an emerginghistoric bloc
challengesand displacesthe establishedhistoric bloc, a more
active and innovative capacity of the state becomes apparent in
production relationsasin other aspectsof socialexistence.
Social revolutions are not to be understood as exogenous
eventsthat burst in upon states.They aretransformationswithin
the stateitself, displacingone form of statewith another.These
changestake shapethrough political activitythe formation of
new political organizationsor partiesthat prove capableof mo-
bilizing sufcient material and ideological force to effect this
displacement.The first thesisto be examinedin part 2 is, then,
that the formativephasesof production relationsaredetermined
by transformationsin forms of statethat areby definition accom
panied by the displacementof one historic bloc by anotherand
of one raison détat by another.
The organizationof production is only one consequence
of a particular raison détatand not the aspectthat hashitherto
drawn the attention of commentators on raison détat. The con-
ventional meaningof raison détat has beenthe understanding
and pursuit of a particular statesinterestsin relation to other
states.This conventional meaning must be brought into relation-
ship with the derivativemeaningdiscussedhereits application
to production. The internal and externalapplicationsof raison
détat are coherent and indivisible. There is a practical connec-
STATES, WORLD ORDERS, AND PRODUCTION 107
tion between the effort of a state to organize its society and its
effort to maintain itself and pursue its goals in the interstate
context.
Raison dé-tat and the modern state system emerged to-
getherin fteenth- and sixteenth-centuryEurope.Not that other
parts of the world at other times havenot known dispersionsof
power amongrival centers.Chinese,Islamic,and earlyAmerican
civilizations experienced alternating phasesof centralized power
and of fragmented contending powers. The fourteenth-century
Arabic Islamic philosopherstatesman Ibn Khaldunl reected on
this alternation in the congurations of power, as did his contem-
porary Chinesetheorists of politics. They could explain it in
terms of the relative weight of urban or nomadic elements or the
level of tolerance of the peasant base of society for exactions by
the dominant classes.The novelty of the European developments
of the fteenth and sixteenth centuries was the founding of a
state system in a context of economic changesthat accumulated
wealth in centers that ultimately were able to transform that
wealth into a capitalist development processa process that
spread from its points of origin in Europe over the whole world.
The state system provided a framework within which that
process engendered a world economy, developing and function-
ing according to its own dynamic. Initially, during the age of
mercantilism, that world economy was constrained within polit-
ical boundaries laid down by statesthrough national monopolies
and trade restrictions. By midnineteenth century, with the spon-
sorship and political support of the single most powerful state,
the world economy achieved autonomy, such that its own laws
began to constrain state policies, particularly through the work-
ings of international nance centered in the City of London. In
the mid-twentieth century, a further stagewas reached in which
production became organized on a transnational scale, and in-
ternational production, as well as international nance, pre-
sented constraints on and opportunities for states. During this
century, the relative weight of Europe receded,the center of world
power shifted from Atlantic rim to Pacic rim, and Europe, the
originator of the process,became a subplot in a global drama.
From the nineteenth century, world order has to be dened
in terms of the duality of interstate system and world economy.
108 STATES, WORLD ORDERS,AND PRODUCTION
If, internally,the state-productionrelationshipis to be seenas

shapedby thenationshistoricbloc,externallythestate(includ-
ing its relationshipto production)is constrainedby world-order
pressures. Theseareexpressed in military and nancial forms
and in dominant-class links with external classes.Such factors
inuencethe compositionof historicblocs,and throughthem
the parameterscircumscribingstate policies relating to
production.
In focusingon the transformationsin formsof statethat
bring aboutchanges in productionrelations,we areled to dis-
cover the relationshipsbetweenchangesin forms of state and
changes
in the structures of world order.Thesecondthesisto be
enunciatedin part 2 is that thereis a parallelismbetweenthe
two, that the emergenceof new forms of stateis associatedwith
changes
in the structuresof world orderandthattheseparallel
changes
havebeenmutuallyreinforcing.Bothkindsof change
in forms of state and in world orderhaVe to be taken into
accountto explain changesin production.
In examiningchanges
in world order,the alternationbe-
tweenhegemonic andnonhegemonic structuresis of particular
signicance.Thehegemoniesof the PaxBritannicaandthe Pax
Americanaboth constitutedinterstatesystemsthat gavefreerein
to the expansionof the world economy.The mostperceptible
constraintson internal state-productionrelationscamefrom the
world economy.
In the interveningnonhegemonic
andmoretur-
bulent structure,the interstatesystemreasserteditself so as to
subordinate and control world-ecomony inuences. Recent
scholarshiphas beendivided on the questionof the relative
weightto begivento statesandworld economy. Themoderniz-
ationtheoriespopularin NorthAmericain the19603considered
political systemsindependently
of eachotherasevolvingfrom
archaic to modern forms divorced from the context of the world
economy.Thesetheoriesunderestimatedthe externalconstraints
on state formation. At the same time, by positing one outcome
the pluralist, industrial,market-oriented,
modernizedstate-
they becamean ideologyof the world economy.Dependency
theories,on the other hand, originating in Latin America and
popularizedmorebroadlyin the 19703,
put thewholeweighton
the world system, regarding states and national societiesas
STATES, WORLD ORDERS, AND PRODUCTION 109
merely playing out roles assignedto them by their place in the

system.Thesetheoriesunderestimatedthe indigenouscapacity
to bringaboutchanges
in relativepowerandin formsof society.
Here I am suggestingthat the relative weight of internal and
external factors, and the nature of these factors, is not constant
but is conditionedby the prevailing structureof world order.
Three successive structures of world order are examined
in the following chaptersas a frameworkfor consideringtrans-
formationsin forms of stateand consequentialshifts in the pat-
terns of production relations. Theseare (1) the coming of the
liberal internationaleconomy[a periodthat canberoughly dated
17891873),[2] the era of rival imperialisms (1873-1945),and
[3] the neoliberal world order (postWorld War II). In the third
structural phasetwo ongoingprocessescall for particular com-
ment, one affectingthe world economy,the other the interstate
system:the internationalizingof productionand the internation-
alizing of the state. Each successivestructure of world order was
characterizedby the emergenceof new forms of state,new his-
toric blocs,and new congurationsof production relations.The
task of part 2 is to suggestexplanationsfor the connectionsbe-
tween these changes.
The ultimate purposeof thesehistorical reections is to
seehow far the relationshipsthey reveal can be helpful in un-
derstandingeventsaffectingworld order,states,and production
relationsthat haveoccurredsincethe early1970s.Theseques-
tions are to be considered in part 3.
CHAPTER FIVE
THE COMING
OF THE LIBERAL
ORDER
The modern state emerged

through the fteenth and sixteenth centuries in Europe out of the
decadence of the medieval universalistic institutions of Empire
and Papacy.An international milieu composed of stateswas fully
formed at the time of the Peaceof Westphalia, which brought a
close to the Thirty Years War in 1648. Throughout the eighteen-
teenth century the modus operandi of this congeries of states-
the balance of power and mercantilismbecame routinized
practice such that it could be understood as a system, as a den-
able structure of world order. This system was severely shaken
by the Warsof the French Revolution and Empire, which became
the catalyst for subsequentchangein the world order. The attempt
by the victorious coalition to restore the eighteenth-century sys-
tem at the Congress of Vienna in 1815 gave way gradually to a
new world order grounded in the liberal principles of political
economy espoused in Britain. From the 18403,these principles
were institutionalized in British practice and subsequently em-
ulated by other major powers. A state system in which Britain
playedthe centralrole becamethe underpinningof an expanding
world economy. This world economy functioned through private
agencies,centered mainly in the City of London, that were sym-
biotically relatedto the British stateand to the Europe-centered
state system. The coming of this liberal world order was the
culmination of the rst major transformation in state structures,

historic blocs,andmodesof socialrelationsof productionto have
left its tracesin thepresent.
THE MODERN STATE
AND
EIGHTEENTH-C
STATE
SYSTE
The fourteenthcentury inaugurateda long period of turbulence
in Europethat canbe tracedto a reversalof the economicand
demographicexpansionof the previoustwo centuries.As the
bioecological
currentebbed,punctuated by faminesandplagues,
the dominantfeudal classesstruggledover control of stagnantor
declining resources.Conflict betweenlords and peasantsinten-
sied, as did conflict amongthe lords themselves.The interclass
strugglemovedtowarddifferentoutcomes
in eastern
andwestern
Europe. In eastern Europe, peasantssuffered the increasing
repressionof the so-callednew serfdom.In the west, peasants
gainedsignicantlyin independence,
thoughtheyremainedthe
soleeconomicsupportof the dominantclass.Theintraclassstrug-
gleamongthenobilitywasgradually,throughthe sixteenthcen-
tury, brought under control by national monarchiesin western
and northernEurope.Thesemonarchiesformedthe nuclei of the
modernstates.In themlay the originsof the stateand statesystem
as we know it.
In the realm of ideology,the revival of modelsof classical
antiquitystrengthened
thesecularspiritagainst
thesupranational
claims of divine and natural law, and in art and architecture gave
expression
to theformof a newterritorialpower.In anagewhen
religious symbolism served to justify wars, religion was con-
verted from a principle of universal solidarity to becomethe
unifyingpublicceremonyof a singlestate.Thedoctrineof cujus
regio,ejusreligio wasenunciatedin the Peaceof Augsburgof
1555 and reiterated in the Peace of Westphalia in 1648. The
revival of Roman law consecrated the authority of the state, an
authority proclaimedalso in the new political theory of
sovereignty.
THE LIBERAL ORDER 113
concept that came into existencewith the state itself. Raison

détat was understoodas a political logic that dictated what
specic acts were necessary to createand maintainthe state
internallyin the faceof threatsto the unity and strengthof the
state and also to defend and advance the interests of the state
externally.Raisondétat dictatedthatHenryof Navarreforsake
Protestantismfor the Catholic religion in the interestsof the
FrenchstateandthatEmperorFerdinandII arrangethe judicial
murderof hisgeneral,AlbrechtVonWallenstein,
lastof thegreat
independentmilitary entrepreneurs,
whosetroopsthen came
underAustrianstatecommand.The specic interestsof partic-
ular statessupersededuniversalistnotionsof natural and divine
law as the ultimate criteria of action?
Theconsequence
forEuropeasa wholeofthecominginto
existenceof a number of centralizedterritorial powers was the
emergenceof the balance of power as a regulatingmechanism
amongstates. A balance-of-powersystemcameintobeingamong
theItalianstatesof thefteenth centuryat a timewhenItalywas
relatively free from foreign intervention. Turbulence had en-
gulfed the lands of potential intruders. Italians innovated and
developed
the techniques
of statecraft
and diplomacy,the tools
of raison dé1:at.Italys respite came to an end on the threshold
of the sixteenth century when France, Spain, and Austria in-
trudedinto the peninsula?With the defeatof EmperorCharles
Vs dreamof a reunied Christendom, the balanceof power
becamea Europeanbalance.
The interstatesystemof old-regime
Europe,asit reached
maturityin the eighteenthcentury,hasbeenperhapsbestde-
scribedby Albert Sorel.4No remainingconceptof publiclaw
effectivelycircumscribedthe behaviorof states,no real residue
remained
ofthemedievalidealofrespublicaChristianasupreme
overterritorial rulers. No principle outsideof the statecould be
affirmedby which to judgea state.No practicesof intercourse
amongstates,suchasthe inviolability of embassies,
were sacred.
Theirobservance dependedultimatelyon enforcement by indi-
vidualstates.Nor weregeneralideasconcerning thepropercon-
stitutionof statestakenseriously.Ideologicalor constitutional
criteriawere foreignto the thoughtof the eighteenth-century
statesman. Differentlyconstitutedstatesexistedrepublican,
114 STATES,WORLDORDERS,
ANDPRODUCTION
aristocratic,and monarchicbut the only testof their statusin

thesystem
wastheirpowertocompel
recognition
onthepartof
otherstates.
Ideological
afnitiesplayedno partin diplomatic
practice.
Thesolitarygoalof a statewasits ownconservation
andaggrandizement.Otherstates mightweaken a rivalby fo-
mentinginternal
conflicts
andrevolutions. Indeed,
theEuropean
states
generally
welcomed theFrench troubles
of1789 asaweak-
eningofapowerfulmember ofthestate system.
Aggrandizemen
waslimitedbythesystem itself.HereSorelepitomizesthebal-
ance of power:
. . . touslespuissantssontdaccordpourne permettrea aucun
dentreeux de séleverau-dessus desautres.Qui prétenda la
partdulion,voitsesrivauxseligueraussitot
contrelui. 11se
formeainsientrelesgrandsEtatsunesortedesociétéenpartic-
ipation:ils entendent
conserver
cequilspossedent,
gagner
en
proportion
deleursmises,
etinterdire
achacun
desassociés
de
faire la loi aux autres.Cestce quon appellela balancedes
forcesou léquilibreeuropéen.5
Theeighteenth
century
gaveusthepureformofthebalance
of
power
system
justasthenineteenth
gaveusthepureformof
competitivecapitalisteconomy.
Theimpetusto centralize
authorityundernationalmon-
archs
waspolitical
andmilitaryin origin.Reaction
against
feudal
disorderwasfurtheredby developments
in militarytechnology.
Therepower
of cannon,
theplanning
andexecution
offorti-
cations,andthe effectiveuseof disciplinedinfantryrequired
centraldirection,professional
attitudes,
andsustained nance.
Theunrulyandunreliable
feudallevywasreplaced
bya force
officered
bynobleswhohadbeentransformed intostateservants,
andit wasmanned bymercenary troopsdrawnmainlyfromthe
moreremoteandmarginal regionsofEurope(Switzerland,Scot-
land,Ireland,Albania,etc.)Mercenaries
employed directlyby
states
(andnolonger,
asin earlier
times,
byindependent
military
entrepreneurs
likeWallenstein)
presentedtheadvantage
thatthe
dominant
classofthecentralized
kingdoms
couldmaintainmil-
itaryforcewithouthaving
toarmtheirownpeasantry.
Thestate
and the professional
permanent
army cameinto existence
togetherf
This military-political innovation had economic conse-

quences.The needto mobilize resourcesfor warfarebroughtthe
state into the performance of new economic functions. Medieval
monarchs, when they wanted to make war, borrowed from mer-
chant capitalistsand hired mercenarycommanderswho raised
their own troops. Kings either squeezedsufcient revenue out of
their nobles, prelates,and townspeople,or they defaultedand
tried to coercetheir creditors.The new stateshad to be put on a
morestablenancialbasisin orderto sustainpermanent
military
forcesso asto stayin the interstategameof power.
The new statesconfronted a scal crisis in the seventeenth
century, and their successor failure in dealing with this crisis
foreshadowed
the rise and declineof powers..Spains
inability
to put statenance on a sound basisdespitethe assetof new-
world treasureheraldedthat countrysloss of the rst position
in Europe.The English civil war and constitutionalstrugglesof
the seventeenth century were about scal controlCrown versus
Parliament.And the fact that the Englishstatewas ableto estab-
lish an unequaledreputationfor scal managementgaveBritain
the edge over Francein their eighteenth-centurywars. Britain
could raisethe funds for war morereadily than any other state.7
Statemanagerssoughtto encouragethe inow of specie
through trade and the production within the nation of materials
and equipmentneededfor war. Overseasexplorations,coupled
with Europeanadvancesin military technology,openedthe pos-
sibilities for colonization.Statessoughtto establishand protect
monopolies in trade, accessto resources,and colonial settlement
asadjunctsto their domesticsourcesof power. Mercantilism is
thenamegivenretrospectivelyto a seriesof suchadhocmeasures
intended to enhance state power in relation to other states. The
national debt, an invention of the seventeenthcentury, put the
relationship between central political power and merchant
wealthon a businesslikebasisthat, in turn, requiredregulartax
revenues.
The intentions of seventeenth-and eighteenth-century
states in the realm of economic interventionism far exceeded
their capabilitiesandresults.Stateadministrationwasminuscule
whereit wasmosteffective,asin England,andencumbered
by
thepractice
of saleofofcesandthewastefulness
oftaxfarming
where it was more extensive,as in France.The eventsleading

up to therevolutionin France
weretriggered
by theimpending
collapseof statenancefNevertheless,
throughaVariety
ofmer-
cantilist measures,statesnurtured the accumulationof merchant
wealthand the expansionof manufacturing.
Mercantilismhad
economicconsequences in societybeyondits limited effectin
enhancingstatepower.
The historic blocs of oldregimeEuropecanconveniently
be discussedin terms of two types.Ludwig Dehio analyzedthe
politicsof powerin Europesincethesixteenth
centuryin terms
of two kinds of state:the continentalpower state,of which, rst,
Spain,thenFrance,
andthenGermany
wereexemplars,
andthe
insularstate,exempliedin succession
by Venice,England,and
the United States. To thesetwo political conceptscorrespond
two patternsof historic bloc.
The French monarchyof the seventeenthcentury is the
archetype
ofthecontinental
powerstatein theeraofabsolutism.
Thetermagrarianbureaucracy
expresses
the relationof stateto
socialformation.The dominant class-acombinationof the old
noblessedépéeandthe newerofcial-professional
noblesse de
robederivedits powerfromthelandthrougha mixtureof rents
paiddirectlytolandlords
andtaxmoney
owingtothestate
but
in practice
sustaining
itsretainers
in thenobleclass.
Thistribute
wasborneexclusivelyby the peasantbaseof society.Peasant-
lordrelations
of production
werein slowtransformation
toward
household farming,a process
thatwouldbecompletedonlyby
the Revolutionsabrogation
of feudalobligationsandthe estab-
lishmentof the peasantryas self-employed smallholders.
The
agrarian
bureacracy
alsofostered
somewage-labor-employing
in-
dustries of interest to the state.
The insular state derived its power from trade, and its
historic bloc reflectedthe relative strengthof mercantilewealth.
Thequasi-insular DutchRepublicbecamethecenterof a world
tradingsystem undertheshadow of Spanishcontinental
power.
Itsmerchant oligarchywasprotected
byanalliance
withregional
nobility.Bythefirstdecade
oftheseventeenth
century,
theDutch
hadsecuredindependence
from Spainandhadassured
the sur-
vivalandgrowthofthenascent
worldeconomy.
Thefullyinsular
English
stateshared
withtheDutchaninterest
in thegrowth
of
the world economy, but it was a rival to the Dutch for dominance
in that economy.United againstSpain,or againstFrance,when
these powers threatenedthe heart of commercial empire, the
Dutch and English fought each other at sea when the continent
wasquiescent.Duringthe secondhalf of the seventeenthcentury,
England displaced the Netherlands as the center of the world
economyand maintainedthat placethroughthe nineteenthcen-
tury. Mercantilism, by creating a national market that could sus-
tain the expansionof Englishtrade,gaveEnglandthe advantage
over Amsterdam, the last of the great city-basedcommercial
systems.
As in the Netherlands,mercantileinterestswere preemi-
nent in Englandin determiningstatepolicy from the time of the
civil war; they achieved osmosis with land-based wealth and
togethercreatedopportunity for the developmentof manufactur-
ing. Manufacturingin Englanddependedless on statesupport
and monopoly privilege than industry in Francedid and more
on the availability of accumulatedwealth for investment,the
availability of labor for employment,and the existenceof the
broadestnational market in which to realize gainsfrom sale of
product. In England, a peasantryhad been all but eliminated,
independentfarmingand largerscaleimprovedagricultureour-
ished, and occupational specialization or division of labor had
advanced further than on the continent.
The old-regimehistoric blocs engenderedcontradictions
thatultimatelybroughtaboutchanges
in formsof state,produc-
tion relations,and the interstatesystem.
First of all, through mercantilist policies, statesassisted
the accumulationof private wealth. At the sametime, the com-
mercial interests entrenched in mercantilism, as well as those of
thestateitself,wereresolutelyopposedto the furtherstepsnec-
essaryto emancipatewealth for capitalist development.These
furtherstepswould be to transformland and laborpowerinto
commodities and to remove mercantilist restrictions on the mar-
ket whentheybecamean impedimentto capitalaccumulation.
This contradiction was foremost in the insular-mercantile state.
In the secondplace,the production basisof the agrarian-
bureaucratic
statewasbecominglesssecure.Peasant-lord
rela-
tions had beenmuch eroded,but the surplus on which the state
and dominant classrestedwas still extractedalmostexclusively

from the peasantry.Statepower restedon an increasinglyresist-
ant base. The mercantile-insular state had been more successful
in shifting the economicbasisof stateand dominantclassesonto
surer grounds.The peasantreaction to the initial stagesof the
French Revolution shattered an overstrained historic bloc.
Thirdly, the historic bloc had little depth in the popula-
tion. The raison détat of the agrarianbureaucratic state by the
eighteenthcentury had becomeprimarily the logic of a court in
its military-political relationswith other courts;that of the mer-
cantileinsular state, the logic of naval power permeated with
commercial instinct. Both neglected the internal logic of state
power,the assuranceof the political supportor acquiescence
for
governmentalpowers,such as had beenof preeminentconcern
in the formative phasesof the Europeanstates.A raison détat
truncated of its internal dimension could be only dimly aware of
the fragility of its domesticbase,unpreparedfor the stormsthat
would shake it. The French state was unaware of the dangers it
unleashed in convening the estatesgeneral. The British state was
better able to repress popular disaffection in mobilizing against
the revolution in France, but it too was surprised by the depth of
popular movements.
A fourth contradiction concerned the world order of the
old regime.A balanceof power activatedby the particular and
conicting interestsof stateswas,during the eighteenthcentury,
challengedin the realm of ideasby a new secularuniversalism
that conceived of a rational statesupported world order governed
by rules. The eighteenth-centuryphilosophers,as an American
scholar has written, were engagedin reconstructing the heavenly
city of St. Augustinewith rationalistmaterials. ImmanuelKant
arguedthat a world order founded on the rule of law must be
basedon componentunits respectfulof the rule of law. Political
economy meanwhile was rediscoveringthe laws of nature in
economic processes,laws that were a manifestationof divine
Providences benecence to mankindor rather the benecence
of that secularized Providence, variously called the Invisible
Hand (Adam Smith] or the Ruseof Reason(Hegel).An organi-
zationof perpetualpeacewasthe political condition for a wealth-
of-nationsvision of world economy.Neitherwasconsistentwith
THE LIBERAL ORDER 1 19
the existing politicaleconomic world of balance of power and

mercantilism: both had a strong appeal for the bourgeoisies,
whose further strengthening seemed to be held in check by the
historic blocs of the old regime.
THE ABORTIVE
RESTORATION HEGEMONY
Albert Sorel interpreted the postNapoleonic settlement of the

Congressof Vienna in 1815 as an attempt to reintroduce univer-
salist principles of public law into a state system that before the
Revolution had been activated solely by the pursuit of individual
state interests. This, he argued, could be understood only as the
collective response of the victor powers to the upheaval of the
Revolutionand the spreadof its ideologyacrossEurope. Hence-
forth, the internal dimension of politics, the relationship of gov-
ernment to people, would necessarily form part of the manage-
ment of interstate relations. Europe was not only a state system;
it was now also to be perceived as a social order. To the victors,
defenseof the social order would become intimately linked with
the maintenance of the balance among states.
From this point of view, the Grand Alliance put together
to bring about the defeat of Napoleonic France was a peculiar
coalition comprising insularmercantile Britain and the absolute
monarchies of the eastRussia, Prussia, and, at the end, Austria.
It was a coalition of nascent capitalism with the new serfdom
against the regime that had struck a deathblow to the principles
and legal basis of feudalism in western and southern Europe.
French conquest had done much to stimulate the spirit of
national resistance within the various eastern elements of the
coalition, but in a real sense the successof the struggle against
Napoleon was an economic achievement. British subsidies
nanced the allied armies. Napoleon had understood the eco-
nomic threat and tried to counter it by denying British commerce
accessto Europe. He thought that he had succeeded and that
Britain had reached the limit of her resources in 1814. In that
year,however,Britain wassubsidizingarmiesof 150,000in each
of her major allies. Shehad, in addition, 225,000soldiersin her
direct payonly 70,000of whom were British, the rest being

hired from foreign powers. The payment of British subsidies was
somewhat eased by the opening of northern Europe to British
trade that the advance of the allied armies made possible. The
continental power state, even as transformed and modernized by
Napoleon,proved lesseffectivethan the insularmercantilestate
in mobilizing the economicsinewsof war.
The ideological basis for the postNapoleonic settlement
sprangfrom the mind of Talleyrand.In defeat,Francehad few
bargaining counters. Talleyrands achievement in regaining rec-
ognition of Francesgreat-powerstatuscamefrom his ability to
use rational argument from accepted premises as his weapon.
The principle on which he groundedhis argumentwas legiti-
macy. Concerninghis goals for France and for Europe at the
Congressof Vienna, he wrote in his memoirs:
Le premier besoin de lEurope, son plus grand intérét était . . .
de bannir les doctrines de lusurpation, et de faire revivre le
principe de la légitimité, seul remedea tous les maux dont elle
avait été accablée, et le seul qui ft propre a en prévenir le
retour.
Talleyrand went on to say that legitimacy was not to be under-

stood merely as the conservation of the power of kings, . . . il
est surtout un élément nécessaire du repos et du bonheur des
peuples. Legitimacycould be monarchicor republican,hered-
itary or elective. In Talleyrands concept, legitimacy meant, not
so much a return to the older order for its own sake, as the search
for a basis of consent in a war-weary world. Tranquility (repos)
takes primacy over happiness (bonheur) in its justication,
though the one may be held to lead to the other. A usurper power,
because it was not legitimate, was a fearful powerfrightened
itself of is own illegitimacy and causing fear in its subjects and
its neighborsa power that in its fear was repressive and aggres-
sive. As a usurper, Napoleon was incapable of making peace.
Only the restored Bourbons could make peacefor France, but the
restored monarchy, Talleyrand proposed, should be constitu-
tional, not absolute. Necessarychange could flow from the prin-
ciple of legitimacy.For Europeasa whole, the settlementshould
undo the effects of conquest and return to regimesand boundaries
that could be justified by recognized precedent and in public law.
Legitimacy was more than a diplomatic ploy designed to

maximize the inuence of a defeated great power, though in this
it eminently served Talleyrands purposes. It was also a political
doctrine of broader import. But it was a political doctrine only
partially developed,presentedin universal terms that left ob-
scured the shakiness of its foundations in early nineteenth-cen-
tury societies. It was a doctrine applied to the European super-
structures that the European societies,in full mutation, could not
for long sustain.
The British government, secure in its own legitimacy, had
the least use for the doctrine of legitimacy. For Lord Castlereagh,
the British foreign secretary,the doctrine was a mere expedient.
The British were, however, rmly convinced of the need to return
to a generalsystemof public law in Europe. It was the theory,
not the practice, of legitimacy that British diplomacy disdained.
The Russian Czar Alexander I embraced the doctrine with
more enthusiasm, giving it his own interpretation. Alexanders
position illustrates the divorce between doctrine and social basis
at its most extreme. The autocrat of all the Russians professed
liberal ideas and was, indeed, looked to by liberals in western
Europe as the hope for a new order. Professions of liberalism
mingled in his words and actions with repressive authoritarian-
ism. Harold Nicholson (1947) drew this portrait:
What Metternich described sententiously as the periodic evo-
lutions of the Tsars mind, were none the less sincere phases
of conviction. What renders his policy so difcult to interpret
is that, although he would oscillate wildly between a given
theory of action and its opposite, he sought always to remain
constant to his word; and since the promises that he had made
when under the influence of one set of theories were irrecon-
cilable with the needs imposed upon him by another set of
theories, he often tried, in almost pathetic confusion, to carry
out the recently discarded and the recently adopted theory at
one and the same time. As these successive impulses were
contradictory, a marked impression of inconstancy and dissi-
mulation was conveyed.
Alexander was a schizophrenic and an idealist. His schiz-
ophrenia only underscored the idealism of his politics. Politics
was the will of the ruler, disconnected from the material condi-
tions of power. Insofar as that will was confused and contradic-
tory, its disjunction from reality becamethe more evident. In

Alexandersinitiative, the principle of legitimacy becamethe
Holy Alliance, a personalcompactof monarchsbinding them-
selvesmutuallyto sustaineachothersrule in accordance
with
the dictatesof Christianity.Castlereagh, no idealist,regardedthe
Holy Alliance as this piece of sublime mysticism and non-
sense.23 Its political effect was entirely reactionary,servingas
the pretext for joint actions to suppressliberal movementsin
western and southern Europe.
Castlereagh,in line from his mentor Pitt, had during the
wartime period associatedthe reconstructionof Europewith the
idea of a collective guaranteeby all the powers,and principally
by the GreatPowers,to the whole of the peacesettlementem-
bodied in one generaltreaty. By the time this idea had evolved
in the Czarsmind into the Holy Alliance, Castlereaghsthinking
had moved in a different direction. He envisaged a permanent
systemof conferencesthrough which the powers combinedin
the Alliance could makeby consensusthe necessaryadjustments
to the Europeanorder. For Castlereagh,however, this system
should deal only with strictly diplomatic questionsand not in-
volve itself in the internal political structures of states.
[N]othing, he wrote in a cabinetmemorandumon the occasion
of The Conference of Aix-la-Chapelle in 1818, would be more
immoral or more prejudicial to the characterof governmentgen-
erally than the idea that [the] force [of the Alliance] was collec-
tively to be prostitutedto the supportof establishedpower with-
outanyconsideration
of theextentto whichit wasabused.He
reiteratedthesewarningswhen, in 1820and againin 1822,the
Czarwas threateningmilitary intervention in Spainon behalf of
the Alliance to repressa revolution againstthat countrysmon-
arch. The Russian autocrat-idealist persisted in trying to mobi-
lize governmentsandopinion to defendthe immutableprinciples
of Christianity againstthe evil specterof Jacobinrevolution.The
arch-Tory pragmatist struggled to preservea mechanismfor
negotiatingconsensusthat would at the sametime allow for the
possibilityof change.
Therst presupposed
a consensus
thatdid
not exist, and the mechanismenvisagedby the secondwas be-
coming all the time further from reachbecauseof mutations in
the relationship of governmentsto peoplethat madeconsensus
harder to achieve. In western and southern Europe, the historic

blocs of the old regime had been only partially restored. They
were, during the decade following the restoration, challenged
and reshaped by emerging counterhegemonic forces. Diplomacy
could not createa hegemony that had insufcient basis in society.
By 1822,the negotiatingmechanismof the Alliance nurtured by
Castlereaghhad ceasedto be an effective instrument of European
collective will.
THE EMERGENCE
OF THE LIBERAL ORDER
The liberal state and the liberal world order emerged together,
taking shape through the establishment of bourgeois hegemony
in Britain"and of British hegemony in the world economy. Brit-
ains ability to managethe balance of power was the link between
the one and the other. For the new form of state to become
consolidated, a period of security and freedom from external
intervention was required. The balance of power provided this
respite.
From at least the time of the Seven Years War [1756-
1763], British policy had not only recognized the balance of
power as a fact of diplomatic life but had also used it to keep the
European powers divided so as better to extend British commer-
cial and imperial interestsbeyondEurope. Napoleonhad de-
stroyed that balance and had organized the continent under
French suzerainty. Britains insular position and supremacy at
sea together with Russias expanse of land and abundant man-
power became the basis of a coalition that ultimately overturned
French dominance. In 1804, Pitt, responding to an overture from
the Czar, drew up a memorandum concerning postwar European
reconstruction that was founded on the idea of the reestablish-
ment of the balance of power. Castlereagh,sharing and continuing
Pitts conceptions of European order, pursued this goal in shaping
the postwar settlement. The victors were agreed to combine
against a revival of the threat of European domination by France,
yet in the interestsof balance,Frenchpowerhadto bemaintained
at a level of rough equality with the other great powers. Further-
more,in the perspectiveof Britain, safeguards

would haveto be
taken againstthe potentiality of Russiandominance.For this
reason, it was an important consideration of Castlereaghspolicy
to strengthen central EuropePrussia and Austria~as a coun-
terweightto both Franceand Russia. Britain for her part sought
no territorial gains in Europe, only the independence of the Low
Countries from control by any other great power and their close
alliance with Britain. The balance of power was thus the keystone
of British policy.
In elaboratingthis policy, Castlereaghwas the embodi-
ment of the fully autonomousstate.He worked as much as pos-
sible in private, informing his cabinet colleagues as little as pos-
sible and concealingfrom Parliamenteverything he could. A
leading member and sometimeparliamentaryleader of Tory-
reactionary cabinets led by Lord Liverpool and the Duke of Wel-
lington, he had no regard for public opinion and steadfastly
refrained from any attempt to inform or arouseopinion to support
his policy. He did not even have any personalcondants. He
madeforeign policy for Britain in the way that seemedright to
him with few constraints placed upon him by Cabinet or Parlia-
ment. Yet Castlereaghspolicy conformed perfectly to the inter-
ests of British economic expansion and the British bourgeoisie-
despite the facts that his coolness toward liberal democratic
movements abroad was at odds with an increasingly isolationist
and liberal-sympathizing British opinion; that he was remote
from the world of commerce and nance; and that there was a
lack of understanding of the balance of power on the part of the
commercial community.
In the first place, the maintenance of the balance of power
in Europe had resulted in an overwhelmingpreponderanceof
British strengthin the rest of the world. Britains trade had be-
come oriented increasingly toward Europe, South America, and
the United States, and proportionately less toward the British
empire. Formal empire mattered lessthan freedom of commercial
accessto all countries. The balance of power in Europe left Brit-
ains maritime rightsits freedom of navigation and claim to
the right of visit and search of all shipping, in other words its
unchallengable naval supremacyintact. Pitt and Castlereagh
secured naval basesacrossthe worlds oceansbut were prepared
to compromise on the question of colonial possessionsif it would

help secure a proper balance of power in Europe. Castlereagh
was ready to grant commercial recognition to Spains South
American colonies, as a first step to ensuring accessto British
merchants, while deferring political recognition. The second
step, political recognition, was taken by his successorCanning,
who also opened the way for the enunciation by the U.S. Presi-
dent of the Monroe Doctrine, which in practice guaranteedSouth
Americas openness to British economic penetration. In com-
mercial matters, whether in South America or Europe, Castler-
eagh sought openness for all countries, not special advantages
for Britain. In this, he left behind eighteenth-century mercantil-
ism for nineteenth-century free-trade conceptions. In an open
trading world, it was clear that Britains industrial and nancial
lead gave her a decisive advantageover all other powers.
In the second place, the balance of power, by ensuring
Britains security from a European threat without requiring a
military presencein Europe, was a relatively cheap foreign policy
in nancial terms. During the war, Castlereaghhad used Britains
nancial capability generously to political advantage.Payments
to the allies had taken the form of subsidies rather than loans.3°
However, the nancial effort had been considerable for Britain
and proved to be the factor that imposed the most serious con-
straint on the governments foreign policy in the postwar period.
The government had nanced the war by borrowing from the
Bank of England, a private chartered institution empowered to
manage the public debt and to issue banknotes. During the war,
conversion of banknotes into speciehad been suspended (thereby
preventing conversion of privately held government debt into
gold) and an income tax introduced. With peace,the income tax
was abolished, but the government was reluctant to return to
specie payment so long as it had to raise more bank loans to carry
the public debt, and almost two thirds of public expenditure was
for service on the national debt. Commercial interests, articulated
notably by David Ricardo, demanded a return to a gold-exchang-
able currency as a necessaryfoundation for world trade, and to
achievethis, draconian steps to retire the debt. Tory country
gentlemen, on the other hand, enjoyed the inationary effect on
agricultural prices of a paper currency freed from the discipline
of gold.Commercial
interestandsoundmoneyprevailed.It was
ayoungTory,RobertPeel,initially predisposed
to theagricultural
interests,who chairedthe commissionthat preparedthe return
tospecie
payments
in 1819[theyearin whichRicardo
purchased
for himself a seatin Parliament) This decisionmarkedthe limits
imposedon statepolicy by Britainsinternationalcommercial
position.
In the third place,by preventingHoly Alliance interven-
tionism, the British balance-of-powerpolicy removedexternal
obstructionsto the bourgeois-liberaltransformationsof western
Europeanstatesin the 18203and 18303,aswell asto the inde-
pendence(and commercialopening)of SouthAmericafrom
SpainandPortugal.Thebalanceof poweroperated in suchaway
asto allow emergingsocialforcesto developand to bring about
political changes.
Castlereagh conductedforeignpolicy asan aristocratcon-
sciousof servingthe interestsof the insular-mercantilestate.He
did not self-consciouslyservea classinterest.A class-based for-
eignpolicy was,however,articulatedin Englandby the doctri-
naires of laissez faire. Richard Cobden challenged the concept of
the balanceof power and favoreda cheapforeign policy based
on disarmament and free trade. The Manchester School saw the
world marketas the primary criterion of policy. The possibility
of commercial accessto the whole world took precedence in its
thinking overBritainsformalempire,and it perceivedsound
gold-exchangablecurrencyasthe linchpin of the world trading
system.Theseideaswerenaturallycombinedwith a sympathy
toward liberal and nationalist movements seeking to remake
statesabroad.As a consequence,British radicals espouseda
contradictionin foreignpolicy, favoringproliberal or pronation-
alist interventionismideologicallybut rejectingmilitary expend-
itures on economygrounds.The economyhorn of their dilemma
easilytook precedence
overthe ideological,and the issuewas
resolvedin the radicalconsciousness
by the myth of a free-trading
world in which force had ceased to be necessary. The aristo-
cratic managersof foreign policy maintained a more realistic
equilibrium.Theypracticeda policy of presencein Europe,but
onedesignedto preserve the balanceof power,not to dominate
politically.Thatbalancecouldbe preserved solongasthe con-
tinental powers remained of roughly equal strength, and Britain

could play the part of manager of the balance so long as her
strength, and particularly her nancial capabilities, were greater.
This policy was consistent with the commercial aims of the new
bourgeoisie, even if some of its spokesmenfound it uncongenial.
The balance of power was the practical nineteenth-century sub-
stitute for the organization of perpetual peace,which eighteenth-
century political economy posited asthe foundation for a division
of labor that would increase the wealth of nations.
Castlereaghssuccessorscontinued the substance of his
policy while altering its ideologicalcoloring and its style. Can-
ning and, later, Palmerston invoked liberal sympathies for revo-
lutionary movements in Europe and took an open stand against
the Holy Alliance when it tted their purposes, but they kept the
balance of power at the center of their foreign policies and never
allowed ideological bias to dictate action. Castlereagh, for his
part,had no sympathyfor revolutionarymovementsand opposed
Holy Alliance initiatives almost apologetically, never seeking to
arouse, let alone defer to, public opinion. The practical results
were similar. The need to mobilize public and parliamentary
support for foreign policy was, however, a new reality of the
nineteenth century. Castlereaghslack of perception of this need
was the principal defect of his conduct of foreign policy.
The liberal world order, like the liberal state, posited a
separation of politics from economics, together with a funda-
mental compatibility between them. The free-trading world econ-
omy was understood to be the condition for the wealth of nations;
this was the domain of industrial, mercantile, and nancial op-
erators. The responsibility of the state and the state system was
to ensure the conditions for this open world economy while
refraining from interfering with the operations of these economic
agents.This was the meaning of liberal as attached to the terms
state or world order. Liberalism had a circumstantial connection
with political pluralism and parliamentary government in the
British case.Regimesin other countries proved capable of achiev-
ing the same balance between economy and politics under au-
thoritarian auspices.Both were liberal in the sensediscussed
here.
In the British case,politics, and especially foreign policy,

remainedpreeminentlythe domainof thearistocracy;economics

wasthe sphereof thebourgeoisie.Aristocraticmanagersunder-
stood that the limits within which they must managewere xed
by the conditions necessaryfor bourgeoiseconomicexpansion.
This sharedunderstanding,and the aristocratic-bourgeois
divi-
sion of labor, constituted the bourgeois hegemony in Britain, the
basisin turn for British hegemonyin world economy.
The Restoration doctrine of legitimacy was powerless to
stop the social forcesencouragedby two decadesof fermentall
overEurope.Thosesocialforcesthe rise of thebourgeoises and
the revolt of the young intellectualscould successfullychal-
lengeold-regimehistoric blocsbecausethebalance-of-power sys-
tem preventedany international concentrationof force against
them. Legitimacy in its turn becameillegitimate.
Before 1830, the Restoration powers tried but failed,
largely becauseof British objections,to give effect to a mutual
commitmentamonggovernmentsto defendestablishedregimes.
After 1830, international rivalries among the powers were too
greatto permit even an attemptat collaborationagainstinternal
threats.Changesof regime did come about in France,Belgium,
Portugal,Spain,Italy, Greece,Poland,and the OttomanEmpire.
Thesechangesgenerallyfavoredthe installation of liberal states.
They did not go so far asa democraticbreakthrough.Democracy
remained anathema to established authorities, a threat to both
property and power, to both economyand polity. In 1848,the
liberal revolutionaries faltered before the implications of democ-
racy, and the failure of theserevolutionarymovementsstrength-
enedthis fear of democracyon the part of the ruling groupsand
thosebeneting by their rule. The very fear of democracyacted
asa moderatingfactorin internationalrelations.Thepowerswere
constrained not to act forcefully against one another lest they
therebyopen the way to revolutions.
Theseconditions made for a prolonged internal and inter-
national equilibrium of forcesfavorableto liberalism.Thesecon-
ditions cameto an end during the last decadesof the nineteenth
century when governmentsperceivedthe potentiality of nation-
alism to establisha bridgeof solidarity betweengovernmentand
people.Democraticforces,assumingthe forms of rival national-
isms, disrupted the liberal equilibrium and enabledstatesonce
moreto challengeoneanotherwithout fearof nourishinginternal

dissensions. International conict was facilitated by domestic
unity and helped to generateit.
The liberal era thus permitted both the transformation of
states toward the liberal form and the expansion of the world
economyin relatively peacefulconditions. The key to the rst
was Britians management of the balance of power and to the
secondthe omnipotenceof British seapower.
THE LIBERAL STATE
The emergenceof the liberal form of state,asof any form of state,

canusefully be looked at in two differentperspectives.Oneis to
treat the form as an ideal type, specifying its properties and
consideringhow far the particular historical stateapproximates
them. The ideal type gives a functional View of the statein relation
to societyand economy.It positscertainactivities on the part of
the statein order to producecertainresultsfor societyand econ-
omy. But it cannot explain how that particular form of state came
to exist or how it may change.The other perspectiveaddresses
directly the explanation of the statesexistence; in it the state is
perceivedas the product of political struggle.This secondper-
spective is concerned with the making of the historic bloc. The
two perspectives are not alternatives but complementary. The
ideal type may serveas an approximationfor the project of an
emerginghistoric bloc or asa shorthandfor the hegemonicideo-
logy of an established historic bloc.
The ideal-typicalview of the liberal statecanperhapsbest
be representedby combiningthe ideasof the classicalpolitical
economists
withthemeasures
instituted
bythereformmovement
_
in Britain and in other countriesin the early nineteenthcentury.
Adam Smith constructeda theory of civil society on the basis
that a natural harmony would result from the freedomof indi-
viduals to pursuetheir own particular interests.Stateinterven-
tions would only impede this natural harmony and reducethe
general welfare. Implicit as conditions for the wealth of nations
were domestic and international freedomfor economicagents
andthe removalof thethreatof violencewithin and amongstates.
Ricardo and his followers took a somewhat less optimistic view

of civil society.They recognizedmore explicitly the existenceof
conicts of interestbetweencapitalistsandworkers,andbetween
bothandlandlords,but theyalsoagreedthat stateinterventions
would makethings worseratherthan better.Despitethis gener-
ally negativeview of the state,however,there were certain in-
dispensable
functionsthestateshouldperformin orderto enable
civil societyto maximizewealth.
In the rst place, the statehad the task of removingthe
existingobstructionsto economicfreedominherited from feudal
and mercantilistpractices.Therewas a long list of these:laws of
succession and entail that inhibited atmarket in land; privileges
grantedby the stateto monopoliesand corporations;
laws en-
trenching guild regulationof production; statutesof apprentice-
ship and Elizabethanlabor statutesthat regulatedrecruitmentof
labor and wages;protective measureslike the Corn Laws; and
the whole mercantile systemdesignedto maintain a favorable
balance of trade, restrict colonial commerce, and produce a stock-
piling of bullion.Thereformmovement
in Britainbroughtabout
the dismantling of all this legislation.The only relic of a former
plethoraof price controls,the assizeof bread,wasrepealedin
1815on petition of the London bakers.In the sameperiod, the
Elizabethan labor statute and the apprenticeship laws (except as
regardsseafaring)were also repealed.Mercantilist protections,
more rmly entrenchedby politically powerful interests,took -
longer to remove,but by the 1840sthe Corn Laws, the sugar
preferenceprotectingthe WestIndian planters,and the Naviga-
tion Acts were repealed.In France,the guild systemwas abol-
ished as one of the acts of the Revolution in 1791, although in
central and northern Europecontrol of guilds and corporations
over entry into artisanproduction remainedstrongup until the
secondhalf of the nineteenth century. Freedomto enter and
practiceanytradewasestablished
in Austriain 1859,andin the
GermanEmpire by 1869, contributing to a lingering hostility
toward liberalism amongformerly protectedartisans.
A second function of the liberal state,beyond the disman-
tling of existingobstructions,was to establishthe conditionsfor
free marketsin goodsand labor. Mercantilist policy had paved
the way in Britain by making the largestnational market the
prime explanation for Britains lead in manufacturing. The

French Revolution resulted in the dismantling of internal ob-
structions to commerce. The German zollverein completed uni-
cation of a large economic space in 1834. Thenceforth, the
processof market enlargementproceededinternationally: rst,
unilaterally in the tariff reductions of Sir Robert Peels budgets
in the 1840s; later, through the elimination of restrictions on the
major international waterways, e.g., the Danube (1857) and the
Rhone (1861); and then by the negotiation of a series of commer-
cial treaties for tariff reduction and the extension of the most
favored-nation principle, beginning with that between Britain
and France in 1860.39
The creation of an unregulated labor market bore more
directly upon the social relations of production than the free
market in goods did. In England, the poor law, since the reign of
Elizabeth, required each parish to care for its own poor. The
intention was to limit the dangers of vagrancy by ensuring that
the poor were stabilized in their own localities under the super-
vision of local landed authorities in their capacities as justices of
the peace. In the late eighteenth century, this practice had been
expandedby the justices of the peaceof Speenhamlandinto a
systemsubsequentlyextendedthroughoutEnglandthat guaran-
teed a basic income to the poor out of the rates paid by landown-
ers, an income linked to fluctuations in the price of bread.
This practice, born of the paternalism of precapitalist so-
ciety, resulted in a distortion of the allocation of labor in an
emerging capitalism. Adam Smith, Malthus, and others attacked
itas obstructing the free movement of labor and contributing to
overpopulation in rural areas.One result was that low wagespaid
by some landlords to their agricultural laborers were subsidized
in the form of outdoor relief nanced by all the ratepayers. An-
other was the general demoralization of agricultural laborers,who
becamepermanently dependent on poor relief.
Poor law reform became a major objective of the liberal
reformers, a reform carried through by Parliament in 1834 with
the enactment of the new poor law. The principles on which the
new law was based were, rst, the abolition of outdoor relief in
favorof conning relief to the workhouse,andsecond,the making
of workhouseconditions a sufcient deterrentso that any work
available on the labor market would be preferred to relief. These

changesin practice reected a changeof attitude toward pov-
ertytoward regardingpoverty as a matter of personalrather
than community responsibility.The new systemdid away with
maintenancein parishesof origin or settlementand thus encour-
agedmobility of laborthroughoutthe country asa whole [partic-
ularly migration from the south to the northern manufacturing
centers].The primary consequence of the poor law reform,apart
from reducingthe scal burden of poor relief for the ratepayers,
was to create a nationwide labor market. This was complemented
by the repeal of the old legislationaffectingwagesand appren-
ticeship, so that the state both createdthe labor market and
refrained from intervening in the arrangementsmade by employ-
ers with workers. The state also obstructed workers from com-
bining collectivelyto inuence the labormarketon the presump-
tion that the labor market is strictly an interaction of equal
individuals.
A third state function was to ensure the soundness of
money.Mention hasbeenmadeaboveof the suspensionof gold
convertibility during the Napoleonicwars and the controversy
preceding the resumption of specie payments in 1819. Govern-
ment manipulation of the Valueof money pits the interestsof
some economic groups against others. Agricultural producers
were happy under the suspensionof convertibility; the fund
holders, or those who had lent to the government, demanded a
return to gold. The return to speciepaymentwasmuch criticized
as sacrificing the producersto nonproductive groups. Liberal
doctrine,particularly asurgedby Ricardo,soughtto removethe
statefrom active manipulation by making the stateresponsible
for ensuring strict application of the gold standard. This was
achievedby the Bank Act of 1844,which separatedthe Bank of
Englandsfunction of issuingcurrencyfrom its bankingfunctions
and tied currency issue by statute to gold. This arrangement
survived well into the twentieth century.
A fourth function, which seemsto contradict the principle
of abstinence from intervention on the part of the liberal state,
was the specializationof functions and centralizationof state
power. In fact, there was no contradiction, since to allow the
market mechanism to function without disturbance required the
sanction of coercive force, and to ensure this force was not to be

usedin particular interestsbut to defendthe systemas a whole
required the creationof a specializedstateapparatus.The dec-
adesduring which the liberal statewas built up were decades
that saw a wide-ranging reform of government at all levels and
the expansionof the public service. A new mobile police force
was established in Britain in 1829 under direct control of the
Home Department, rst in London, then extended elsewhere in
the country. The administrationset up to managerelief under
the new poor law, by forming unions of parishes,introduced a
new and more centralizedbasisfor other functions of local gov-
ernment.A Municipal CorporationsAct provided the basisfor
middle-classcontrol over urban local government. Fiscal re-
forms also enhancedstatepower.As tariffs were reducedin the
interestof free trade, this sourceof governmentrevenuehad to
bereplaced.Theincometax,previouslyonly a wartimeexpedi-
ent, was introduced on a permanentbasisby the governmentof
Sir Robert Peel in 1842. Governmentexpendituresin Liberal
Britain at that time were four times those of Czarist Russia. The
liberal statewas not a weakstate.It had acquiredcapabilitiesfar
beyond those of the old-regime state.
A fifth function of the liberal state was in the area of
mobilizing capital.It involved both direct investmentby the state
and the provisionof legalarrangements
that encourage
private
capital formation. Adam Smith recognizedthat the statecould
properlyproducesomepublicgoodsessentialto the workingof
the marketthat would not be privately produced,e.g.,roadsand
harbors.His only qualication was that in doing this the state
shouldsimulatethe marketas far as possibleso asto provide
only what would be used widely and at a reasonablecost.The
eraof theliberalstatesawtheexpansion
of publicpostal,railway,
judicial, and educationalsystems.Privatecapital formation was
encouragedby legislation limiting liability through joint-stock
and corporateforms of businessenterprise.The corporateform
lost its erstwhilecharacterof public monopolyto becomean
organization of capital for private purposes free of state control."
AdamSmithposedveryclearlytheissueof theautonomy
of thestate.He washighly suspiciousof the motivesof merchants
and capitalistswhen they beganto involve themselvesin state
134 STATES,WORLDORDERS,AND PRODUCTION
policy.Thisled,heperceived,
to demands forspecial
privileges
andprotectionsthatwoulddistorttheproper
functioning
ofthe
market.He thusrejectedin advancethe instrumentalist view of
the liberalstate,in which the stateis the merevehiclethrough
whichvariousorganized
interestsof civil societyinteractand
reachcompromises
among theirdivergentgoals.Smiths analy-
sisenhances theview thatthecoincidence of politicalpluralism
with theliberalstateis fortuitous,a matterof circumstanceand
indeeda circumstance carryingwith it somerisksto the purity
of the liberal form. Enlightenedauthoritarianism might be an
equallyvalidandpossiblylessvulnerable
modeof government
for a liberal state.Historical experiencehas given both variants.
Here it becomesdesirableto abandonthe functionalist
perspective
soasto examine theprocessesof politicalstruggle
through
whichliberalformsofstate
came about.TheBritishcase
haslongbeenconsideredthemodelofliberaldevelopment. The
French
bonapartist
state,asamoreauthoritarian
instance
ofstate
autonomy,
andtheUnitedStates,
asaninstance ofamoreinstru-
mental liberal state,offer points of comparison.
Recentwork of British historianshasstressedthe political
character
ofpopularstruggles
duringthelateeighteenth
andearly
nineteenthcenturies.Thesestruggles
wereconcernedessentially
with the line betweenaccess
to andexclusionfrompowerin the
state.The agriculturaland manufacturing
laborers,and the
skilledartisansanddomesticputting-outworkerswere,of course,
excluded;but soalsowasthe middleclass,includingthe entre-
preneursin burgeoning
butpoliticallyunrepresented
manufac-
turingtowns.Theexisting
statewasperceivedbytheexcluded
asanagency through
whichthepower-holding groupscould
engrosslandthrough
enclosure
bills,protect
themselves
bypass-
ingcornlaws,andreward themselves asfundholders
through
suchmeasuresas the return to speciepaymentin 1819.The
conflictwaspicturedbytheopposition
asonebetween
thepro-
ducingclasses
(bothworkers
andmiddle-class
manufacturers
andthe idle classes
who drewincomebut did not wor .49
For the workers,the employerswere middlemen, inter-
mediatebetweenthemselves
andtheiroppressors
whocontrolled
thestate.
Upto the1830s,
thecriticalpointin theevolution
of
thestruggle
wasabouthowthemiddlemen
wouldalignthem-
selves.Briggs(1960)haswritten: The Whigswishedto hitch the

middle classesto the constitutionto preventa revolution: a sec-
tion of the extreme radicals wanted to associate them with the
working classesto secure a revolution.5°
Amongrural laborersthereoccurreda spontaneousmove-
ment of revolt born in resentmentsagainstpauperizationand
increasingly restrictive applications of poor law maintenance,
which burst into machinebreakingand incendiarism in the
Swing riots of 1830.Theseriots took on the aspectof a nation-
wide movement.They were forcibly repressed,with sentences
of deathand transportation,leavingsmoldering,spasmodicvio-
lence in the English countrysideduring the following decades,
until the emergencein the 1870sof agriculturaltradeunionism.
In this early nineteenth-centuryrevolt, the rural working class
neverlinked up with manufacturingworking classdiscontent.
Mobilization of manufacturingworkers took place alter-
nately through Chartism and Owenite trade unionism. Trade
unionism grew apace during the years of economic growth when
employmentlevelswere relatively high (1832-36).This wasnot
the collective bargaining craft unionism of the late nineteenth
century, pursuing incrementalgoals.It was a movementof big
unions that envisageda radical transformationof production
from the rule of employersto workercontrol throughcooperative
associations. The movement failed from its own internal divi-
sions and from resistanceby employers and local authorities. The
downturn in the economywith rising unemploymentthat fol-
lowed during years of extremeprivation for the working class
from 1837 into the 18403rechanneledworker protest into the
moreovertly political form of Chartism.Chartismaimedat chang-
ing the state by gaining representationfor the working class
through universal manhoodsuffrage,annual parliaments,equal
electoraldistricts, and the abolition of propertyqualications for
members of Parliament.
The Whig reformsenactedby Parliamentduring the early
1830sbrought the middle classinto participation in the state.
Thesereformsalso had the effectof dividing middle-classfrom
working-classopposition. The working classesremained ex-
cluded.They now perceivedthe stateasan oppressiveapparatus
intendedto maintain a dictatorshipoverworkerson behalfof the
ownersof capital, a vision that replacedthe view of the stateas

the agencyof landlords and fundholders-the idle classesen-
riching themselvesat the expenseof the productiveclasses.Now
the middlemen had alignedthemselveswith the old oppressors
to bring abouta moredirect polarizationbetweentheir combined
force and the excluded majority of working people.
Specic reform measuresreinforcedthis image.The Re-
form Bill of 1832gavethe middle classrepresentationin Parlia-
ment, but the property qualication excludedthe working class
from the vote.53
The Municipal CorporationsAct of 1835put local
governmentinto the handsof the employerclass.The new police
systemand the coercivemeasuresundertakenin Ireland in 1833
seemed like the construction of a coercive state apparatus that
could be used to repressworkers.The refusal of Parliamentto
provide relief for the distressedand starvinghandloomweavers,
leaving them victims to marketforces,and the poor law reform
of 1834, which transformed the old senseof a right to assistance
into a form of compulsionto work for low wages,showedclearly
the purposesfor which statepower would be used.The rise and
fall of Owenite trade unionism and the aring up and remission
of Chartism were manifestations of worker responseto this class
polarization of society during the initial phaseof formation of
the liberal state. The Chartists, anticipating Marx, argued that
labor was the source of all value, that manufacturers were robbing
workers of a part of their just return for their labor, and that the
employersability to exploit in this way was abettedby state
measuresthat createda reservearmy of labor.
The Anti-Corn Law Leaguewas the principal agencyof
middle-classmobilization during the period following the Whig
reforms of the 1830s. It maintained the distinctive pursuit of
middle-classpolicy aims once the bourgeoisiehad securedad-
mission to representationin the state.Therewere also attempts
both on the part of Leaguemembersand on the part of some
Chartist radicals to build an alliance between worker and middle-
class activists on the basis of opposition to the landed interests
stakein corn-law protection.Theseeffortsfounderedas the op-
position betweenmanufacturersand workersinterestsbecame
increasinglymanifest,statepower beingusedby the one against
the other. Furthermore, the solidity of the landed interest was
breached. Many larger landlords had no special interest in the

corn laws, which were defended with most determination by
tenant farmers. The Tory Sir Robert Peel, himself representative
of a new alliance between land and manufacturing capital, spon-
sored repeal in 1846.53Richard Cobden, the principal activist of
the League, saw this as a decisive bourgeois victory. In a since-
famous letter to Peel, he wrote:
Do you shrink from governing through the bona de represen-

tatives of the middle class?Look at the facts and can the country
be otherwise ruled at all? There must be an end to the juggle of
parties, the mere representatives of traditions, and some man
must of necessity rule the state through its governing class. The
Reform Bill decreed it: the passing of the Corn Bill has realised
it.
Peel did not, however, perceive the event in the sameway.

He saw repeal as resolving an issue that had become extremely
divisive, pitting middle class against gentry, and workers against
both. Where Cobden was calling for a middle-class dictatorship,
Peel became the architect of a new hegemony. Repeal removed
an obstacle to the aristocracys regaining its status as Britains
natural leaders. It also removed the principal reason for the po-
litical mobilization of the middle class, enabling it to return
without distraction to its preordained activity of making money.
The alienation of the workers was another matter. An aristocratic
governing class running the state in accordancewith the require-
ments of the liberal economy could also make some concessions
to workers without undermining the basis of bourgeois order.
As early as 1815, Peel had introduced a factory act with the
support of Robert Owen. In 1847, an act limiting the working day
to ten hours was passed and within a few years made effective.
Though no political concessionswere made to Chartism, coercive
repression of the movement ceased.It withered and died during
the
18408.
The
British
liberal
state
asconsolidated
under
SirRobert
Peel was autonomous; it brought order and regulation into busi-
nessactivity through the Bank Act and the CompaniesAct of
1844,and the income tax put state nances on a sound basis. It
conict. Conict was not eliminatedbut diffused.Revolt in the

countrysideneverpassedbeyondthe levelof individualactsof
violence.Employmentpickedup with economicexpansion, and
a new model unionism of skilled artisans,which acceptedthe
existingproductionrelationsasabasisfor improvingtheirmem-
berspositions,disarmedmiddleclassfearsof rebellion.The
hegemony wasa bourgeoishegemony underan aristocratic
gov-
erningclass.Thishegemony reachedfromthecenterof the state
into local government.The manufacturing boroughs,as noted,
were securelyin the handsof the manufacturers.
In the rural areas,the new poor law administrationhad
broughtabouta compromise
amongtheTorypaternalism
of the
squirearchy,
continuous
fromElizabethan
times;the capitalist
characterof farming,which employeda wagelaborforce;and
the manufacturersneedsfor an openlabormarketwith a mobile
reservepool of labor.Localpeersandgentrytooka leadingrole
in the earlyboardsof guardianssetup underthe newpoorlaw.
TheSwing riotsleft botha convictionof theneedto reestablish
order and labor discipline and a senseof the needto show some
small measureof compassionfor the laborersplight. The boards
of guardiansenjoyeda certainflexibility in applyingthe rules
concerningentitlementto relief.Asthethreatof disorderreceded,
peersand squiresleft the task of active managementto tenant
farmerswithout therebylosing control.
This hegemonic socialorderremainedin placeuntil the
endof the century,whena furtherphaseof legislationbeganthe
process
of transformation
thatculminated
in thewelfarestateof
the postWorldWar II period.
Marxs analysisof the bonapartiststateformed in France
followingtherevolutionof 1848presents
certainpointsof struc-
tural similarity and also of contrastto the British experience.In
both cases,the liberal economybecamethe basisfor public pol-
icy, and the statebecamestrongand centralized.However,in
Franceno hegemonywas achievedasin Britain.
The proportionsof the differentclassesmadea marked
contrast between the two countries. Small-holding farmers were
preponderant
in numbersin Frenchsociety,whereas wagelabor
wasprevalentin Britainbothin agricultureandin manufacturing,
which was much more developedthan in France.The removal
of residual feudal obligations by the revolution of 1789 in France

had turned self-employed small-holder farmers from a revolu-
tionary into a conservative social force. Marx perceived that
though these small holders constituted a class because they
shared a common material situation, they had not achieved any
community or political organization that could expresstheir com-
mon class interest.
They cannot represent themselves, they must be represented.

Their representative must at the same time appear as their mas-
ter, as an authority over them, as an unlimited governmental
power that protects them against the other classes and sends
them rain and sunshine from above. The political inuence of
the small-holding peasants, therefore, nds its nal expression
in the executivepower subordinatingsocietyto itself.
Here, Marx has identified a more general phenomenon, in more

recent times often characterized as populism, whereby a social
group that has not achieved any effective and autonomous artic-
ulation of its interests responds to the appeal of an authoritarian
leader.
Another distinction between the British and French cases
was the relatively greater size of the state bureaucracy in France.
This is something France inherited from the old regime, which
was further developed by the Revolution and Empire and again
by the Second Empire. It meant that very many families, partic-
ularly of the petty bourgeoisie, were directly dependent on the
state for their material welfare. The state machinery itself had a
greaterformative impact on society in France than in England as
a force both of attraction and of coercion.
At the same time, society was more polarized in France as
a consequenceboth of the cleavagesbrought about through rev-
olutionary experiences and the lesser development of capitalist
production. The wage workers, especially those of Paris, had
played a decisive role in the revolutionary movements of 1830
and again in 1848. They were, however, a minority in an urban
population composed in its majority of self-employed artisans
and petty bourgeois shopkeepers.The bourgeoisiesof agriculture,
nance, and manufacturinghad, following the setbackthey suf-
fered by the proclamationof the worker-dominatedsocial re-
publicin therst revolutionary

thrustof 1848,regained
control
thanksto the supportof the small-holder
massof thepopulation
outside Paris and the separationof the urban petty bourgeoisie
from the workers.The socialrepublic gaveway to the bourgeois
republic.Thecleavage
between
themwaswroughtin blooddur-
ing the JuneDaysof 1848when thousandsof workerswere
slaughteredby troopsin Parisandthousandsmoretransported
afterward.Thenceforth,a weak labor movementin Franceiden-
tied itself with the radical revolutionary republican tradition;
conservative France united the surviving old-regime elements of
societywith the bourgeoisie
of the emergentliberal economy.
Eachsegmentof Francelived in fearand distrustof the other.
This cleavagewasstrengthenedafterthe downfallof the Second
Empireby the evengreaterbutcherythat occurredin therepres-
sion of the Paris Commune [1871].
Uncertain of their ability to give secureand continuing po-
litical leadershipin a coalitionof conservative
forces,theFrench
bourgeoisie in 1852abandoned their own parliamentaryparties
andplacedtheirpoliticalfatein thehandsofBonaparte
andthe
army.Thebonapartist regimewasa formof statepowerthat
could enforce order within which the bourgeoisie could get on
with their businessof makingmoney.(Theeventcreateda prec-
edent.Thepost-WorldWarI Italianbourgeoisie
in similarfashion
abandonedthe Liberalsand placedits fate in the handsof Mus-
solini.)Thecomingof the bonapartiststatesignieda failureto
overcomethe basiccleavagein Frenchsocietyand the failure of
the French bourgeoisieto achieve a hegemony.The state ma-
chine,staffedby pettybourgeois
bureaucrats
andthe army,had
to substitutefor the kind of hegemonyachievedin British society.
Thoughthe Frenchstatehad greatpowersof attraction
and compulsion,it presidedovera societybesetby contradic-
tions.Thebonapartiststatebecamethe virtual representativeof
conflictingclassinterests.It represented
the bourgeoisie
by en-
forcingtherulesof liberaleconomyandtheeraknewno alter-
native economicsystem.But Bonapartewas also the represen-
tative of the small-holding mass of the population and of the
lumpenproletariat
hehadorganized
ashis politicalghtingforce.
He exhibited also an unrequited desireto becomethe represen-
tativeof the workers[he legalizedstrikesin 1864).It requireda
permissiveeconomyand a permissiveworld order for such a

stateto beableto givepayoffsto this varietyof divergentinterests.
The economywas indeed expansivelypermissivethrough the
duration of the SecondEmpire;the regimecollapsedjust before
the onsetof the late nineteenth-centurylong depression.World
order ceasedto be equally permissivewith the comingto power
of Bismarkin Prussiain 1862andultimately with Francesdefeat
by the HohenzollernEmpire in 1870.
As Marx observed,Bonapartebrokethe political power of
the bourgeoisiein order to protect its material power, but in
protectingits materialpower, he generatedthe bourgeoisiespo-
litical poweranew.In thesuccessor
regimeof theThirdRepub-
lic, a petty bourgeoisgoverningclasscontinued the task of pro-
tecting the bourgeois economic order.
The Third Republic,traumatizedby the repressionof the
ParisCommune,was no more able than Bonapartewas to bring
the workers within a hegemonicorder. The labor movementin
France,weak as it was, maintainedits fundamentalrejectionof
the bourgeoisorder.The bourgeoisiefor their part maintaineda
defenseof the absoluterights of property, unwilling to share
power in industry with a movementthat rejectedthe legitimacy
of ownership.Thus, evenafterthe legalizationof tradeunions in
1884,industrial relations in Franceremainedcharacterizedby
stateinterventionism.Employerswere disinclined to negotiate
with workerswho challengedtheir rights.Confrontedby impasse
andpossibleviolencein the eventof industrial disputes,the local
prefect would intervene, sometimes at the instance of the work-
ers leaders, to bring about a settlement. The state maintained its
autonomy, acting to restore peaceand orderly production rather
thanasenforcerof theparticularinterestsof employers
in indus-
trial disputes. In so doing, the state maintained an order that
favoredemployersover workers.
The United Statesduring the nineteenth-centuryliberal
worldordermaintaineda statethat wasrelativelyundeveloped
in relationto civil society.Struggleoverthe statewasa struggle
among divergent class interests to use the state for their own
protectionand for the advancementof their particular interests.
The interestsof the growingmanufacturingeconomyof the
Northeastconictedwith thoseof theplantationeconomyof the
Old South. Distinct from both were the interests of small-holding

farmers in the North and the New West. These various interests
usedthe machineryof governmentto their own endswherethey
could but were not overly constrainedby it. Local and state
governments
directly investedin or guaranteed
loansfor the
constructionof canalsand railways that would servethe needs
of capitalists. The tariff, a matter of controversybetweenthe
protectionistmanufacturers
of theNorthandthefree-trade
plant-
ers of the South, becamein its details the creature of innumerable
particular manufacturinginterests.The issue of cheap versus
sound money pitted farmersagainstmanufacturers,and farmer
resistance obstructed the creation of a national central banking
systemuntil the twentieth century.The greatestresourceat the
disposal of governmentswas public land, and the issue over
whether this should be held as a reserve for the future or distrib-
uted liberally to able-bodiedcitizens,therebystrengtheningthe
farmerinterest,was anothermajorcontention. In short,govern-
ment was an opportunity of plunder in somebodysinterest.At
the sametime, governmentdid not impinge much on the actions
of citizens by comparisonwith Europeanusagesof the time. It
did little to regulatebusiness,whosestandardswere free-wheel-
ing, especially in the post-Civil War era, when businessand
government
corruptionmergedin MarkTwainsgilded age.
The privatejusticeof vigilanteswent uncontrolled,and capitalist
baronsmaintained private armed forces to defend and extend
theirproperty.
Bynostretchoftheimagination
couldonespeak
of an autonomous state in nineteenth-century America. State
autonomy,insofar as it now existsin the United States,was the
creation of twentieth-century wars and the Great Depression.
Nor can one speakof a hegemonicsocietyin nineteenth-
century America. The Civil War (1861-65)was precipitatedby
anallianceforgedin the RepublicanPartyof tariff andhomestead,
of northern capitalist and westernfarmer,againstthe power for-
merly wielded by southern planters through the Democratic
Party.Threemodesof socialrelationsof production,eachwith
a distinct geographicalbase,competedfor supremacy.The bal-
ancetipped againstthe slaveeconomyof the plantersand gave
the upper hand to the wage-laboreconomyof the northern cap-
italists, but the self-employedfarmersremaineda constraining
forceobstructinga fulledged bourgeoishegemony.The farm-

erswon a victory in the HomesteadAct of 1862for the granting
of westernland freely to settlers.In practice,the operationof the
act worked in the interest of large land speculators,but the small-
settler movementcontinued through the century as a political
and economicforce. This movementdrained a potential wage-
labor force away from the manufacturers, but the manufacturers
were compensatedby the ImmigrationAct of 1864,which gave
federalauthorizationto the importationof working peopleunder
terms of contract analogous to the indentured servitude of colo-
nial times. Western farmers did provide markets for manufactur-
ers,and farmersalsohelpedto sustainthe ideologyof freeenter-
prise and freedomfrom governmentalcontrols.
If the western frontier delayedthe proletarianizationof
the United States,wage labor did nonethelessbecomethe pre-
ponderant form of economic activity by the late decades of the
nineteenthcentury. Conict betweenlabor and capital, unme-
diated by state intervention, was widespread and violent in the
1870s and 1880s. This reached a point of crisis in the 1890s,
when capital decisivelydefeatedlabor and beganto bring about
a new organization of productionan organization that dis-
placedthe old agglomerationof skilled workersin factoriesby a
fragmentationof the work processcoordinatedunder managerial
control. It is on this basisthat U.S.capitalbuilt its hegemony
in the twentieth century.Stateautonomy,regulatingthis capital-
ist development,camewith the New Dealduring the Depression
of the 19303.
CONSOLIDATION
OF THE LIBERAL WORLD ORDER
The economicprocessesgiven freerein by the institutionalizing

of liberal principles in early nineteenthcenturystatesenjoyeda
period of expansion from the 1840sto the 1870s.It was a period
of growing prosperity for the more advancedeconomiesand of
optimism in the continuity of expansion in manufacture and
trade. Transport improved within and among countries. New
sourcesof energy and raw materials were opened up in response
to the appetitesof industry. Increasedmining of gold, together

with increasedcirculation of papercurrenciesand the introduc-
tion of new techniquesof credit, expandedthe money supply
and stimulated economicactivity. New methodsof nance, no-
tablythejoint-stockinvestment
bank,facilitatedthemobilization
and channelingof capital.
The liberal world order was the creation of an expansionist
society,British in the rst instanceandEuropeanin the following
instancesles bourgeoisconquérants. Expansionismtook the
forms of trade, emigration,and capital investment.The move-
ment was aided and abettedby stateactions,notablyby Britain.
There was a certain consistencyin the variety of methodsused
bytheBritishstateto promotethisexpansion:
formalintervention
and political control where necessary, but wherepossible,infor-
mal and lesscostly arrangements that would leaveenforcement
of the rules in the hands of reliable local governments.Britain
promoted,recognized,
andprotectedthe independence
of Bue-
nosAires and Brazil in the earlyyearsof the centuryand secured
favorable commercial treaties that the new governments were
relied on to enforce. India, however, which became the key to
the British paymentssystem,giving Britain a favorablebalance
to offset its decit with Europe and the United States,was man-
ageddirectly and in accordancewith mercantilist practices.In
smallstates,wherelocal governmentsprovedlessreliable,Britain
intervenedforcibly, e.g.,to protectbondholdersinterestsin Gua-
temala and Colombia in the 1870s. Overseas territories controlled
by Europeansettlerscould,however,bereliedon to conformto
the economicrequirementsof liberal world orderwith a measure
of selfgovernment.Theseinstancessuggestthe variety of state
policies and political responsesto a single expansionistmove-
ment of global reach.
The world of liberal states was a hierarchical order. Britain
was its center:the principal trading nation, principal sourceof
capitalfor the rest of the world, principal enforcerof market
rules, and preserverof the military balance.Other European
countriesFrance,Germany,the Low Countriesformed an in-
ner circle of participantsin industrial growth and trade expan-
sion. Protectionistat the outset,the governmentsof theseand
otherEuropeancountriesbecameconvertedto the principleof
freetradeduring the peakyearsof liberalism.From 1860through

the two following decadesa series of trade treaties reduced tariffs
amongthe major trading nations [exceptfor the United States).
Internationaltrade and paymentswere further facilitated by the
gradualacceptanceof the gold standardby all thesenationsfrom
the 1870sup to the outbreak of war in 1914.Thesewere, however,
the yearsduring which the liberal erapassedits peakand entered
aphaseof closure.Protectionism,neverabandonedby the United
States,revived in Germany,Italy, and Franceduring the 1880s
and 18908.
Politically structuredglobal economicexpansionhad an
impact on both production relations and forms of state in the
penetratedareas. The initial effect of commercialpenetration
by British or Europeancommercialexpansionwasto put pressure
on local tributary or peasant-lordproduction methodsto yield
more surplus that could be exchangedfor goodsproduced by
enterprise-labor-marketrelations in the expansive country.
Throughout the nineteenth century and well into the twentieth
these precapitalist production relations were linked into world-
wide capitalist exchangerelations.Surplusextractionwas inten-
sied in peasant-lordcultivation without any basic changein
production relations.In other places,changesin production re-
lations did come about. Slave production of cotton in the south-
ern United Statesgaveway to enterprise-labor-market
plantation
production after the Civil War. In Egypt,demandfor cotton by
British and European mills led to a concentration of land into
largeholdings and the ruin of peasantagriculture. In India, the
imposition of direct British rule during the nineteenthcentury,
andthe application of British contractand propertylaw that this
involved, transformedland into absoluteproperty and madeit a
marketablecommodity.Concurrently,the ruin of Indian artisan
textile production by the importation of British cotton textiles
createda massof unemployedlaborers.Enterprise-labor-market
production emerged in India in these conditions in the forms
both of plantation wagelabor producingraw cottonand of a new
indigenousmachine cotton textile industry. Indian cotton tex-
tiles,alongwith Indianopium,wereexportedto China,offsetting
Chinas exportoftea.Extractionofrawmaterialssoughtby British
and Europeanindustry was achievedby the implantation of
foreign-controlled
enclaves
of miningandplantationsin partsof
Africa. Theseenclavesrequired a labor force, to securewhich
local state action was necessary.Sometimessuch state action
took the form of direct coercion, i.e., forced labor, and sometimes
the indirect method of imposinga headtax, which would make
it necessaryfor at leastsomemembersof a communityto earna
wagein orderto paythetax.Someareasof thepenetrated
regions
came to serve as catchment zones in which labor contractors
would recruita supplyof migrantwageworkers[mainlyyoung
males)while anotherpart of the population(women,children,
andelderly)continuedthroughsubsistence productionto repro-
duceawage-labor
forceavailable
fortemporary
export.
Thusthe penetratedareasof the liberalworld economy
were transformedin their production relations.In this process,
local statemachinery,both colonialandformallyindependent,
was likewise transformed. The state developed its capacity to
protectthegrowthoftheliberaleconomy
throughamixofdirect
coercion,tax policy,andpropertylaw. Thestatealsomobilized
nance for investmentin transport and communicationsfacili-
ties. Thus, the functions of the liberal statewere exportedfrom
theexpansive
countries
tothepenetrated
countries.
In penetrated
regions,
old hegemonieswerechallenged,
butrarelycouldit be
saidthat new socialhegemonies
wereestablished
underbour-
geoisleadership.
Typically,statemachines
intervened
to enforce
an orderthat would permit thesechangesin production,and
exchange
relations
to continue.
In penetrated
countries
fromthe
Mediterranean throughAsiaandLatinAmerica,localbourgeoi-
siesactedasagentsor intermediaries
for capitalfromtheexpan-
sive centers.Europeaneconomicpenetrationwas encouraged
andprotected
bylocalauthoritarian
regimes,
aswellaswelcomed
by thesecompradorgroups.
Toward the external world, the liberal state in the pene-
tratedcountryhadthefunctionofadjusting
thelocaltotheworld
economy.Sometimes
this functionwasfreelyaccepted,some-
timesforceduponit. Britishnavalpowerenforced
mercantile
accessand financial contractswhere necessary,but most fre-
quentlycoercionwasnot necessary.States weregladto have
access
to Britishcapitalandtechnology
for theircountriesand
werereadyto adopttherulesandpractices of theliberalorder
as their own guidelines.
The stability enjoyedby the liberal stateand world order

during the mid-nineteenthcentury (roughly 1848-1873]can be
attributed principally to three factors: (1) class conict in the
expansive center was not polarizedthe bourgeoisieshad ceased
to be a revolutionaryforcesincethe old-regimearistocracieshad
learnedto rule in their interests,and the workershad not yet
become a coherent challenge; [2] the economic boom of 1848-
1870 sustainedgovernmentsand underminedrevolutionary
hopes;and(3)themanagers
of theworld economyin the City of
London and Europeanhaute nance moderatedadverseeffects
of recurrent paymentsdecits in the penetratedzones of the
world economyby providing a flow of new capital.
Underlying this stability were the contradictions inherent
in the liberal systemthat would ultimately challengeand trans-
form it: [1] the self-regulatingmarket, as Karl Polanyi pointed
out,75
by underminingthe traditionalsocialfabricand leaving
many people vulnerableto unemploymentand starvation,pro-
voked a reaction of social defensethrough factory laws, social
insurance,trade unions, and political action by labor; (2) the
hierarchy of the world economygeneratedinequalitiesthat be-
camemore entrenched,therebydemonstrablyfalsifying the for-
mal equality of marketrelationships;and (3) the maintenanceof
conditionsfor continuing capital accumulationcameto conflict
with the requisites for legitimating the liberal order in broad
public support,e.g.,throughthe unemployment-creating
and
income-reducingconsequencesof decit-country adjustments
under the gold standard.
ANALYTICAL PROPOSITIONS
CONCERNING THE TRANSFORMATION
OF FORMS OF STATE AND WORLD ORDERS
This review of evidencerelatingto the comingof the liberal order

enables
usto returnto somegeneralanalyticalpropositions
about
the transformationof forms of stateand world orders and the
impact of such transformationon production relations. These
propositions may serve as heuristic guides for the examination
of subsequenthistory.
First, the form of stateis the productof two congurations
of forces:one,thecongurationof socialclasses
within a historic
bloc;the other,the permissiveness
of theworld order.
The aristocratic British governingclass recognizedthat
Britainsworld power dependedon its commerceand manufac-
turingandwasthereforepreparedto governin sucha wayasto
allowthebourgeois economy to ourish andexpand.Themiddle
classwas sufficientlypolitically mobilizedto specifyand de-
mandpoliciesin its interestsand to takecontrolof municipal
governments in its particularareasof implantation.Aristocratic
paternalism,
togetherwith economicgrowth,madepossiblesuf-
cient concessionsto workersto keep the peaceso that repres-
sion, an ever-presentpossibility, wasrarely resortedto.
The economicand naval power of Britain enabledit to
lead an alliance to victory in the Napoleonicwars, thereby se-
curing the military-political conditionsfor continuing economic
supremacy. Britainsmanipulationof the Europeanbalanceof
powersecureda permissiveenvironmentfor westernEuropean
countriesto adoptliberalformswithoutrisk of interventionfrom
old-regime restorationist powers.
Second,classstrugglesleadingtoward a transformationof
statestakea political form,i.e.,they arestruggles
aboutthe in-
clusion or exclusion of social groups from accessto political
decisionmaking.Theoutcomes of suchstrugglesareinuenced
by a varietyof factors,includingrelativenumbers(determined
by the extentof development of particularmodesof socialrela-
tionsof production),self-awareness of groups,geographical
con-
centrationor dispersion,effectiveorganization and leadership,
and accessto existingformsof statepower (bothcarrotand stick,
services and coercion).
Third, classconict in the formationof new historic blocs
can lead either toward states that are autonomous in relation to
civil societyor towardstatesthat arethe mereinstrumentsof
divergentsocialforces;with regardto theformer,theautonomous
statemayreston a hegemonic society,or it maybind togethera
societyin which no hegemony hasbeenachieved.The British
caseshowed an autonomousstatein a hegemonicsociety;the
French,a powerful stateholding togethera nonhegemonic,po-
larizedsociety;the American,a weakstatestruggledoverand
usedin their respectiveinterestsby conflicting socialforces.
Fourth, the state gives a legal-institutional framework for

the economic practices of the economically dominant class, i.e.,
the class that sets the pattern for the development of production
relations. The autonomous state, whether in hegemonic or non-
hegemonicsocieties,standsoverthis classto regulateits activity
in a manner consistent with the economic project of the class as
a whole, not responding to particular interests of elements in this
class. The weak state that becomes the creature of particular
interests is unable to achieve this level of disinterested regulation.
The interaction of particular interests in this caseis closer to the
Hobbesian state of nature.
Fifth, the legal-institutional framework set up by the au-
tonomous state creates the basis for the social relations of pro-
duction, laying down the conditions for the development of the
dominant mode of social relations of production and for the
subordination of other modes to the dominant mode. State legal
and institutional reforms dismantled the old economic and social
protectionismand establishedlabor markets.This, togetherwith
legal-institutional inhibitions to combinations of workmen, made
the enterprise labor market the dominant mode of social relations
of production of early capitalism. In France, small-holder pro-
duction was subordinated to the dominant sector of manufactur-
ing and large-estate agriculture employing wage labor through
the mechanisms of banking and mortgages,as well as by a change
in the terms of trade detrimental to agriculture [late-nineteenth-
century decline in agricultural prices]. In the penetrated econ-
omies beyond Europe, peasant-lord production was linked into
exchangerelations with enterprise-labor-market production, and
exploitation of peasants was intensied to provide more raw
materials. Subsistence production became a labor reserve for
enterprise-labor-market production.
Sixth, a world hegemonic order can be founded only by a
countryin which socialhegemonyhasbeenor is beingachieved.
The expansiveenergiesreleasedby a social hegemony-in-for-
mation move outward onto the world scale at the same time as
they consolidate their strength at home. The French Revolution
gavebirth to a hegemonicprojectthat reorganizedEuropebefore
it was defeated by a combination of external forces. The defeat
left France in a condition of polarization: conservative forces
reassertedthemselvesand cameto outweighthe continuingrev-

olutionarythrust,whichremainedpresentbut frustrated.
The
Britishvictoryopened
thewayfortheconsolidationofbourgeois
hegemony at homeandits expansion
to founda liberalworld
order abroad.
Seventh,the hegemonicorderbothdomestically and on
the world scaleseparates
economics
frompolitics.The political
foundationsof hegemoniceconomicorder are so taken for
granted
asto bepractically
ignored.
Politicians
learnto observe
the distinctionbetweeneconomicsand politics in their political
practice.
Thisobservance sustainstheeconomic orderby con-
rming thepredictability
of itsrulesandpractices.TheBritish
government,
for instance,
continued to honoritsnancial obli-
gations
totheRussian governmentduringtheCrimean War.The
dualityof economic
andpoliticalrationalities
wasnotunaccom-
paniedby sentiments
of disdainandresentment.
Disraelide-
scribed the international bankers somewhat disparaginglyas
mightyloanmongers,
onwhose
at thefateofkingsandempires
sometimes
depend.75
Theprominence
ofJewish familiesin in-
ternational
bankingwasreflectedin antisemitism
amongthearis-
tocratic
politicalclassa phenomenon
distinct
fromthepopulist
antisemitismand racist doctrinesthat becametools of political
massmobilization in the later nineteenthand twentieth centu-
ries.Thefactthattheseparate
claimsoftheeconomic
orderwere
observed
despite
politicalinconvenience
gavetheworldordera
kindofautonomyin relation
tonational
interests
similarin kind
to the autonomyof the statein relationto particulardominant-
class interests.
Finally,hegemony,
though
rmly established
atthecenter
of the world order,wearsthin in its peripheries.
Actualrevolts
provoked
byeconomic
penetration
arose
intheperipheries,
and
the use of coercionwas much more evidentin theseareas.Lands
peopledby non-European
populations
experienced
violentre-
actionsto the penetrationof Europeancapitalismthere were
colonial
risingsin Indiain 1857-58,in Algeriain 1871,andin
Egyptin 18791882,andtheTaipingrebellion in China(1850
1866]wasthemostextensive social
movement ofthenineteenth
century."
CHAPTER SIX
THE ERA
OF RIVAL
IMPERALISMS
The years from the UniversalEx-

hibition of 1851 in London to that of 1866 in Paris can be seen
as the apogeeof the liberal era.The decadesthat followed wit-
nessedregressionfrom the principles, practices,and institutions
of liberalism. Historians in retrospect have noted a rupture in
continuity during the period from the 1870sto the 1890s.The
discontinuity marksthe decompositionof onefully formedstruc-
ture that coherently linked world political economy,forms of
stateand productionrelations,andthe emergence of the elements
of a new structure in process of formation in which all of these
elements were to become transformed. It was, in Geoffrey Bar-
racloughs words, one of those moments when humanity swings
out of its old pathson to a new plane . . .1
THE TRANSFORMATION
OF THE WORLD POLITICAL ECONOMY:
THE END OF HEGEMONY
To begin with, a change in the relative power of statesaltered the

way in which the interstate system functioned. In Europe, the
start of the period saw the consolidation of a unied Germany,
which in limited wars had defeated rst Austria [1866] and then
France (1870). Paris and Vienna, hitherto foci of the European

balance, yielded precedenceto Berlin. A united Italy under Pied-
montese leadership entered the balance. Britain withdrew from
an active presence in Europe with the death of Palmerston and
the triumph of Cobdenite ideology in foreign affairs. British lib-
erals looked to free trade to maintain peace and Conservatives
preoccupations lay overseasrather than in Europe. Both agreed
to a benign neglect of the European balance of power.
That balance was not ended following 1870 but was trans-
formed. A number of powers still remained effectively in the
European system, sufciently equal in strength that no one could
dominate the others. (Bismarck, after his success over France,
proclaimed Germany a satised power, thenceforth intent on
maintaining the balance, not suppressing it.) However, from the
1870sthere begana new phaseof alliance building that by /the
1890s, had led to a polarization of Europe between the Triple
Alliance (Germany, Austria, and Italy) on the one side and a
Franco-Russian alliance on the other. When Britain reentered the
European political system after 1900, it was as a member of the
alliance with France and Russia. The balance of power had by
then come to an end.2
The rising power of Germany in Europe and relative de-
cline of Britain and France were items in a larger agenda.Europes
world dominance was in relative decline as non-European pow-
ers claimed status in world politics. The United States emerged
from its Civil War as a power that by the end of the century would
stake out claims in the Pacic and in World War I decide the
outcome in Europe. The Meiji restoration made Japaninto a new
power that was brought into the world system by the Anglo-
Japanesealliance of 1902. Japan then proved its status by the
dramatic defeat of Russia in 1904-5.
Sensing that a shift was taking place from a European to a
world political system, Germany, flush with new preeminence
in Europe, sought to gain the status of world power. In this
ambition, Germany was encouraged by Britains disengagement
from European politics and by the emergence of the new non-
European powers, foreshadowing a dispersion of power at the
global level. Germanys bid took the form of a direct naval chal-
lenge to Britain, the building of a eet that could seeka decision
RIVALIMPERIALISMS 153
in the North Sea, and thereby open Germanys way to the world
overseas.This action convinced Britain that Germany had be-
come its number-one enemy and that the full resources of diplo-
macy and military strength should be directed to circumscribing
that challenge.3Britain accordingly came to terms with Russia,
removing from contention Anglo-Russian imperial rivalry in
Asia; entered into alliance with France; and strengthened bonds
with the United States. It took two world wars nally to defeat
the German thrust to world-power status before the world polit-
ical system once again, after 1945, became restabilized in a new
conguration.
The logic of interstate power relations was but the outer
skin of the onion. The underlayers explained the rupture in world
politicsthe end of the Europeanbalanceof powerand of British
world hegemony, and the shift from a European to a world system
in which neither balance of power nor hegemony could be rees-
tablished. First of these underlayers was the continuing and un-
even spread of industrialization. Industry was the basis of mili-
tary and naval power. Britains lead had been overtaken by
Germany and the United States. France had developed more
slowly. Japan began a drive to industrialize after Commodore
Perrys squadron in Tokyo Bay had demonstrated ]apans Vul-
nerability to western intervention. The relative pace of industrial-
ization in different countries determined their military-political
potential. Weapons costs,reecting new technologies, becameso
expensive that only the front cluster of runners in the industrial-
ization race could afford power status, and positions within this
cluster were likely to changeasthe race went on. Britains launch-
ing of the Dreadnought in 1906 gave the Royal Navy an instan-
taneous advantageover the German eet, but it also, by rendering
virtually obsolete all warships built before 1905, wiped out Brit-
ains long-term lead and gave Germany, with its upto-date in-
dustrial capacity, the opportunity to compete on a more nearly
equal basis. Steel production was the best single indicator of
industrial power, and hence, of military potential. By 1893
Germany had passedBritain in steel production. As early as 1890,
the United Stateshad alreadytakenrst place.The monopolistic
position of Britain in industrial power during the midcentury
period gave place at the end of the century to a competition of
industrial powers among which Britain was in many ways the

least dynamic.
This competition for power required states to promote
their own industrial bases. Two consequencesfor state policy
directly followed: a revival of protectionism and an expansionary
thrust for markets and colonies. Protectionism can be looked at
from two perspectives. In one, it is the result of pressures from
particular intereststo use the statefor their own benet. It has
been argued that landed interests identied with old-regime aris-
tocracies led the revival of protectionism in the late decades of
the nineteenth century.5At the sametime, the owners of emergent
industries challenging British dominance, together with workers
in these industries, supported protectionism. In another perspec-
tive, states concerned both with enhancement of their own mil-
itary strength and with the need to bond the social classesof a
growingly complex society into loyalty to state goals perceived
protectionism as an instrument to these ends. The French return
to protectionism seemed to conform to the first perspective.
French economic interests had resented Napoleon IIIs move to
free trade, an initiative by the state intended as a stimulus to
efciency and modernization. These interest-group pressures
gained their ends in the Méline tariff of 1892. In Germany, the
second perspective had doctrinal legitimacy from Friedrich List
and the Historical School in the notion of the statesresponsibility
to orchestratean organic developmentof state,economy,and
society.In Japantoo, the statesupervisedthe developmentof
industry while protecting the homeland againstforeign economic
penetration. Even in Britain, free trade doctrine was challenged
when JosephChamberlain launched his protectionist program in
1885, though it was not until World War I that import duties, and
subsequently, imperial preferencesbecamestatepolicy. The Brit-
ish state, close to the nancial interests of the City, retained a
lingering allegiance to the liberal economic policies of its heg-
emonic past. Britains rivals had no such inhibitions.
A complex of factors encouragedthe overseasexpansion-
ism of the new imperialism in the last two decades of the
nineteenth century. Prominent among these was state concern to
safeguardindustrial growth. Domestic markets were alone insuf-
cient to absorb the products of national industries. Raw mater-
RIVAL IMPERIALISMS 155
ials had to be procuredabroad.Outletsfor surplus capital were

sought.Industrial growth was necessaryto sustainthe ghting
capabilitiesof states.Navalbaseswererequiredto give those
capabilitiesglobalreach.In actualfact,colonialacquisitionsof
the late nineteenthcentury did not bring notableeconomicben-
ets. The principal states,not their respectivecolonies,remained
each others best customers. Nevertheless, the incentive to ex-
pandwasirresistible.
It wasrationalized
andpublicized
by ide-
ologicalforcesChristianproselytizing,la missioncivilisotrice,
and racial supremacy doctrines.
All the majorpowers,the United StatesandJapan,aswell
asBritain and the Europeanpowers,joined in. From 1871to 1914
there was peacein Europe,but rivalry shifted to Africa, the Far
East, and the Pacic. The greatly augmented hiatus in power
betweenthe new industrially basedstatesand the nonindustrial
world beyondinvited dominationoverthe latter,and the percep-
tion that the frontier of preindustrial lands was closing,that a
nite arearemainedto be brought under the control of the in-
dustrial states,incited preemptiveactionto secureevenzonesof
marginal economicor military interest.The western European
powerspartitionedwhatwasleft of Africaduringthe 1880sand
1890s.Chinasweaknessand supposedlyvast internal market
beckoned,and only the presencein the region of other rivals
Russia,Japan,and the United States-preservedthat country
from a similar fate.
Peelingoff yet anotherlayerof the onion, industrialization
hadbroughtaboutmajorchangesin the structureof societiesthat
had consequences for the natureof the state.During theseyears,
the balance shifted from rural to urban society in the industry-
basedpowers.Between1870and 1900,the populationof Europe
doubled, increasingby one hundred million. During the same
periodforty million emigrated,mostlyto the Americas.The prin-
cipal impact of the quantumjump in population was,however,
in Europesurbanization.In the overseascountriesof immigra-
tion too, population rosefastestin the cities. By 1850,when the
liberal form of state was becoming well established, only in Brit-
ain wasurban population greaterthan rural, and factoryworkers
remaineda minority in the whole population.Parisin 1848was
a city populated mainly by artisansand other self-employed
workers.The liberal stateruled over a population in which the

old solidarities were being destroyed,releasingindividuals and
nuclearfamilies for employmentby manufacturers.Political pro-
test during this period, though acuteconsider the Chartist re-
bellions in Englandcould be masteredby statepower. When,
during the last decadesof the century,the majority of the popu-
lation becameconcentratedin towns, and when people were
brought into durable, compact groups in the factories and in the
urban areas where workers lived, political action became more
feasibleand more threateningto the liberal order.The spreadof
literacy, the emergenceof a popular press,and the formation of
mass-basedpolitical parties of socialist allegiance enhanced this
probability. Statesnow confrontedstrategicallylocated,cohesive
population groups with very explicit social grievances,against
whomrepression
couldat mostbeonlya partialresponse-/a
phenomenongenerallyidentied as the labor problem. '
The statespredicamentwasrenderedeasierto resolveby
other tendenciesin economic and social organizationthat si-
multaneously fragmented and divided the workers. These in-
cluded the growing concentrationof capital (acceleratedby the
long depressionbeginningin 1873] and increasingapplicationof
science and technology to large-scaleindustrial organization,
which tended to separateworkers into established[more edu-
cated,more skilled, more permanent)and nonestablished[less
educated,less skilled, less steadily employed].The former had
the resourcesto developthe organizationsof a new labor move-
menttrade unions, workers educational institutions like the
mechanicsinstitutes, cooperatives,and political parties. The
latter were less able to articulate their demands in a coherent
manner. The state could selectively respond to the established
workersby giving them a placein the political system,providing
some state support or legitimacy for their organizations, and
encouraging them to look to the state for protection. Various
measureswere steps along this road: the British factory acts,
Disraelis extension of the franchise to include the skilled work-
ers, legal recognition of trade unions, Bismarcks social insurance,
and (especiallyfollowing World War I) immigration restrictions
to protect national labor markets.
Symbolic of this restructuring of state-societyrelations
was Bismarcks initiative to enter into secret discussions with

Ferdinand Lassalle, the leader of the principal organization of
German workers of the early 1860s. The common ground of the
two protagonists was a perception of the state as the shaper of
society. Bismarck sought worker support for the military and for
territorial aggrandizement by the state in return for state action
to improve workers conditions. Lassalles responsiveness fore-
shadowed European labor movements future behavior, in de-
partingfrom the appealmadeby Marx and Engelsin 1848for the
international unification of worker action against states.Bismarck
was the rst statesman of a major power to use effectively the
popular force of nationalismto bridgeclassantagonismsin com-
mon loyalty to the state and its foreign policy goals. The formula
was nationalism, protectionism, and welfare. Leaders in other
states adopted the same course. The trend of the late nineteenth
century was well expressed by Carr: The socialization of the
nation has as its natural corollary the nationalization of
socialism.7
The merger of nationalism and welfare was in the rst
instance an initiative from above, a preemptive stroke by state
mangers aware of the disruptive potential of the social forces
generatedby urbanizationand industrialism.Marx publishedthe
rst volume of Capital in 1867, but he was by no means unique
in perceiving the contradictions of industrial society. Joseph
Chamberlain addressed the issue of unemployment in Birming-
ham and launched an attack on the laissez-faire system in 1886.
The Fabian Society was founded in 1884. In England as in
Germanythe rst initiatives camefrom above.In Germany,these
social policy initiatives proved for a time sufficient to enable
Bismarckto suppressthe socialists.In Britain, worker franchise,
enacted in 1867, made little distinctive impact on the political
system until the end of the century. In addition to measures of
socialprotectionfor workers,the social dimensionsof imperial-
ism may have retardedthe independentarticulation of worker
demandsas one German scholar has expressed it diverting
attention away from the question of emancipation at home to-
wardscompensatorysuccesses abroad.8
Nevertheless,pastthe turn of the century,the pressurefor
welfare began to well up from below through the political partic-
ipation of workers.During the yearsbefore1914the germof the

modern welfare state was visibly at work. The Liberal party vic-
tory in Britain in 1906inaugurateda seriesof socialreformsand
was accompaniedby the first appearanceof a signicant number
of LabourPartymembersof parliament.In the United States,the
successes of the Progressives
in federaland stateelectionsmarked
an interlude of concern with social policy in the Hobbesian social
strugglefor economicsurvival and aggrandizement.
In Germany,
the Social Democrats scored a major victory in the elections of
1912,becomingthe largestsingleparty,thoughshortof a majority
in the Reichstag.World War I mobilized all socialforcesbehind
the nation-state, and in so doing reaffirmed, in a context of en-
largedpolitical participation, the supremacyof the Bismarckian
union of nationalism and welfare over class conict.9
Beneaththis processof sociopoliticalrestructuringmani-
festedin all the industrial powers,yet anotherand deeperlayer
of reality has beenrevealedthrough the study of long wavesin
economichistory.The long depressionfrom 1873to 1896marked
the end of one such long wave. Many small businesses failed,
and capital becamemore concentratedin large concerns.The
depressionwas the thresholdbetweencompetitiveand monop-
oly capitalism.The nineteenthcenturyhad beena period of more
or lesssteadily declining prices,punctuatedby a few sharphes-
itations or reversals, as the productivity gains of the rst indus-
trial revolution affected a widening range of commodities, ini-
tially in manufacturing,then, after a revolution in international
transportationand agricultural machinery,in food production.
By the late decadesof the century, the last returns were being
wrung out of the industrial innovationsput in place during the
rst industrial revolution. This was a principal explanation for
the relative decline of Britain, the power that had the most ex-
tensive stock of obsolescent means of production, in terms both
of installed physicalplant and of the capacityto generateknowl-
edge and attitudes conducive to future growth.
The years from 1896 onward saw the start of a new wave.
The technologyof a secondindustrial revolution had been pi-
oneeredand was ready for expandedapplicationthe technol-
ogyof steel,electricity,organicchemistryand synthetics,and the
internal combustion engine. An investment boom in the new
RIVAL IMPERIALISMS 1 59
industrial processeswas facilitatedby an increasein the money

supply from the boom in gold mining at the end of the century.
Thetrend in pricesreversedand inationary pressuresappeared.
World War I gavefurther impetusto industrial growth.
The weakness of most theorizing about long waves has
been the economic determinism it tends to assume. Human tra-
jectoriesarereducedto historiesof technologyand prices,ex-
plainedby the occurrence of clustersof technological
innova-
tions, which themselves remain unexplained. It is more
consistentwith the approachof this book to posit a social di-
mension to the invention and selection of technologies. Tech-
nologies are means of solving social problems of production.
Those who have the most social power can determine which
problemsmerit solutionand which of the availablemeansare
most appropriate to their interests.
Following this line of reasoning,the widespreadapplica-
tion of a cluster of new technologies at the beginning of a long
wave would be precededby the putting into place of social
relationscapableof exploiting thesetechnologies,or what a U.S.
scholar has called a new social structure of accumulation.
The installation of such a new social order of production would
come about as the outcome of struggle among social forces. It
would be conditioned by existing power positions but not en-
tirely predictableor determined.The turning points in history
are thus not to be explained by the impersonalmovementsof
prices or sequencesof technologicalapplicationsbut rather in
termsof the changesin socialrelationsthat makethesepossible.
Sucha restructuringof socialrelationsin production was
undertakenunder the aegisof capitalin large-scaleindustry dur-
ing the 1880sand 1890sin the more advancedindustrial coun-
tries. At the point of production,themost important changewas
a transitionfrom the workshopto the assemblyline. It completely
changedthe nature of work, the qualications requiredof work-
ers, and the method of control over the work process and led, in
the longer run, to new modesof organizationand political be-
havior of workers.In the largercontextof society,thesechanges
broughtabouta concentrationof capital into largerms capable
of innovating new technologies,a growing distinction between
monopolyand competitivesectorsof capital,and a changein the
relationship betweenstateand capital, the stateplaying an in-

creasing role in the new social structure of accumulation. The
growth in the statesrole was not steady and continuous. It moved
by ts and starts,in one areaand then another,under pressure
of events moving forward on a broad front, then for a time in
repose or retreat. World War I precipitated a rapid advance; the
postwaryears,relaxedeffort or withdrawal; the depressionyears,
rearmament and World War II, a new thrust forward.
The work of FrederickWilliam Taylor at the Bethlehem
Steel Companyin the 18803is symbolic of the changesintro-
duced by managementin the organizationof production. The
pattern affected, however, all the industrial societies. Its essence
was to take the control and pacing of work out of the hands of
skilled workers,to fragmentwork into a number of simple op-
erationsthat could be performedby unskilled persons,and to
recombinethesefragmentsinto a processcontrolled and paced
by machines.As prot marginsnarrowedin the late stagesof the
industrial cycle,management had a strongincentiveboth to com-
press labor costs in production and to minimize labors control
in the production process.Taylorism [in the broad sensein which
that term has come to be used) achievedboth goals.It was a
clear caseof technologydesignedand used as an instrument of
social struggleone that greatly strengthenedmanagements
power over labor and therebyset the stagefor a new expansion
of investment.
The new workers of mass production industriescalled
semiskilled or in French ouvriers specialises[O.S.)because
they could be trained for their jobsin anythingfrom a few hours
to a few weekswere a different breed from the old skilled
workers. They came in the new demographicwave, uprooted
from rural society or from foreign lands. They did not suffer a
degradationof trade skills or loss of autonomy to their craft
organizations,as the skilled workers had. Their strengthlay in
their numbers,which gavethem leverageon governmentsinsofar
as they could act collectively. They learnedalsothat if individ-
ually or in small groups they could make no impact on the
machine-regulatedproduction process,collectively they could
bring it to a halt. The new work processencouragedmassbased
industrial unions that would enter the political process to influ-

ence governments and legislatures. The new unionism appeared
in Britain and western Europe before World War I; it appeared
rst in North America in the general labor movements of the
1880s and early twentieth century but acquired durable organi-
zational strength there only through the industrial union move-
ment of the 19303.
The state had little directly to do with the restructuring of
social relations at the point of production. Mass production with
semiskilled workers was an innovation of capital. The states
support of this phase of restructuring was indirect, through its
encouragement of investments in industries that would enhance
national power. Soon, however, the state had to confront the
social and political consequencesof this restructuring at the point
of production. In Britain and westernEurope,the confrontation
beganin the yearsbeforeWorld War I as massbasedpolitical
partiesand massbased unions rst pressedtheir demandsupon
the political system. World War I enabled governments to re-
channel these popular pressuresinto conicting national causes.
Statesacquired experience in coordinating industrial production
for their war efforts; at the sametime they had to take account of
worker requirements in order to retain loyalty. The state had to
offer the goal of a postwar world to which workers could join
their hopes. Out of this experience came two related projects:
national economic planning, or statecapitalism, and corporatism,
or the alignment of worker with employer interests in harmo-
nized state policy. These two projects joined with a third, the
social protection initiated by western states from the 1880s, to
become the interrelated features of a new welfare-nationalist form
of state, a compound of nationalism, social security, planning,
and corporatism.
Tripartism was the form corporatismtook in the evolved
industrial states of western Europe. It was a development out of
the bipartite production relationsthat had grown up under the
liberal state when the state gave legal recognition of the right to
organize trade unions and for unions to bargain collectively with
employers.Tripartism gavean institutional shapeto the states
recognition of its own stake in the regulation of industrial conflict
and in the outcomes of negotiations. It also implied a recognition

that the state would need the collaboration of both unions and
employersin orderto dene and attain policy goals.
Tripartism at its origins, and even in its fullest develop-
ment, covered no more than a part of national production; it
coveredonly workersin large-scaleindustry. Evenin the leading
industrial countries on the eve of World War Ion the eve, that
is, of the rst experiments with corporatist organization on a
national scalelarge-scale industry employed fewer workers
than small-scaleenterprisesof the family-rm type whosesocial
relations were in the enterprise-labor-market
mode.Agriculture
occupieda substantialproportionof producersin westernEurope
(thoughrelatively fewer in Britain]. Self-employedshopkeepers
and artisans were numerous, as were employees in commerce
and administration. Domestic household production accounted
for a much largerrangeof goodsand servicesthan is the casein
the same countries in the late twentieth century. Nevertheless,
thoughthe tripartite sectorcoveredbut a relatively small portion
of the total productive effort of society,it coveredthat portion
most vital to the state. The state could safely leave the other
modesof social relations of production to their own devices;it
seemedcompelledto try to guide socialrelationsin the leading
sector.
The countries that rivaled Britain in the second industrial
revolution, in the new long wave that beganat the turn of the
century, shared many of the characteristicsof the ideal-type
welfare-nationalist state. For these, the reputed advantages of
backwardnessprovedreal. Theywereableto investin the latest
technologiesand to begin the new internationalcompetitionon
conditions more nearly equal than prevailed when Britain led
the rst industrial revolution. They all experimented with var-
ious forms of tripartite corporatism.
Othercountrieslaggedbehind.To remainwithout a strong
industrial base,however, not only implied an acceptanceof lower
standards of national material well-being; it also meant exposure
to the threat of foreign intervention and control. The condition
of the interstatesystemheightenedstatesecurity concerns.The
liberal state,in its basicpolitical-economic[not political-consti-
tutional) form, was sustainedby the hegemonicliberal world
order. Interventions could, where necessary,ensure observance

of the rules of that order. The dispersion of power and absence
of rules in the era of rival imperialisms precluded any such
conformity. Both the attempted restoration of liberal order
through the League of Nations and the attempted foreign inter-
ventions to subvert the Bolshevik Revolution in Russia failed.
States had more freedom of internal management in a more an-
archic system, provided they were able to muster sufcient in-
ternal strength in their economies and in their pub1ics
sentiments.
In this world context, two alternatives to the tripartite
corporatismof the welfare-nationaliststatewere mappedout by
states whose industry lagged behind the new leaders. Bolshevik
power gavebirth to centralplanning,a mode of organizingnon-
capitalistredistributive development.Fascism,rst in Italy, later
in other countries of southern Europe and beyond, offered in state
corporatisma catch-up modelof capitalistdevelopment.These
alternative models were perceived as ways to accelerate indus-
trialization, to preserve a countrys independence, and to raise
its power statusin an unstableand potentially threateningworld
system.
The era of rival imperialisms divides into three phases.
From the 1870s to the 1890s, the power structure, practices,
ideology, and institutions of the liberal era becameweaker, chal-
lenged not by a coherent alternative world order so much as by
similar but conicting national ambitions. In forsaking world
order, state leaders focused on bridging the chasm of class antag-
onism IL; consolidate loyalties to the national order; hence, the
beginningof a transformationfrom abovein the constructionof
social and welfare policy. From 1900 through World War I, forces
at the base of society became more articulate; the initiative in
social policy was no longer from above but now from below; the
state succeededthrough wartime mobilization in reconciling the
new pressureswith nationalunity behind stategoals.From 1919
to 1945 came a phase of building new historic blocs as the foun-
dations for quite different developmental trajectories with tripar-
tism, state corporatism, and central planning as their principal
modes of social relations of production.
The different forms of state and of production relations
they spawned emerged in reaction both to developments within

societies (urbanization and the new social structure of accumu-
lation) and to the transformation of the interstate system (demise
of hegemony and of the balance of power in the confrontation of
rival imperial ambitions). In this reshaping of social institutions
and practices,the preeminentrole of the stateand the forcing
ground of war cannot be denied. This is proclaimed as obvious
in the histories of Bolshevism and fascism. Democratic consti-
tutionalism may be less disposed to accord preeminence to the
same forces. Nevertheless, reecting on the end of this era in
World War II, the British Civil History of the War stated:
There existed, so to speak, an implied contract between Gov-
ernment and people; the people refused none of the sacrices
that the Governmentdemandedfrom them for the winning of
the war; in return, they expected that the Government should
show imagination and seriousness in preparing for the restora-
tion and improvement of the nations wellbeing when the war
had been won.
This restatesBismarcksstrategyin mid-twentieth-centuryterms.

The contract now extended beyond stateguaranteedsocial se-
curity to include state involvement in production relations and
in the maintenance of economic growth.
THE WELFARE-NATIONALIST STATE
As for the liberal state,two distinct approachescan help toward

understanding the nature of the welfare-nationalist form of state,
one a functional modeling of its different aspects, the other a
genetic explanation in terms of the struggle of social forces that
gradually produced this form of state.
The term welfare state did not come into common use
until after World War II, even though elements in its composition
had been apparentsince the late nineteenth century. To my
knowledge, the term welfare nationalist state has not been used
hitherto and serves here to characterize a historical structure that
can be recognized even if it has not yet acquired a conventional
name.The welfare-nationaliststatewas not built accordingto a
comprehensive plan. It wasbuilt stepby stepin reactionto a

sequence of events.In differentcountries,variationsin aspects
of this generalform areattributableto nationalcultures,tradi-
tions, institutions, and political and socialpractices.
The necessary
point of departureis to recognize
that the
welfare-nationaliststatewas a transformationof the liberal state
in whichtheessence of theliberalstateasguardianof themarket
andof theprincipleof private(ornonstate)
propertyin themeans
of production was preserved.
However,the statesupplemented
the market-sustaining
functions of the liberal state with new functions intended to
compensatefor the negativeeffectsof the marketon signicant
numbersof citizens.Unemployment, occupationalinjury, ex-
tendedsickness,and old agewererecognizedby the stateas
socialcontingenciesthat the freeplay of the marketwould leave
many people unable to copewith on their own. Somecitizens,
theincapacitated andhandicapped, mightneverhavetheoppor-
tunity to participatefully in marketregulated
activity so as to
supportthemselves.In time, purely market-oriented activity
cameto be recognizedas having somenegativeeffectsfor the
whole of societysuchas excessive atmospheric pollution and
depletionof naturalresources.
In all of theserespects,
functions
were attributed to the statefor the protection of individual citi-
zensand of the whole of society.
Recognitionof social contingenciesimplied an abandon-
ment of that elementof liberal ideologywhich attributed social
distress
to personalfailings.Theseafflictionswerenowperceived
as resultingfrom impersonaleconomicprocesses. Unemploy-
mentwasproducedby the industrialprocessitself,not by the
indolence of individuals.
Stepby stepwith the building of welfare-nationalist-state
institutionswent an increasinglyprofoundknowledgeof eco-
nomic and social processesand a searchfor ways in which the
statecould inuence or control theseprocesses.
The observation
thattherewereregularrecurrentcyclesin economic
activity,
phasesof investmentandlaborabsorption
followedby phasesof
stagnationand unemployment, led to speculation about the
causesof these cycles and thus to the identication of remedies
through which the statecould act to moderateor counterthese
cycles.
Concern
to correct
themarkets
socialdefects
thusmoved
towarda projectfor regulatingthe marketitself,for makingthe
state into the markets tutor while at the same time preserving
the marketspreeminencein the economy.
Of all socialcontingencies,nonehasgreaterconsequence
for the mass of citizens than unemployment or the threat of
unemployment.
No factorhasbeenmorecentralto the design
anddevelopment
of thewelfare-nationalist
state.Understanding
of the various causesand types of unemploymentcameslowly
overtime.JosephChamberlain,
politicallyrootedin the indus-
trialist classof Birmingham,recognizedunemploymentas a so-
cialproblem
[rather
thananindividualfailing)duringthedepres-
sion of the mid-1880sand proposedmunicipal works asa means
of tidingoverhonestworkmen
whohadbeenaffected.
Sucha
measuretended,however,in practiceto help seasonalor casual
laborerswho had never had regular employment rather than
those for whom Chamberlainhad intended it. The British Un-
employed
WorkmenAct of 1905still conceived
the curefor
unemploymentas temporaryrelief works. Inadequate
as was
the prescription,
the actdid crossan ideological thresholdby
implicitlyrecognizingtherightof amanto expect workandthe
obligationof the stateto try to ensurethathe gotit. Still, the
meansof achievinga satisfactorylevel of employmentwas not
well understood.William Beveridge,in his 1909report, took a
forwardstepby distinguishingunderemployment
from unem-
ployment(theformerendemic,
the lattercyclical)andrecom-
mendeda complexof measures,
includingpublic works,labor
exchanges,
anda higherschool-leaving
age,combined
with in-
dustrialtraining,asmeasures
to dealwith thesedifferentkinds
of unutilized working capacity.
During the interwar period, when unemploymentre-
mainedan intractableproblem,a further aspectbeganto be
understood.One part of British society[in the midlandsand
south)wasrelativelyprosperous with newexpanding industries,
while anotherpart (the north and Wales)remaineddepressed
amiddecliningindustries.Long-termstructuralunemployment
requiredremedies
differentfromthosefor cyclicalunemploy-
mentresultingfrom uctuatingdemand.The depression
of the
1930sstimulated analysis of the phenomenonof massunem-
ployment. Keynes General Theory of Employment, Interest and

Money, published in 1936, focused attention on the need to
maintain high levels of investment and of aggregatedemand in
order to have full employment. States could do this, Keynes
analysis suggested,by direct investment in public works and by
transferring money from the rich to the poor, who were more
likely to spend it than to save it. Social programs could thus be
seen not merely as measures of compensation for the ill-effects
of impersonal economic forces, but as built-in stabilizers for the
economy, which, in times of economic regression, would raise
the level of demand and restimulate growth. It remained only to
discover once again in the late 1930sthe most effective corrective
to a sluggish economy: preparations for war and war itself.
The central issue of unemployment, the most politically
dangerous of social contingencies, thus provides a thread con-
necting all the major innovations of the welfare-nationalist state:
social insurance, relief works, public investment and the creation
of a state sector in the economy, the organization of the labor
market through employment services and other agencies, the
expansion of education and the linking of education and training
to employment, measures to protect and/or aid in the transfor-
mation of declining industries, measuresfor the development of
depressedregions, and still others. All of these measuresimpinge
upon one another in their effects;their use requires coordination,
in other words, planning. Planning in the welfare-nationalist
state meant that the state attempted to reconcile and make com-
patible its goals of economic policyto make some determina-
tion, for example, of the acceptablemix of unemployment, ina-
tion, and balance-of-payments decit and to select a mix of
instruments appropriate to this determination. The fact that both
the desirability of goals and the acceptability of policy instru-
ments were swayed by political pressures did not diminish the
necessity for planning. They only underlined that planning is
never simply a matter of rational choice; it is rational choice
superimposed upon bargaining among interests. Of course, the
ideological heritage of liberalism inhibited many politicians from
using the name planning for this activity of the state. The
activity often went unnamed or else described by some euphe-
mism [like medium-term programming or conjunctural pol-
icy), but wasnonetheless

present.Planningcameaboutnot by
design but as practical necessity.
There is a functional relationship between economic na-
tionalism and market-correctingplanning.National planning re-
quirescontrolovereconomiceffectsoriginatingabroadandthus
to a degreeeither the defensiveisolation of national economic
spaceor aggressive
externalexpansionism.
Thelatterextendsthe
national economysaccessto foreign resourceswhile ensuring
that the countriesproviding theseresourcesare brought within
the orbit of the national economicplan either ascolonial appen-
dagesor asclientstates.Thepromotionof socialwelfare,which
is thelegitimatingfunction servedby economicplanning,in this
way becameimplicated in economicnationalism and imperial
expansionism.
Therewere,however,practicallimitations to the planning
of welfare-nationalist states.The state retained the liberal notion
of the market as the basic determinant of the economy. In the
longrun, themarketwoulddeterminewhatwasto beproduced.
The statesrole in planning was to correctsomepolitically and
socially disastrousconsequences of the market,while continuing
to acknowledgethe preeminentrole of the market in capitalist
development.Reinforcingthis functional principle of the wel-
fare-nationaliststatesrelationshipto the economywasthe prac-
tical political fact that democraticallyelectedgovernmentscan-
not plan beyondtheir term of ofce and the organizationalfact
that administrative implementation of policies is modied in
practiceby pressureof clientsservedor regulatedby bureaucratic
entities. The state reacted to the market; it neither replaced the
market nor subordinated the market to politically determined
goals.
With
this
essential
qualication,
thestates
role
inthe
economywas considerable.It made a major investmentin the
materialinfrastructureof transportand communications.It made
evengreaterinvestmentin humanresourcesin health and
housingand in education.The right to a basicstandardof phys-
ical well-being and the right to learn, i.e., to equal opportunity,
becamerecognized
principlesof the state.Oneof the principal
had over Britain was the rapidity with which they built merito-
cratic, scientically orientedhigher educationalsystemsupon a
baseof universalliteracy. Furthermore,statescontributedheav-
ily to the growth of knowledge with industrial applications
throughfunding researchand development.
Nationalsecurity
considerations were the main stimulant here, but radar and elec-
tronics, nuclear energy,and spaceresearchhad civilian industrial
spinoffs.Statesalsosetup labor exchangesand otherservicesfor
the managementof manpower.In all theseways,statescontrib-
utedto the development
of the productiveforcesof societiesby
making investmentsthat market rationality alone would have
neglected.
The statesrole in accumulationextendedbeyond these
services. Tariffs and subsidies were time-honored methods of
stateaid to private accumulation,but many statesnow acquired
direct ownershipof substantialsegmentsof national economies.
The expansionof the statesectorwas more haphazardthan pre-
meditated. Frequently it happenedas the ultimate meansto
savean unprotable industry, especiallyif this could be justied
on national-interestor national-securitygrounds,and to protect
the jobs of its employees.In somecases,expropriationswerethe
political consequenceof war, e.g.,as in the Austrian statesac-
quisition of former German industries and industries taken over
by Sovietoccupation,or the acquisitionof Renaultby the French
state.In a few cases,stateshaveinvestedmoredeliberatelyin
advancedtechnologyin order to establisha position in the na-
tionalinterest.Whatever thehistoricalexplanation
forthegrowth
of the statesector,it hastakena placealongsidemonopolistic
and competitive sectors.
This threefold division of monopoly, competitive, and
statesectorsgavethe welfare-nationaliststateleverageto promote
the organizationof the economy.Stateand market are coordi-
nated by consensus,not by authority. The state provokesand
distillsconsensus
amongthemostpowerfulgroups[industryand
tradeunions) becausetheir acquiescence
is necessaryto the im-
plementation of policy.If theymustacquiesce
in orderthat pol-
iciesbe carriedout,theymustalsobeconsultedandparticipate
in someway in the formulationof thesesamepolicies. The
existence of a large state sector, combined with the economic
expertise
available
to the stateandthe administrative
anden-
forcementservicesof the state,give the leveragenecessaryto set
the consensus-seeking processin motion. Despiteconstitution-
allyenshrined
principles
ofterritorialrepresentation
andparlia-
mentaryorlegislative
decision
making, welfare-nationalist
states
movedgraduallyin the directionof functionalrepresentation
andcorporatist
decision
making
asregards
thoseaspects
ofpolicy
mostcloselyrelatedto production.Corporatism
wasexpressed
througha varietyof institutional
experiments
andpractices,
all
havingtripartismastheir commonfeature.
Ideological
consensus isanecessary underpinningforcor-
poratism.
A certaintensionof conictinginterests
is inherentin
thepostliberal
pluralismof thewelfare-nationalist
state,butfor
Corporatism
to workthistensionmustbecontainable withina
commitmentto seeka modus vivendi amongthe rival interests.
Conict hasto be thoughtof in termsof the divisionof shares
andof distributingobligationsandresponsibilities
andnot asa
matter of fundamentalantagonism.This desirability of nding
groundfor agreement
arisesin a contextof constraints
imposed
by alienandimpersonal
forces:on the onehand,theexternal
constraints of the world economy;on the other, the internal
constraintsof ination, employmentlevels,ratesof profit and
propensity
toinvestwhenthese
arethought
ofastheoutcome
of
impersonal
economic laws.Theassumption isthattheparties
to
corporatist
decision
makingperceivetheseforcesin moreorless
thesameway.Theyaccept therationalityof themarketandthe
laws of economicsderived from it as part of the natural order.
Nationalism
bringsthemto coalesce
in dealing
withtheexternal
forces,andhegemonic
economics
is their basisfor consensus
in
dealingwith the internal constraints.
Public education,which in oneaspectis an investmentin
raisingthe levelof productive
forces,in anotheraspectis an
investment in conformism. One function of education is to
heighten
thecriticalfaculty,but this affectsa relativefew.For
themajority,
publiceducation
creates
a basisforacceptance
of
the establishedsocial order as a technically complex system
intelligibleto officiallycertiedspecialists.
Thisdisposition
is
reinforced by otheragencies formingopinionthepress,radio
and television,and advertising.Cumulatively,theseinuences
generatea picture of public policy as a problem in engineering,

a problem of technical means, not one of moral choice. It is
assumedthat there are no fundamentalissuesconcerningthe
nature of the state.What the statehas to do is determinedby
impersonalforcesto which an agreed-uponrational responseis
possible.The statestask is not perceivedas involving a conict
-between alternative visions of the future. Alternative societies
are deemed to be unrealistic. Politics therefore becomes man-
agement and is depoliticized. Party conict is over the choice of
the best team of managers,all of the contendersbeing likely to
carry out the samesetof rationally dictatedpolicies.Corporatism
in its origins was a challenge to the ideologies of both liberal self-
regulatingmarket and Marxist classstrugglean ideologicalal-
ternative. Corporatism triumphant, through its depoliticization
of the state,mystied its ideologicalcharacteraspragmatismand
technical problem solving."
The welfare-nationaliststatecarried through a scal rev-
olution. In Britain, total expendituresby all levels of the statein
1905, represented less than 10 percent of GNP. In 1959, this had
risen to somewhat less than 30 percent. Stateexpenditures were
playing a major redistributive role. This redistribution was not
uniformly in a richto-poor direction. Privatecorporationsben-
eted considerablyby subsidiesand statepurchasing.Professor
Titmuss has demonstratedthat the redistributive consequences
of social services can benet the bureaucracies of these services
more than thosewho are to be served. Redistributionthrough
the welfare-nationaliststatereflectsthe relative political power
of the major organizedintereststhe military-industrial com-
plex, the trade union movement, the welfare bureaucracies, and
private insuranceand the statesneed for legitimacy in being
seento respondto the problemsof inuential groups.
Alongside this redistribution through the state budget,
corporatewelfare schemesburgeoned.Rangingfrom stock op-
tions for senior employeesto fringe benets negotiatedby trade
unions, corporatewelfare strengthenedcorporatismamongthe
top third of societywho participatedin it. Enterprisecorporatism
symbioticallyrelatedthe mostfavoredin productionrelationsto
the largergroupcoveredby tripartism.The materialinterestsand
loyalities of thesepeople were focusedon the corporationsand
tradeunions that securedthesebenets,andthe stateencouraged

theprocess
byexempting
contributions
tocorporate
welfare
from
taxation.Thus the welfarenationaliststatetendedto developa
two-tier structurea relatively privileged corporatewelfaresys-
temsupported
by thestatefor thetop levelanda basicsocial
securityadministered
by the statefor therest.
Thegrowthin thevolumeof stateexpenditures andcor-
respondingly
in taxationmeantthattheold divisionin society
between
thosewhopaidtaxesandreceived directlynobenets
andthosewho receivedpublicassistance
but paidno taxeswas
verylargelyeliminated.
In itsfully developed
form,mostcitizens
paidsome
taxes
tothestate
andmostparticipated
in some
direct
benets,thoughin differentwaysandto differentdegrees.
State
budgets
in becoming
larger
alsobecame
morerigidanddifcult
to modify,becauseentitlement
to benetswasxed by legisla-
tion,andcontracts
withprivatecorporations,
e.g.,forthedelivery
of armssystems,
werelargeandof longduration. In a periodof
economic growth,staterevenues
wouldrisesufficientlyto carry
the statesnancial obligations,but in a period of prolonged
stagnation
or declininggrowth,thestates
payment
obligations
would increasewhile its revenuesdecreased.The welfarena-
tionalist statewas constructedto revive or sustaingrowth in a
market-led
economy.
Fiscalcrisiswouldin turnbecompounded
by rigiditiesobstructing
readjustment
of production.
Associal
benetsincreased the proportionof the individualworkersin-
comereceivedfrom the citizen wage,i.e.,the totalof benets
receivedasof right throughlegislativeentitlement,in relationto
theemployment
wage,the reservearmyeffectof higherun-
employment
wasreduced.
Theliberalmethodof readjustment
by lowering
wagelevelsandfacilitating
reorganization
of the
laborprocess
wasthushindered.
Prolonged
recession
wouldtest
corporatisms
abilitytond alternative
means
ofreviving
indus-
trial activity.
The functional coherenceof the welfarenationalistform
of stateis perceptible
onlyastheoutcome
of a longperiodof
development.
Topresent
thestatein thiswayconveysgan
illusion
ofteleologyeither
ateleology
ofconscious
purpose,
thegradual
construction
of a preconceived
plan,or theteleology
of anun-
conscioushistoricaldeterminism.
Neithercanbe justied. The
welfare-nationalist
statewastheoutcome
of struggle
amongso-
cialforces
in thecourse
ofwhichnewhistoric
blocstookshape.
Thehistories
of BritainandGermany
illustratetheprocess.
The rst measures
of socialprotectiontakenin the late
decades
ofthenineteenth
century
wereinitiated
fromabove
by
governments representative of ruling classescontinuous from the
old regime.Thesemeasures
responded
to a perceived
threatfrom
below.TheParisCommune
of1871madeaprofound
impression
on governmentsall over Europeasthe imageof what this threat
couldbecome: the peoplein armsengaged
in violentoverthrow
of established
order. Thisunforeseen
consequence of thePrus-
sian armiesquick victory over FranceunderscoredBismarcks
conviction
of theneedfor a preemptive
strokeof policyto give
some measureof satisfactionto workers so as to attach their
loyaltiesto thestateandto forestalltheappealof socialism.That
Bismarcks mind wasalreadyaliveto the problemwasdemon-
strated
bytheconversations
hehadinitiated
withLasalle
asearly
as1863.Concretemeasuresof socialinsurancewere not enacted
in Germanyfor another decade,but the rulers minds were al-
readyfully alertedto the problem.
In Britain,revolton thescaleof theParisCommune
ap-
pearedsomewhat
lessthreatening.
In 1867thefranchisehadbeen
extended
soasin practice
to bringskilledworkers
intopartici-
pationin the electoral
process.
Thedecisionwasanalogous
to
theinclusion
of themiddleclasses
in 1832,anexpression
of
condence
on thepartof therulinggroupsthattheseworkers
were now secureagainstrevolutionarytemptations. The 1880s
were,
however,
troubled
timesinBritishsociety.
Output
dropped
in the depressionand labordisputesincreased.In 1885there
wereriots in Londonand someof the provincialtowns.Bir-
mingham
wasparticularly
hardhit, andJoseph
Chamberlain,
a
leading
gureamong
theindustrialists
ofthatcity,articulated
a
new,radicalprogram.In the yearsthat followed,Chamberlain
cameto representthe tendenciesmakingfor the welfare-nation-
aliststateacombination
of imperialism,
protectionism,
and
socialreform.
Heleda breakaway
fromtheLiberalPartythat
linkedup with theDisraelian
traditionof socialreformin the
Toryparty.Chamberlainsimpactonpolicywasprofound, even
thoughhe wasneverableto breakthroughtheclassbarrierof
Toryaristocratic
governance
toachieve
thestatus
offirstminister.
BismarckandGermanpolicywerestronginuencesin histhink-
ing at a time whenGerman
modelswereshapingthoughtin
Britain over a wide range.
As mayorof Birmingham,
Joseph
Chamberlain
camefor-
ward with measuresto counteractthe unemploymentof the mid-
1880s;he alsoundertookslum clearance
andworkershousing
construction.In Parliament,hewassuccessfulin securingawork-
manscompensation lawin 1897.Heraisedtheissueof oldage
pensions, inspiredbytheGerman old-age
insurancelawof 1889,
thoughthe enactment of this measure wasdeferredby his im-
perialistcommitment to Britainsinvolvementin theBoerwar.
Chamberlains
social-policyinitiativeswere,in the paradoxes
of
politics,broughtto fruitionbytheLiberalgovernment
thattook
ofce in 1905,culminatingin the old-agepensionact of 1908
and national health insuranceact of 1911.32
Iust asGermany,
duringtheseyears,wasstrivingto over-
take Britain in naval construction,so Britain was attemptingto
catchupwithGermany
in socialprotection.
Welfare
andwarfare
were the twin dominant concernsof the statein both countries,
andboth concernswerestructurallylinked in the evolvingraison
détatof therulinggroupswith theexistence
of a laborproblem.
The mannerin which that problemwasmanifestedamong
theworkingclasses
differedin thetwocountries.
It is probable
that the failureof bourgeois
revolutionin earlynineteenth-cen-
turyGermany
leftthewayopenforsocialdemocracy
to combine
thedemands
for politicalandsocialrightsintoasingleopposition
movement.The concern of the ruling groups to forestall this
oppositioncouldexplainwhy the construction
of thewelfare
statebegan
earlierin Germany
thanin Britaindespite
thelatters
muchlongerindustrialhistory.In Britain,politicalrightswere
extendedgraduallyto workers,but a political labormovement
wasslowerto developanddid notbecome therealparliamentary
opposition
until WorldWarI. Reforminitiativessprang
fromthe
mindsof perceptive
ruling-class
politiciansandwereshaped by
theresearches
andwritingsof civil servants
andof reformerslike
William Booth,Seebohm Rowntree,CharlesBooth,Sidneyand
BeatriceWebb,William Beveridge, andthe FabianSociety.The
phrase
Weareall socialists
now,attributed
to theLiberalpol-
itician Sir William Harcourt in 1889, stands as a reection of the

consciousness of at least those members of the ruling class most
sensitive to the labor problem. It can be juxtaposed to the lament
of the upper class Fabian reformers in 1896: The difculty in
England is not to get more power for the people, but to persuade
them to make use of the political power they have.33
Although hardly visible at all at the national parliamentary
level, working class participation in the administration of welfare
had begun at the level of local governments, where, since the
urban franchise of 1867 and rural franchise of 1884, workers had
been elected to county and borough councils. This experience
gained by worker representativesat the level of government clos-
est to the reality of welfare problems would be important for the
future development of the welfare system. However, in Britain at
the turn of the century, as in Germany, welfare measures were
enacted for the Workers, not by them.
In France and the United States, state intervention in the
social policy eld was less in evidence. Alone among the Euro-
pean states,France was ruled by a nonaristocratic class. A petty
bourgeois political class manned the apparatus of the state and
political parties, leaving the grande bourgeoisie of finance and
industry their economic freedom. The electoral predominance of
the rural small holders and urban artisans and petty bourgeoisie
precluded the expression of a strong socialist movement, and the
labor movement, rooted in craft traditions, espoused an anti-
political syndicalism that rejected the state instead of seeking to
use it. The issues of the time were ones of political ideology
rather than welfare. When some social measures were initiated
through the participation of the socialist Alexander Millerand in
the Waldeck-Rousseaugovernment in 1899,these were criticized
by other socialists.
The other major country to have had no aristocratic gov-
erning class was the United States.Here the progressive move-
ment of the rst twentieth-century decadegavevent to an appeal
for state intervention in the economy. Such intervention was,
however, conceivedas regulation of economicagentsso as to
equalizeconditions for strongand weak in the marketplace,not
ascompensation for the socially undesirable effects of the market.
Antitrust and monopolies regulation epitomized the progres-
sivesapproach,
butnostateoftheunionestablished
unemploy-
ment insuranceuntil the Wisconsinmeasureof 1932,and social
securitycameonthepoliticalagenda
onlywiththeNewDeal.
'
DuringtheyearsbeforeWorldWarI, theworkingclasses
in BritainandGermanyceased
to bepurelylatentforceswhose
autonomousaction ruling groupstried to forestallby preemptive
reform.Theybecame active,organized socialforcescapableof
changingexistingpoliticalstructures.
In Germany, thistransfor-
mationtookeffectthroughtherisingstrengthof the SocialDem-
ocraticParty,whichgavea rm organizational,
political,and
cultural identity to the working classand its affiliatedsocial
groups.In Britain,thetransformation waslessrmly anchored
in a singleorganization,
morediffuse;it foundexpression
partly
in thegrowingstrength of theLabourParty,butmostof all in a
worker movementthat challengedboth capital and the existing
tradeunion leadershipon the industrialfront.The greatstrike
waveof1911began
in theseaports
among
unorganized,
unskilled
workers. The movement radicalized the old centersof union
strengthcoal,cotton,engineering, shipbuilding,and rail-
waysandspreadto hithertononunionized industries.
It was
sparkedbythedeclinein realwages thathadfolloweduponthe
general
risein pricestouchedoff by theincreasing worldgold
supply,but the majorityof strikeswerelessaboutwagesthan
over issuesconnectedwith the right to organizeand conditions
of work.
Thegoalsof the movementwerehardlyprecise;it wasa
wellingup of protest,not a strategically
plannedcampaign;
yet
ideologically
it borea certainresemblance
to the syndicalism
whosepracticehadbeentheorizedin France
asadirectchallenge
to therule of capitalwithin industry.Syndicalism
had,however,
entereduponits historicalmomentof contradiction.
Looking
backward,syndicalismhadbeenthepractice
of skilledworkers,
seeking
tomaximize
theirowncontrol
overthelaborprocess
and
ultimatelyto supplant
theownersofthemeans ofproductionso
asto createproducers selfgovernmentwithoutbenetof the
state.Lookingforward,theunskilledworkerswhoweretaking
initiative in the labor movementworkers who had been re-
cruitedinto industryby capitalsrestructuringof the laborpro-
cessthroughthe longdepressionwouldcometo seektheir
salvationthroughindustrialunionsandpoliticalactiondirected
towardthe state.At this historicalmoment,however,the one
certaintywas the fact of workerrevolt. British industrialists,
alreadyconscious
of their decliningworld supremacy,
were
frightened.
Initially, the war resolvedthesefears.It generateda na-
tionalistunity transcending classstrugglesin both Britain and
Germany.World War I markeda transition from stateinterven-
tions in particularaspectsof economicactivitywith tariffs,
subsidies,
colonialexpansion,
andmeasures
of socialprotection
for workers, as instancesto state direction of whole national
economiesthrough the mediation of businessmenand with re-
current concernfor the loyalty of workers.
Germanytookthe leadin recognizing thatthewar would
in the lastanalysisproveto bea struggleof economies
andthat
therefore
theeconomy
mustbemanaged
anddirected
bythestate
towardthe prioritiesof war. In August1914a war materials
department wassetup to coordinateprivatebusiness
understate
direction,with the businessman WalterRathenauat its head.
Englandfollowed;in May 1915a ministry of munitionswas
created,
andby 1918it hadbecome
the countrys
largestem-
ployer.(A similarministrywascreatedaboutthe sametime in
Francewith the socialistpolitician Albert Thomasat its head-
atokenof concern
to consolidate
workerbacking
fortheproduc-
tion effort.)Furtherextensionand centralizationof economic
controls
in BritainfollowedthepoliticalcrisisofDecember
1916,
whenministries
of foodandshipping
tookoverall aspects
of
supply and imports, coordinatedwithin a small war cabinet.The
experience
of economicplanningof theseyearsleft a deep
impressionon many of the participants.Evenin the United
States,
a farlesscomprehensive
experience
withwarplanning
left an ideologicallegacyto theNewDeal.
Asthewarwenton,classtensions
reappeared.
Although
in August1914,the SocialDemocraticPartyrepresentation in
theGermanReichstag haddecidedto votewar credits,within a
yearthereexisteda vocalantiwaropposition
within theparty
evenat a time whenGermanarmiesseemed to be prevailingin
bothRussiaand France.In 1916,therewereseriousstrikeson
theClydeandin Walesandsporadic
disruptions
elsewhere,
less
ANDPRODUCTION
explicitlydirected
against
thewarthansignaling
workers
alien-
ationfromtheirrulerssenseof nationalgoals.Therevolutionin
Russia
aroused
panicin therulingcirclesof all thebelligerents,
a fearthattheir owntroopsandworkersmightalsopreferpeace
tothecontinuing
slaughter.
During1917, thereweremajorstrikes
in BerlinandLeipzig,and,followingtheBrest-Litovsk
diktatin
January
1918,
strikes
ofGerman
munitions
workers,
coinciding
with Ludendorffsnal offensivein France.Whenthe London
Metropolitan
Policewentonstrikeduringthesummer
of1918,
arumorspread
thattheBritisharmywasaffected."
If the GermanHigh Commandsoughtarmisticein the
autumnof 1918,it wasto preventits armyfromdisintegrating
as
theRussian
armyhadbeforeit, to forestallenemyoccupation
of
Germany,
tobeabletoobstruct
Bolshevik revolutionin Germany,
and to conservethe armedforcesasa factor in Germanysuncer-
tainpolitical
future.
Thespecter
ofBolshevism
sweeping
through
centralEuropewasequallyagitating
to theAlliedgovernments.
Whathadhappened in Russia
andmightwellhappen in central
andevenwesternEuroperemaineda persistentunderlyingcon-
cernof all partiesto theVersaillespeacenegotiations.
Theresurgence
of classtensions
undermining
nationalist
unityin thebelligerent
powers
was,however,
contained.
It was
contained
throughanewcoalitionof socialforces,
thegermof a
newhistoricbloc,aconflictualtripartiteententeof state,industry,
and trade union leadership.
In 1917,LabourPartyrepresentatives
werebroughtinto
Britainscoalitiongovernment.
Asthepriceof participation,
the
MinistryofLabourwascreated.Inresponse tothestrikewaveof
theprevious year,a committeeof Parliamentunderthechair-
manship ofJ.H.Whitley framedproposalsforanorganization
of
industryunderJointStanding IndustrialCouncils providing
equalrepresentationfor employersandtradeunionists.These
councilswere to be complementedby works committees,oneto
eachfactory.TheWhitleyCouncils
proposal
sought
to meetsev-
eral concerns.Onewasfor the perpetuation
and institutionali-
zationof wartimeexperience
in the settlement
of specicin-
dustrialization
issueswage
rates,workingconditions,
techno-
logical
change,
etc.Inthisrespect,
theWhitley
proposals
could
be seenas a recognition
by Parliament
of laborsright to
collective
bargainingrecognition,
in effect,
thattheworking
classhadattained
a collective
strength
sufficient
to compel
ac-
knowledgment of thisrightby employers
andthestate.A broader
goal of the Whitley proposalswas,however,to found a new
structureof productionrelationsuponclasscollaboration.
In this
concept,thecouncils wouldbecomea constitutional
starting
point for industrialgovernance
to be elaboratedby future
practice.
Whitleycouncilsweresetup by mutualagreement
in
industries
with newlyorganized tradeunions.Theywere
shunnedbyunionsin thealready
strongly
organized
industries,
e.g.,mining,railways,and transport.Only a small numberof
workscommittees
weresetup,andthesewerecreated
byem-
ployerinitiatives
aimingata worker-employer
community
in
whichunions wouldplayalessadversarial
role.When,
early
in 1919,
theBritishgovernment
faced
theprospect
ofaparalyzing
strikein thekeyindustries,
LloydGeorge calleda NationalIn-
dustrialConference
thatattemptedto dealbothwiththematerial
wages
andhoursissues
andwithlonger
terminstitutional
ques-
tions.Thepostwarslump,however,
disciplinedworkermili-
tancy,andthegovernment
largelyignoredtherecommendations
oftheconference.
In 1921,
thetradeunionmembersresigned.
InBritain,
thestate
tooktheleadinpromoting
acorporatist
structure
for industry.In Germany,
theemployers
tooktheiniti-
ative
atatimewhen
thestate
wasdisintegrating.
Intheimpending
chaos
ofdefeat,
industrialists
discounted
thediscredited
military
andcivilianbureaucraciesandtheinarticulate
middleclassesas
validallies.Perceptive
industrialleaders
sawtheirsalvation
in
alliance
withtradeunionleaders,
especially
those
in heavy
in-
dustry.Therewassomeobjective
basisforthealliance
in thefact
thatworkers
realwages
hadgrownalong
withcompanyprots
inwarproduction.
Bothwouldhave
astake
in maintaining
high
exports
andbothcouldturntheinationthathadbegun
with
warnancingto theirbenet.An alliancewith thetradeunions
wouldgiveindustrialists
someleverage
withaSocialDemocratic
Partystrengthened
byGermanys defeatandwith AlliedPowers
endorsingthenotionof democratization
oferstwhile monarchic-
military
political
structures.
Themining
industrys
Hugo
Stinnes
negotiatedan agreement
with CarlLegienof the SPD-afliated
ANDPRODUCTION
unionsto setupapyramidofjointlabor-management
arbitration
committeesknown asthe Arbeitsgemeinschaft.
This institution,
thoughsetup withoutstateparticipation,
wasrecognized
in the
earlydecree
legislation
oftherevolutionary
regime
thatassumed
political power in November1918.
Parallel with this employer-union initiative was the
growthof theworkscouncilsmovement, i.e.,organs
of worker
representation
withinparticular
factories.
Suchbodieshadbeen
recognizedasWorkerandEmployee Chambers undera war-
time law of 1916.Contraryto the British case,whereworks
councilshadbeenenvisagedin theoriginalWhitleyproposalbut
rarelysetup asa general
practice,
in Germany
[andalsoin Italy
afterthe defeat)workscouncilsbecamea modeof workerrep-
resentationdistinct from trade unions and, in the perceptionof
someunion leaders,rivals to the unions.
The increase in working-class strength brought about
throughthewarwasthuscountered in bothBritainandGermany
by initiativesfromthestatein onecaseandfromemployers in
the othertowarda corporativegovernance of industry.These
initiativeswereat leastpartiallysuccessful,
but they did not in
anywaymeetthedemands
foreconomic
reorganization
towhich
some elements of the labor and socialist movements were at-
tached.On the one hand were the advocatesof guild socialism
in England
andof theideasof KarlKorschin Germany.
These
had afnities with syndicalistthoughtand envisaged
the self-
government
of industries
byworkersorganized
ona corporative
basiscorporatisn1
withoutcapitalists
andwiththestateplaying
a minimal role. The works councilsmovementtted in with this
approach.
Ontheotherhandweretheadvocates
ofamoretechno-
cratic state socialism.The terms socialization and nationaliza-
tion confused both approaches.
In both countries,the issueof nationalizationwasdecided
in the coal industry. The provisional revolutionarygovernment
in Germany
proclaimed
theprincipleof coalindustrysocializa-
tion at the end of 1918and setup a committeeto examinehow
to goaboutit. Theproposalthatemerged
envisaged
a supervisory
organonwhichcompany
directors,
workers,
consumers,
andthe
statewould be represented.
Ultimatelya compulsoryCoalAs-
sociationwas set up on which worker and consumerrepresen-
tation was ineffective and real power rested with the employers.
It became little more than ofcially consecratedcartel.
In Britain, confronted by demands for worker control in
the mines, which had been taken over by the state during the
war, Lloyd George appointed a royal commission to study the
matter. The chairman of the commission,Mr. JusticeSankey,
rather unexpectedly sided with the workers and came out for
nationalization with worker control. Lloyd George, politically
aligned with capitals opposition to nationalization, at rst tem-
porized, then proposed an alternative to nationalization in which
the industry would be concentrated into large corporations with
vaguely empowered joint labormanagementconciliation boards.
Meanwhile, he tested the solidarity with the miners of other
sectors of the labor movement and the degreeof commitment of
the workers to nationalization. It developed that the miners were
not supported by the Trades Union Congressand that the workers
were more concerned about the bread-and-butter issue of wage
rates that would be paid once the mines reverted from state
control to private ownership. [Since 1917, when the mines were
unied under state control, all miners were paid on the samerate
scale where previously under fragmented private ownership,
small marginal mines had paid less than others.) The prospect of
a nationwide worker mobilization behind the demand for nation-
alization had passed.
The corporatist experiments of the late wartime and early
postwar periods in Britain and Germany were responsesby state
and employers to a worker offensive. The offensive was, however,
diverse in its objectivestorn between the aims of worker con-
trol, nationalization with planning, and immediate material
gainsand divided in its leadership. By late 1920 and early 1921
its force was spent and there was very little to show for it. No
nationalizations. Few signicant gains in material conditions. An
increase in unemployment. And the loss by the working classes
of the crucial political inuence they had possessedin the im-
mediate aftermath of war. In 1920-21, the working classes
snatched defeat from the jaws of victory. Thenceforward, they
were on the defensive, in retreat. As the working classesweak-
ened,sodid the interestof stateandemployersin corporatism.
The Whitley councils all but fadedawayby 1921.43
In Germany,
works councils remained as an institutional bridgehead gained

in the offensive, but works councils were not necessarily agencies
of worker control; they could and did just aswell becomeorgans
of enterprisecorporatism(asthoseBritish employerswho had
favoredthem surmised].Yet the corporatistmodel had entered
into the consciousnessof employers,union leaders,and state
officials. It would be revived as state policy in the crises of
depression
andwar duringthe 19305and19405whentheacqui-
escenceof the working classeshad onceagainto be soughtand
obtained.
The corporatist experimentsstimulated by World War I
were manifestations of the solidity of European bourgeois society
and of its resiliency in respondingto the pressureof social de-
mandsunleashedin the postwardemobilization-compounded
in the Germancaseby the collapseof the state.Antonio Gramsci
waslaterto explainthe contrastbetweenthe successof revolution
in Russiaand its defeatin the Westby the differencesin the state-
society relationship:
In Russiathe Statewas everything,civil societywas primordial
andgelatinous;in theWest,therewasaproperrelationbetween
State and civil society, and when the Statetrembled a sturdy
structure of civil society was at once revealed.The Statewas
only anouterditch,behindwheretherestoodapowerfulsystem
of fortressesand earthworks:more or less numerousfrom one
state to the next, it goes without sayingbut this precisely
necessitated an accurate reconnaissance of each individual
country.
The war of maneuver, successful in Russia, could not

achievevictoryin theWest.Therea war of positionwouldhave
to be fought by the workersto establishtheir own hegemonyin
civil society,creatingtheir own powerful systemof fortresses
and earthworks beforethey could durably take control of the
state.The workerslost in the postwarWestbecausethe bourgeoi-
siewashegemonicithadthe effectiveleadershipof the other
classes,
includingtheleadingelements
oftheworkingclassitself.
Corporatismwas the bourgeoisies
hegemonicresponseto the
workerchallenge,andit wanedastheworkerchallenge ebbed.
Tripartite corporatismdid, however,becomeinstitution-
alized at the interstate level during the brief moment of Corporatist

experiment in postwar Europe. In the peace negotiations at Ver-
sailles, a British initiative produced the International Labour
Organization (ILO), which consecrated tripartism as a world
model of industrial organization. The rst director of the ILO was
Albert Thomas, a French socialist who had been minister of
munitions in Clemenceaus wartime government. His appoint-
ment was an expression of the same desire on the part of the
ruling groups to secure worker collaboration in the conversion
to peacetime industry as had given substanceto the British pro-
posal for an ILO. One of the rst concerns of the British and
French leadership in the new ILO was to bring postwar Germany
and Austria into the organization, so as to conrm tripartisms
status as an acceptable model.
After World War I, the economic primacy of the market
reemerged and wartime planning was dismantled. Yet two dec-
ades of ination followed by restabilization, endemic unemploy-
ment followed by mass unemployment, and brief recovery fol-
lowed by stagnation and depression undermined credibility in
the ability of the market to satisfy the needsof society. Corporatist
literature burgeoned, and economic revisionism reached a pin-
nacle in Keynes General Theory published in 1936. Such theo-
rizing was more reective of the demise of liberal hegemony than
indicative of the pursuit by statesof coherent policy alternatives
to liberalism.
More inuential than theory were the facts of the post-
1929 depression and the sauve qui peut international economic
environment it generated. States struggled to defend their na-
tional economies as best they could with a series of ad hoc
measures.In market-led economies, i.e., those industrial powers
other than the Soviet Union and Nazi Germany, there were many
state interventions but no overall plan with consistent goals. A
statescompetitive position in international trade was most often
the controlling factor in state intervention. Tariffs, devaluations,
quantitative import restrictions, and other forms of protectionism
were adopted by all; and statesalso sought to make protectionism
work in the absenceof market discipline by taking stepsto enable
their industries to produce more efciently. In Britain, the state
encouraged the reorganization of industries, often a euphemism
for concentrationaround the biggestenterprises,and initiated a

permanentprocessof interactionbetweenindustryrepresenta-
tives and statemanagers.Few gesturesweremadeduringthe
interwarperiodin the directionof the unions,muchweakened
byunemployment
andtheshiftin thebalance
between
newand
old industries. In someof the smallerEuropeancountriesheav-
ily dependent
onforeigntradeforthemaintenance
oftheirliving
standards,thereweregreaterachievementsin labor-management
agreement.
Industrialpeacetreatieswereconcludedin Norway
in 1935,Switzerlandin 1937,Swedenin 1938.47
In all industrial
countries,the experienceof massunemploymentduring the
1930srekindledpolitical demandsthat the stateextendits re-
sponsibility
forwelfareto acommitment
to achieve
full employ-
ment,thoughpracticaladvancein this directionawaitedeco-
nomic recovery through war.
World War II revived the practiceof planning and gaveit
thecleargoalsthathadbeenlacking,eliminatedunemployment,
built upon the existingstate-business
relationships,and gave
labor access to government.
Britain can be taken as the paradigmfor the welfare-na-
tionalist stateas it becamefully developedthrough World War
II. SamuelBeerhaspointedoutthatthecriticalmomentin forging
the new collaborativerelationship betweenlabor and the state
was 1940,i.e.,the startof the organizedwar effort,and not 1945,
i.e., the election of a Labour government.Labors organized
strengthin the economymadeit indispensable that the state
securelaborsacquiescencein directingthe economytoward
nationalgoals.Thesyndicalistthesisgivingpriorityto powerin
production
wasthusvalidated
beforetheachievement
of elec-
toral success.
Subsequently,
tradeunionpowerin productionbecame
a
constraintupon the developmentof socialistplanning. In 1940,
the unionsacceptedcompulsorydirectionof laborby the state
and a ban on strikes. To retain a semblance of their collective-
bargaining
rights,theunionshadrejected
wage-xingbythestate.
After the war, the unions opposedan extensionof government
controlsby the Labourgovernment,seekingto return to full
collectivebargainingandfreemovementof labor.This wasthe
principalreason
for thegovernments
shiftfromdirectphysical
planning to the useof indirect leverson the market.Wagepolicy

remained a crucial elementin any form of planning, however,
and the governmentrecognizedthat no wagepolicy would work
without union concurrence. In 1948, the government reached
agreement with employers and unions whereby the unions
would observe wage restraint in return for an assurance of a
reductionin prots, a continuanceof food subsidies,and a policy
of full employment.The agreementlasteduntil 1950when price
increases consequent upon devaluation of the pound eliminated
one key element in the bargain.Wagesbeganto rise sharply
through trade-union action in 1950, and businessesrelaxed the
limitations on dividends.
This British experience illustrated both the new balance
of socialforcesin the stateand the constraintsimposedupon the
welfare-nationaliststateby its very structure.The working class,
beaten into retreat following World War I, had during World War
II acquired through the trade unions an apparently entrenched
position in the state. Union leaders had accessto government at
the highest levels and to all agenciesof the statein which they
had an interest. Thenceforth, government would have to take
labor, as well as business,into accountin framing statepolicy.
However,in a polity basedon a continuing negotiationamong
powerful interests, government was limited in the powers it could
use. Unions, no less than employers, imposed constraints upon
economic planning by the state.
Government was in many ways dependent on interest
groupsfor information and advice.It relied on thesesamegroups
to give effectto the policies agreedon. It could not, accordingly,
act against the veto of any powerful group. Government could
inuence the evolution of an oligopolistic market through the
use of its scal and monetary levers to the extent that consensus
could be maintained among the powerful economic and social
forces. Government could also exert inuence because of the size
of the statesectorof the economy(which madethe government
itself a particularly weighty interest in the negotiation,though
one among several). But the government could not dictate, or if
it were to try to dictate, could not enforce. Moreover, consensus
was relatively difcult to reach and maintain in the absence of
war.
The primordialcharacterof this taskof negotiatingeco-

nomic and social consensusinduced a similar pattern of behavior
in bothmajorpoliticalparties.LabourandConservatives
might
have-differentstylesandappealto differentconstituenciesamong
the voters,but on the substanceof policy they cameto differ very
little. Both were committed to the welfare state, to Keynesian
management of a marketeconomy,and to the consultationof
organizedinterestsin the makingof policy,i.e.,to a corporatist
formof polity.Bothconceived their rangeof actionaslimitedto
a reactiveform of economicmanagement,
respondingto the con-
sequences
of themarkettoination,unemployment,
payments
decits, and falling exchangeratesbut both unable and un-
willing to envisage
an economicplanningthatwould supersede
or subordinatethe market. The corporatist structure of power
within the statereinforcedby ideologydeterminedthis limitation
in capabilityand intent. The welfare-nationalist
form of state
createdtripartism,and tripartismin turn limited the scopeof
action of the state.
Corporatistformsof organization
wererevived,not only
in Britain but also in other countries of advanced capitalist de-
velopment,throughthe mobilizationof governmentbusiness-
labor collaborationduring World War II. Corporatismwas sub-
sequentlyembodiedin someof the postwarinstitutionaland
constitutional settlements in western Europe. These took a vari-
ety of specicforms:therepresentation
of economicinterestsin
the Economic and Social Council and the Commissariat général
du Plan in France;the Social and EconomicCouncil and the
Foundation of Labor of the Netherlands; the National Economic
DevelopmentCouncil and its sectorallittle Neddiesestab-
lishedby the British Conservative
government of HaroldMac-
millan in 1961;the labormarketorganizationof the Scandinavian
countries;the formal interestrepresentationwithin the Austrian
state and its more informal counterpartin Switzerland. The
United States,reluctant latecomerto corporatismin the 1930s,
beata retreatin thepostwarperiod,thoughit did, in 1973under
President Nixon, experiment unsuccessfullywith corporatist
methods of wage and price control. These post-World War II
institutionalizationsof corporatistmachineryoccurred,however,
afterchanges
in the structureof world orderhadalreadybegun
to place demands on states different from those that had led to

construction of corporatism in the rst place. This threshold of
the post-World War II era is, accordingly, a suitable point at which
to contemplate the contradictions of the welfare-nationalist form
of state.
Corporatism, which aims to transcend class conict, pro-
duces a pattern of cleavagebetween those who are included and
those excluded from the corporatist sector. It attempts to stabilize
this cleavageby granting to the corporatist sectorto large-scale
business and officially approved trade unionsa monopoly of
the resources of organization and of accessto political authority.
It alienates the excluded and leaves large numbers available to
be mobilized by a revival of class-basedsolidarities. Class-based
cleavagesare obscuredby corporatistorganizationand ideology
but can resurface when corporatism appears to some of the in-
cluded workers as an unrequited concessionto capitalist interests
and gives them cause to merge their opposition with the discon-
tent of the excluded.
The inequalities of the corporatist form of polity are many,
but their expression is muted. Tripartism institutionalizes the
inequality between the relatively privileged established workers
who are included in the corporatist sector and the other modes
of social relations of productionenterprise labor market, self-
employment, and household production, for instancewhich
are excluded and are subordinated to the tripartite mode. There
is an inationary bias to the Keynesian demandmanagement
mechanism of economic regulation, and the more powerful
groupsbig business and trade unionscan protect their inter-
ests in a situation of rising prices while the weaker cannot. Ina-
tion thus becomesa mechanism for disguising a redistribution of
wealth favoring those included within the corporatist sector,
disadvantaging those excluded. In the political bargaining pro-
cess that yields general acceptance for the states welfare pro-
grams, benets are granted to those not in social need, e.g., chil-
drens allowances to middle- and upper class families, in order
to gain political support for benets to those who do need them.
Politics thus skews redistribution through the state budget in a
regressive manner that in practice favors the welfare bureaucra-
cies and the middle classesmore than the poor. A hierarchy of
levelsof welfareemerges:
at the top, thoseprotectedby enter-
prise-related
benetsadditionalto thosebenetsuniversally
availablethroughsocialsecurity;below,the dependentclients
of the welfare state.Someof the latter, like old-agepensioners,
are sufciently numerousto be courtedby politicians.Others
constitutea categoryof moreor lesspermanentlyunemployed
whomightposea threatto thesocialorder.Thecorporative state
avoidsthis dangerby ensuringthat thesegroupsremainfrag-
mentedand depoliticized.
RichardTitmuss,philosopherand analystof the post-
World War II British welfare state,expressedhis critical disillu-
sionment with the extent to which a welfare state had been
achievedwhenhe put the question:Who disposesof the social
surplus?
In theemergence
of a corporatist
pressure-group
polity
asthemanipulatorofwelfaresystems,
heperceived
thedistortion
of the idea of a societyorganizedto createsocialequity. He saw
that powerfuland very largelyunaccountable interestgroups
werecomingto havea preponderant inuenceoverthe disposi-
tion of the socialsurplus.Thealternativehe advocatedwasstate
ownershipandstateeconomicplanningby publiclyaccountable
representatives. Yetthepracticalprospectof achievingTitmuss
preferred
statehasbeennegated
by thepoliticsof thewelfare-
nationalist state.
The economicmanagementrecord of the welfare-nation-
alist form of state has not been notably successful. Its economic
interventionswereincapableof pulling the industrial nationsout
of theDepressionduringthe19303.Attemptsat incomespolicies
in the postwarperioda carryoverof welfare-nationalist
state
practices~werelikewiseineffective.Military Keynesianism
in
World War II worked better than civilian Keynesianism.The
welfarecomponentof the stateprovedto be dependenton the
nationalist component.This lack of successin peacetimeeco-
nomicmanagement mustbe perceivedas a counterpartto the
limitationstripartismplacedonthescopeof thestates economic
initiative. Beingrestrictedto a reactiverole in relationto the
market,the statelackedtheabilityto conceiveandcarrythrough
anorganization of productionanddistributionthatwouldreplace
themarket.It couldtinkeror ne tune; it couldnot design.
Finally,theaccumulation process wasthreatened bybeing
restricted
tothenational
economy.
Thiswastragically
apparent
in the beggarmy-neighbor
climateof the 1930s.Accumulation
couldbeextended,it seemed,
onlyby imperialistic
expansion
andwar,or else,possibly,
withina newworldhegemony in
which nationaleconomies
wereonceagain,asin the mid-nine-
teenthcentury,subordinated
to a worldeconomy
in whicha
world processof accumulation
couldproceed.The ineffective-
nessof welfare-nationalist
statepoliciesopenedthequestion
whetherKeynesianism,
whichhadbeentriedwithonlylimited
effecton the nationallevel,mightnot be moreeffectiveon the
worldlevelasa regulative
mechanism
fora worldeconomy.
But this speculationimplied a differentform of stateanda dif-
ferent world order.
THE F ASCIST
CORPORATIVE STATE
Fascismwasbornin Italy whencapitalistcorporatism

failedto
become
established
afterWorldWarI. Fascism
spreadin
Germany
andcentralEurope
duringtheeconomic
collapse
ofthe
19305when the capitalistcorporatismthat had becomeestab-
lishedtherefailedto containthe socialandeconomiccrisis.In
Germany,
fascismsubstituted
oneformof corporatism
for an-
otherit displaced
anautonomously
generated
capitalist
cor-
poratism
byanauthoritatively
imposed
statecorporatism.
In functionalterms,thefasciststatewasa distortionof the
samedevelopment that producedthe welfare-nationalist state.
Thetwo formsof statehad similareconomicfunctionsbut dif-
ferentsocialandpoliticalbases.
Bothformsofstate,
quiteinde-
pendentlyoftheirprofessedideological
aims,reacted
against
the
socialconsequencesof marketdominance,particularly
unem-
ployment.
Bothacted
tomaintain,
revive,
andexpand
thecapi-
talistproduction
process
and,though
in verydifferent
ways,to
bring aboutlabor peace.
Fascism
in Italyin themid-1920s
followedeconomicpol-
iciesanalogous
to thoseof conservative
governmentsin other
European
countries.
It espoused
liberallaissez-faire,
monetary
stabilization,and a high exchange
rate.Mussolinisactionsin
190 STATES,
WORLD
ORDERS,
ANDPRODUCTION
revaluing
thelirain 1926
mirrored
Winston
Churchills
reval-
uationof sterling
in theprevious
year.Later,following
theex-
amples
of BritainandtheUnitedStates,
NaziGermany
aban-
donedan international
monetary
standard
to construct
the
tightest
ofalltheeconomicblocs
intowhichtheworldeconomy
fragmented.
Fascist
Italyclungto thegoldblocwithFrance,
Belgium,
theNetherlands,
andSwitzerland
untilthatremnant
of
an earlierinternational
monetary
orderdissolved
in the later
19303.Both Italian and Germanfascistspracticedscal
conservatism.
Underfascism,
however,theseeconomic
policyobjectives
werepursued in acontextin whichbothparliamentary
account-
abilityandtheinstitutionalized
formsoflabor-management
con-
flict hadbrokendown.Theybrokedownasbothcauseand
consequence
oftheadvance
offascist
power
itself.
Thedominant
economic
classes
lostcondence
in theabilityof theirownpo-
liticalparties
tosecure
theindustrial
order
thatwasacondition
forprots.Fascistpreeminence
inthepractice
ofillegal
violence
convincedthemthatonlythefascists
couldrestore
andguarantee
thisorder.Fascism
accomplishedthisthroughanimposedstate-
corporatist
system
in industry.
Strikes
wereabolished
andstrict
labordiscipline
enforced.
Workers
weregivensomeaccess
to
political
power
asachannel
forresolving
grievances.
Anideology
of enterprise
community,
betriebsgemeinschaft
in its German
form,wasproclaimed.
Although
in theory
theworker-employe
community wasoneofreciprocal
obligationsubordinated
toan
overriding
common obligation
to nationor state,
in practice
it
wasbiasedin favorof the employer.Therightsof management
became
supremein theworkplace.
To achievetheir goals,the dominanteconomic
classes
connived
to create
a powertheycouldnotthemselves
control.
Thefascistrulershadtheirowngoals,andtheywouldusein-
dustry
instrumentally
topursue
these
goals.
They
didnothesitate
to intervene
in theeconomy by securing
thevoluntaryacquies-
cenceof businessmenif possible
butusingforceif necessary.
A
commandeconomywassuperimposeduponthe economy
dominated
bycorporate
monopolies.
Yetif thecapacity
toapply
directinstrumental
powerlaywiththefascist
rulers,structural
power
remained
withthedominant
economic
class.
Thefascist
rulers ability to attain their goals dependedon the economic

strengthof the industrial system,which the dominanteconomic
class controlled. In that sense,the fascist rulers had to and did
servethe interestsof the industrialsystemandits monopolists.
Fascisteconomicintervention in practice strengthenedthe in-
dustrialcombinesandenhanced their abilityto makeprots.
Fascisteconomicmanagement waseffectivein reducing
unemployment, raisingindustrialoutput,controllingwagesand
prices, and introducing technologicalinnovations.In thesere-
spects,by placingGermanandItalianeconomies
onawarfooting
beforeWorld War II, fascismanticipatedthe revival that the war
brought to the economiesof the emergentwelfare-nationalist
states.Yet stateintervention and the considerableexpansionof
state ownership accomplished under fascism never aimed at or
approachedthe coherenceof an economicplan conceivedas an
instrument for transformingeconomyand society. The fascist
stateseconomic goals remained specific and relatively short
range.
If functionally the fasciststateappearsas a distortion of
the welfare-nationalist statewith a moreauthoritarianpolitical
base,the importanceof fascismlies preciselyin the genesisof
that political base.In this geneticperspective,
fascismappears
not just as a historical aberration of welfare-nationalism but as a
type that may be replicated under certain conditions.
Probablyno one achieveda clearerunderstandingof fas-
cism in its origins than Antonio Gramsci.He saw,experienced,
and struggledagainstits birth in Italy in the postWorld War I
period.He distancedhimselffromsomeof the simplisticexpla-
nations of the Comintern, such as those that identied fascism
with monopoly capitalismand with socialdemocracy.Conned
in a fascistprison, he reflectedon the historical specicities of
Italy, western Europe,and Russiain an attempt to understand
the conditions for fascismand its meaning.
Among these conditions, Gramscilisted three: first, an
emergenceof popular forcesthat had hitherto not participatedin
political life, but in a manner in which these forces had no
coherence,leadership,or direction; second,an alienation from
the political systemof the petty-bourgeoisie
or middle classes,
particularly those employedin the statebureaucracyor of the
ANDPRODUCTION
milieus furnishingstateofcials; and third, a polarizationof

employers
andworkers
andtheirrespective
alliessuchthatnei-
ther sidecould effectivelyleadand societyappearedto beheaded
for a catastrophic
conict.Undertheseconditions,parliamentary
institutions, which function effectivelyonly to the extentthat the
realforcesin societyaremediatedthroughtheminto acceptable
compromises, becomeparalyzed.The alienatedmiddleclasses,
disillusionedby theconventional
politicalprocess,
supportthose
of their number who use illegal violence to gain control of the
streets.Thepopularclasses, lackingan effectivepoliticalorgan-
ization,areunableto resistbutaresufficientlyarousedto provoke
petty-bourgeois
violence.
A caesarist
solutionthemanof des-
tiny-imposesitself betweenthe antagonistic
forces.Caesarism
produces
order,butit freezes
conictwithoutresolving
theissue
betweenthe antagonisticsocialforces.
Caesarismbecomesthe instrumentality of a passive rev-
olution, i.e., of an attemptto introduceaspectsof revolutionary
changewhile maintaininga balanceof socialforcesin which
thosefavoringrestorationof the old orderremainrmly en-
trenched.Italian fascismsoughtto modernizecapitalism along
American lines but shrank before the implications of market
freedomas the avenuetoward industrial concentration,shrank
particularlybeforethe threatof unemployment
this approach
would involve. Instead,fascismsoughtto introduce moderniza-
tion and concentration within the framework of a state corpora-
tism in which the traditional economically dominant classes
wouldbepreserved, includingtherentierclassandthe clientel-
ism of the mezzogiorno.Fascistcorporatismrepresented there-
forea passive(andin Gramscisview ineffective)modernization
of capitalism.The basicantagonisms of capitalismwere sup-
pressed,not overcome.
Gramscisanalysis highlights key factors in the rise of
fascismin both Italy and Germany.In both countries,fascismpre-
sentedsomeof the aspectsof a revolutionarymovementbut was
ultimatelyeased
intopowerbythedominanteconomic
andsocial
groupswith the connivanceand supportof their foreigncounter-
parts. In Italy, the factory and land occupationsof 1919-20
so shockedthe industrial bourgeoisieand the landlord classthat

they were ready to abandontheir traditionalparties[and a
political systemof coalitionsknown as trasformismogeared
around the liberal center] for a fascist solution. The Liberals
themselveswere preparedto View fascism,in CharlesMaiers
words, as a regrettablycruder but muscular wing of liberal-
ism.62Theviolenceof thefascistsquadsmayhavebeenregret-
table to Liberals and their erstwhile industrialist backers,but
violenceclinchedthe argumentthat only Mussolini could restore
order. Mussolinis own declaration of affiliation to economic
liberalismbeforehis accessionto powergaveassurancesufficient
for the bourgeoisie to discount the radical rhetoric of fascist
syndicalism.Petty-bourgeoisfearsand the backingof industrial
and landlord interestsgavefascisman electoralsuccessat the
expenseof the traditional liberal center.The path to governmen-
tal power was preparedby the former ruling groups,but it was
precededby a symbolicreminderof the revolutionarypreten-
sions of fascism and of its ultimate foundation in violencethe
marchon Rome.Oncehe enjoyeda monopolyof statepower,
Mussolinidomesticated
the squadrianddemobilizedthe syndi-
calists.Both retainedonly a marginalutility as levershe could
use when necessaryto inuence the old dominant classesand
the organizedemployers.
The samecombinationof streetviolencewith petty-bour-
geoisalienation gainedelectoralsupportfor National Socialism
in Germany.But Hitlers real strengthlay not in electoralsuccess
but in the convictionof the dominantgroupsthat only the Na-
tionalist Socialistscould protect their interestsin a situation of
increasingmassunemploymentandineffectivelegalinstitutions.
It was, in fact, after the National Socialist vote had fallen in the
November1932electionsthat army [Hindenberg],
aristocracy
(Papen],and Ruhr industrialists(Thyssen]allowedHitler to form
a government.The Nazi radicalswerepurgedin bloodierfashion
than their Italian counterpartson the night of June30, 1934,half
a year after Hitlers accessionto power.
In his comparative
studyof France,Germany,
andItaly in
the 1920s,CharlesMaierdiscerneda commonpatternof change
194 STATES,
WORLDORDERS,
ANDPRODUCTION
in political
structures
fromtheemergence
ofa workingclass
challengein theimmediate
postwar
yearstotherecasting
and
restabilization
of thebourgeois
orderin the mid-1920s.
What
permitted
stability
after
1924
wasashiftinthefocalpoint
of decisionmaking.Fragmented
parliamentary
majorities
yielded
toministerial
bureaucracies,
orsometimes
directly
to
party
councils,
whereinterestgroup
representatives
could
more
easily
workoutsocial
burdens
andrewards.
Thisdisplacement
permitted
a newcompromise:
a corporatist
equilibrium
in
whichprivate
interests
assumed
thetasksthatparliamentary
coalitions
founddifficultto c0nfront.65
Fascism
played
a roleofmaintaining
bourgeois
orderin two
distinct
stages.
In therst stage,
fascism
wasdecisive
onlyin
Italy;inthesecond,inbothGermany andItaly.
In theearly1920s,theItalianbourgeoisie
wasunable
through
itsownmeans
(political
parties
andeconomic
power)
to
exorcise
the demonof popularrebellionandthe challenge
to
property.
Fascism
acted
inplace
ofthebourgeoisie
through
a
combination
ofstate
corporatist
industrial
structures
andliberal
economic
policies.
InGermanyduring
thesame
period,
thework-
ingclass
wasdivided
andtheindustrial
bourgeoisie
wasableto
cometo anunderstanding
withonesection
oftheworking
class
in ordertosuppress
theother.
Indicativeofthisunderstanding
wastheactiontakenbytheSocial
Democraticminister
ofdefense
GustavNoske in January
1919tocallin theanti-Bolshevik
Free
Corps
ofdemobilized
armyofcers,
tocrush
a left-wing
labor
movementin Berlin.The Germanindustrialbourgeoisie
wasnot
alonein itsefforttobuildabasis
forunderstanding
withmoderate
elements
ofthepolitical
andtrade-union
wingsoftheGerman
labormovement.
TheAlliedgovernments
werepreoccupied
that
Bolshevism
mightspread
in thewakeof Germanys military
defeat.
TheGermangeneral
staffremained
intactasa resultof
the armistice
and ableto backthis effort.FieldMarshalvon
Hindenberg
entered
intoa compact
withFriedrich
Ebert,
then
leaderoftheSocialDemocratic
Partyandlatertherst president
oftheRepublic,
tofight
Bolshevism.
Thus,
withthecollaboration
ofapartoftheGerman
working
class
through
itspolitical
and
trade-union
representatives,
anewinstitutional
structure
wasput
in placewithin which a capitalistcorporatismcould becomethe

focal point for decisionmaking.Fascismwas unnecessaryto the
recastingof the bourgeoisorder in Germanyat this stageand
remainedunimportant.The division within the Germanworking
classlasted,however,to weakenits capacityfor resistancewhen
later the fascist threat became real.
This cameabout during the secondstagewith the onset
of the GreatDepressionof the 1930s.Capitalist corporatismin
Germany proved incapable of containing that crisis. Those within
the corporatistcompactindustrialists and employedworkers
could defendthemselves,but thoseexcludedthe unemployed,
small businesses,and xed-income peoplebecame increas-
ingly numerous,alienated,and susceptibleto the anticapitalist
rhetoric of National Socialism.Germanfascismcameto power
as a movementagainstcapitalist corporatism.It used power to
establishstatecorporatism.Italian fascism,with statecorporatist
structures already in place, made the transition to the second
phase without a break in institutions.
By following Gramscis cue that we should look at the
formation of historic blocs in order to understand the foundation
of different forms of statepower, fascismmay be consideredas
one possible outcomeof a crisis of hegemony. Fascismtakes
power when the industrial bourgeoisiethrough its normal polit-
ical parties and modes of inuence has been unable to contain
the rise of a popularly basedbut insufciently coherentchallenge.
The bourgeoisiehas either not attainedor is in dangerof losing
its hegemony,and no counterhegemonicpower basedin the
working classis able to displaceit. This is a situation that, as
mentioned above,Gramscisuggestedis ripe for caesarism.But
he wasquickto addthatthe charismatic
manof destinyis only
one form of caesarism.Another form, which perhapsstrainsthe
roots of the word but not the conceptasGramscipresentedit, is
a parliamentarytype of equilibrium betweenbalancedbut op-
posing social forces.
A social formation in which such an unresolvedpolari-
zation of socialforcesexistsmay alternatebetweentwo forms of
state:an authoritarianrepressiveform that emergesout of acute
social conict and a more relaxed cartel form of state that main-
tainsthe stakesof the principalcontendingsocialforcesduring
194 STATES,
WORLD
ORDERS,
ANDPRODUCTION
in political
structures
fromtheemergence
ofa working-class
challenge
in theimmediate
postwar
years
totherecasting
and
restabilization
ofthebourgeois
orderin themid1920s.
What
permitted
stability
after1924
wasashiftinthefocalpoint
of decisionmaking.Fragmented
parliamentary
majorities
yielded
toministerial
bureaucracies,
orsometimes
directly
to
party
councils,
whereinterestgroup
representatives
couldmore
easily
workoutsocial
burdens
andrewards.
Thisdisplacement
permitted
a newcompromise:
a corporatist
equilibrium
in
whichprivate
interests
assumed
thetasks
thatparliamentary
coalitionsfounddifficult to confront.
Fascism played
aroleofmaintainingbourgeois
orderin two
distinct
stages.
In thefirststage,
fascism
wasdecisive
onlyin
Italy;in thesecond,
in bothGermany
andItaly.
In theearly1920s,
theItalianbourgeoisie
wasunable
through
itsownmeans [political
parties
andeconomic
power)
to
exorcise
thedemon
of popularrebellion
andthechallenge
to
property.
Fascism
acted
in place
ofthebourgeoisie
through
a
combination
ofstatecorporatist
industrial
structures
andliberal
economic
policies.
InGermany
during
thesame
period,
thework-
ingclass
wasdivided
andtheindustrial
bourgeoisie
wasable
to
come
toanunderstanding
withonesection
oftheworking
class
in ordertosuppress
theother.
Indicative
ofthisunderstanding
wastheaction
takenbytheSocial
Democratic minister
ofdefense
GustavNoskein January
1919to callin theanti-Bolshevik
Free
Corps
ofdemobilized
armyofficers,
tocrush
aleftwing
labor
movement
in Berlin.TheGerman
industrialbourgeoisie
wasnot
aloneinitsefforttobuildabasisforunderstanding
withmoderate
elements of thepoliticalandtrade-union
wingsoftheGerman
labormovement. TheAlliedgovernments
werepreoccupied
that
Bolshevism
mightspread
in thewakeof Germanys military
defeat.
TheGermangeneral
staffremained
intactasaresultof
thearmistice
andableto backthiseffort.FieldMarshal
von
Hindenberg
entered
intoa compact
withFriedrich
Ebert,
then
leader
oftheSocial
Democratic
Partyandlatertherst president
oftheRepublic,
toghtBolshevism.
Thus,
withthecollaboration
ofapartoftheGerman
working
class
through
itspolitical
and
trade-union
representatives,
anewinstitutional
structure
wasput
in place within which a capitalist corporatism could become the

focal point for decision making. Fascism was unnecessaryto the
recasting of the bourgeois order in Germany at this stage and
remained unimportant. The division within the German working
class lasted, however, to weaken its capacity for resistancewhen
later the fascist threat became real.
This came about during the second stage with the onset
of the Great Depression of the 1930s. Capitalist corporatism in
Germany proved incapable of containing that crisis. Those within
the corporatist compactindustrialists and employed workers-
could defend themselves, but those excludedthe unemployed,
small businesses, and xed-income peoplebecame increas-
ingly numerous, alienated, and susceptible to the anticapitalist
rhetoric of National Socialism. German fascism came to power
as a movement against capitalist corporatism. It used power to
establish state corporatism. Italian fascism, with state corporatist
structures already in place, made the transition to the second
phasewithout a breakin institutions.
By following Gramscis cue that we should look at the
formation of historic blocs in order to understand the foundation
of different forms of state power, fascism may be considered as
one possible outcome of a crisis of hegemony. Fascism takes
power when the industrial bourgeoisie through its normal polit-
ical parties and modes of influence has been unable to contain
the rise of a popularly basedbut insufciently coherent challenge.
The bourgeoisie has either not attained or is in danger of losing
its hegemony, and no counterhegemonic power based in the
working class is able to displace it. This is a situation that, as
mentioned above, Gramsci suggestedis ripe for caesarism. But
he was quick to add that the charismatic man of destiny is only
one form of caesarism. Another form, which perhaps strains the
roots of the word but not the concept as Gramsci presented it, is
a parliamentary type of equilibrium between balanced but op-
posing social forces.
A social formation in which such an unresolved polari-
zation of social forces exists may alternate between two forms of
state: an authoritarian repressive form that emergesout of acute
social conict and a more relaxed cartel form of state that main-
tains the stakes of the principal contending social forces during
196 STATES,
WORLD
ORDERS,
ANDPRODUCTION
aphase
ofrelative
truce.
Italyhasexemplied
bothmodels
in
thefascismo
ofMussolini andthetrasformismo
ofGiolitti.
In-
deed,fascism
whenit came topowerincorporated
thepraxisof
trasformismo.
Mussolinisfirstgovernment
wasasbroadly
com-
prehensive
a coalition
of existing
parliamentary
fragmentsas
Giolitti evercouldhavemustered.
Fascism
hascometo powerin situations
of acutepolari-
zation
ofanapparently
irreconcilable
kindsuchasarose
in the
agricultural
andindustrial
revolt
inItalyin1919-20,
during
the
Popular
Front
andcivilwarin Spain
inthe1930s,
andduring
theGreek
civilwarafterWorldWarII. Similarcrises
ofhegemony
havebeenrecurrent
in late-industrializing
countriesin thepost-
WorldWar11period,including
somein LatinAmerica,
where
capitalist
production
hadbecome
implanted
butthenational
bourgeoisie
hadbeen
nomoresuccessful
in establishing
hege-
mony
thantheItalian
hadinthepost-World
WarI era.Italian
fascismcreated
the prototype
of the authoritarian
fasciststate
andelaboratedandinstitutionalized
statecorporatist
socialre-
lationsin production.
TheArgentine,Chilean,andUruguayan
military-bureaucratic
states
ofthe1970s
and1980s
areitslatter-
daymanifestations,
FrancosSpain
andtheGreece
ofthecolonels
having
passed
in theinterim.TheItalyofChristian
Democracy,
postFranco
Spain,
theGreece
ofCaramanlis,
thePortugal
ofthe
post-carnation-revolution
period,
allexemplify
thecartel
state.
Fascist
authoritarianism
freezes
classantagonisms
under
acloakofpopulist
nationalism
backed
byrepression
ofdissent.
It gives
thepettybourgeoisie
possession
of state
jobs,turnsa
blindeyetolandlord
violence
andprotects
theagricultural
in-
terest,
continues
thestate
rolein capital
accumulation,
andcom-
pensates
repression
ofindustrial
labor
protest
byaccording
a
certain
statusin thestate
to ofcialorganizations
of established
industrialworkers.Thecartelstateallowsmorefreedom of
expression
andsome
mobility
in interclass
relations.
Struggles
canbemore
open
sothatthebalance
ofclass
forces
canbetested.
At thesametime,thisconflictis verylargelyinstitutionalized
andtakesplacewithinthestate, whichremains thestructure
throughwhichcontending
classes gettheirpayoffs.
Unionsmay
beableto demonstrate
anincrease
in strength
andin allegiance
among
workers
(asinItalyduring
thehotautumnof1969]
and
therebyclaimandsecurea strengthening
of theirinstitutional
positionwithinthestate[controlof thelaborministry,more
securestatuswithin enterprises).
But maintenance
of the cartel
statedepends
onmoderation
in thelevelof conict;anyreturn
to totalandirreconcilable
conictwouldthreaten
areversion
to
authoritarianism.
Thecartelstateappears
to effecta transformation
of state
corporatism
intotripartism.
Thedirecting
roleof thestateis,
indeed,dismantledandmoreinitiativeallowedto autonomous
labororganizations.
Thestate,however,maintains muchof the
mechanisms of controloverunionsthat couldbe invokedin
emergency,
andunionscontinueto directtheiractiontowardthe
state.
Strikes
aremorepoliticalthaneconomic,
leading
to state
intervention
in thenegotiating
process.
Thuscorporatism
atthe
national
levelremains,
though
thestates
rolein it maybemore
mutedthanin theauthoritarianphases.
Forthe criticaldifferentiation
betweenfascismandthe
morebenignformofcartelstate,
thedecisivefactormustbefound
infascisms
disposition
toviolence.
Petty-bourgeois
shock
troops
andstreet
gangs
furnished
thehuman
material
forviolence,
but
thedisposition
itselfseems
to lie deeper
thanclassstructure
in
thehumanpsyche. In thisrespect,
Gramsciseparated
himself
fromthelimitedclass
analysesoffascism
made byothermarxists
duringtheyearsmarxism wasdominated bytheComintern.
As
early as 1921he wrote in the OrdineNuovo:
It hasnowbecome
evident
thatfascism
canonlypartlybe
assumedto bea classphenomenon,
a movement of political
forceswhichareconscious
of havinga realgoal:. . . it has
become
anunleashing
ofelemental
forces
withinthebourgeois
systemof economicandpoliticalgovernment,
which cannotbe
braked:
fascism
is thenamefortheprofound
decay
of Italian
society. . . .71
Hewenton to explainfascismastheresultof a low levelof

culture
(Italyisthecountrywhere
mothers
bringuptheirchil-
dren
byhitting
them
about
thehead
withaclog)
inspecically
national
terms.
Others
have
been
impressed
bytheubiquity
of
thephenomenon.
WilhelmReich,
forinstance,
sawfascism
as
theunleashing
ofa normally
subconscious
layerofcharacter,
which consistsof cruel, sadistic,lascivious,rapaciousand en-

viousimpulsesandwhichhasbeengenerated bytheexperience
of authoritarianrepression
in childhood.This layerof character
he sawas something characteristic
of thegreatmassof mankind,
not limited to any national cultures. Normally this irrationally
aggressivelayeris overlaidby a conscious
personalityrestrained
by normsof civility. Reichperceivedtheattractionof fascismfor
the petty bourgeoisieas derivingfrom a characterstructure
shapedby the authoritarianfamily.Whenthesestrataof society
areplacedunderdire stressin which their statusappearsto be
threatened,hidden wellspringsof violencebecomerevealed.The
characterstructureshapedby authoritarianrepressionexpresses
this violence in a typically fascistform.
THE REDISTRIBUTIVE
PARTY-COMMANDED STATE
Thefascistcorporative
statedeviatedfromthewelfare-nationalist
form of state in becominga frameworkfor the continuation of
capitalistdevelopmentwherebourgeoishegemonywas either
absentor had broken down. A quite different mode of develop-
ment was initiated by the state that took form following the
Russian revolution. This was a redistributive mode development
carried on under the leadershipof a revolutionaryparty with a
monopoly of state power.
The redistributiveParty-commanded
form of statedid not
evolve out of a transformation of the liberal state.In the two most
signicant casesthe Soviet Union and Chinathe form
emergedout of the crisis of old-regimeagrarian-bureaucratic
states.
In Czarist Russia,private industry was introduced and
encouragedunderstatetutelageandfor purposes ofthestate[e.g.,
producingmilitary supplies).In thatrespect,Czaristindustriali-
zationwas analogousto the mercantilismof the seventeenth-
centuryFrenchmonarchy.Thesocialrelationsof productionin
industrywereinitially adaptedfromthe peasant-lord patternof
serfdom,thoughfollowingthe endingof serfdomandthe initia-
tion of reformssuchasthoseof Stolypin in agriculture,the Czarist
state acted to create an enterpriselabor-market mode of social

relations in both industry and agriculture. This had, however,
been only partially achieved when the state collapsed.
Imperial China suffered the implantation of enclaves of
foreign capitalism on its coastline, and republican China fostered
capitalist developmentfrom its coastalbase.Here,too, capitalist
production and enterprise-labor-market socialrelationshad only
a limited impact when the statecollapsedand the protoliberal
experiment ended.
In some of the easternEuropean stateswhere redistributive
Party-commanded stateswere installed after World War II under
Soviet politicalmilitary dominance,capitalist organization of
production and the modes of social relations of production
enterprise labor market, bipartite and tripartiteassociated with
them were more developed, as was the self-employment mode
among the small holders of their agrarian sectors. In these cases,
the new form of state was imposed by external intervention with
a modicum of internal support and cannot be considered as an
endogenous transformation of the preexisting national state. In
still other cases, Yugoslavia and Indochina, the redistributive
Party-commandedstatewas foundedafter a successfulpeasant-
based revolutionary struggle.
Virtually all the historical evidence thus suggeststhat this
form of stateinauguratesan alternativeto the capitalist process
of accumulation fostered by the liberal state and that it does not
presuppose any initial liberal phase. Just as the liberal state
createdthe enterpriselabor market,so the redistributive Party-
commandedstatecreatedcentralplanning and also,as a transi-
tional mode of social relations of production, instituted the com-
munal organization of agriculture. The historical fact that the
redistributive Party-commandedstateconstitutes,so to speak,a
separate track does not exclude that, once established, it can be
a model to be propagatedin social formationswith a capitalist
and liberal-statepasteitherby forceor conceivablyby emulation.
The Soviet state came into existence in a hostile world
and had from the beginning to defend its existence. One current
of revolutionary thinking envisagedthe Bolshevik seizure of
power in Russiaasbut a rst step in a world revolutionary process
and that, indeed, the success of the revolution could be assured
only to the extentthat it spreadfrom Russiato the capitalist

nations.Theseexpectationswere setback when revolution was
forestalled in defeatedGermanyby the coalition of capitalist,
social-democratic,and military forces with the backing of the
Allied powers.Thenthe new Sovietstatehadto ght awar on
its own territory againstcounterrevolutionaryforcesreinforced
by foreignmilitary intervention.Success
in this defensive
effort
led to a pausein the revolutionaryprocesstheNew Economic
Policy." The isolationof the Sovietstatein a world in which
bourgeoisorderhad beenreestablished in westernEuropeleft
socialism in one country asthe only independentoption open
to it.
The defeat of intervention gave the Soviet state a respite,
but for how long?The Leagueof Nations could only appearto
the Soviet leaders as a hostile alliance, though one that lacked
coherenceand effectiveness. The greatestguaranteeto the Soviet
statelay in the divisions amongthe capitalistpowers,not in their
toleranceof a communistpower. Revolutionhad been possible
to achievein a backward,peripheraleconomy,but to sustainthat
revolution the Soviet state would have to be able to modernize
its economyrapidly enoughto matchthe military capabilitiesof
the most advancedcapitalist powersbeforethey attackedagain.
The imperative placed upon the new stateby the condition of
the world systemwas industrializationand militarization.
This imperativeshapedthe natureof the regime.The col-
lectivization of agriculture and the constructionof the central
planningsystemdid not comeinto existence
in utopianfashion
as the conscious realization of an intellectually determined
model. The structureemergedas the consequenceof a seriesof
political decisionsshapedby socialand economicrealitiesand
taken under the stressof acute political conflict. The internal
debateduring the 1920swas overshadowedby the issueof how
most effectivelyto preparefor the expectedattackfrom the cap-
italist world. Those like Bukharin who advocated snails pace
industrialization so as leastto disrupt a possiblepeasant-worker
alliancehad to confrontthe chargethat this strategywould leave
the Soviet state Vulnerable to the external threat. Forced collec-
tivizationwasjustied asthe only way to expandagricultural
productionrapidlyandat thesametimefreeup a laborforcefor
industrialization.Draconianenforcementof labor discipline was

justied as necessaryto adjust an industrial labor force of ex-
peasantsto factory work. In short, the coerciveand repressive
characteristics associated with Stalinism flowed with a certain
logic from the Soviet statesvulnerable position in a hostile world
system. To its supporters, the justication of this phase of forced
draft development was the ability of the Soviet system to survive
under the German onslaught during the Great Patriotic War and
to emerge as one of two superpowers in the postwar world.
The other greatredistributivesystem,that of China,began
its course in a similar world-system context. When the Commu-
nist forcesoccupiedthe coastalcities evacuatedby the retreating
Guomindangarmies and proclaimed the PeoplesRepublic in
1949,Mao Zedong offered a place in the new order to the national
bourgeoisie. This offer envisaged the maintenance of the trade
links between the Chinese coastal cities and the southeast-Asia
region in which the coastal-city bourgeoisies had been the inter-
mediaries.China was, however, immediately confronted by a
U.S. blockade and threat of U.S.-supported invasion from the
Guomindang forces in Taiwan. Soviet alliance and the introduc-
tion of the Sovietplanningsystemfor the developmentof Chinese
heavy industry was the only remaining option consistent with
building up Chinas capacity to defend the new order. When this
option was taken, the alliance with the national bourgeoisie be-
came meaningless. Shanghai and the other coastal cities were
broughtwithin the scopeof the centralplanning system.
In the post-Stalin years, the position of both the Soviet
Union and China changed within the world system. Mutual nu-
clear deterrencegavea certain stability to U.S.-Sovietrelations,
a situation that became mutually recognized in the more relaxed
relationshipthat followed the testban treaty of 1963.During the
post-Stalinyearsthe internal developmentof the Sovieteconomy
required a shift from the extensive pattern of development fol-
lowed under Stalin to an intensive pattern that could sustain
growth now that labor reserveshad becomefully employed.The
only sourceof growth now would benew capitaland technology
and the quickest way to obtain this seemedto be through in-
creasedeconomicintercoursewith the capitalist world. Internal
and external factors combined to favor detente.
China at the sametime appearedto its leadersto be in a

mostvulnerableposition.Duringthe heightof Soviet-Chinese
cooperation,
theSovietUnionhadagreed to assistChinain the
developmentof a nucleardefense
capacity.
Nowin thecontext
of detenteleadingup to thetestbantreaty,in whichbothsuper-
powersaccepted
the principleof nuclearnonproliferation,
the
Soviet Union renounced this agreement.Relations between
Chineseand Soviet communistpartieshad also becomeembit-
tered: in 1954 the Chineseleadershippurged the directors of
Manchurianheavyindustryand the centralplanningmecha-
nism,suspected
ofbeinga Sovietbridgehead
withinChina,and
in the summerof 1960the Soviettechnicianswere withdrawn
from China.MeanwhileU.S.hostility andthe threatfrom Taiwan
continuedto menaceChina.The Chineseleadershipreactedwith
a dual thrust toward autarky: continued priority for the devel-
opment
ofanindependent
nuclear
militarycapability
plusashift
fromSoviet-style
heavy-industry-based
development
to agamble
on internal self-reliance.The internal developmentstrategyhad
profoundimplicationsfor productionrelations.It, in effect,
stakedeverythingon the ability of ideologicalmobilization
throughcommunalism to createby humaninvestmentthenew
capitaland the technological
innovationrequiredto sustain
Chinasinward-orienteddevelopment.China was successfulin
developing
itsnuclearcapability.
It wasnotsuccessfulin achiev-
ingsustainedgrowththroughfull andeffective
utilizationof its
vast manpower.
Bythelate1970stheworldsystementered
another
phase.
BothcapitalistandSovieteconomies
encounteredsevere
prob-
lemsof maintaininggrowth,andtheir mutualpoliticalrelations
becamemore hostile. The United Statesbeganto reviseits here-
toforeconsistentanti-Chinesestanceto perceivein Chinaauseful
counterweightin theeastto theSovietUnion.Thenewpost-Mao
Chineseleadershipwasat the sametime determinedto change
theinternaldevelopmentstrategies
basedonself-reliance
in order
to placetheemphasis
onthemodernization
ofChinese
industry
andtheraisingof agriculturalproduction.Thenewdevelopment
strategy,
byits insistence
thatimprovementof productive
forces
hadpriority,impliedbotha drasticchange
in productionrela-
tionsnotablya shiftfromideological
mobilization
to material
incentivesand a need to expand economic relations with the

outside world in order to import technology. Now, however, the
outsideworld meantthe capitalistworld economy.
The manner in which the world system has conditioned
the developmentof productionrelationsin redistributivesystems
through the mediation of the redistributive partycommanded
stateunderlinesthe dilemmaof revolution in backward,periph-
eral economies.If one were able to abstractthe world system
from development processes,there would be nothing inherent in
redistributive development that would tie it to the authoritarian
and repressive features associated with Stalinism. It should be
possibleto sift out what is essentialand lasting in central plan-
ning as a system of social relations of production from what is
transitory and conjunctural,to seeit as a dynamic and evolving
structurenot irrevocablybearingthe stigmaof its Stalinistorigins.
It is, however,impossibleto abstractthe world systemin the case
of a backward, peripheral country. Severance from the world
system through revolution exposessuch a country to intervention
and destabilization.It can gain a senseof securityonly by rapid
industrialization such as would give the country the military
strength to survive. The paradox of this necessity is that in order
to industrialize rapidly the revolution must adopt the same kind
of industrial technology and organization as is used in the more
advancedcapitalistcountriesand must thus forgothe possibility
of pioneering new forms of social organizationof production
consistent with the goals of revolution. The implication, in other
words, is that the opportunitiesfor revolutionary development
in backward, peripheral countries are severely limited.
Things would be otherwise if revolution were to occur in
the most advanced industrial society. Such a revolution would
be less constrainedto retain the models of social organization
prevailing in competing powers for the simple reason that its
own productive forces were already the most developed.The
paradox in this caseis that, being the most developed,more
resources are available for alleviating the causes of revolution
and so revolution is leastlikely to occur there.Juxtapositionof
these hypothetical casesone technologically backward, the
other advancedsuggests, however, that prospects for internal
changesin social organizationmay be enhancedas the techno-
logically backwardredistributive societysucceedsin raisingthe

level of its productiveforces.This is perhapsthe strongestargu-
ment in support of the declaredaims of the present Chinese
leadership.This leadershiptakesthe position that Chinaspro-
ductive forces must be improved before signicant further ad-
vances can be made toward more collective forms of life and
work. The question that remains to be answered is whether grow-
ing links to the world capitalist economydesignedto facilitate
the developmentof productiveforceswill in themselvesrestrict
or divert such advances in a capitalist direction even if the level
of productive forces is raised. Will these links undermine the
redistributive character of the regime and assimilate it to a market-
oriented world economic order?
The redistributive party-commanded state fuses politics
and economics into a single process. The functional outline of
this form of state economy is given in chapter 4, i.e., the role
playedby the statein coordinatingthreemodesof socialrelations
of production: central planning, communal and self-employment
modes (with in some casesthe addition of enterprise-labor-mar-
ket production]. It is, however, important to consider how func-
tional relationships may be changing, and it is most difcult to
form an accurate and up-todate picture of the internal develop-
ments that are transforming redistributive systems.
Gramscis analogy from wars of movement and wars of
position is apposite to conceptualizing this transformation. Rev-
olution in Russia succeeded,Gramsci argued, as a war of move-
ment. The Czarist state was strong in its coercive powers until
these succumbed in military catastrophe,but it had no rm base
in civil society. It was possible for a determined revolutionary
party to destroy such a state in a rapid war of movement and
then to make a new state that would mold an amorphous society
in its own image. The Russian casecould not, Gramsci continued,
be transposed to western Europe, becausethere even the collapse
of a regime, e.g., Hohenzollern Germany, would leave behind
solid bulwarks of economic and social power. Any revolutionary
group that seized power in such circumstances would confront
organized forces that would soon bring it down. In this case,the
necessaryrevolutionary strategywas the war of position-slowly
but surely to build up a class-basedcounterhegemony in civil
society until the conquest of power in the state becamea feasible

goal.Gramsci,in otherwords,wasthinkingaboutthe prospects
for a socialisttransformation
of societies
permeated
by capitalist
institutions and social relations in a way that Czarist Russia and
prerevolutionary China were not.
The statefounded in a war of movementis, in substance,
the centralized disciplined party organizationthat proceedsto
insert itself into the inherited mechanismsof the prerevolution-
ary state and to create new institutions and instruments for re-
shapingsociety.The revolutionary party dominatesthe disarti-
culatedremainsof prerevolutionary
socialstructurein a directly
dictatorial, nonhegemonicmanner.It attemptsto draw certain
socialelementsinto its orbit in apreferentialstatus(urbanmanual
workers, rural poor peasants),but the party itself has not been
built upon the broad support of an existing social class that
throughthe party extendedits socialhegemonyover other social
classes.
Thepartysubstitutes
for a class-based
socialhegemony
andusesorganization
andideologyasthemeansof establishing
a broadly basedmasssupport.
The initial revolutionary seizure of powerthe war of
movementis thus followed by an extended social revolution
fromabove.In the courseof this effort,theparty-state
(1)main-
tainsandrenewsa disciplinedcadre;(2)removescoercivelyor
by attritionthe socialauthorities(notables,
thewealthy,experts)
of the old regime,therebycreatingspacefor replacements re-
cruitedfor their loyaltyto the new order;(3)usesideologyasa
tool for reshapingattitudes toward work, social relations, and
polity; and (4) creates the economic-material base for new state
power. During the phaseof primary accumulation,in which the
economic,aswell asthe social,basesof a future societyareto be
laid, the partysfocus is on struggleagainstthe residuesof old
socialclassesand againstthe emergence
of new socialgroups
that could challengeor undermineits leadership.
The mostinterestingand difcult questionsconcerning
the development of redistributive social formations concern the
reemergenceof civil societyfollowing this initial phaseof pri-
mary accumulation and revolution from above. Social cate-
goriesareshapedby the newpoliticalandproductionorganiza-
ton: the top party-politicalleadership;the leadingcadresor heads
Z06 STATES,WORLDORDERS,AND PRODUCTION
of enterprises
andotherproductiveunitsandofthevariouslevels
of economic and social bureaucracies; the scientific-humanistic
elite; the much larger categoryof degree-holdingintelligentsia
who staff the middle levels of state,party, and economicorgan-
izations; the established skilled workers and technicians; non-
establishedworkers; richer and poorer peasants.As this new
structureof social categoriesbecomesa relatively stablecong-
uration, the party-statehas to take it into accountin its task of
directingthe developmentof the economy.The war of movement
must accordinglygive place to a war of position. The party, in
advancingits policies, will rely on the support of somesocial
groupsmorethan others.
The essence of Stalinism, the revolution from above,
was that the top party-political leadershipmonopolizedpower
and preventedthe other categoriesfrom acquiring any separate
senseof identity or any legitimacyof their own, distinct from the
legitimationof politicalorthodoxyconferredbythepoliticallead-
ership.Thepost-Stalinerasawthe emergence of boththe lead-
ing cadresandthe scientifichumanistic elite asdistinctsocial
forces. Some critical observersfrom within the system perceived
a historiccompromise"Z throughwhichthepoliticalleadership
recognized the existenceof thesesocialforces,andtheyin turn
acknowledgedthe hegemonyof the political leadership.
Hegemony is,of course,adifferentthingfromdictatorship.
The hegemonicpolitical leadershiphasto takeaccountof the
distinctive interests of the social forces on whose acquiescence
its exerciseof powerin a measure
depends.Onefactorfavoring
the continuedhegemonyof the Sovietpolitical leadershipgroup
is its ability to mobilizethe supportof the upperlevelof estab-
lishedworkers,the engineering-technical personnel(ITRs]who
have been the dominant element in the Soviet trade unions and
closeto management.
An ideologicalconsequence
of the lead-
ershipsreliance on this support has been a propensity to en-
couragepopulist,manualist,antiintellectualsentiments
thatcan
havethe effectof isolatingmanifestationsof devianceamongthe
scientic-humanistic elite. Socially, this support relationship
could lead toward the consolidation of a labor aristocracy enjoy-
ing corporatistrelationswith management
anddominatingover
any tendenciestowarddeviancyfrom a subproletariat
of non-
established workers. Speculations can be raised about whether

analogous tendencies are at work in post-Mao China.
To the extent that this analysisis correct,the party has
lost something of its erstwhile character as a mechanism for
enforcingdiscipline and uniformity, to becomesomewhatmore
of a channelof communicationsamongand an encadrementfor
the now more identiable groups associated in the exercise of
power. The party can,perhaps,no longerbe identied so exclu-
sively with the political leadership.Once a substitutefor civil
society, the party may now be experiencingsomethingof the
diversity of a reemergentcivil society.
The relationship betweenparty and society could move
in different directions.The laborrevolt in Polandin August1980
thatled to theformationof Solidarnosc
showedthatthe strategy
of the political leadershipto seeksupportamongthe established
workers and thereby to marginalize the humanistic intellectual
opposition might not succeedand that other alignmentswithin
evolvedredistributive societiesarepossible.
In the Polish case,the political elite was in danger of
becomingmarginalizedby a coalition of workersand intelligent-
sia in which the divisions betweenskilled and unskilled, rural
andurban,mentalandmanualseemed
to havebeenverylargely
bridged. The Polish caseis certainly untypical in outcomebut
may not be untypical in terms of the socialgroupsavailablefor
coalition. Recognition of the existence of identiable social
groups within industrialized redistributive social formations
gives a basis for reasoningabout alternative futures for these
formations.
Themostconservative visionof the futureandperhaps
the mostlikely prospectis for a continuanceof the peaceful
coexistenceof a political leadershipand a technological-human-
istic elite, the former ruling, the latter managing.This outcome
would be reinforced by a reform of the official trade unions
reinvigoratingcorporatismin industry and an improvementof
efciencyand reductionof corruptionin planningand admin-
istrationwith the useof moresophisticated
methods,including
computers.A variant of this strategy,favoredby somemembers
of the technologicalelite, would give greaterplaceto market
mechanisms. Theseareintendedto makethe allocationprocess
more efcient, not to openthe way for a transformationof redis-

tributive into capitalist accumulation.There is no clear pattern
of supportor oppositionamongsocialgroupsfor the market
orientation.Someenterprisedirectorsmaysupportit andothers
be concerned that it would make their work more precarious.
Workersmaybe indifferentor worrylestthe marketorientation
extendto the staffingof enterprises,therebyunderminingthe job
securitythat is guaranteedunder existingpractices.
More radical directionsof changecould attackthe organ-
izationandhierarchyofproductionby challenging
whatRudolph
Bahro calls subalternity,essentiallythe reproductionwithin re-
distributive social formations of the command structure of capi-
talist industry.One suchline of attackenvisages workerself-
management at the enterpriselevel.This couldleadto a weak-
eningof centralredistributivefunctionsanda growthof auton-
omousself-regarding enterprises.Anotherradica1onemight
sayutopianchallengeenvisages a strengthening,
not a weak-
ening,of political Partycontroloverthe redistributiveprocess,
but with arevitalized,nonbureaucratic,democraticallyreponsive
Party.
The contradictionsor problemsinherent in this form of
statecanbe put under four headings:
First, there is a contradictionbetweenthe social goalsof
emancipation
on which the legitimacyof the regimerestsand
the dictates of the world context, which tend to maintain its
extractive (high redistributive accumulation] and repressive
character.
Second,
and
closely
related
tothe
first,
isacontradict
betweenthe commandhierarchyandalienatingcharacterof work
in industryorganized
onthesamepatternascapitalistproduction
andthe expectationof newnonalienating
workingrelationships
kindled by revolution.
Third, the rationality of central planning is limited by
inefciencies,but changesin centralplanning might well leadto
lower rates of redistributive accumulation. For instance, to seek
greaterefcienciesby givinggreaterscopeto marketmechanisms
might encourage corporativeengrossment of earningswith the
result that less would flow into central redistribution. Alterna-
hierarchicalbasisof established
statepowerandwouldprobably
also lead to lower central accumulation.
Fourth, the reemergenceof civil society after an initial
phasein whichthePartyhasanexclusiveinitiativein reshaping
society requires that a modus vivendi be reached between state
structures
andemergent
socialforces.Thisconcerns
particularly
the relationships between Party elite, technical intelligentsia,
humanistic intelligentsia, and workers.
FURTHER ANALYTICAL
PROPOSITION S
The questions discussed in this chapter enable us to add to the

analytical propositionsconcerningthe transformationof forms
of stateandworld orderpresented
at theendof chapter5.Many
of the changesconsideredin the present chapter are further
evidenceof thosepropositions,
particularlyasregardsthe polit-
ical form of classstruggles[secondproposition),the formationof
new historic blocs (third proposition),and the creationof new
frameworksfor production (fourth and fth propositions).The
experience
of the eraof rival imperialismsaddedparticularlyto
our understandingof worldorderstructures.To the eightprop-
ositionsof chapter5, the following may now be added.
Ninth: the transformation of a historical structure of world
orderis a complexprocessinvolvingsimultaneously
(1)change
in the relative powers of the principal states,(2) unevendevel-
opment of productive forces leading to a new distribution of
productivepowersamongsocialformations,(3) changes
in the
relativepower of socialgroupswithin socialformationsand the
formation of new historic blocs,and (4)the formation of a social
structureof accumulation,i.e.,the putting into placeof new social
relationsof productionand new mechanisms
of capitalaccu-
mulation through which economicgrowth is able to continue
and increase.
Tenth:suchtransformationsmaybein the direction either
of a unied andconsensual,
homogeneous, hegemonic
orderor
towarda fragmentedand conictual,heterogeneous,
nonhege-
monic order. The hegemonicorder tends to limit forms of state
to thosethat arecompatiblewith the prevailingsocialstructure

of accumulation.The economic-productivestructuresof social
formationsaremadecompatible
with thehegemonic
worldecon-
omyeventhoughstate-political
structures
maydiffer.Thediffer-
encesamongthe latteraresuchasto ensurethe compatibilityof
the former.Thenonhegemonic world order,because of the frag-
mentationof powerthatprevailswithin it, permitstheemergence
and developmentof formsof stateand of socialstructuresof
accumulationthat arenot compatiblewith any singlepreeminent
form of world economy.
Thusconsistent with the ninth proposition-the last
decadesof the nineteenthcenturywitnesseda simultaneouspat-
ternof changes
thatcumulativelytransformed thesocialstructure
of accumulation(andwith it thetypicalmodesof socialrelations
of production]of the liberal era and broughtinto existencea
nonhegemonic
worldorder.Thewelfarenationalist
formofstate
evolved out of the liberal state as an adaptationboth to the
nonhegemonic
worldorder(itsnationalist
aspect)
andtothenew
internal relationship among social forces (the welfare aspect).
Fascism was the most extreme manifestation of aggressivity in
interstaterelationsduringthe eraof rival imperialisms.Where
the welfare-nationaliststatewasa continuationof bourgeoisheg-
emonyinternallyadaptedto a nonhegemonic
externalworld,
fascism
expressedaruptureofinternalhegemonya
statebased
on domination in the serviceof which it was able to mobilize
barbaricpropensitieslatentin all populations.Fascismrepre-
sented,however,continuity in the structuresof accumulation-
indeeda tighteningof thesestructuresby assimilatingthem
throughstatecorporatism
tothemodeofdomination
established
in the state. The establishmentof revolutionary redistributive
regimes
initiatedanalternative
socialstructure
of accumulation
to that linked with the emergence
of the welfare-nationaliststate.
The decentralizationof power in the world systemconsistent
with the tenth propositionwas sufficientto precludethe
suppression
of this alternative
at its originsandthusto enable
the revolutionaryregimesto survive.But the competitivenature
of powerin theworldsystemdid constrain
thewayin which
redistributivedevelopmenttookplace.This way wasnot freely
chosenbut dictatedby the desireto achievethe mostrapid
increasein productiveforcessoasto enhancethe regimessur-
vival capacityin a conflictual world.
CHAPTER SEVEN
PAX Al\/IERICANA
World War H wasthenal parox-

ysmof alongtimeof troubles.Outof it emerged
anewhegemonic
era in which the United Statesassumedthe samekind of lead-
ershipthat Britain had exercisedduring the mid-nineteenthcen-
tury.Thetermsuperpower
entered
thepoliticalvocabularly
to
signify the distanceseparatingboth the United Statesand the
SovietUnion from other major statesin the system.No balance
of powerin the conventionalsensewaspossibleonlycondo-
minium or bipolarity. The institutional framework for condo-
minium was preparedin the designof the United Nations Se-
curity Council. Although the ction of a balance-of-power
world
was preservedin the designationof ve permanentmembers,
there was little doubt but that two [the United Statesand the
SovietUnion) were determiningand the otherthree (Britain,
France,and China) presentin acknowledgmentof their historic
status.The rule of unanimity of the permanentmembers,embod-
iedin therightof veto,signiedthehopefor condominium.
That
hopewasshortlived.Polarization
quicklybecame
thepostwar
pattern.TheUnitedStatestooktheinitiativeto constructanopen
worldpoliticaleconomy,
exclusiveoftheSovietsphere,in which
WesternEuropeand Japanand what cameto be known as the
ThirdWorldwereall to beincorporated.
Theredistributive
sys-
temsof theSovietUnionandChinaatfirstcontinued
a separate
existence,later to becomeinvolved in sometentativecontrolled
links with the U.S.-ledworld economy.
The presentchapteris concernedwith the structureand
mechanismsof this hegemonicworld order:the PaxAmericana.

In referenceto propositionnine enunciatedat the end of chapter
6, the new hegemonicorderwasbroughtaboutthrougha change
in power relations amongthe major states,reecting a decisive
shift in their relative economic-productivepowersa change
that gave the United Statesan opportunity for unquestioned
leadershipoutside the Soviet sphere.The putting into place of
the new order involved the transformation of state structures
the emergencein the countriesof more advancedcapitalist de-
velopmentof a neoliberalform of stateattunedto the hegemonic
order and in peripheraleconomiesof formsof stategearedto the
linking of theseperipheralzonesto the world economy.
It did not, however, bring into existence a new social
structureof accumulation.Basicallythe samestructureof accu-
mulation remained in place that had emergedout of the long
depressionof the late nineteenthcenturyat the beginningof the
eraof rival imperialisms.The new hegemonicorderenabledthis
structure of accumulation to work for a time with maximum
effectivenessasa globalsystem.The questionwhetherits poten-
tialities have been exhausted and whether the accumulation pro-
cessis entering a phaseof restructuringmust be linked to the
questionwhetheror not the PaxAmericanahascometo an end?
Here I am concerned with the anatomy and physiology of hege-
monywith the formsof stateand congurationsof socialforces
that have sustainedglobal hegemonyand with the processesof
internationalizing of production and internationalizing of the
state that have bound these forms of state and social forces into
a total system.In part 3 I turn to considerthe economic,political,
and socialforcesgeneratedwithin the PaxAmericanathat could
lead to its transformation.
GLOBAL HEGEMONY
Although therewasconsiderableactivity of planningfor postwar

political and economicorganizationamongthe allied powersin
the later phasesof World War II, what eventually came about
was not clearly envisagedduring this planning phase.The allies
of the United Stateswere concerned to avoid a U.S. relapse into
PAX AMERICANA 213
isolationism such as followed World War I and were disposed to

make concessions to encourage U.S. commitment to an active
leadershiprole. Both U.S. and allied plannerswere awarethat
the U.S. economythat had fueled the war effort could be kept
running at capacitywhen the war endedonly if the United States
wereableto continuea hugeexportsurplusfor a numberof years.
Such an export surplus would alsobe the meansof reequipping
the economies of war-devastatedcountries (and in the longer run,
which then preoccupiedfew people,of developingeconomically
backwardcountries].It wasby no meansclear,however,in what
sort of world order theseobjectivesof U.S. participation could
best be accomplished.
The experienceof the Depressionof the 1930sleft a legacy
of opposedpolicy orientationsin all the major capitalist coun-
tries, including the United States.On the one hand were those
who saw salvation in the return to an open liberal world economy
by breakingthrough the barriersand controlserectedduring the
Depressionyears.On the other hand where those who had ac-
quired experience with the planning techniques developed
through the Depressionand war; thesepeople had more con-
dencein consciousstatepolicy than in the invisible hand of the
market to achieve the social goals to which governments were
now obliged to be sensitive-aboveall the maintenanceof rea-
sonablyhigh levelsof employmentand socialsecurity.
In the United States,Wall Street and the State Department
representedthe former, the U.S. Treasury,with its New Deal
heritage,the latter. In Britain, the Labour Party and the trade
unions, with their commitment to full employment and the wel-
fare state,recognizedthat governmentmust be preparedto use
controls in pursuit of thesegoals.On the right, the Beaverbrook
press defended imperial preferencesas the bastion of British
world power.Thus elementsof both left and right in Britain saw
salvation in the preservationof national economicautonomy.
The City of London represented,like Wall Streetin the United
States,the internationalistoption. Lord Keynes,the chief British
negotiatorin the conclusion of the postwar international eco-
nomic settlement,thoughtboth setsof goalsmight bereconciled.
The ClearingUnion he proposedwould havepreservednational
autonomyin economicpolicy sothat governmentscould pursue
full employmentand welfare,and it would haverequiredsub-

stantial commitmentsby statesto internationalcooperationboth
in the creation of credit and in avoidance of measuresthat would
exportdeationarypressures.
Keynesaimsweresharedby the
U.S. Treasurynegotiators:they wanted a schemethat would be
internationally expansionistwhile at the sametime preservinga
directingrolefor the statein the economy.
But inuential forces
in Congress,as well as some in the executive,were wary of
substantial nancial commitments by the United States over
which the United States would not have full discretionary
control.
The
history
ofinternational
economic
institution
buildin
afterWorld WarII tracesthe victory of the liberal internationalists
over the proponentsof statecapitalism?The way in which the
InternationalMonetaryFundsmodusoperandiwasput in place
in March 1946gavethe Fund powerful leverageover economic
policyin decit countries.WhereKeyneshaddefended theprin-
cipleof unconditionalityin drawingrightson theFundsoasnot
to compromisea governmentsability to pursue expansionist
policiesinternally,loanswouldin factnowbemadeconditional
upon the adjustmentof nationaleconomicpoliciesto favora
returnto paymentsequilibrium,andthis would mostlikely re-
quire debtorsto abandonexpansionary measures
for full em-
ployment.Eventhoughthe Fund did not beginto operatefor
someyearsthereafterbecauseof the onsetof the Cold War and
the exceptionalmeasurestakenby the United Statesfor European
recovery,the future policy lines for the world economicsystem
were made clear at that time.
The principalinstrumentalitythroughwhich the United
Statesshapedthe postwar world economicorder was the Mar-
shall Plan. The conceptof multilateralism was embodiedin the
provisionthat the countriesreceivingMarshallfunds should
agreeamongthemselvesthrough the Organizationfor European
EconomicCooperationon the distribution of thesefunds. They
would also through this agencydevelop a practice of mutual
negotiationoverthe framingof nationaleconomicpolicies.Com-
mon policy conceptionsenvisagingmovementtoward a more
integratedmultilateralworld economyconsistent
with U.S.pol-
PAX AMERICANA 215
Europe progressivelytoward trade liberalization and exchange

convertibility, basic conditions for the coming into effect of the
openeconomyenvisagedin 1946.
There was a transition period, roughly from 1946 to 1958,
during which the major participant statesother than the United
Statesadjustedtheir own structuresandtheir nationaleconomies
to the requisities of the new world order. The Marshall Plan
providedtheincentiveto join theneweconomic
orderandal-
lowedtime, aswell asfunds,throughwhich the adjustmentcould
be made. Opposition from less competitiveprotectionoriented
industrieswas moderatedin a climate of economicgrowth; the
KoreanWar boom, for instance,facilitated restructuringin the
steel and coal industriesindustries that in other circumstances
mighthavebeensuccessful
in demanding
protectionist
policies.3
The MarshallPlan extendedbeyondinuencing statepol-
iciesrightinto theconscious
shapingof thebalanceamongsocial
forceswithin statesand the emergingconguration of historic
blocs.Tradeunions in Germanywerereconstructedafterthe war
under U.S. inuence with leadership favorable to the new polit-
icaleconomic orientation. In France and Italy, U.S. inuences
were instrumentalin splitting off minority groupsfrom the ma-
jority communist-sympathizingtrade-unionmovementsseces
sionistmovementsthat were readyto supportthe Marshall Plan
orientation.Theseminority trade unions were accordedaccess
to the governmentsof their respectivecountries,while the ma-
jority tradeunions,opposedto MarshallPlanpolicies,wereex-
cluded from consultation. U.S. business and labor-management
relations practiceswere exportedto Europe in a drive to raise
productivity. Informal U.S. initiatives supportedthe formation
of a Europeanmovementof inuential privateindividualsthat
throughvarious Europeanchannels,carriedforward the project
of Europeanunification basedon liberal economicpolicies and
support of the Atlantic alliance.This unofficial groupingand
its successor,jean Monnets Action Committeefor the United
Statesof Europebecamepotent channelsof inuence on na-
tional governmentsin WesternEurope.At the political level,the
strongcommunistpartiesin both Franceand Italy wereexcluded
from the internal coalition-buildingprocess.The leftward thrust
of Europeanand British politics, pronouncedin the immediate
postwaryears,wasstemmed.TheMarshallPlanwasableto bring
about a center-right orientation in the domestic politics of West-
ernEuropeduring the 1950sand 1960sthat providedthe political
basis for the building of neoliberal states.
By 1958,the WesternEuropeangovernments,their econ-
omiesfully recovered,were able to maketheir currenciesfreely
convertible. Six of these countries joined in a common market
and seven others in a free-trade association. These steps signied
the readiness of the Western European countries to participate
without basic reservations in the U.S.-sponsoredworld economic
order. In 1960, the coordinating agency for economic policies of
the Western European countriesrenamed as the Organization
for Economic Cooperation and Development [OECD)-was ex-
pandedto include the United States,Canada,and Iapan.All the
major capitalist countriestherebysignied their commitmentto
the new world order.
U.S. initiative, based on that countrys economic and mil-
itary preponderance, thus led the Western European countries
and Japan toward a world economy with free access to raw
materials; free movement of goods, capital, and technology; and
the elimination of discrimination in economic relations. In such
a world economicspace,capital accumulationcould transcend
national limitations. Only the Soviet sphere remained outside
this design.
The new world economy grew very largely as the conse-
quenceof the U.S. hegemonicrole and the global expansionof
U.S.-based corporations. U.S. hegemonic actions included the
Marshall Plan and extensive military expenditures abroad (no-
tably in Koreaand Indochina,the Indian Ocean,and the Persian
Gulf). U.S. corporations moved capital on a large scale, particu-
larly into Europe.Thesetwo factors createda large and accu-
mulating U.S. payments decit.
Initially, the ood of dollars stimulatedeconomicgrowth
in Europe and elsewhere. From the 1960s, it created inationary
pressures.From the mid-1970s, the dollar ow continued as the
world economy was stalled in prolonged recession. Burgeoning
unemployment coincided with continuing inflation as Keynes
liquidity trap reemerged.5Only the U.S. government might
have been able to control the decit, but it was a convenience to
PAX AMERICANA 217
U.S. world policy that foreign rms and governments were ready
to accept and hold dollars. Seigneurageof the worlds money
gavethe U.S. governmentunlimited credit abroadto pay for its
foreign expenditures without having to compensate by liquidat-
ing U.S. assets and increasing taxes on U.S. corporations and
citizens.
The U.S.public debtbecamea world debtasan increasing
proportion of it washeld by foreigners.The moredollarsforeign-
ers held, the more they becamehostageto U.S. hegemonic policy.
Some countries had specic interests implicated in the dollar
outow. West Germany agreedto accept more and more dollars
in order to maintain a U.S. military presence in Europe. Arab
countries accumulated big dollar balancesby increasing the price
of oil, which was denominated exclusively in dollars. U.S. policy
makers were able to ignore the admonitions of some foreign
governments that they should control the decit and adopted an
attitude of benign neglect. The international nancial institu-
tions-the International Monetary Fund and the World Bank-
behaved as accessoriesto U.S. policy.
The new hegemonic order was held in place by a cong-
uration of different forms of state whose common feature was the
role each form played in adjusting national economic policies to
the dynamics of the world economy. The central premise of
hegemonic order was that the world economy is a positive-sum
game in which some businesses and some national economies
may benet more than the others but in which all have the
opportunity to gain. The ideology derived from this premise
representsthe highest interest of all countries as being to faciliate
the expansion of the world economy and to avoid restrictive
national measures of economic policy that would be in contra-
diction in the long run with world-level expansion. The inter-
national institutions of this world orderprincipal among them
the International Monetary Fundwere able to use both incen-
tives and sanctions to secure compliance on the part of the more
reluctant governments and disabled national economies.
Two principal forms of state constituted the most active
participants in the world economy that emergedfollowing World
War II. The neoliberal form of state managedthose national econ-
omies with the most highly developed productive forcesthe
countries that formed the OECD. A distinctive form of state be-

came characteristic of late-developing peripheral economies that
we can call the neomercantilist developmentalist form of state.
Historically the neoliberalstatewas a transformationof the wel-
fare-nationalist state in which an internal bourgeois hegemony
was preserved.The functions of the statebecameadaptedto the
different world contextthe transition from a rival-imperialisms
to a hegemonicworld order.The neomercantilistdevelopmental-
ist statefollowed the prototype of prewar Italian fascism.It ini-
tiated capitalist developmentas a passiverevolution within an
authoritarian framework under state leadership for lack of any
established bourgeois hegemony.
Beyondthesetwo forms of statethat played a major role
in the new world economic order, two other forms of state estab-
lished a more tenuous link with it. They are of quite different
kinds.
One categorywould more accuratelybe describedasvar-
ious forms of protostate,i.e., political structuresthat try more or
lesssuccessfullyto monopolizethe capacityfor exercisingpolit-
ical force within the national territory but have not acquired
either a rm social basis of consent or the administrative capacity
to formulateand apply effectiveeconomicpolicies.Someof these
protostatesare conservativestructurescontinuousfrom former
colonial administrations or from monarchic or oligarchic regimes
that had formally independentinternationalstatus.Somearebest
describedas lumpenprotostatesthat manifest bizarre forms of
arbitrary rule resting on the violence of armed thugs over an
inarticulate majority of the population.7Othersare protorevolu-
tionary statesthat havemore or lessradical goalsof socialtrans-
formation but that are so weak relative to the outside world that
their societies and economies are penetrated by external coun-
terrevolutionary forces.
The world economy does not depend to any signicant
extent on the protostatesalthough some contain mineral-ex-
porting enclaves that supply world-economy industries. Al-
though the vast majority of their populations are engaged in
agriculture, these countries often do not grow enoughfood to
feedtheir people.They import food and equipmentfrom a world
economyto which they are marginal,and they borrow from its
PAX AMERICANA 2 19
public and private lending institutions. The primary concernof

the world-economymanagerswith referenceto theseprotostates
is to prevent the situation within these countries from deterio-
rating to the point where it might constitutea political threat to
the world order on which the world economy is based.This
objective is pursued by a combination of foreign loan consortia
that establish a collective world-economymanagementof the
national nances of some protostates;IMFimposed stabilization
programs that direct economic policies; United Nations and bi-
lateral administrativeaid, advice,and support;World Bank pro-
grams to promote agricultural self-help and employment on la-
borintensiVeprojects;and bilateral military counterinsurgency
aid.9
The other category of states consists of the redistributive
systems that have established links to the world capitalist econ-
omy without thereby becoming an integral part of that world
economy. During the 1960s, detente brought with it an increase
in economicexchangesbetweenthe Sovietsphereand the capi-
talist economies of the OECD. From the late 1970s, the new
Chinese leadership manifested a desire for increased economic
links. The problem for the redistributive system is to be able to
draw specically desired benefits from relations with the world
economy without losing control of the direction of its own de-
velopment. By contrast with the functional role of the neoliberal
and neomercantilist states in relation to the world economy,
redistributive states maintain priority for their own autono-
mously determined developmental goals and seek a modus viv-
endi with the external world economy. They do not subordinate
their own national economies to a development dynamic deter-
mined by the world market.
THE NEOLIBERAL STATE
The welfare-nationaliststate was built to protect the national

economyfrom outsideinuences andto enhancenationalpower
in relation to rivals. The neoliberalstatesoughtits securityas a
memberof a stablealliancesystemand its economicgrowth asa
participant in an open world economy. Its task was to adjust the
ZZO STATES, WORLD ORDERS, AND PRODUCTION
nationaleconomyto the growthof the world economy,to faciliate

adaptationrather than to protect existing positions. The term
neoliberal is more appropriate than the term liberal, evocative of
the nineteenth-century situation, becausethe new form of state
had to pursue its coursein conditions createdduring the inter-
vening era.It had to takeaccountof a morecomplexsituationin
three main respects.
First,the stateitself hadbecomean economicactorplaying
a direct role in the accumulation process by undertaking tasks
not protable for private industry and by comingto the nancial
aid of private industries in various ways (subsidies, price sup-
ports, tax abatement,etc.). Second,the state had taken on a
political responsibility to cushion vulnerable social groups when
the market threatened to penalize themat least those groups
that had some political clout (labor, farmers, small business, the
unemployed]. Third, the structure of the economy was not the
market of anonymous equals pictured in nineteenth-century ide-
ology but a segmentedstructure in which concentrations of cap-
ital in an oligopolistic sector coexisted with a competitive sector
of smaller scalebusinessesreminiscent of the nineteenth-century
doctrine and with the state sector. The oligopolistic sector was
open to the world market, and the other two sectors were con-
ceived as playing supporting roles. The world market had become
a realm of competition among unequal giants capable of manip-
ulating demand and of mobilizing Varying degreesof economic
power and political inuence. The neoliberal state mediated be-
tween an oligopolistic world market that dictated the policy
priorities and domestic groups that had varying claims on its
political allegiance. The mediating role justied transitional ex-
ceptions to the pure doctrines of liberalism. Such exceptions take
the form of adjustment assistance or temporary import restric-
tions to cushion the negative impact of the world market on
particular sectors while encouraging a restructuring of the na-
tional economy in the direction dictated by world market
tendencies.
The neoliberal state inherited from the welfare-nationalist
state the institutions of corporatist government-business-labor
coordination and the tools of Keynesian macroeconomic demand
management. In appearance there was virtually nothing to dis-
PAX AMERICANA 221
tinguish the neoliberal from the welfare nationalist form. The

differenceemergedin the goalspursued,in the usesto which the
structure was put.
Fiscal policy, becauseof the largeproportion of national
income that passedthrough the statebudget,was the principal
regulatorof the economyand stimulus to growth. Governments
used demand managementto pursue expansionarypolicies in
time of recession. With incomes widely distributed, demand
could be kept high and investmentencouraged.Moderateina-
tion was a modestprice to pay. Differentialratesof ination and
their effects on the balance of payments did, however, put a strain
on the exchange-rate
stability, which was a centralfeatureof the
world-economy system establishedat Bretton Woods. Conse-
quently,governments
of the majorcountrieswererecurrently
confronted with a conflict between international commitments
to maintain exchangestability and domesticpolitical commit-
mentsto avoid the unemploymentthat would result from slower
growth.The outcomefor the neoliberalstatewaswhatcameto
be called stop-go economicmanagementalternatingphases
of expansionaryand restrictive scal and monetary measures
gearedto the evolutionof thebalanceof payments,
i.e.,dictated
by the rhythm of the world economy.The United States,because
of its role as coiner of the worlds money and its imperial position
abroad,for long managedto avoid the constraintof stop-go.This
constraint caught up with the United Statesevenutally in the
long downward slide of the dollar during the administrationof
PresidentCarter.Britain experiencedthe constraintmuch earlier.
West Germanyand Japanminimized the constraintthrough ex-
port-orientedpolicies with undervaluedcurrenciesand effective
restrainton rising wagecosts.
Supercially the causesof ination lie in the relationship
of money to goods.Within particular societies,however, this
relationshiphasto be explainedat a deeperlevel in termsof the
political decisionsdealing with the issuesof capital accumula-
tion, investment, unemployment,and growth. These political
decisions, in turn, are inuenced by the level and nature of social
conict prevailing. Britain and Italy have had higher levels of
classpolarization and conict than WestGermanyand Switzer-
land, and correspondinglyhigher levels of ination. The neo-
ZZZ STATES, WORLD ORDERS, AND PRODUCTION
liberal state has tried to moderate the inationary bias inherent

in its own structure through the use of its corporatist framework
for policy making.
VDemand-pull ination could be regulated directly by the
state through scal and monetary policy. But it becameapparent
that the demand-pull was only part of the problem. Cost-push
ination was another matter. It arose from the ability of big cor-
porations to pass on to the general public through administrative
pricing the costs of wage settlements reached with their trade
unions. Wage and price controls would be one conceivable re-
sponse to this kind of ination but a response inconsistent with
the corporative theory of policy making. Incomes policies became
the preferred methoda consensually reached agreementon re-
straint by unions and corporations with regard to wages and
prices. Incomes policies became the principal objective of social
contract or general consensus among the most powerful eco-
nomic interests and government within the neoliberal state.
Incomes policy had meaning within the framework of the
welfare-nationalist state as one element in a comprehensive na-
tional economic planning. In this context, agreed restraint in
respect of incomes would be a counterpart to an agreed policy
regarding accumulation and investment geared to maximizing
output, welfare, and employment. Incomes policy in the context
of the neoliberal state had a quite different signicance. Here
incomes policies were gearedto the balance of payments, them-
selves the consequencesof a world accumulation process over
which national policies had little or no control. With capital free
to ow within a world economy, there could be no guarantee
that incomes restraint in one country would be followed by
investment in its national economy.
During phases of expansion, when labor markets were
tight and unions might expect to gain higher wages, workers
would be subject to wage restraint. During phases of recession,
unions could gain little in any case.To workers it seemedthere
was no evident predictable quid pro quo for wage restraint. Fur-
thermore, the general rule advocated for incomes policies was
that wage increases should keep in line with increases in pro-
ductivity. That in effect meant the existing distribution of income
between labor and capital would be maintained. So long as na-
PAX AMERICANA 223
tional economieswere growing, this freezingof income shares

between labor and capital might be acceptable to unions. It
strengthenedcorporatisttendenciesin union leadershipand un-
dermined union combativity and classconsciousness.As Charles
Maier wrote: The concept of growth as a surrogate for redistri-
bution appears,in retrospect,asthe greatconservativeideaof the
last
generation.13
Moderate
levels
ofination
were
the
consequence
ofcor-
poratisttripartiteeconomicmanagement. Suchination wasthe
price paid by the neoliberalstatefor the moderatingof social
conict among the most powerfully organizedeconomic and
social forces. Moderate ination had a redistributory effect fa-
voring both corporationsand establishedlabor though disadvan-
taging unorganizedgroups excludedfrom the corporatistcom-
pact.Higherlevelsof ination had,however,a contraryeffect.
At a certain threshold the stimulus to growth turned into a dis-
incentive to invest and a consequential downturn in growth. A
series of factors could combine to reversethe growth trend: ina-
tion led to trade decit and pressure on currency exchangerates;
monetaryrestrictions,i.e.,higherinterestrates,intendedto com-
bat both ination and exchange depreciation, inhibited invest-
ment while raising the cost to capital of debt service;unions
would pressharder to maintain the inationary incomesexpec-
tations of established workers, narrowing capitals prot margins
and creatingfurther disincentivesfor investment.This negative
spiral did not materializeuntil the mid 1970s.The neoliberal
stateworked well enoughduring the long postwarphaseof eco
nomic growth.It provedunableto copeeffectivelywhen inatior
combinedwith surplus capacityand unemployment.
The world economywasthe externalconstraintupon the
neoliberal state. Whereas the welfare-nationalist state had sought
to createits own protected autonomousspherewithin which
national goalscould be pursued,the neoliberalstateourished
or languished with the world economy.The major capitalist
states,foremostamongthem the United States,could exertsome
inuence over the world economy. They had differing concep-
tions of their roles in this respect. The United Statesand Britain
generallyespousedthe pure conceptof neoliberalism:primacy
pendence with a minimum of direct state involvement in indus-

trial decisions and a restricting of state action to the use of macro-
economic instruments of scal and monetary policy. In Japan
and France,the stateplayed a more active role closely coordi-
nated with big national capital in investmentand trade policy.
West Germany and some of the smaller European states mani-
fested something of a compromise between these two variants:
commitment to liberal competition policies in the world-econ-
omy spherecombinedwith domesticwelfareprotection.
The Bretton-Woods institutional structure for the world
economy began to work according to its basic constitution only
in the late 1950s. European and Japaneserecovery were condi-
tions for its coming into effect. By the early 1970s its rules con-
cerning gold parity and xed exchangerates ceasedto be operable
and were abandoned, though the institutions continued as a
framework for applying the residue of the system and for explor-
ing the possibilities for a reconstructed monetary order. The abil-
ity of the United States to dominate world-economy arrange-
ments had been weakened with the revival of Europe and Japan.
Henceforth, a series of issues beset the economic relations of the
major capitalist powers: exchange-ratepolicy, interest-rate pol-
icy, the surveillance of international indebtedness, accessto mar-
kets, and protection of market shares. There seemed to be no
longer any effective overall means of regulating the world econ-
omy. Though neomercantilist tendencies appeared during the
1970s and 19803, these took the form of state involvement in a
struggle for world-market shares,not the carving out of separate
economic spheres. Countries could not secedefrom a system to
which they were bound in a web of reserve holdings, foreign
indebtedness, foreign investments, trade outlets, and political
and military commitments. The neoliberal state had become trib-
utary to an uncontrolled world economy.
From the mid-1970s the world economy ceasedto be an
engine of growth. For the neoliberal state, a principal conse-
quence of this slump was a growing scal crisis. The gap between
state expenditures, including service on enlarged public debts,
and state incomes became an acute problem with the prolonged
economic downturn. Statutory-entitlement payments for social
security rose and state revenues declined as a result of the de-
PAX AMERICANA 225
pressedeconomy.The countercyclicalremedyof decit nanc-

ing seemedlikely only to accelerateboth ination and stagnation
by driving up interest ratesthrough increasedgovernmentbor-
rowing while deterring new investments. The limits of conven-
tional macroeconomic techniques of cyclical adjustment seemed
to have been reached.
The limits of tripartite corporatismwere also tested.The
neoliberal state endeavored to maintain a coalition of powerful
economic and social forcesoligopolistic business and those
elements of the labor movement disposed to work with govern-
ment and business in a consensual economic policy. The basis
for agreementin such coalitions included support for welfare
programs,an understanding
attitudeby union leaderstoward
balanceof paymentsconsiderationsand the needto keepexport
industries internationally competitive.Union and businessbur-
eaucracies had a mutual interest in the institutionalization of
conict in industrial relations procedures.Dramatizationof is-
suesdealt with through these proceduresenabledbusinessto
passon higherlabor coststo the public in the form of price
increases and enabled union leaders to reassure rank-and-le
members that their interests were being defended. Governments
could offer union leaders the symbolic benets of accessto the
highest level of state and the appearanceof participation in at
leastcertainspheresof public policy. They alsoin North Amer-
ica and more reluctantly in Japanopened the state sector tn
unionization, somethingthat had alreadyhappenedin most 0
the Europeancountries. Businessgainedthe aura of politica}
and union backing for its own expansion.
The mutual benets available through the tripartite coa-
lition were most apparent in times of economic expansion. Eco-
nomic stagnationbroughtout the underlyingconflictsof interest.
The testing ground lay in attemptsto implement incomespoli-
ciesthe ultimate form of tripartism and the occasionof its
breakdown.
The Beveridgepackageof welfare statepolicies prepared
for Britain during World War II included wagerestraintasa quid
pro quo for full employment. The samereasoninggainedac-
ceptancein tradeunion circlesin othercountries,moreespecially
when social-democraticpartieswere in governmentand seemed
more likely to deliver on wage restraints counterpart. In practice,

however, investment policies were largely inoperative, price con-
trols proved ineffective,and improvementsin the employment
level appearedto dependon externaleventsoverwhich govern-
ments had little or no control. In such circumstances, incomes
policies becamea trap for the labor leaderswho participatedin
them.The symbolicaccoladetheseleadersreceivedfrom govern-
ment for their public-spirited deferenceto the national interest
had to be balanced against loss of support among union members
when real wages declined. Union leaderswho refused to be
involved in incomes policiesthe French CGT and the Italian
CGIL,for examplewere lesscompromisedvis-a-vistheir own
rank and file. Participatingunion leaderswerethreatenedwhen
rank-and-le movements challenged existing officeholders and
effectivebargainingpower shifted toward the shopfloor?
The world recession that began in 1974 beleagueredand
ultimately routed tripartite incomespolicies in neoliberalstates.
In Britain, the Wilson and Callaghan Labour governments nego-
tiated a social contract with the unions and employers in 1975.
It rst resulted in a reduction in real wages and then dissolved
in industrial confusion, which abetted the election of the
Thatchergovernmentin May 1976.In West Germany,the less
formalized practice of concerted action between business and
labor leaders who accepted the rationale of defending industrys
export position, which had beendifcult to maintain following
1974,cameapartin the strikewaveof 1978-1979. In the United
States,President Nixon introduced a negotiated and mandatory
incomes policy accompanied by price controls during 1973 as
part of a packageof measuresaddressedto the international
position of the U.S. economy.Subsequently,laborsreluctance
to participate made incomes policies politically unlikely and
labors relative weakness made them unnecessary to government
and business.
In France and Italy, where labor movements had been split
and weakened in the postwar period as a result of Marshall-Plan
activities," social protest concentrating in the trade unions re-
emerged during 1968-69. Governments in those countries, con-
fronting the economic crisis of the 1970s,had to deal with
strengthened labor movements. In France, an incomes policy was
PAX AMERICANA 227
applied by direct governmentcontrols in 1976.23In Italy, the

compromesso storico in which the Communist Party (PCI) for a
short time gave support to a center-left government, may be con-
sidered a functional equivalent for an incomes policy, since Com-
munist participation provided a measure of restraint in union
demands. The unpopularity of the compromesso storico among
rank-and-le union and party members and its connotation of
sharing responsibility without substantial compensating inu-
ence ensured its end and the return of PCI and unions to oppo-
sition. Even in Sweden, where national-level bargaining has
taken account of public interest considerations, this practice was
severelyshakenby the strike waveof 1980.24
All of theseevents
conrm that the limits of tripartite corporatism within the neo-
liberal state had been tested and reached during the recession
period following 1974.Tripartism wastendingto revertto bipar-
tite confrontation.
Various factors have played a role in the incentive to
negotiatetripartite incomespoliciesandthe relativesuccesssuch
policies have had. Where trade union movementshave been
strong and broadly based in the labor force, there has been a
strong incentive on the part of governmentsand capital to involve
them in incomes policies. High dependence on exportsand
particularly the perceived need to maintain competitiveness in
manufactured exports on world marketsis another powerful
incentive. Conversely, a high level of class conflict prevailing in
a society is an obstactle to the achievement of incomes policies.
A further factor that, in at least some cases, has facilitated the
conclusion of tripartite arrangementsis presence in the govern-
ment of social-democratic or labor parties with links to the trade
unions. Incomes policies were for a time most successful in
countries like the Netherlands and the Scandinavian countries,
where labor has been strongly organized and recognizesthe coun-
trys high dependence on maintaining a competitive edge in
export markets. Class conflict has been muted in these countries
by the practice of corporative public policy making. In the Scan-
dinavian case, the long-term presence of social-democratic par-
ties in government has certainly provided a propitious climate
for tripartism, although in the Netherlandsthis has not been a
signicant factor. In Britain, although the strength of the trade
unions has constituted an incentive to government to attempt

incomes policies, class conict and a disposition of labor to
discount the imperative nature of maintaining export competi-
tiveness have made incomes policies harder to sustain. In the
United States,trade unions have been relatively weaker and less
imbued with class consciousness;they have been ready at times
to take a pragmatic if skeptical approach to wage and price guide-
lines. In France and Italy, trade union movements have been
either too weak to be an interlocuteur Valable [the case of the
minority unions) or too opposed on class grounds to want to
participate {the caseof the majority unions].
Apart from formal tripartite incomes policies, a practice
of informal corporatism has also developed. The general model
of this type consists of a close interrelationship between central
agenciesof government and the management of big corporations
at one level and a cooperative pattern of relations between cor-
porate management and the core established workforce of these
corporations at a second level. Management is the hinge between
core labor and government, and government is the hinge between
corporate management and the world economy. This pattern has
been characteristic of Japaneselabor-management-government
relations. It has also emerged in French practice, and some as-
pects of the model have been evident in West Germany and the
United States as well.
The two-tier structure of informal corporatism corre-
sponds to the internationalization of the neoliberal statea pro-
cessto be discussedbelow. The primary function of the neoliberal
stateadjustment of the national economy to worldeconomy
trendsinvolved a restructuring of the hierarchy of agencies
within government. The welfare-nationalist state brought into
prominence agencies concerned with national economic plan-
ning and associatedcorporative arrangements:planning bureaus,
ministries of industries and labor, all with links into the client
groups of the national economy. The neoliberal state gives prior-
ity to those central agencies of government that act as links be-
tween the world economy and the national economy: nance
ministries and treasuries and foreign trade and investment agen-
cies, functioning in close coordination with the ofces of presi-
dents and prime ministers. The earlier structures of national
PAX AMERICANA 229
corporatism are not displaced; they are just subordinated, becom-

ing instruments of policies transmitted through the world-econ-
omy-linked central agencies.
The Frenchcase,thoughuntypical in its relative clarity of
form, servesto suggestan ideal type of the two-tier structureof
informal and formal corporatism.Two patterns of linkage be-
tween the stateand industry becamesuperimposed.Onepattern
was the formal structureof institutionalized corporatism,which
connectsthe ministries of industry and laborwith businesstrade
associationsand tradeunions respectively.The principal task of
this structureis to regulatethe different sectorsof the economy
according to general norms. In order to do this, these structures
alsodeterminewhat the relevantfactsareon which regulationis
to be based; e.g., state agencies and their clients collaborate in
the preparation of sectoral statistics.
The second pattern of linkage consists of informal contacts
between the upper levels of public administration and the man-
agementof big enterprises. In France, such contacts are facilitated
by the existenceof informal networks amonggraduatesof the
gransdesécoleswho occupy high-level positions in industry, as
well as in the state administration. (In Japana similar function is
performedby the cohortsof prestige-universitygraduates.)This
level of interaction is propitious for active intervention by gov-
ernment in the economy, i.e., specic interventions rather than
the formulation of generalrules. Specic intervention empha-
sizes the discretionary rather than the normative role of state
ofcials; consequently,routineseekingbureaucratsof the Weber-
ian ideal type ght shy of it, and this kind of activity tendsto be
performed by the more political officials attached to the cabi-
nets of ministers. Thus a exible managerial coordination devel-
ops betweenkey agenciesof the stateand the biggerenterprises
in both stateand private sectors,i.e., betweengovernmentand
oligopolistic capital.
The first patternof institutionalizedcorporatismprevailed
in France during the years following World War II. The recon-
struction of French industry took place under the guidance of the
Commissariat général du Plan. This may be regarded as a con-
tinuation of the thrust of welfare-nationaliststateplanning. As
the Frencheconomybecameincreasinglyopento the world econ-
Z30 STATES, WORLD ORDERS,AND PRODUCTION
omy,i.e., with the transformation

from welfare-nationalist
to a
neoliberal form of state,the secondpattern assumedpredomi-
nance. The first pattern was not rescinded,but it functioned
mainlyfor thesmallerenterprises
andto manifestpreferredstatus
for the minority tradeunions (excludingthemajorityCommunist-
sympathizingCGT)that participatedin it. Differentpartsof the
statemachinerywereinvolvedin thetwo patterns. National-level
planninglostmostof its initial meaningwhenthenationalecon-
omy wasopenedformallyto partnersin the EECand whenat
the same time U.S.-based multinational corporations expanded
their investments within the EEC. Government inuence
thenceforthcould be exercisedthroughscal and monetarypol-
icies and by stateinuence in nancial networks,togetherwith
discreet interventions in the ad hoc decisions of big enterprises.
Theseenterprisesin effect set the pattern for sectoraldevelop-
ment; a few big enterprisescould determinethe direction for a
whole sector. The ministry of nance and the ofces of the
primeministerandpresidentof therepublicwerein theposition
to undertake this kind of intervention and direction of the
economy.
In this two-tier corporativestructure,trade-union inu-
encewas nonexistentin the upper and determininglevel. Estab-
lished workers in the big enterprisesof the oligopolistic sector
are encompassedindirectly through the developmentof enter-
prisecorporatism.Tradeunionshavedirectaccess
only to the
lower and lessimportant level. This level regulatesin particular
the medium and smallerscaleenterprises.It doesso in the wake
of the keydecisionstakenat thehigherlevel,whicharedictated
by world-economy opportunities.
THE NEOMERCANTILIST
DEVELOPMENTALIST STATE
In a number of countries of the Third World, forms of state power

exist,evenrepressive
coercivepower,that arenot sustainedin
anycoherentwayby internalsocialforcesandareof onlylimited
effectivenessin controlling externaleconomicand political in-
uence. I have called these forms protostates. The protostate can
PAX AMERICANA 231
extracttribute but lacksthe capabilityor incentiveto reshape

society,andsocietyis neitherstrongenoughnorcoherentenough
eitherto manageitself or to fashiona statein its own image.In
economic terms, the national market does not contain sufcient
effectivedemandto becomea dynamic force,and the existence
of anexcess supplyof laborgivesnoincentiveto stimulategreater
efficiencyon the part of investors.In politicalterms,the power
holdersin thestateapparatus cangainenoughcreditandenough
armsfrom externalsponsors not to haveto mobilizesocietyso
thatit will produceasurplusunderstateauspices. Theprotostate
is symptomatic of an impassein the relationship of state to
society.
A developmentof statepowermay overcomethat impasse
by allowingthe stateto takethe initiativeto inducechangein
economyand society.This initiative may be more or less suc-
cessful.The attemptmay be aborted,or its successes,
its conse-
quences, may not correspond to the declared intentions of the
statemanagers.The form of statethat thus seizesthe initiative is,
in the rst place, neomercantilist;it seeksto gain control over
the instrumentsnecessaryto shapethe national economy.In the
secondplace,it is developmentalistbecauseit wantsto usethese
instrumentsto achievecontinuousgrowth and structuralchange.
(Growth is not, of course,identical to development.Growth is
reducibleto a statisticalconcept,namely,continuing increasein
GNP.Developmentis a morecomplex,normative,and telelogical
concept,implying changesin the structuresof production and
the distribution of the product. The initiative of the stateenvis-
agesboth growth and development.)
Neomercantilistaims include control by the state appa-
ratus over accessby foreignersto the national economyand the
termson which that accessmay be granted,e.g.,for extractionof
minerals,productionof agriculturalexportcrops,manufacturing
eitherfor thelocalmarketorfor export.Theinitiative-taking
state
extractsrents when it authorizesforeignersto undertakesuch
operations,and in addition it undertakescertain forms of pro-
duction directly throughan expandednationalizedsector.These
becomemoreimportantsourcesof staterevenuethan general
taxation,andthestatecomes
to controla verylargepartof the
surplus product and of total domestic resources available for
232 STATES,
WORLD
ORDERS,
ANDPRODUCTION
investment. Initsdisposition
ofthese
resources,
thestate
isnot
activatedsolely
bythedynamic ofcapitalist
accumulation;i.e.,
it isnotobliged
byitsownrulestomakeaprot.Itsinvestments
aredetermined bypolitical,
aswellasbyprotability criteria.
However,
thestate
isnotredistributionist
inthesense
inwhich
central
planning
isaredistributionist
system
operating
through
thestate.
Neomercantilist
developmentalism
opens
awidesphere
ofpolitical
appropriation
anddisposition
ofresources
within
an
economic
system
thatremains
linked
withcapitalist
accumula-
tionattheworldlevel,
i.e.,through
remission
ofprotsbyforeign
directinvestment
andbyservicing
offoreign
debt.
Development
hasthusbecome
conditional
uponexternal
capital
andtechnology.
Theprincipal
determinants
ofthedirec-
tionofdevelopment,
i.e.,decisions
about
whatistobeproduced
andforwhich
markets,
aretheinvestment
criteria
ofinternational
capital.
Thestates
roleistomaximize
itsshare
oftheprots
to
beearned
bythenations
participating
in world-economy
in-
vestmentandmarketing.
Thestatemayalsoexert somesecondary
inuence ondevelopment
objectives.
Thisinfluence
is,however,
nulliedatthepointwhere
it runsupagainst international
cap-
itals criteria of protability.
Theneomercantilist
developmentalist
stateseeks
to in-
creaseits bargaining
power vis-a-vis
foreign
capital
without
breakingwithforeign
economic dependency.
Thisformofstate
istheprincipal
agencyfortransforming
classic
dependencyinto
dependent development.Thestate
achieves
thischieythrough
acombination ofstricter
controlover
accessbyforeigncapital,
increases
in therentsextracted
fromresource
exports,
support
fornational
capital,
expansion
ofthestate
sector,
andincreased
foreign
borrowing
forinvestment
according
tostate-determine
plans.
The state
sector
plays
anincreasingly
important
role
along-
sidenational
private
capital
andforeigncapital.
Theforeign
com-
ponentshifts
awayfromdirectinvestment
bymultinational
cor-
porations
towardanincreasingproportion
ofjointventures
and
especially
ofstate-guaranteed
loansfrom
multinational
banks.
Theneomercantilist
stateposes
problems
for foreigninvestors
because
it ismoreinterventionist,
butit alsooffers
advantages.
Thesocial
peace
andinternal
political
order
maintained
bystrict
statecontroloverlaborrelations
andpoliceandparapolice
PAXAMERICANA 233
repression
protect
foreign
investments
andsafeguard
theservic-
ing of debt.
The statethat seizesthe initiativein the state-society
im-
passewilltrytoincorporate
some elements
ofsociety
withinits
sphere,
underitsdirectsponsorship
andcontrol.
Theseefforts
usually
encompass theindustrial
workersandsomepartsofthe
ruralpopulation.
Theattempt
toincorporate
industrial
workers
ofteninvolvesdomesticating
or replacinganyformsof labor
organization
notcontrolled
bythestate.
Incorporation
oftherural
population
usually
implies
setting
upnewstate-sponsored
co-
operative
organizations.
Corporatist
initiatives
ofthiskindare
oftenundertaken
in atimeof socialcrisiseitherasapreemptive
response
bythestatetothethreat
thatautonomous
class-based
organizations
mightgaintheallegiance
ofthese
social
groups
or
asameans
ofneutralizing
suchorganizations
wheretheyalready
exist.State-sponsoredorganizations arealsoa means of giving
thedevelopmentalist program a basisof popular support.
Cor
poratism canresulteitherfromtherulers desiretocreate
asecure
base ofsupportforstateinitiatives
orfromfearthatindependent
initiatives
arising
in civilsocietywill thwartstateaims.
Thefirst
leads toadegree ofmobilizationatstate initiative;
thesecond, to
a degree
of demobilization
understatesupervision.
In both
cases,
themobilization
ofsociety
ispartialandcontrolled.
Socialconditionscharacteristic
of Third Worldcountries
arein some
respects
propitious
forthispattern
ofstate-dominated
organization.
Dependentandinstrumental
attitudes
andbehavior
patterns
tendto prevail
among newlyurbanizedpopulations.
Autonomy,whether
forindividuals
ororganizations,
usually
re-
quires
adegree
ofadaptation
totheurban-industrial
milieuand
anaccumulation
of resources
sufficient
to giveself-condence.
Bothconditions
areusuallymissingin ThirdWorldurbanset-
tings.Reforms
designed
to beneturbanmarginals
comemore
frequently
fromincorporative
initiatives
ofthestate
thanfrom
thepressure
ofmass
revolt.
Thistends toconrmthedependent
pattern
ofbehavior.
Mobilizing
experiences
in different
coun-
triesdo,however,
leavelegacies
of autonomous
organizations,
e.g.,thePeronist
tradeunionsin Argentina,
thetin miners
or-
ganization
inBolivia,
theAPRAlinked
unions
inPeru.
Residues
of autonomy
maythuspersist
in uneasy
coexistence
withthe
incorporatingdrives of the neomercantilistdevelopmentalist

state.
This form of state creates statecorporatist institutions as
its characteristic mode of social relations of production. The
organization
of industrialproductionin theperipheralformation
is itself conduciveto this mode.Typically, there is a dualism of
largestate-or foreign-owned
undertakings
andsmallerlocalpri-
vateenterprises.The big undertakingsdependenton exportmar-
kets and with substantialcapital investmenthave an interestin
continuousproductionthatmakesthemreadyto giverm guar-
anteesof employmentandto providea certaintrainingandup-
gradingfor their employees.Theirrelativelyhigh nonlaborpro-
duction costs give the employeran incentive to stabilize
employment, evenfor somesemiskilledworkers,soasnotto risk
disruptionof production.In theIapanese model,suchstabiliza-
tion wasachievedthroughenterprisecorporatism,and this tend-
encywasalsoto befoundin someof theenclaveenterprises set
up by foreign-based
multinationalcorporations
beforethe emer-
genceof neomercantilist
states.
Neomercantilist
stateshave,how-
ever, combatedand generallyreplacedemployer-dependentin-
corporationof workersby state-dependent incorporation.This
tendencywas further assistedby the internationaldiffusion
throughthe ILO of the practiceof legalizinglaborrelations.Al-
thoughthe ILO favoredautonomous tradeunionsbasedon the
experienceof advanced capitalistcountries,
this ideadid notfare
well in late-industrializingcountrieswhere neither social con-
ditions nor the will of the state gave it much support. It was easy
for the stateto give newly draftedlabor codesa statecorporatist
form. Consequently,wherestatesin late-industrializingcountries
succeeded in takingtheinitiative,theirownwills conspiredwith
boththe organization of productionandtheinternationalmilieu
of ideasto producestatecorporatism.
The origins of the neomercantilistdevelopmentaliststate
and the patternof conict throughwhich this form of state
evolvedcanbe describedin generaltermsasthe result of (1) the
impactof foreigneconomicpenetrationandthegradualinclusion
of a countrywithin the world capitalisteconomyand (2) the
nature of the local responseby socialand political forcesto this
impact.
PAX AMERICANA 235
Opportunities to extract minerals and some agricultural

productshaveloomedlargeamongthe incentivesfor capitalin
the industriallyadvanced
countriesto penetrate
into precapital-
ist, resource-richzones.Foreignmining or petroleumextraction
or plantationsrecruiteda localwork force,part of moreperma-
nentlyemployedandoftenunionizedworkers,andpart largely
unskilled and continually replaced by migratory movements.
Thoseactivities alsocameto employ somelocal managerialstaff
alongsideexpatriates
from the metropole.Locallyspentwages
provided incomesfor small local businesses.At the sametime,
the growth of industry and of overseaseconomicrelations was
accompanied
by anexpansion
of stateservices,
whetherthrough
colonial administrationsor by sovereigncountries;by a continual
erosionof primitive agriculture[accelerated
oftenby statepoli-
cies designedto createa wagelabor force, e.g.,by direct forced
labor or more indirectly by compelling subsistencefarmersto
earncashin orderto paya headtax);andby a flow of job-seeking
ruralemigrants intothecities.Thusforeigneconomic penetration
broughtwith it anewstructureof productionrelations:enterprise
corporatismin the stateservicesandthe staffsof foreigncorpo-
rations;elementsof bipartismor tripartismamongthe skilled
workers in the biggerundertakings;an enterpriselabor market,
partly of the small-businesstype, and partly of nonestablished
workersin big industry; a growingprimitive labormarketof those
displacedfrom rural modes;anddecliningsubsistence
or peas-
antlord agriculture.
In such a social formation, a new class structure became
apparent,superimposedupon earlier social divisions. A petty
bourgeoisie,
very largelybureaucratic
and consistingof govern-
ment and big corporationemployeesbut also of small business-
men, and a small organizedworker group with notions of labor
relationspatternedon thoseof the rnetropole,jointly acquired
the potentialto form a nationalistcoalition.This coalition,where
it wasformed,demanded a greatershareof thebenetsof growth
broughtaboutby foreign-induced
economicactivity,in whichits
componentelementswere all directly involved. The enterprise-
labor-market
workersin bigindustry,because
oftheirhighturn-
over,and thosein smalllocal enterprises,becauseof patrimonial-
typerelationswith bosses,
werelesslikely to formaclasscapable
of consistentaction but were neverthelesscapableof explosive

spontaneous
protests
thatcouldbeturnedto serve
thepolitical
goalsof the nationalistcoalition.
In general,
theclassmostcapable
of achieving
a degree
of
popularcohesion
andcommon purpose
arounda nationalist
programwastheurbanpettybourgeoisie,
composed
mainlyof
government
officials,militaryofcers,clericalandsupervisory
employees
offoreignbusinesses, andindigenous businessmen.
Theability or willingnessof this ratherheterogeneous
aggregate
to undertakeradical social transformationwas usually limited
bythestates
dependence
onexternal
supports,
e.g.,foreign
loans,
monopsonistic
markets
for nationalproduce,
andmilitaryand
administrativeaid. Petty-bourgeois
leadersmight use populist
slogans
to arouse
theworkersbutbackedawayfrommoretho-
roughgoing
mobilizationof the popularstrata.
The social groups upon which such an emergentstate
based
its supportwerenotthemselves
hegemonic.
Norwerethe
politicalparties
thatmonopolized
participation
in suchstates
disciplinedmonolithslike thosethat carriedout revolutions
foundingredistributivesystems. Thestateitselfwastheonly
basisfor the projectof an indigenously
inspired,populist-a-
vored,autonomous
directionto nationaldevelopment.
Thepetty-
bourgeois
statemanagers
identified
withthestateandtendednot
to think of themselvesin classterms.They were, however,de-
pendent
onthesupport
oftheurbanpettybourgeoisie
andthe
urbanwageearners. Toconsolidate theirinuenceoverthelatter,
thestatemanagers introduced statecorporatist
productionrela-
tions.Thisgavethepoliticalleadershipcontrolovertradeunions,
whichtheyusedto restrictindustrialconictandasa leverin
bargainingwith foreigninvestors;theydid notpursuefull-scale
workerincorporationinto unionsbut limitedcorporative
union-
ization to the key industries.
Populistleadership
typicallymarkedthe rst phaseof
neomercantilist
development.Populismwasfacilitatedby exter-
nal revenuesfrom foreignloansand salesof resources.
These
provided
thestatewiththeabilityto makepayoffs
tothesocial
groups
onwhichit mostdependedthe urbanmiddlestrata,
the
armedforces,andstate-corporatist
workersaswell asprovided
returns
toforeignandnational
capital.
Thepopulistappeal
would
PAX
AMERICANA 237
soon
wear
thinasrevenues
declinedsomething
determined
by
theworld
economy,
over
which
thestate
managers
hadnocon-
trol.
Populist
leadership
wasinhibited
internally
from
thorough-
goingmobilization
ofthewholepopulation
because
ofthe
lack
ofeither
armbasis
insociety
orofadisciplined
vanguard-party
organization
capable
ofsustaining
along-term
dictatorship
work-
ingtotransform
society.
(The
Algerian
political
cadres
ineffect
demobilized
thepeasantry,
which
hadbeen
thebasis
forthe
liberation
struggle,
andthePeruvian
radical
military
failed
to
mobilize
either
arural
oranurban
worker
base.)
Itwas
inhibited
externally
because
ofitsdependence
onworld-economy
sources
fortherevenues
that
made
populist
policies
possible.
Populism
intheThird
World
faltered
intheearly
1960sandvirtually
disappeared
asapolitical
basis
forneomercantilist
development
Populism
was
replacedtypically
bymilitary-bureaucr
regimes.
Populisms legitimacy
rested
onevidence
ofbenets
for
atleast
some ofitsclient
groups-animportsubstitution
thrust
inindustrial
development,
jobsecurity
forstate-corporatist
work-
ers,subsidized
housingfortheurban middle
strata,
etc.
The
legitimacy
ofthemilitary-bureaucratic
regime
rested
onmainte-
nanceoflawand orderamongurban
populations
vastly
increased
byinternal
migrations
that
hadnotbeenabsorbed
byemploymen
creation.
Theseregimesalso
shifted
theemphasis
inindustriali-
zation
fromimport
substitution
to export
promotion.
They
workedoutamodus
vivendi
withboth
foreign
capital
and na-
tionalbourgeoisie.
Thestate
became
more
autonomous,
more
authoritarian,
andeven
more
dependent
onworld-economy
links.Where
populist
leadership
had
atendency
toundermine
thecondence ofworld-economy
managers
becauseofspend-
thriftcatering
tointernal
client
groups,
themilitary-bureaucr
leadership
offered
these
world-economymanagers
greater
guar-
antees
ofsecurity
fortheirinvestments.
Theshift
from populist
tomilitary-bureaucratic
leadership
over
nonhegemonic
societies
that
characterized
neomercantil
development
inthe
Third
World
during
the
Pax
Americana
has
aclear
analogy
tothealternation
between
cartel
state
andau-
thoritarian
state
discussed
above
inchapter
6inconnection
with
fascism.
Gramscis
analysis
ofcaesarism
applies
toboth.There
isacaesarism
without
caesar-the
assemblage
offactions
ina
238 STATES,
WORLD
ORDERS,
ANDPRODUCTION
cartel
state,
each
maneuvering
forinuence
withinthestate
ap-
paratus,
seeking
control
overstrategic
instruments
ofstate
(mil-
itaryforces,
police,
intelligence,
development
bank,
regional
power
positions,
etc.),
andcultivating
clienteles
andsupport
bases
in society.
There
isacaesarism
withcaesarnow
notso
frequently
theman
ofdestinylikeMussolini
orPeron,
but
more
frequently
thefaceless
autocrat
likePinochet,
thefunction
ratherthanthepersonality
of repressive
power.
Therearepro-
gressive,
transformative
forms
ofcaesarism,
andthere
arereac-
tionary,
stabilizing,
andrepressive
forms.
Their
common denom-
inator
istheexternal
dependency
ofapassive
revolution
from
above.
Theideas
andtechniques
ofthedevelopmental
process
these
various
forms
ofcaesarism
sponsor
aretaken
fromabroad.
These
techniques
arewelcomed
bysome
segments
of society,
e.g.,
state
technocrats
andsome
local
entrepreneurs,
butob-
structed
byothers,
e.g.,
traditional
landowners.
Thedevelop-
mentalist
state
mediates
among
social
groups
bymaking
thestate
thearbiter
andbysuppressing
opensocial
conict.Thestate
does
thiswithinitsprimary
constraint,
whichistheneedtoadjust
its
policies
totherequirements
ofaccumulation
attheworld
level.
Such
states
appear
objectively
tobeallies,
if sometimes
querulous
allies,of multinationalcapital.
Thefailureofpopulism
wasin parttheresultofanin-
ability
ofcartel
states
toresolve
developmental
issuesinwhich
social
forces
werepolarized.
Thestate
asarbiter
couldonlytry
tosuppress
openconflict
butprovedtobeincapable
ofremoving
the roots of conflict.
Theexistence
ofprimitive
peasantlord
agriculture
wasan
obstacle
tocapitalist
developmentin allsuch countries.
When
thestate
came
togrips
withthisproblem it attempted
toresolve
it through
land
reform,
more
successfully
inthecase
ofsome
of
thesmaller
countries
[South
Korea
andTaiwan)
thaninthecase
ofthelarger
ones.
TheMexican
landreform
carried
outbyMex-
icosearly
twentieth-century
revolution
wastherstandmost
revolutionary
attempt
todealwiththisissue;
it isnow,in retro-
spect,
theclassic
example
oftheultimate
failure
ofanincomplete
orinsufficiently
comprehensive
reform.Landdistributions
to
individual
families
andtotraditional
indigenous
communities
insufficiently
supported
by othermeasures
suchasstate-sup-
PAX AMERICANA 239
ported
credit
andlocally
based
political
power
resulted
infarmer
indebtedness
andareturnof dominant-subordinate
relationships
in the countryside
andin marginalization
of partof the rural
population
intosubsistence
farming.
Halfhearted
landreforms
in
IndiaandPakistan
generally
did not breakthe localpowerof
landlords.
In Indonesia,
theprospectof landreformimplicit in Pres-
identSukarnos movetowardcloseralliancewith theIndonesian
CommunistPartyin 1965was counteredby a military coup
supported
bytheU.S.Central
Intelligence
Agency
andthemas-
sacreof morethanhalfamillion people.In Brazil,atacitdivision
of powers came aboutfromthe1930sbetween urbanbased po-
liticalparties
andrurallandlords,
whichleftthelatterafreehand
in ruralareas
[rulebylocalcolonelsorstrong
men)andresulted
in violent repressionof recurrentattemptsto organizepeasant
and subsistence farmercooperation and resistance
to landlord
power,asin thepeasant
leagues
of thenordeste
in the19603.
Whenthepopulistpresident
IoaoGoulartseemed
to beencour-
aginga mobilization
of peasants,
urbanworkers,
andrank-and-
le militarysuchaswouldthreaten
toupsetthebalance
ofsocial
forcesin a radicaldirection,he wasremovedby a militarycoup
in which covertU.S. encouragement
was alsoa factor.
Thepoliticallimitsofpopulism
werethusmanifested
by
militarycoupwhenpopulistregimes
seemed
to beturningto-
wardradical
popular
mobilization.
Themilitaryregimes
thattook
overprovedtobebetter
abletopreside
overadifferent
direction
of change:
theremovalof obstacles
to capitalist
development.
Military-bureaucratic
statesexpanded
thestate
sectorsofnational
economies;
theybargained
with multinational
corporations
and
persuaded
themto undertake
moreinnovative
anddevelop-
mentalactivitiesin the country;theychanneled
foreignborrow-
ingfromtransnational
privatebanksintonational
[publicand
private)
investment
projects;
andtheyfacilitated
thedisplace-
mentoftraditional
agriculture,
bothintensive
small-holder
farm-
ingandwastefulextensive
latifundiafarming,
by indigenous
green-revolution
commercialfarmingand foreigncontrolled
agribusiness.
At the lower reachesof the socialhierarchies,a new bal-
anceof forceswasalsoemerging.
Between
theabjectpovertyand
Z40 STATES, WORLD ORDERS, AND PRODUCTION
social disorganization
of the primitive labor marketand the
closelysupervisedspheresof enterprisecorporatismand state
corporatism,thenonestablishedworkforceof theenterprise
labor
market.grew appreciably.
Nonestablished workersconsistof dis-
tinct segments:green-revolution-promoted commercialagricul-
ture hasexpandedwageemploymentin agriculture;small indig-
enous industries have grown with ofcial encouragement;and
largerindustries,both national and foreign,employmorenones-
tablished labor. The latter segment,often working in proximity
to the more protected and privileged establishedworkers, are
mostlikely to becomea selfconscious
and articulateworking
class.Agricultural laborers,experiencinga growingpolarization
of rural society, may also becomeavailable for protest move-
ments.Thesenewly mobilized workerscould becomea threatto
the stability of domestic politics.
Capitalist development led by neomercantilist states
achieved some notable successesduring the decade of the 1970s
with the stimulus of foreignborrowing. During this decade,the
growthratesof countrieslike Brazil,Mexico,SouthKorea,and
Taiwan measure this achievement. This pattern of development
alsogeneratedinternal socialtensionsin someof thesecountries;
it fosteredwidening income differentialsbetweensocial classes
andregions.Foreign-linked
rms usinghightechnology
enjoyed
relatively high prot rates; local enterprises,maximizing their
commercialadvantagein local markets,had lower ratesof prot.
Established workers in the state corporatist sector received a
certainmeasureof protectiongiving them advantages relative to
enterprise-labor-market workersand the unemployed.Commer-
cialization of agriculture favored the larger holdings, reduced
employmentin rural areas,and increased
the flow of rural mi-
grantsinto the primitive labormarketof the urbancenters.Prices
rose during the ination of the expansionaryphase;the most
favoredgroupscouldkeeppacewith it, thoughthoseoutsidethe
corporatistsectorwere in greaterdifculty.
Thenat thebeginningof the 1980scamethe debtcrisis.
Regimesthat had nancedtheir growthon foreigncreditwere
no longerableto meetthe interestpaymentson their external
debt. The measuresrequired by foreign creditorsas a condition
for extendingdebtsincludedcurrencydevaluations
andcutbacks
PAXAMERICANA 241
in domestic
spending,
which
hadtheeffect
ofraising
prices
of
foodtothegeneral
population,
raising
prices
ofimported
equip-
menttolocalcapitalists,
reducing
governmentservices,
andre-
ducing
realwages.
These
measures
could
onlyexacerbate
the
social
tensions
andinequalities
thathadbeen
generated
during
theexpansionary
stage.
Thesuccess
ofdependent
development
had a social cost.
Wouldit alsohaveapolitical
costin termsoftheviability
ofthemilitary-bureaucratic
regimesthathadledthelatest
phase
ofneomercantilist
development?
Schematically,
thereseemed
to
bethreepossibilities
offuturepolitical
orientation.
Onewasa
continuation
ofmilitaryrulemaintaining
sufficient
repression
to
prevent
theincreased
tensions
fromexploding
intodomestic
disorder.
Another
possibility
wasaradical
turnunder
different
leadership
toward
amore
autocentric
development.
Athirdwas
reversion
frommilitaryruletothecartel
state
thatwouldcontinue
thepath
ofdependent
developmentundercivilian
auspices,
gain-
ingindomestic
legitimacy
whatit lostinrepressive
capability.
Underthemilitary-bureaucratic
regime,therelatively
moresatisedpartofthepopulationacquiesces
inrepression
in
order
tofendoffthethreat
ofrevolt
fromthedissatised.
Inorder
to maintain
thisbalance
of support,
themilitary-bureaucratic
regime
must
beable
toensure
continuance
oftheprocess
of
dependent
developmentthatsustains
therelatively
satised
part
ofthepopulationand
thismeans retaining
andexpanding
for-
eignmarkets,
maintaining
aflowofforeigncredit,
andcontinuing
thegrowth
ofexport
industries.
Themilitary-bureaucratic
regime
may
beable
tocount
onexternal
military
aidfromtheprincipal
guarantor
oftheworld
hegemonic
order.
Butmilitary
aidandthe
maintenance
of a strongdomestic
repressive
capability
maynot
beenough.
Dependent
development
must
beperceived
towork
in theeconomic
sphere,
atleastforenough
ofthepopulation
to
maintain
sufcient
support
fortheregime.
Events
duringtheearly
1980s
in Argentina,
Chile,Brazil,
andthePhilippines
suggest
thatsome
ofthosemiddle-strata
social
groups
thatinitiallysup-
ported
military-bureaucratic
government
mayhave withdrawn
support
andthereby
opened
theprospect
ofatransition
tocivilian
rule.
Autocentric
development
under
radical
leadership
would
ANDPRODUCTION
implya returnto populism

butunderverydifferent
conditions
fromthoseof the earlierphaseof populism.To carrythroughan
effectiverevolutionfrom above,the radicalleadershipwould
haveto be lesstimid in its determination
to mobilizethe whole
population
behind
thedevelopment
effort,
andit wouldhave
to
dothis onthebasisof domestic resources,
whereearlierpopulism
lived off accumulatedforeignexchangereserves
andforeignrev-
enues.Whereasthe earlierpopulismflourishedin a permissive
worldorder,a postmilitary-bureaucratic
populismwouldcon-
front a hostileworld ordera foreignembargoof creditand of
exportmarkets,
together
with activemilitaryandpolitical
destabilization.
The radical alternative presupposesa distinctive eco-
nomicstrategy.
Rejecting
theillusionof a totalseverance
from
theexternal
worldeconomy,
theradicalalternative
nevertheless
envisages
thatinternally
determined
development
priorities
will
dictatehowexternal
economic
linksareto beused.A popularly
based
development
effortwouldgivefirstplace
tothesatisfaction
of humanneeds.Thismeansprimarilyincreasing
agricultural
production
andexpanding
employment
andthusspreading
in-
comesto createan effectivemassdemandfor essentials.
Sucha
policyisnotlimited
tolabor-intensive
investments;
it could
well
includesomeforeignnanced
capital-intensiveprojectsde-
signed
to produce
theinputsto theagriculture
production
pro-
cess,for example,
fertilizersandfarmmachinery,
aswell as
capital-intensive
production
of foreign-exchange-earning
ex-
ports.
Butit wouldbequitedifferent
fromtheproduction
and
import
patterns
characteristic
ofdependentdevelopment
toward
which the conservativedirectionof neomercantilist
develop-
mentalismtends,i.e.,onethatfeatureslocalproductionof con-
sumerdurablesfor an élitedomesticandforeignmarket.
The radical alternativeequally presupposesa certain po-
litical base.In Gramscianterms, the war of movementseems
unlikelyto succeedorto succeed
forlongwheretherepressive
stateapparatusis strongandexternal
destabilization
effective.
Thiswouldbethelessonof thefall ofthegovernment
of Salvador
Allendein Chile.Electoral
strength
aloneis clearlynotenough.
The radicalalternativewould haveto be basedon a long-term
warof positionbuildinga secure
supportbasewithinsociety
PAX AMERICANA 243
such as has occurred in some countries of the Third World in

the courseof prolongedwars of liberation. On the assumption
that it hasbeenpossibleto createsucha baseof support,it is also
necessary
to foreseehow popularpressurescan maintainthe
radical courseonce statepower has been acquired.One thesis
envisagesthe possibilitythat someforceswithin the governing
populistcombinationwill coalesce with popularforcessuppor-
tive of the radical economicprogramand therebybuild sufcient
political pressureto enhancethe inuenceof this factionwith
the state. Continuance of the radical reforming thrust would then
haveto be ensuredthroughthe samedynamic repeatingitself-
some factions within the state always being ready to activate
renewedpopular pressures.
Hitherto, radical caesarism has been of relatively short
duration. The experiencesof Algeria just after independence,of
NassersEgypt, SukarnosIndonesia, Nkrumahs Ghana, and
VelascosPeru provide a variety of examplesto support this
proposition.In all thesecases,
aradicalthrustturnedaftera time
in a conservative direction. There are compelling reasonsfor this.
Political cadreshesitateto pursuemobilization lest it get out of
hand,and sothey cometo rely moreon policemethodsto control
populations.Foreignborrowingoffersan easierway to nance
developmentthan extractingcapitalfrom the nationshuman
resourcesthrough organizingpopular participationin the devel-
opmenteffort.Thecadresthemselves
maybetornapartinto rival
factions competingfor the statesresources,giving more scope
for privatecapitalists,who favorand securemoreliberal eco-
nomic policies.
The third possibilitya reversionto a civilian form of
cartelstateimpliesa failureof bothmilitary-bureaucraticand
radical-populist
experiments
in a situationwhereno internal
socialhegemonyhasbecomeestablished.
Thecartelstatewould
continuethepathof dependent
development andwoulddoubt-
lessreceiveexternalsupport from the principal capitalist states
andagencies
of the world economy,
whichwould perceiveit as
a hopefor stability.Thisstates
effectiveness
wouldsufferfrom
its verylackof unityunity beingthecorresponding Virtueof
themilitary-bureaucraticandradical-populist
alternatives.
The
differentcomponents
of the carteltakeup positionswithin the
Z44 STATES,WORLDORDERS,AND PRODUCTION
state.Their struggleto capturesharesof the rentsand other

revenuesowing throughthe stateunderminesconsistency in
thedisposition
of state-controlled
resources.
It mayleadto un-
wise investments,to the entrenchmentof rival power positions
within the state, and to corruption. State corporatism,for in-
stance,enablesestablished
workersin state-sector
enterprises
to
capturea disproportionate
shareof incomeat the expense
of
nonestablished workers,unemployed, andruralproducers.The
cartelstateis the political expression
of a stalledpassiverevo-
lution. The fundamentalproblemunderlyingits immobilityis
theabsence of socialhegemony, andthatsituationcanbechanged
onlythrougha successful
warof positionthatwouldresultin
the constructionof a hegemonichistoric bloc.
THE
INTERNATIONA
OF
PRODUCT
The PaxAmericanacreateda world hegemonicorderin which a
worldeconomy of international
productionemergedwithinthe
existinginternationaleconomy of classical
tradetheory.The
international-economy
modelconnectsnationaleconomies
by
flowsofgoods,
capital,andspecie.
Where theinternational-econ-
omymodelfocuses on exchange, theworld-economy modelfo-
cuseson production.
It consists
of transnational
production
or-
ganizations
whose
component
elements
arelocated
in different
territorial jurisdictions.
Eachof thesetransnationalproduction organizationspro-
ducesfor the world market.Eachtakesadvantageof differences
in costs and availabilities of factors of production in deciding
about the location of its component elements.
Knowledge,in the form of technologyandmarketinfor-
mation,is the principalresourcein the world economy,espe-
cially knowledgein its dynamicformasthe capacityto generate
newtechnologies andto marketnewproducts. Moneycanbe
tappedwhereit is to befoundby thosewhohaveknowledge
assets,
e.g.,in localcapitalmarkets
orin international
credit.The
nature of international trade changes.Arms-lengthintercountry
PAX AMERICANA 245
corporatetransfersbecomemore important in the world

economy.
Transnationalproduction organizationstake advantageof
the differences between the factor endowments of countries in
the international economy,especiallydifferencesin labor costs.
They internalize thesedifferences,makinguse of them to mini-
mize overall production costs.The world economypromotesa
homogenizationof consumerhabits, social values,and produc-
tive technologies,but it doesthis on the basisof existing differ-
ences,which affect relative costs of production and accessto
markets. Accumulation takes place through a hierarchy of
modesof social relations of production linked within transna-
tional productionorganizations.
Someof thesemodesof social
relationsof production generatemoresurplusthan others.Strug-
glestakeplaceovertheproportionsof thesurplusto becaptured
by the centraldecisionmakersof the transnational production
organizationand by the political authoritiesof the different
jurisdictionsin whichit functions.Thecrucialproblemfor trans-
nationalproductionorganizations is continuallyto increasethe
surplusthroughhigherproductivityand to lower production
costs.
Production costsare determined by (1) the cost of producer
goods,(2)the costof raw materials,(3)the costof labor,(4)the
cost of externalities such as environmental degradation insofar
asthe producingorganization
is requiredto bearthem,and (5)
the combinationsin which (1), (Z),(3),and (4) areput together.
Most researchand developmenthas taken place in the
advancedcapitalist countries and most of that in the United
States.Very little of it has been located in the less developed
countries." A greatdeal of this researchhasbeendone by large
corporationsor by governmentagenciesworking on projectsfrom
which large corporationscould benet (e.g.,nuclear and space
research).Advancein productivetechnologieswas concentrated
in core-countryheadquartersof transnationalproduction organ-
izations.Theseorganizationshavebeenin a position to maintain
a lead in the productivity of industrial processes.
Accessto cheapraw materials,especiallyenergy,but also
otherminerals,was a majorinitial goalof the postwarexpansion
of U.S.corporations
andthoseof someotheradvanced
capitalist
countries. There is little question but that raw materials ex-

ported from less developed countries as inputs to advanced-
country industries were cheaper than similar raw materials ex-
tracted in the latter countries, though the exact extent of the cost
difference was obscured by the fact that prices were controlled
by advanced-country-based
multinational corporations[MNCS].
Nevertheless, from 1969 to 1974 all raw materials prices [includ-
ing but not conned to the price of oil] rose,signifying a major
readjustment in international accumulation.
Cheaper labor was available either by employment of im-
migrants from poor countries or by relocating plants from rich to
poor countries. Japaneserms, for cultural reasons, never en-
couraged immigration and preferred to locate subsidiaries or use
subcontractors in South Korea, Taiwan, and other countries with
cheaper labor, while countries of Western Europe resorted to
immigration on a large scale and with corresponding social and
political costs. U.S. industries have used both immigrant labor
and foreign location as means of tapping cheaper labor. Often
these methods have been used in sequence: French-Canadian
labor was imported to man the textile plants of New England
before these plants were relocated, first in the southern states,
then abroad. The future expansion of European industries seems
more likely to take place through relocation in less developed
countries than by any recurrence of the massive immigration of
cheap labor that took place in the 1960s and 1970s.
Somewhat similar to the search for cheaper labor has been
the impact of environmental controls imposing cleanup or anti-
pollution costs on industries. Such regulations proliferated in the
rich countries from the 19705 as public awareness of environ-
mental degradation became aroused. Poor countries offered sites
that did not impose such costs.
Transnational production organizations can maximize
cost advantagesby combining these various factors in complex
hierarchical systems.Inputs to the production process organized
by dominant rm A can be provided by (1) foreign-located de-
pendent rm B, which produces raw materials, or (2) foreign-
located dependent rm C, which produces components by em-
ploying labor cheaper than is available to A in its home country
and/or which pollutes the environment in ways not allowed in
PAX AMERICANA Z47
As country.Thuspart of As prots arederivedfrom cheaper

raw materials,the degradationof nature, and cheaperlabor in
the countriesof B and C. If fact,A may not deriveany prot from
the workers it directly employs in its own country. Theseare
highly skilledandwell paidandenjoyconsiderable job security
and benets.Theyarenecessary to maintainthe sophisticated
technologyat the coreof this transnational
productionorgani-
zation and to do the nondirectly productivework of researchand
development,
marketresearch
andpromotion,andnancial op-
erationscrucial to the planning of the transnationalorganization.
Laborcostsat the coreof the industrial processhave,in fact,been
absorbedinto the xed capital costs of the organization.The
difference between sales and costs comes rather from the de-
pendent
unitsin theproduction
organization
andthusultimately
from the differences in social relations of production prevailing
amongthem.
An illustration can be had from one of the most recent
industries, microchip information technology.Microchip man-
ufacturingbeganin 1971and grewrapidly during the 19703,
peakingin 1974andthendecliningastherewasmorecompeti-
tion andgrowingcapacity,leadingto a crisisof overproduction
in 1981.Initially, computers
weremadeby maleelectricalengi-
neersin core installations;as the industry grew, chips made in
SiliconValley,California,weresentto FarEastassembly plants
to be placedin their carriersby semiskilledenterprise-labor-
marketwomenusingmicroscopes.As industrial capacitybecame
surplus,someof thesewomenweresentbackto the rural com-
munities from which they had beenrecruited.The labor coststo
the manufacturerof expandingand then contractingproduction
werethus minimized. Thepoor-countryenterprise-labormarket
became the buffer for economic downturn.
The formal institutional, legal,or proprietaryrelationships
involved in transnationalproductionorganizations
may be of
manydifferentkinds.Theseincludetheinternalizing
of a dual
laborprocesswithin rm A by the recruitmentof an immigrant
laborforcealongsidea coreskilledlaborforceof nationalorigin;
outrightownership byA offoreignsubsidiaries
B orC;supplyof
A by foreignjointventurermsusingcapitalsubscribedin part
by A andin partby nationalsandstatesof countries
in which
they aresituatedthat usetechnologysuppliedby A; subcontract-

ing by A to foreign rm D; leasingof patentedtechnologyby A
to foreign rm D; compensationagreementsthrough which A
providestechnology,and foreignrm D or E repayswith part of
its production of goods[usedas componentsby A); and ad hoc
commercialagreements worked out by A with a Varietyof foreign
rms on the basis of its superior information about the sourcing
of required inputs throughout the world. Any or all of these
arrangementsconstitute aspects of the internationalizing of
production.
Preferencesdiffer in the choice among these various tech-
niques for putting togethertransnationalproduction organiza-
tions. Internalizing of dual labor processesand outright owner-
ship of subsidiarieswas the preferenceof MNCs, especiallyin
the rst phaseof expansion.Subcontractingwasextensivelyused
by Japanesecorporations in their overseasmovement. Joint ven-
tureswere urgedon MNCSby the governmentsof industrializing
Third World countries and some socialist countries as a means
of enhancing local participation. Compensation agreementsare
associated with the relationships between capitalist-country-
based MNCS and socialist-country enterprises. Electronic infor-
mation processinghas been applied by Japaneserms to put
togetherdealsfor the acquisitionof componentsand otherinputs
in a variety of countries.
Political pressures can inuence within limits the distri-
bution of power in transnational production organizations. The
successof OPECin capturing a larger share of petroleum rents is
an outstanding case of a successful political coalition redistri-
buting surplus. Neomercantilist states have successfully pres-
sured MNCs to undertake more research and development lo-
cally, to do moreprocessingof raw materials,and to manufacture
more for export. Governments can intervene to contest adminis-
trative pricing by MNCSso asto maximizetheir scal takefrom
corporateactivities.The limits within which political inuences
canbeeffectivelyexertedon foreigncapitalarethe points beyond
which capital loses its incentive to invest. A less-developed-
country location presentsa balanceof advantages and disadvan-
tagesto the decision-makingcentersof transnationalproduction
organizations.This balanceis calculatedin terms of accessto
PAX AMERICANA 249
raw materials, market opportunities, the preempting of compet-

itors, political security, and so forth. The range of what is ac-
ceptable to foreign capital may be fairly wide. It may include
changesin formal ownership; indeed, the transnational decision-
making center may turn the nationalization of a peripheral sub-
sidiary to advantage if it becomes a means of acquiring capital
infusions from the peripheral country government and giving
that government an interest in the protability of the transna-
tional production organization as a whole. What is negotiable
concerns the relative sharesof the surplus. What is not negotiable
concerns the goals and direction of the development process
itself. Actions by peripheral country governments that would
disrupt the accumulation process,e.g.,by default on debts, rather
than accept new terms for rescheduling, or that would redirect
production toward meeting local basic needs rather than maxi-
mize prots on the world market, invite either a severance of
economic relations or the political riposte of destabilization.
International production grew through a prolonged boom
in the world economy extending from the postwar investment in
European recovery through the Korean and Indochina Wars. Con-
ditions were propitious. Trade restrictions were progressively
lowered and international trade expanded. Major currencies be-
came convertible from 1958 and international capital ows in-
creased spectacularly, encouraged, in the case of U.S. capital
exports, by the prolonged overvaluation of the U.S. dollar, which
facilitated the nancing of U.S. corporate expansion throughout
the world for twenty years after World War II. U.S. government
investment in nuclear and spaceresearch (and European govern-
ments support of projects like the Anglo-French Concorde] sup-
plemented the accumulation of capital in private industry.
These boom conditions faltered by the late 1960s. During
the 1970s, industrial capacity becamesurplus to demand, incen-
tives to invest withered, and a competitive struggle for limited
markets became overt. What new investment took place in inter-
nationalized production during the 1970s was mainly in raising
productivity and lowering costs. It reflected the search for com-
petitive advantage either through greater capital intensity and
technologyintensity of productionor throughtapping sourcesof
cheaper labor or lower environmental costs. It was not directed
toward expanding capacity, since capacity was already in sur-

plus. In face of the worldwide problem of marketing, world in-
dustry and trade was kept going during the 19703by an infusion
of credit facilitated by the increasein U.S. dollar holdings outside
the United Statesgeneratedby cumulative U.S. payments decits.
These foreign dollar holdings became the basis of a Eurodollar
nancial market that escapedeffective regulation by any national
monetary authority and to which the decision centers of inter-
national production had preferred access.The result was a strug-
gle for relative advantages among the most highly productive
organizations in a context of worldwide inflation, rising unem-
ployment, and surplus capacity.
The problem of markets is inherent in the mode of capi-
talist development. Investment choices in this mode of devel-
opment are determined by prospects of realizing a prot through
sales.Demand is determined by the existing structure of incomes,
which, being skewed inequitably, gives an edge in demand to
things the rich or relatively rich are able and prepared to buy. In
Third World countries, for instance, there is a local demand
among the rich for consumer durables that may remain strong
while effective demand for basic necessities of food, clothing,
and shelter for the massesis weak. At some point, however, this
elite market on the world scale may become saturated, and when
this happens, the mode of development runs up against its limits.
Up to thisrpoint, development proceeds by capital-deepening,
through which new and more sophisticated products are intro-
duced that appeal to the elite market. During the 1970s,it
seemed that the limits of the global elite market were being
probed. Geographically, the elite market had been broadened
from the rich countries to include the rich people of the poor
countries; the domestic markets of Third World countries had
becomeinternationalized in the sensethat the consumer products
of the rich countries were now available there, too, through local
production. The limits were also probed in respect of the scale
of production organizations; in some industrial sectors,the scale
of production of the most cost-efcient technologies had become
greater than what could be absorbed by any single national
market.
PAX AMERICANA 251
If the limits had, indeed, been reached in a confrontation

of supranational-scaleproduction organizationswith a nonex-
panding level of demanddeterminedby existing income distri-
bution, then the alternatives appeared as: (1) a more intensive
strugglefor survival amongthe largestproduction organizations
in which stateswould become involved as supporters of national
champions; (2) a radical redistribution of income shifting the
structure of effective demand to a mix of products different from
those produced for the elite market, i.e., products responding
more closely to basic needs; or [3] a political takeover of produc-
tion organizationto be run on a redistributive basisdetermined
by states.Alternative (1) implies interimperial competition,and
alternatives(2) and (3) imply social and political revolutionsor
an overturningof the political structuresthat havehitherto guar-
anteed the capitalist mode of development.
What has been the impact on labor of the internationaliz-
ing of production?What havebeenlaborsresponses?
It must be remembered that only a small fraction of world
labor is directly involved in international production. The pro-
cess indirectly affects, however, a much larger proportion of
workers, and the behavior of these others, as well as of those
directly employedby MNCs,in turn affectsthe process.Multi-
nationals have been in the forefront of enterprise corporatism as
regardstheir more skilled employees;they have also,especially
in Third World countries, resorted increasingly to use of semi-
skilled, nonestablished workers, operating with a dual labor force
on a world scale. Some international trade union organizations
have tried to bargain collectively with MNCs by establishing
affiliates in their branches in different countries and coordinating
their actions against the employer. Some voices in the late 1960s
proclaimed international collective bargaining as the wave of the
future. Achievements have not matched the advance publicity,
and international bargaining has suffered the same setbacks as
national labor movements under the pressure of the world eco-
nomic crisis of the 1970s and 19803. To the extent that there were
modest successes,these tended toward consolidating the posi-
tions of the most favored employees, in effect working as a kind
of conictual enterprisecorporatismthrough which the upper
echelons of workers became increasingly dependent for their

welfare on MNC employers.Union action tendedif anythingto
conformwith the managerialthrust toward a dual labor force.
_ Established workers in the advanced capitalist countries,
through their trade unions, were generallysuccessfulin raising
wagesduring the boomyearsof the 1950sand 1960s.Thesewere
passedon to the consumerin the form of higher administered
prices but probably had some effect in squeezingprots and
consequentlyprovided managementwith the incentive to relo-
cateproduction in cheaplabor areas. Establishedlabor fought
back at the national level by urging protectionist measuresagainst
the export of jobs. However,the rising unemploymentlevels of
the 19703and 1980splacedestablishedlabor on the defensivein
all the core countries; unions reluctantly accepted concessions
on labor costs in order to save jobs and acquiesced in manage-
ments almost exclusive powers over production rationalization
and technological innovation. Thus, in a rst stage,union power
gavemanagementan incentiveto relocate,and in a secondstage,
union weaknessgavemanagementfull control over the restruc-
turing of production processes.
During economic recession and the restructuring of the
production processesof internationalproduction,the burden of
adjustmenthasbeendisproportionatelyborneby noninternation-
alized subordinate sectors. Households in the core countries have
had to support unemployed male workers by drawing on savings
and the aid of relatives and by the uncertain secondary-labor-
market earnings of wives. In Third-World countries, the relative
cheapnessof employed labor is sustained not only by the exist-
ence of a massive reserve army of available labor but also by the
relative cheapness of food and other necessities through local
networks of farm and artisan production and marketing. Some-
thing analogoushasoccurredin the advancedcapitalistcountries
with the burgeoning of black or underground economies in
which goodsand servicesaretradedand barteredoutsideformal
markets and legalized exchange.
The overall effect of the internationalizing of production
has been to emphasizethe disparities in the conditions of workers
subjectto differentmodesof socialrelationsof production.It has
enhanced the relative privilege of established workers in enter-
PAX AMERICANA 253
prise-corporatistrelationshipto the coreservicesof international

industry. It has weakened bipartite relations in the major heavy
industriesautomobiles, steel, shipbuilding, etc.where work-
ers have been hit by the deindustrialization of advanced cap-
italist countries and the shift of production to Third World lo-
cations. This sameshift hasfavored the growth of state-corporatist
relations in the Third World countries into which these industries
have been moving. The secondaryeffectsof the internationalizing
processhave likewise stimulated the expansionof enterprise-
labor-market employment in Third World and in advanced cap-
italist countries in the national sectors symbiotically linked to
international production, and they have encouraged the further
expansion of the primitive labor market through urbanization in
Third-World countries.
THE
INTERNATIONAL
OFTHE
STATE
The internationalizingof the stateis the global processwhereby
national policies and practices have been adjusted to the exigen-
ciesof the world economyof internationalproduction.Through
this process the nation state becomes part of a larger and more
complex political structure that is the counterpart to international
production. The process results in different forms of state corre-
sponding to the different positions of countries in the world
economy. The reshaping of specific statestructures in accordance
with the overall international political structure is brought about
by a combinationof externalpressures(external,that is, to par-
ticular countries though arising within the overall international
political structure) and realignments of internal power relations
among domestic social groups. Like the internationalizing of pro-
duction, the tendency toward the internationalizing of the state
is never complete, and the further it advances, the more it pro-
vokes countertendenciessustainedby domestic social groups
that have beendisadvantagedor excludedin the new domestic
reali.gnments. These countertendencies could prove capable of
reversing the internationalizing tendency, especially if the bal-
254 STATES,
WORLD
ORDERS,
ANDPRODUCTION
nothing
inevitable
about
thecontinuation
ofeither
theinterna-
tionalizing
ofthestate
ortheinternationalizing
ofproduction.
Themeaning givento theterminternationalizing
of the
statecanbeexpressedin threepoints:
First,thereisaprocessof
interstate
consensus
formationregarding
theneedsor require-
mentsof theworldeconomythattakesplacewithina common
ideological
framework
[i.e.,common
criteria
ofinterpretation
of
economic
events
andcommon
goals
anchored
in theideaof an
openworldeconomy).
Second,
participation
in thisconsensus
formationis hierarchically
structured.
Third,theinternalstruc-
turesof states
areadjusted
sothateachcanbesttransform
the
global
consensus
intonational
policyandpractice,
takingac-
countofthespecic
kindsofobstacles
likelytoarise
in countries
occupying
thedifferent
hierarchically
arranged
positions
inthe
worldeconomy.
State
structure
heremeans
boththemachinery
of government
administration
andenforcement
(wherepower
liesamong
thepolicy-elaborating
andenforcement
agenciesof
states)
andthehistoric
bloconwhichthestate
rests
(thealign-
mentof dominant
andacquiescent
socialgroups).59
In considering stagesin theinternationalization
of the
state,it is usefulto referbackto thedistinction
madeabove
between
theinternational
economy
andtheworldeconomy.
In
theinternational
economymodel,
thestateactsasa bufferbe-
tweentheexternal economic
environment andthe domestic
economy.
Itspolitical
accountability
iswithin,itsprincipal
task
beingtodefend
theinterests
embodied
in thedomestic
economy
against
disturbances
fromwithout,
togivepriorityto domestic
overexternalforces.Inward-directed
accountability
in a gener-
allyhostile
external
environment
wasexpressed
intheeconomic
nationalisms
of the Depression
yearsof the 1930s.Countries
turned
inwardtorevive
economic
activity
andemployment,
nd-
ingtheeventual
solution
inrearmament
andworldwar.
TheBretton
Woods
stage,
conceived
in themid1940s
and
putintopractice
ultimately
inthelate1950s,
placed
thestate
in
a halfwaypositionmediating
between
international
economy
andworld-economy
structures.
BrettonWoodswasa compro-
misebetween
accountability
ofgovernments
[especially
ofdebtor
countries)
toinstitutions
oftheworldeconomyandaccountabil
ity ofgovernments
todomestic
opinionfortheireconomic
per-
PAXAMERICANA 255
formance
andforthemaintenance
ofwelfare.
In ordertobeable
to borrowor to renewdebtabroad,
governments
wouldhaveto
satisfyconditions
laiddownby theinternational
institutions.
Theabilitytoborrowwouldmake it possible
forgovernmentsto
soften
theimpact
ofexternal
economic
developments,
e.g.,
the
riseof rivalswith a competitive
advantage
overdomestic
pro-
ducersorfallingprices
ofcommodity exports,
soastoallowtime
forinternaladjustmentsandto maintaininternal
welfarecom-
mitments.Thecenter ofgravity
shifted
fromnationaleconomies
to the worldeconomy,
but stateswererecognized
ashavinga
responsibility
toboth.Theprospect
ofopen
contradiction
be-
tweenthetwowasobscured
in a condence
thattimeandre-
sources
wouldbeadequate
to effecta reconciliation.
Thecom-
promise
worked
aslongastheworldeconomy
wasindeed
expanding.
TheInternational
Monetary
Fundwassetup to provide
timeandmoney
to countries
withbalance
ofpayments
decits
inorder
thattheycould
make
thekindofadjustments
thatwould
bring
theireconomies
back
intopayments
equilibrium
andavoid
thesharp
deationary
consequences
ofanautomatic
goldstand-
ard.TheWorldBankwastobeavehicle
forlonger
termnancial
assistance.
Economically
weakened
countries
wereto begiven
assistance
bytheworldsystem
itself,
either
directly
through
the
systems
institutions
orbyother
states
once
theircredit
worthi-
nesshadbeencertiedbythesystems
institutions.
Theinstitu-
tionsof the world economyincorporated
mechanisms
to super-
visetheapplication
ofthesystems
norms
andtomake
nancial
assistance
andotherbenetsof thesystem
conditional
upon
reasonable
evidenceof intentto live up to thenorms.
Thismachinery of surveillance
was,in thecaseof the
Westernalliesand,subsequently,
ofall industrialized
capitalist
countries,
supplemented byelaborate
machinery fortheharmo-
nization
of national
policies.
Theincentive forpolicyharmoni-
zationcamewith thepromise of externalresources,
initially
through
theMarshall
Plan.
Thepractice
ofharmonization
shifted
thebalance
ofaccountability
onestepfurtherin theworld-econ-
omydirection.
Thispractice
began
withthemutual
criticism
of
reconstruction
plansin Western
Europeancountries,
whichwas
theU.S.condition
forMarshall
funds.
It evolved
further
withthe
annual review proceduresinstituted by NATO to overseethe

sharing of defenseburdens and defensesupport programs.It
becamean acquiredhabit of mutualconsultationand mutual
review of national policies from 1960onwardwhen the postwar
reconstructionphasepassedinto a phaseof world-economyex-
pansionunderthe aegisof BrettonWoods.
The notion of international obligation moved beyond a
few basiccommitments,suchasobservanceof the most-favored-
nationprincipleor maintenance
of an agreedexchange
rate,to a
generalrecognitionthat measures
of nationaleconomicpolicy
affect other countries and that such consequencesshould be taken
into account before national policies are adopted.Conversely,
othercountriesshouldbesufciently understandingof onecoun-
trysdifculties to acquiesce
in short-termexceptions
to general
normsof behavior.Adjustmentswerethus perceivedasrespond-
ing to the needsof the systemasa wholeandnot to the will of
dominant countries.External pressuresupon national policies
were accordinglyinternationalized.
Of course, such an internationalized policy process pre-
supposed
a powerstructure,onein whichcentralagencies
of the
U.S. governmentwere in a dominant position. But it was not
necessarily
a powerstructurewith linesof forcerunningexclu-
sivelyfrom the top down,nor wasit onein which the units of
interaction were whole nation-states. It was a power structure in
which the components soughtto maintainconsensus through
bargainingand onein which the bargainingunits werebureau-
craticfragments
of states.Thepowerbehindthenegotiation was
tacitly takeninto accountby the parties.
Not only were pressureson statebehaviorwithin this
powerstructureinternationalized,theywerealso,throughideo-
logical osmosis,internalizedin the thinking of participants.
SusanStrangeexplainshow British policy makersformulated
policiesin anticipation
ofthekindofexternal
inuencetheyhad
cometo expectandhowU.S.policymakersweremoreconcerned
with Britishpolicysconformingto the conventional
orthodoxy
[soasnotto seta badexample
to othersandto undermine
the
rst line of defensefor the dollar) than they were with getting
their moneyback.Sheexplainsthe internationalizing/internal-
izing policy processwith greatclarity:
PAX
AMERICANA 257
During
andimmediately
after
negotiations
foralarge
new
international
debt,adebtor-governments
main and
most diffi-
cultproblem
istomaintain
itsprecarious
balancebetweenthe
twoconictingpressures
withwhichitiscertain
tobeassailed.
Thewordingand form
ofitscommitmentsinthisperiod
isless
decisive
thanthebalanceof-power
relationship
withthecred-
itors.
Ontheonehand,
itsdomestic
securityisjeopardized
ifit
seems
tolayitself
toowide
open
tocharges
ofabdicating
sov-
ereignty
andsigning
away
thecountrys
independence
tofor-
eign
bankers
andgovernments.
Itisobliged
toshout
inadeaf-
ening
stage
whisper:
Look,
nostrings!
tothegallery.
Atthe
same
timeit isobliged
toreassure
thestalls,
insoothing
tones
compelling
condence,
ofitscorrect
economic
behavior,
ac-
cording
tothe
termsagreed
forthe
loan.
Theonlyway
inwhich
suchaconflict
canbereconciled
andsuchanabsurd
contradic-
tionoverlooked
isbyndingamiddle pathofpolicy
which
does
nottoobadly
upset
either
sideandwhich
does
notseem
tooresponsive
toeither
source
ofpressure.
Bysuch
means,
the
pantomime
ofmultilateral
surveillance
can
beplayed
toevery-
bodys satisfaction.
Theonecertain
result,
therefore,
ofadopting
adebtors
posture
istogive
both
national
officials
andtheir
foreign
or
international
opposite
numbers
astrong
incentive
tofudgethe
issues
andtoconceal
and obscure
any
possible
conflict
between
thenational
interests
ofthedebtor-states
andthenational(or
special
international)
interests
ofthe
creditors.
Thiswillbeall
theeasier
byreason
ofthesort
ofinternational
freemasonrythat
has
grown
upover
twoorthree
decades
between
English-spea
ingeconomic
officials;
andbyreason
also
oftheinternationa
sympathies
feltbyprofessional
economists
foreachother.
The
belief
istherefore
propagated
bytheexperts
onboth
sides
ofthe
creditor-debtor
relationship
thatthere
isnofeasible
alternative
tothepolicies
adopted.
Discussion
becomes
muted,
if notal-
together
silenced:
noonediscusses
theultimate
consequences
oftaking
onthedebt,
andofthepossible
alternative
coursesof
action
open
todebtors
andcreditors.
TheEuropean
Economic
Community
offers
acase
ofin-
tensive
internationalization
ofagroup
ofstatesinternationa
zation
in thedouble
sense
inwhich
these
states
become
more
closely
bound
upwitheach
other,
and asagroup
they
become
more
responsive
toworld-economy
pressures.
TheEuropean
Monetary System(EMS)establishedin 1978,for example,was

part of a grand designby ChancellorHelmut Schmidtand
PresidentValery GiscarddEstaingto createa Europeancenterof
politicaleconomicstability by linking the major Europeancur-
rencies together in common defenseagainstthe destabilizing
effectsof uncontrolleddollar proliferation.The EMSalsoopened
the prospectof evenclosermonetary[and henceeconomicpol-
icy) unication amongthe EECcountries.
The growth in policy unication of the EECcountriesin
an overall sensehascomeaboutonly to a limited degreethrough
a transferof powersto supranationalagencies;to a greaterextent
it hasbeenthe result of interpenetrationof national policy-mak-
ing processes.Coordinationmechanismshavebeendivided be-
tween the hard and the softhard coordination owing
from authoritative central decision making, and soft from the
practiceof mutualconsultation.The soft type of coordination,
which is basic to the developmentof Europeanconstitutional
practice,takesplacewithin thesamekind of evolvingideological
osmosisin regardto the norms of correctEuropeanbehavioras
was noted by Susan Strangein the sphere of debtor-creditor
relations between Britain and the United States. European coor-
dination is fairly hard in areaslike trade policy, agriculture,and
regional assistance;it is softer in respectof control of money
supplies and credit regulation,industrial policies, and incomes
policies.The mechanismsin placefor soft coordinationinclude
monthly meetingsof the ECnance ministersprecededby prep-
aratorymeetingsof a coordinationgroup and the preparationof
an annual report every autumn that servesas a referencedocu-
ment for policy analogousto those of the U.S. Council of Eco-
nomic Advisers.Further developmentsin the soft coordination
areacould be envisagedin the form of machineryof a European
corporativekind to dealwith industrialandincomespolicies.
Looked at as a whole, the international political structure
that is in processof formation appearsto be more evolved,more
denitive, in someof its parts;lessformed,morefluid, in others;
and the connections between the parts are more stable in some
casesand more tenuous in others. Any attempt to depict it must
not be taken teleologically, as an advancedstagetoward the
inevitable completion of a latent structure.Ratherit should be
PAX AMERICANA 259
taken dialectically, as the description of tendencies that, as they

become revealed, may arouse oppositions that could strive to
confound and reverse them. With these reservations, the inter-
nationalizing state structure can be described in terms of three
linked levels.
At the top level, consensusformation takesplace among
the major advancedcapitalist countries.In this process,the cen-
tral agenciesof thesestatesprime ministerial and presidential
offices, foreign ofces, treasuries, central banks,interact with
each other, sometimes through formal institutions like the IMF,
the World Bank, and the OECD with their own autonomous
bureaucracies; sometimes through more ad hoc multilateral
forums, including economic summit conferences; sometimes in
a complex of bilateral relationships.U.S. agencieshave a domi-
nant but not necessarily determining role; they are determining
only when they rally a broad measureof support on specic
policy measures.The international institutions are particularly
important in dening the ideological basis of consensus,the
principles and goalswithin which policies are framed,and the
norms of correct behavior. When, during the 1970s,the explicit
norms of Bretton Woods [xed exchangerates and most favored
nation treatment, for instance] were either totally or partially
abandoned,the practiceof policy harmonizationbecamecorre-
spondingly more important to the maintenanceof consensus.
The habit of policy harmonizationhad been institutionalized
during the two precedingdecadesand was, if anything, rein-
forced in the absence of clear norms. Ideology had to substitute
for legal obligation.
Within this top level, the European Communities are a
particularly evolved instance of the internationalization process.
The European process is a microcosm of the larger internation-
alizing process encompassing all the advanced capitalist coun-
tries. The EC contains, however, an implicit option: either to be
a more effective transmission belt between the world economy
and the European regional economy, promoting the internation-
alization of Europe, or to give a better defense of Europe, partic-
ularly in relation to the United States and Japan, than separate
European countries could provide by themselves. If, up to the
present, the EC has worked more in the first sense than in the
second,the tendency could be reversedif the United States,

disheartenedby Europeanand Japanese behavior,should move
in a more protectionistor isolationist direction.
. A secondlevel comprisesthe links betweenthe redistrib-
utive systemsof socialist countries and the world economy.
Theseexpandedduring the yearsof détenteroughly from the
Germanostpolitik beginning in 1966 to the Soviet military oc-
cupationof Afghanistanin 1979takingthe formsbothof con-
ventional trade and of industrial cooperationarrangements.The
latter wereagreements betweenWestern-based or Japanese-based
multinational rms and socialist country enterprises. They usu-
ally involved exchangeof socialist-countryproduction for West-
erntechnologies.The socialiststateretainedcontrol of the linkage
and could break it off if political conditions were so to dictate.
Westerngovernments,too, could cool the relationshipaspolitics
might require.The relationshiphad advantages for both sidesbut
neither becameinextricably enmeshed.Apart from the changing
fortunes of direct economic relations between countries of East
and West,there is a systemiceffectneither side can escape.The
principal form it takesis the armsrace.This bearsmoreheavily
on the Soviet side since that country must devote a higher pro-
portion of its national productto defensethan the Westerncoun-
tries do just to retain arms parity.
At a third level, a stricter regime than that applying to
advancedcapitalist countrieshasbeenenforcedon Third World
countries.One elementin the top-level consensusconcernsthe
conditions for nancing Third World debt. Consensusin this
matterhasgenerallybeeninternationalizedthroughthe IMF and
thenappliedcaseby caseto Third-Worldcountries.
Thetop-level
countriesin effectjointly x the parametersof the developmental
optionsof late-industrializing
countries.Third World elitesdo
not participate with the sameeffectivestatusas top-level elites
in the formation of the consensus. The consensus does, however,
gain ideologicalrecruitsand placesideologicallyconditioned
agentsin key positionswithin Third Worldcountries.The net-
works through which internationalnance ows to thesecoun-
tries are staffed within these countries (e.g., in top positions in
central banksand nance ministries)by peoplewho havebeen
socialized to the norms of the consensus and of its professional
PAX AMERICANA 261
cadres.These people are often graduatesof major advanced-

capitalist-countryuniversitiesand haveoftenpassedthroughthe
IMF Institute and similar bodies that bring Third World technical
nancial personnel into personal contact with the milieu of in-
ternational nance. These are not the political decision makers
of Third World countries but those who inform those decision
makersaboutwhat their optionsare.
President Salvatore Allende of Chile underlined the im-
personaland almost invisible nature of the relationship in his
speechto the General Assembly of the United Nations on Decem-
ber 10, 1972:
We nd ourselvesopposedby forces that operatein the
shadows,without a flag,with powerful weaponsthat areplaced
in a wide range of inuential positions.
We are not the object of any trade ban. Nobody has said
that he seeksa confrontation with our country. It would seem
that our only enemies or opponents are the logical internal
political ones. That is not the case. We are the victims of almost
invisible actions, usually concealed with remarks and state-
ments that pay lip service to respect for the sovereignty and
dignity of our country. But we haverst-hand knowledgeof the
great difference that there is between those statements and the
specic actions we must endure.
The Chilean coup and assassinationof Allende less than
ayearfollowing this speechwasa salientbut by no meansunique
instance of how recalcitrant Third World governments are ulti-
matelyremovedby violenceif they do not conformto minimum
standardsof correctworld-economybehavior.More frequently,
internal policy shifts are effectedthrough changesin the com-
position of governmentsin thesecountries,togetherwith realign-
mentsof the domesticforcesbackingregimes,givingthem a more
conservative basis. The internationalization of the Third World
stateis externally determined and imposed, but it attracts internal
allies and collaborators.
During the expansive years of the 19603 and their ina-
tionary prolongationup to 1974,the contradictionsbetweenthe
welfare of Vulnerabledomesticgroupsand the requisitesof in-
ternational capital accumulationwere usually obscured.In the
advancedcapitalist countries,the ideologicalosmosisbetween
the agentsof world-economy

nancial management
and their
domesticcounterpartspatchedup policies that preventedopen
cleavage
of interests.Thesepoliciesoscillatedbetweenthe re-
straint and stimulus of stop-gobalance-of-payments
manage-
ment.Apartfrom an acutecrisislike the Chileancoupof 1973,
Third World nonconformityprovedto be manageable, and some
of thesecountriesexperiencedeconomicmiraclesof growth.
The deepand prolongedrecessionin the world economy
following 1974,however,broughtthe latent contradictionsinto
the open.In the advancedcapitalistcountries,ofcial ideologues
opinedthat countrieshad becomeungovernable,by which
they meantthat the guarantees for vulnerablesocialgroupsbuilt
into social policy during the yearsof expansionwould not cede
beforethe demandsof capitalaccumulationwithout touchingoff
a seriousinternal struggle. A return of Cold-Warbehaviorbe-
tween the United States and the Soviet Union ended détente and
raised obstaclesto the continuing expansionof nancial, trade,
and industrial cooperationbetweencapitalistand socialistcoun-
tries. Third World indebtedness reached proportions threatening
the stability of the international financial system,raising the
prospectsof bothmorestringentandunpopularinternationally
imposedconditionsfor reschedulingdebtand greaterchancesof
debt repudiation with incalculable (but dangerousfrom the
standpoint of world-economy management)political conse-
quences.Neomercantilist protectionism loomed in advanced
capitalist countries and so did radical revolution in the Third
World.
As has been suggestedabove, the state structures appro-
priateto the internationalized
processof economicpolicy har-
monization contrasted with those of the welfare-nationalist state
of the precedingperiod.National-and industry-levelcorporative
structurestendedto raiseprotectionistor restrictiveobstaclesto
the adjustmentsrequiredfor the adaptationof nationaleconomies
to the world economy.Corporatismat the national level was a
responseto the conditions of the interwar period; it became
institutionally consolidatedin WesternEuropejust asthe world
structure was changinginto somethingfor which national cor-
poratism was ill suited.
As national economies became more integrated in the
PAX AMERICANA 263
world economy, it was the large and more technologically ad-

vanced enterprises, those participating in internationalizing of
production, that best adaptedto the new opportunities.A new
axis of inuence linked international policy networks with the
key central agencies of government and with big business. This
new informal corporative structure-a corporatism with inter-
national tendenciesovershadowed the older and more formal-
ized national corporatism and reflected the dominance of the
sector oriented to the world economy over the more nationally
oriented sector of a countrys economy.
The shift from a national to an internationalizing corpo-
ratism involved a realignment of social forces underpinning state
power. When consensus on world-economy requisites replaced
consensus on national economy goals as the basis for policy
formulation, some nation-based interest groups that had been
included in corporatist coalitions becamemore marginal or were
excluded. These found little sympathetic response in the central
agenciesof government but could exert inuence at other points
in the governmental process, notably in elected legislatures at
national and provincial or local levels. Industries that were nation
based and faced severe international competition, such as steel,
shipbuilding, and textiles, were naturally protectionist and hos-
tile to the internationalizing tendency. Medium and small busi-
nesseswere also potential allies in the protectionist cause.Trade
unions of established labor, which had won recognized status
and material concessions within the postwar state structures of
corporative Keynesianism, becamethreatened both by exclusion
from the processof world-economyconsensusformation and by
the rise of enterprise corporatism. These social and economic
forces were gradually pushed into opposition to the dominant
internationalizing power bases of governments, but, weakened
by the recessionaryconjunctureof the world economythat pre-
vailed in the 1970s,they lackedboth the cohesionand the polit-
ical clout sufcient to reverse the trend.
In the Third World, the internationalizing of the state
produced a different kind of state structure. In the first flush of
postcolonial independence in Asia and Africa, successor states
were imitative of the pluralistic structuresof core states.It was
duringthis periodthat populist regimesthrived in Latin America,
as well as in some Asian and African countries, based on dispar-

ate coalitions in political cartels grouping landowners,urban
bureaucratic middle classes,and urban industrial workers. The
credit balancesaccumulatedby someof thesecountriesduring
World War II allowedfor a period of free spendingduring which
the appetitesof politically signicant domesticgroupscould be
appeased.During the 19603and early 1970s,when the reserves
of Third World countries were depleted, these countries con-
fronted separatelythe consolidatedstructuresof the world econ-
omy. The worldeconomyconsensus,operatingthrough world-
economy institutions, exacted certain conditions from Third
World debtors in return for allowing them to continue to draw
on worldeconomyresourcesfor their continuing development.
These conditions determined the path of development; i.e., de-
velopmentmustbeconduciveto accumulationon the world scale
and complementaryto the internationalizing of production.
These conditions also determined internal political structures
sincethey could be met only by regimeswilling and ableto use
forceto carry throughunpopular economicpolicies.
The Peruvian caseis a paradigm for the internationalizing
of the statein peripherycountrieswith a signicant worldecon-
omy linkage. A nationalist military group took power in 1968
that begana programto nationalize major foreign investments
and to control future foreign investment, while at the same time
broadeningits popular baseof support by introducing land re-
forms aiming to mobilize peasantparticipationand measuresfor
worker participation in the managementand prots of industrial
enterprisesand by organizingsquattersin the urban barriadas.
This regimewasunpreparedto extractfrom the nationaleconomy
an investment surplus sufficient to pursue its developmental
goals.At the sametime, it encountereda credit barrier in U.S.
and world nancial markets becauseof its nationalization policy.
In 1974the military regimesettledclaims for compensationfor
the nationalizations with the United Statesand thereby obtained
accessto new foreign nancing. Escalation of foreign borrowing
combined with less-thananticipatedexport earnings brought
Peru into a severe exchange crisis by the beginning of 1976.
Meanwhile,in 1975,new governmentleadershipof a more con-
servativebentreplacedthe initiators of the nationalist-mobilizing
PAX AMERICANA 255
experiment.Alfred Stepanrelatesthe pressuresarising in the

exchangecrisis to the changein the characterof the regimethus:
In April 1976 Peru had virtually exhaustedits foreign
reserves and initiated a major loan request. While other factors
were also at work, it is impressivethat in the thirty daysbefore
the Vital loan was nally approved by a consortium of U.S.
bankers,the [new] government(1) imposeda stabilization pack-
age involving a wage freeze, devaluation, and public sector
budgetcuts, a packagethat led oneradical minister to apologize
for the capitalist cut of the measures; (2) announced a state
of emergencyby which the unions right to strike was cancelled;
(3)changedthe cabinet,in which the mostprominent remaining
military radicals . . . were removed, while the civilian head of
social property resigned; [4] ended the ban on new oil contracts
with foreign rms; (5) announced the first sale of a state com-
pany to the private sector;and (6) reachedagreementin prin-
ciple to pay compensationfor the expropriation of Marcona
Mining.
Thus the foreign exchangecrisis is typically the inescap-
able event that precipitatesa restructuringof Third World state
personnel, policies, and supportive coalitions in line with the
requirementsof internationalproduction.The internationalizing
of the Third World state is more openly induced by external
pressuresthan the internationalizingof the advancedcapitalist
state is and thus provokes more awarenessand resentment. The
IMF has becomea known political enemy to nationalist and
popular forces in Third World countries; it has never become
known to the public to the sameextent in advancedcapitalist
countries.In the latter countries,the internationalizingprocess
appearsto the public to be the result of ineluctableimpersonal
forcesthat can be separatedfrom the symbolismsof domestic
political debate.
ONE MORE ANALYTICAL

PROPOSITION
In this chapterI havearguedthat new stateformsthe neoliberal

and the neomercantilist developmentalist forms of state-
emerged in the same historical process as produced a new he-
gemonicworldorder structure,the PaxAmericana.This histor-

ical processdid not bring into existenceany new modesof social
relationsof productionnor did it changefundamentallythe social
structure of accumulation. A new hierarchical arrangement of
modes of social relations of production was, however, structured
by the new forms of state.Enterprisecorporatismconrmed and
stabilizedthe preferredstatusof employeesat the core of world
industrial processes.
Tripartism wasrelegatedfrom the top status
it had achieved in the welfare-nationalist state to a secondary
though still relatively preferredposition in the neoliberalstate.
Statecorporatismgrew with relatively privileged statusin neo-
mercantilist developmentalist states.There was a general expan-
sion [encouragedintentionally or unintentionally by both forms
of state) of modes of social relations of production in which
workersarerelatively unprotectedenterprise-labor-marketand
primitivelabor-market modes.
The hegemonic character of the Pax Americana showed a
number of facets.The new world order was founded by a country
in which social hegemony has been established [proposition six
at the end of chapter 5) and in which that hegemony was suf-
ciently expansiveto projectitself ontothe world scale.U.S.meth-
ods of production becamethe world model, exportedand emu-
lated abroad. Furthermore, the ideological and political power of
global hegemonyrestrictedthe forms of statethat were tolerated
within this world order (proposition ten at the end of chapter 6).
A combination of rewards and penaltiesaccess to credit for
compatibleand political destabilizationof incompatiblenational
regimesenforced conformity.
Hegemonywas more secureat the center of the world
system,lesssecurein its peripheries[propositioneight at the end
of chapter 5). The weaknessof hegemony in the peripheries took
two forms. The neomercantilist developmentalist statewas a form
of caesarism that substituted for an absenceof social hegemony
where it governed. Elite members of peripheral societies partic-
ipated in the global hegemonywhile ruling over nonhegemonic
societies. But the Third World was also the site of some revolts
againstthe global hegemony,which took the form of efforts to
build up locally based counterhegemonies. While caesarism se-
cured the passive acquiescenceof some Third World societies in
a globalhegemonycenteredin the advancedcapitalistcountries,
counterhegemonic movements in other Third World countries
PAX AMERICANA 267
constitutedopen and activechallengesto globalhegemony.Cor-

responding
to this differentiation
in hegemonic
intensitybetween
core and periphery of the world system,class struggleswere
mutedby corporatiststructuresin the corebut moreopenand
self-conscious in peripheral areas.
One further analytical proposition, to add to those ad-
vancedat the end of the previoustwo chapters,canbe presented
here. It is an elaboration of the already enunciated proposition
that in a hegemonic order,economics is separated
from politics
[propositionseven,chapter5]. This nal proposition(number
eleven)is that internationalnanceis the preeminentagencyof
conformityto worldhegemonic orderandtheprincipalregulator
of thepoliticalandproductiveorganization of ahegemonicworld
economy.
Financeis the fungible form of surplusaccumulatedfrom
production.
Its originis in theproduction
process
andin pro-
duction relationsthat allow for surplusaccumulation.In its form
as money capital, this derivative of production becomesauton-
omousin relation to production and ableto shapethe develop-
mentof the productionprocess
andthefuturenatureof produc-
tion relations. When a business tries to borrow, the credit
mechanism decides in effect whether or not that business will be
ableto acquirea certaintechnologyto expandits prot-making
capacity.Thetechnology to beacquiredimpliesa certainpattern
of productionrelations.The nancial mechanismwill thereby
strengthenor weakenthat pattern,dependingon whethercredit
is grantedor withheld.Whengovernments borrow,similarcon-
sequences follow: internationalcreditis extendedto the extent
that the policies of statesare deemedby the credit managersto
be consistent with accumulation in the world economy. In ad-
dition,governments
incurpoliticalobligation,throughthenan-
cial mechanism,to adjust national economicpolicies so as to
facilitate service on the debt, and this has further implications
favoringcertainkinds of production relations.
Internationalnance, accordingly,is analogousto social-
classformation, in that both areforcesderivedfrom production
but that achievean autonomyfrom production and can become
apoweroverproductionrelations.Financeis theeconomic
form,
social classthe political form, taken by theseforces derivative
from production.
«Ea»,-(»
»
CHAPTER EIGHT
THE WORLD
ECONOMIC CRISIS:
Il\/[PACT ON STATE
AND
WORLD-OR
STRUCTUR
Since the word crisis is so fre-
quentlyabused
for dramatic
effect,it is well to beprecise
here
aboutits meaning.Economists distinguisha crisisfroma cyclical
downturn:the economymustundergosomestructuralchangein
orderto emergefrom a crisis;in a cyclicaldownturn,the same
structurecontainsthe seedsof its own revival. Crisis signies a
fundamental disequilibrium; the cyclical downturn, a moment
in the diachrony of equilibrium.
In a morepoliticalvein,Gramsciwroteof organiccrisis
andcrisis of hegemony.Whatheidentiedby thesetermswas
a disarticulationbetweensocialgroupsand their putative polit-
ical leaders,in sum a crisis of representation.In sucha situation,
old and new social forces coexisted, but the old ones had become
detached
fromthe politicalorganizations
that hadformerlyrep-
resentedthem,and the new oneshad not producedorganizations
or organicintellectuals
whocouldleadthemeffectively
and
bringtheminto coalescence
with existingsocialforcesto forma
new hegemonic bloc.Two outcomes arepossiblein an organic
270 THE MAKING OF THE FUTURE
The risks in trying to comprehendthe presentareconsid-

erablygreaterif the presentturns out to havebeena phaseof
structuraltransformation.Therearegroundsfor thinking that the
years197374markedthebeginningof sucha historicalturning
pointthestartof a periodcomparablein its longrange
effects
to theonsetof thelongdepression
of thelatenineteenthcentury,
which initiated a nonhegemonicsequelto the Pax Britannica,
beganthe transformation
of the liberalstateinto welfarenation-
alist and other contemporaryforms, and put into place a new
social structure of accumulation led by mass-production
industry.
Putative transformations in thesethree orders are currently
the object of concernand debate.Hasthe Pax Americanacome
to an end and with it the hegemonicworld order that gave a
frameworkfor world-economicexpansionin the post-WorldWar
II decades?Do the phenomenaof Thatcherisrnand Reaganism
herald a new form of stateradically differentfrom the neoliberal
corporativestate,or aretheybut evidenceof transitoryconvul-
sionsin political structurethat will leadto othernovelforms?
Hasmassproductionor Fordismreachedits limits asthepreem-
inent form of industrial organization?Although each of these
questions
hasattractedscholarlyanalysis,theirinterconnections
have so far not received much attention. Part 3 of this work
attemptsto bring the conceptsand analyticalpropositionsdis-
cussed above to address these matters.
The startingpoint mustbe a consideration
of the nature
of the economiccrisis that hasaffectedthe world economysince
the mid-1970s.Ination and indebtednesswere the principal
indicatorsof that crisis. The nancial indicatorswere,however,
manifestationsof social and political conflict linking the three
levelsof our inquiry: production,state,and world order.They
pointdirectlyto thedisintegration
of hegemony
in worldorder,
to a weakeningof historicblocs,and an openingof hegemonic
criseswithin states.Theseare, accordingly,the rst objectsof
attention.
Somewhat
less
apparent
than
the
changes
taking
place
in
the structuresof statesand world order are those transforming
production
processes,
changes
bothin theinternational
division
THE MAKING OF THE FUTURE 271
seem in part to arise out of the conicts inherent in the power

relationsof the productionprocesses themselvesbut are encour-
aged or thwarted both by state power and by the international
conguration of power. Hence the prospectsof a new social
structure of accumulation [for the emergenceof the previous
structure, see chapter 6) are linked to the issuesof structural
changeat stateand world levels.
Finally, we are led to the human energieswhose activity
or passivitywill make the future. Theseenergiesare both deter-
mined and free in their development.They are determinedin-
sofar as they are nurtured and shapedin certain directionsby
existingsocial practices.Thus, they constituteidentiable bun-
dles of social forcesan emergingglobal classstructure.They
are free insofaras peopleconditionedin theseways have oppor-
tunities to seizeor to forgo.This will take us asfar asI aim to go:
to try to delineatethe human material, the socialforcesshaped
by production, state,and world ordersthat are themselvesthe
shapersof tomorrows orders,and to discernthe optionsopen to
theseforcesin their building of the future.Beyondthat is the task
of mobilizing action.It is implicit in my analyticaleffortbut my
book stopsshortwhere that taskbegins.
Part 3
{?#-:_'g:
Production
Relations
in the Making
of the Future
Uptonow wehavebeenconsidering
theinterconnectio
ofmodesofproduction
relations,
formsofstate,
and world
orders
ascomplexhistorical
structures
inwhich elementsofcoherence
andstability
arematchedagainst
contradictions
andconflicts.
Outofthese
conflicts
ultimately
come structural
transformations
Theadvantage
oflooking
tothepastistobeable tosee
someof
these
processes
completedcompleted,that
is,bytheinitiation
ofanew phaseofstabilization
leading,after
atime, toafurther
transformation.
Fromaconsideration
ofthese
completed
phases
a series
ofpropositions
have
been
advanced
asguides
tothe
analysis
ofhistoricalstructural
changes.
These
considerations
havebrought
ustoathreshold
ofthe
world
system
during
the19703.
Thepurpose
ofacquiring
knowl-
edge
about
past
processes
istobeable
toapply
this
knowledg
toanunderstanding
ofthepresent
insuch
awayastogain
more
initiative
inthemaking
ofthefuture.
Thepresent
isin itsnature
incomplete.
Ithas
tobeseen
asmovement,
whereas
thepast
can
more
clearly
begrasped
asstructure.
Thestructures
oftherecent
past
fixthecircumstances
inwhich
thehistorical
action
ofthe
present
takes
place.
Theactors
have
power
toshape
their
future
both
inrelation
totheircommand
over
material
resources
andin
It is postulatedherethat economiccrisis is but one man-

ifestation of a Gramscianorganiccrisis. In order to bring about
structural changein the economy it is necessaryto realize a
realignmentof socialforces,eitherby consent(throughhege-
mony)orbythemoreor lessforciblestabilization
of contradictory
forces (through caesarism).
THE CRISIS: INFLATION

AND SOCIAL POWER
The economicsymptomsof crisis during the 1970sarea familiar

catalogue:high levels of ination accompaniedby massunem-
ployment,low growth,the emergence of substantialsurplusca-
pacity,andlow ratesof investment.To a generationconditioned
by reactionto the Depressionof the 1930s,unemployment had
beenthe most politically sensitiveindicator. Recessionsduring
the postwar period, which brought about an increasein unem-
ployment,hadbeencounteredby governments
givinga moder-
ately inationary stimulus to the economy.A little ination was
a small price to pay for renewedgrowth and resorptionof un-
employment.During the 197Os,however,ination becamemore
seriousand persistent.Ination in the industrialized capitalist
countries during the three years 197072 averaged5.3 percent
annually, in 1973it was 8 percent,and from 1974morethan 10
percentannually}Duringthe midyearsof this decade,a shift of
perceptioncameoverpolicymakersin thesecountries:ination
ratherthan unemploymentbecamethe principal enemy.
The impact of economiccrisis wasnot uniform in time or
intensity. It wasfelt first in WesternEuropein 1973-74with the
joint impactof a wageexplosion,continuingfromthe eventsof
May 1968in Franceand thereafterencompassing all of industrial
Europe,and the OPEC-initiatedoil price rise. The United States
was less vulnerable and managedto continue antipoverty and
full employmentpolicies at home while escalatingits overseas
expenditures,thanksto the U.S.privilege of printing the worlds
money.This freeride on an ever-decliningdollar wasinterrupted
in 1979 with a radical switch to tight money policies following
the appointmentof Paul Volker as Chairmanof the FederalRe-
THE WORLD ECONOMIC CRISIS Z75
servein the last year of the Carteradministration,policies con-

tinued under the Reaganadministration,which followed from
1981.2
The industrializing neomercantilist developmentalist
states had a somewhat longer enjoyment of relatively uncon-
strained growth, thanks to their ability to borrow heavily from
privatetransnationalnancial markets.This borrowingfacility
came to an abrupt end in the debt crisis of 1982. The same
stringencyalso besetthe economicand nancial relations that
had developedbetweenthe redistributiveandthe capitalistecon-
omiesduring the détenteof the 1970s.This sequenceof impacts
signied, not a seriesof national crises,but the unfolding of a
single worldeconomy crisis. This crisis manifesteditself prin-
cipally in the form of ination of which ballooningdebtwas one
aspect.If ination was the indicator, it was not the explanation.
Theexplanationlay in the conict of socialandpoliticalforces
at the three levels of production,state,and world order.
The moderatecreepingination of the advancedcapitalist
countriesduring the 1960swas a direct consequenceof the cor-
porativestructureof the neoliberalstate.Wageincreases
agreed
betweenbig corporateemployersand trade unions were passed
on to the public in price increases.Lesspowerful social groups
wereprotectedby the safetynet of the welfarestate.Thestates
expensestendedto rise both becauseof welfare-state transfer
paymentsandbecause of thehigherwagessecuredby increasing
numbers of state employeesthrough unionization of the state
sectorand the growth of welfare-stateprograms.Cost-pushina-
tion wassupplemented
by statedecit nancing.Thistookplace
within a broadly consensualpolitical and ideological frame-
work.3 There was a national consensusin the major stateson the
goalsof growth,productivity,high employment,and welfare.
Laborby and largeparticipatedin this consensus;
evenin Italy
and France,where communist movementsrepresenteda sub-
stantialmajorityof industrialworkers,therewasno openchal-
lengeto the neoliberalstate.Duringthis time, tradeunionsof
establishedworkers gained strength,and laborspolitical inu-
encethrough socialdemocraticand analogouspolitical parties
won enactment of social legislation in many Western countries,
putting in place comprehensivewelfare and employment-sus-
taining state policies. Labor also in a number of countries secured

protection against ination in the form of wage indexation to the
cost of living.
Signs that the limits of this consensus had been reached
occurredin the explosionof socialconict that occurredin May
1968 in France and the autunno caldo of 1969 in Italy. These
events were followed by an acceleration of wage increases in
otheradvancedcapitalistcountries,including WestGermanyand
Japan and the Scandinavian countries, where labormanagement
relationshad beenleastconictual. In all thesecountries,higher
levels of ination temporarily attenuatedsocial conict, post-
poning rather than avoiding it.
In neomercantilist developmentalist states ination has
been the natural consequenceof caesarism,i.e. the temporary
stabilization of an unresolved confrontation of social forces none
of which can subordinate the others without at the same time
risking its own survival. Caesarism, in what we may call its
benignphase,tendsto accommodate
this situationby acquiescing
in the demands of all groups [though favoring some over others)
and allowing the market to inict the consequencesin the im-
personalized form of ination. Caesaristregimeswill lean toward
one side or another in using ination as a redistributive mecha-
nism. Populism, in economic terms, was a policy of distributing
incomes toward workers and other popular groupsa leftist in-
ation. The first Peron government of Argentina and the Allende
government in Chile presided over inations of this kind.5 Other
types of caesarist ination favored some bourgeois sectors over
othersimport substitution manufacturers over agricultural ex-
porters,for instance.Albert Hirschmanrecountshow in Argen-
tina the industrial bourgeoisie would make common cause with
the urban massesunder populist leadershipduring recessionin
order to secure an expansionary policy and to hold down the
price of meat, the principal export product and wage good, but
would shift to ally with the cattle breedersin backingmilitary
intervention when workers in a tightening labor market were able
to demand higher wages.Military regimeshave been just as
inationary asnonmilitary formsof caesarismin their propensity
to offer incentives to many different industrial groups and to
satisfythe demandsof the military and otherinuential segments
THE WORLD ECONOMIC CRISIS 277
of the state bureaucracy.During the 1970sheavy international

borrowing by authoritarianregimesbecamea substitutefor the
locally induced inations of an earlier period. Indebtednessfor
countries, as well as for individuals, is grounded in inationary
expectations:money borrowednow can be usedto generatefu-
ture income ows that will enable the borrower to repay the
principal in future depreciatedcurrency.The newly industrial-
izing countriesof the 1970sexpectedto be ableto servicetheir
growing debts from rising prices for their raw material exports
and expanded export of their manufactures.
The United Stateswas in a special position as founder and
guarantorof the hegemonicworld economy.Its role was critical
in the internationalizingof what otherwisewere a seriesof do-
mestically induced inations. The critical factor in the interna-
tionalizing of ination wasthe U.S.paymentsdecit. This decit
grew apaceduring the 19603as a direct consequenceof U.S.
military expendituresabroad,notably becauseof the escalation
of war in Indochina, and the international expansion of U.S.
basedmultinational corporations.The decit was thus directly
related to the costs of U.S. hegemony. U.S. governments were
unwilling, and in practicepolitically unable,to bearthesecosts
domesticallyin the form of reducedexpendituresat home.The
administration of President Lyndon Johnson was committed to
an antipoverty program,an offsetto the unpopular war in Viet-
nam. The succeedingadministrations of Presidents Richard
Nixon and Jimmy Cartercounteredrecessionaryconditions by
stimulating the economytoward full employment.This political
inability to choosebetweenforeignand domesticgoals,between
guns and butter, was acquiescedin by foreigners,who cameto
hold an increasingvolume of U.S.treasurybills and dollar bank
balances.The U.S.public debtbecamea world debtincreasingly
held by foreigners.This gaveforeignerscauseto admonishU.S.
governmentsfor irresponsiblenancial management,but it also
made the holders of debt increasingly dependent on the system
that generated it.
The international transmission of ination took place
through severalmechanismsthat dominatedinternationalnan-
cial networksduring the 19703.7
Onewasthe rising pricesof raw
materials, of which the vefold increase in petroleum prices
tainingstatepolicies.
Laboralsoin anumberofcountries
secured
protectionagainstinationin theformofwageindexation
to the
cost of living.
- Signsthatthelimitsof thisconsensus
hadbeenreached
occurredin the explosionof socialconict thatoccurredin May
1968 in Franceand the autunno caldo of 1969 in Italy. These
events were followed by an accelerationof wage increasesin
otheradvanced
capitalistcountries,
includingWestGermany
and
IapanandtheScandinavian
countries,
wherelabor-managemen
relationshad beenleastconictual. In all thesecountries,higher
levelsof ination temporarilyattenuatedsocialconict, post-
poningratherthanavoidingit.
In neomercantilistdevelopmentaliststatesination has
been the natural consequenceof caesarism,i.e. the temporary
stabilizationof an unresolvedconfrontationof socialforcesnone
of which can subordinatethe others without at the sametime
riskingits own survival.Caesarism,
in whatwe maycall its
benignphase,tendstoaccommodatethissituation
byacquiescing
in the demandsof all groups(thoughfavoringsomeoverothers)
andallowingthemarketto inict theconsequences in theim-
personalized
formofination.Caesaristregimes
will leantoward
onesideor anotherin usingination asa redistributivemecha-
nism.Populism,
in economic
terms,wasapolicyof distributing
incomestoward workersand other popular groupsa leftist in-
ation. Thefirst Perongovernment
of ArgentinaandtheAllende
government
in Chilepresided
overinations
ofthiskind.5
Other
typesof Caesarist
ination favoredsomebourgeoissectorsover
othersimportsubstitution
manufacturers
overagricultural
ex-
porters,
for instance.
AlbertHirschman
recounts
howin Argen-
tina the industrialbourgeoisie
wouldmakecommoncausewith
the urban massesunder populist leadershipduring recessionin
orderto securean expansionary
policy and to hold down the
priceof meat,
theprincipal
exportproduct
andwage
good,
but
would shift to ally with the cattlebreedersin backingmilitary
interventionwhenworkersin atighteninglabormarketwereable
to demandhigherwages.Military regimeshavebeenjust as
inationaryasnonmilitaryformsof caesarism in theirpropensity
to offer incentivesto many differentindustrialgroupsand to
satisfy
thedemands
ofthemilitaryandotherinuentialsegments
of the state bureaucracy. During the 1970s heavy international

\- borrowing by authoritarian regimes became a substitute for the
locally induced inations of an earlier period. Indebtedness for
..-
countries, as well as for individuals, is grounded in inationary
expectations: money borrowed now can be used to generate fu-
ture income ows that will enable the borrower to repay the
principal in future depreciated currency. The newly industrial-
izing countries of the 1970s expected to be able to service their
growing debts from rising prices for their raw material exports
and expanded export of their manufactures.
The United Stateswas in a special position as founder and
guarantor of the hegemonic world economy. Its role was critical
in the internationalizing of what otherwise were a series of do-
mestically induced inflations. The critical factor in the interna-
tionalizing of inflation was the U.S. payments decit. This decit
grew apace during the 19603 as a direct consequence of U.S.
military expenditures abroad, notably because of the escalation
of war in Indochina, and the international expansion of U.S.-
based multinational corporations. The deficit was thus directly
related to the costs of U.S. hegemony. U.S. governments were
unwilling, and in practice politically unable, to bear these costs
domestically in the form of reduced expenditures at home. The
administration of President Lyndon Iohnson was committed to
an antipoverty program, an offset to the unpopular war in Viet-
nam. The succeeding administrations of Presidents Richard
Nixon and Jimmy Carter countered recessionary conditions by
stimulating the economy toward full employment. This political
inability to choose between foreign and domestic goals, between
guns and butter, was acquiesced in by foreigners, who came to
hold an increasing volume of U.S. treasury bills and dollar bank
balances.The U.S. public debt becamea world debt increasingly
held by foreigners. This gave foreigners cause to admonish U.S.
governments for irresponsible nancial management,but it also
made the holders of debt increasingly dependent on the system
that generated it.
The international transmission of inflation took place
through several mechanisms that dominated international nan-
cial networks during the 19705.7One was the rising prices of raw
materials, of which the vefold increase in petroleum prices
broughtaboutthroughthe agencyof the Organization

of Petro-
leumExportingCountrieswasthe mostdramatized instance.A
secondwas the growth of an unregulatedtransnationalEurodol-
lar market,a nancial markettrading in foreign-heldliquidities,
continuallyfed by the U.S.decit andthe dollarbalances
accu-
mulatedby the petroleum-exporting countries.This marketbe-
camea sourceof credit for major corporationsand governments
of newly industrializingcountries.A third mechanism wasthe
systemof exible exchange rates,which the internationalnan-
cial systemfell backuponfrom 1973afterabandoning succes-
sivelythe gold-parityand xed-exchangerateprinciplesof the
Bretton Woods accord. This enabled the United Statesin partic-
ular to pursuefull-employment
policiesat homewhile allowing
the dollar to deteriorate in value abroad throughout the decade.
The debasement of the dollar also advantaged U.S. exports and
offsetto someextentthe increasedprice of imported petroleum.
Throughthesetransmission
mechanisms
eventhesurpluscoun-
tries like West Germanyand Japanimported ination. This im-
portedination stimulateda wagepushin thesecountriestoo
a phenomenon hithertorestrainedthereby cooperativelabor-
management relations.
Thewagepushin the neoliberalstates,caesarist
ination
in the neomercantilistdevelopmentaliststates,and the world-
wide rise in raw-materialprices can all be seenasthe effectsof
a diffusionof power.The wagepush reectedthe growingpower
of labor;caesaristination, the absenceof a consensusthat would
enableconicting social forcesto act cooperatively;and rising
raw material prices,the slipping of power awayfrom coreman-
agersof the world economytowardperipheryforces.Thefactor
that tied thesedistinct origins of inationary pressurestogether
into a generalized world inationaryprocesswasthe growthin
liquiditiesfed by the U.S.decit. TheUnitedStateswasableto
run this decit throughoutthe 19703becauseof its political
dominance.Increasingly,however,political pressureswere re-
quiredto securetheacquiescence
of foreigners
to acceptgrowing
amounts of decreasinglyvaluable dollars. In Susan Stranges
terms,the dollarwasslippingfrom top-currency to negotiated-
currencystatus.In the late1960s,the U.S.negotiators
usedthe
nancial deterrent [the threat to severthe link betweenthe
THEWORLDECONOMIC
CRISIS 279
dollarandgold)9
asabargaining
chip;in the1970s,
thatweapon
havingbeenexpended,
theymadeacceptance
of U.S.debtthe
quidproquofor U.S.militarycommitments
in Western
Europe
and the FarEast,and they arguedthat generalrecoverywould
depend
on recovery
of theU.S.economy,
whichothermajor
capitalistcountries
wouldhaveto helpnance.
The dollars contestedstatusin the systemthus also re-
flecteda shiftin power.AlthoughtheUnitedStates
remained
predominant, it faceda challenge
to itspolicies
fromeconomi-
callyrecovered Western EuropeandJapan. Pressure
ontheU.S.
government fromtheotheradvanced capitalist
countries
reached
a peakin 1978,butthenal blowthatprecipitated a radical
change in U.S.monetary policycame, notfromthem,butfrom
theperiphery. TheAyatollah Khomeini triggered
a sequence
of
eventsthat led to PaulVolkersinstallationas chairmanof the
New York FederalReserveand the beginningof restriction on
the U.S.moneysupply.Meanwhile,
ideologues
of the hege-
monicorderhad soundedan alarmthat the diffusionof power
within statesas within the internationalsystemhad led to a
problemof ungovernability
THE DISINTEGRATION
OF THE NEOLIBERAL HISTORIC BLOC
A keyindication
thattheworldsystemconfronted
crisisrather
thanconjunctural
adjustment
came withareevaluation
ofofcial
thinkingaboutthehierarchy
of economicproblemsthattook
placeatthemidpoint
ofthe1970s.
Inationceased
toberegarded
benignlyasthe inevitablebut relativelyinnocuousconsequence
of a necessary
stimulusto growthandbegan
to beperceived
by
thedominantgroupsandstateeconomic managersastheprin-
cipalobstacle
toeconomic
revival
andrenewed
growth.
Ination
at the new higherratesnow signiedunpredictability
of the
future economicenvironmentand becamean inhibition to
investment.
Behind the disincentive to invest was a long-term narrow-
ingofprotmargins
beginning
inthe19603.
Partofthissqueeze
onprotswasperceived
bybusiness
ascomingfromthesucces-
sive wageincreasesextractedby the entrenchedpower of labor

in the neoliberal state. This may have contributed more to the
psychologythan to the reality of narrowing protability during
the earlier phasesof the decline. Higher production costsfrom
wage increaseshad been passedon to the consumerin higher
prices. There had beenvery little changein the relative returns
to labor and capital from production.
Duringthe 1970s,however,thefactorof internationalcom-
petitionbecame
amajorconstraintonpricing.ExportsfromWest-
ern Europeand Japangainedan advantagein internationalmar-
kets over those from the United States, where productivity in
industry had risen more slowly. U.S. exportsregaineda com-
petitive edgeon price for a few yearsin the mid-1970sthanksto
the depreciationof the dollar, but U.S.industry faceda long-term
challengeof competition that could be met only by investment
in technological renovation. Surplus countries like West
Germanyand Iapan with revaluedcurrencieshad to pareexport
costsso asto maintain the competitivenessof their productsjust
as industry in a decit country with a devaluedcurrency,asthe
United Stateshad become,attemptedto increasethe competi-
tiveness of its products.
Capitalistmanagementwas caughtin a prot squeezebe-
tween labor on the one side keeping wageshigh and foreign
competitorson the other holding prices down. The tension be-
tween theseopposingforcesrose with the wageexplosionthat
engulfedthe capitalistworld in the early1970swhenthebite of
international competitionwasbeing acutelyfelt.
Behind this contradiction was another that affected the
problem of productivity. The strengthof worker organizations
limited managementscontrol in the production processjust
when managementforesawthe needfor radical restructuringof
production.Theimperatives
of international
competitionseemed
to require a more technology-intensiveproduction processwith
fewer established workers and a more exible use of semiskilled,
nonestablished workers. Unions would be bound to resist these
changes.
Another squeezeon capitalin the neoliberalstate,for some
analyststhe crucial factor in precipitating the crisis, hasbeena
reduction of the shareof capital in total output as a result of the
transfers effected by state welfare programs. An increased pro-

portion of workers (and also middleclass) incomes was now
coming from various statutory entitlements nanced through tax-
ation. These programs were an integral part of the consensus on
which the neoliberalstaterested.They increasedthe proportion
of GDP passing through the state budgets in all the advanced
capitalist countries. Ultimately, they brought about a scal crisis.
Unemployment automatically increased the social expenses of
the state while at the same time it reduced state revenues. The
costs of much-expanded state sectors continued to rise, since
wages in the state sector were frequently indexed to ination, a
practice that had also spilled over from the state sector to large-
scale private industry. Cumulative decit budgeting not only
contributed to ination; it also raised interest rates as govern-
ments borrowed in domestic and international nancial markets.
The burden of service on public debts in turn became a growing
claim on current state revenues. Middleclass tax revolts erupted
in a number of countries. The social consensus was eroded as
those who paid taxes were pitted against those who beneted
from state revenuesprivate-sector against state-sectorworkers,
middle classesagainst welfare recipients, small businessmen fac-
ing bankruptcy against corporate welfare bums.15
The social contract that had been the unwritten constitu-
tion of the neoliberal states historic bloc was broken in all the
advanced capitalist countries in the years following 1974-75.
These years were a threshold in class struggle. Governments
allied with capital to bring about conditions that business people
would consider favorable to a revival of investment, and they
pushed labor into a defensive posture. Thenceforth tripartism
ceasedto be the preeminent mode of social relations of produc-
tion. A new structure of production relations emergedthat tended
to polarize the working classinto a relatively secureand protected
minority, encompassed as a rule by enterprise corporatist rela-
tions, and a fragmented and relatively unprotected majority of
nonestablished workers.
It has become a commonplace on both left and right of the
political spectrum that the capitalist state has both to support
capital in its drive to accumulate and to legitimate this accumu-
lation in the minds of the public by moderatingthe negative
282 THEMAKING
OFTHEFUTURE
effects
ofaccumulation
onwelfare
andemployment.
Asgrowth
stagnates,
thecontradiction
between
thetwofunctions
ofaccu-
mulation
andlegitimation
sharpens.
Thecontradiction
manifests
itselfinternally
intheadvanced capitalist
country
intheformof
a scalcrisis,
justasforthelateindustrializing
ThirdWorld
country it manifests
itselfasanexchangecrisis.
Asgrowthstag-
nates, thecosts
ofsocial
policiesriseandthetaxbase
onwhich
tofinance
themdiminishes.
Budget
deficits
become
inflationary,
whilecapitalargues
thatthetaxburden
inhibitsinvestment.
Thereis strong
pressure
fromcapital
tocutbackonlegitimacy
byreducing
social
expenditures
ofgovernment
androlling
back
realwages,
thereby
denouncing
thesocialdemocratic
compro-
miseworked
outamong
capital,
labor,
andgovernments
during
thepostwar
economic
boom.
Governments
have
tobalance
the
fear
ofpolitical
unrest
fromrising
unemployment
andexhaustion
ofwelfare
reservesagainst
thefearthatbusiness
willrefrain
from
leading
arecoverythatwouldbothreviveemploymentanden-
large
thetaxbase.
Inthiscircumstance,
governments
inthead-
vanced
capitalist
countries,
whatever
theirpolitical
coloration,
haveleanedtowardtheinterests
of capital.
During
theyears
of postwar
consensus
it hadbecome
accepted
wisdom
thatsociety
would
nottolerate
highunemploy-
mentoranydismantlingofthewelfare
state.
Ifthese
things
were
to occur,
it would,it wassaid,costthestatethelossof its
legitimacy.
Thetruthofthisproposition
hasnotbeen
demon-
strated
uniformly.
Indeed,
it wouldmoregenerally
seemtobe
thecasethatthelegitimacy
of statewelfare
andof labormove-
mentshasbeen undermined
in publicopinion,
notthelegitimacy
ofthestate.
Large-scale
unemployment
hasproducedfearand
concern
forpersonal
survival
rather
thancollective
protest.
The
unions
arein strategic
retreat,
losing
members,
andunable,
in
general,
toappealtopublicopinion
forsupport.
Thedisintegration
oftheneoliberal
historic
blocwaspre-
pared
byacollective
effort
ofideological
revision
undertake
through
various
unofficial
agenciesthe
Trilateral
Commission
theBilderberg
conferences,
theClubofRome,andother
less
prestigious
forumsand
then
endorsed
through
more
ofcial
consensus-making
agencies
liketheOECD.
These
agencies
of
latterday
neoliberalism
prepared
itsdemise.
Anewdoctrine
de-
THE WORLD ECONOMIC CRISIS Z83
ned the task of statesin relaunching capitalist development out

of the depression. There was, in the words of a blueribbon OECD
committee, a narrow path to growth, bounded on one side by
the need to encourage private investment by increasing prot
margins, and bounded on the other by the need to avoid rekin-
dling inflation.
The methods advocated were strict control of national
money supplies, strict restraint on government spending, and
equally strict deterrence of increases in real wages. High and
persisting levels of unemployment, it was recognized, would
inevitably accompany this kind of adjustment. The new doctrine
rejected positive government intervention in the economy while
underlining the imperative nature of these negative measuresof
intervention. This seemedto rule out corporativetype solutions
like negotiated wage and price policies and also the extension of
public investment. It placed primary emphasis on restoring the
condence of business in government and in practice acknowl-
edged that maintenance of welfare and employment commit-
ments made in the course of the postwar development to politi-
cally important but economically subordinate groups would have
to take second place. While applauding wage restraint and state
budget cutbacks, business also demanded a strengthening of man-
agerial authority over the organization of work, an authority that
had been weakened by worker power on the shop floor, and the
freedom to restructure production so as to be able to make greater
use of technology-intensive processesand flexible employment
of temporary and part-time nonestablished workers and support
services.
The goals of the government-business alliance could be
achieved only through a weakening of trade union movements.
Rising unemployment created the conditions for undermining
organized labors power by fragmenting and dividing the working
class. This did not come about in quite the same manner as the
classical effect of unemployment lessening labors bargaining
power in general vis-a-vis capital. From 1970 onward a new
phenomenon appeared in the inationary process. Unemploy-
ment ceased to have a restraining effect on wage increases.
Thenceforth wages continued to rise at the same time as unem-
ployment increased. Those workers who retained jobs did as
well or betterduringphasesof high unemployment

as during
periodsof employment
expansion.
Thelink between
wages
and
unemployment
wasbroken.At thesametime,thoseworkerswho
remainedin the establishedcategorywhile unemploymentwas
spreading
aroundthembecame
moredependent
on theirem-
ployers.Objectiveconditionswerepropitiousfor enterprise
cor-
poratismamongthe dwindlingproportionof relativelysecure
and relativelywell-offemployees.
Theywerenot badlyserved
by theeconomic program of thegovernment-business
alliance.
Theycouldperceive theirinterests
asdistinctfromandpossibly
opposedto thoseof thenonestablishedandunemployed.
Another line of cleavagethat could be exploited by the
government-business
allianceseparated
statefromprivate-sector
workers.In a number of advancedcapitalistcountries,the most
recentforward thrust of the tradeunion movementshad beenin
the organizingand securingof collective-bargaining
rights of
state-sectorworkers. Thesenow found themselvesin the front
line of attackby the new programof budgetcutbacksandwage
restraint.Where the private sectorhad set the pattern for wage
demandsand trade-union organizationaldrives by state-sector
workers,governmentsnow setthe exampleof wageresistance
andemployment rationalization
for theprivatesector.Theattack
on state-sectorworkers erodedboth public sympathiesfor the
labor movement and working class solidarities. State-sector
strikes always appearedto hurt the public, and private-sector
establishedworkers, like middleclass people, could identify
themselves as taxpayers interested in reducing government
spending.
Amongthe unemployedand nonestablished therewere
alsodivergentinterests.
Downgraded
formerestablished
workers
mightclingto trade-union
solidarityasahopeforrevivalof the
halcyondaysof the neoliberalsocialconsensus.
Migranttarget
workers,womenseekingpart-timeemployment, illegalworkers
in the burgeoningunderground economies,
unemployedghetto
youthsall wouldhavequitedifferentorientations
to workand,
distinct in their own ways,all be far lessattractedto trade-union
solidaritiessm
This fragmentation
and growthof divisionswithin the
working classhasnot beenuniform. In many WesternEuropean
countries,a longhistoryof ideologicaleducationhasmaintained
a senseof solidarity.Theforceof this traditionis muchweaker
in North America. (It remains stronger in Canada than in the

United States.)In both Italy and France there have been instances
where unions have maintained solidarity of action between mi-
grant workers and local established workers, whereas in other
instances these groups have been juxtaposed in opposition one
to another. Fragmentationhas, however, been the underlying
trend that explains the weakness of labor in preventing the dis-
integration of the neoliberal social consensus and opposing the
program put in its place by the government-businessalliance.
If the strains tending toward a disintegration of the neo-
liberal historic bloc have been visible since the mid-1970s, it
would be premature to dene the outlines of a new historic bloc
likely to achieve a certain durability as the foundation for a new
form of state. One can, however, prudently speak of a crisis of
hegemony as having opened in some of the leading countries of
the capitalist world. Its symptoms are an uncertainty of direction
among the dominant groups and a fragmentation and absenceof
cohesion among the subordinate groups. Some of the dominant
groups espouse a classical liberal View of national and world
economy; others envisage a more state-interventionist national
capitalism with some revival of corporatist methods of consensus
building. The lack of cohesion among subordinate groups is evi-
denced by the incoherence of opposition politics. The crisis of
hegemony is a crisis of representation: one historic bloc is dis-
solving, another has not taken its place. Such a condition is ripe
for caesarism, not necessarily in its man-of-destiny (or, pace
Thatcher, woman-of-destiny) form, but quite possibly a caesarism
without Caesar.Indeed, a parallel can be drawn between the
inations of the advanced capitalist countries during the late
1970s and the inations of the neomercantilist developmentalist
states. With the erosion of social contract, the former were slip-
ping into the same condition of uncooperative competition
among social forces locked in a political impasse that had char-
acterized the latter.
TENDENCIES IN THE TRANSFORMATION

OF THE NEOLIBERAL STATE
Twoprincipal
directions
ofmovement
in politicalstructures
are
visible in the erstwhile neoliberalstates:one is exemplied by
the confrontational tactics of Thatcherism in Britain and Reagan-

ism in the United States toward removing internal obstacles to
economicliberalism; the other by a more consensus-based ad-
justment processas in Iapan, West Germany,and someof the
smallerEuropeancountries.The crisis of hegemonyis more ap-
parentin the former, while the latter seemsto suggestthe possi-
bility of an adaptationof neoliberalstructuresto the prospectof
a more powermanagedworld political economy.In France,the
structures of economic management present analogies to those
of the latter,while the polarizationof societyand politics is more
like the former. Meanwhile, minority left-wing groups in some
of thesecountries(e.g.,the CERESgroup in the FrenchSocialist
Partyand the LabourPartyadvocatesof the AlternativeEconomic
Strategyin Britain) proposemoreself-reliantstrategiesto protect
national economies from world-economy inuences so as to be
able to plan production of use valuesrather than rely on com-
petition in the production of exchangevaluesfor the world mar-
ket. Thesedivergenttendenciesdraw strengthfrom factors dif-
ferentiating the different countries: position in the world
economy,the structuresof production and nance, entrenched
ideologies, and political practices. Each of these tendencies
toward an alternative form of state posits a changed structure of
world order and presupposesa reconstructedpatternof produc-
tion relations. Underlying these different prospectsfor a new
order of production is the implication of a transformationof the
social structure of accumulation.
The Thatcher-Reagan model can be treatedteleologically
as the anticipation of a hyperliberal form of statein the sense
that it seemsto envisagea return to nineteenth-centuryeconomic
liberalism and the rejection of the neoliberal attempt to adapt
economicliberalism to the sociopoliticalreactionsthat classical
liberalism produced.The whole paraphernaliaof Keynesiande-
mand-supportand redistributionist tools of policy are regarded
with the deepestsuspicionin the hyperliberalapproach.Govern-
ment spendingto createemployment,and transferpaymentsto
targetedgroupsintended to sustaintheir purchasingpower and
thus indirectly to maintain employment,fall under this suspi-
cion. So also do other kinds of government intervention to sup-
port industries in difculty such as credits,bailouts, price sup-
ports, and subsidiesalthough in these respects principles are

not consistently followed in the practice of the hyperliberal tend-
ency. Government-imposed regulations to protect the public with
respect to industrial activities [antipollution, safety and health
controls, etc.) are also to be weakened or dismantled. The market
is to determine how much protection the public really wants.
(Peoplewill not, accordingto the reasoningof this tendency,buy
unsafeproducts if they do not want them and will move away
from polluted areasif they nd them unpleasant. The economists
assumption of perfect information and freedom of decision is
touchingly naive.)
The hyperliberal tendency in the state actively facilitates
a restructuring, not only of the labor force, but also of the modes
of social relationsof production.It renouncestripartite corpora-
tism. It also weakens bipartism by its attack on unions in the state
sector and its support and encouragementto employers to resist
union demands in the oligopolistic sector. Indirectly, the state
encourages the consolidation of enterprise corporatist relations
for the scientic-technical-managerial workers in the oligopolis-
tic sector, a practice for which the state itself provides a model
in its treatment of its own permanent cadres. Finally, state poli-
cies are geared to the expansion of the new enterprise-labor-
market type of employment in short-term, low-skill, high-turn-
over jobs. The overall impact of the hyperliberal tendency on the
social formation is thus toward a polarization of labor between a
privileged minority enterprise-corporatist component and a
large-scale,unstably employedenterprise-labor-market
compo-
nent, with a declining but aggravated and conictual bipartite
residue. Cohesion among enterprise-labor-market workers is ob-
structed by the fact that they are segmentedalong age, sex, and
ethnic lines.
The political implications, as mentioned above,are a com-
plete reversal of the coalition that sustained the neoliberal state.
That state rested on its relationship with trade unions in the
oligopolistic sector (the social contract), an expanding and in-
creasingly unionized statesector,readinessto support major busi-
nessesin difculty (from agricultural price supports to bailouts
of industrial giants), and transfer payments and services for a
range of disadvantaged groups. The neoliberal state played a
hegemonic
rolebymaking
capital
accumulation
onaworldscale
appear
tobecompatible
withawiderange
ofinterests
ofsubor-
dinategroups.
It foundedits legitimacy
on consensual politics.
Thewouldbehyperliberal stateconfrontsall thosegroupsand
interestswith which the neoliberalstatecameto terms.It does
notshrinkfromopenopposition
to state-sector
employees,
wel-
farerecipients,and tradeunions.
Thegovernment-business
alliancethatpresides
overthe
transformationof the neoliberalinto a would-behyperliberal
formof stategenerates
an imposinglist of disadvantaged
and
excludedgroups.State-sector
employees madegreatgainsas
regards
theircollective
bargaining
status
andtheirwages
during
theyearsof expansionandhavenowbecome front-linetargets
for budgetary
restraint.Welfarerecipientsandnonestablished
workers,
sociallycontiguouscategories,
arehit by reduced state
expenditureandunemployment. Farmers andsmallbusiness-
menareangrywith banksandwith governments asaffordable
nance becomesunavailable to them. Establishedworkers in
industriesconfrontingsevereproblemsin a changinginterna-
tional divisionof labortextiles,automobiles,
steel,shipbuild-
ing,forexampleface
unemployment
orreduced
realwages.
So
longastheexcluded
groups
lackstrong
organization
andpolitical
cohesion,ideologicalmysticationand an instinctivefocuson
personal
survivalratherthancollective
actionsufcetomaintain
the momentumof the new policy orthodoxy.If at leasta small
majorityofthepopulation
remains
relatively
satised,
it canbe
politically
mobilized
asnecessary
to maintainthese
policiesin
placeagainst
thedissatisfaction
of anevenverylargeminority
that is divided and incoherent.
Thisconfrontational
postureof thewould-behyperliberal
statetoward the variousexcludedgroupsrequiresa new basisin
legitimacy.
Theanswerhasbeensoughtin a nonhegemonic,
populist
appeal
to thesanctity
oftraditional
values.
At theora-
toricallevel,the newlegitimacystresses
the work ethic,family,
neighborhood,
andpatriotism.
Atasubliminal
level,theappeal
is tingedwith racism-against
immigrantsand minoritiesster-
eotypedinconsistently
bothaswelfareburnsandasthreatsto
jobs.Theideological
appeal
is nominally
classless,
thoughin
practice
aimedatanamorphous
blue-collar
andpetty-bourgeois
constituency. The managerial elites and scientic-technical

cadresof enterprisecorporatismare by and large too sophisti-
cated for this kind of appeal. They are more likely recruits for a
state-capitalist alternative.
The appeal to traditional values is strengthened by the
strong military stance of the hyperliberal state. The state justies
militarism as necessary to defend the capitalist world order. In
economic terms, there is a military Keynsianism effect in stim-
ulating the economy, but inated arms budgets and military ad-
venture abroad increase the statesbudget decit far beyond the
cuts achieved in the welfare and social services. Persistent and
mounting statebudgetdecits expandthe public debt, keep in-
terest rates high, and act as a deterrent to productive investments.
Military expenditures, moreover, being increasingly of a tech-
nology-intensive and capital-intensive kind, are less able than
during earlier phases of military expansion (the Korean and
Indochina wars) to expandemployment. The ideologicalben-
ets of military expansionism are probably greaterfor the would-
be hyperliberal state than its economic benets are.
The international consequencesof militarism reveal the
ambiguity of the hyperliberal model. The state disengagesfrom
civil societyit reverses the trend toward interpenetration and
blurring of the edgesbetween state and society that corporatism
promotedin order to force more radically the adjustment of
national economies to the world economy. In this respect, it is
the fullest, most uncompromising instance of a liberal state. But
the militarism with which it is entwined is the harbingerof a
reversion from the hegemonic capitalist world order, which
called the neoliberal form of stateinto being in the rst place.
Militarism is a symptomof the regressionof globalhegemonyon
which the world economic order has rested. The more that mil-
itary force has to be increasedand the more it is actually em-
ployed, the less the world order rests on consent and the less it
is hegemonic. Economic benets appear to flow less from the
operation of universal laws of the market that is the basic article
of faith of liberalism and more from power positionsbackedby
force.
While the hyperliberal model reassertsthe separation of
state and economy,the alternative state form for relaunching
capitalist developmentpromotesa fusion of stateand economy.

This state-capitalistpath may take severalforms differentiated
by national positionswithin the world economyand by institu-
tional structuresand ideologies.The substancecommonto these
differentiated forms lies in a recognition of the indispensable
guiding role of the statein the developmentof the nationspro-
ductive forces and the advancement of their position in the world
economythrough a consciousindustrial policy, and in an equal
recognitionthat this can be achievedonly through a negotiated
understandingamongthe principal social forcesof production
arrived at through the mediation of the state in a corporative
process.Such an understandingwould have to produce agree-
ment on the strategicgoalsof the economyand alsoon the sharing
of burdens and benets in the effort to reach those goals.
The state-capitalistapproachis groundedin an acceptance
of the world market as the ultimate determinant of development.
No single national economynot eventhe largestcan control
the world market or determine its orientation. Furthermore, un-
like the neoliberal approach,the state-capitalistapproachdoes
not posit anyconsensualregulationof the world marketasregards
multilateral trade and nancial practices.Statesare assumedto
intervenenot only to enhancethe competitivenessof their na-
tions industries but also to negotiateor dictate advantagesfor
their nationsexporters.The world marketis the stateof nature
from which state-capitalisttheory deducesspecificpolicy.
The broadlines of this policy consistof, in the rst place,
developmentof the leadingsectorsof national production so as
to give them a competitive edgein world markets,and in the
secondplace, protection of the principal social groups so that
their welfare can be perceivedas linked to the successof the
national productive effort.
The rst aspect of this policyindustrial competitive-
nessis to be achievedby a combinationof openingthesein-
dustrial sectors to the stimulus of world competition, together
with state subsidization and orientation of innovation. Critical to
the capacity for innovation is the condition of the knowledge
industry; the statewill have a major responsibility of funding
technologicalresearchand development.In its task of guiding
productive development,the statewill haveto balancestrategic
security values against competitive efciency. Competitive ef-

ciency dictatesspecialization,but if specializationin compara-
tive advantages were to neglect sectors essential to national se-
curity, e.g., automotive, aerospace, and computer sectors, the
state would seek to retain a national position in these sectors
despitehigher costs.Obviously,the trade-offsbetweensecurity
and efficiency are more difcult for smaller economies than for
a continental economy like that of the United States.
The second policy aspectbalancing the welfare of social
groups-has to be linked to the pursuit of competitiveness. Pro-
tection of disadvantaged groups and sectors (industries or re-
gions] would be envisaged as transitional assistance for their
transfer to more protable economic activities. Thus training,
skill upgrading, and relocation assistancewould have a preemi-
nent place in social policy. The state would not indenitely
protect declining or inefcient industries but would provide in-
centives for the people concerned to become more efficient ac-
cording to market criteria. The state would, however, intervene
between the market pressures and the groups concerned so that
the latter did not bear the full burden of adjustment. (By contrast,
the hyperliberal model would evacuatethe state from this cush-
ioning and incentive-creatingfunction, letting the marketimpose
the full costs of adjustment upon the disadvantaged.)
Where internally generated savings were deemed to be
essential to enhanced competitiveness, both investors and work-
erswould haveto be persuadedto acceptan equitablesharingof
sacrice, in anticipation of a future equitable sharing of benets.
Thus incomes policy would become an indispensable counter-
part to industrial policy. Similarly, the managerial initiative re-
quired to facilitate innovation and quick response to market
changesmight be balancedby forms of worker participation in
the process of introducing technological changes.The effective-
ness of such a state-capitalist approach would, accordingly, de-
pend on the existence of corporative institutions and processes,
not only at the level of enterprises and industries, but also of a
more centralized kind capable of organizing interindustry, inter-
sectoral and interregional shifts of resources for production and
welfare.
The state-capitalist form involves a dualism between, on
292 THEMAKINGOFTHEFUTURE
the onehand,a competitively efcientworld-market-oriented

sector,and,ontheother,a protected welfaresector.
Thesuccess
of theformermustprovidetheresources forthelatter;thesense
of solidarityimplicitin thelatterwouldprovidethedriveand
legitimacyfortheformer.Statecapitalism thusproposes ameans
of reconcilingthe accumulation and legitimationfunctions
brought
intoconictby theeconomic
andscalcrisesof the
1970sand frozenin caesaristpolarizationby hyperliberalpol-
itics. In its mostradicalform, statecapitalismbeckonstoward
theprospect
ofaninternal
socialism
sustained
bycapitalist
suc-
cessin worldmarketcompetition.This would be a socialism
dependent
oncapitalist
development,
i.e.,onsuccess
in thepro-
ductionofexchange
values.
But,soitsproponents
argue,
it would
be less vulnerable to external destabilizationthan attemptsat
socialistself-reliance
werein economically
weakcountries(e.g.,
AllendesChile and postcarnation-revolution
Portugal].
The
moreradicalform of state-capitalist
strategythuspresentsitself
asanalternativeto defensive,
quasi-autarkic
prescriptions
for the
constructionof socialismthroughreducingdependency on the
worldeconomy
andemphasizing
theproduction
of useValues
for internal consumption.
Differentcountriesaremoreor lesswell equippedby their
historical
experiencefortheadoptionof thestate-capitalist
de-
velopmentalpathwithorwithoutthesocialist
coloration.
Those
bestequipped
arethelate-industrializing
countries
(fromFrance
andJapan
in thelatenineteenth
century
to BrazilandSouth
Koreain the latetwentieth],in which the state[or a centralized
but autonomousnancial systemas in the Germancase)has
played
amajor
rolein mobilizing
capital
forindustrial
develop-
ment.Institutionsandideologyin thesecountrieshavefacilitated
a closecoordination
of stateandprivatecapitalin thepursuitof
common
goals.
Those
leastwellequipped
aretheerstwhile
in-
dustrialleaders,
BritainandtheUnitedStates,
countries
in which
hegemonic
institutions
andideology
keptthestatebyandlarge
outof speciceconomic
initiatives,conningits roleto guaran-
teeingandenforcing
marketrulesandto macroeconomic man-
agement
of market
conditions.
Thelagging
effects
of pasthege-
monicleadership
maythusbeadeterrent
totheadoption
ofstate-
capitalist
strategies.
It canalso,
however,
beasked
whether
strat-
egiesthat wereappropriateto catchingup the hegemonicleaders

(when the industrial model of the future was presentbeforethe
late-developingrivals) will prove equally successfulin the un-
charted realms on the frontiers of technologicaldevelopment,
where many countriesnd themselvestoday.
RecentU.S. literature comparingthe policy structuresof
advancedcapitaliststateshaspointedto factorsbothpropitious
and unpropitious to taking the state-capitalistroute. PeterKatz-
ensteinhas contrastedstatesthat have used policy instruments
for specic industrial interventions(FranceandJapan)with those
that have limited their action to macroeconomic instruments
(Britain and the United States],26and he has illustrated the vari-
etiesof experienceof small Europeancountriesin combining
offensive world-market export strategieswith commitment to
stateWelfare. John Zysmanhas underlined the importanceof
very different nancial structuresin either facilitating (France
and Japan)or inhibiting (Britain and the United States)state
leadership in the orientation of investment and thus industrial
development.LikeKatzenstein, hepointsto WestGermany and
thesmallEuropean countriesasinstances
of compromise among
theprincipalsocialgroupsbeingnegotiated
in relativeautonomy,
thoughsanctionedby the statein a processcharacterized by
anotherauthor,Philippe Schmitter,as societal corporatism.29
Theseauthorsdiscussthe stateasan ensembleof govern-
mental instrumentsand goalsof policy. I have stressedalso the
historic bloc as a constitutive componentof the state. It was
argued above that the world economic crisis of the 1970s dis-
mantled the neoliberalhistoric blocs of the advancedcapitalist
countries.The hyperliberalprojectsustainsitself with a political
coalition of the relatively satised, excluding a signicant but
ideologically and politically fragmentedpart of the nation, and
it mysties this polarization with an appealto patriotism. This
constitutesa caesaristresponse:the temporarystabilizationof a
basicallycontradictory
andconictualsituation.Thestate-cap-
italist project must be read,by contrast,as an attemptto recon-
stitute social hegemonywithin the nation through corporatism.
If the incentivesto this endeavormay appearattractive,the ob-
staclesaregreatand differ from country to country.
One condition for its success would seem to be the exis-
tence of a corps of personsaround whom a coalition of social

forces could be constructedthose whom Gramsci would have
called the organicintellectuals.In France,the graduatesof the
grandesécoles,in particularthe Ecolenationaledadministra-
tion, providesucha corps,linking the upperechelonsof state,
nance, and industry. In Japan,the graduatesof the prestige
universities,in particular Tokyo University, give the samekind
of leadership.Thesegroupsare capableof dening a national
interest transcendingparticular economicinterestsof rms, in-
dustries, or regions, and they disposeboth of instruments to
implementsuchpoliciesand of inuenceto secureconformity
of diverse business interests with the overall objectives. In Britain
(asJohnZysmanhaspointedout] the civil servicehasthe nec-
essaryautonomyto evolvea national perspective
but lacksthe
instrumentsof policyandchannelsof inuenceto carryit out.
The tradition of separationbetweenstateand economyis a major
obstacleto effectivestateleadershipof economicdevelopment.
U.S.political practiceand ideologyhasmadegovernment
of-
cials the creaturesof interacting special interests,to the point
where the very conceptof the statehasbeensomewhatalien to
U.S.thought. The principal objectionto the ideaof an industrial
policyin theUnitedStatesis thattheU.S.politicalprocess
would
inevitablymakeof it a panoplyof protectionismfor the inef-
cient.(Thereasoning is thatthoseindustriesthathurt mostwill
bethe mosteffectivepressureson government,andsinceinterests
arefragmented,
eachcanseeonly its own success
or failureand
will not havecondencein adjustmentpoliciesthat requireaban-
donmentof existingpositions) -
A second condition is the availability of a potential
coalition of socialforcesadequateboth to carrythroughthe proj-
ectfor enhancingthe competitivenessof nationalproductionand
to agreeon the burden and benet sharingto be incurred in the
process.Onemostcriticalaspectof this conditionis the ability
to convincethe weaker,lessproductivesectorsof industry of the
needfor change.In Japan,developmenthashitherto takenplace
througha dualeconomy: theleadinghigh-productivity,
technol-
ogy-intensivesectorbasedin the Japanesehomelandhaspro-
gressively
strippeddownandupgradedits laborforce;the lower
productivity,morelabor-intensive
industrieshavemultination-
alized themselves,making increasinguse of cheap labor over-
seas. A seniorFrenchofcial writing on industrial policy, Chris-

tian Stoffaes, has advocated a similar policy for France: high
wages in the leading sector to encouragetechnological upgrading
of industrial processes and delocalization (or movement
abroad to make use of cheaper foreign labor) for the more labor-
intensive processes. In the United States, Reaganism has
achieved a political unication of U.S. business in support of the
Republican Party, but it is a unity based on a contradictory eco-
nomic policy. Defense-relatedindustries benet from big military
budgets while Wall Streetscondence is shaken by uncontrolled
budget decits. Main Street, i.e., businessesthat are not interna-
tionally competitive and have had their prot margins squeezed
by union wages,remain ideologically in the Republican fold but
suffer from the high interest rates of Reagan-eramonetary policy.
This contradictory coalition precludes any industrial policy, ex-
cept insofar as the defense budget underpins a de facto but un-
avowed industrial policy.
Another aspect of the coalition-building problem is the
availability of an interlocuteur Valable on the side of labor. Only
in West Germany and the small European countries have broadly
representative labor movements acquired, since World War II,
experience as negotiating partners enjoying a certain equality of
status with business and government in deciding matters of na-
tional economic and social policy. This experience was, as noted
above, interrupted by the economic crisis that pushed labor in
all the advanced capitalist countries into a defensive position. In
both France and Japan,where industrial policies were successful,
labor was relatively weak. In France, the largest and most repre-
sentative segment of the labor movement was politically ex-
cluded during the years of industrial modernization supported
by the MarshallPlan.In Japan,the laborforcewasinstitutionally
segmentedinto established and nonestablished, the trade unions
being conned to the former group and within it fragmented into
enterprise-corporatist organizations. In Britain, by contrast,
where the trade union movement was relatively strong, it was
unable (becauseof shop floor versus top leadership tensions) to
constitute a valid partner in industrial policies, and industry was
unwilling to countenance any union voice in investment
decisions.
In principle, the corporative forms of organization re-
quiredto negotiate
theindustrialandincomes
policybases for
state-capitalist
developmentwouldinvolvea revivalof tripar-
tism.Theindustrial-policy
proposals
fortheUnitedStates
drafted
by FelixRohatynenvisage
a top-levelindustrialdevelopment
boardcomposed of members of cabinet,business,andlabor,
located in the ExecutiveOfce of the President,and disposing
througha newIndustrialFinanceAdministrationof fundsto
supportindustries
or rms whosecompetitiveness
is criticalto
the national interest. The Boards administrative authority
would be limited, but the statureof its membersand its access
to thePresidentwouldgiveit inuenceto marshaltheresources
of the executivebranch in support of a coherentdevelopment
strategy.35
Sucha mechanism
seemsto assumenot onlythat
laborrepresentatives
beaccorded
considerable
inuencein the
determinationof national economicpriorities but alsothat these
representatives
will be ableto arbitratethe differences
among
differentunionsandgroupsof workersthatwill inevitablyarise
in anyreadjustmentof productionstructures.
Bothassumptions
aremostdoubtfulin thelight of theweakening
of thetradeunion
movementby the economiccrisisandthe restructuringof pro-
duction. The lack of centralizedcontrol over economicnegotia-
tions has differentiatedthe U.S. labor movementfrom those in
Scandinavia and West Germany.
If tripartitecorporatismappearsan unlikely prospectin
the United States,Christian Stoffaesperceivedsome risks for
industrialpolicyin France
of allowingtripartismfreerein.The
worldmarket-conquering offensivestrategyhe sawasFrances
salvationwould requirea strongstatecapableof dening and
implementing
specicpolicychoiceswhile at the sametime
associating
economicandoccupational
interestswith thepursuit
of nationalgoals.He feared,however,
that a morepolitically
likelyoutcomewouldbeadefensive protectionist
policydictated
by the diverseinterests
with access
to government. In other
words,themoresocietal(toborrowPhilippeSchmitters
term]
tripartitecorporatism
becomes,
thelessaptit is forthemanage-
ment of an effectiveworld-marketcompetitivestrategy,but the
moretripartiterepresentationis subordinatedto state-ledcor-
poratism,
themorechance thereis thatcompetitiveratherthan
protectionist
policieswill beconsistentlyfollowed.This,atany
THEWORLD
ECONOMIC
CRISIS 297
rate,
may beavalidproposition
forcountries
witharelatively
weaklabor
movementandonehastobear
inmind thegeneral
weakening
oflabor
movements
intheadvanced
capitalist
coun-
triessince
themid-1970s.38
It maywellprove
thattheIapanese
model ofstate-capitalist
development,
inwhichtrade unionpar-
ticipation
takes
placethrough
anenterprise-corporatist
relation-
shipwithbigenterprises
rather
than
through
national-level
union
representation
ontripartite
bodies,
isthemore
likely
formfor
state-capitalist
development
in the1980s.
Thecorporatist
process
underpinning
state-capitalist
de-
velopment,
whichwould
include
business
andlabor
in the
worldmarket-oriented
sector
andworkers
inthetertiary
welfare-
services
sector,
would
atthesame
timeexclude
certainmarginal
groups.
These
groups
have
afrequently
passive
relationship
to
thewelfare
services
andlackinuence
inthemaking
ofpolicy.
They aredisproportionately
theyoung,women, immigrant
or
minority
groups,andtheunemployed.Therestructuring
ofpro-
duction
tendsto increase
theirnumbers.
Sincethesegroupsare
fragmented
andrelatively
powerless,
theirexclusion
hasgener-
allypassed
unchallenged.
Itdoes,
however,
containalatent
threat
tocorporatist
processes.
Part
ofthisthreat
istheriskofanomic
explosions
ofviolence,
particularly
onthepart oftheyoungmale
unemployed element. Suchexplosions often,however,
strengthen
byreaction
theestablished
authority.
Theother
part
ofthethreat
istheriskofpolitical
mobilization
ofthemarginals,
whichwouldpitdemocratic
legitimacy
against
corporatist
eco-
nomicefficiency.
These
dangers
areforeshadowed
inthewritings
ofneoliberal
scholars
about
theungovernabi1ity
problem
of
modern
democracies.
Theimplication
is thatthecorporatist
processes
required
tomake
state-capitalist
development
succeed
may
have
tobeinsulated
fromdemocratic
pressures.
Tothe
extent
thisbecomes
true,theprospects
ofinternal
socialism
sus-
tained
byworld-market
state
capitalism
would
beanillusion.
Inshort,
thestate-capitalist
alternative
hassome
potential
for reconstructing
internal
hegemoniesandovercomingthe
caesarist
impasse
thathyperliberalism
tendstorigidify.
Thenar-
rowing
basis
ofcorporatism
(particularly
asregards
itslabor
com-
ponent)
onwhich
state-capitalist
development
must
restdoes,
however,
contain
alatent
contradiction
todemocratic
legitimacy.
Its historic bloc would be thin. The excluded groups available

for mobilization into a counterhegemony
would be considerable,
thoughthe fragmentation
and powerlessness
of thesegroups
would make the task formidable. In the medium term, state-
capitaliststructuresof someform seema feasiblealternativeto
the hyperliberalimpasse. Thelong-termviability of theseforms
is a more open question.
STRUCTURAL CHANGE
IN THE WORLD POLITICAL ECONOMY
Thepropositionsemerging fromthestudyof preceding historical

periodssuggest
thatchanges in formsof statewill beconditioned
by boththesocialstructureof accumulation (includingin partic-
ular the socialrelationsof production)and the structureof world
order. At the presenttime, changesin both of these structures
canbe perceived.Thoseaffectingthe socialstructureof accu-
mulation,which may well be the most profoundand of the
longestduration,will bediscussed
in thenextchapter.Structural
changesin world orderandtheir implicationsfor the direction
of changein forms of stateare consideredhere.
These can be summarized under three points: (1) a Virtual
abandonmentof the central regulatory functions of the world
economyentrustedunder the PaxAmericanato the institutions
of global hegemony,accompaniedby a weakeningof central
authority and increasingrelianceby statesand corporationson
their political-economicbargainingpower;(2)little changein the
basicbipolarity of the militarystrategicsystem,but a relativeloss
of control by the superpowersoutsidetheir homelandsand loss
of credibility in their leadershipand of confidencein their sense
of priorities,particularlyamongU.S.allies;and(3)a heightening
of competitive pressures,beginningwith the armsrace and ex-
tending through world marketsfor raw materials,capital equip-
ment, and manufacturedgoods,which tends to encouragean
emulative uniformity in the way problemsare confrontedand
solvedratherthan withdrawal into isolatedsphereswithin which
distinctive solutions can be attempted.
The lastpoint implies that the world is not movingtoward
THE WORLDECONOMICCRISIS 299
asystem
ofself-contained
economic-strategic
blocssimilartothe
trend of the 1930s.It is, however,movinginto an aggressively
competitive
tradingpattern
in whichnegotiating
power,
rather
thanthe impersonal
rulesof liberaleconomic
behavior,
deter-
mines outcomesin a zero-sumgame.The systemhas become
moredecentralized
andpowermorediffused,a diffusionthat is
morepronounced
in theeconomic
thanin themilitary-strategic
realm.Tothis diffusionof powercorresponds
a lossof hegemony
in the senseof a consensualnorms-based
system.The continuing
militaryandeconomicpredominance of theUnitedStates
out-
sidethe Sovietsphererestsmoreopenlyon its strengthand
bargainingpower.Hegemony hasgivenplaceto dominance.
Doesthisgreater
diffusionof powermeanthattheworld
orderis becoming
morepermissive
in thesensethatthereis more
freedom
forthedevelopment
of novelformsof stateandof pro-
duction relations?Not likely, becauseof the competitive pres-
sures
present
in theworldsystem.
These
arelikelytoactonall
statesoutside the redistributive societiesin such a way as to
encourage
theadoption
ofsimilarformsofstate-capitalist
devel-
opment
gearedto anoffensive
strategyin worldmarketsand
sustained
by corporatist
organization
of societyandeconomy.
Productionin thesesocietieswill most likely be organized
througha combination
of enterprise-corporatist
andenterprise-
labor-market
socialrelations,andtripartismwill be invokedin
somecountries
asa process
fortheformulation
of industrypol-
iciesandincomespoliciesunderstateleadership.
Any countries
drivenby internalpressures
to adopta defensive-withdrawal
strategy
vis-a-vis
theworldeconomywouldincurtheriskof
economicfailure with a drasticdrop in living standards.
The redistributivesocietieswill alsobe constrainedby the
competitive
pressures
oftheworldorder,
though
nottothesame
degree
asotherstates.
Thedevelopmentalpossibilities
of the
Soviet Union and China are limited aboveall by the armsrace.
Totheincreased
defense
budgetof theUnitedStatescorresponds
a proportionately
greater
economic
effortby theSovietUnion
with a smallermarginremainingfor socialdevelopment.
Never-
theless,
boththe SovietUnionand[to an evengreater
extent)
Chinahaveentered
phasesofexperimental
changein socialpro-
ductive
organization
regarded
bytheirleaders
asessential
tothe
maintenance
andstrengthening
of theirpowerwithintheworld
system.
These
social
andeconomic
experiments
areguided
by
the internalcriteriaof the redistributivesystems,eventhough
some
aspects
[e.g.,thegreater
useof market
mechanisms
and
decentralization
of management
in economicdevelopment)
may
appear
toreectsome
practices
ofcapitalist
development.
The
links that redistributivesocietiesestablishwith the capitalist
world marketare limited and controlledby themto servethe
specicpurposes ofthesesocieties.
Theireconomies
arenotin
thepositionof competingfor worldmarketshares
asarethe
countriesof capitalistdevelopment.Exportsare importantto
thesecountries,but assurplusfromtheir internallydetermined
production
requirements.
Thesecountries
areconstrained
exter-
nallybytheworldmilitarypowercompetition
andinternally
by
the limits to their ability to mobilizepopulationand resources
fornational
goals.
Furthermore,
thediffusion
of poweroutside
theSoviet
sphereandthedecline
ofU.S.hegemonicleadership
openmoreoptionsfortheSoviet
UnionandChina. Thearrange-
mentsconcludedby the SovietUnion with WesternEuropean
countriesfor the constructionof a naturalgaspipelinegiving
Western
Europe
access
to Sovietenergy
aresuggestive
of arange
of possible
international
economic
arrangements
the Soviet
Union and Chinacould makewith differentpartners(or with
eachother)in a worldeconomic
ordergoverned
bynegotiated
contracts.
Thedeclineof centralized
management
characteristic
of
theworldeconomy
ofPaxAmericana
canbetraced
through
the
1970s.Thetop management
of this worldeconomy
canmore
adequately
berepresented
asa system
thanasaninstitutiona
system
onlypartly
composed
ofstate-like
institutions.
During
the
1960s,
theU.S.Department
oftheTreasury
mighthaveappeared
tobetheapex,itsgeneral
policycriteria
being
internationalize
through
themedium oftheIMF,WorldBank, theGeneral
Ar-
rangements
to Borrow,
theBankforInternational
Settlements
theOECD,
andseveral
otheragencies.
Through
theseinstitutions,
linkedbytheoverlappingpersonnel
oftheirprincipal
decision
makers,theretookplace
theprocess
ofpolicyosmosis
among
the
leading
personnel
of advanced
capitalist
states
andof policy
projection
intoThirdWorld
countries
thathasbeen
described
in
Chapter 7. However, during the 1970s,private transnational

banksassumed
suchan importantrolethatthetop management
structure could no longer be convincingly representedexclu-
sively in termsof stateand interstateinstitutions.Of course,
nancialmarketshadalwaysshapedthewaythesystemworked.
The World Bank had dependedon the private banksto market
its bonds,and in this way capital marketsin New York and in
Europeconstituteda checkon the kinds of policies that both the
WorldBankandits potentialborrowers
couldin practicepursue.
The capitalmarketsin questioncannotrealisticallybe thought
of as nonpolitical. They arenot castin the classicalmodel of an
innity of buyersandsellersof money;rathertheyarecomposed
of a limited number of oligopolists whose consensuscan be
ascertained
by a few telephonecallsandwhoseindividualjudg-
mentsarebasedon a balancingof nancialrisk-takingandprud-
ence,of political pressuresand personalprejudices.
When,duringthe 1970s,the chief expandingsourceof
international credit was the lending operationsof the transna-
tional banks,the exactnatureof the interrelationshipbetween
stateand privatestructuresat the apexof the world systembe-
cameboth more important and more mysterious.U.S. and Ger-
man state policies encouragedthe private banksto lend to the
SovietUnionandEastern
European
countriesaspartofthepolicy
of détente.Simultaneously,industrializing Third World coun-
tries found borrowingfrom the privatebanksless politically
distastefulthangoingto the IMF. Ultimately,it musthavebeen
acceptedby all concernedthat the advancedcapitaliststates
throughtheir centralbankswould haveto backup the private
banksin caseof paymentscrisis or default in order to avoid an
unacceptableshockto the internationalnancial system.Indeed,
theprincipleof ultimatestateresponsibilitywasmultilateralized
through a decision of the central bankersat the Bank for Inter-
national Settlementsin July 1974that the central banks of the
majorcapitalistcountrieswould act to preventthe collapseof
privatebankswithin theirjurisdictions.Theprivatebankswere
beingencouraged to takeon quasi-state-likefunctionsin inter-
national lending and in return had some assurancethat the cen-
tral bankswould,in crisis,bail themout.Themysteryconcerns
howmuchlatitudeprivatebankers
hadandhowmuchpolitical
restrainttheyoperatedunder.It seems
evidentin retrospect
that
this was not a very tightly managedsystem.
When,in the early1980s,a sequence of crisesrevealed
the inability of someEasternEuropeanandThird World coun-
tries to meet their debt obligations,proposalsemergedto move
the official institutions, particularly the IMF, back into a central
role supervisinginternationallendingand at the sametime to
enhancethe political characterof the IMF, i.e., to reassertthe
statecharacterof internationalnance. This is somethingdesired
notjustbygovernmentsasameansof controlling
theirrisksbut
alsoby thetransnational
banksasa meansof limitingtheirs.
However,a more central and perhapsessentiallysymbolic role
for the international institutions in debt managementand the
multilateralizing of debt renewal conditions was not accom-
paniedby anyreformoftheinternational
monetary
system
such
aswould makepossibleenlargedcentrallycontrolledcreditand
greaterexchangestability.
The relativeenlargementof the private,nonstatecharacter
of international nancial managementduring the 1970smay be
seenas an effect of weakeninghegemony.Private international
credit expandedfor lack of any agreement
on how the ofcial
intergovernmental
structures
in thesystemcouldbereformed.
The impasseon reformwas the consequence
of stalemate
be-
tweenthe United Statesand the Europeancountrieson the future
role of the dollar. The United States had an effective veto on
reformandwasnot preparedto forgothe advantages
of the dol-
lars international status. The United States could run a contin-
uingdecit solongasthedollarremainedtheprincipalcurrency
for settling internationalaccountsand the principal reserve
currency.
Therelativelygreaterdependence of EuropeandJapanon
importedoil denominated in dollarstied thesecountriesever
moretightly to the dollar standardas OPEC,following 1973,
raisedthe price of oil. It weakened thesecountrieschancesof
gainingU.S.acceptance
of anyreformdisplacing
thedollarfrom
its dominantposition.Ascondencein U.S.management waned,
privatetransnationalbankstook on moreof the actualmanage-
ment of the system.In the absenceof agreementon management
by ofcialinstitutions,
dollarhegemony
shiftedto thenancial
market,that is to say,to the very largelyunmanageddollar itself.

Perceptions of impending crisis in the early 1980s revealed the
risks in this hegemoniccop-out,but the political prospectsof
consensualreform of the systemat the interstatelevel, though
apparently more necessaryto the systemssurvival, did not seem
for all that more likely. Authority weakenedat the apex of the
international nancial system. Crisis did not produce effective
centralization.U.S.power was too greatto be broughtunder any
externallyimposeddiscipline but no longergreatenoughto shape
the rules of a consensual order.
In trade,the erosionof the GATT systemand the growth
of neomercantilist practices through the 19703and into the 1980s
have been abundantlydescribed:the negotiationof specialsec-
toral agreementslike the multiber one;the difculty of dealing
with nontariff barriers; state backing for corporate national
champions; the growth of countertrade,compensationagree-
ments, and other forms of barter.
Although for long perceived by Western commentators
through the lenses of hegemonic liberalism as unfortunate de-
parturesfrom the rational courseof policydepartures dictated
by selsh intereststhis complex of trade measuresis now com-
ing to be understood,at leastby someanalysts,in its own terms
as a rationally coherentstrategyunder existing world-economy
conditions. Susan Strange has proposed a web-of-contracts
model asa moreadequatesubstitutefor the liberal model,point-
ing out that the neomercantilistreality doesnot imply lesstrade
than was the caseheretoforeunder liberal hegemonicrules.
Underthe webof-contractspractice,dealsarenegotiatedby states
with states,by stateswith corporations,and by corporationswith
corporations.The total volume of tradeis limited much moreby
the capacity of the nancial systemto provide credit than by
protectionist exclusions of products. In other words, the failure
of the nancial systemwhich in the 1970sprovided too much
credit and in the 19803 too littleis a more serious constraint
than the shift in the mode of trade relations is.
If nance is the chief determinant of the level of economic
activity, technology is the principal factor in competitive success
or failure. Thosestatesmost concernedto captureand expanda
shareof the world market must invest heavily in technological
research. The advanced countries on the frontiers of technology

must become innovators in order to compete successfully. Third
World countries pursuing rapid industrialization likewise seek
to build up a domestictechnologicalcapability, in order not to
remainforeverdependenton outsideknowledge;to this endthey
requireforeigninvestorsto do someresearchand development
in the hostcountry,in addition to acquiringup-todateequipment
from abroad.
Technologyis a eld in which the military and economic
aspectsof power overlap. Defensespendinghas been a major
stimulus to technologicaladvance,not only in defenseproduc-
tion per sebut alsoasa spilloverfromdefense
to civilian indus-
trial applications.The Europeancountriesand Japanhave suc-
ceededin supplanting U.S. world leadershipin someelds of
engineering
andelectronics.
President
Reagans
Strategic
Defense
Initiative (star wars) containsthe potential for reassertingU.S.
leadershipin high technologybackedby a hugestatebudgetand
conceived so as to attract industrial research in allied countries
into a contributory relationship to the U.S. effort. All the more
reasonfor Franceand her Europeanassociatesto advancethe
Eurekaproposalasa meansof furtheringEuropeantechnological
autonomy,not only in armaments,but, evenmore,in the areaof
industrial competitiveness.
The diffusion of economicpower and the internationally
competitivetnatureof the world political economyput pressure
on statesto adoptan offensivestrategyin world markets.Through
such offensivestrategies,stateswould lead and assistnational
industriesto conquermarketpositions.At the sametime, internal
pressures
comefrominterestsdisfavored
by competitionto adopt
a defensivestrategyof protection and partial withdrawal from
world competition. The prospect that the defensive strategy
would lead to a long-term decline in both power and plenty
arguesagainstit. But,asdiscussed
abovein connectionwith the
transformation of the neoliberal state,to follow an offensive strat-
egyrequiresbotha competentcorpsof statepersonnelpracticed
in theuseof adequate
policyinstrumentsandthe negotiationof
a social contractdistributing the costsand benets of industrial
readjustmentamongthe most inuential socioeconomicgroups.
Theseconditions may proveto be beyondthe capacitiesof some
states.
The defensive strategy would close off certain external

flows to and from the national economy, e.g.,by the use of foreign
exchange and trade controls. The offensive strategy, by contrast,
would preserve the openness of the national economy in its
leading sectors while it involved the state to a signicant extent
in their development. It is precisely this opennessto competitive
pressure with free international movement of capital that would
tend toward a uniformity of economic structures and also of the
culture underpinning economic activity. It would lead toward a
number of competing national entities increasingly similar in
their broad political, economic, social, and cultural outlines.
The international nancial network, despite its manifest
failings [lack of consensuson key currency reform, on recentral-
ization of management,or on mechanisms for credit creation and
distribution) remains the principal external constraint on na-
tional policies, acting as an incentive to opennessand as a deter-
rent to the defensive strategy. The very hint of a threat by some
government to control capital movements or foreign exchange
can lead to an investment strike and a capital ight, precipitating
thereby an exchange crisis that will require foreign borrowing
and possibly devaluation of the national currency. Reluctance to
follow a policy of opennessmakesforeign or domestic borrowing
by the state difcult, as does a perception in the nancial markets
that the state is not managing its expenditures in relation to its
revenues. The British Labour government was forced in 1976 to
reduce state expenditures as a proportion of GNP by a combina-
tion of IMF pressures and the high cost of borrowing in the
domestic nance market. The alternative to borrowing would
have been to print more money and provoke a run on the pound.
The French Socialist government under President Francois Mit-
terand introduced during its first year a number of social meas-
ures, including a fth week of paid holidays, retirement at sixty,
reduction of working hours to thirty-nine a week, and improve-
ment of conditions for part-time and temporary workers, and it
also carried through nationalizations of banks and industrial
groups. In its second year, however, the government had to face
decits in the social services and unemployment insurance, in
public and private enterprises, and in the balance of payments
of the country, which resultedin an alignmentof statepolicies
on those of the other advanced capitalist countries: priority to
antiination measures,imposition of a wagefreezeand abandon-

ment of wageindexation,and cutbacksin governmentspending
in generalandin socialexpenditures
in particular.
. A combinationof internal pressuresfrom domesticsocial
forcesand externalconstraintsoperatingthrough nancial mar-
kets and institutions of the world economy sets practical limits
to the options of governments.If a governmentwere determined
not to heed the external forces, it would have to be prepared to
rely exclusivelyon internalmeansof stimulatingandcoordinat-
ing the productiveforcesin its society.In the extremecase,this
would mean mass mobilization, collective and egalitarian aus-
terity, and the organizationof production gearedto use [or the
basicneedsof society)ratherthan exchange(or the possibility of
prots on world markets].This would imply a shift,not toward
p thedefensive-protectionist
strategy,
buttoward
theconstruction
of a redistributive system.
The defensive strategy,in opposition to competitive open-
ness,is advocatedby conservativegroups [of both capital and
labor) who want to protect their existing positions,not to revo-
lutionize society.It is lessa strategy,in the senseof a coherent
program,than a demandfor concessions.
But the mobilizing
redistributivealternativeis somethingelse.Thereis no indication
that public opinionin advancedcapitalistcountriesis psycho-
logicallypreparedfor suchan alternative.Theethicof personal
choicethatnourishes the hope of a personalsalvationon earth,
aswell asin heaven,is too widespreadto succumbto a collectivist
solution exceptperhapsunder conditionsof socialand economic
catastrophe.
In some Third World countries, the magnitude of foreign
debt is so great and the domestic political and social pain of
makingthe kinds of adjustmentslikely to be requiredso intense
thattheprospectof defaultscannotberuledout. SusanStranges
observationwith respectto Britain, that rich creditorsare much
moreconcernedwith appearances than with gettingtheir money
back,doubtless
appliesalsoto theMexicos,Brazils,andPerus.
The international nancial networks, to the extent they can main-
tain coherence, will doubtless make the maximum compromise
to keepthesecountrieswithin the system,and to toleratethe
reality of default so long as the forms of nancial obligationare
respected. The political elites of these countries in turn will

shudder before the political consequencesof overt default, which
would cut off foreign resources and require them to rely on the
committed support of their own populations. These governments
are more likely to gamble on the understanding of the world
nancial networks. Regimes that have held power by excluding
popular groups cannot readily transform themselves into mobi-
lizing regimes. At the sametime, there are limits to the economic
exactions they can be perceived to inflict upon their own popu-
lations for the satisfaction of foreign capital.
For the Third World country caught in this nancial bind,
the alternative to either authoritarian repression or the stalemate
of a cartel state is a national-populist revolution of the kind that
overthrew the Shah of Iranan alliance of the excluded. Such
alliances are difcult to build because of the fragmentation of
potential opposition groups and the effectivenessof modern tech-
nologies of repression. Nevertheless, the Iranian revolution, as
well as other movements like the liberation strugglesin southern
Africa and Central America, show it to be possible. The survival
of such movements depends on the dispersion of power in the
world system.The chancesmay be somewhat better in the Persian
Gulf than in a small Caribbean island.
Are there prospects for a comparable alternative in the
advanced capitalist countries? As a general proposition, the pres-
sures for conformity are stronger at the center than at the periph-
ery of a system. There would seem to be very little chance for a
successful war of movement leading to the capture and retention
of power by forces committed to radical social restructuring in
any of the advanced capitalist countries. There is somepossibility
of a longer, slower growth of an alternative political culture in
some countries that would give greater scope to collective action
and place a greater value on collective goods. For this to come
about, whole segments of societies would have to become at-
tached, through active participation and developed loyalties, to
social institutions engaged in collective activities. They would
have to be prepared to defend these institutions in times of ad-
versity. Although the basic strength of such a movement is nec-
essarily derived from its roots in society, it is extremely unlikely
that it could breakthrough successfullyto reorganizethe polity
in isolation in any single country. Successwould be conditioned

by the strengthof similar movementsin other countries,aswell
as by a diffusion of power at the world level such as would
preclude a concerted external effort at suppression.
The condition for a restructuring of society and polity in
this sense is to build a new historic bloc capable of sustaining a
long war of position within capitalist society until it is strong
enoughto becomean alternativebasisof statepower.This effort
hasto begroundedin the popular strataof any particularsociety,
but at the sametime it must be able to mobilize sufcient strength
in the world systemto protect its national bases.The adversity
that has befallen the left during the economic crisis of the 1970s
and 19803may perhapsbe turned to advantageif it were to
provokereection on the conditionsfor sucha long~termstrategy.
In a fascistprisonduringthelate
1920s
and
early
1930s
Antonio
Gramsci
reflected
upon
the
trans-
formation
ofproductive
forces
hecalle
Americanism
and Ford-
ismand itssignicance
forthedevelopment
ofcapitalism
in
Europe.Histhoughts
probedtheconnections
between
technol-
ogyand thepowerrelations
ofproduction,
between
bothofthese
and themoralorderofsocietyand
roleofthestate,
and the
relevancyofallthese
factors
totheprocess
ofaccumulation.
Gramscisreflections
raised
anumberofissues
involved
inthe
putting
came
intoplace
togovern
of
world
thesocial
economic
structure
of
processes
accumulation
during
the
first
that
halfof
the
twentieth
century.
Theyareauseful
starting
point
forconsid-
ering
whetherthisstructure
has,during
thelast
decadesofthe
century,
entered
anewphase
ofmutation.
TECHNOLOGY
ANDSOCIETY
Fordism,
inGramscis
thinking}
didnotbring
intoexistence
a
basic
change
intheclass
relations
ofcapitalism
butwasrather
a
rationalization
andextension
ofthese
relations
shorn
ofallex-
traneous
andprecapitalist
baggage.
Fordism,
through
itsability
to massproduceconsumergoodsfor peoplesneeds,showedthe
progressivefaceof capitalism,its ability to developthe produc-
tive forces.This productive capacitywas opposed,not by work-
ers, but by the regressiveand parasitical forces in existing society
that lived off the fruits of capital but were not themselvespro-
ductive: the traditional intellectuals, the rural bourgeoisie, and
the multitudes who battened upon state office for their incomes.
If Fordism had achieved its breakthrough in America, it was
largelybecausetheseregressiveforceswere relatively powerless
in America. This was also why American industry could at the
sametime achievehigh levels of accumulationand afford high
wagesfor its workers-the weight of the unproductiveelements
of societywas relatively light. Subsequently,the lash of compe-
tition compelledEuropeanindustriesto emulateAmericanmeth-
ods, but in Europe the regressiveforces were relatively more
powerful, and the statemediatedbetweenthe rationalizationof
production, on the one hand, and the regressiveforceson the
other.
The fascist corporativestatewas caughton the horns of
this dilemma. There were some elements in fascism that envis-
aged the corporative state as the means of making a gradual
transition toward the adoptionof Americanmethodsthroughout
Italian industry. Gramsciwas,however,skepticalthat this tend-
ency within fascism could triumph, becauseof fascismsde-
pendenceon the entrenched,dominant,plutocraticlandlord and
traditional intellectual elements of society. This made a break-
through by the technical-managerial
cadresof industry improb-
able. Fascism would remain a passive revolution, stabilizing
through coercion an impassein social development,verbally
espousingcertain aims of industrial concentration,but stopping
shortof the agrarianand industrial reforma thoroughgoingFord-
ism would imply.
Thereis a strongsenseof historical dialectic in Gramscis
thoughtsaboutFordism.The condition for the successfulinstal-
lation of Fordismin industry wasthe breakingof worker power,
achievedby a combinationof coercion(the weakeningand de-
struction of trade unions] and persuasion(high wages).The im-
plications of Fordism, once establishedas a generalmodel of
production organization,were,on the onehand, economicplan-
ning for the economy as a whole, and on the other, a moral
MUTATIONS 311
transformation creating new types of personalities both mascu-

line and feminine. Gramscisskepticismaboutthe prospectthat
state capitalism, through fascist corporatism, would be able to
achieve the planned economic environment for Fordism relates
to the rst of these implications. So does the adoption by the
Soviet Union of Fordist principles of industrial organization as
the production basis for a planned economy.
The second implicationthe prospects of a new moral
order convergent with massproductionwas closer to Gramscis
continuing preoccupation with historical materialism, with the
relationship of social being to social consciousness.Hitherto all
major changes in modes of existence had been the result of coer-
cion, i.e., the dominanceof one social group over another.[He
gavethe exampleof the shift from nomadismto settledagricul-
ture, accompanied by the imposition of serfdom.) What fasci-
nated Gramsci about the installation of Fordism was the effort on
the part of employers to reshape working-class morals that
accompanied their use of coercion against working-class
institutions.
Mass production, by its fragmentation of tasks and assem-
bly-line organization,reducedwork to a sequenceof physical
movements. It required a worker who would be disciplined and
attentive. A dissolute and irregular life outside the factory would
render a worker unt for factory discipline. Strongpuritanical
social and moral controls over the workers life as a whole would
compensatefor the inherent interest in and creative commitment
to work characteristic of the artisanal methods that had been
displaced by Fordism.
Perceptive capitalist employers like Henry Ford under-
stood this problem of bringing about concordance between fac-
tory work and social existence. They approached it by trying to
manipulate the social lives of workers whose collective power
had been broken. Their initiatives at moral reform went on at the
level of the worker and the factory: Hegemony here, wrote
Gramsci,is born in the factoryand requiresfor its exerciseonly
a minute quantity of professional political and ideological inter-
mediaries. It would, Gramsci foresaw, become a problem for the
state;the capitalist statewould takeoverand extendthe ideolog-
ical work of employers?
The RussianBolshevikswere awareof the sameproblem.
They approachedit by imposingan externaldiscipline upon the

factorywhile attemptingto spreadamongthe working classasa
whole a spirit of dedicationto the goalsof revolution.The mil-
itarization of labor associatedwith Trotskys organization of war
communism was revived in practice by Stalin in the First Five-
YearPlan. Gramscisacknowledgmentof Americancapitalsef-
fectivenessin the biggestcollectiveeffort to dateto create . . . a
new type of workerand of man3canbereadasa rebuketo wrong
methods employed by the Soviet leadershipin what Gramsci
agreedwas a right purpose.
The focus on the workers and the factory as the baseson
which a new order would have to be built conformed with Gram-
scisearlier experiencewith the workerscouncilsmovementin
Turin. Contraryto both Henry Ford and Stalin, he envisagedthe
new orderemergingthroughthe autonomousinteractionof work-
ers with their organicintellectualsin the revolutionaryparty-
the modernprince~creatinga workerledcounterhegemony.
Gramsci saw two contradictions arising with Fordism.
One was the hypocrisy inherent in the growth of libertinism
amongthe dominant classes,who would abandonin their own
behavior the puritanical standardsprescribedfor the working
class.(He might also have foreseenthe growth of cynicism in
countriesof actually existing socialismas a reactionto the self-
serving behavior of Party and bureaucraticcadres.)The other
contradiction arosedirectly out of the transformationof work,
which emptied work of creative or intellectual challengeand
content,aiming to turn the worker into a trained gorilla. Con-
trary to Adam Smith5 and subsequentwriters on alienation,
Gramsci did not see this as the spiritual death of man6a
progressivebrutalizationand mental deprivationof the working
class. The workers who had no longer to think about the concep-
tual content of their work would have other things to absorbtheir
mental capacities,including projectsthat could becomequite
threateningto the ruling classes.Fordism,for the working class,
was but a stagea liberation of the mind consequentialupon a
defeat in class strugglein the historical developmentof an
alternative society.
Gramscisanalysisof Fordism brings out severalguiding
principles for the examination of evidence regarding current
MUTATIONS 313
changein the socialstructureof accumulation.One of these

principlesis thattechnology
hasspecicimplicationsfor social
organization, productive
organization,
theroleof thestate,and
ideology.Theseimplicationsarenot,however,dictatedin a sin-
gularone-way-only
manner
bytechnology.
Different
ideological
and social forms may be devised as consistentwith a given
technology.Anotherprinciple is that technologiesare spread
throughcompetitionengendering the necessityof emulation.
This is preciselywheredifferencesin social,productive,and
ideologicalformsariseasdifferentadaptationsaremadeto the
same diffused technology.
Two furtherpointsto thoseguidingprinciplesexamined
by Gramscicanbe addedfor our own consideration. Onecon-
cernsthe possibilityof alternativetechnologies
andthe factors
determiningthe choiceof thosetechnologies thatbecomedom-
inant, like Fordism.The other is that dominanttechnologiesdo
not absorbthe whole of productionevenin the eraof their greatest
dominance. Theycoexistwith otherpreviouslydeveloped tech-
nologies,eachwith its own differentform of socialrelationsof
production,
andaccumulation
takesplacethrough
thestructured
interconnectionsof the coexistingvariety of dominant and sub-
ordinatemodesof productionrelations.Gramscidid notconsider
thesepoints.They are additionalto but not inconsistentwith
those he did.
Thequestioncontainedin the first of thesepointscanbe
phrasedasan alternative:Doestechnologydevelopon its own,
from its own internal logic, therebydictating what adjustments
societymustmaketo it? Or is technology
itselfa productof
societyand of societyspower relations?
Thereis a strongbiasin modernthoughtin favorof the
autonomy
oftechnological
development.
Byadopting
theideaof
a natural history of technology,three phasesin a progression
havebeenperceivedastakingplacesincethe industrialrevolu-
tion of the late eighteenthcentury:7
1. Manufacture based on skilled manual trades. The fac-

tory workshopconsists
of an assemblage
of artisans
or skilled
tradesmen,eachcarryingout a relativelycomplextask in the
course of which he can control the quality of his work and the
pace at which it is carried out.
2. Mass production with conveyor-belt technology (Ford-
ism) in which tasks have been highly fragmented and are carried
out by quickly trainable,semiskilledworkers.The motionsto be
performedby eachworker and the paceat which they are to be
performed is determinedby the technical system,not by the
workers judgment.
3. Automated or continuous processproduction in which
work is reintegrated on the scale of the workshop or enterprise
but is carriedout by machinesthat arenot directly controlledby
the worker. The worker plays a supporting role as dial-watcher
or maintenance mechanic.
Thesethree stages havethe form of abstractideal types

more than of fair representations of the historical development
of production. The image of the workshop as an assemblageof
skilled craftsmen is, for instance, hardly representative of early
cotton textile mills, in which many women and children were
employed.8 Nevertheless, the sequence craftsmanship-Fordism-
automation has a certain validity in simplifying the modern his-
tory of leading technologies.
Based on this, various theories have attempted to explain
the social consequences of changesin production technology,
for example, the kinds of worker organization evolved as a re-
sponse to each phase. Thus the craftsbased phase evoked the
response of unions composed of skilled tradesmen. These work-
ers identied with their craft or profession and had a relatively
high mobility among enterprises. Their unions controlled access
to trades qualications and defended their members earning
capacity by holding a strong position on the supply side of a
labor market in which there was a scarcity of skilled labor. The
workers of the mass-production phase responded differently,
through industrial unionism. They had little or no control over
the supply side of the labor market, being drawn from a large
pool of unskilled migrants who could be trained in a few days to
perform the work required of them. Their strength lay in their
numbers and their potential political impact, and they conse-
MUTATION S 315
quently sought to inuence the industrial systemthrough the

state,for example,by gainingprotectionagainstunemployment
and other social benets. Unlike the craft workers,they had no
senseof deprivationat losingcontrol overthe work process.The
arrival of the automation phasein the 19605brought with it
speculationsconcerninga third type of workerresponse.Observ-
ers noted the emergenceof a new category of scientic and tech-
nical personnelwith professionalqualications of a moregeneral
or polyvalent order than the craft-specic skills of old, i.e., math-
ematical, analytical, and communicationsskills. Such people
were thought likely to identify with the enterpriseand with the
integratedproduction processesin which they worked. Specu-
lation hascenteredon whetherthey would asserttheir functional
autonomy and lead a movement demanding both more self-man-
agementby technicianswork groupsat the enterpriselevel and
more inuence over future investment policy at the level of so-
ciety asa whole, or whetherthey would becomemoredependent
on the enterprisesinto which they were integratedand would
identify more with managementgoals."
Thesethesestreat technologyasa given and infer worker
responsesfrom the nature of the technical organizationof pro-
duction. There is no suggestioncontainedin them that tech-
nologicalchoicesthemselvesmay bedeterminedby socialpower
relations. The alternativeapproachconsiderstechnologyas a
part of a strategyof social conict inherent in the processof
capital accumulation.Technologyconsists,after all, in the prac-
tical methods selectedfor the purpose of solving production
problems.Thus dened, the questionsthat arise are: Problems
for whom? Solutions toward what purpose?The answersare
simple: For the accumulatorsand for the purposeof accumula-
tion. The basicand relatedthrustsof technologicalchangefrom
the nineteenththrough the twentieth centurieshavebeen (1) to
gain greater control for management over the execution of work
through labor discipline, and the consequentialability to mini-
mize labor costsand increasethe intensity of work; (2) to substi-
tute capital for labor as labor costsincrease;and (3) to separate
the tasksof conceptionand directionof productionfrom the tasks
of executionin such a way asto strengthenmanagementcontrol
and weaken worker autonomy in the work process. The cu-
mulative effect of thesetechnologicalchangestilts the odds in

socialconict in favor of managementand againstlabor.In doing
so, it has enabled managementto continue the accumulation
processon morefavorableterms.The sametechnologies serve
bothcapitalistandredistributiveaccumulation.
Accumulationis
the commonfactor,not capitalism,though capitalismpioneered
the processand rst put the technologiesinto practice.
Looked at in these terms, the three sequential ideal types
of technologydescribedabovearephasesin a continuousmove-
mentenhancingthe accumulators poweroverlabor.In a rst
stage,capitalbroughtthe machineryof productionunder its
control in factories. It did so because the existing method of
putting cut productionof goodsto artisansworkingin their
owncottages hadspecicdisadvantages for themercantileentre-
preneur:therewas no control over the paceof work and no
effectiverestrainton pilfering and embezzlement
of raw materials
and goods.The factorywas createdas a meansof enforcing
employerdiscipline,not because
newlyinventedmachineryre-
quiredafactoryformof organization
of production.Factory-scale
machineryfollowedthe introductionof the factoryand further
facilitated reduction of labor costs,e.g.,by enablingemployers
to hire women and children as machine tenders rather than pay
craftsmenswages.The factory and the technologythat owed
from it werethe result of the triumph of capitalistsoverdispersed
laborerswhose only power had lain in their control over their
own work. The factorymuch diminishedthis control.As Marglin
(1974)put it: The steammill didnt giveus the capitalist;the
capitalistgaveus the steammill.
Even in the factory,however,the capitalistscontrol over
work was not complete.The worker could still, individually or
as part of a team,pacethe use of machinery.This residueof
worker control was the targetof the innovationsin production
technologybegunin the late nineteenthcenturythat became
widespreadin large~scale
industryduringthe interwarperiod
throughmassproduction,scientic management, Taylorism,
etc.-the complex of changes signied by Fordism. These
changes inaugurateda longprocessof deskillinglaborby sepa-
ratingthe manifoldmotionsthatthe skilledworkercoordinated
in his own mind into simple, repetitive movementscarried out
MUTATIONS 3 17
separatelyby unskilled workers and coordinatedthrough the

engineeringdesignpreparedby management.Automation and
robotics are, in this sense, a further extension of Fordism. The
movementsat the coreof the production processare carriedout
by machinescoordinatedby othermachines,with somescientic
and technical staff standing in a support and monitoring rela-
tionship to the process.
Characteristicsof societiesother than the power relations
between capital and labor also played a role in the selection of
technologies. Charles Sabel has drawn attention to the nature of
markets, itself a consequenceof social structures. It was in the
United Statesthat a mass market for standardized machine-made
goodsbecamemost rmly established.Social and geographical
mobility and the relative weaknessof particularisticcultural tra-
ditions and social distinctions facilitated the emergenceof a
homogenizedtaste that led Americansto buy the goodsmass
producedby machines.Socialand cultural valuessupportedthe
Fordist innovations. In Britain, the samepropensitiesexisted,
though in a more restrictedway. The largepopulation uprooted
from rural life and subjectedto the experienceof massurbani-
zationduring the earlynineteenthcenturybecamea massmarket.
The socialstratication and particularismsthat characterizedthe
rest of British society,however,demandedmore differentiated
products. Franceprovides a third type of social demand.The
Revolution stabilized a large population of agricultural small-
holderswho provided for much of their own consumption,and
the rest of Frenchsociety,asin Britain, maintaineda demandfor
customizedor individually craftedproducts.As a result, a dif-
ferentmodeof industrialproductionpersistedanddeveloped
in
centerslike Birmingham and Sheffieldin Britain and Lyons in
France,a mode in which technologicalprogresswas consistent
with small-scaleproduction and product differentiation.
Given the existence of two alternative directions of tech-
nologicaldevelopment1arge-series production of standardized
goodsfor a massmarket and small-seriesproduction of differ-
entiatedgoodsfor segmentedmarketsthe ultimate triumph of
the mass-productionmodeis attributableto two factors.Onewas
the cost advantageof massproduction, which enabledit to cut
competitivelyinto specializedmarkets.Oncea technologicalin-
318 THE
MAKING
OFTHE
FUTURE
novation
cutting
costs
hadbeen
introduced
byonecapitalist,
competition
would oblige
others
tofollow.The
other
factor
was
theadvantage
ofmassproduction
forthesupply
ofwarmaterials.
Statesthussaw
theexistence
ofnational
mass-production
indus-
triesasa condition
forwarpreparedness.
Bothfactors
canbe
assimilated
tocompetition:
competition
forshares
ofconsumer
markets
andinterstate
competition.
Thusamode ofproduction
thatoriginated
inthepower
struggle
ofcapital
withlabor
became
generalized
through
theeffect
ofcompetition.
The most
unlikely
instance
ofthisdiffusionary
effect
wastheadoption
ofFordist
production
organization
byLenin
and
theBolsheviks
inRussia.
Motivations
in thismatter
oftechnological
changehow
muchis dueto conscious
strategies
ofclass
struggle
andhow
much
todiffusionthrough
competitionare
lessimportant
than
consequences.
Theconsequences
point
tothefurther
principle
mentioned
above:
thatdominanttechnologies
coexist
withearlier
technologies
incomplexhierarchical
relationships.
Different
pro-
duction
methods
arelinkedtogether
in asystem
ofcomplemen-
tarities
andcompatibilities.
New technologies
donotnecessarily
displace
olderones;
theyformarelationship
withthem,dividing
andallocating
production
between
them.
Particular
technolo-
gies
express
apower relationship
betweenlaborandtheaccu-
mulators,
andthecompatible
coexistence
ofdifferent
technolo-
gies
expresses
apowerrelationship
between thegroups
engaged
ineach.
Thus thedescription
oftheglobal
patternoftechnologies
ofproduction
isamap ofglobal
powerrelations.
Thispoint
is
illustrated
inthediscussion
ofcurrent
tendencies
in production
organization
thatfollows.
THE CORE-PERIPHERY
STRUCTURE
OF PRODUCTIONAND JOBS
In order
tograsp
whether
andin whatwaytheglobal
accumu-
lation
process
maybechanging,
it isnecessary
toascertain
the
mutations
taking
place
intherelationships
among
different
tech-
nologies
ofproduction
andthemodes
ofsocial
relations
associ-
atedwiththem.
These
mutations
canbeobserved
onlyastend-
encies
thatarestillfluid.Thepatterns
thatultimately
emerge
will
MUTATIONS 3 19
be shapedboth by social power relationsand the technological

solutions that are available. States will orient the choices made,
therebyreinforcing certainsocialforces,and stateactionswill in
turn be inuenced by international competition, military and
economic.It is unlikely that the total processof changein pro-
duction and jobs will prove to be reducibleto any singlefactor
and futile to look for such a determining factor. It will be more
to the point to considerthe variety of factorsunderlying observ-
able changesso as to try to estimatetheir relative weight in
different situations and therefore the probabilities of alternative
futures.
Chapter 7, in the discussionof the internationalizingof
production,notedthe developmentof a core-peripherystructure
of production on a world scale.Themorecapitalintensivephases
of production and the innovation of more sophisticatedtechnol-
ogiesthrough researchand developmenttake place in the core.
The more labor-intensivephasesand standardizedtechnologies
shift to the periphery. The core concentratesincreasingly on
softwarewhile the peripherytakesa growing shareof hardware
production.Thehardwareproductionof theperiphery,however,
usually remainstechnologicallydependenton the softwaresof
the core.
This differentiation in production organization corre-
spondsto differencesin labor supply.Laborfor the capital-inten-
sive, technologically sophisticatedphasesof industry is high-
cost labor,but becauseof the capital-intensityof the production
process,labor costsare a lesserproportion of total production
coststhan they are with standardizedlabor-intensivetechnolo-
gies.Managementsaccordinglyseekto retain in their servicethe
core workers in whom they have made an investment in training
and whose skills and dedication are necessaryfor the continuing
flow of production by high-costequipment.Managementsalso
seek to nd for the labor-intensive phases workers who are
quickly trainable,readily disposable,docile, and cheap.
While it is relatively simple to describethesecharacter-
istics of core and periphery,it is more difficult to give the terms
core and periphery generalizableconcretepoints of reference.
The terms originatedwith a geographicalconnotationthat they
still retain. The core was rst located in the leading industrial
countriesand the periphery in the economicallylessdeveloped

countries. Yet it is quite possibleto note shifts in industrial
leadershipwithin the geographicalcore (from the United States
to Japanfor certainaspectsof electronics),aswell asinstancesof
conventionalcore-typeindustry in certainless-developedcoun-
ties (e.g.,steelin Brazil and South Korea].Similarly, within so-
called core countries, there exists a coreperiphery division
within industries betweenthe principal centersof innovation
and development,on the one hand, and regional or provincial
productionunits of a lower technologicallevel,on the other.
Geographicalshifts of the core have also taken place within
countries,the mostrecentlycelebratedbeingthat from the north-
east to the southwest of the United States. Although the func-
tional characteristicsof core and periphery remain analytically
valid, their associationwith specic geographicalpositionsmust
be considered to be a matter of perhaps transitory circumstance,
not of immutable destiny.
Similarly, the associationof coreand peripherywith sec-
tors of industry, i.e., that large-scalecorporateindustry consti-
tutes the core and small- to medium-scale industries the periph-
ery, hasbeenand remainsquestionable.
The difficultiesof the
automobileindustry illustrate those of largecorporatemultina-
tional enterprisesthat have some of the featuresof periphery
production:relativelylabor-intensive
andstandardized
technol-
ogy. At the -sametime, someof the breakthroughsin innovative
technologyhavebeenmadeby relatively small enterprises.
As regardslaborsupply,two strategieshavebeenfollowed
with oppositegeographicalconsequencesin thesearchfor cheap
anddisposable labor.Onelayin thedesignof plant,whichwould
combinea reducedproportion of high-cost,high-skill labor with
a higher proportion of low-skill, quickly trainable labor. The
Europeanautomobileindustry followed this route. Immigrants
from the Mediterraneancountries provided the cheap labor.
There was, however, a limit to the toleranceof societiesfor
immigrants and their ability to absorband provide them with
services.Xenophobicreactionensued. Another answerwas to
transferplant into geographicallyperipheralzoneseither within
the samecountry or abroad.Within countriesthis usually means
shifting away from centersof strongtrade-unionorganizationto
MUTATIONS 32 1
tap a new labor force of former farmhands, immigrants, and

women workers lacking a tradition of trade-unionism. In move-
ment abroad, countries that had extended primary education to
a large part of the population and that have strong regimes ready
and able to control or suppress unions have had the advantage.
Taiwan, South Korea, and Singapore are preeminent examples.
This movement provoked a response in the form of pressure for
statepolicies to counteractdeindustrialization.
Although the geographical and industrial-sector connota-
tions of core and periphery have become increasingly confused,
the analytical validity of the differentiation between core and
periphery has been strengthenedby the economic crisis since the
mid1970s. The basis for the distinction, however, needs to be
redened so as to avoid tying it too closely to these factors of
geography and industrial sector.
The combination of heightened international competition
for market shares in a nonexpanding world economy with the
existence of surplus capacity in already installed technologies
has oriented new investment toward cutting production costs.
This takes two directions: the introduction of automation, robot-
ics, and analogous methods of displacing labor by equipment,
and the more systematic use of cheap labor. At the same time
market demand has become more differentiated, particularly the
effective demand of the elite markets that pull forward the process
of innovation in capitalist development. Thus, in tandem with
cost cutting, enterprises seek greater exibility in adjusting pro-
duction to this differentiated demand. The knell is sounding for
the mass production of standardized articles made possible by
Fordism. The consequences of this search for cost-cutting and
diversication of output as the keys to competitiveness are to be
found in the variety of divergent tendencies now observable in
contemporary production processes.
A general pattern underlies these various tendencies. Em-
ployers under competitive pressure have been Very sensitive to
labor costs, scal burdens, and costs imposed by regulation (for
example, antipollution controls). They have sought to stabilize
their work forces at as low as possible a level consistent with
continuous production. They have also soughtto achievewith
this work force the maximum versatility to meet changing market
demands.As regardsincreasesin demand,they have tried to

meet this either by investing in more highly productive equip-
ment or by using sourcesof labor that involve no long-term
employment commitments andin somecases thatfacilitateevas-
ion both of scal controls and administrative regulations.
Employersarenow tendingto envisage their work forces
ascomposed of xed andvariableelements.At the coreof the
enterpriseis a groupof full-timecareeremployees engaged di-
rectlyin theproductionprocess andin managerial,
nancial,and
marketingwork. This coregroup doesnot vary with fluctuations
in the enterprises
level of activity.It haslong-termsecurityof
employment.For this group,management emphasizesexible
utilization made possibleby training, retraining, and redeploy-
ment within the enterprise.The skills of the membersof the
groupbecomeincreasingly
polyvalentbut alsoincreasingly
spe-
cic to the enterprise.Their security and their knowledgebind
them to it.
Next to this coregroupis a peripheralcategoryof full-time
employees who havefew opportunitiesof careerdevelopment
and lessjob security.Manyof thesearesemiskilledworkersor
elsedowngraded skilledworkerswho did not makeit into the
coregroup.Management toleratesor encourages
a relativelyhigh
turnover amongthis group so asto facilitate adjustmentsto mar-
ket-dictatedchangesin output. Most conict is likely to arise
from within this group,particularlyon the part of downgraded
workers who look to their trade unions for protection.
A furtherperipheralcategory consistsof employees of the
enterpriseon contractsof a type that allow for adjustmentof
employmentlevelsto demandchanges. Theseincludepart-time
and short-term contracts and also work-sharing arrangements.
Finally, employersmakeincreasinguseof outworkand
externallycontracted services.
Thisincludescontractingfor cer-
tain operations within theplant,suchasmaintenanceandclean-
ing services,
andalsocontracting for workdoneoutsidetheplant
either by self~employedindividuals or by subcontracting
enterprises.
The more stableand permanentjobs are those with the
best working conditions and prospectsof advancement.Low-
paid, dangerous,
dirty, or pollutingwork and work for which
MUTATION S 323
thereis a morevariable
demand
arerelegated
to thetechnologi-
cally peripheralcategoryfor subcontracting,
etc. An interna-
tionalextension
of thesubcontracting
practiceis a mostlikely
development,
wherebyThird Worldenterprises
would contract
to undertake
the mostenergy-consuming
andmostpolluting
early stagesof industrial processes,
reservingthe cleanest,most
sophisticatedstagesfor the coreinstallationsin their homecoun-
tries. Sucha differentiationbetweencategoriesof tasksand terms
of employmentwas pioneeredin Iapaneseindustry.Now all
majorworld industries,fromtheircoresoutward,areundergoing
a process of Iapanization.
Through such strategies,employersare able to shift the
burdenof uncertaintyfromthemselves
andthecoregroupto the
variousperipheralgroups.Thecumulativeconsequences
of these
strategies
canbe observed in a decliningproportionof securely
employed, relativelyhighlypaid,andenterprise-integrated
work-
ers,togetherwith agrowingproportionoflesssecurelyemployed,
low-paid, peripheral workerssegmentedinto severaldistinctive
groups having little cohesion with one another. The social rela-
tionsof productionof thecoregrouparetypicallyon enterprise-
corporatist lines. Those of the peripheral groups rangefrom a
decliningbipartismamongthefirst category
of peripheralwork-
ers,through a vastly expandedenterprise-labor-market
modeen-
compassingboth in-plant part-timersand temporarypersonnel
and workersin subcontracting
enterprises,
to a self-employed
sectorof outworkersin effectdependenton enterprisecontracts.
Thesechangesin the socialrelationsof production in the
advancedcapitalist countriesare particularly marked since the
onset of the economic crisis in the mid-1970s. In the United
States,it has been observedthat new jobs createdhave been
predominantlyin thelow-skill,low-paycategory,
andmainlyin
services(of which temporaryclerical work and fastfoodrestau-
rants are preeminentexamples)?"In West Germany,beforethe
crisis, labor marketsegmentationinto isolatedcategorieswasnot
signicant; there was a generalmobility flow from lessto more
attractivejobs within enterprises,and where workerswere dis-
placedby technology,theywererapidlyreemployed elsewhere.
Sincethe crisis,boundarylineshavebecomevisibleseparating
[1] a corelaborforcewith secureemployment,(2)a secondary
laborforceofmoreprecariously
employed
workers
vulnerable
to
economic
cyclesanddoingthelessattractive
work,and[3]a
marginal
category
ofthemore
orless
permanently
unemployed.
At the sametime asthesechanges
areincreasing
socialvulnera-
bilityforalargesection
ofthelaborforceandforthose
excluded
fromthe laborforce,thescal crisisof the stateleadsto a reduc-
tion of social services.
Thetrendtowarda decliningproportionof corejobsand
anincreasing
proportion
of peripheral
jobsin theadvanced
cap-
italist countries,accelerated
by the economiccrisis,canbe de-
scribedastheperipheralization
of thelaborforce.Thestructure
ofemployment
in these
countries
begins
totakeonsome
ofthe
featureshithertoassociated
with industrializingcountriesof the
Third World.Thetrendhasalsobeenperceivedasa regression
to theheroicageof competitive
capitalism
in thenineteenth
century.
Peripheralization
takesbothlegalandextralegal
orillegal
forms.Thelegalavenues
includepart-timeandtemporary
em-
ployment
andsubcontracting.
Theextralegal
forms,
i.e.,avoid-
anceoflegalregulationsandnonobservanceoflegalnorms, and
theillegalforms,
i.e.,those
involved
in theactivities
ofcriminal
organizations,
together
comprise
whathasbeencalled
theun-
dergroundorsubmergedeconomy,acounterpart
in manyways
to whatin Third Worldcountries
hasbeendescribed
asthe
informal sector.
Theunderground
economy
covers
amultitudeofdifferent
formsof work andof socialrelationsof production.Mostunder-
ground
activities
areverypoorly
paid,afewarehighly
rewarded.
There
isworkbyundeclared
workers:
some
workasoutworkers
in theirhomes,
othersin clandestine
workshops oftenremovable
soasto avoidstateinspectors.
Thereis alsoundeclared
work
(andtherefore
untaxed
income]
byworkers
whoholdlegally
declared
jobs.Some
ofthistakes
theformofunreported
overtime
paidoutside
theofcialpayenvelope.
Often
it takes
theformof
aworker
having
twojobs,onelegally
regulated
anddeclared,
the
otherundeclared
andunregulated.
Different
kindsofpeopletyp-
icallyenterintothese
different
kindsofillicitproduction
rela-
tions. Womenand children are commonlyemployedas out-
workers.Thesegroupsare joinedby illegal immigrantsin
MUTATIONS 32 5
clandestine workshop employment. Skilled male workers are

more commonly practitioners of double employment. A further
form of exchange in the underground economy is barter, for
example, of services among higher income professionals. The
only common features among these various forms of work in the
underground economy are that no taxes are paid on the transac-
tions, and legal norms and regulations are ignored.
Thesevarious forms of underground production have been
noted in the United States.Illegal work is prevalent in agriculture,
hotels and restaurants, cleaning services,and the clothing indus-
try. Most striking has been the revival of sweatshops in the gar-
ment industry in New York City, employing many illegal immi-
grants from the Caribbean. But the underground economy is
implicated also in the shift of industry toward nonunionized sites
in the Southwest and in the expansion of domestic outwork.
Among Western European countries, the phenomenon of the
underground economy has been most pronounced in Italy and
may have comparable dimensions also in Spain. In these coun-
tries, it is well represented in construction, clothing, shoes,
gloves, hotels and restaurants,mechanical maintenance and elec-
tronics, agriculture, and domestic servicesbut is present to some
extent in Virtually every branch of economic activity. In Naples
alone, it is estimated that more than 100,000persons are engaged
in clandestine work, whole neighborhoods being organized for
the production of gloves, shoes,and articles of clothing. In Prato,
near Florence, a town noted for its booming small-scale textile
manufacture, the vast majority of enterprisesemploy illegal work-
ers. Double employment is particularly common among govern-
ment employees in Italy. It has been estimated that about one
third of the shoe production in one region of Spain is either in
clandestine workshops or by undeclared outworkers, the latter
about 70 percent women and 25 percent children.
The underground economy is not separatedfrom the reg-
ular economy. The two are closely interconnected. Factories that
operate to a degree within the law also employ illegal workers;
some may declare a few workers but employ in practice many
more, others pay undeclared overtime to their declared workers.
Clandestine factories subcontract to supply large-scale enter-
prises of the regular economy. Self-employed workers enter into
undeclared contracts with legally recognized enterprises. Indi-

viduals, holding two jobs, divide their time between the regular
and the underground economy. The underground economy is
clearly an extensionof the regulareconomy,symbioticallylinked
to it. The two make a functional whole.
The underground economy has attracted a good deal of
attention since the early 1980s. The way in which the problem
has been dened and the questions being asked indicate the
source of this interest. The concern of the state is primarily scal.
The underground economy is a counterpart to the scal crisis of
the state. Underground production does nothing to increase state
revenues, but it does benet directly or indirectly from state
expenditures. Clandestine workers benet from certain social
services, e.g., health services and education for their children.
Their employers benet indirectly from the statessubsidization
of some of the costs of reproducing their labor. With high un-
employment, many unemployed in receipt of benets have un-
declared jobs. Civil servants, who benet from job security, pen-
sion rights, etc., have second, undeclared incomes on which no
taxes are paid. High-income professionals, like lawyers and ac-
countants who exchange services with no invoices, avoid taxes
on these services. The state is therefore interested in nding out
how much revenue it is losing because of these practices. Ac-
cordingly, the underground economy is dened very largely in
terms of tax evasion, irrespective of the very different kinds of
activity, the very different categories of workers, and the very
different forms of production relations covered by this denition.
Another concern of the state is with the maintenance of a
satisfactory level of economic activity and of employment. This
brings out the ambiguity of the statesposition with referenceto
the underground economy, for despite the loss of revenue and
the undermining of the states regulatory authority, the under-
ground economy is recognized as providing a considerable num-
ber of jobs and incomes. Indeed, the expansion of the under-
ground economy since the onset of the economic crisis has been
attributed in some measure to the scal pressuresof the state on
business. The good news for the state behind the bad news. of
revenue shortfall and loss of authority is that the existence of the
underground economy means that GNP has been understated.
MUTATIONS 327
How much it has been understated becomes a matter of interest

to the state. Since there are no hard gures because the very
nature of the undergroundeconomyis that it falls outside col-
lected statistical data, various methods have been devised for
estimating its size. (In this respect, i.e., its nonappearance in
ofcial statistics,the undergroundeconomyis analogousto do-
mestic production for family consumption.)
These estimates vary widely. The low estimates are those
made by the OECD.They suggestan undergroundeconomyin
the United Statesand other highly industrialized member coun-
tries (UK,WestGermany,Japan)of about4 percentof GNP,while
in Italy and other SouthernEuropeancountries,where it is gen-
erally assumedthe undergroundeconomyis relatively largeby
the standardsof advancedcapitalistcountries,it would be more
than twice that level, i.e., in the range of 10 percent. The high
estimates for the United States and Italy are in the 35 percent
range,for WestGermanymorethan 25 percent,for Swedenmore
than 15 percent,and for the United Kingdom about 10 percent.
All estimates,high or low, agreethat thesefiguresfor the early
1980sreect a considerablegrowthin undergroundactivity since
the onset of the economic crisis in the mid-1970s.
The denition of the underground economy is thus de-
rived from certain concerns of the state, which are different from
thoseof the presentstudy.The categoryundergroundeconomy
does not, as such, have much meaning for the social relations of
production. Neither,for that matter,doesthe categoryinformal
sector as applied to Third World countries. Both are blanket
terms coveringa rangeof different modesof social relations of
production. The expansionof the informal economyand its rel-
ative importance in certain advancedcapitalist countries do,
however, underscore certain broader tendencies in the social
relations of production. It is one aspectof the restructuringof
production in advanced capitalism. This restructuring is accen-
tuating what I havecalledthe peripheralizationof the laborforce
within a core-peripherystructure of production. Peripheraliza-
tion, for the workers concerned, involves both precarious em-
ployment and segmentationinto distinct groups having little
possibility of achievingcollectiveaction. Its concomitantsare a
weakeningor dismantling of stateservicesfor thesegroupsand
an undermining of regulatory protection of working conditions,

health and safety, i.e., a general disengagementof the state from
the production process.The growth of the underground economy
is a manifestation of these tendencies. In regard to the social
relations of production, it takes the form of an expansion of
enterprise-labor-market conditions and a revival of putting-out
as a form of dependent self-employment. The terms core and
periphery increasingly express position in the social relations of
production rather than either geographical location or size and
type of industry.
FLEXIBILITY, DECENTRALIZATION
AND THE BALANCE OF SOCIAL POVVER
The keynotes in the restructuring of production in the advanced

capitalist countries are exibility and decentralization. The em-
ployers incentive to experiment in these directions is the desire
to cut costs and to be able to respond to a more Variegatedand
shifting market demand. Some workers, too, are attracted by
certain forms of exible stafng arrangementsand decentralized
production.
Industrys reorganization of production methods has taken
several forms. Some of these constitute a development and ra-
tionalization of Fordist production. Others move away from the
Fordist pattern in the direction of smaller scale production units
and more ad hoc coordination of autonomous units in complex
production processes.
The model that most represents a further development of
Fordism is one in which a small core of managersand planners
monopolizes the conception and organization of work, and a
largely unskilled contingent of easily replaceable workers exe-
cutes work tasks. It is noteworthy that some of the clearest cases
of this model are in service industries rather than in manufac-
turing. Department stores and fast-food restaurants are prime
examples.
Department stores have a highly paid managerial core
engaged in long-run planning, and a secondary-labor-market
sales force of parttime and temporary workers. Cost-cutting to
MUTATIONS 329
meetcompetitive
pressures
haseliminatedthesalesperson
who
throughlongexperience
in the samedepartment haslearned
enoughaboutproductqualitiesanddifferences
to be ableto
advisecustomers.The salesfunction hasbeenTaylorized.
Theorganization
of the fast-food
business
is somewhat
morecomplex.Themanagement structurein formis anarrange-
mentbetweenabigbusiness
andamultitudeof smallbusinesses,
eachof whichhaspurchased
thefranchisefor exclusivemarket-
ing of thebig-business
productin its locality.Thebig-business
franchiserthus shifts part of the profit-and-loss
risk onto the
small-businessfranchisee.The latter benetsfrom the brand-
nameadvertising
of thefranchiser
but mustusetheprescribed
methods,
equipment, andmaterials
providedby thefranchiser.
Sinceproduction
is laborintensive,
themethods
prescribed
by
the franchiserinclude the organizationof the labor process.Pro-
ductionof the limited rangeof standardized
fooditemsoffered
byfast-food
restaurants
is structured
bythemachinery.
Workers
are unskilled and readily transferable
from one phaseof the
process
to another.
Thefranchisee
is boundby the operations
manualof thefranchiserandhasno autonomywith regardto the
organization
andmanagement
of thelaborprocess,
andopera-
tions allow for no worker discretion.The whole processis pro-
grammed fromcorporate
headquarters
andregulated
through
inspection
fromheadquarters.
Employees
consist
ofamajority
of
part-timeteenagers
paidat thelowerstudentminimumwage,
whosecareerswith the fast-foodchain end at the ageof eighteen
or whentheymustlegallybepaidthefull minimumwage,and
aminorityoffull-timewomenworkers paidatthefull minimum
wage.Laborturnoveris fairlyhighandof little concern
to man-
agement
since
workers
aresoeasily
replaceable.
Because
theonly
meansof demonstrating
oppositionto management
is to quit,the
highturnoveractsasa safetyvalvereinforcing
managements
authority.
An alternativeroute that also combinescore and periph-
eral work forceswithin the samelarge-scaleproduction organi-
zationis the creationof a complexin whichinnovativeresearch
anddevelopment, togetherwith the morecapital-intensive
pro-
ductiontechniques,
areconcentrated
in a centralplant,and
standardized,
laborintensive
phasesof productionare carried
out in peripheral factories.The latter may be part of the same

rm, or alternatively consist of small businesses dependent on
the central factory. The latter caseis often the means whereby a
centralfactorymakesuseof the undergroundeconomy.Obsolete
textile equipment,for instance,is not abandonedor destroyed;it
nds its way into the undergroundeconomyto produce with
labor subjectedto substandardwagesand working conditions.
Subcontracting and outwork also provide avenues of ex-
ibility for big rms. Strongtrade union power in core factories
may lead managementto seekcost reduction through subcon-
tracting and outwork, togetherwith a stabilizationor reduction
of core-factory personnel. Outwork and subcontracting are also
used to provide specialized services. Some such services require
high skills and arewell remunerated.Someof the subcontractors
of big enterprisesarethemselvesorganizedon a nationalor even
on an international scale, e.g., in the caseof some business serv-
ices and engineering agencies. These subcontractors are often
retainedwhen their bigenterpriseclients shift the geographical
location of some of their industrial activities. Local small enter-
prisescomein at the bottom of the scaleto pick up the subcon-
tracting and temporarywork not takenby the interregionalsub-
contracting rms. These local subcontractors typically provide
the worst conditions of employment, with minimal juridical pro-
tection for employees,who have ambiguousinformal contracts
of employment and may not be coveredfor safetyand health
risks. When such subcontracting employees work within plants
alongsidecore workers,as is frequentlythe case,the result is a
coexistenceof highly protected,securecareer-typejobs with a
revival of archaic labor practices and unprotected forms of
employment.
A second direction of changein the labor processis toward
making large-scaleorganizationsmore exible so as to meet a
more diversied product demand.This representsa revision of
Fordism, retaining the Fordist scaleof production while adjusting
to the fact that the product-standardizationfor uniform demand
in mass markets that made Fordism possible can no longer meet
competition. This type of adaptationhasbeenmostin evidence
in the consumer-durable industries where Fordism made its
breakthrough, for instance, in automobiles.
Product standardization was based on special-purpose
MUTATIONS 331
machineryplannedas a productionsystemto be operatedby

unskilled or semiskilled workers.This is a lowtrust pattern of
organization
in whichworkersaretechnically
controlled
bythe
mechanicalprocessand have a minimum of discretion or initi-
ative in their work. If, however,a production organizationis to
beableto respondto changes in demandby shiftingto different
modelsor products,it will requiregeneralpurpose machines,
i.e.,whosefunctionscanbequicklyadjusted,anda moreskilled
and adaptablework force.This impliesa high-trustpatternof
organizationthat will rely to a considerable
degreeon the initi-
ative and discretion of workers. The separationof conception
from executionthat was a basicprinciple of Fordism has to be
reversed,and the unity of conceptionand executiononceagain
enacted on the shop floor. Any such reorganizationcontains
contradictions:management wantsexibility in productionand
cooperativeinitiative on the part of workersbut doesnot want
to lose control of the production process;workersmay perceive
greatershopoor responsibilityin the productionprocessasan
opportunity
to regaincontrolandto assert
a claimto self-man-
agement.
In determining how thesecontradictions develop,
muchwill dependon the cultureandinstitutionsof laborrela-
tions and the level of trust presentin them.
The contributionthat reorganizingproductioncould make
towardgreatercompetitiveefciency(asdistinctfrombetterhu-
man relations]was underlinedin a reporton an international
conferenceof personsfromlabor,management, government,and
academia held in Toronto in 1981:
An often overlooked dimension . . . is the pressure of competi-

tion andresultingneedsfor exibility, that canbestbehandled
throughsolutionsthat are efficientfrom a technicalpoint of
view and at the sametime improve the quality of work. For
example,machine-paced assembly linesareknownto bedefec-
tive because
theygenerate stress,boredom,alienation,psycho-
logicallydamagingsocialisolation,anda generallypoorwork-
ing environment.But it is lesswidely recognizedthat they are
inadequatein the view of the urgentneedin todaysbusiness
environment for more exibility and capacityto adaptto model
variationsand rapid shifts in product lines. A conventional
assemblyline cannotcopewith this type of need,but small,
selfregulating,
multi-skilledgroupscan.
Humanization of work and quality of working life

[QWL) are code terms for this second direction of change in the
labor process. In practice, employer initiatives have ranged from
application of occupational psychology techniques to encourage
more positive worker attitudes without making any signicant
changes in assembly-line methods, through job-enrichment and
job-rotation practices to make work more interesting and workers
more adaptable,to the restructuring of assemblylines into a series
of autonomous work groups. Union reactions have ranged from
resistance to manipulatory techniques that seek to have workers
identify with managementgoals, through cooperation with man-
agement in productivity raising as quid pro quo for some partic-
ipation in management, to aggressiveunion action to enhance
workshop control on humanization of work grounds. Where
management had virtually won the battle for control of the labor
processthrough Fordism, the adaptation of Fordism to diversied
demand has once again brought workplace organization onto the
agenda of social conflict.
An alternative to making large-scale production organi-
zations more adaptable while retaining their size and scale of
output is to break down large organizations into a series of small-
batch producing units. This has been done by some steel pro-
ducers, in a shift away from the large-scale integrated plants
geared to maximum demand that were the ultimate in massive
modernization investment in the 1970s and that contributed to
worldwide surplus capacity in the industry in the 1980s. Spe-
cialty steels are produced in smaller batches, require a more
skilled work force, and, on the part of management,more imag-
inative marketing to think of new applications of steel and to
respond to new industrial opportunities. An example is the Ruhr
steel manufacturer Thyssen, which beganin the 1970sto produce
a variety of specialty steels in order to counter the competition
of new integrated steel mills in Japan and Third World steel
production in Mexico, Brazil, and South Korea. The French steel
rm Solmer, which built a new steel complex at Fos-sur-mernear
Marseilles in the late 1970s with a View to supplying a growing
heavy industry in the south of France and the adjacent Mediter-
ranean region, converted the plant to specialty steelsas the initial
project threatened to add to surplus capacity during years of
MUTATIONS 333
recession.SomeIapaneseand U.S.steelproducersarefollowing
the same route, while the more conservative integrated steel
producersseekrefugein protectionistpressureon the state.
Onestagefurther in decentralizationof productionbeyond
the specializingof subdivisionsof abig corporationis production
by small independentunits. In manufacturing,technologicalde-
velopmentshavemadesophisticatedequipmentefficient for use
by small-scaleproducers.Numerically controlled machines,for
instance,can be reprogrammedfor different tasks. Largescale
no longernecessarilyhaseconomicadvantageand may havethe
competitivedisadvantageof rigidity, a rigidity derivedboth from
heavyinvestmentin a technologythat must be amortizedover a
long time and from bureaucraticrules often reinforcedby trade-
union-protectedworkshoprules. The small enterprisecan often
economizeon capital, plan for actual demandrather than the
cyclical peak,and enjoy more exible organizationalstructures
and stafng practices.
In the steel industry, so-calledminimills have taken an
increasingshareof the marketwhile the big integratedproducers
havebeensufferingsurplus capacity.Minimills arethe dynamic
component of an otherwise sick steel industry in the United
States.They competesuccessfullywith the big integratedpro-
ducersby using quite different technologyand materials.[They
use electric-arc furnaces, which can efciently produce much
smaller quantitiesthan the giant blast furnacesthat setthe min-
imum economicscaleof productionfor integratedmills, andthey
use scrap,which is cheaperthan iron ore.) In 1981,minimills
had about 15 percent of total U.S. steel shipments,and it is
projectedthat by 2000 they should be competitive in up to 40
percentof the U.S.market.Their technologyand marketingmeth-
ods are seenasthe most likely meansof revitalizing an industry
badly hit by foreigncompetition,andthe big integratedproducers
havebeenadoptingsomeof their features,alongwith decentral-
izing toward more specializedproduction.
The social relations of production in minimills make a
completebreakwith those of the strongly unionized integrated
steel industry. Minimills have located close to their markets,
awayfrom the old centersof steelproduction.They aregenerally
nonunionized, pay lower wagesthan integratedmills (though
incentive-wageschemesallow someworkersto achievethe same

or higher levels), and allow managementgreaterexibility in
organizing work and in taking productivity-raising initiatives.
Managementshavealsofollowed the Japanese practiceof foster-
ing a team-orientedcorporateculture.The mostpublicizedmini-
mill, Nucor, has even introduced lifetime employment. The mini-
mill has,in other words, embracedenterprisecorporatism.
Speculationhasalsocenteredon the ideathat really small-
scale[or cottage)industriescould becomethe focusfor an auton-
omousindustrial development,breakingout from a dependency
on big corporations.(Minimills in steelare small only by com-
parison with huge integratedplants.) The recenteconomichis-
tory of central Italy providesthe paradigmfor this model. An-
alystsof this developmenthave seenthree stagesto it. The first
phasecameabout as an employerresponseto the peakof trade
union powerin the big factoriesof northernItaly in the late 1960s.
Managementbeganto reducestaff in the coreplants by attrition
and to shift production to small-scale subcontractors. Concur-
rently, someskilled workersfrom the corefactories,restiveunder
the wage solidarity policy of their unions, which had recently
concentratedon upgradingthe statusof migrant workers from
the south, soughtto enhancetheir earningpower by going into
businessas suppliersto their former employers.This also coin-
cided with big industries need to adapt production to the de-
mand for more customized short-run output, which recourse to
subcontractingfacilitates.In this phase,the expansionof small
industry took place under the umbrella of big industry. In a
secondphase,cottageindustries discoveredthey could supply
more than one client by equipping themselveswith up-to-date
machineryand by maximizing inventivenessto shift production
to meat market demand. In a third phase, the more technologi-
cally advancedsmallproducersdiscovereda capacityto innovate
new techniquesof production and new productsfor the national
and even for world markets.
The expansionof sophisticatedworld-classcottageindus-
tries in the Emilia-Romagnaregionwas sustainedby the penetra-
tion of the regionseconomyinto more backwardregionsof the
country, e.g.,the Marchesand Apulia, to which Emilian busi-
nessmencould put out or subcontractlabor-intensivework. The
MUTATIONS 335
existence of this external labor force made it possible to maintain

steadyemploymentand relatively high incomesin the cottage-
industry and artisan sectorof Emilia-Romagna,by shifting the
burdenof economicfluctuationsontothe regionsnewly acquired
periphery, where the classic conditions of low pay, obsolete
machinery, and employer freedom to dismiss redundant workers
prevailed.
The socialrelationsprevailingin theseworld-classcottage
industries are conditioned by the specic Italian context. The
income range is very considerable: skilled maintenance workers
may earn twice as much as their counterparts in big industry,
while the worst paid homeworkers are paid only about one third
of the lowest factory wage.Jobsfall broadly into two categories:
routine machine-tending work, which is not demanding of skill
and offers no opportunities of upgrading; and versatile skilled
work in setting up production processesand designing products,
which is often based on skills once applied in big industry but
offers scope for more initiative than big industry ever could.
Many of the foundersof thesecottageindustriesarestrong
union men and Communist Party supporters. [Some were purged
in the antiunion campaigns waged by management of big indus-
tries during the 19603.]Unions arepresentin the small-industry
sectorbut allow for much more exibility in staffingand organ-
ization of work than in the big factories.Furthermore,the regional
and municipal governments of Emilia-Romagna, a strongly Com-
munist region, have been helpful to cottage-industry develop-
ment by promoting common services for small business and by
mobilizing pressure on the central government to secure state
investment in local infrastructure. [In this the local Communist-
led authorities have to counteract the bias of the ChristianDem-
ocrat-led central authorities against disbursing public funds to
Communistcontrolled regions.) Communists and Socialists have
been concerned not to leave the defense of small-business inter-
eststo the political right.
The experience of cottage-industry development in Emi-
lia-Romagnasuggests
a reincarnationof the entrepreneurialspirit
vaunted by Schumpeter in at least temporarily auspicious cir-
cumstances.
Thereare longerterm problemsbesettingsucha
development.One is how the small enterprisecan reproduce
itself. Typically, its leadershipcomesfrom outside,from the

ranksof skilled workersin big industry, and it doesnot train and
developsuccessors to theseleadersasbig bureaucraticmanage-
rial structuresdo systematically.Moreover,there is little or no
chancethat the relatively unskilled machinetendersemployed
in cottageindustrycouldmakethe transitionto leadership.
An-
otherproblemis how the spirit of innovationcanbe keptalive
when the easycoursemay seemto beto try to continueto supply
existing demandrather than continually to searchout new op-
portunities.Relatedto ahappysolutionto bothof theseproblems
is the maintenanceof a favorablepolitical and institutional en-
vironment for small industries such as exists in the Emilia-Rom-
agnaregion.A goodpart of the secretof innovationlies in the
maintenance of a collaborative relationship among technicians
in manysmallrms sothattheycanshareexperiences in solving
problems.Two analystsof the Italiancottage-industry
develop-
ment havecomparedthe relationsamonginnovativerms to the
collegialrelationamonggooddoctors,goodlawyers,or good
university teachers:each rm is jealousof its autonomy,over-
proudof its capacity,butfully conscious
thatits success
andvery
survival is linked to the collective efforts of the community to
which it belongsand whose prosperityit must defend.4
Throughcooperationsmallbusinesses canpool administrative,
marketing,and purchasingservicesand cansecurebankloans
on better terms than they could individually. The culture and
politicalcontextof the development
is, moreover,conduciveto
cooperative development.
Bylookingbackovertherangeoftendencies in therestruc-
turingof industrialproductionin advanced
it can be seenthat cumulatively they have been destructiveof
laborsautonomouscollectivesocialpower.Nevertheless,it can-
not be deniedthat someaspectsof the restructuringareattractive
to certaingroupsof workers,afactthatraisesadditionalobstacles
to the achievement of a common working-class strategy.
The context of mass unemployment generatespressures
and someincentivesfor workersto adaptfor their own survival.
A maleworkerdisplacedfromhis job in oneof the old strongly
unionizedindustriese.g.,steelor automobilescannoteasily
make the transition to a job in the much-vauntedhigh tech
sector.For onething, thejob will bein anotherpart of the country,
MUTATIONS 337
probably an area in which unions are weak; for another, it will

pay only about one third of the unemployed workers former
wage. The underground economy, however, offers some incen-
tivesto supplementunemploymentbenetsor welfarepayments.
Ex-workers wives and teen-agechildren are similarly attracted
into secondary-labormarket part-time or temporary employment
or outwork in order to sustain the familys existence. A close
relationship has, indeed, been found between welfare and the
undergroundeconomy.Welfare is insufcient for the familys
survival. Clandestineemploymentmakesthis survival possible
as a supplement to welfare. From the clandestine employers
standpoint, welfare is a wage subsidy.
Another group of people, nurtured in the revolution in
lifestyles of the 19605, seek alternative ways of workingalter-
natives to the clock-punching, externally controlled work envi-
ronment of Fordism. Thesepeopleare willing to trade income
potential for leisure and for autonomyin determiningthe pace
and timing and site of their own work. Their attitude toward
work is partly instrumental: it gives them an income to live the
way they want to. It is also partly qualitative: they want their
work to be consistent with their primary values in life. Outwork
of a dependent self-employed type with exible schedules and a
home environmentts theseconcernsfor many young people.
Part-time or shortterm temporary work suits many women who
want to adjust their earning capacities to their family
responsibilities.
For other workers,orientedmore toward maximizing in-
come than personal autonomy, double employment is a solution.
The basic official job givesthe elementof security,especially
if it is in governmentservice or of some equally guaranteed
permanent status, and the second irregular job produces a
perhapshigher but more uncertain income, rewarding, for ex-
ample, skills that are underutilized in the ofcial job. Still others,
frustratedby limits to their wagesand opportunity for initiative
in large organizations,chooseto trade relative security for the
risk of independent-artisan or small-business status. This is the
casefor thoseskilled workerswho haveled the successfulcottage
industry developmentof centralItaly. The successfuloneshave
maximized both income and autonomy.
Finally, there is the impact of the economic crisis on the
family and more broadly on the production of use values by

individuals and throughinformal socialnetworks.Certainly,un-
employmentand the cutbackof statesocialserviceshaveplaced
greatstrains on the family. Wherethe family structureis weak,
it hasfrequentlysuccumbed,leavingmanypeoplein an isolated,
anomic condition. The challenge has also produced responsesof
resilience in which the informal, natural structures of society
have attemptedto compensatefor the inadequaciesof someof
the formal structuresof socialprotectionand socialopportunity
first createdand then starvedby the state.Do-it-yourselfaround
the household and in vehicle maintenance has been given a
stimulus by unemployment.One can assumealsoan increasein
reciprocalexchangesof serviceson a neighborhoodand friend-
ship basis.Informal friendship and extendedfamily networks
take on more functions of child care, care of the aged, minor
medical services, education and skill development, organization
of leisure, and so forth. Families have also taken on more market-
oriented exchange-valueproduction in the form of outwork
alongsideproduction for their own use. The strengtheningof
interfamily cooperationin respectof householdneedsnot only
cushionsthe impact of unemployment;it alsofacilitatesthe fam-
ilys adjustmentto the expansionof this form of dependentmar-
ket activity.
Restructuringof production in the advancedcapitalist
countriescenterson industrial processesand has beenacceler-
atedby the economiccrisis following the mid-1970s.From there
it hasextendedthroughoutsocietywith impacton all production
structures,including the family. Thesechangesin the advanced
capitalist countriesarelikely to setnew patternsof socialpower
relations on the world scale through the effects of competition,
emulation,and penetration.Changesarealsotaking placein the
productionprocesses
of Third World andredistributivesocieties,
some of which have been going on for a longer time.
In the Third World, transformations in agriculture have
had particularly dramaticimpact. Sincethe nineteenthcentury,
a dualismhasdevelopedin agriculturebetweena sectororiented
to world markets and another oriented to self-sufciency and
local supply. In the Sahel region of Africa, as in other Third
World regionsbut with more devastatingeffect,the growth of
MUTATIONS 339
export-crop agriculture linked in various ways to multinational

agribusiness has appropriated much of the best land, leaving
marginal land to subsistenceproduction. The consequenceis that
these nonindustrialized countries have had to import food to
supply their urban populations, and their rural populations have
been recurrent victims of famine. International economic and
nancial links have made it difficult for Third World countries
to move back from a position of dependence on the earnings of
export crops toward an agriculture geared more to local supply.
When Mexico envisaged such a policy, including a splitting-up
of large export-oriented holdings into farms for small-scale pro-
ducers of crops for local consumption (the sistema de alimenta-
cion mexicana or SAM], it was disrupted by the debt crisis of
the early 1980s, which put a premium, for example, on the grow-
ing of luxury strawberries by largescaleproducers for sale in the
U.S. market as one means of securing foreign exchangefor debt
service.
In Brazil, a three-stage development in agricultural pro-
duction can be seen. Cheap food for urban consumers was in a
rst stage produced in latifundia-minifundia complexes as a
surplus extracted from peasant communities. These communi-
ties, besides providing labor for the latifundista, existed on the
margin of the exchangeeconomy, providing for their own repro-
duction, including handicraft manufacture of the nonfood items
they needed. The latifundista used surplus labor for relatively
inefficient extensive cultivation of export crops. In a secondstage,
local handicrafts were very largely destroyed by the extension of
the national market for manufactured goods. Food production for
local consumption was increasingly taken over by small farmers
renting land from latifundistas or by squatters on unoccupied
lands. These small farmers sold their produce to middlemen who
supplied the urban markets. In a third stage,export-crop produc-
tion (meat, coffee, soya, sugar cane) has expanded and modern-
ized, enclosing large areas and using machinery with minimal
amounts of wage labor. [This has also happened in other Third
World countries, e.g., in Iran under the Shah, as Third World
agriculture becomes linked into a global food-processing indus-
try.) Small farmers,and particularly squatters,are vulnerableto
government-supported expansion of largescale export agricul-
340 THEMAKING
OFTHEFUTURE
ture.Theyaredriven
fromthelands
theytill intothefavelas
and
alagados
surrounding
theurban
centers.
Urban
crowding
in-
creases
the primitivelabormarket,which,in turn,serves
asa
reserve
armyfortherecruitment
anddisciplining
oftheenter-
priselabormarket
inbothsmall
andlarger
scale
industries.
Theredistributive
economies,
sincethemid-1950s,
have
been
preoccupied
withtheissue
ofdecentralization
ofmanage-
mentandproduction.
Developmentsin these
countries
haveim-
plications
forthesocial
relations
ofproduction.
Redistributive
systems
functionaccording
to a different
logicfromthatofcapitalist
development,
inwhich production
is directed
byanticipations
ofprot.Production
ofusevalues
is
in principleplannedona nationwidescale
accordingtothe
political
priorities
oftheleadership.
Allable-bodied
membersof
society
areavailable
forwork,andallshare
in some
manner
in
theredistributed
product.
Accordingly,
laboris a xed,nota
variable
cost;therefore
theproductive
effortofanyindividual
is
a netgainto thewholesociety,
evenif it is notsufcient
to
reproduce
thatindividuals
ownlabor
power
andinaddition
to
create
a surplus
value.(Thiswouldbethecondition
of its em-
ployment
in a capitalist
economy.)
Planning
in redistributive
systems
achieved
considerable
success
in initiatingrapidgrowth.
Capital
andlaborcouldbe
fullyemployed
anddirected
toward
attaining
theredistributor
goalsforoutput.
Redistributive
planning
alsoencountered
seri-
ousproblems,
thereverse
sideofitssuccess.
Theredistributors
preference
forlarge-scale
production
unitsandforbureaucrat
regulation
ledtoinefficiencies.
Laborshortages
emerged
asbot-
tlenecks
to production,
oftentheresultof laborhoarding,
as
enterprises
wanted
toretain
underemployed
workers
sothey
wouldbeavailable
in peakperiods.
Aftertheinitialphase
of
revolutionary
enthusiasm
anddespite
campaignsofsocialist
em-
ulation,workers
began
towithholdeffort.Theconsequences
were ,
thefrequently
mentioned
deciencies
of theplanning
system:
output
does
notmatch
demand,
particularly
forconsumer
items;
goods
areshoddy;
andworkers
perform
atasometimes
lacka-
daisicalpace.
SincetheendoftheStalinera,duringwhichmilitary-type
discipline
wasthemodel
forfactory
andfarm,
theleaderships
of
MUTATIONS 341
the redistributiveeconomies
havebeenrecurrentlypreoccupied
with the reform of economicmanagementso asto overcomethe
decienciesof thesystem.Experiments
in reformincludedecen-
tralizationof managementdecision-making authorityto enter-
prises;
simplication
ofplanprocedures,
forexample
through
a
reductionin the numberof controlgures;anda greateruseof
marketmechanismsfor the allocationof resourcesand nal
output.
Contemporaneous
withthesereformeffortsattheofcial
level,aspontaneous
compensation
forthedefects
oftheplanning
system
tookshapein whathasbeencalledthesecond
econ-
omy.Thiscorresponds
in some
waystotheunderground
econ-
omiesof capitalist
countries
buthastobeunderstood
withinthe
different context of a redistributive system.
The secondeconomyis part legal,part illegal.The legal
partincludes
privateplotcultivation
byfarmfamilies
andfree
marketingof their produce,someconstruction
andmaintenance
ofprivatehomes,
andsome authorized
artisan
work.Theillegal
partincludes
diversion
ofstate-enterprise
equipment,
materials,
andlaborfor privatepurposes
andtradein foreigngoods,etc.
Moreimportantlyit alsoincludestheactivityof enterprise
man-
agerswhoillicitlyobtainmaterials
theyneedin orderto meet
theirplantarget(notfortheirownpersonal
gainbuttomeetthe
obligations
of theenterprise)andwhoarethustempted to dis-
simulatepartof theirenterprises
outputin orderto beableto
makepayment
for suchneeded
inputsnot available
through
regularchannels. Thisamountsin practice
to thespontaneous
creationofanillegalmarket
throughwhichenterprisescanmake
goodtheshortfalls
in plan-directed
inputs.
Theexistence
ofthis
secondeconomyhasbeenfunctionalto the planningsystem,
despite
itspartialillegality,
in helping
bothindividuals
anden-
terprisesto meettheir needs.
Outrightrepression
ofthesecond
economy
[oratleastits
illegalcomponent)
wouldbebothimpossible
anddysfunctional
tothesystem.
Thereseem.tobetwoalternative
possibilities.
One
wouldbeto keepthingsthewaytheyareillegalbutneverthe-
lesspermeating
thesystem,
tolerated
butwithrecurrent
crack-
downson morenotoriousabuses.The otherwould be to legalize
moreof thesecondeconomy
soasto integrate
it with theplanning
system.
By andlarge,theSovietUnionseems
to havefollowed
the rst route,thoughthat maychange.Sincesomepeoplegen-
erate substantial illicit incomes in second-economyactivities and
manymanagers areaccustomed to operatingpartiallywithin the
secondeconomy,thereareundoubtedlyentrenched resistances
to change.The secondroutehasbeenfollowedin EasternEu-
rope and morerecentlyin China.
The Chinese case concerns an economy with far less de-
velopedproductiveforcesthan exist in the SovietUnion and
EasternEurope.Its primaryproblemsare:to put thewholelabor
forceto work, to effecta gradualtransferof laborfrom agriculture
to industry[andthereforeto raiseagriculturalproductivitysoas
to feedmore industrial workerswith fewer farmers],and to raise
theproductivityof industrythroughtechnological
improvement.
In confrontingthe employment problem,theChineseleadership
hasreversedpreviouspolicies in order to encouragean increase
of jobsoutsidethestatesector.It is anticipatedthatfuturetrends
in employment will below growthin the statesectorandhigher
growthin the collective[especiallysmallcollectives)and self-
employment sectors.
The transition from agricultural to industrial production
is to be effectedasmuch aspossiblethroughthe developmentof
rural industries,therebyavoidinglargemovementsof population
to the cities. Initially, rural industries were gearedto local agri-
culture,processing
of local crops,and productionof toolsand
utensils,etc.usedby local people.Fromthe late 1970s,however,
therehasbeengreaterofcial emphasis
on interdependence
and
division of labor within China. A core-peripherystructure has
developed in whichruralindustriesarecloselylinkedasperiph-
eralsuppliersto urban-based coreenterprises.
This core-periph-
ery structurealsofacilitatestechnological
upgrading:urbanen-
terprisesdisplacetheir oldermachineryto a rural site,working
it with locallyavailablelabor,makingplacefor moreup-to-date
equipmentin the corefactory.
The social relationsof production differ as betweencore
andperipheryfactories.Coreworkersarestateemployees,
estab-
lished workers with considerablerights in their jobs (despite
ofcial urgingsthat thereshouldbe moreexibility in manning),
but rural workers are nonestablished, technically peasants tem-
MUTATIONS 343
porarily
employedinrural
industries.
Inaddition,
casual
workers
mayberecruited
from ruralvillages
forspecic
types
ofxed-
duration
workin urbanfactories.
If enterprise
managers
have
Very
littleexibility
todismissestablished
workers, theyhave
muchmorescope forvarying
thesizeof staffto needsin the
peripheral,
nonestablished
laborsector.
These differencesin
workersrelative
jobsecurity
areprobably
moreimportant
than
differences
in money income,although
nonwagebenets
and
subsidies
alsogiveadvantage
totheestablished
urban
overthe
nonestablishedrural worker.
In themoredeveloped
redistributive
economies
ofEastern
Europe,
opportunities
forbroadening
thelegality
ofthesecond
economy
raise
prospects
analogous
tosome
ofthedevelopments
in capitalist
economies
discussed
above~as
regards,
forin-
stance,
theopportunities
fordecentralization
andforapplying
sophisticated
technology
in small-scale
production.
Small
co-
operatives
ofprofessionals
andtechnicians
couldcontract
serv-
icesto stateenterprises,
for instance;
thestatecouldcreate
a
network
ofworkshops
tobeleased
forsmall-scale
production.
Thiswouldbeconsistent
withtheexisting
practice
ofsmallplot
agricultural
cultivation
onstate
land,
which
has
proven
tobethe
mostefcientwayto growcertainmorelabor-intensive
crops,
andforwhichtheinputsandoutputs
areincluded
in state
plans.
Thusanexpansion
of self-employment,
andofwhatcouldbe
calleda plan-regulated
smallprivate-business
sector,
could
evolvewithin an overall plannedeconomy.
THE STATE
AND THE WORLD ECONOMY
IN THE RESTRUCTURING
OF PRODUCTION
Thetendencies
discussed
abovedepictmovements
in a variety
of directions,
someseemingly
negative,
some
morepositive
for
thepeople
involved
in them.
Tofocus
onanysingle
tendency
creates
theriskofbiasanddistortion
in appraising
thewhole.
Preoccupation
withthefastfood
chain
maycreate
animpression
thattheworldis moving
toward
theultimate
in Taylorization
of
work, an impression that is controverted by evidence of move-

ment away from Taylorism and Fordism in more technologically
sophisticated spheres of production. Emphasis on the autonomy
of new high-tech cottage industries on the Emilian model con-
trasts with the revival of more exploitative putting-out production
in the Marches and Apulia. And so forth. Since all these tend-
encies are in a uid state, they cannot give any rm picture of
the new overall social structure of accumulation. Whatever form
that structure ultimately takes will be determined by social
choices to be made now and in the near future. Those social
choices will, as suggested,be very largely shaped by the actions
of states, which in turn will be inuenced by the world context
in which states exist. The most that can be done now is, rst, to
attempt to see whether the variety of tendencies observed t
coherently into a pattern, in which apparently opposite move-
ments in different sectors and different geographical regions re-
ect contradictions within a complex structure; and, second, we
can attempt to see what alternative directions of development
may possibly emerge out of such a pattern.
The general features of the labor process are similar in
both capitalist and redistributive development. The purposes to
which accumulation is put and the mechanisms of deciding what
is to be produced differ as between these two modes of devel-
opment, but up to now the ways in which work has been orga-
nized and the technologies on which work organization is based
are not very different. Grosso modo, this labor process as it is
currently evolving can be analyzed in terms of four productive
sectors: (1) a relatively small core of skilled polyvalent workers
integrated with their enterprises on a quasi-permanent basis; (2)
an increasingly large and segmentedperiphery consisting of peo-
ple doing unskilled and sometimes unpleasant work whose em-
ploymentis moreprecarious;(3)stateworkersin the socialpolicy
eld providing services to the population in education, health,
and welfare, etc.; and (4) production of use values outside the
exchange economy, in the household or through informal net-
works, which contributes substantially to feeding, clothing, and
housing those who produce in the exchange or redistributive
economies, i.e., wage workers, and to raising a new generation of
such workers.
MUTATIONS 345
In capitalist development, the core-periphery differentia-

tion between the rst two categories takes the form of a polari-
zation in the social relations of production between enterprise
corporatism for the core workers and enterpriselabor-market and
dependent self-employment status for the periphery in the work
force. (I am using core and periphery to designatesocial position,
not geographical location, in the light of my earlier discussion.)
A seemingly positive aspect, from the standpoint of hu-
man emancipation, of the industrial restructuring that has been
going on is the trend toward more decentralization and more
autonomy for work groups and toward the reunification of con-
ception and execution that had been severed by Fordism. Al-
though these tendencies are apparent so far only among core
workers and some small high-tech entrepreneurs and artisans,
they do seem to herald the end of the Fordism that had been the
industrial dynamic throughout most of the twentieth century.
Is, then, the fast-food chain the last gasp of Fordism, or is
it the dawn of a new Fordist era? F ordism is, indeed, still alive
and well but in new places and new occupations different from
those that witnessed its early triumph where at present Fordism
is in regression. Fordism has shifted to the periphery; it is devel-
oping there alongside a revival of more archaic production meth-
odssweatshops and putting-out. Fordism has colonized some
of the service industries in advanced capitalist countries, e.g.,
fast foods, and also the production with standardized technology
of consumer goods in Third World countries, destined both for
domestic and world markets. Gramscis analysis with which
this chapter began remains pertinent to the Third World today,
where Fordism is being introduced as a passive revolution within
the structures of state corporatism.
In the advanced capitalist countries, the fourth sector-
state social serviceshas been cut back, major victim of the scal
crisis of the state. These services are labor intensive, but their
pay scales are inuenced by the pattern of earnings of industrial
core workers. The cost of state social serviceshas in consequence
risen sharply with ination, but as these services expanded dur-
ing the precrisis boom years, quality of output may have suffered
from bureaucratic overexpansion. With the reduction in state
social services following the economic crisis, more responsibility
has fallen upon family and informal networks of use-value

producers.
In the redistributive systems,analogoustendenciesare
present:a polarizationof coreandperipheryjobs,a deterioration
of state social services, and more reliance on informal relation-
shipsto getthings doneat both householdand enterpriselevels.
How these various tendencies develop will depend to a
considerable extent on what states do or refrain from doing. If
the presenttendenciesprevail,it is Verylargelybecausestates
have encouragedthem. Someinstancesof stateimpact on the
structuringof the labor processarethe following:
° The most powerful stateshave investedheavily in re-

search and development,e.g., nuclear and space re-
search,mainly for military purposes,which has accel-
eratedtechnologicalinnovation in industry, including
nonmilitary applications,and generallycontributed to
the developmentof a knowledgecapability for certain
kinds of technologicalinnovation. SomeThird World
stateshave soughtto bargaintheir way toward the ac-
quisition of technologicalcapability by requiring mul-
tinational corporationsto locate someof their research
and developmentwithin the host country asa condition
of settingup operationsthere.The kinds of technology
so encouragedare those propitious to world-economy
competition(e.g.,gearedto elite demandratherthan
basic needs).59
- Stateshave aided capital accumulationin specic in-
dustriesby subsidiesand taxwrite-offs.Wherethe aim
hasbeeninternationalcompetitiveness, this hasfavored
certain kinds of innovations in technology and labor
process.
Whereit hasbeenprotectionist,
theresultis to
stabilizeexistingproduction methods.
- Stateshave encouragedthe expansionof low-wagepre-
carious employment through the managementof un-
employmentbenet systemswhenthey haverequired
beneciariesto acceptlessqualied work than they pre-
viously performedand when they exemptcertain cate-
MUTATIONS 347
gories of enterprises from the application of labor and

socialsecurityregulations.
° Selective enforcement of work permit requirements has
in practice encouraged clandestine employment of ille-
gal immigrants and disciplined these workers to accept
low wages and poor working conditions for fear of
expulsion.
- Reduction in welfare benets has also, as noted above,
resulted in an increase in underground employment.
[Public authorities have also, on occasion, contracted
out services at substandard conditions.]
- The role of a Third World state in the transformation of
agriculture is illustrated by the Brazilian casementioned
in the previous section of this chapter: by extending a
minimum wage to agriculture, the state encouraged
large-scaleexport-crop producers to mechanize in order
to save labor; by extending the national road network, it
lowered transport costs and opened the interior market
to manufactured goods, thereby helping to destroy local
handicrafts that had made rural communities quasi-au-
tarkic and encouraging farmers into more specialized
production for urban markets; finally, the state put its
political and repressiveresourcesbehind the enclosure
of lands for large-scalecrop production.
- Like the British state in the early nineteenth century,
Third World states have encouraged urban industry
through a cheap-food policy, helping employers mini-
mize the cost of maintaining a labor force. By keeping
the urban minimum wage low and by repressing or con-
trolling tradeunion activity, the state has protected the
employers margin between productivity and costs.
Thesepoints illustrate how the statehas affectedthe re-

structuring of production. It is appropriateat this stageto ask
how the possibletransformationsof statestructuresdiscussedin
chapter 8 might translateinto action [or inaction) shapingthe
future labor process.
In the hyperliberalmodel,the stateis an ally of capital in
a repressiverestructuringof the labor process.The directly re-

pressiveeffectson labor flow from the market.The statedisman-
tles mechanisms hitherto built up to protect the labor force and
ensures that the market can operate without obstruction. Hyper-
liberal ideologues,advocatesof deregulationin all things, have
gloried the undergroundeconomyasa strugglefor marketfree-
dom againstcollectivist stateinterventionism. The defenseof
traditional valuesby their populist-moralityallies revealsa pres-
suretoward relegatingthe recentlyexpandedfemalewage-labor
force to the home. The combination of market-imposed discipline
and patriarchalfamily structurewould be countedon to stabilize
the peripheryand householdsectorsof the economywith a min-
imal level of state social services. The hyperliberal state offers
nothing to the industrial core other than the opportunity to ex-
ploit the periphery and the householdin order to remain com-
petitive in world markets.
The neomercantilist alternative, with its post-Keynesian
industrial and incomespolicies,doesoffer moreto the core:aids
to capital accumulationfor technologicalupgrading,active po-
litical support in international competition,and negotiatedcor-
poratist consensusamong core labor and industry. This state
model alsoproposesto maintain the existingstatesocialservices
soasto mitigatethe socialtensionsinherentin the core-periphery
polarization of work and the probability of long-term,ineradic-
able unemployment.The state,in this model, gamblesthat its
successin international economic competition will be such as to
make possible sufficient transfer paymentsthrough the social
servicesto keepsocialdiscontentat a containablelevel.As noted
in chapter 8, the historic bloc on which this model is basedis
thin and its institutions remote from the mass of the population.
Its long-term survival dependson political demobilizationand
the fragmentation and isolation of dissent.
A speculativealternativethat hasclaimedsomeattention
in advancedcapitalist countriesenvisagesa dual society. In
this somewhatidyllic vision one small fraction of human activ-
ities would be engagedin highly sophisticatedproduction of
goods;anotherlargerfractionwould bedevotedto labor-intensive
servicesfor people.Somepeoplewould be activeexclusivelyin
one or the other sector. Others would be able, by exible time-
MUTATIONS 349
sharingpractices,to divide their effortsbetweenthe two sectors.

The secondor people-orientedsectorwould not consistprimarily
of expandedstateservices;
it wouldratheremphasize
networks
of autonomousvoluntary groupsdedicatedto the production of
use values. The first sector would maximize efciency; the sec-
ond, conviviality.
If this third modelhasnot provento beentirely convincing
as an alternative direction of state-societyrelations, it may at least
be credited with having posedboth explicitly and implicitly a
numberof critical problemsbesettingthe processof restructuring
production and accumulation.
Critics of the dual-societymodel,who areat the sametime
critics of the hyperliberalstatemodel,point out that both models
imply the weakeningof the socialpowerof labor.Thepowerof
labor, they argue,has been the mainspring of social progress
throughthiscentury;itsweakening
wouldleadto thedismantling
of the welfarestatethat hasbeenits principal achievement.They
arguefurtherthat the benignlyregardedpeople-oriented
sector
of the dualist model concealsa regressionto nineteenth-century
social conditions or an assimilation of advanced capitalist soci-
etiesto contemporary
Third Worldconditions.Themodelsays
nothingaboutthe negativeaspects
of theexpansionof theenter-
prise labor marketand dependentself-employment. Informal
autonomousservicegroupshavetaken on more socialresponsi-
bilities as a result of the same restructuring process that has
created more sweatshopsand outworkers. The hyperliberal
model at least has the merit of frankness,whereasthe dual-society
model turns the starkreality of peripheralizationinto a mythical
creative informal sector. The dual-society vision is derived
from thosepeoplewho optedout of consumerism
in the 19605
to searchfor alternative styles of life and work. It ignoresthe
coerciveforceof peripheralizationthat hasmarginalizeda much
largernumberof peopleagainsttheir ownwill.
Nevertheless, these critics of the dual-society model do
not themselveshavea convincingalternativeto propose,onethat
would resolvethe problemsthey can justly point to. Principal
amongtheseproblemsarestructuralchanges in productionthat
maymakeit possiblefor all the goodsthat societywould need
to be producedby 10to 15percentof the population.TheKey-
nesian world in which infusions of monetary demand were from

time to time required in order to ensure full employment of
human resourcesbecomescompletelyirrelevant in such a situ-
ation. A rethinking of the relationship of work, income, and
societybecomesnecessary.
The dual-society
theoristshaveaf-
rmed the need to separatework from income and instead to
evaluate work in terms of its contribution to society.
The not-so-improbableassumptionthat no more than 15
percentof the populationneedbeinvolvedin goodsproduction
alone demonstratesthe absurdityof linking individual incomes
to the productivityof industry.Therecouldbe no principleof
naturaljusticethat would rewardthat smallproportionof the
populationin relationto thehighproductivityof the equipment
they usewhile otherswho do not work with high-productivity
equipmentarerelativelydeprived.In faceof this absurdity,it
becomesreasonableto regardwork as a privilege, to be sought
andperformedfor its own satisfactions.
Thosewho do not work
at producinggoodswith high-productivityequipmentcanwork
at producingneededservices,or objectsof someaesthetic
merit,
whosevalue to the peoplewho benet from them and to society
as a whole is at leastasgreatasthat of the goodsthey consume.
Dual-societytheoryhasat leastposedanew,if it hasnot resolved,
the questionof the socialvaluationof sociallynecessary
work,
as well asthe problemof nonwork-relatedcriteria and methods
for the distribution of incomes.
Also posedis the questionhow to determinewhat is to be
produced.Thehyperliberalandneomercantilist
modelsdo not
needto raisethis question.Both beginwith the propositionthat
the world market will decide what is to be produced. The issue
they both confrontis what the bestmethodis for successin
creatingandresponding to world-market
demand.If, however,it
turns out that 15 percentof the peopleareall it takesto produce
the goodsthat are needed,it becomesrationalto seeksome
criterion other than international competitivenessfor determin-
ing the sociallydesirablecompositionof that production.The
searchfor that criterion marksthe dividing line betweencapitalist
and redistributive development,betweenproduction impelled
by exchangeand production for use.
The dual-societytheory also raisesbut doesnot resolve
MUTATIONS 351
the question of bureaucracy. It is sensitive to the criticisms that

the social services have become self-expanding imperial entities,
cultivating their own institutional interests and those of their
staffsevenmore than the interestsof their clients, and that they
have become remote and alien to the people they are intended to
serve. It proposes to remedy this by turning over most of the task
of social service to less formal, autonomous groups. The virtue
of bureaucracy,as Max Weberreminded us, lies in impartiality
and the rule of law, the institutionalization of impersonal rational
norms. It is fair to object that real-life bureaucraciesdo not match
this ideal type, that they embody beneath the rational facade
elements of clientelism, personal ambition, favoritism, and cor-
ruption. The corresponding ideal-typical defect of informal au-
tonomous groups is particularism and discrimination, although
they may also in practice evoke dedication and altruism on the
part of those who work in them. The question that dual-society
theory has not answered is how to retain the dedication while at
the same time controlling against particularist abuses.How can
the larger interest of society assertitself through a maze of small,
autonomous groups?
The hyperliberal model rests ultimately on the patriarchal
family. Womens work in the home reproduces a primarily male
labor force. The male workers top status at home compensates
for his dependentstatusat the workplace.The wifes consump-
tion habits and desires, assuming she behavesas the advertising
industry would hope, keep the patriarch at work (and less
inclined to strike) and keep the demand side of the economy
active. This kind of family is functional to capitalist development.
The patriarchal family may also have been functional to redistri-
butive accumulation as it has so far been experienced, though
redistributive societies have mobilized more women into the
labor force and they have recognized an at least formal equality
in the workplace, even as they did nothing to alter the sexual
division of labor in the home. Alternative visions of society raise
the question of a restructuring of family production, as well as of
industrial production: a sharing of domestic tasks not based on
sexual stereotypes; removal of the barriers between work for
family consumption,socialservice,like education,careof the
aged, and so forth; and production of some exchangevalues of a
352 THE MAKING or THE FUTURE
specializedkind by the applicationin the homeof small-scale,

high-techproductiveequipment,craftskills,andtools,etc.
Theprincipalobjectionto visionsof analternative
society
is the politicalone:theseVisionsdo not containa clearstrategy
for changingexistingsociety.Hitherto,the working classhasbeen
the politicalbasisfor the hopeof change.The achievements
of
socialpolicy throughthe twentiethcenturywerebasedon the
growthof workerpower.Now,however,visionariesof an alter-
nativesocietyseemto haveabandonedhopein the working class_
It is too fragmented,they affirm, and those working-classele.
mentsthat retain somepower are too much bound up with the
existingsystem.Thereis muchtruth in this.AndréGorzfounds
his hopes on a non-classof non-workers (he useswork in
the narrow senseof wageemploymentrather than in the broad
senseof productive activity].65The membersof this non-class
would have to be dened more in terms of their subjective ori-
entationsthan their objectiveposition in production relations.
They would compriseall thosewho feel alienatedin existing
societyandwho rejectthe ideaof work (in the narrowsense)
as
personalfulllment. Sucha category,Gorzrecognizes, hasno
positiveprincipleof cohesiononly a commonnegationof es-
tablished social order. The non-class cannot by any strategy
takepower(asa worker-based revolutionmightconceiveof tak-
ing power).Takingpower,moreover,wouldbeinconsistent with
its only commonprinciple:negation.
Rather,thegoalasserted
by
Gorz is the erosion of power. The activities of the autonomous
groupsideallycomprisingthis non-classarenot directedto-
wardthe state;they aredirectedtowardsocialaction.It would
have to be out of the tension between such manifold social activ-
ity andthe corporatistsuperstructures
of statepowerthat some
transformationof the state-societyrelationship could be hoped
for..
Whateverslim groundsfor hopetheremightbefor bring-
ing aboutpolitical changethroughthesemeans,they arecom-
pletelyblockedby militaryconfrontations
in thenewColdWar
andthemanyactiveregional andcivil wars.Theverynotionof
a witheringof statepowerhasasprecondition the absence
of
international threat and the enjoymentof internal security.For
thisreason,
thepeace
movement
is thenecessary
foundation
for
MUTATIONS 353
anyalternative
vision.Onlya dismantling
of theexternal
and
internalrepressive
capabilities
of the statewouldpermitsuch
alternative
societies
to comeinto existence.
Thepeacemovement
islogically
thebroadest
basis
forpopular
mobilization
toward
an
alternative
society.Thewarmovementis thegreatest
threatto
thatalternative
andthe mostpowerfulforcein defense
of the
hyperliberal
state,
theneomercantilist
state, andtheredistribu-
tiveregimesof actuallyexistingsocialism.
The unlikelihoodthat the peacemovementcansucceed
in disarmingstatesin no way diminishesits utility asa means
ofbroadpopularmobilization.
Thisunlikelihood does,
however,
makeit reasonableto envisage strategies
for change
basedon a
morerigorousanalysisofsocialforcesthantheconcept
ofanon-
class.Strategies
basedonnon-classesimplya leapintosub-
jectivity
thatmakes
for ephemeral
politics.
Thefactthatthe
workingclasshasbecome fragmentedandthatpartsof it have
beencooptedintotheestablishedorderis notsufcientground
for abandoning
classanalysisaltogether.
Theinferences to be
drawnfromclassanalysis
todaymayprovetobepessimistic with
regard
totheexistence
ofarm basis
forchange,
butthatpessi-
mismwould be a surerguideto buildinga coalitionof forces
a prospectivecounterhegemonythan voluntarismresting
solelyon sentiments
triggered
by events.Thenon-classis-
suespeace, ecology,
andfeminismarenottobesetaside but
givena firmandconscious
basisin thesocialrealities
shaped
throughtheproduction
process.
Tothetaskofidentifying these
socialforcesandtheir directionsof movement
I turn now in the
nal chapter.
CHAPTER TEN
THE
FORMATION
OF CLASSES
AND HISTORIC BLOCS
Class is to be understood as a real

historical relationship and not as merely an analytical category
in the mind of the analyst. Whether or not social classesexist is
a matter for historical investigation. The social basis for the ex-
istence of classescomes from the way in which people are po-
sitioned in production processes,but if the production process
createsthe potentiality for classes,it doesnot make classes.Social
practicesshapedby eventsgive peoplethe commonexperience
of class identity and of collective action. Someof these practices
are oriented toward production, e.g., trade unionism, some to-
ward the state, in the form of political parties or movements.The
former have often tended toward an institutionalization of class
relations within the established productive system. The latter
have exhibited greater potential for transforming structures both
of production and the state. Since the form of state has been
found to be the determining inuence on the development of
modes of production relations, the orientation of classestoward
the state, their channeling into political action, is a crucial his-
torical question. However autonomous such political action may
be, it is constrained by its social basis. People may be momen-
tarily arousedby political enthusiasms,but in the longer run,
political movements can do no more than their classbasisallows.
Severalfactorsaffectingclassariseout of the fact that

distinctmodesof socialrelationsof productioncoexistwithin
any society.
1. Noteverydominant
or subordinate
groupin eachdis-
tinct modeof socialrelationsof productionnecessarily
formsa
class;somemaynot attainthe levelof commonidentityand
capacity
forcommon
action
thatconstitutes
class;
theyremain
a
latent or potential class.
2. Dominant or subordinategroups from two or more
modesof socialrelationsof productionmaycombineto form a
class,
e.g.,through
thedevelopment
ofsolidarity
between
estab-
lishedand nonestablished
workers,or betweensmall-scale
en-
trepreneursand corporatemanagers.
3. The differentmodesof productionrelationsarehier-
archicallyconnected
in dominant-subordinate
relationships
(peasant
production
providing
cheap
foodfornonestablished
workersin small-scale
industries,who in turn producecheap
inputsforlarge-scale
industries
withestablished
workers)
that
affectthe classorientationsof their componentelements,e.g.,
throughseparating
the interests
of established
andnonesta-
blished workers.
4. Theclasses
formedaroundthedominantmodeofsocial
relations
of production
havea predominant
inuence
overthe
formationandorientation
of classesderivedfromsubordinate
modes,includingtheopportunity
to formahegemonicrelation-
ship with theseother classes.
The statecreatesand maintainsthe frameworkfor the
development
ofproduction
bydirectorindirectintervention
in
productive
processes.
It structures
thehierarchical
relationship
among
thecoexisting
modes of socialrelations
of production.
Thewaythestateregulates
production is conditioned
by the
classstructureof supportunderpinning thestate.Socialrevolu-
tions,or radicalshiftsin classstructures,
cangivea different
orientation to the statesrole in production.
Thus-classis importantasthe factormediatingbetween
production
ontheonehandandthestateontheother.
The
buildingand disintegrationof historicblocsis the process
whereby classformation
cantransform bothstates
andtheorgan-
ization of production.
CLASSESAND HISTORICBLOCS 357
Themediating
roleof classbetween
production
andthe
stateis most clearlyperceptiblewithin particularsocietiesor
socialformations.
Thesamemediatingrolecanalsobeexamined
at thegloballevel.Hereclassformation
andconflictmediates
between the world economy of production and the interstate
system.Theclasses
thatparticipate
in thismediation
havetheir
origins
in national
societies,
butformlinksacross
theboundaries
separatingnational societies.
Thestudyof emerging
classstructureis an exercise
in
socialmapping
atbothnational
andglobal
levels.
Themapwill
includethe tendenciesin classformationthat areapparentin
differentkindsof nationalsocieties(e.g.,advanced
capitalistso-
cieties,industrializing
ThirdWorldcapitalistsocieties,
there-
distributivesocietiesof actuallyexistingsocialism,andsocie-
tieswith a still primitivelevelof productive
forces).
It will also
show tendenciestoward a globalizingof certain classesor tran-
scendence
of their originsin nationalsocialformations.
The
importance
ofattempting
thiskindofsocial
mapping
istobetter
understand
the composition
of existinghistoricblocsandthe
elementsavailablefor the formationof newhistoricblocsand
hencethepotential
forchangein theformofstate,
in theinterstate
system,andin thefutureorganization
of production.
Outcomesin all three spheresare an open question.No
independentanddependent variables
areposited,no one-way
causalities,
e.g.,froman inevitablyemerging
organization
of
production
to consequentially
necessaryformsof stateand
interstate
system.
Thefutureshape
ofproduction
organization
is
justasopenasthefutureformofstate
andjustasconstrained
by
theexistingpatternof forces.Thestruggle
goeson at thesame
time on all threeterrains.Thequestionto be addressed
hereis:
what are the forces that are either presentin combat or more
passively
available
formobilization
intocombat?
This approach,
whichregardsclassformationandthe
formationof historicblocsasthe crucialfactorin the transfor-
mationofglobalpoliticalandsocialorder,hasseveral
advantages:
1. It avoidsreducingstatesandthe statesystemto the
worldieconomy,
atendency
forwhichworldsystems
theory
has
been
criticized?
systemfrom the bottom up by a mappingof production systems

and historic blocs and thereby avoids reication of world
systems.
.3. It keeps historical dialectic at the center of concern,
i.e., the confrontation of social forces and the strategiesthat can
shape future structuresof power [national and global] in one
direction or another, and thus avoids attributing structural-func-
tional homeostasisto world systems?
This approachis groundedi.nthe propositionthat people
do maketheir own history,thoughnot in conditionsof their own
choosing.It aimsto delineatewhat thoseconditionsactually are
and to identify feasibledirectionstoward the building of historic
blocs. For this reason, much of the discussion of global class
structure below will appear indeterminate, opening questions
instead of answering them conclusively. That is becausethe
answers will be given only by future social practice.
Insofar as tendencies appeartendencies that may, of
course,be reversedby future practicethese give a picture that
is the inverse of the one depicted by Marx and Engels in the mid-
nineteenth century. In the Communist Manifesto, they saw cap-
italists alignedwith their respectivestateswhile the vocationof
the workers of the world was to unite. Recent developments in
the late twentieth century suggestrathera movementtoward the
unication of capital on a world scale,while industrial workers
and other subordinate classeshave become fragmented and di-
vided. Realisticstrategiesfor social and political changeshould
begin with the facts, however unpalatable.
DOMINANT GROUPS
Consider rst of all the dominant social groups. Their hierarchy

can be plotted as (1) those who control the big corporations
operatingon a world scale,(2)thosewho controlbig nation-based
enterprisesand industrial groups, and (3) locally basedpetty
capitalists.The middle categoryis a heterogeneous one that in-
cludesmanagements of private nationscalecorporations,public
sectorcorporationsin capitalist countries,and stateenterprises
in socialist countries.
The rst grouphaveattaineda clearlydistinctiveclass

consciousnessand, though they do not identify themselvesas
such,constitutewhat canbe calledthe transnationalmanagerial
class.Beinga memberof a classdoesnot meansubmerging
conicts of interest with other classmembersindeed,it is of
the essenceof a capitalist classthat rivalries exist amongcapi-
talists. What it does mean is awarenessof a common concern to
maintainthe systemthat enablesthe classto remaindominant.
Various institutions have performedthe function of articulating
strategies
in this commonconcern:the TrilateralCommission,
the OECD,the IMF, and the World Bank all serve as foci for
generating
thepolicyconsensus
forthemaintenance
anddefense
of the system.Interdependence
is the keysymbolin an ideol-
ogylinkingeconomic
rationality,socialwelfare,andpolitical
freedom or modernization (dependingon whether the refer-
enceis to advancedcapitalist or Third World countries)with a
world economyopento corporatemovements of goods,capital,
and technology.Prestigious
businessschoolsand international
management trainingprogramssocializenewentrantsto theval-
ues,lifestyles,language(in the senseof sharedconcepts,usages,
and symbols],and businesspracticesof the class.The culture
specicto theclassis generically
American
andhasbeenspread
transnationally
from a U.S.base,homogenizing
the outlookand
behavior of members of the globally dominant group in a way
that distinguishes
them from the differentiatedculturesof na-
tional elite groups.It has, despite its pervasiveAmericanness,
become nonetheless transnational. American executives try to
repressnativeatavismsin orderto embracea styleof interper-
sonalrelationsconduciveto commonaction with Germansand
]apaneseeven
with Frenchmenand Soviets.The participant
Frenchmen,Germans,etc.,have traveleda longer cultural jour-
ney into this homogeneity,seducedby its blandishments.To-
gether,all of themenjoya senseof superiorityto the common
run of mortals in their shared liberalism, efficiency, and
enlightenment.
The transnationalmanagerialclassis not limited to per-
sonsactuallyemployedamongthe managerial cadresof multi-
nationalcorporations
andtheir families.It encompasses public
officials in the national and internationalagenciesinvolved with
economicmanagement
and a wholerangeof expertsand spe-
cialistswho in someway areconnectedwith the maintenanceof

the world economyin which the multinationals thrivefrom
managementconsultants, to business
educators,
to organizational
psychologists,
to the electronicsoperators
who assemblethe in-
formation base for business decisions, and the lawyers who put
togetherinternationalbusinessdeals.
Internationalnancial managementhas becomeof grow-
ing importanceas a componentof this class.Financeis the
principal mechanismfor enforcingclassdominanceover the
world economywithin an ordermaintainedby military strength.
Finance binds countries into the world market and obliges gov-
ernments,as a condition for renewingtheir internationalloans,
to carryoutthepoliciesrequiredfor thetransnational
managerial
classto ourish, policiesthat placethe mainburdenof adjust-
mentsupon the morevulnerablesocialgroups.Financealso
containsthe main endogenous
threatto the world economy,from
the excessivegrowthof indebtedness by bothgovernments and
big corporations,
whichhassince1982revealedtheworld econ-
omyasa fragilestructureliableto a nancialcollapsethatcould
leadto a generalmovementtoward neomercantilism.
Theothertwo categories,
associatedrespectively
with na-
tionalandlocalcapital,aremorediverse.Symbolsareavailable
to thesegroups-nationalsymbolsto nationalbourgeoisies
and
free-enterprise
andpopulistsymbols
to pettycapital.Whether
or
notthesesymbolsareusedto emphasize distinctiveorientations
is contingentuponthe waysin which nationalgroupsreactto
world-economy developmentsandto the dominantpositionof
the transnational managerial class.
National bourgeoisiestook form historically in countries
of earlycapitalistdevelopment.
Theyevolveddistinctivecultural
traditions,aswell asspecic nationaleconomicpowerbasesand
different alliance relationships with precapitalist dominant
classes(landowners,military nobility, and statebureaucrats]in
the formation of national historic blocs. There was also, from the
earliestphaseof capitalistdevelopment,
an internationalcom-
ponent-what
KarlPolyanireferred
to ashautefinancewhich
linked national capital into an international economicsystem.
Therewas alsoa commonunderstandingon the part of national
capitalistsof their mutualinterestin supportingthis systemin
CLASSES
ANDHISTORIC
BLOCS 361
theeraof lesbourgeois
conquérants.
Nationalcapitalfromthe
start had an internationalistdimension.
Theworld-economy expansionof thePaxAmericana fa-
voredtheinternationalizing
ofproduction.
Somenationalcapital
thatformerly
hadrested
onanational
territorial
base
nowbecame
global
in scope.
It remained
national
in itsreliance
uponthe
political
support
ofthehome
state
butnowcame
tooperate
in
manycountries.
Elements
ofnational
capital
werenowwonover
to theneoliberal
worldorderandabsorbed
intothetransnational
managerial
classtheybecameitscomponents
withinthena-
tion,agents
promoting
theadjustment
ofnational
policies
tothe
requisites
ofworld-economy
expansion.
Someelements,how-
ever,oftentheleastdynamic,
remained
apartfromthis move-
ment,increasingly
dependent
uponstateprotectionist
measures.
The economiccrisisfollowing1974broughtout the con-
flict of interests
between
thenationallyandinternationally
ori-
ented
capitalist
interests.
Thepolicydebate
between
theadher-
ents of a reconstructed neoliberalworld order and the
neomercantilists,
andbetween hyperliberal andstate-capitalist
orientations
in theformof state,reflects
thestresses
withincon-
temporary
capitalism.
Does
it signify
aconfrontation
ofthetrans-
nationalmanagerial
classby revivednationalbourgeoisies?
Not
necessarily.
Neomercantilism
withstatecapitialist
formsofman-
agementdoesnotimplyaretreat
intoautarkicspheres
withquite
separate
class
structures.
Ratherit implies
anintensication
of
unregulated
competitionamong nationalcapitals,
eachim-
planted
in anumberofcountries,fordominancein worldmar-
kets.Eachmajornations
capitalseeks
to beeverywhere
that
protscanbemade,andall,bytheverypressure
ofcompetition,
arebecoming
morealike.Thedifferent
national
capitals
engaged
in thisglobal
competition
arenomoredistinctive
thanrms
competing
inanational
marketsomething
thatdoes
notprevent
competing
capitalists
fromforming
acommon
class.
Thetrans-
nationalmanagerial
classwould,in a neomercantilist
future,
become
somewhat
moreweighted
thanat present
with stateof-
cials,andits common institutionswoulddisappear or lose
inuence,butthesocialrealityof a globalclasswouldnot,for
all that, necessarilycometo an end.
There was little evidenceof cleavagebetween interna-
tional and national tendencies in U.S. capital during the expan-

sive yearsof the 19503and 19603.The internationalorientation
led the expansion,but therewasroomfor all. Somelinkageswere
establishedthrough subcontracting,and segmentationof labor
marketsminimized the competitivedisadvantage of local capital.
Cleavagebetweenthe two tendenciesappearedmore openly in
the yearsof economiccrisis following 1973,most notably in a
variety of protectionist demandsthat contradictedthe world-
economy orientation of policy supported by the international
sector.3The political impacts of each of the two tendenciesis
brought to bear at a different point in the U.S. political system.
The international sectorhas privileged accessto the executive
branch and particularly to thoseagenciesmanagingforeigneco-
nomic policy, the StateDepartmentand Treasury.Protectionist
interestsaremore effectivethrough lobbiesin the Congressand,
alongwith local entrepreneurs, in the statelegislatures.Theresult
has been ambiguity in U.S. policy: continuing commitmentaf-
rmed by the executiveto international commitmentsand ad
hocprotectionistmeasures
enactedby Congress?
The ad hoc political inuence of protectionist interests
has beenreinforcedby the emergenceof an ideologicalcurrent
that offers an alternativeView of policy to that of liberal inter-
nationalism. Various strands entwine: concern for the deindus-
trialization of the United Statesresulting from the shift of man-
ufacturing by multinationals into foreign (often Third World)
locations;concernto avoid making the British mistake of the
late nineteenthcenturyby exportingcapital and with it the tech-
nologicalcapabilityto generaterival economicpowers;advocacy
of neomercantilistforeign economicpolicies gearedto the pro-
tection and enhancement of U.S. economic power and more
direct participationby the statein the mobilization of capitaland
direction of investment.5
Petty capitalists in the United Stateshave, in post-1973
crisis conditions,becomehighly vulnerableto the reducedlevel
of demand in the domestic market and to high interest rates,
leadingto lower prots and a high rate of bankruptcies.
The
grievancesof small businesshavenot, however,generated an
autonomous class-fraction revolt. Small business has come in-
creasinglyunder the dominanceof largecapital,particularly
CLASSES AND HISTORIC BLOCS 363
through the franchise mechanismwherebythe local business-

man absorbsa major part of the risk for corporategiants,who
provide the technology,brand name,and market organization,
while the local businessman tries to draw his prots from the
cheaperlabor availablethroughlabor marketsegmentation.
In other advancedcapitalist countries, the balancebe-
tween international and national fractions of capital has differed
historically. Britain is the exceptionalcasein which the inter-
nationally orientednancial interestsof the City havetradition-
ally dictated policy, allowing balance-of-payments considera-
tions affectingthe exchangerate of the pound to outweigh the
developmentalconcernsof industry. In Germany,France,and
Japan,governmentand nance havebeentraditionallymore
closely linked to the developmentof national industries. The
industrial recoveryand expansionof the postwar yearsaccen-
tuated the differentiation between large-scale and small-scale
enterprises.The Iapanesesolution brought small-scaleenter-
prisesinto a dependent
subcontracting
relationshipwithin a na-
tional policy gearedto export expansionby large-scaleenter-
prises.TheEuropean
countriessoughtmarketsto matchthescale
of production of largeunits of capital both by export promotion
andby formingthe European
CommonMarket[EEC].Whilebig
capitalwelcomedtheEEC,localcapitalistsaccustomed
to stable
sharesof local marketsadaptedlesseasilyto the new conditions.7
Resistanceto the rationalization and modernization promoted by
the coalition of big capital, states,and EECprovokedsmall busi-
ness revolts.
Throughthe 1960s,big capital in Europebecameincreas-
ingly internationalized
as U.S.capitalowed into the EECto
producebehindthe commontariff andto takeadvantage of the
higher rates of prot to be earnedtheref Iapan, always more
resistant toward intrusions of foreign capital, acceded in some
measureto U.S. pressuresto permit certain forms of foreign
investmentas a quid pro quo for Japanesefull participation in
the rule-makingand rule-supervisingagenciesof the world econ-
omy. Conicts betweeninternational and national orientations
of capitalbecome
manifestatthispointin theadvanced
capitalist
countries other than the United States. Jean-JacquesServan-
Schreibersbook TheAmericanChallenge(1967)enlivenedpub-
lic awareness
of a struggle
to resistconsolidation
of U.S.tech-
nological
supremacy
bystrengthening
anindependent
European
capacity
forindustrial
growth
andinnovation.
Thestruggle
wasnot,however,
openlyjoinedbetween
twoopposed
segments,
international
andnational,
of capital
withinEurope.
Alternative
policyclusters
emerged
in national
politics.
Thedominant
ones
(e.g.,
theregimes
ledbyValéry
Gis-
carddEstaing
in France
andHelmut
Schmidt
in WestGermany)
expressed
continuing
commitment
totheneoliberal
world-eco-
nomicorderwith continuingenhancement
of thecompetitive-
nessofbignational capitalin thissphere,
combinedwithtran-
sitionalprotection
andadjustment aidforthelesscompetitive.
Opposition
clusters
(e.g.,
theGaullists
inFrance]
expressed
the
apprehensions
ofcapital
lessabletoadapt
toworldmarket
con-
ditionsandofpopular
groupsnotbeneting
fromthegrowth
of
themoredynamic industrial
sectors.
Prolonged
economic
crisis
following
1973
reduced
theplausibility
ofthefirstanddeepened
theconcerns
ofthesecond.
Capitalmovements
reversed,
owing
nowthrough
Eurocurrencymarkets
intotheUnited States,
while
thedepreciation
ofthedollarfavoredU.S.overEuropean and
Japanese
exports
onworldmarkets andincreased laborcosts
in
Europe
andJapanrelative
totheUnited States.
Theearly advan-
tages
ofEuropean
andIapanese capital
in worldmarketcompe-
titionwerenowchallenged
by arevivedU.S.industrialcompet-
itiveness~~acompetitiveness
duemoreto theuseof U.S.power
to manipulate
theworldfinancial
systemthanto realgainsin
industrial
productivity.
Capital
in allthemajorcountries
became
morethaneverawarethatworldmarketsuccess depended
equally
uponproductive
efficiency
andpolitical
power. S
In late-developing
countries,
fromthoseof southern
Eu-
rope
totheindustrializing
countries
oftheThird
World,
national
bourgeoisies
neverattained
thesame degree
ofhegemonic
status
asbourgeoisies
in oldercapitalist
countries.
Thestate
inmostof
thesecountries
became
amajoragency
formobilizing
andaccu-
mulating
capital.
Thepredominance
ofstate
officials
in theac-
cumulation
process
andinthecontrol
ofthecountrys
productive
apparatus
gives
risetoanattempt
todene
thenature
ofthegroup
thatcontrols
development.
It is,of course,
necessary
to differ-
entiateseveral
distinctpatterns
of powerrelationship.
In some Third World countries, state structures coexist

with evolvedlocalpropertiedclasses-landowners andnascent
nationalbourgeoisies.
The state,with its militarybureaucratic
apparatus,
hasassumed theroleofguidingnationaldevelopment
andof managing
thelinksbetween localandforeigncapital.In
Brazil, the statehas fosteredthe associationof multinational
capitalwith statecorporations
andsomeof the largerblocsof
nationalprivatecapital.Thestatehasalsousedits international
credit to raise and underwrite foreign loans for investmentin
stateandprivatesectors.
It hasbeenthemajorforcein capital
accumulation. The Brazilian casemay be exemplary but not
unique.
Thereis an elementof rivalry in the relationshipto foreign
capitalto the extentthatstateofcialsandnationalcapitalists
bargain with multinationals
fora largershareof totalaccumula-
tion. The notion of a compradorbourgeoisie,which suggestsa
role of subordinateagentto multinationalcapital,is totally in-
appropriate
to this relationship.
Nevertheless,
therivalrytakes
placewithin the frameworkof a commoncommitmentto a pat-
ternof development
orientedto worldmarkets.
State-centered
economic management
is oneof themanifoldmanifestations
of
world-economy
capitalistdevelopment.
(Thealternativewould
be autocentric development,but to adopt such an alternative
would imply a degreeof massmobilizationtoo risky for the
political survival of the dominantgroups.)
In other less developedcountries,an indigenousclass
structurebasedon propertywaslessthanfully evolved.In many
African countries,it is difficult to speakof an indigenousland-
owningor localcapitalistclass.Landowning, in the senseof
capitalistfarming,andlocalcapitalistenterprise
werethemo-
nopolyof foreigners.
Eventhoughstateadministrative
structures
were somewhatmoresketchyand lessthoroughlyarticulated
with societythanin someof themoredeveloped
postcolonial
Third World countries,the statewasrelatively morepowerful in
relationto society.
Thecivil andmilitarycadres
of thestateand
parastatalcorporations
became thedominant powerandtheex-
clusivelink to outsidecapitalandthe interstatesystemwith its
potentialsfor aid and inuence.
The personnelof this dominantgrouphad a common
background.
Theyweredrawn
fromtheeducated
pettybourgeoi-
sie with someadmixtureof moretraditionalsocialauthorities
[although
thechildren
ofthelattersoon
integrated
withthefor-
merthrough education].
Thishadledto a varietyof efforts
to
identifytherulinggroup
in theuseofterms
suchasbureaucratic
bourgeoisie,
managerial
ororganizational
bourgeoisie,
andstate
class.
Theyhavebeencalledabourgeoisie
byanalogy
because
of
thecontrol
theyhaveovertheproductive
apparatus
through
their
controlof the statebut also,perhaps,
because
of an observed
disposition
of someoftheirelementsto linkupwithforeign
capital
bothasrealcompradors,
e.g.,
in theroleoflocalstaffof
multinational
corporations,
andasanautonomous
groupseeking
external
capital
andalliesfortheirowneconomic activities.
The
stateclassappelation,bydropping thebourgeoisqualica-
tion,suggests
anindeterminacy onthepartofthisgroup(itcould
moveeithertowardintegration
withworldcapitalism
ortoward
a moreautocentricand socialistdevelopment).
It alsosuggests
thatthegrouphasattained
a self-reproducing
powerstatus
that
canbeopposed tosubordinate
classes
in thesociety.
The inherentambiguityof the ruling grouphasbeen
underlined
bymanyobservers.
Amilcar
Cabral,
believing
thatin
African conditions,only elementsfrom the petty bourgeoisie
couldleada successful
revolution,proposed thattherevolution
wouldbeableto maintainits integrityonlyif thesepetty-bour-
geois
elements
wereprepared
tocommit
class
suicide.
Broadly,twocoursesof actionareopentothem.Oneis to
maintainthe revolutionary
thrusttowardautocentricdevelop-
mentemphasizing basicneedsand socialequitya course
fraught
withpolitical
risks.Thisisnotinconsistent
withselective
links to the world economy
throughforeigninvestments
and
exports
butmustsubordinate
these
linkstonational
development
goals.
Theotheristoseek
oraccept
foreign
capital
andproduce
for the world marketasa meansof servicingthatcapital.Thisis
thesoftoptionforaleadership
tiredoforthreatened
bycontinued
popular
mobilization.
It isacourse
thatmayshowevidence
of
economic
growth,
albeitwithgrowing
inequities
andanexternal
orientationto the economy.The statemanagers
of a country
possessing
mineral
resources
in demand
onworldmarkets
are
especially
liableto beattracted
tothesecond
course.
Insofar
as
theyderiverentsfromtheircontroloveraccess
to minerals,
they
becomein effectpartnersof the multinationalcapitalthat pro-
cessesand marketstheir raw materials.
Thus, if the stateclassdoesexist,it is an ambivalent
structurethat may moveeitherin the directionof self-reliant
development
or in thatof dependent
integration
intotheworld
economy,
withanaturalinclination
overtimetothelatterunless
popular
pressures
canberecurrently
rekindled
to pressure
the
leadershipto staythe revolutionarycourse.
A numberof lessdeveloped countriesareonlyof marginal
interestto transnationalcapital.Their poor domesticmarkets
offerlittle or no incentivefor foreigninvestors
to setup local
production.
Norareexportplatforms
a likelyoptionsolongas
theindustrializing
ThirdWorldcountries containuntapped re-
servesof morereadilytrainable
anddisciplined
manpower. The
nancingof foodandenergy inputsposesproblemsof interna-
tional credit.Thegreatestinuencethe statecadresof these
countrieshavewith thoseelementsof the transnational
mana-
gerialclass
theyencounter
liesin thethreatof sociopolitical
disorderinherentin their countrieslack of development
and
deteriorating
economic andsocialconditions.
Somehopeto ex-
tractsufcientpoorrelieffromtherich countries,
averting
the
risksofpopular
mobilization.
Others offerthemselves
franklyas
repressive
policemenin returnfor militaryandcounterinsur-
gency assistance.
Whether playingthebenign orthemalevolent
role,thesestatecadres
become
accessories
to thetransnational
managerial
classthwarting
thedevelopment
of socialforces
in
their countries.
Economic
management
in socialistcountries
is a special
case.Industriesin thesecountriesoperateunderthe tutelageof
apoliticalsystem
centered
in aPartywhose
leadership
thinksin
termsof totality,linkingall signicantactivitiesin thesociety,
includingthemanagement ofindustry,to overallgoals. Thecon-
cernsof differentindustrialsectorsarereconciledwithin this
totalframeworkandmanagerial positionslled soasto conform
withthegeneral
directiongivenbythecentralleadership.
Poten-
tial existsfor the emergence
of a directingclassin the Soviet
system,
butit is stilldifculttospeak
oftheemergence
ofclass
asa self-reproducing
socialcategory.
Thesedirectinggroups
adopta perspectiveof nationaleconomicinterest.[This doesnot,

of course, mean that as individuals they are any less self-serving
or corrupt than people in authority in other systems.)
They haveenteredinto reciprocalrelationshipswith par-
ticular elements of the transnational managerial class, e.g.,
through interindustry cooperationbetweensomemultinational
corporations and some socialist enterprises.They have also
joined in projects with the transnationalmanagerialclass,in-
cluding the expansionof East-Westtrade,nancing through the
Eurocurrencymarkets,and participation [by a few of their coun-
tries) in the InternationalMonetaryFund. Such reciprocalrela-
tions betweendominant groups of state managementsand the
transnationalmanagerialclassremain subjectto the veto of the
former. They have not enmeshed the state managements irrev-
ocablyin the dynamicsof a world economyled by the transna-
tional managers.
SUBORDINATE GROUPS
Looking downward from the dominant social groups, it is pos-

sible to spot tendenciesin classformation amongsubordinate
groups.In summary,thesetendenciesare:(1)the emergenceof a
new middle stratum of scientic, technical, and supervisory per-
sonnel comprised within enterprise-corporatist production rela-
tions and closely linked to the functions of industrial manage-
ment; (2) an increasinglydefensivepostureof thoseestablished
workers who remain within the scope of bipartite and tripartite
productionrelations;(3)continuingexpansionof nonestablished
in relation to established jobs in advanced capitalist countries,
accompaniedby both a fragmentationof worker interestsand a
general spreading of instrumental values among all worker
groups,both of which tendenciesput in questionthe prospectof
working-classsolidarity; (4) the mobilization of new industrial
laborforcesin industrializing Third World countries,which will
either be tamed in the protective embrace of state corporatism or
becomefoci for revolutionaryupheaval;and (5) the socially and
politically destabilizing consequencesof agricultural transfor-
mation in the Third World and of the increase in marginal pop-
ulations and so-called informal-sector employment.
The New Middle Stratum

Technical, scientic, and supervisory personnel in the
most technologically advanced sectors of industry have been
hailed both as a new middle class and as a new working
class. The labels reect different appraisals of the historical role
this group is expected to perform. The new middle class des-
ignation describes a buffer layer within industry between those
who control the accumulation process on top and the mass of
the workersbelowa statusquo-protectingfunction. The new
working class designation expresses an anticipation that this
group will become the cutting edge of change leading the rest of
the working classtoward selfmanagedsocialism.
The long-term trend toward industrial concentration has
brought about a broadening and deepening of the management
function. The individual entrepreneur assistedby several clerks
whose managerial decision-making process went on within his
own skull has been replaced by an ever more elaboratedcollective
system of management,specializedinto functions of nance,
marketing, research and development, and production engineer-
ing, all coordinatedat the top but collectively constituting an
interdependent labor processof management.The new technical,
scientic, and supervisory cadres constitute the lower layers of
this managerial structure and its interface with those whose work
is externally determined by this structure. Automation has cre-
ated somenew specializationsbasedon theoreticalknowledge
of a polyvalent kind rather than on specic trades skillson
ability to think in systemstermsandto interpretinformationand
manipulate symbols.Often these skills becometied closely to
particular enterprisesand production processes.Thosewho de-
velop such skills may thus develop at the same time an identity
with and loyalty to the enterprise. The management structure as
a whole depends on the continuity of action of the cadres.There
are incentives on both sides to transform a contract for the pur-
chaseof labor power (determined by short-term market prospects)
into a more integral form of employment relationship with the
corporation,i.e., a salariedrelationshipwith careerdevelopment
prospects and a pension at the end. What was once, in Marxian
terms, thought of as variable capital becomesmergedinto con-
stant capital. The form of socialrelationsof production through
which this is doneis enterprisecorporatism.
Claus Offe has examined the ideological implications of

the integrationof suchpersonnel.Achievementand merit arethe
principal legitimatingcriteria acknowledgedin modernsocieties
for differential rewards to individuals. The cooperative, interde-
pendentnatureof the work of technostructures,
however,
makesit Very difcult to measureobjectivelythe contributions
of individuals since the product is that of a team. In practice,
selectionand promotionto positionsof higher statusin the work
processare basedon criteria that have only a very approximate
functional relevancyto the contentof work but aregoodpredic-
tors of conformity to the social goalsof management.Coupled
with a tendency to recruit cadres,not from below, but from
outside,this accentuatesa socialseparationbetweencadresand
workers. Offe concludes that the integration of employees
through careerprospectswith the enterprisemeans that large
areas of motivation are now tied to the current status quo of
power and income distribution.2°
Integrationdoesnot, of course,eliminate conflict. Cadres
have collective demandsto press on top management.Their
identication with the enterprisemaywell bematchedby a sense
of their own indispensabilityto the production processand ca-
pacity for technical self-determination.The conicts in which
they may be engaged,whether for a larger shareof enterprise
income or for more autonomy in decision making, remain issues
within the enterprisefamily and have little or no bearing on
generalizedworking-classactionor political unionism.The new
working class thesis recognizesthat technical and scientic
personneltend to split awayfrom class-based alignmentsand to
engagein enterprise-orienteddemands.It argues,however,that
enterpriseidentication is not synonymouswith an alignment
to top managementand that sincecadreshavethe senseof being
the authentic knowledgebasefor the production process,they
are the group of workers most likely to envisageopportunities
for self-management, in other words,for a regimein which man-
agementlegitimatedby property ownership can be replacedby
managementlegitimatedby technicalcompetency.
The most doubtful part of the new working-classthesis,
however,is that which envisages the cadresfoundingand leading
CLASSES
ANDHISTORIC
BLOCS 371
anew
kindofenterprise-based
labor
movement
toward
socialist
self-management.
There
islittleornoempirical
basis
forthis
proposition;
scientic
and
technical
personnel
have
notbeen
at
theforefront
ofstrike
action
and labor
agitation.
Explosions
have
more characteristically
broken outamongthesemiskilled.
Itis
truethatscientic
andtechnicalpersonnel
haveusually
gained
more thanproportionate
inuence inconsultative
schemes
set
upwithin enterprises,
butthese schemes
areother
instances
of
thesocialdistancing
ofestablishedworkers
inthelarger
scale,
more integrated
enterprises
from thenonestablished
andmore
precariously
employedanother
manifestation
ofenterprise
corporatism.
What
does
remain
plausible
inthenewworking
class
thesis
isthepossibility
thatthecadres
could
bepositively
re-
sponsive
tostate
action
tonationalize
industries.
Anyprospective
change
inthestatus
ofindustry
seems,
indeed,
morelikely
to
comefrom state
initiative
asaresultofapolitical
change
ofregime
thanfrom anyautonomous reformoftheenterprise
ledbythe
cadresthemselves.
Thenancial dependencyofenterprises
on
thebanks,andofthebanks ultimately
onthestates
capacity
to
mobilizecapital,
underlinesthisplausibility.
Bankers
mayper-
ceiveanaturalalliance
withthetechnical cadres
ofindustry
since,
inthelastanalysis,their
workismore
necessary
toeffective
debtservicethantheformal ownersare.
Thisperception
would,
ofcourse,bemore vividwhen asocialist
government
controls
thebanks.Possiblyit isthisthat
theFrench
socialists,
who have
beenforemost inadvancing thenewworking class
thesis
have
inmind.One may,however, question
howfarsuch achange
necessarily
implies
atransformation
ofsocial
relations
inpro-
duction.
Itmight
wellinvolve
aconsolidation
ofenterprise
cor-
poratism
understate
tutelage.
Thereisalower stratumofpersonnel
integrated
within
enterprises
whocan becategorized
asspecialized
workers.
They
have
qualications
superior
tothose
ofthesemiskilled
though
lacking
thetechnological
sophistication
ofthecadres.
Their
status
dependsontherolethey
playinsupervising
the
owofworkbysemiskilledoperatives.
Theirpower
isthus
identied
withthetechnical
organization
ofproduction
specic
to particularenterprises,
andtheirmainfunctionis to ensure
conformitywith the normsof the enterprise
on the part of
subordinates.
Often suchspecializedjobs areto be found in older
industriesor oldertechnologies
that haveadaptedto the com-
petitiveimpactof thetechnologically
leading
enterprises.
The
coexistence
of old andnewtechnologies
is a furtherfactorfavor-
inga fragmentation
of theinterests
of differentgroupsof work-
ers. Someof the olderindustriesthat havetraditionallybeen
thepreserve of skilledtrades,e.g.,printing,furnituremanufac-
ture,precision mechanics, haveexperienced a shiftin thecom-
positionof theirlaborforceswith a reduction in theproportion
of skilled workers and an increasein the cheapersemiskilled.
Where this has occurred,someof the skilled workersare often
promoted
intotasks
involving
preparation
ofworkprocesses
and
supervision
whilesomeof theothersaredowngradedto less
skilled work alongsidea new lot of workers,oftenwomenor
immigrants.
Underbouyanteconomic
conditions
suchaspre-
vailedin the1960s,opportunities
for individualpromotionmight
outweigh resentmentatthedegradation ofskillsandimpede
any
collectiveprotestby erstwhileskilledworkers.Therestricted
opportunities
ofthepost-1973
crisisaremorelikelytoengender
a collectiveresponse.
Sucharetheforcesdetermining
thebor-
derlinesof the enterprisecorporatistconsciousness.
TheDefensive
Postureof Established
Workers
Skilled manual labor hasbeenthe coreof the tradeunion
movementin the industrialized capitalist countries.Strongor-
ganizations
of established
workersgained
recognition
bothas
legitimate
forces
bargaining
to determine
thetermsandcondi-
tionsofemployment
in industryandalsoasasignicant
political
forcein inuencingthe development
of socialpoliciesin the
statethroughtheir association
with mass-based,
oftensocial-
democratic,
politicalparties.Established
laborbecame
akeycom-
ponent
ofthecoalition
ofpoliticalandsocialforces
thatconsti-
tuted the social contract of the neoliberal state.
There were three variants of this generalpattern.In the
rst, unionsorganized
a relativelysmallproportion
of thetotal
nonagricultural
laborforce(notmorethanabout
25percent)
and
CLASSES
ANDHISTORIC
BLOCS 373
were effectivein determiningconditionsof employmentin large-
scaleenterprises
of key industrialsectorsbut somewhat
less
effectivein the realmof statepolicy.This wasthe casefor the
United Statesand Canada.In the second,unions were more
strongly
based
in thelaborforceandwereparticularly
inuential
in the determinationof statepolicy through social-democratic
parties,
whichheldpowerthrough at leastpartof thepostwar
period.Thiswasthecasein Scandinavia,
WestGermany, and
theNetherlands.
In thethird variant,unionswererelativelyweak
in membership
butbecame
vehiclesfor occasional
mass-based
protests,
whichtookonaclassform(unions,
in asense,
catching
up withdeeplyrootedrank-and-file
movements].
Theseexplo-
sionssecureda politicalresponse
froma statecontrolled
essen-
tiallybynonworking-class elements.
Thiswasthecasein France
andItaly,e.g.,in thebroadlybasedsocialmovements of May
1968in Franceand the hot autumn of Italy in 1969.
Duringthe1950s
and1960s,
variations
in strategies
of
socialconflictandin themodes
of resolution
of conflictscanbe
explained
verylargely
bythese
three
variants.
There
wasasteady
levelof strikeactivityin theUnitedStates
andCanada
(variant
one);a declineof strikes
to a negligible
levelin Denmark,
the
Netherlands,Norway,andSweden (varianttwo];andsomede-
clinein Belgium,WestGermany, andtheUnitedKingdom (par-
tial formsof varianttwo);andheavyconcentrations
of strike
activityin FranceandItalyaround
moments of sociopolitical
crisis(variant
three).z5
Theserepresented
different
waysinwhich
establishedworkersbroughtinfluenceto bearon bothindustry
and the statewithin the generalframeworkof Keynesian-type
economic
managementin aneraof economic growth.
Demand
management
maintained
a welfarestatewithreasonably
high
levelsof employment.
Withinthestate,established
workers
or-
ganizations
weresought
outaspartners
in national-level
eco-
nomicconsultative
bodiesandeconomicplanningcommissions
(withsomeexceptions,e.g.,theFrench
CGTandItalianCGIL,
considered
to fall outside
thebounds of consensus
because
of
their Communist
Partyconnections).
Workerswereaccorded
someconsultative
statuswithin industry,themostinstitutionally
developed
formbeingmitbestimmung
in theGerman
coaland
steelindustries.Established
laborparticipatedalbeit
asajunior
partnerin the powerblocthatgoverned thesecountriesduring

the postwaryears.This accountsfor the widespreadacceptance
of the ideologyof social partnership in WesternEuropeand of
businessunionism in North America during theseyears.
Theyears1973-74canin retrospectbeseenasthethresh-
oldbeyondwhichestablished workerswereplacedin adefensive
postureandbecamealienatedfrom the state.Theriseof public
expenditures
to 50 percentor moreof the nationalproduct,the
prolongeddeclineand stagnation
of economicactivity,andthe
attendant exacerbation of the scal crisis of the state triggered a
middle-classbacklashagainstorganizedlabor and againstthe
welfare state.This changein the political environmentwas not
necessarilyaccompanied by changesof regime.In the United
Kingdom,DenisHealysconductof treasurypolicyin theLabour
Partygovernment of 1974-76
foreshadowed themoredoctrinaire
positionsof theConservative
Thatchergovernment thatfollowed,
and in WestGermany,the transitionfrom the Willy Brandtto the
Helmut Schmidt governmentmarkeda thresholdpresidedover
by the SocialDemocraticparty.In Sweden,the countrywhere
the inuence, even dominant inuence, of labor over stateand
labor marketpolicy had beenmost rmly entrenched,the Social
Democrats,asthe guarantorsof this powerstructure,wereousted
from ofce.
The backgroundto this movementtoward the exclusion
of the establishedworker from political power hasalreadybeen
noted:the compressionof the skilled-workercategoryin industry
itself and a proportionateincreasein the semiskilled.The
compression of theskilledcategory
erodedthepowerbaseof the
bipartiteandtripartitemodesof socialrelationsandthe autono-
mouspolitical influenceof establishedworkers.This compres-
sion in the traditional industries was offset to some extent by the
progressof unionizationamongstate-sector
workers,which in-
volved amongother things the gainingof establishedstatus(i.e.,
moreprotectedemployment
status]by groupsofworkershitherto
nonestablished,suchashospitaland insidepostalworkers.State-
sectorworkers,whosegainsweremostly madein the 1960s,have
alsobeenplacedon the defensiveby the generalpressurefor
budgetcutsin all the advancedcapitalistcountries.Employers
stiffened their resistance to union demands and reassertedtheir
control over the organizationof work so asto be ableto decrease

the proportion of skilled to semiskilledjobs.
Forcedinto opposition to the neoliberalstate,the defen-
sivepostureof established
workerorganizations
is expressed
in
a variety of ways. There hasbeena new emphasisin labor dis-
puteson technologicalchangethenaturalattemptby skilled
workers to reversea vanishing control over the work process.
Unions have also tried to head off tendencies toward integration
of worker interestswith the enterprise(which would undermine
the workers collective autonomy of action] by reassertingthe
class basis of worker interests. Realizing that the trends ad-
verselyaffectingskilled employmentcannotbe resolvedat the
level of union-managementrelations,movementsof established
workers in some countries have been calling for a voice in in-
vestmentpolicieswith a view to promotinga kind of industrial
reconversion that will not result in a large-scaledisplacement of
skilledjobs. This very demand,however,couldbecomeeffec-
tive policy only if the the post-1973
trendtowardalienationof
establishedlabor from the power blocs of advancedcapitalist
states were reversed. Whether at the enterprise level or the state
level, establishedworker unions confronta problemof their own
politicalweakness.
Acquiescence
in thepoliticalstatusquo,com-
bined with industrial action, such as brought material results in
the expansive1950sand 19603,is no longeradequate
to their
post-1973 situation.
Within established worker ranks, the post1973 trends
haveenlivenedsuspicionandrevoltagainsta union.leadership
perceived
astoomuchaccustomed
to operating
withintheerst-
while systemof powerfrom which little or nothingnow seems
to be obtainable.One consequence hasbeento open opportuni-
ties for more radical leadership. Radicaltendencieswithin es-
tablishedlaborthat jostleconservative
union leadershiphave
shed the corporatismof earlier establishedworker movements:
the radicalsexpectnothingfromlaborappointments
to national
consultativebodies,reject incomespolicies (which in any case
have not been much favored by the capitalist statessince the
crisis),andrejectthe cooptational
implicationsof workerrepre-
sentationin enterpriselevelbodies.Any forms of participation
whetherat enterpriseor nationallevelswould be envisaged
by
the radicalsas opportunities

for waginga powerstruggle for
controlof industryandindustrialpolicyfora denitelycon-
ictual participation.
Participationwouldbecomeacceptable
onlyto theextentthatestablished
workerorganizations
gained
power.
Radical tendencieswithin establishedlabor have, how-
ever,beenanexpression
offrustration
atlabors
declining
power.
Theyrepresent
littlemorethananexasperated
awareness
ofthe
ideological
cleavagethatincreasingly
separates
organized
labor
fromcapitalandthestatesincetheonsetoftheeconomic
crisis.
In their economicrole, unionshavefound themselves
in the
degrading
positionofbargaining
concessions
to capital,tryingto
maketheir retreatasorderlyaspossible,tryingto conserve
their
organized
strength
against
thedaywhentheymightbeableto
useit moreeffectively.
Withsomeexceptions,
unionmembership
in theadvanced capitalist
countries
hasdeclined.Labors
eco-
nomic strengthhaseroded.
Onthepoliticallevel,therecordhasbeenscarcely
more
promising.
Right-wing
politicsandideologies
havecome
todom-
inate in a numberof the advancedcapitalistcountries.In France,
themajorexception, a Socialist
Partygovernment tookpowerin
1981.Duringits first yearof rule,socialreformmeasures
and
nationalizations
wereput into effect.Thiswasfollowedby a
renewedpolicyofrigor,theresultofworld-economy pressures,
thatbrought
thissocialist
experiment
intoconformity
withthe
general
pattern.
Tradeunionstrength
hasebbed in France,
too,
underliningthat the traditionalbasisof supportfor left-wing
politics
isnolonger
whatit was.Apartfromeroding
electoral
support,
thelefthasshown
itselftobeideologically
weakened.
Variousattempts
havebeenmadeto build coalitions,
but no-
wherehasa coherent
policyalternative
emerged
to confront
the
actionsof the stateand capital,to counterdeindustrialization
andtheexpansion
ofthenonestablished
workforce.
Someof the critical issueslie in the areaof investments
andincomespolicies.Unionsopposeincomes
policieswhere
workersarenotaneffectivepartofthepowerblocthatdetermines
thewholeof economicpolicy,includingespeciallyinvestments.
Anygainwithrespect
tounioninfluence
overinvestments
might
thus be met by a possibleadvancein the directionof incomes
CLASSES
ANDHISTORIC
BLOCS 377
policy,
usheringin apost-Keynesian
typeofnational
economic
policy,thelikelyinternational
implications
ofwhichareneo-
mercantilist.
Thiswouldclearlyimplya resurgence
of labors
relative
powerandthereinsertion
ofestablished
laborbackinto
thehistoricbloc.However,
unless
anduntilthiscanbeachieved,
establishedlabormaytakethepositionthatunionsmustrelyon
theirownstrength aloneandremainsuspicious towardtheap-
peals
andblandishments
ofstates
which
havesoobviously
down-
graded
worker
interests.
Ofcourse,
whatunions
cannot
achieve
through
economic
strength
theymaytrytoachieve
through
po-
litical alliance.(Thismaybeseenasthemeaning
of AFL-CIO
support
fortheMondale
Democratic
Partycandidacy
in the1984
U.S.elections.)
Laborpoliticshave,however,beenno moresuc-
cessful
thanunionorganization
inmostoftheadvanced
capitalist
countries since the mid-1970s.
TheShiftingBoundary
Between
Established
and Nonestablished Workers
Asnotedin chapter9,thetransition
frommanufactureto
Fordismduringthelatenineteenthandearlytwentiethcentury
brought
withit a neworientation
oftradeunions.
Asworkers
lost control over the work process,their organizationsconcen-
tratedeffortsondefending
andimproving
theirlivingstandards
through
bothindustrial
andpolitical
action.
Attheworkplace,
managerial
authority
became
formallysupreme;
workerresis-
tancewaslimitedto informalrestrictions
of output.Modelsof
personal behavior
shiftedfromtheworkgroupto thestreet
groupandfromoccupational solidarity
toconsumer conform-
ity.Inthelatetwentieth
century,
automationandhightechnology
in theadvanced
capitalist
countries accelerated thesetendencies:
therehasbeenjobenrichment for a relativefew,jobimprover-
ishmentanda loweringof skillsfor others,
andanintroduction
of still othersto semiskilledwork havingno intrinsicallysatis-
fyingcontent.
Atthesametime,
thecommunications
media
have
spreadconsumerism,
instrumental
attitudes
toward
work,and
acquiescence
in thelong-term
stability
ofpoliticalsystems.
Theenlargement
thathastakenplacein thesphere of
semiskilled
workhasresultedin shiftinganduncertainbound-
ariesbetweenestablished
andnonestablished labor.Muchof
present-day social conict concerns the denition of these

boundaries.Threeinteractingsetsof factorsareinvolved in their
demarcation. One is the technical organization of work and con-
tent of jobs, discussedin chapter 9. The secondis the weltan-
schauungor form of consciousnessof the workers concerned,
their typical attitudestowardwork and life. Thethird is whether
or not workers are organizedin trade unions and the nature of
their employment relationships.
One type of worker dened by the interaction of these
three sets of factors is the affluent worker depicted in the
studies by Goldthorpe and others at Luton in Bedfordshire,
England. Thesestudieswere doneduring a period of economic
growth in a new industrial town amongemployeesin three en-
terprises.They could be regardedasrepresentativeof male,Brit-
ish (i.e.,nonimmigrant)workersin modernmanufacturing.Being
in a new town, these workers were relatively removed from close
family and community inuences such as might be assumedto
be transmitters of traditional working-class culture. They were
alsoin the youngeragegroups.The studiesshoweda high degree
of attachment to consumer values as these arise in the nuclear
familywhat the authors characterizeas privatizationand
of instrumental attitudes toward work. Work, in other words, is
valued only asa meansfor gainingthe incomerequiredto satisfy
consumer values. There was, however, little evidence of em-
bourgeoisement in the senseof identification with the moretra-
ditional middle-classaspirationsfor independenceand individ-
ual upward mobility. The worker wastypically a union member
who regardedthe union instrumentally as the necessarycollec-
tive means of defending and increasing income.
Objectively, the affluent worker has been presentedas
falling within the establishedworker categoryand asbeingtyp-
ically a supporter of the status quo. This latter attribute most
probably is to be explained by the favorableeconomiccontext
and by an ideological milieu characterizedby aspirationsfor a
middle-classway of life shorn of the Protestantwork ethic and
manipulatedby commercialadvertising.Nevertheless,the pos-
sibility remainsopen,asthe authorssuggest,that a changein the
economic environment could activate collective consciousness
amongafuent workers,most likely in a political form. Keener
CLASSES
ANDHISTORIC
BLOCS 379
awareness
of collectivedisadvantage
in opportunities
vis-a-vis
othersocialgroups
or aneconomic
downturn
bringing
deterio-
rationoftheirrelativeincomes
couldsparksuchachange.
In the
absenceof anysuchevents,
bipartite
socialrelations
ofproduc-
tion among theseworkers
aresystemmaintaining ratherthan
systemtransforming.
A second
typeofworker
situated
close
totheestablished/
nonestablishedboundaryin the coreindustrialcountriesis in a
fulltime,low-statusjob.Manyof thesearerelativenewcomers,
including
people
ofruralbackground,
ethnically
differentiated
imigrants,
andwomen.
Theyareemployed
inthelargefactories
of theautomobile
industry,smallerregional
plantsof industries
suchaselectronics,
andin smallor medium-sizedlocalenter-
prises
suchastextiles
orinformation
processing.
Some ofthe
mostexplosive
social
conflicts
ofrecentdecades havebroken out
amongthiscategory.
Thesegenerallyfocusonunionrecognition
andtheattempttoacquire
established
status.Oftenthese efforts
havefoundered uponthehostilityor indifferenceof already
established
workers,
andthishasmadeit easier
foremployers
to
resistnonestablished
workerdemands.Sometimes,
however,a
prolonged
conictsparksamovement
ofsolidarity
onthepart
oftheestablished
workers,
andunionsareformedorrestructured
to encompass
anddefend
those
attempting
to gainestablished
status.Heretheboundaries
between established
andnonesta-
blishedaremostuid andformsof consciousnessrangefrom
social
passivity
andaninstrumental
Viewofthewage
relation-
ship,ontheonehand,
toactive
challenge
tothestructure
of
powerandcontrol
inboth
management
andunions,
ontheother.
It maywellbethatemployment
offulltime,
semiskilled
workersrecruited
fromamong
groupssuffering
variousformsof
socialdisadvantage
(minorities,
immigrants,
women)peaked
during
theprecrisis
years
ofthelate1960s
andearly1970s
and
will notgrowagain.
Thereby
theestablished
orderin industry
mightspareitselftheriskofgenerating
anexplosion.
Thefunc-
tionsperformedbythese workerscaneither
beshifted
totem-
poraryjobsorreprogrammed intothesphereofthemoreinte-
grated
enterprise-corporatist
work
forcethrough
automation
and
robotization.
A thirdtypeencompasses
thosein a moreprecarious
or
marginal employmentrelationship.Thesepeopleare in tempo-

rary or part-time occasionaljobs requiring a variety of skilled or
semiskilled qualications. This includes people who welcome
short-termor temporary work as a meansof maximizing their
freetime and minimizing the sphereof their lives subjectto work
discipline while providing them with a necessary,if minimal,
income. It also coversthosewho would prefer regularemploy-
ment but have been unable to obtain it. The expansion of precar-
ious employment was discussed in chapter 9.
According to the classicalanalysesof work and classfor-
mation, precariousemploymentwould be unpropitious in the
extremefor the developmentof a classconsciousness. Classcon-
sciousnesswas supposedto thrive on propinquity, whereasit is
the characteristicof temporary,part-time,and putting-out work
for workersto be associatedonly intermittently or not at all. The
work processisolatesthem rather than brings them together.
Furthermore,precariousemploymentof this kind expresses, for
many of the workers,a divorcebetweenwork and what is mean-
ingful in their lives. Work becomesexclusively instrumental.
There is no satisfaction in it for its own sake, but only for what
earningswork can procure.Quite possiblethoseparticipatingin
occasional,temporary employment may devote some of their
energiesto social and political action. Alternatively, they may
share passively in the manipulated desires of consumerism.
There is little or nothing in the work relationship itself that
predisposes to the one or to the other.
On the other hand, for some the precarious status does
involve a social and political consciousness,a rejection of the
authority structureof the establishedeconomicand political or-
der, an option for an alternative.This is particularly the casefor
someof the youth, who feel at the sametime marginalizedfrom
the established economic order and alienated from its values.
Perhaps,asis oftenalleged,this consciousness is morefrequently
to be found amongmiddle and upper-middle-classyouth who
havereactedagainstan orderto which their opportunities(in the
minds of their parents)weresupposedto havebeenlinked. What-
evertheir classorigins,theseelementsof youth havegivena form
of consciousness to a variety of informal,autonomous,use-value-
producinggroupsin a kind of parallel economy.This conscious-
ness is antipolitical rather than political and is directed more

toward affirming a separate sphere of social action than putting
pressureon the statefor the extensionof socialpolicy.
These three types of social relationship to be found on the
borderlines between established and nonestablished jobs embody
contradictory tendencies,somesupportive, some disruptive of
existingindustrial structuresin the advancedcapitalistcountries.
The afuent worker is objectively supportive during good eco-
nomic times but could, in less favorable circumstances, become
an opposition force. The newly recruited, still marginal, low-
statusworker may be kept in a relatively isolatedand powerless
position and be animatedby a purely instrumental attitude to-
ward work and an ambition to achieve personal upward mobility
toward established status, but collective action can and has ig-
nited these workers and has had a broader radicalizing effect on
labor movements.The third type-precarious, temporary,and
part-time employmentis equally ambiguousin its signicance
for class formation. Objectively,that is to say, in terms of the
work relationshipitself, it seemsto favor the statusquo of power
relations in production or the increasingdominanceof capital
over labor. The instrumental attitude toward work it encourages,
insofar as it providesa free run for consumerism,tends to per-
petuate petty-bourgeoisindividualist ideology in enterprise-
labor-marketconditions of superexploitation.But subjectively,
this particular realm of work can alsoharborVisionsof an alter-
native societyvisions sufciently alive to trouble and even
traumatize some members of the ruling class in Western Europe.
Work in this sector of the economy can be a means of secession
from established order, a secessionthat nds expression in non-
work relatedmovementslike the peace,ecological,and feminist
movements.
The apparentquiescenceof labor in the advancedcapital-
ist countriessince1974quiescencerelativeto expectationsthat
these societieswould never again tolerate massiveunemploy-
ment after the experienceof the 1930sis to be explained,not
only by the coercivethreatto employedworkersmadeby high
unemployment, but alsoby the politicallyandsociallydemobi-
lizing effectsof a growing enterprisecorporatismat one extreme
and of fragmentedprecariousemploymentat the other.Those
382 THEMAKING
OFTHEFUTURE
sectors
inwhichcollective
laborprotest,
intheclassical
analysis
of laborandpolitical
action,
wouldhavebeenmostexpected
have beensteadily
compressed.
Traditional
labor
ideologies
have
beendrained
of theirclasssubstance.
At thesame
time,new
potential
sources
ofprotest
havebeen
createdfrustration
ofthe
affluent
workersexpectations,
discrimination
disadvantaging
newly
recruited
immigrant
andfemale
workforces,
theresent-
mentof thecraftsman
downgraded
to semiskilled
status,
the
alienation
ofyouthchallenging
thevalues
ofthedominant
soci-
ety.Ontheonehand
areforces
making
fordemobilization
and
social
andpolitical
passivitythe
condition
forgovernability
in themindsofthedominant
groups.
Ontheother,anopportu-
nityappears
fortheformation
ofideologies
thatcould
bridge
the
gapsbetweenthesefragmented
sources
ofdiscontent.
Thisop-
portunity
fortheconstruction
ofacounterhegemonic
blochas,
however,
notyetbeenveryeffectively
seized.
TheIndustrialProletariat
In TheThirdWorld
In ThirdWorldcountries,
workis attheheartof actual
andpotential
social
conflict.
Three
interrelated
processes
dene
thenature
andoccasions
of suchconict:theformation
ofan
industrial
proletariat
(most
prominent
andnumerous
in those
ThirdWorldcountries
thatwereindustrializing
rapidlyduring
the1970s
butoccurring
toalesser
degree
inother
ThirdWorld
countries
aswell];expulsion
ofpopulation
fromtheruralareas
asaconsequence
ofthepenetration
ofcapitalist
agriculture;
and
thegrowth
ofmarginal
urban
populations
andinformal-sec
activities
in tandem
with economic
growth.
Anatural
history
ofclass
formation
inperipheral
capitalist
development
can
beoutlined.
Itwillnott every
case
precisely
butit doessuggest
a certain
logicin theconnections
between
sequential
stages
inpatterns
ofeconomic
growth,
instate
struc-
tures,
andin modesofsocial
relations
ofproduction.
Therst linksbetween
a precapitalist
formation
andthe
capitalist
worldeconomywereestablished
throughtrade.
The
precapitalist
formation
provided
amarket
forsome oftheprod-
ucts
ofcapitalist
production
andsupplied
some goodssought
by
capitalist
traders
(rawmaterials,
slaves).
Theselinks
were estab-
lished
through
ports
oftrade
regulated
bytheauthorities
ofthe
precapitalist
formationandinitiallytendedto strengthen
these
local authorities insofar as they could remain in control of the
trade.
The expansiveproclivity of capitalismand the superior
force it musteredled to a secondstagein which capitalist pro-
ductionimplanteditself directlyin the precapitalistformation.
This was accomplished throughthe mediumof imperialism,
eitherby supplantinglocalpowerswith acolonialadministration
or by useof gunboats
to compelacquiescence
by localpowers.
Therst capitalistundertakings
mightberaw-material
extraction
enterprises
(mines,plantations)
or facilitiesto penetrate
further
into domesticmarkets(ports,railways),or both.Whateverthey
were,theyrequiredwagelaborandlocalcashdemand.
Local
stateadministrations,whethercolonial or formally independent,
accordingly
hadto adoptmeasurestofurtheracashmarketecon-
omyanda supplyof wagelabor.Publicborrowingandtaxation
produced
these
effects,
supported
byotherinstruments
ofpublic
policy.
The socialrelationsof productionweretransformedat two
extremities. Production of agricultural products for markets,
whetherfor regionalurbanfood or long-distance
commercial
singlecrops,tendedtowarda consolidation of largerholdings
usingmorecapital(irrigation,
fertilizers)
in relationto laborand
alsoto extensiveengrossment
of landby agribusiness.
This left
only the lessproductivelandsfor subsistence
farming,andit
transformed
erstwhilepeasants
into agriculturalwagelaborersor
sent them to the urban slums. At the other extreme,capitalist
industryemployed
a relativefewin jobs,which,alongside
gov-
ernment services,seemedsecureand well paid by comparison
with what most of the urban population could hope to receive.
Commercialagricultureand industrial and governmentwage
earners
providedmuchof thecashflowintothelocaleconomy.
Betweenthem was a heterogeneous
group engagedin activities
variouslystyledastraditional,informal,or marginal,comprising
severalmodesof socialrelationsof production.Thereweresmall
workshops
employing
wagelaborin theenterpriselabor-market
mode;simplecommodity
productionby artisans
andproviders
of services(tailors,barbers)and small traders,all of the self-
employment
mode;andpeddlers,
domestic
servants,
andpara-
sitical and illicit activities of all kinds, encompassedin the pri-

mitivelabor-market mode.
The industrial work force and the modernized capitalist
formof thestategrewup together,
bothaconsequence of external
capitalistpenetrationof a precapitalistformation.The initial
forms of social relations of production in industry were some-
timesenterpriselabormarket,i.e.,completely
unregulated,
some-
timestransplantedformsof enterprisecorporatism,sometimes
formsof bipartism,oftenintroducedunderthe tutelageof colo-
nial administrations in imitation of metropolitan labor practices.
Theseinitial formsrepresented
theadaptationof practicesin the
capitalisthomelands
to theopportunities
andconditions
of the
lands of capitalist implantation.
The state,which initially performedunder metropolitan
surveillance
the tasksrequisiteto createthe conditionsfor local
capitalist
production,
became
lateraninstrument
thatlocalelites
coulduseto gaingreatercontroloverthe development
process
andgreater
returnsfromit. Theindependent
ThirdWorldstate
confrontedthesesocialrelationsof production generatedby me-
tropolitancapitalandsoughtto bringthemwithinits sphere
of
control. Two methodswere adoptedto achievethis. The more
short-lived method was populist mobilization of workers into
politicalsupport
foraregime
pursuing
nationalist
developmental
goals(seechapter7).Themoredurablealternative
methodwas
statecorporatism:the impositionby the stateof a singletrade
union structureconned to the big undertakingsof the industrial
sector.By substitutingstatecorporatismfor theinitial enterprise
corporatism of someforeigninvestors,thestategaineda bargain-
ing countervis-a-visthe foreigninvestorandmadeworkersde-
pendenton it ratherthan on the enterprise.Statecorporatism
also provideda frameworkfor clientelism.Foreigninvestors
couldbuy toleranceandfavorsfrom the publicauthorities,and
localpoliticianscouldbuypoliticalsupportwith jobs.Thusstate
corporatism
became
thegeneralized
modeof socialrelations
of
productionin the industrialsectorsof Third Worldcapitalism.
In those few Third World countries that have succeeded
in achievingextended
periodsof higheconomic
growth,thestate
depends
onits controloverofficialunionsto ensure
thesupply
of trainable, docile, and cheap labor on which this growth is
based.To the extent that it can prevent the emergenceof an

alternativelabor leadershipand prevent prolongeddisruptions
of production,statecorporatismunderwritesthe protability of
industry.It hasnot generallybeenableeitherto gainthe alle-
gianceof workers
orto supress
entirelytheexpression
ofworker
interests and worker discontents. This is especially so where
there has been someexperienceof autonomousworker organi-
zation. An ofcial union is generallyregardedby workersas an
arm of the stateor of industry, not asa worker organization.
Discontenttypically breaksout in spontaneous
wildcat
strike movements,directed as much againstthe ofcial union
bureaucracy
asagainstemployersandthe stateall part of the
powerstructure
fromwhichworkersarein practiceexcluded.
Oneof the mostimportantand unanswerable
questionsabout
future directions in the Third World concerns the consequences
of such socialexplosions.Insofaras they can be quickly re-
pressed,
theywill belittle morethanminordisturbances
onthe
routeto dependentdevelopment. To the extentthattheygainin
intensityand in duration,and the authoritiesfalter or fail in
repression,
theycouldheraldthepossibility
of alternative
social
andpoliticalstructures.
TheCordobazoin Argentinain thespring
of 1969wasa warningthat pent-upsocialpressures threatened
an economicallyweakened regime.Theoil workersof Iran,in
the insurrectionthat overthrewthe Shahin February1979,joined
their discontentto the making of a revolution. Is a lessrevolu-
tionarytransformation
of statecorporatism
conceivable?
Spains
experiencewith the growth of illegal workerscommissions
alongside
theofficiallabororganizations
duringthelateyearsof
FranciscoFrancos
regimesuggests
a modelamodelthatmight
be reected in the evolution of the workersmovementin Brazil,
especially
in theSaoPauloregion,duringa phaseof relaxation
of military-politicalpowerin the early1980s.
Problemsarise in the application of the classconceptto
Third World workers. A common thesis was that the full-time
industrialwageearners
in thesecountriesformalaboraristocracy
whose trade unions have made an economistic defense of their
specialinterests.Somefactssupportthis thesis.Certaingroups
ofworkersin majorundertakings,e.g.,mines,ports,andrailways,
havebecomeorganized in effectiveunions.Evenwhereformal
386 THE
MAKING
OFTHE
FUTURE
ideological
affiliations
wererhetorically
expressed
inclass
and
revolutionary
terms,
asin thecase
ofChilean
copper
workers
affiliated
totheChilean
CGTin thepre-Allende
period,
actual
practice
waseconomistic.
Moreover,
thecleavage
between
estab-
lished
andnonestablished
workers
thatgrew
upintheindustrial-
izedcountries
wasreproduced
inThird
World
countries.
Astrik-
inginstance
ofthisoccurred
inPeru
when
aradical
military
junta
inFebruary
1969expropriated
theprivate
sugar
haciendas
and
transformed
themintoworker
self-managed
cooperatives.
The
newself-management
committees,
rather
thanexpand
member-
shipofthecooperatives,
preferred
tohirenonmembers
aswage
labor
andthuscreated
twocategories
ofworkers,
oneprivileged,
theother
not,leading
tostrikes
andthethreat
ofstrikes
bynon-
members. Theestablished/nonestablished
cleavagehasarisen
outside
thesphere
ofcapitalist
industry,
asnoted
above
inthe
case of China.
Whether
thistendency
hasformed
a stabilized,
conserv-
ative
upper
class
ofworkers
isamuch
more
questionable
prop-
osition.
Several
factors
militate
against
theformation
ofaclass-
conscious
upper
proletariat.
One isthatalthough
wage
workers
may beoccupationally
differentiated,
inThird
Worldurban
cen-
ters
theyareoften
notsocially
differentiated
fromtheamorphous
category
oftheurban
poor.Even
thosewhoaswageworkers
earn
higher
andsteadier
incomes
livenodifferently
fromtheothers
because
social
custom
requires
thattheysupport
larger
numbers
ofextended-family
members.
Wage workers
mayalsotakeona
second
job,almost
always
intheso-called
informal
sector,
and
members
oftheextended
household
willalso
beworking
inthis
sector.
Thus occupationally
basednotions
ofclass
aremuted.
A second
factoris thatinstrumental
motivations
aregen-
erally
common
among
lowstatus
Third
World
urban
residents
something
theyprobably
share
withallworkers
most
ofthetime,
andthisis combined
withtherugged
durability
ofthepetty-
bourgeois
mythofupward
social
mobility.
Work isthemeans
of
gaining
theincome
indispensable
tosurvival,
andbeyond
sur-
vival,of nourishing
thehopeof amassing
enough
savings
to
become
apetty
trader
orself-employed
producer.
Wheremobility
hopes
seemfrustrated
andworkingconditions
areoppressive
resentments
aretypically
articulated
in we/theyterms
ofa
populistcharacter
ratherthanin thedevelopment
of class
consciousness.
Thepotentiality
for a revolutionary
roleonthepartof
wage
laborcannot,
however, bediscounted.
Asnoted,statecor-
poratism
hasbeen
moresuccessful
in screening
outalternative
leadership
thanin positively
attracting
theloyalties ofwage earn-
ers.A politicalvoidremains,
thoughit is difcultto ll, given
theobstacles
to buildingopposition
organizations,
whether
they
bebasedonresidence or ontheworkplace.
Factors
thatenhance
thepossibility
thatanoutbreak
of industrial
conflict
couldbe
transformed into a challengeto politicalandsocialauthority
include:[1]apriorhistoryof autonomous workerorganizations,
(2)theexistence
of occupational
communities
generating
a
greater
intensity
ofsocial
interaction
among
particular
groups
of
workers,
[3]theprevalence
ofarelatively
highlevelofeducation
among
theworkers
concerned,
and(4)thepresence
ofradical
intellectuals
amongworkerswho takeadvantage
of crisesin
society
totransform
prevailing
instrumental
attitudes
intoclass
solidarities.
Of course,thefirsttwo of thesefactorscouldbeconducive
to economistic
labor.-aristocracy
formsof consciousness,
aswell
asto a revolutionary
class-solidarity
perspective.
Furthermore,
evenaninitial class-based
revolutionarymovementmaybeen-
gulfed
in a comprehensive
populist
consciousness,
expressing
itselfmorein nationalist
or religioussymbols
suchasthoseof
ShiiteIslamin Iran.Third Worldindustrialdevelopment
is gen-
erating
conditions
propitious
forwork-related
social
protest.
Pos-
siblythepotential
forrevolt
arising
directly
outofthesocial
relations
in theproduction
process
isgreater
in theThirdWorld
thanin the advanced
andthis despitethe
repressive
instruments
available
toThirdWorldstates
andthe
limitedandfragile
nature
ofworker
class
consciousness.
Whether
revolt,whereit occurs,
takesa classor a populistformremains
mootandwill depend
ontheideological
preparation
ofworkers
and the nature of the leadership.
Peasantsand Marginals
Thethirdquarter
ofthetwentieth
century
sawtheglobal
incidence
ofviolence
shiftfromtheindustrial
heartlands
toThird
Worldpeasant
societies.
Twoworldwarscentered
in Europe
werefollowedby the successof a peasant-based
revolutionin
Chinaandby warssuccessfully
prosecuted
by peasantghters
against
thearmsandtechniques
ofadvanced
industrialcountries
in Indochina,Algeria,andsouthernAfrica.Peasants
wereslaugh-
teredor repressed
in Indonesia
andfoughtcontinuing
struggles
in much of Central and South America.
This encouraged the notionthat peasantsthewretched
of the earth9werethe genuinerevolutionaryclass.Neverthe-
less,by the last quarterof the century,new revolutionaryper-
spectives
in peasantsocieties
appeared dim.In thosecountries
wherepeasant-based
revolutions hadsucceeded,established
rev-
olutionaryregimes
tookthevillagesin hand;theyreestablished
compliance by peasants
in the leadership
of urbanelites.The
dynamicof revolutionin the countrysidewasquelled.In the
nonrevolutionary
areasof Third World capitalistdevelopment,
two tendenciesbecamesalient.Onewas rearguardaction fought
bypeasants against
thetransformation
ofpeasant
agriculture
into
capitalist
farming.Sincethepeasants
werealways
thelosers,
the
result was an increase in urban marginality as peasants were
extrudedfrom the land and ocked to the cities. The other ten-
dencystemmed froma realization
bythemanagers
of theworld
economythatcapitalist
developmentwouldnotabsorb
morethan
a fraction of the worlds rural populations.It took the form of an
attemptto stabilize
theruralpopulation
leftoutside
theeffective
scopeofthecapitalisteconomythroughself-help
schemesaiming
toward self- sufciency.
Thegrowthin marginalityis the numericalconsequence
of (1)risingpopulations,[2]signicantdeclines
in thenumbers
ofpeoplesupported onthelandascapitalist
agriculture displaces
peasant cultivation,and(3)verysmallincreases in industrial
employment. Thesethreefactorsexplainwhymarginality grows
with thelevelof economicgrowthandis highest(reaching
about
30percentof thelaborforcein somecases)
in thoseperipheral
countriesthat haveachievedsomedegreeof industrialization in
both agricultureand manufacturing.
Objectively,
thegrowthin marginality mustberegarded
aspotentially
destabilizing
forthesocialandpoliticalorder,since
it impliesa concentration
of largerthannecessary
reservearm-
ies of labor in conditions of extreme poverty proximate to the

centers of economic, social, and political power. In practice, this
threat is muted by the subjective conditions of marginality. The
rst generation of marginals have rarely evinced radical behavior,
being similar in this respect to most immigrants. Their concerns
are survival and adaptation. Their outlook is dependent and
instrumental, conducive to clientelism rather than group soli-
darity and collective action. Uprooted from traditional belief-
systems, they have sometimes taken to messianic movements
whose concepts of salvation tend to depoliticize. Attempts have
been made to organize marginals from without, sometimes by
state or church in structures consistent with the political order
(e.g., in Peru by the military regime of the 1960s], sometimes by
political parties or guerilla groups as a support for revolutionary
change [the MIR in Chile and the Tupamaros in Uruguay, for
instance]. The threat of the latter becomes the overt justication
for the apparatus of a repressive state. In all cases,the shanty-
towns, bidonvilles, favelas, barriadas, etc., where marginals are
concentrated, become foyers of crime, most of which victimizes
the marginals themselves but some of which spills over to
threaten the more privileged communities. This continuing dan-
ger, whose causesmanifestly increase rather than decrease,gen-
erates the mentality of the garrison state among the settled pop-
ulation, further advancing the dynamic of repression. Thus the
very existence of marginality, quite apart from any real revolu-
tionary threat it may pose (and this has not usually been very
credible], becomes a catalyst of the military-bureaucratic state, a
systemic cause of human rights violations and institutionalized
repression.
IN SUMMARY
The foregoing suggeststhat class formation is not a given, deter-

mined historical process but a very uid one-a dialectic of
opportunities created by changes in the structure of production
and of praxis evolved in response to those opportunities. It also
suggeststhat powerful forces are at work, supported by the dom-
inant classes, that obstruct class formation among emerging
subordinate social groupsoccupational fragmentation, exploi-

tation of ethnic and religious identities and symbols, helplessness
before the coercive repression of states and dominant groups
[both official police and military repression and unofcial death
squads), consumerism, and the petty-bourgeois aspiration to in-
dividual upward mobility.
The world economic crisis since 1973 has put these ob-
structive factors to the test. So far, in general, they have held. If,
however, the crisis is long enough and deep enough, these ob-
structions are likely in some places to give way.
In the advanced capitalist countries, where labor histor-
ically achieved its greatestpolitical and social gains, the past
centers of labors powertrade unions and social-democratic
political partiesare almost everywhereon the defensive.Mu-
tations in the production process are revealing new social bases
of discontent, but so far the existing organizations of the official
left have not been willing or able to encompassthese in a coherent
social and political movement. To do so is a challenge to the
unions and especially to leftwing politics. The building of a new
counterhegemonichistoric bloc is a longterm task for organic
intellectuals working in constant interaction with the groups
whose dissent from the established order makes them candidates
for inclusionit is a task for Gramscis modern prince, the
party as creator of a new state.
In Third World countries, the obstructions to class for-
mation may well give way more easily becausesocial and polit-
ical structures are less solid, especially in those countries that
have experienced the greatest economic growth in recent dec-
ades. The breakthrough of opposition forces could be triggered
by a debt crisis accompaniedby a failed attempt to enforcean
austerity program whose main burden would fall upon the pop-
ular classes.The question here is whether class formation, and
the organizational and ideological work it implies, will have kept
pace with the socially destabilizingeffects of rapid economic
growth.Varietiesof populism may provide a morelikely form of
revolutionary consciousness than class identity. Third World
workers may not have acquired the degreeof self-consciousness,
organizational capacity and ideological maturity necessary to
become the basis of a counterhegemonic bloc.
Wherever social revolt does break out, the capacity of the

world systemto maintainordercomesinto play.Foranysignif-
icant shift in the relations between classesto take place such as
would allow for the formation of new historic blocs, it would
probablybenecessary
thatbreaksin thepresentsocialstructures
occur in both advancedcapitalist and Third World countries.
Thus there could be supportwithin the most powerful statesfor
the struggleof repressedsocialgroupsin the Third World
supportat leastsufcientto preventexternalinterventionof a
repressivekind.
CONCLUSIONS
Action is purposive.Social action

can be broadlydivided into that which tendsto conservethe
existingorderandthatwhichtendsto changeit. At the outset,1
indicatedmy purposewasa criticaloneto searchfor the most
usefulway of understanding the socialand political world in
orderto changeit. The modelof changeI adoptedwasto seek
out the contradictionswithin the existingorder,since it is from
thesecontradictionsthat changecould emerge.Implicit here is
the assumptionthat eventhe mostapparentlystableordercon-
tains some areas of conict and uncertainty.
Critical awarenessof potentiality for changemust be dis-
tinguishedfromutopianplanning,i.e.,thelayingoutof thede-
signofafuturesociety
thatistobetheendgoalofchange. Critical
understanding
focuseson the processof changeratherthan on
its ends;it concentrateson the possibilitiesof launchinga social
movement rather than on what that movement might achieve.
Utopianexpectations
maybe an elementin stimulatingpeople
to act,but suchexpectationsarealmostneverrealizedin practice.
Theconsequences
of actionaimingat changeareunpredictable.
Oncea historical movementgetsunder way, it is shapedby the
materialpossibilitiesof the societyin which it arisesand by
resistanceto its courseas much as by the [invariably diverse)
goals of its supporters.
An optionfor changeratherthanpreservation
of thestatus
quois dictatedmoreby dissatisfaction
withtheprevailing
order
andhopefor improvement thanby anyblueprintfor an alterna-
tive society.It mayarisefromskepticism
thatprevailingpolitical
and economic mechanisms will satisfy human needs in a manner
394 CONCLUSIONS
that is safebothfor individualsandfor the fabricof societyasa

whole.It will likelybedrivenbya sense
of injusticeandahope
forgreater
equity
in thedistribution
ofphysical
necessities
and
in thediffusionof socialpower.In themindsof thosewhoopt
forchange,
thesolution
will mostlikelybeseenaslyingnotso
muchin the enactment
of a specicpolicyprogram
asin the
buildingof newmeans of collective
actioninformed bya new
understandingof society
andpolity.These, ratherthanpolicy
planning,
become
theprimaryobjects
of action.
The examinationof conditions favoringthe maintenance
ortransformation
ofexisting
socialorders
has,in thisstudy,been
posed
in terms
ofthethreelevels
ofproduction,
thestate,
and
world order.No oneof theselevelsdetermines whathappensat
the otherlevelsin a one-waycausalrelationship.Changes
come
aboutthroughmutuallysustaining
developments
at all three
levels.Conditionsfoundto be propitiousfor transformation
in-
clude:
(1)aweakening
ofglobal
hegemony
tending
toward
amore
permissive
worldorder
inwhichit would
bedifficult
foradom-
inantpowerorgroupofdominant
powers toenforceconformity
toitsnorms;
(2)theexistence
offormsofstate
thatarenotmerely
differentbutthathavedifferenteffectsonthestabilityof world
order(neoliberal
andneomercantilistdevelopmentaliststatesare
differentformsthatbothsupportthesamekindof worldorder];
and(3)themobilization
of socialforces
intonewcounterhege-
monichistoricblocs,particularly
if thishappens
concurrently
in
severalcountries,includingsomeofthemorepowerfulcountries,
withlinksofmutualunderstanding
andsupportcrossingnational
boundaries.Thesethreeconditionsaddup to a diffusionof
power.
Suchconditions
prevailed
at thedawnof theliberalera
in theearlydecades
ofthenineteenthcentury,
permitting
anew
system
of productionmanufacturing
undercompetitive
capi
ta1ismtobecome thematerial foundation
foranewworldorder
andnewkindsof state.Thelongperiodof decomposition ofthe
liberalworldorderin thelatenineteenth
centuryrecreated such
conditions,
outofwhichultimatelyemerged thebasisfor a new
hegemonic
era,thePaxAmericana.
Similar
tendencies
areob-
servable
atpresent.
Thequestion
iswhether
theyaresufficiently
faradvanced
to allowfornewexperiments
in socialandpolitical
CONCLUSIONS 395
organization,
or whethertheexisting
order,evenweakened, is
stillstrong
enoughto eliminate
thepoliticalthreatofa consoli-
dationof counterhegemonic
tendencies.
Theanswerto this ques-
tion canbegivenonlyin politicalaction.Peoplein Nicaragua,
Mozambique
andPolandbearthecostof raisingit.
Theimplication
fortheoryoftheapproach
takenin this
studytoward
thetransformation
ofsocial,
political,
andworld
ordersis, in the first place,to forsakethe actors-interactions
paradigm
thathasbeen
soinuential
in social
science,
in favor
of onegroundedin historical
structures.
Theobjective
of-the
latterapproach
istodiscern
thestructures
thatgiveaframework
for action and that form the actors.Historical structuresexpress
theunityofthesubjective
andtheobjective.
A nation,
aclass,
a
religionarenotrealphysical
objects,
yettheygiverealformto
thehumansituation.
Theyareideasshared
in thesubjectivity
of
innumerableindividualswho arerealphysicalbeings.In being
soshared,theseideasconstitutethesocialworldof thesesame
individuals.
Theyattainobjectivity
in thestructures
thatcircum-
scribehumanaction.Thesestructures areasmucha partof the
materialexistence
of peopleasthefoodtheyeatandtheclothes
they wear.
Structuresarein onesenseprior to individuals.Theyare
already
present
in theworldintowhichindividuals
areborn.
People
learn
tobehave
withintheframework
ofsocial
andpolit-
ical structuresbeforethey can learn to criticize or opposeor try
to change
them.Butstructures
arenotin anydeeper
sense
prior
to the humandramaitself,assomestructuralist
theorywould
have us believe.Structuresare not givens (data),they are
mades(facts)madeby collective
humanactionandtrans-
formable
bycollective
human
action.
Thishistorically
changea-
ble character
of structures
is whatdistinguishes
the historical
structures
approach
fromstructuralism.
Myapproach
haslooked,
not at individualactionsandevents,but at evidenceof changes
in theframeworks that setlimits for thinkingandacting.
I havefound suchframeworksor structuresat the three
levelsof inquiry:modes
ofsocial
relations
ofproduction,
forms
ofstate,
andstructuresofworldorder.I havealsofoundstructures
of structures
linkingtogetherthesethreelevelsin systemsthat
havehada certainstabilityfor a certainduration.Thepointof
396 CONCLUSIONS
my inquiry has,however,beenlessconcernedwith the syn-

chronic conditionsreinforcingstability than with the diachronic
developmentsexplaining structuraltransformations.
Thechosenstartingpointhasbeenthelevelof production.
This was premisedon the proposition that production is a uni-
versalhuman activity that conditionsall other human activities.
Productionresultsnot only in the supply of the physical requi-
sites of life but also in the creation of the institutions and rela-
tionships through which life goes on and through which the
accumulationof resourcesthat sustainpowerand authoritytakes
place.Productionof physicalgoodsplus the productionof his-
torical structurestogetherconstitutethe materialreproductionof
society.
It would seem that Marx meant something like this when
he wrote aboutthe modeof production,though differentauthors
in the Marxiantradition haveinterpretedhis meaningin different
ways. It is important to distinguish my usagefrom someof the
ways in which this term modeof production hasbeenused.One
of theseother ways hasbeento think of the modeof production
as the discovery of the inner essenceof capital, giving rise to
notions like the logic of capital or the laws of motion of
capital. My approachhas rather been to infer structuresfrom
observablehistorical patternsof conduct.A coherenceor logical
unity is imputed to thesestructures,but that coherenceis con-
ceivedasbreakingdown over time when new patternsof coher-
ence come into existence. There are no privileged points in time
at which an inner logic is revealed(suchasthe mid-nineteenth-
century apogeeof competitivecapitalism).It is recurrentlynec-
essaryto reconstructexplanatoryhypothesesof structuraltrans-
formation from the standpoint of each successiveepoch. The
methodand approachof previousattemptsto understandchange
may remain useful, althoughthe conclusionsdrawn from them
will almost certainly have to be revised.Inner essences
remain
forever elusive, but mental constructs of the ways prevailing
structures condition action, and the openings they allow for
change,can be of practical help in channelingcollective action
for structural transformation.
Another
difcultyinherent
intheusage
mode
ofproduc-
tion lies in Marxsexpectationthat capitalismwould bring about
CONCLUSIONS 397
a unication and homogenization of production processes. In

Capital Marx foresawthe transformationof scatteredsmall-scale
production into large-scaleproduction. He went on: These
changesresult in the destructionof all the antiquatedand tran-
sitional forms in which the dominion of capital is still to some
extent concealed, so that the rule of capital now becomes direct
and conspicuous. This demystication of capitals autocracy
through the homogenizationof work would, he thought,hasten
the prospects for revolution.
In the short term, Marxs forecast was correct with regard
to a progressivehomogenizationof production processes.The
triumph of Fordism vindicated him on this point. (His forecast
of the ripening of conditions for revolution was less accurate,
since it underestimated the extent to which the transformation
of the liberal state into the welfarenationalist state could preempt
revolutionarypotential.)In the longerterm,however,production
processeshave becomeonce againvery diverse.Fordism never
encompassed more than a fraction of total production.Thereare
today a greatvariety of modesof production, using that term in
the simple direct meaningof how things are produced.Capital
has shifted strategyaway from concentrationinto ever larger
homogenizedunits of production and toward a greaterdiversi-
cation of different modes of social relations of production linked
together in complex production systems,sometimesglobal in
extent.As a consequence, the term modeof production haswith
some authors lost its simple direct meaningand come to refer
rather to the linking togetheror coordinating of these diverse
social relations of production into a single complex processof
accumulation. It is this ambiguity in meaning, shifting between
how things are producedto how accumulationtakesplace,that
empties the concept mode of production of much analytical
usefulness.
This ambiguity can be dispelled, so I have argued,by
distinguishinganalytically amongthe socialrelationsof produc-
tion, the processof reproduction,and the processof accumula-
tion. Focusing on the social relations of production revealsa
number of distinctive structures. These structures originated in
differentepochsunder differentpolitical auspicesand havebeen
associatedin their originswith differentaccumulationprocesses.
398 CONCLUSIONS
Thusthe enterprise-labor-market
modeof socialrelationsof pro-
duction becamethe preeminentmode during the era of compet-
itive capitalism,butthismodecameinto aworldin whichhouse-
hold production,subsistence production,slavery,peasant-lord
production,andselfemployment survivedfromanearlierepoch
and becamerestructured in a subordinate manner into a capitalist
accumulationprocess.Similarly, when centralplanningbecame
the preeminentmodein a redistributiveaccumulationprocess
installedby revolution,someothermodescontinuedor subse-
quentlyrevivedin a subordinate
relationshipto it. Thereseems,
indeed, to be little justification for attributing an indelibly or
essentiallycapitalistqualityevento the enterpriselabormarket
or to bipartiterelationsdespitetheir unquestionable historical
associationwith the rise and developmentof capitalism.Enter-
prise-labor-market
relationshavebeenrevivedin subordination
to centralplanning,and thereis no reasonto excludeevena
possiblecompatibilityof bipartismwith centralplanning[the
Polish Solidarnoscwas a failed attemptto achievethis].
If the socialrelationsof production arebestdistinguished
analyticallyfrom reproductionand accumulationprocesses
in
order to be able to examine how different modes of social relations
of productionhavebecomelinkedtogetherin complexsystems
of production,it is otherwisewith reproductionandaccumula-
tion processes.Theseseemto conformmorecloselyoneto the
other.
I made a first distinction between simple reproduction
(thereconstitutionin the nextproductioncycleof the sameso-
ciety asproducedin the first] and expandedreproduction[the
generatingof a surplusthat enablesthe societyto grow and
changethroughsuccessive cyclesof production).Only in ex-
pandedreproductioncan one speakmeaningfullyof develop-
ment,and accumulationis the meansto development.Expanded
reproduction,development,
and accumulation
designate
differ-
ent aspectsof the same process.
I distinguishtwo basicmodesof development:
capitalist
and redistributive modes. Both accumulate in order to grow. Both
may organizeproductionin similar waysin orderto produce
surplusfor accumulation,
but the mechanisms driving the ac-
cumulation process are different. Capitalist development is
CONCLUSIONS 399
driven by opportunities for realizing prots in the market,and

perceptionsof theseopportunitiesdeterminewhat is produced.
In redistributive developmentwhat is produced is determined
by decision of the redistributors,i.e., the political authorities.
Subjectto thesedistinctive mechanisms,there remainsa range
of choice in regard to the combinations of modes of social rela-
tions of production that are possible under either mode of
development.
These
combinations
andthedominant
and
subordinate
linkagesamongmodesof socialrelationsof production delineate
the social structure of accumulation, i.e., the manner in which
production in one mode subsidizesproduction in another or
transferssurplus to that other [e.g.,householdproduction sub-
sidizes both central planning in redistributive development and
the dominant tripartite or enterprisecorporatist modes in capi-
talist development].If, hitherto, there has been a marked simi-
larity in production methodsunder capitalistand redistributive
development,this is to be attributedmore to the effectsof inter-
national competition (ultimately competitionin military prepar-
edness) between the two systems than to the inherent nature of
either
system.
Although
production
wasthe
point
ofdeparture
ofthis
study, the crucial role, it turns out, is playedby the state.States
create the conditions in which particular modes of social rela-
tions achieve dominance over coexisting modes, and they struc-
ture either purposively or by inadvertencethe dominant-subor-
dinate linkages of the accumulation process. States thus
determine the whole complex structure of production from
which the state then extracts sufcient resources to continue to
exerciseits power. Of course,statesdo not do this in an isolated
way. Each state is constrainedby its position and its relative
power in the world order,which placeslimits on its will and its
ability to changeproductionrelations.A majorpoint of emphasis
in this study has been on the crucial importanceof the states
relationship to production.
400 CONCLUSIONS
conditioned by both internal and externalconstraints.Stateau-

tonomy, in other words, is exercisedwithin a structurecreated
by the statesown history. The internal aspectof this structure
lies in the historic bloc. The external aspect lies in the way the
military and nancial constraintsof the world systemlimit the
statesoptions and the extent to which its historic bloc is pene-
tratedby classforcesthat transcendor areoutsideits own borders.
Class forces, and nancial and military constraints, as
arguedabove,all derivefrom production.They are different
forms of power into which the accumulatedresults of the pro-
duction processhavebeentransformed.In being so transformed
they have becomedivorced from the production processto be-
come forces that can either maintain or change production rela-
tions. In dening the parametersof the statetheseforcesmark
both the dependenceof the state on production and its domi-
nanceoverthe developmentof productiveforcesand production
relations.
The world economic crisis following 1973 appears as a
thresholdmarking a transition from one world order to another.
It may prove to be comparablein importanceto the crisis that
begana century earlier and heraldedthe end of Pax Britannica.
Even if it be prematureto pronouncethis historical verdict, it
makessenseto think throughthe implications of tendenciesnow
apparent on the premise that major structural changesare
possible.
The crisis hasbeengeneratedby the neoliberalorderitself.
This order, basedfor a long time quite successfullyon a corpo-
rative social contract, on state-administered welfare, and on an
internationalizing of production and internationalizing of the
state regulatedby international nance, createdthrough these
verypracticestheconditionsof its undoing:stagation,thescal
crisis of the state, and the international debt crisis. The responses
to the crisis by the dominant political and social forces have
wittingly or unwittingly exacerbated
internaland international
polarizations.Internally,theyhavebroughtabouta polarization
between enterprise-corporatistprotected workers, on the one
hand, and a Varietyof much more socially vulnerableperipher-
alized workers, on the other. Internationally, strong pressures
have been brought to bear on Third World countriesto adopt
CONCLUSIONS 401
policies that would lay the burdenof meetingtheir international

nancial obligationson the popular classes.Initially, the conse-
quenceof the crisis has been to strengthencapitals power in
relation to labor and thereby provoke the disintegrationof the
neoliberal historic bloc in the advanced capitalist countries. At
the sametime, externally imposedscal discipline has choked
off somelocal developmentalpossibilitiesin the Third World.
In the longer run, the diversication of production rela-
tions resultsin the growth of a numberof categoriesof producers
not included asfull-edged participantsin existingformsof state.
These include nonestablished and self-employed workers who
havenot beenorganizedinto tradeunions or mobilized by polit-
ical parties.In Third World countriesnew industrial workersand
growingnumbersof urbanmarginalsor informal sectorproducers
have not been included in industrial or political processes.There
is cynicismand alienationamongworkersin the countriesof
actually existing socialism. Within statesof all kinds, there
exists a Vastcrisis of representationthat would have to be re-
solvedasa steptoward the building of new historic blocs.
Beyond the crisis of representationthere looms a crisis
concerningthe natureof work andits placein society.This comes
about as a consequenceof the developmentof the technical
capacityto produceabundance. Throughall of history,the task
of physicalreproductionthemakingof what is necessary for
biologicalsurvivalandfor thenourishment
of politicalpower
hasabsorbedthe greaterpart of humaneffort.Now an era dawns
when most of this effort canbe doneby machineswith relatively
little human effort. A vast reserveof potential human effort
therebybecomes
availablethatcouldbedevotedto socialrepro-
duction and developmentthe building and running of institu-
tions and patterningof socialrelations.Solong asphysicalre-
productionhasbeenthe dominanttask,socialreproductionhas
seemedto beconstrainedby blind necessity.Institutionsinstalled
by differentformsof compulsion,from the military coercionof
feudal lordship to the marketcoercionof capitalist property re-
lations,took on the appearanceof inevitability. Peopleremained
for longstretches
of time in a conditionof passivitywith regard
to the social order, so fully absorbedwere they by the tasksof
physicalsurvival.Wherefrustrationsbuilt up, theseburstout in
402 CONCLUSIONS
revolutionary
spasms,
followedagainbyperiods
ofsocialpassiv-
ity. Theconcerns
voicedrecently
by someideologues
of the
establishedorder that democracieswere threatenedby ungov-
ernability
wasa signalthatperhaps
thatpassivity
andabsten-
tionismtowardactiveinvolvementin politicalandsocialaction,
whichtheseideologues considered
to bea conditionfor political
stability,
mightbegivingplace
tomoreactive
participation.
If the
realityis not obviousat present,thefearof it is.
A varietyof practices
existthatobstruct
anysuchshiftin
the balanceof humaneffortawayfrom tasksof physicalrepro-
duction toward opportunitiesfor socialdevelopment.
One is
consumerism, which increases
demandsfor unnecessarygoods
andpromotes
obsolescence
andwasteandthereby
callsforth
everhigherlevelsof physicalproduction.
Anotheris excessive
individualism,wherebythe duplicationof privatefacilitiesis
preferred
topublicorcollective
facilities.
Yetanother
isthearms
race,absorbinga substantial
shareof productivecapacityand
demandingevermorein response to aperceived
mutualthreat.
Theprospectofsuchashiftin thebalanceofhumaneffort,
evenvaguelyperceived, appears asthreatening
to many.It is
threatening,
in therst place,to thosebenetingmostfromthe
existing
orderthreatening
to governmental
andpoliticalprac-
tices,to theauthorityof employers,
to established
tradeunion
leadership,
to thedeference
shownbythepublicto thesocial
policybureaucracies,
andsoforth.It wason behalfof these
interests
thatthecryof ungovernability
wasraised.
It is threat-
ening,also,to deeplyentrenched
notions
of morality
touching
thework ethicandconventional
sexroles.Thesehavefunction-
ally reconciled
peopleto a worldpreoccupied with physical
reproduction
andhavegiventhesocialinstitutions
ofthatworld
the aura of sanctity.
Theexistence
of productivecapacitythatcouldsatisfythe
essential
physicalneedsof thewholeworldspopulation
con-
trastswith a situationin which that capacityis underutilized,
andthereis waste,inequity,anddangerthreat
of nuclearde-
struction,bloodyconventionalwarsin theThirdWorld,envi-
ronmentaldamage, unemployment. Nowhere, perhaps,
is the"
contrastmoremarkedthanbetweenthe capacityof agricultural
science
toproduce
abundant
foodwithsmallnumbers
ofworkers
CONCLUSIONS 403
and the soil erosionthat brings recurrentfamine to millions of

marginalizedsubsistencecultivators.
The Cold War and the prot motive have been the two
principal dynamicsdeterminingwhat and how much is pro-
ducedand how it is distributed.Any shift in thebalanceof human
effortawayfromphysicalandtowardsocialreproductionwould
soon confront and challengethe implications of thesetwo dy-
namics.Theprospectof allowingpeopleagreaterscopefor social
participation and inventivenessis likely to increasepressuresto
tameboth dynamicsin the interestsof a rationaluseof global
resourcesand a more equitable distribution. Planning (which
contains its own risks of inefciencies, waste, and inequities)
would have to be reconciledwith variety in the needsand de-
mandsof differentgroupsandwith freeexpressionin the creation
of newsocialpractices.
A moreparticipantsociety,onein which
the balanceof effort had swung from physical to social repro-
duction, could be the meansof achievingthat reconciliation.
Sucha societywill not comefrom wishing for it. It canbe
built only througha politicalmovementcapableof unitingsuf-
cient of the segmentedelementsof existing societiesinto a
counterhegemonic
historicbloc.Thattaskbeginswherepart3 of
this book ended: with an awarenessof the present social divisions
generated
in the productionprocess,of the conditionsof exist-
enceof thesevarious groupsand their modesof perceivingthe
world, and of their potential directionsof movement.
NOTES
Preface
1.Several
articles
foreshadow
earlier
stages
inthe
thinking
that
hasgone
into this volume,includingRobertW.Cox(1971):13964;
Cox,Harrod,etal. (1972);
Cox (1977c):11337; and Cox (1973).
2. Somepreliminaryreectionson thelevelsof stateandworld orderareto
be found in Cox (1981):12655; and Cox (1982): 37-58.
3. Gottfried Wilhelm Leibniz (1646-1716) named the irreducible simple
unity or spiritual substance
a monad.Monads,for Leibniz,hadbothindividuality
anddevelopment; eachmonad,differentiated
fromeveryother,hadits owninternal
principlethatguidedits changes
until all its possibilities
wereexhausted.
Each
monadalsohada particularperspective
on theworld.ForLeibniz,however,mon-
adscouldnotactupononeanother;theywerecompletelyprogrammed fromwithin
at the moment of their creation, seeLeibniz (1934).The monad concept is adopted
here as a heuristic device, not as a metaphysicalabsolute.In particular, the notion
that monadsarenot actedupon from outsideis rejected.Thesensein which the
term applieshereis onein which particularpatternsof productionrelationsare
examined as distinctive forms of social life so as to discern their characteristic
dynamics
asthoughtheydeveloped
according
to a distinctiveinternalprinciple.
Thisis merely,of course,arst step.Subsequently, thesepatternsmustbeexamined
in their interrelationships,i.e., explicitly recognizingmutualinuences.On the
contribution of Leibniz to the historicist concepts of individuality and develop-
ment, see Meinecke (1972):1530.
Theme
1.This
position
was,for
instance,
taken
byKerr,
etal.(1960)
inabook
that
hada certainideologicalimpactin andbeyondtheUnitedStatesin theearly1960s.
A similar messagewas conveyedby Bell (1960).
2. Bahro (1978): esp. 183-202.
3. Gorz (1982): esp. 15.
4. Reinhard Bendix (1967)usesthe terms limited applicability concepts
and contrast concepts to designatesuch models of historical structures.
406 THEME
6. This was the View of Giambattista Vico, who did not, of course, use the
term structure but rather cosa, a rendition of the Latin res, which can be understood
as institution. Language and law were, for Vico, such institutions. See Thomas
Goddard Bergin and Max Harold Fisch Introduction to their English translation
of The New Science of Giambattista Vico (1970): lilii. For Vico, the nature of
institutions is nothing but their coming into being (nascimentoj at certain times and
in certain guises (ibid, para. 147, p. 22) and the world of civil society has certainly
been made by men, and . . . its principles are therefore to be found within the
modications of our own human mind (ibid., para. 331, pp. 52-53). I have elabo-
rated the notion of historical structure in Cox (1981).
7. Before speaking of modes of development, it is well to consider the more
nearly comprehensive notion of the mode of reproduction, i.e., the processes
whereby societies are extended through time by giving birth to, raising, and edu-
cating a new generation and placing its members in their economic and social roles.
Throughout much of human history, reproduction often seemed to have been a
circular process, constantly repeated, through which the same structure of society
was reproduced. Agrarian-basedsocieties reproduced themselves in the forms
either of small subsistence communities or of peasant villages part of whose product
was extracted by a dominant political-religious class that took no part in material
production but saw to the reproduction of the social-political order. Reproduction
tended to be a circular, no-growth, nonaccumulative process.
Development implies a reproduction process with both accumulation and a
consequential change of structures. (No positive valuation is necessarily intended
in the use of the term development, e.g., as is conveyed by a term such as progress.)
Development was initiated through the capitalist mode. In capitalism, the labor
hired by the capitalist produces more than is required for its own reproduction.
The surplus is taken by the capitalist who uses it, not for consumption and con-
spicuous display [like those extractedfrom precapitalist agrarianproduction), but
for investment in expanding the capacity to produce in the next cycle, either by
hiring more workers or by installing machinery that enables the same workers to
produce more in the same time. Of course, the capitalist as a person may also
indulge in excess consumption but to the extent that he does so he is not behaving
as a capitalist.
The term capitalism is used here exclusively in this senseas a mode of
development that breaks the cycle of continuous reproductio'n
and introduces a
purposive time dimension, an upward spiral of accumulation, investment, ex-
panded reproduction, and so on. The term capitalist is not used in this study to
apply to a single mode of production. Indeed, the capitalist mode of development
hasspawnedseveraldistinctive modesof social relations of production. To bracket
theseall togetheras a single capitalist mode of production confusesthings that are
signicantly distinct. Moreover, the capitalist mode of development links modes
of production that are distinctly noncapitalist into the capitalist process of
accumulation.
The capitalist mode of developmentdoesnot depend on individual capital-
ists or ultimately even on private property. It consists in (1) the appropriation of
the difference between, on the one hand, the costs of maintaining and reproducing
the labor force and productive equipment, and on the other, the returns from the
marketing of what is produced; and [2] the use of this appropriated surplus to
expand production in ways that will generatethe largestadditional surplus in the
next production cycle as indicated by market demand.Who or whate.g., individ-
ual capitalist or technostructureor stateactually appropriatesor reinvestsprots
THEME 407
is fundamentally unimportant or nonessential to the mode of development, pro-

vided reinvestment is geared to prot-maximizing in a market context.
The redistributive mode of development also aims at expanded reproduction,
but it departsfrom prot maximization as the criterion for investment in favor of a
teleology that xes goalsfor society and a production strategyfor their incremental
attainment independent of market or protability. Welfare, in redistributive devel-
opment, is a matter of political denition and conscious political choice, not some-
thing left to the market.Exponentsof the capitalist mode of developmentmaintain,
of course, that welfare is in fact promoted through the market by an unconscious
process,aggregatingthe whole massof individual market decisions,that determines
not only what peoplereally want but how it canbe mostefciently provided. Critics
point out that capitalist development promotessocial and interregional inequali-
ties, that consumer choices are manipulated by advertising so that freedom of choice
is an illusion, and that prot-maximizing growth, by taking little or no account of
social costs, reduces welfare. Critics of redistributive development for their part
argue that it fosters privilege, inequalities, and inefciencies. It is no part of our
intent here to argue the relative merits of these opposed perspectives. These argu-
ments are examined in Lindblom (1977). The point to be made is that redistributive
development substitutes consciously chosensocial goalsfor the unconsciouspro-
cess of welfare promotion purported to lie in the market.
Just as capitalist development does not necessarilyimply individual capi-
talists, so redistributive development does not necessarily imply a big state political
bureaucracy.The Soviet central planning systemdid in fact createsuch a bureauc-
racy. Chinese central planning, which oscillated between antibureaucratic and
bureaucratic phases, seems now also to be set in the direction of bureaucratization.
Communal redistributionism can function with a good deal less bureaucratic su-
perstructure and more scopefor internal participation. Leftist critics of the bureau-
cratization of Soviet planning envisage nonbureaucratic methods for making the
plan more responsiveto social pressuresand providing people with the necessary
information and possibilities of intervention.
Historically redistributive development has not appeared as a successor
emergingout of capitalist development.It arosein social formations that were very
largely precapitalist, in which the capitalist mode of developmenthad made only
limited impact and was far from having transformed traditional reproduction (Rus-
sia and China). There it was not a successor to capitalism but an alternative mode
of development.
8. Social class, as used in the present study, designates a real historical
relationship and not merely an analytical categoryexisting only in the analysts
mind. Class in this real historical sense is based on production, i.e., it is based on
the fact that a certain group of people occupy a common position in production
relations. But people who are membersof a social classalso know themselvesto be
membersand they recognizeothersasmembersof their own or anothersocial class.
Class involves awareness of sharing common experiences of life and work, common
perceptions of the cleavagesin society (of being distinguished from and opposed
to another class], and most likely of expressing this sense of community in collective
action and shared aspirations. Whether or not classeshave formed is a historical
question that can be demonstratedonly by historical evidence.I am adopting here
grosso modo the standpoint of Thompson (1968).
Delicate problems arise in dening classesand relationships amongclasses.
One extreme to be avoided is a priori deductive denition: this leads to the prop-
osition that classes must exist because of the very juxtaposition of social groups in
408 THEME
production,thatacertainformof consciousness
canbededucedfromclassposition
[otherformsthatmaybefoundto prevailin practicebeingfalse consciousness),
and that classeshave historical roles attributed to them by a general theory of
history. The other extremeto be avoidedis an ernpiricismthat aggregates
the
attitudesandopinionsreportedby a numberof individualswhohavebeenprede-
termined for survey purposesas membersof the targetedsocial group; class con-
sciousness is then assumed to be the aggregate of individual consciousnesses.
Neither of these extremesgetsat the historical phenomenonof class.To do this, it
is necessary
to relatethedevelopment
of consciousness
to realeventsandhistorical
processes.
A priori deductionsconcerningclasslead to a dogmatismthat may
reconrm the convictions of committed activists possessedof a senseof historical
mission but are a poor guide to social and political practice. Empiricism reveals
statesof passive,manipulatedconsciousnessthat maywell betransformed under
pressureof eventsthat channelindividual responsesinto collectiveaction.The
sources of class identities and orientations are to be sought in events and changes
of real social, economic, and political situations in which particular social groups
areconfronted by specic problems:either theseeventsprovokea responsethrough
common action or they reveal an incapacity for action.
The socialpractices,i.e., the routinizedmeansof collectiveaction,of the
socialgroupsgeneratedin the productionprocesshavetakenformsorientedre-
spectivelyto thespheresof productionandof thestate.In thesphereof production,
these forms include trade unions and employer associations;in the sphere of the
state,political parties.Tradeunionismby itselfhasnotusuallybecomesufciently
free of the immediate context of production to be able to pose a challenge to the
productivesystem.It hasbeenimmersedwithin that systemand seeksits own
advantagewithin it-seeksthe maximumavailableto organizedworkerswithout
threateningthe systemitself.Compared
to tradeunions,political partiesof subal-
tern classeshave had a greater capacity for autonomy with a potential for trans-
forming production relations. Political parties are not the spontaneousemanations
of social classes. Rather, where class-based political parties have come into exis-
tence,they havethemselvesbeenthe meansof arousingand channelingclass
consciousness.There is commongroundbetweenthe Leninist and Gramscianviews
of partyand evenbetweentheseandtheoligarchytheoryof RobertMichelsbased
on trade union and social democraticpolitics or the elite theoriesof GaetanoMosca
and Vilfredo Paretoin regardto the critical importance of organizationalcadres.
Gramscistheoryhas,however,givena superiorformulationto the relationship
between cadres and class consistent with his broader understanding of the rela-
tionship betweensocialbeingand social consciousness.
The cadrescannotbe
merelymanipulative;theyareboundbytheobjectiveclassexperience
within which
theywork.Theycando no morethanto givethat experience consciousness of its
own potential.Gramscisviewsareto be foundin Gramsci(1971)andin the full
Italian edition (1975). Lenins views on the roles of party and trade unions are
expressed
in WhatIs ToBeDone?(1947).Theelitist theoriesarein Michels(1959);
Mosca(1939);andPareto(1963).SeealsoHughes(1979):ch.7;andBurnham(1943).
9. Since Gramsciswritings are fragmentary,unnished, and unsystematic,
they lend themselves
to varyinginterpretations.They containashesof insight,
manyof which arenot fully developed.
Whatfollowsmaybeconsidered by some
readersas developments of Gramscisthoughtratherthan propositionsdirectly
attributable to him in a literal sense.I am more concerned with following his
inspirationthan with textual exegesis.
Generallyspeaking,thereare two main
tendenciesin the interpretation of Gramsci.One comesout of the Marxist-Leninist
THEME 409
tradition andconsidersGramsciprimarily in relationto the issuesof that current.

An outstandingexampleis Buci-Glucksmann (1975),thoughunfortunatelyit is
muchinuencedby the Frenchstructuralismof Althusser,which is wholly out of
tune with the historicity of Gramscis
thought.TheothertendencyseesGramsci
more in relation to the Italian tradition from Machiavelli to Croce,including non-
Italians like GeorgesSorel,who wasmoreappreciatedin Italy than in his own
country.Femia[1981]is a goodexamplein theEnglishlanguage.
10. Gramscisenlargement of the conceptof the stateincludesthe limited
conventionalideaof the stateasthemachineryof coercionor themonopolyof the
legitimate
useof physicalforcewithina giventerritory,i.e.,legalstructure
and
machineryfor lawmaking,policyformulating,
andenforcement throughadminis-
tration, police,andmilitary. It alsoincludesthe machineryof organizingconsent
througheducation, opinionshaping, andideology formationandpropagation.
This
lattersphereof organizingconsent coversmanyagencies usuallythoughtof as
nonstate or privateaspectsof civil societysuchaspoliticalparties,thepress,
religion,andculturalmanifestations.It doesnotincludeall suchagencies
butonly
such as tend to consolidate and stabilize a certain form of establishedpower.
Thisenlargement
makesthestrengthofthestatemuchmorecomprehensively
intelligiblethanthenarrowcoercive
notionalonedoes, butit doesnotsayanything
specicaboutthecontentof thestate,whatit is in a concretehistoricalinstance.
This what it is is conveyedby the notion of the bloccostoricoor historicbloc
[Gramsci,
1971:366,377,418}.Thestate,for Gramsci,
cannotbeseparated
asa
technicalinstrumentor agency,whetherof coercionor of the organizationof con-
sent,fromthe socialclasses
that sustainit. Thehistoricblocis thetermappliedto
theparticularconguration
of socialclasses
andideology
thatgivescontentto a
historical state.The term directs our attention to the analysisof the concretenature
of a particular state.
To conceivethe content of the statewhat it isas the historic bloc focuses
attentionon certainproblemsin thehistoryof a state,namely,whatconguration
of socialforceslies at the originof theformationof thehistoricbloc?Whatcontra-
dictionswithin theformedhistoricblocarecontainedandminimizedby its unify-
ingideology? Whichsocialforcesarethepotentialbases for a rivalhistoricbloc?
Andis a politicalpracticeemergingthatcangivesubstance andcohesion to this
alternative? Thesequestionspointbothto theexplanation of phases of relative
stabilityin termsoftheconsolidation
of ahistoricblocandequallyto explanation
of phases in whichthenatureofa stateis beingtransformed
bythedecomposition
of an erstwhileestablishedhistoricbloc andits displacement
by a new one.The
general
concept
ofthestatemachinery
of coercion
plusmachinery
fortheorgan-
ization of consentis contentempty.As soonasstatesarerecognizedashaving
contenttheybecomeparticularizedanddifferentiated.
Historianshaveobserveda stabilityandcontinuityof goalsandmethodsof
exercising powerin particularstates thatis independent of theactualpersonnel
holdingpositions of authority.
Thisgivesriseto thenotionof nationalinterest, or
moreaccurately, of raisondétot,i.e.,thatforanyparticular statethereis a discov-
erablelogicof actionnecessaryto maintain its powerinternally(withreference to
its citizensor subjects]andexternally(with reference to otherstatesor other
external forces]. Seeespecially Friedrich Meinecke (1957).
Closer
historicalinquirywill revealthatalthough thereareindeedprolonged
episodesofstabilityin raisondétatfor particularstates,
therearealsodiscontin-
uities,phasesof upheaval in previously
accepted goalsandwaysof doingthings,
following which a new raisondétutis inaugurated.Suchdiscontinuitiesarenot
410 THEME
brought about merely by changes in the personnel of government; they involved

more profound changes in the structure of societies. This leads to a deeper level in
the concept of a state, namely, the complex of social class relations to which the
raison détat conforms, i.e., the historic bloc. This complex of social class relations,
with its hierarchies of dominance and subordination and its cleavages and alliances,
sets the practical limits for feasible goals and methods of exercising power. One
can say that during periods of relative stability characterized by an identiable
raison détat, this social substratum has been absorbed tacitly and unconsciously
into the state. In these periods it is so much taken for granted in the framing and
discussion of political action as to be virtually forgotten. Discontinuities occur
when there are signicant movements and shifts of social power relations among
classes. During such periods, classes and ideologies and the political parties that
shape and guide them form rival historic blocs contending over the very nature of
the state. If one bloc displaces another, a new state is born and with it a new raison
détat.
Consequently, in the histories of particular states, one can look for disjunc-
tions between successive forms of raison détat as clues to a succession of forms of
state. Then, with regard to each form, it becomes possible to reconstitute not only
the persistent goals and methods of exercising power but also the particular social
conguration to which they conform and the ideology through which the compat-
ibility of social power and political authority is expressed.
Structural similarities between several states remove these forms from the
particularity of national histories so that they become expressions of a common
type. Thus forms of state become concepts of wider applicability, each positing
certain conditions and a certain structure, and each containing certain internal
contradictions likely to lead ultimately to its transformation into another form.
11. On hegemony as used here, see Gramsci (1971) passim and Cox (1983).
Part 1. The Social Relations of Production

1. It is important to distinguish various Marxist usages of the term mode of
production from the usage in this book of the term mode of social relations of
production. I have deliberately avoided the use of the term mode of production
because it has been given different meanings by different authors and so has lost
whatever analytical value it may have had. An analytically scrupulous study of
Marx by Cohen (1978) attributes three distinct meanings to Marx. The first equates
mode of production with the technical or material way in which things are pro-
duced, or with what is sometimes called the labor process. Thus small-holder
cultivation, the putting-out system, and the factory are different modes of produc-
tion. By this reckoning, the Soviet truck assembly line would not differ in mode of
production from the Detroit assembly line, or the Soviet state farm from the Mid-
western wheat farm. The second of Marxs meanings is more complex, grouping
together a number of social aspects of production. These include (1) the purpose of
production, i.e., whether it is for use (direct consumption) or exchange (marketing),
and, if for exchange, whether or not for the purpose of capital accumulation; (2) the
form in which surplus labor is extracted from the worker, e.g., through feudal
services or the realization of prot on the market; and (3) the mode of exploitation,
i.e., the social mechanisms whereby workers are obliged to work. e.g., direct dom-
ination of serfdom versus the impersonalized compulsion to earn a wage felt by
laborers who do not own means of production. The third of Marxs meanings,
according to Cohen, was a combination of the first two or the entire technical and
social conguration of production.
1. DIMENSIONS OF PRODUCTION RELATIONS 411
Cohen was concerned with economic structure, or the set of relationships or

framework of power through which things are produced. A mode, he pointed out,
is a way or a manner, not a set of relations. Whatever the merits of this distinction
and I am not sure that I would follow him here, since mode is also commonly used
to mean the most frequent instance of a quality and thus as having the character of
a typeCohen obviously considered the term mode of production to be more am-
biguous than clarifying, and he abandoned its use in his explication of Marx.
Cohens rendition of Marxs combined usage is not very different from the
way in which I have attempted to spell out in the present work the concept of a
mode of social relations of production. However, the ambiguity of the term itself
has been compoundedby yet other usagescurrent today, and this persuadesme to
avoid its use. One such common Marxian usage distinguishes epochs in a theory of
history asmodesof production, epochsthat succeedoneanotherastotalities linked
by a dialectic between the development of productive forces and the relations of
production. See Banaji (1977). In a similar manner, Wallerstein (1974a,b) uses
capitalist mode of production to characterizea whole world systemcoming into
being from the sixteenth century. Wallerstein conceivesthis system as linked by
relations of exchangeand accumulation, eventhough it comprisesa Varietyof ways
in which the things exchangedhavebeenproduced,e.g.,by free labor, quasi-servile
sharecroppers,and various forms of coercedlabor. Louis Althusser (seeAlthusser
and Balibar, 1970) made of the capitalist mode of production a Marxist equivalent
of Talcott Parson's
social system, a comprehensive structure of structures deter-
mined in the last instance by production but including, as relatively autono-
mous regionsor levels or instances,stateand ideology,etc. Still othershaveargued
from Althussers stress on relative autonomy the possibility of an articulation
of distinct modes of productionthough here, once again, the denition of mode
of production becomesvaguerand more uncertain. SeeFoster-Carter(1978).In the
present book modes of development and accumulation are distinguished from
modes of social relations of production (see note 7 to the Theme].
Chapter1 The Dimensionsof ProductionRelations

1. On intersubjective meanings,seeCharlesTaylor [1976)and Cox (1981).
Polanyi (1957):6876.
The point is developed in chapter 9, below.
..°"t>5'°E°
Landes (1969):5462.
Braverman (1974):85121.
Anderson [1974):37187. In the wake of the Turkish conquest, peasant
tenure was guaranteedand local ethnic nobility displaced. Concurrently, peasants
in EasternEurope were being subjectedto stricter control and exactions.With the
decline of Turkish power, by the eighteenthcentury, Turkish provincial landlords
and the taxgatherersbetweenthem were taking two thirds of the peasantsoutput.
7. The contrast between community and association was made by Ferdinand
Tonnies (1957)in the conceptsgemeinschaftand gesellschaft.The formulation has
beenjustly criticized for ideological bias. Tonnies looked back nostalgically to the
warmth of gemeinschaft,confronted with the disintegration of social life in indus-
trializing and urbanizing Europe. Subsequently,values in dominant social theory
were reversed: modernization and rationalization of social relations became the
goal and.earlier forms of society were lumped together as traditional, i.e., to be
superseded.Eric Wolf [1982:1013) has recently pointed out that such a dualist
View of social processis nonhistorical in its singular disregardof the many differ-
encesamongso-called traditional societiesand in its unconsciousacceptanceof
412 1. DIMENSIONS OF PRODUCTION RELATIONS
an idealized U.S. society as the model of modernity. With these caveats concerning
the ideological traps to be avoided, the contrastsbetween community and associ-
ation, status and contract, remain useful tools of analysis.
3. Weber (1930), (1946]:30Z22.
9..Note Karl Polanyis (1957):4355 insistence that for most of humanity
through most of its history, the economy,including all laboring activity, has been
embeddedin society. The exceptional casehas been the selfregulating market of
early capitalism which separatedthe economyfrom society or disembeddedit.
10. There is a parallel here with Max Webers (1946:24564) charismatic
typeof authoritythat tendsto becomeroutinizedinto traditionalor legalbureau-
cratic forms.
11. Points discussed here have been dealt with also in Cox (1977c).
12. Bendix [1963]:8l0.
13. Hilton (1978):9Z9. On the affinity of social rebelsto heretical doctrines,
see Engels (1956]:part 2 and Cohn (1970). On the Anabaptists, who recuperated
someof the peasantangerfollowing the repressionof 1525,seeClasen[1972]. The
Dolcinians of northern Italy provide the backdropto UmbertoEcosnovel TheName
of the Rose (1983).
14. This loss of legitimacy in popular culture is well illustrated by von
Grimmelschausenspicaresque novel of the Thirty Years War Adventures of a
Simpleton (n.d.).
15. Bahro (1978):176.
16. One signicant reported caseof strike action in the Soviet Union was at
Novocherkasskin June 1952. It was triggered by a rise in food prices. SeeBoiter
(1964):3343. The Hungarian dissidents GeorgeKonrad and Ivan Szelényi (1979:
175)write: It is hardly a coincidencethat whenevera political upheavalculminates
in a workers rebellion . . . the rst order of business for workers is to form their
own, noncorporative organizations:workers councils or soviets.
17. The United Nations has inherited from the League of Nations the task of
investigating reports of the existenceof slavery.This is doneby the Working Group
on Slavery, which reports to the Subcommissionon Prevention of Discrimination
and Protection of Minorities of the Human Rights Commission. In practice the
denition of slaveryhasbeenbroadenedto include many situations in which people
are not free to withdraw labor or in which conditions of superexploitation exist.
See,e.g.,Updating of the Reporton Slavery,E/CN.4/Sub.2/1982/20and Add. 1. The
conditions of superexploitation range from child labor, rampant in many countries,
including European countries like Greeceand Spain, as well as Brazil and other
Third World countries; debt servitude, which continues to exist in India despite its
outlawing; practices like the sale of sugarcanecutters by the Haitian authorites
to the Dominican Republicsee Lemoine (1981);and trafc in women and children
for the whiteslave trade.
18. SeeCox [1971]for the original denitions with which this processbegan.
19. The structural denitions included in this chapter are preliminary ones.
The three volumes of this study that follow are devotedto an examinationin depth,
one after another, of these modes. The in-depth studies will, of course, give greater
nuance and a fuller senseof developmental movementwithin each mode than is
possible in this preliminary identication of its characteristics.The preliminary
statementof the concept as structure is a necessarystagearst approximation-'
in a research process in which the elaboration of the concept in the next three
volumes is a further stage.
2. SIMPLE REPRODUCTION 413
Chapter 2. Simple Reproduction

1. On embeddedness of economy in society, see Polanyi et al [1971]:67
83; Polanyi (1957]:43~55,on natural economy in general;seealsoPolanyi [1966a)
and Polanyi (1966b). The subsistencemode of social relations of production as
described here is dealt with under different names by authors using somewhat
different conceptualizations. Sahlins [1972:esp. 76-77) analyzes it as the domestic
mode of production, in which he includes production within extended families
and also in lineage and village communities that allow for more extensive collab-
oration and division of labor than is possiblewithin small-family producing units.
Rey (1975)and Davidson (1978:54]both prefer the term lineagemodeof production
to designatecommunities in which most production is for local self-sufciency,
but there is also an accumulation of exploitable labor power in the hands of the
headsof the communities. This term puts the emphasison the political implications
of lineageheadsbeing able to manipulate this surplus labor power to becomechiefs,
pointing the way toward kingship, statehood, and the consolidation of a class-
structured society. Catherine Coquery-Vidrovitch uses the term African mode of
production in Gutkind and Waterman,eds. (1977]:77-92. Wolf (19BZ:esp.88-100)
calls the same kind of structure the kin-ordered mode of production. Friedmann
(1980) prefers to set aside the concept mode of production as being analytically
ambiguousand attempts to specifyforms of production as conceptsfor the analysis
of agrarian structures. The form of production is to be dened through a double
specication of the unit of production and the social formation. She thus differen-
tiates agricultural production using household labor according to the type of social
formation in which it takes place, particularly in regard to whether there is limited
factor mobility or active factor markets. The degree of commoditization becomes
the critical variable for Friedmann, just as the degree of state formation and class
formation is for Wolf. Friedmanns typology does not, however, include the sub-
sistence form discussed here, though it does succeed in differentiating small-holder
farming, sharecropping, combinations of these two, and hacienda or latifundia
production. The problem pointed to by Friedmann, (the distinction between pro-
duction unit and social formation) is discussed in a different sense by Banaji [1977]
who takes the historical laws of motion as the basis for dening modes of pro-
duction, making specic relations of production (and by implication what Fried-
mann calls forms of production] intelligible only in terms of a prior knowledge of
these laws of motion. He concludes that subsistence production . . . gures . . . as
the specic form of reproduction of labourpower[italics in original] within a capi-
talist processof production. It becomesmisleading, accordingto Banaji, to regard
it as a specic, separate mode of production (e.g., a domestic mode of production)
in a system of modes of production dominated by capitalism [p. 34]. My reasons
for rejecting this approach are discussed in footnote 1 to part 1 above.
2. Wolf (1982).
3. Sahlins (1972]:37.
4. Wolf (1982:18689) points out that economic power is not necessarily or
even primarily the basis of authority in such communities. The potlach of the
Northwest Pacic Coast Indians, for instance, validated chieftainship but did not
create it.
5. Stavenhagen (1981]:168~70.
6. Davidson [1978] categorizes this complementarily of subsistence culti-
vation with export enclave industries as the colonial mode of production. This is
another instance to be added to those noted above [note 1 to chapter 2) of using
414 2. SIMPLE REPRODUCTION
modeofproductionto applyto acomplexof interconnected

modesofsocialrelations
of production.
7. Wolf (1982):79-88, following Amin (1973) usesthe term tributary mode
of productionto designate
whatwe herecall the peasant-lordmodeof socialrela-
tionsof production.TheseauthorsputtogetherboththeAsiaticmodeof production
and the feudal mode of production in Marxs work as, for analytical purposes,
constitutinga singletributary modein which surplusis extractedfrom peasant
agricultural producersby a ruling class.
8. Anderson (1974]:52049; Wolf [1982]:49-52, 55.
9. The importance of the clan as a link between membersof the extracting
classand the peasantcommunities supporting it hasbeenstressedby Moore, (1967):
207-8, 469-70, 478. Noting that the revolutionary potential of peasantsocieties
undertheimpactof modernizationhasvariedconsiderably,
heaccountsfor part
of this variation by the following: . . . an important contributing causeof peasant
revolution has been the weakness of the institutional links binding peasant society
to the upperclasses,
togetherwith the exploitativecharacterof this relationship
(p. 478).Theselinks werestrongerin the Japanese than in the Chinesecaseand
much less strong in the Islamic context than in the Chinese.
10. See Anderson (1974):379-93; Wolf (1982): 367.
11. SeeHilton, in Landsberger,ed. (1974);Hiltons introduction in Hilton,
ed. (1978); Brenner (1976); and Brenner (1977). Seealso Wallerstein (1974a):25-
27, 109-17, 139, 254-61, 293-94.
12. Anderson (1974):435-61.
13. Wallerstein (1974a):90-100.
14. Wolf, (1969).
15. Braudel, (1979):45057. Braudel wrote Le déracinementsocial, a une
telle échelle, se pose comme le plus gros probleme de ces sociétésanciennes (p.
456).
16. Suchmovementsourished amongthe workersof the new and expanding
textile industry of Flanders in the thirteenth century, uprooted from rural village
life yet not protectedby the urbanguilds,and amongshepherds, cowherds,and
vagabonds in the samenorthernregionsof risingpopulation.Later,in thefteenth
and sixteenth centuries, when the cloth industry in Flanders was in decline and
industrial and population growth passedto south Germanyand the northern Neth-
erlands, so did the incidence of popular millenarian expectationsamongthe dis-
orientedpoor.SeeCohn(1970):53-60,107,118-26,282-84.Theradicalsectari-
anism of seventeenthcenturyEngland has beenlinked to the growing number and
relative mobility of masterless men who by fate or by choice lived outside the
conventional institutions of societya condition acceleratedby enclosuresof land
incidental to the introduction of capitalist development in agriculture. See Hill
(1972]:Z0, 39, 40-45, 85.
17. Piven and Cloward (1971).
18. Nelson (1979) considers four ways in which the membersof what we
havecalledthe primitive labormarketattemptto relateto andinuencethe estab-
lishedsociety:patron-clientrelationships,ethnic-based
organizations,
smallspe-
cial-interest organizationsbasedon neighborhoodor occupation, and mobilization
by populistor Marxistpolitical movements.
Sheconcludesthat thesepeoplehave
not acted as a coherent class and do not destabilize the established order.
19. Pereira de Queiroz (1970):93-121.
20. In the United States, family production for direct consumption, if
counted in GNP, would by rough estimatescome close to one-fourth of total pro-
duction. Lindblom (1977):108,citing Abdel-Hamid Sirageldin (1969).
3. CAPITALIST DEVELOPMENT 415
21. Shorter (1975) uses a rather simple traditional/modern dichotomy to

discuss the history of the family as a social institution from the eighteenth through
the twentieth centuries. Something of the unease concerning the resiliency of the
modern family in the advanced industrial world is caught in this historians con-
cluding sentences:
In the 1960s and 1970s the entire structure of the family has begun to shift. The
nuclear family is crumblingto be replaced, I think, by the free-oating couple, a
marital dyad subject to dramatic ssions and fusions, and without orbiting satellites
of pubertal children, close friends, or neighbours . . . just the relatives, hovering in
the background, friendly smiles on their faces (p. 280).
Chapter 3. Capitalist Development

1. Paul Sweezy, André Gunder Frank, and Immanuel Wallerstein put the
stress on exchangerelations. For Wallerstein, the capitalist world system exists
already in the sixteenth century. Maurice Dobb,RobertBrenner,and PerryAnderson
put the stresson production. For Anderson, absolutism was the nal form of feu-
dalism, even though it gavehospitality to mercantile accumulation of capital. The
English historians RodneyHilton and Christopher Hill agree.Maurice Dobb saw a
long period of transition during which petty commodity production was preemi-
nent. Much of the debate is summarized in Hilton (1978).
2. Wolf (1982]:8388.
Hilton, in Hilton (1978]:2527, 114-17, 150~53.
Hoffmann et al. (1956).
.°5-":5."-
Anderson (1974):44950.
Braudel (1979):tome 1, pp. 426-32.
7. Takahashi in Hilton (1978]:79, 87-97. The parallel transformation from
self-emp oyment to the employment of hired labor for expandedreproduction in
nineteenth-century United States is discussed in Gordon, Edwards, and Reich
(1982):65-66.
8. Hilton (1978222) writes: In the 13th-century Flemish textile towns there
was still confusion concerning the payment made to the textile craftsman by the
merchant putter-out. It was not quite a wage,and yet it was not simply a payment
for a job done by an independent craftsman.
9. Hobsbawn1(1954):nos. 5 & 6, esp. no. 6, pp. 46, 51-52.
10. The importance of the national market is stressed by Braudel (1979]:tome
3, pp. 235-330. Also Hobsbawm (1969):2378; Williams (1980) passim.
11. Polanyi (1957]:78102. Polanyi saw the Speenhamland system, intro-
duced in 1795, as a critical turning point. Speenhamland seemed initially to be a
generous measure in the tradition of the Elizabethan poor law. It was designed to
assure a minimum income linked to the price of bread irrespective of earnings. Its
result was to subsidize low wages paid by employers and to put increasing numbers
of people on the rates, leading to widespread pauperization and demoralization
while at the same time obstructing the formation of a working class by keeping the
recipients in their counties. The triumphant middle classes through the Poor Law
Reform of 1834 replaced this demoralizing protection with a harshly competitive
labor market. Also see Hobsbawm (1969):104-5, 229; Thompson (1968]:73.
12. Several studies in Landsberger, ed. (1974) illustrate these points, espe-
cially those by George D. Jackson (Eastern Europe], Yu. G. Alexandrov (Asia and
North Africa), and Gerrit Huizer and Rodolfo Stavenhagen (Mexico and Bolivia).
These studies underline the importance of peasant political pressures in bringing
416 3. CAPITALIST DEVELOPMENT
aboutlandreformsapoint alsomadeby RodneyHilton with reference to peasant

resistance
in the latemiddleages.SeeHilton, ed.(1978):22,
andHilton in Lands-
berger,
ed.(1974).
Onthepatternoffailurein landreforms,
seeStavenhagen
(1981):
2728.
13.Engels
(1969]:106.
Thompson
(1968)
recounts
theundermining
of skill
differentiationwith the repealof apprenticeship
laws,the increaseof dependent
outworkersandthe factoryemploymentof children,youthandwomenin such
formerlyskilled andindependentoccupations asweaving(pp.259-346).
14. Schlesinger (1960):393406.
15. Galbraith (1975).
16. de Grazia (1983).
17. On these tendencies, Carr (1945).
18. This is the basic thesis of Edward Shorter and CharlesTilly (1974).
19. Shorter and Tilly (1974);also Gordon et al. (1982):ch.4.
20. On Bakunin and Marx, seeCarr(1967):44157.Leninsviews arein Lenin
(1970);
Fanonsin Fanon
(1968).Gramscisprincipalpoliticalconcern
wastobreach
the separation
andto build an allianceof all workersandpeasants underthe
leadership of the industrial workers.
21. Georges
Sorelwasthe bestknowntheoreticianof revolutionarysyndi-
calism.Seeespecially
hisReflections
onViolence
(1941).
OntheFrench
activistand
leaderof revolutionarysyndicalismFernandPelloutier,seeZeldin(1973):pt.1, 10,
pp.246-50.Lichtheim(1961):22333,
dealswith thesyndicalist
issuein ideolog-
ical terms.Notwithstanding
Sartresdisavowalof Georges
Sorelin his introduction
to Fanon(1968),
thecriticalreadercannotbutbestruckby thesimilarityin the
treatmentof violenceby FanonandSorel.In NorthAmerica,syndicalismtookform
in theKnightsof Laborduringthelatenineteenth
centuryandin theIndustrial
Workersof the World in the early twentieth century. SeeAronowitz (1973):62106.
TheearlyC10in the UnitedStatesmanifested someelements of syndicalism,
notablyin its practiceof thesitdownstrike.SeeSchlesinger(1960):393406.On
anarcho-syndicalism in Argentina in the 1920s,seeInternational
LabourOfce
(1930).
PatrickdeLaubier(1968)discusses syndicalismin thecontextof newly
urbanizedworkers.His argumentis examinedcritically by Shorterand Tilly
(1974):272-73.
Theyareconcerned
withorganizational
effectiveness
andargue
that
establishedskilled workers have more resourcesto put into organization and are
moreeffectivethannewlyurbanizedworkers.This point is not in disputehere.
22. The institutionalization of conict is a concept advancedby Dahren
dorf(1958):6466,
224-31.It impliestheseparation
of industrialdisputes
from
conflictoverthe socialand political orderandthe adoptionof a reformist,incre-
mentaliststrategybyunions.I havelinkedit hereto Gramscis
conceptofhegemony,
in which a dominantclassperceivesthe needto makeconcessions to subordinate
classesthat are not of such a kind asto weakenits dominance.Gramsci(1971):161.
23. TheDerby-Disraeli
ministryin 1867sponsored
the ReformBill that ex-
tended the franchise to British householders,i.e., to the skilled worker and artisan
classes.TheDisraeliministry in 1865passedtwo actsgivinga juridical statusto
tradeunionsand legalizingpicketing,therebygroundingbipartiteproductionre-
lationsin law. DisraelisbiographerRobertBlake(1966)discountsanybasicphi-
losophy
ofTorydemocracy
astheground
forDisraelis
actionin theserespects
and
seesthem ratheras successfulattemptsto takethe political initiative from the
Liberals:The forcesof property,commercialand industrial as well as landed,
wereby 1874toodeeplyrootedin theConservativePartyto makeit politically
possible
forthepartytopursue
theideaofanartistocratic
anti-middle
classalliance
3. CAPITALIST DEVELOPMENT 417
with the working masseseven if it had wished to do so (p. 447). Blake also
considered that
Disraeli, more than any other statesmanof his day, had the imagination to adapt
himself to this new situation [i.e., an enfranchisedworking class] and to discern,
dimly and hesitantly perhaps, what the artisan class wanted from Parliament.
Imperialism and social reform were policies which certainly appealedto themor
to a large section of themand Disraeli seemsto have sensedthis in his curiously
intuitive way, although even here it is important not to overstatethe case(p. 553].
See also Hobsbawm (1969]:125.
24. Ingham (1974) discussessome of the factors inuencing employers to
prefer negotiation at these different levels.
25. Schlesinger(1960) part 6. Franklin Rooseveltmakesa striking parallel
to Disraeli in this respect (seenote 23]. Schlesingerwrites of him:
For Roosevelt, labour was not, like conservation or social welfare, a eld in which
he had primary experienceor clearcut views. He approachedit quite without the
preconceptions of his classwith, indeed, sympathy for the idea of organised
labour as a make-weight to the power of organisedbusiness.But he sympathised
with organisedlabour more out of a reaction againstemployer primitivism than as
necessarilya hopeful new developmentin itself. . . . He saw himself as holding the
balance between business and labour; and he viewed both sides with detachment.
. . . Rearedin the somewhatpaternalistic traditions of prewar progressivismand
of the social work ethos, Rooseveltthought instinctively in terms of governments
doing things for working people rather than of giving the unions power to win
workers their own victories (pp. 387-88].
SenatorWagnertook a more positive view of unions; he looked to collective
bargaining to increasepurchasing power that would keep the economygoing, and
he thought a strong labor movementwould convince workers they could gain their
own ends within capitalism so that unions would become our chief bulwark
againstcommunism and other revolutionary movements" (p. 390). Skocpol (1980)
concludes that the U.S. labor movement was too weak to have been a very effective
pressure on the state in the early 1930s and that state initiatives, opposed by
employer interests,to strengthenthe labor movementand institutionalize collective
bargaining were possible becausethe collapse of the international monetary and
trading order had openedpolitical space for the state,i.e., Rooseveltand Wagner,
to act. This spacewas not, however, sufcient for the stateto move further toward
more thoroughgoing intervention of a Keynesian social-democratic kind (which
would have implied a movementfrom bipartism to tripartism). The gures on the
growth of the U.S. labor movement are cited by Skocpol from Derber and Young,
eds. (1972):3, 134.
26. This proposition is conrmed by Shorterand Tilly (1974)with regardto
France.They infer from their data on strikes through the nineteenth and twentieth
centuries that the governmentsmain preoccupation in labor relations was the
preservationof public order, rather than the strangulationof working-classpolitical
movements (p. 39]. Governmentintervention in strikes, mainly by state ofcials
like labor inspectors and subprefects,would lean heavily on employers,as well as
on workers, to limit the chances of public disturbances and force the parties to
negotiate (pp. 39-41).
27. For example, Konrad and Szelényi (1979):22052, esp. 232 writing of
the countries of Eastern Europe:
. . . . economicreforms demandthe creation of a political systemin which arbitrary
interpretation of the law is replaced by formal legal guaranteeswhich will permit
the legitimate expression of different interests, place the struggle of contending
4 18 3. CAPITALIST DEVELOPMENT
political forces in a legal and constitutional framework and make it visible to all,
and guarantee public control over important decisions. The technocracy must ac-
cept the legitimate articulation of workers interests eventhough they now conict
at times with its own interests and may do so systematically in the more remote
futureup to and including worker self-managementand the right to organizeand
defend their interests, even if such organizations may develop into rival power
centers (p. 232).
28. Bendix (1963):810.
29. Galbraith (1968):7182.
30. Dore (1973):375420 and Hanami (1979).
31. Bendix (1963):41.On the effectsof Taylorism and the ideological signif-
icance of industrial psychology, see also Braverman (1974):12452. Mayos work
is described in Mayo (1945) and Homans (1951).
32. Dore (1973) uses the term welfare corporatism to describe what is here
called enterprise corporatism. In his comparison of British and Iapanese industrial
relations, the main point of which is to underline cultural differences that contradict
the convergence theories inspired by technological and economic determinism,
Dore nevertheless notes certain tendencies in Britain toward the Japanese model.
(Convergencetheories, by contrast, tend to forecastthe disintegration of the )apa-
nese pattern under the impact of markets.) See Dore (1973):3 38-71. He is, however,
cautious about exaggerating these trends. One is sometimes tempted to see in the
spread of enterprise corporatism the Iapanization of industrial relations in Europe
and North America. Enterprise corporatism has had its own dynamic in Europe and
North America arising directly out of the processesof concentration of capital and
segmentation of the labor force. Latterly, under the inuence of )apans economic
success, there has also been some conscious imitating of Japanese practice, includ-
ing naive transplants like compulsory morning exercisesfor workers and company
songstestimonials to the robustness of positivist thinking.
33. Maier (1975).
34. Schlesinger (1960):83-187.
35. Memoirs by two of the senior ofcials involved who later played leading
roles in the ILO are Sir Harold Butlers Confident Morning (1950) and Edward I.
Phelan's
Yesand Albert Thomas(1949).On the ideological role of the ILO regarding
tripartism, see Cox (1977a).
36. Maier (1975):513-15.
37. Schlesinger (1960):83.
38. Schlesinger (1960):83187.
39. A descriptive outline of these various tripartite organisms is given in
Malles (1971).For a critical analysis of tripartite experiences,seePanitch (1984).
40. Maier (1975):54578.
4. Hedistributive Development
1. Carr (1952); Nove (1969):5758, 63-72; Erlich (1967); Moshe Lewin
(1974).
Z. Grossman (1977); Sauvy (1984):23341.
3. Stalin told Churchill that the ordeal of collectivization was evengreater
than that of World War II. Volin, in Black, ed. (1960):306.
4. Bernstein (1967).
5. Bendix (1963):810.
6. Bendix (1963):181.
7. Bendix (1963):206-7.
5. LIBERAL ORDER 419
8. Meissner (1972):37, 40-44.

9. Schurmann (1966):26384.
10. Teckenberg (1978).
11. Howe(1973a):95,
115,153;andHowe,in Schram,ed.(1973b):234,
237,
253.
12. Shkaratan, in Yanowitch and Fisher, eds. (1973).
Part 2. States,World Orders,and ProductionRelations

1. Ibn Khaldun (1953).
Chapter5. TheComingof theLiberalOrder

1. Burckhardt(1945)wroteofthisperiod:. . . anewfactappears
in history-
the State as the outcome of reection and calculation, the State as a work of art
(p. 2). The Renaissance spirit, for Burckhardt,expressed
power in unity, e.g.,
Bramantes plan for the reconstructionof St.Petersin RomeunderPopeJulius II
(p. 75).Thesucceeding
baroque period,for CarlFriedrich(1952):39,
expressed
powerasmovement, intensity,tension,
force.Ontheimportance of therevival
of Roman law, see Anderson (1974):2429.
2. Meinecke (1957) passim.
3. Mattingly (1973).
4. Albert Sorel (1922).
5. Roughly translated:
. . . all thepowerfulStates
areagreed
notto allowanyoneoftheirnumber
toraise
itself abovetheothers.Wereanyoneto claimthelion's
share,it wouldseeits rivals
form at oncea leagueagainstit. Therethusarisesamongthe greatStatesa kind of
business association: each aims to conserve what it possesses,to take gains in
proportion
to itsstakein thebusiness,
andtoforbidanyoftheassociates
to dictate
to the others. This is what is called the balanceof power or the Europeanequilib-
rium (Sorel, 1922:3334).
6. Clark (1947):98114; Anderson (1974):2933.
7. Clark (1947):3061,on the developments
in scal machinery.Braudel
(1979:t.3,pp.322-24)attributes
Britishmilitarysuccesses
duringtheeighteenth
centuryto soundscalmanagement. Onthedeclineof Spain,seeVicensVives,in
Cipolla, ed. (1970):12167.
8. The classicstudy on mercantilismis by Heckscher(1935).Heckschers
work has been criticized asboth mistakenly perceiving a seriesof ad hoc measures
asa coherentbodyof economictheoryandasjudgingthis purportedtheoryby the
canonsof classical liberal economics.On thesecriticisms, seeColeman,ed. (1969).
Theroyalcharterof 1694establishing
theBankof England
wasa criticalactin
puttingtherelationship
betweenpoliticalpowerandmerchant
wealthona busi-
nesslike basis.The Crown cededcontrol over the issuanceof currency to a consor-
tium of wealthymerchants
in exchange
for their fundingof theroyaldebt.Thence-
forth merchant and state interests had to be managed in common~an arrangement
thatprevailed
unbroken
untiltheeconomic
crisisofthe1930s
displaced
controlof
the currencyfromthe Bankof Englandto theTreasury.SeeBrianJohnson(1970).
9. Eli Heckscher,
in reconsideringhis work on mercantilismin the light of
criticism that he gaveinsufcient attentionto the differencesamongcountries,
contrasts the Virtual absenceof administrative controls in England in the late
seventeenthcenturywith the vast administrativemachinerycreatedby Colbert
in France.Coleman(1969):23. Thoughvast,Frenchold-regimebureaucracy was
420 5. LIBERAL ORDER
ineffective by modern standards. Goubert [1966] depicts a situation in which gov-

ernment actions, though ambitious in their aim of economic promotion, penetrate
only very marginally into society.
10. Marx linked the prots of trade, the import of gold and silver from the
New World, and the transportation of African slaves to the Americasall aspects
of mercantilismwith the expropriation of the English peasantry, as elements in
the primitive accumulation of capital necessary to launch the process of capitalist
development. Keynes saw the virtue of mercantilism in its effect in encouraging
foreign investment and, by reducing the interest rate, stimulating domestic invest-
ment. See Brown (1974):7395. The classic study of the impact of the triangular
trade with the West Indies on the development of British capitalism is Williams
(1980). See also Hymer (1971).
11. Dehio (1963).
12. Skocpol (1979]:5660.
13. On the critical importance of the creation of a national market for the
development of English capitalism, see Hobsbawm [1969):30-31, 41~51; and Brau-
del (1979 t.3,:pp. 235-53).
14. Becker (1932).
15. Meinecke (1957) epitomizes this contradiction in his treatment of Fred-
erick the Great, who was an eminent practitioner of raison détat in both its internal
and external aspectshe rationalized state administration and founded his foreign
policy in realpol1'tikwhile
at the same time he wrote a tract against Machiavelli
and harbored universalist philosophers in his court. Immanuel Kants essay Eter-
nal Peace postulates that world peace is to be founded on the existence of states
governed by the rule of law. Friedrich (1948) includes a translation of Kants essay.
List [1885:11932) emphasized that the idea of perpetual peace was the foundation
of all of Adam Smiths argument about the wealth of nations. Smiths model, which
List called cosmopolitical, situates individual economic men in a ctitious univer-
sal commercial republic, whereas List himself reasoned in terms of a real world of
national political economies. There is a concordance between the eighteenth-
century ideas of universal peace and liberal economics that together expressed an
emerging bourgeoisconcept of world order. Nannerl Keohane (1980) points to the
link made between private vices and public virtues in the Augustinian revival led
by Montaigne and the seventeenth-century Iansenists, and Hirschman (1977) traces
the genealogy of the new vision of world order.
16. Albert Sorel (1922): vol. 1, p. 71.
17. Webster [I963]: vol. 1, pp. 120-21, 127-28, 227-28, 492.
18. Briggs (1965a: 137, 182, 207, 210] points out that England was not spared
internal dissensions during the war against France. Discontent arose, however, more
as the product of changes in industrial structure than from sympathy with French
revolutionary goals. Support for the war was widespread, if not unanimous. It was
following the peace that discontent became more pronounced, since the fall in
urban employment and rise in indirect taxation hit the workers most of all. The
year 1819 was the most troubled one for working class distress, and it took a political
form, repressed by the Tory regime in the Peterloo massacre and introduction of
the Six Acts.
19. Talleyrand (1967): t.2, p. 159. The passage quoted may be rendered in
English as:
The greatest need and most pressing concern of Europe was . . . to do away with
the doctrines of usurpation, and to revive the principle of legitimacy, the only
remedy for all the evils that have aficted Europe and the only one capable of
preventing their recurrence. . . . (l)t is above all a necessaryelement in the tran-

quility and happiness of peoples.
20. An Italian historian of imperial Rome,Gugliemo Ferraro (1941),sought
to explain the upheavalsleading to World War II asthe consequenceof disregarding
the principle of legitimacy, the sameprinciple that Talleyrand had perceivedto be
the only surebasisfor internal and international order. Ferrerofound in the doctrine
of legitimacy, by analogyto the post-Napoleonicera, a conservativesolution to the
disruptions wrought by fascism and Nazism. There is a certain reminiscence of
Machiavellis metaphor of the centaur in Ferreros statement: .. a legitimate
governmentis a power that has lost its fear asfar as possiblebecauseit has learned
to depend as much as it can on active or passiveconsentand to reduce proportion-
ately the use of force (p. 41). The weaknessof Ferrerosargumentlies in treating
legitimacy as a universal principle without regard to sociohistorical context. By
contrast,Gramscisconceptof hegemony,alsoreminiscent of Machiavellis centaur,
makes the condition of acquiescence,stability, and tranquility dependenton the
relationship between the principle on which a regime is founded and the historic
bloc, i.e., makes legitimacy a historically contingent, not a universally valid,
proposition.
21. SeeWebster (1963: vol. 1, p. 58) on Pitts endorsementof the need to
createa foundation of public law; and p. 498, on CastlereaghsView of the doctrine
of legitimacy.
22. Nicholson [1947]:17.
23. Webster (1963): vol. 1, p. 482.
24. Webster (1963): vol. 1, p. 151.
25. Webster (1963): vol. 2, pp. 240, 406, 472.
26. Hinsley (1967):18385.
27. Webster (1963): vol. 1, pp. 57-60, 493; vol. 2, p. 52.
28. Webster (1963: vol. 1, pp. 48889) writes:
Castlereaghdeliberately misled Parliamentasto the part he had played in the Saxon
and Neapolitan questions. Similarly, his public policy towards the second
restoration of the Bourbons was assumed in order to make his real policy possible.
. . . The concealment, which was known to the other leaders of the Alliance, must
have led them to believe that Castlereagh was prepared to deceive his own coun-
trymen deliberately when he could not win support for his policy in any other way.
. . . No wonder that the British people never understood the principles on which
the reconstruction was based! He never fully took them into his condence. Those
who admire his honesty of purpose and diplomatic skill must regret this blot on
his character which no casuistry can palliate.
29. Webster[1963]: vol. 1, pp. 491-93; vol. 2, pp. 47-49, 407-9, 428. There
was a good deal of British private enterprise involved in the independencemove-
ments in Latin America. Lord Cochranes naval exploits on behalf of the South
American rebels were highly popular in England, and large sums of money were
raised for him in London. Castlereagh toyed with the idea of recognizing independ-
ent monarchies in South America. Canning ultimately recognized the new repub-
lics. Commercial recognition was necessaryas a rst step becauseSpain regarded
British merchants trading with South America as pirates, and these merchants
sought the protection of the Royal Navy.
30. Doubtlessa bourgeois-runstate would not have been able to grant sub-
sidies rather than loans. This was the privilege of aristocrats dealing with finance.
The one exception to the subsidy rule concernedAustria. The Austrians had ap-
parently preferred a loan as being more consistent with Hapsburg dignity. The
422 5. LIBERALORDER
repayment
problem
afterthewarbecame
embroiled
inParliament,
whichdemanded
somereturnwhenthegovernment
wouldhavepreferred
to cancelthedebt.The
Austriangovernment
nallysettled
forsome partofthesumdue.Webster
(1963):
vol.2,p.401-2.TheBritishpractice
in theNapoleonic
warscompels
comparison
totheU.S.practice
duringWorldWarI,whichleftahuge wardebtandreparations
problem
to bedevilpostwar
international
relations.
31.Halévy(1949b):36-40,46-53.Ricardo andParliamentary
criticshad
objected
tothegovernments expedientofrenewing
thedebtbyborrowing
fromthe
SinkingFund:Ricardo wrotetoacorrespondent:
WhileMinisters
havethisfund
virtuallyattheirdisposal,
theywill ontheslightest
occasion
bedisposed
forwar.
Tokeepthempeaceable
youmustkeepthempoor(n.,p.40).
32.Theperpetuation
intothetwentieth-century
interwar
period
ofthiscon-
tradictionandofthemyththatreconciles
it is analyzedcriticallybyCarr(1946).
33.Halévy(1949b):164.
Nicholson(1947:266-78) is moreinclinedto stress
thebreakbetween Castlereaghs
andCannings policies,whereas Halévyseescon-
tinuity.Nicholsons
bookhas,at theend,theringof Greek
tragedy,
in which
Castlereaghs
suicide
coincides
withthedefeat
ofallhispublicgoals,
andpartic-
ularlytheendofthecongress
system.Hinsley
(1967:222-25]:
pointsoutthatthe
basicgoalsof Castlereaghs
policywerecontinuedbyCanning andPalmerston.
Webster(1963:
vol.2,p.504)alsorecognizes
that,thoughthecongress
system
came
to anend,Castlereaghs
fundamentalideacontinuedin theConcert
ofEurope.
34.Theprolonged
politicaldominance
ofthearistocracies,
notonlyin Brit-
ainbutalsoin all European
countries,
up to theFirstWorldWaris discussed
in
Mayer (1981,)
35. Hinsley (1967]:22021, 245.
36.A. ]. P.Taylor(1957):xxxv,
wrote:Nationalism
andmass-education,
whichhadbeenexpected
tobringpeace,
wereturnedeverywhere
totheadvantage
of state-power.
Where
Germany
ledtheway,Great
BritainandFrance
followed,
though more slowly.
37. Hinsley(1967:223}wrote:It is notunreasonable
to regard
theConcert
ofEurope
asbeing
fromonepointofviewthesystem
whichnaturally
replaced
the
aim of universalmonarchyduringthe periodof British predominance.
38.AdamSmithsviewsonthestatearefoundmainlyin books4 and 5 of
TheWealthofNations.
SeealsotheIntroduction
byAndrewSkinner
tothePelican
edition(1970):77-82.
Onthedismantlingof guildandmercantilist
restrictions,
Landes(1969):145;Hobsbawm(1977):51.
39. Landes(196Q]:152,
199-200;Checkland(1964):329.
40.Polanyi (1957)
discussesboththesocial
implications
oftheSpeenham-
landsystem,
evolved inthelateeighteenth
century
toreplace
theElizabethan
poor
law,instablilizing
therural
population
andinstemmingtheowintotheindustrial
labormarketandtheeffectof the1834poorlawin effectively
creating
a general
nationalmarketin labor.SeealsoThompson
(1968):73,
244,247-249; Hobsbawm
and Rudé (1969):50-51.
Bendix
(1963:21, 24,61-62,73-86,115)shows
thechanges
thattookplace
in theprevailing
attitudes
toward
poverty. Formerly
regarded
asamisfortunefor
whichthecommunity
asa wholeboresomeresponsibility,
povertynowbecame
a
matterof personal
responsibility
thatthehigherclasses
coulddonothing
to
alleviate(Malthusprovidingscienticjusticationfor this view).Povertywasa
self-inicted
deprivation
thatcouldbecombated
onlybyreforming
thecharacter
ofthepoorunderthestrictest
discipline.
Theoptimistic
counterpart
tothiswas
thatthemostindustrious
among
thepoormightthemselves
become
capitalists.
The
importance of Methodism in convincing the poor themselvesof this new doctrine

was also emphasizedby Elie Halévy, (1949a:424~25),the Frenchhistorian. Seealso
Thompson(1968:4546),who seesan enhancement
of working-class
capacityfor
organization and growth in self-condence as an unintended consequenceof
Methodism.
On poorlaw reform,seealsoHalévy(1950):119~Z9, 28486.Halévywrote:
The law appeared to regardpovertyitself asa crime.Thepaupersweredeprived
of sufcient bedding,warmth,andnourishment.Indeed,it wasthe avowedobject
of the regulations to makethe conditions of life in the workhouseharder than those
of the worst-paidlabourerin the district (pp. 284-85).Hobsbawmand Rudé
(1969286) wrote concerning English labourers: The New Poor Law of 1834 de-
stroyed the last and most modestof their claims on society, namely the belief that
it would not let poormenstarvelike dogs.AlsoCheckland(1964]:32930;
Briggs
(1965a):27882.
41. Bendix(1964:82~83) discernsthreepoliciesconcerningworkingmens
associationsfollowedby differentEuropeanstatesduringtheliberalera:(1)a form
of benignneglect(notBendixsterm),whichconsistedin allowingcraftassociations
to continueto existin accordance
with themedievalconceptof libertyasaprivilege
(Scandinaviaand Switzerland);(2) the suppressionof all associations
lling the
spacebetweenthe stateand the people(Prussianprohibition of workingmens
associationsand French Loi Le Chapelier);and (3) a prohibition of combinations,
i.e.,affectingmarkets,while allowingassociation
in otherrespects(Britain).
42. Halévy(1950):98; Halévy(1949b):4653; BrianJohnson(1970]:3034;
Checkland (1964):201;Briggs (1965a):339.
43. The Parliament that adopted the reform of 1832 also set about to cen-
tralize and strengthen state administration. JeremyBentham, who had converted
from advocacyof enlighteneddespotism"to supportof democracy, retaineda
convictionin the needfor a strongcentralpower.His thinking inspiredmanyof
the administrative changes.Tories and traditionalists, Disraeli included, saw this
as a tendency to impose a bureaucracyon the nation, aping Prussian and French
models. See Halévy (1950):98101.
44. Halévy (1Q49b:288)discounts the possibility that Peelspolice reform of
1829might havebeenintendedto forestalla Jacobin-typerising. Suppressionof
crime was the only thoughtin his mind, Halévyconsidered.However,Behagg
(1982:7980)pointedout thatworking-classradicalismwasrepressed in Birming-
ham in 1839by a detachmentof Londonpolice draftedin by the middle-class
mayor.
45. Halévy (1950):21316; Behagg(1982]:61.
46. Halévy (1951):2022;Hobsbawm(1962):230~31.
47. Landes(1Q69):15657.Habermas(1976:5355) outlines functions of the
capitaliststate.Thefirst two of his functionsare(1)thestatestasksof constituting
the modeof productionand maintainingit throughcivil, property,and contract
law andtheestablishment of themarketandof providingcertainbasicprerequisites
of productionsuchaseducation,transportation,and communication; and (2) its
aidto theaccumulation process. Botharemarket-complementing actions.Theother
two functionshelists aremarketreplacing actions.Theformercorrespond roughly
to those of the liberal state. The latter arise in more recent transformations of the
liberalstate.Wolfe(1977)hasattempteda typologyof formsof capitaliststate.His
two initial forms are called the accumulative state" and the harmonious state.
Theformerhe regardsascontinuingfromthe absolutist(mercantilist?)
periodthe
statesrolein encouraging
capitalaccumulation;
thelatterexpresses
theideological
424 5. LIBERAL ORDER
convictionthat the pursuit of particularbusinessinterestswill be in the general

interest.I do not find this distinctionvery usefulor historicallyvery convincing.
Theideology ofharmonydidnotawaitthelatenineteenth
century,asWolfeseems
to suggest;
it wascurrentin theeighteenth
centuryandevenearlierandinuenced
thenewearly-nineteenthcenturylegislation.Furthermore,
therewasanimportant
breakin thestatesaccumulation
functionsin theearlynineteenthcenturywith the
dismantling
of guildandmercantilist
protections,
thecreation
of a labormarket,
andtheinstitutingof a regulatedcurrencyandbankingandcreditsystem.Ideology
and accumulation were two aspectsof the samehistorical structure, a structure that
cameinto existencein Europein the earlynineteenthcenturyandentereda crisis
of transformationinto a postliberalstatein Europeduringthe last decades
of the
nineteenth century.
48. Adam Smith (1970)wrote that legislativeproposalsemanatingfrom
members of the mercantile classes:
ought
always
tobelistened
towithgreat
precaution,
andought
never
tobeadopted
till afterhavingbeenlongandcarefullyexamined,notonlywiththemostscrupu-
lous,butwiththemostsuspicious attention.
It comesfromanorderofmen,whose
interestis neverexactlythe samewith that of the public, who havegenerallyan
interestto deceiveandevento oppressthepublic,andwhoaccordinglyhave,upon
manyoccasions,
bothdeceived
andoppressed
it [book1,ch.11,pp.358-59).
49. Jones,in EpsteinandThompson,eds.(1982]:1821.
50. Briggs, in Briggsand Saville, eds. [1960):56.
51. Hobsbawmand Rudé (1969):passim and esp. 15-19, 24-36, 69, 76, 91,
195,253,26263,281,28384,286~88,
297-98.Swing"wastheanonymous
signature
appended
tothreatening
letters
received
bymany
landlords.
52. On Owenite trade unionism, Checkland (1964):34749; Briggs
[1965a):Z89304;
Halévy(1949b]:28182.
OnChartism,
G.S.Jones
[1982];
Briggs,
ed. [1965c);Briggs [1965a]:304~12.
53.Halévy(1950:63],commenting onthecompositionofthefirstParliament
electedfollowingthereformof 1832,concluded:
the rst Reformed Parliament,
returned
byamiddle-class
electorate,
waslikeitspredecessors
aParliament
the
overwhelming
majorityof whosemembers
werecountrygentlemen
andmembers
of the aristocracy.
54. Jones [198Z]:4849.
55. Briggs [1965b),in Briggs,ed. (1965c):296.
56.Halévy(1951]:10336;
Briggs[1965a):31223;
Briggs(1955b):29697;
Briggs (1960):5961.
57.Quotedin Briggs(1965b]:298.
Briggs[1965a)wrotethatChartism
dem-
onstrated
not theweaknessoftheworkingclasses
in thesocietyofthe18403
but
thestrength
ofthemiddle
classes
(asorganized
through
theAnti-Corn
LawLeague)
(p. 312).
58.Briggs
(1965b),
commenting
ontheabsence
ofrevolution
in England
in
1848and of counterrevolution in 1849,wrote: The mid-Victorian yearswereyears
ofsocialequipoise,
andthemilitantclass
language
withered
onbothsides
ofthe
classbarrier.It became
thefashionparticularly
in 1851,theyearof theGreat
Exhibition-to
singthepraises
ofallclasses.
Iones
[1982:5051),whohasargued
thattheappeal
ofChartismdepended ontheperception
thatthestatewasbeing
used
bythepropertied
classes
tooppress
thepoor,
theworkers,
andthose
excluded
from political power, observed:
Peelmadenopoliticalconcessions
toChartism,
buthisavowed
aimwastoremove
thematerial
sources
ofpopular
discontent
andtoavoididentifying
theState
with
any particular fraction or economic interest of the propertied class. . . . All this
provedfatalto the convictionandself-certaintyof the language
of Chartism,espe-
cially in the period after 1842, when somereal measureof prosperity returned to
the economy.
59. Hobsbawmand Rude (1969247)pointed to a fundamental contradiction
in English agrarian society:
Its rulers wanted it to be both capitalist and stable,traditionalist and hierarchical.
In other words they wanted it to be governedby the universal free market of the
liberal economist (which was inevitably a market for land and men as well as for
goods),but onlyto theextentthatsuitednobles,squiresandfarmers;theyadvocated
an economy which implied mutually antagonistic classes,but did not want it to
disrupt a society of ordered ranks.
The hegemonic order stabilized and perpetuatedthat contradiction. As Anthony
Brundagediscovered,the effect of the new poor law of 1834was to strengthen the
powerof thecountrystraditionalleadersovertheir localities,enablingthelanded
class,shakenby the Swing revolts, to restore labor discipline, lower the rates,and
try to reestablishsocialcohesionby a exible applicationof thenewrelief system.
In practice,they madeuse,despitethe new legislation,of outdoorrelief asbeing
less oppressive and also in somecasesless costly than incarceration in the work-
house.Brundage(1978):90,106, 144-45, 178-79, 182-84 (quotefrom p. 182).
60. Marx [1969):124.
61. Marx [l969):131.
62. Sellier, in Sturrnthal and Scoville, eds. (1973); also Shorter and Tilly
(1974): esp. 39-45.
63. On the U.S. economy in relation to government, Williamson, ed.
(1951):1004,113,359-63 (re land issue);118-28,282-84 (re governmentand
capital formation); 228-31, 244-53, 297, 554-63 (re cheapversus sound money);
302-5, 535-39 (re the tariff].
64. The Gilded Age, a novel by Mark Twain (SamuelClemens)and Charles
Dudley Warner (1873),set in a context of speculation, graft, and corruption during
the Grant administration years.
65. Beard and Beard (1940):esp. vol. 2, ch. 18, pp. 52-121.
66. Gordon, Edwards, and Reich (1982): ch. 3, pp. 48-99.
67. Landes (1969):Z01-10.
68. Morazé (1957).
69. Gallagher and Robinson (1953).
70. One of the earliest analysesof the impact of expanding capitalism on
production relations in penetratedareaswas in Luxemburg (1968;first published
in 1913). A more recent attempt to theorize stagesin the impact of capitalism on
penetratedformations in the Marxist tradition is by Rey (1976).More recently still,
the task of interpreting history in terms of the impact of capitalist developmenton
precapitalist production relations hasbeencarried forward by Wolf (1982):esp.ch.
10, pp. 296-309.
71. Luxemburg (1968):42939; Wolf [1982).28687.
72. Luxemburg (1968):37177, 386-94; Wolf (1982]:24749, 252-61.
73. Wolf (1Q82):307.
74. Goldfrank (1975) gives an illustration of capitalist development in the
periphery under the regime of Porrio Diaz. The Mexican state,encouragedby the
localbourgeoisie,
soughtforeigninvestment,expectingit wouldtaketheportfolio
form. Foreign capital was forthcoming, but as direct investment along with U.S.
policing of foreign indebtedness.The Mexican bourgeoisiewas not strong enough
426 5. LIBERALORDER
orindependent
enough
tolead
anational
development
andwere
willing
tobecome
accessories to foreign capital.
75. Polanyi (1957): esp. 130-77.
76. Cited in Checkland (1964]:209~10.
77. Hobsbawm (1977):15060.
Chapter6. TheEraof RivalImperialisms

1. Barraclough (1967]:1Z.
2. A. P.Taylor(1957]:25556,
284,34647;Hinsley(1967):24471.
3. Dehio(1963:230]
explained
theGerman
gamble
ofthepostBismarckian
era as
a sadstoryof a consistent
inabilityonthepartoftheContinentals [i.e.,Dehios
conceptofthecontinentalpowerstate]toappreciatefullythestrange
andhidden
sourcesofstrengthamongtheinsularnations.
. . . Thecharacteristic
element inall
thestruggles forsupremacysince
thetimeofPhilipII thatI havediscussed
sofar
is a collisionbetween a powerdominating
theoldcontinent andtheexponent,or
exponents, ofWestern seapower.A secondaryfeature,appearingatthetimeof
Napoleon I, isthecollision
betweenthedominantcontinental powerandRussia.
See alsopp.232-42. Dehios thesis,
elegant
initseconomy ofvariables,
takesthe
formsofstatepowercontinental
andinsularas
givenanddoes
notattempt
to
probe
theireconomic
andsocial
foundations.
Typesofstate
thereby
tend
tobecome
idealized as modesof thought conditioned by history.
4. Landes(1969)'.269,
326~58;
Hobsbawm
(1969]:127,
178-93.
5. Mayer(1981:Z77)
argues
thatthelanded
interests
werehardhit bythe
decline
inagricultural
prices
brought
about
during
the1870s
and1880s
fromgreatly
expanded
grain
production
forworldmarkets
in theMidwestern
plains
ofNorth
America,
theUkraine,
andArgentina.
Thisbuttresses
hiscasethatit wastheper-
sistence
of theoldregime,
notemergent
capitalism,
thatlaybehind theriseof
protectionism
andimperialism
in thelatenineteenth
century,
athesis
reflecting
thatearlier
advancedbyIoseph
Schumpeter
(1955:esp.
65,67]in hisessay
onthe
sociologyof imperialism.
Schumpeter
arguedthatcapitalism
is bynature
anti-
imperialist
andthatimperialism
isanatavisminthesocial
structure
thattends
todisappear
asastructural
element
because
thestructure
thatbrought
it tothefore
goesintoa decline,giving
way,in thecourse
of social
development, to other
structures
thathavenoroomforit andeliminate
thepowerfactors
thatsupported
it. Thedubious
quality
ofthisthesis
undercuts
Mayers
principal
argument,which
laystheresponsibility
foraggressivity
leading
uptoWorld WarI entirely
uponthe
old-regime
aristocracies
ofEurope.
It doesnotdisallow
thecontribution
ofagricul-
tural protectionism to that process.
6. In France,
thestate-initiated
freetradepolicyof theSecond
Empirewas
reversed
byacoalition
ofagriculturalists
andmanufacturers,
firstinatarifflawof
1881,
andsubsequently
in theMéline
tariffof1892.
Cobban
(1965:
vol.3,pp.42-
43).InGermany,
protectionism
wasaninstrumentofthestate
bothtodevelop
the
economyandtoconsolidate
ahistoric
bloc.Bismarck
securedthealliance
ofthe
most powerful
group
ofindustrialists
throughtheprotective
tariffof1879,
while
simultaneously,
agrarian
tariffsbrought
smallfarmers,
hitherto
liberals,
intoalign-
mentwiththeIunkerlandowners whohadbeen themainstayofthegovernment
bloc. Barraclough (1947):426.
7. Bismarcks
discussions
withLassalle
arediscussed
in Carr[1950]:72~87;
thequote
isfromCarr(1945]:19.
CarrtooktheideafromBorkenau
(1942).
6. RIVAL IMPERIALISMS 427
8. Wehler (1972]:77.
9. Barraclough (1947:43334), citing Halévy in support, considered that a
major factor in the decision of the Germanymilitary to run the risk of war in 1914
was the perceived threat to them of the Social-Democratic success of 1912. In
Britain, too, the coming of the war silenced a mounting revolt of both workers and
suffragettesthat threateneddomestic peaceand channeledboth into a nationalist
response. Note Wingeld-Stratford (1933:310):if the war peril from Germany
delayed much longer to materialize, it seemedquite on the cards that it might be
forestalled by revolution. As the Edwardian passes into the Georgian age . . . class
rises againstclass. . . faction againstfactionit is a questionwhether international
will not be anticipated by civil war. Note also Dangereld (1961;rst published
19352388]: with the outbreak of war, the suffragettes turned patriot to a woman.
. . . So in loyal fervor and jingoistic enterprise,endedthe greatWomansRebellion
(pp. 387-88); and . . . even the proletarian movement, the Workers Rebellion,
which had carried its semi-revolutionary banner on to the very ramparts of Capital,
now threw that banner aside, and hurled itself forward, in a new direction, against
a more visible enemy, and beneath the Union Jack.
10. The classicanalysisof long wavesis by Nikolai Kondratieff, summarized
in Kondratieff (1935). In his work, written in the 1920s, Kondratieff plotted two
and a half long cycles. The upswing of the most recent cycle he dated from 1896to
1914«1920. Ernest Mandel (1978) estimates the downswing of this long wave as
lasting until the end of World War II. Kondratieff did not claim to explain the waves,
only to plot them. He did hypothesizethat they could be explained within the logic
of capitalism and were not the product of exogenousforces.Different scholarshave
concurred in the probable existence of long waves while focusing on different
explanatory factors. Ioseph Schumpeter(1939) pointed to innovation (clusters of
inventions] and availability of credit as factors conducive to launching a wave.
Mandel (1978:108-46) considers the declining rate of prot to be the critical factor.
Monetarists have stressedchangesin the money supply, in particular the new gold
mined in the Rand and the Klondike after 1896 (although Kondratieff thought that
gold discoveriesshould be regardedaseventstriggeredby the logic of the capitalist
systemand not as chanceexogenousoccurrences).Landes(1969:23237)takesthe
balanced view that both innovation and expansion of the money supply were
critical. Iay Forrester (1976:195214) infers from his systemsdynamic modeling
that the explanation for long wavesmay be in the disjunction betweencapital goods
and consumer-production sectors,the application of new technologiesduring an
upswing leading to surplus capacity in the capital goodssector.He seesproduction
planning rather than monetary policy as the appropriate approach toward initiating
a new upswing. See also Forrester (1978) 145-48. For a summary analysis of long-
wave theorizing, see also Research Working Group on Cyclical Rhythms and Secular
Trends (1979) 483-500.
11. Gordon, in Hopkins and Wallerstein, eds. (1980). Gordon points to the
weaknessof earlier analysesof long waves,both Marxist and non-Marxist, which,
he suggests,lies in the fact that they havedwelt upon the purely economicindicators
of growth and crisis, ignoring the environment of social relations that conditions
whether or not investors are condent in the prospects for accumulation. The
composite of structures constituting this environment he calls the social structure
of accumulation, hypothesizing it as a unied whole, instability in one element of
which will tend to create instability in the whole. Gordon then explores the rela-
tionship between economic crises generatedin capitalist development and social
structures of accumulation. Crisis will, he suggests, undermine the stability of the
428 6. RIVAL IMPERIALISMS
socialstructureof accumulation,
sothat the constructionof a newsocialstructure
of accumulationwill be necessaryin orderthat investmenttakeoff again.Con-
versely,instabilityin thesocialstructure
of accumulation
maycontribute
to eco-
nomic crisis. Gordonthen denesan economiccrisis as a periodof economic
instabilityin capitalisteconomies
whoseresolution
depends
uponthereconstruc-
tionof asocialstructureofaccumulation(p.20].Aselements in thesocialstructure
of accumulation, Gordonconsiderssocialclassrelationsin theproductiveprocess,
stateinvestmentin theeconomicinfrastructuresnecessary for accumulation (trans-
port,communications,
etc.]andstateinvestment
in world-market
control[impe-
rialism, internationalmonetaryorder,etc.]. Gordon's
thinking carriesone step
forwardTrotskyscritiqueof the originalKondratieff
thesisaboutlongwaves.
Trotskycontested
theafrmationthatlongwavescouldbeexplained withinthe
logicofcapital,
asserting
thattheymustoccur
asaresultoftheinteraction
ofsocial
andpoliticalforceswith economiclogic.Gordon
provides
thegermof atheoryof
howsociopolitical
factorscanbeintegrated
witheconomic
factors
in anunderstand-
ingoftheunevenness
ofcapitalist
development.
Implicitinsuchatheory,
although
notdiscussed
byGordon,
istheproblematic andunpredictable natureofsociopolit-
ical changes.
Thereconstruction
of the socialstructureof accumulationis a
dramaof socialconict thatcannotbereducedto a sequence
of objectiveeconomic
data.The economicdatadene the stageon which the dramais playedout, but
theydonotdetermine
itsoutcome.
OnTrotskys
critiqueof Kondratieff,
seeGarvy
(1943);Mandel (1978]:12629; and Day (1976). y
12. Braverman(1974)dealswith the United States;GeorgesFriedmann
(1956), with France.
13. Edwards(1979):97104
takesa narrowview of Taylorism,conning it
to theapplication
of systematic
studyof timeandmotionandproduction
ow,
which he seesas only a small part of the changestaking placein management
practice.
Braverman
(1974) usedit in a broadsense to namethewholemovement
towardfragmentingof work,whichremoved controlof theworkprocess from
workersandplacedit in thehandsof management. Gramsci[1971]:277318
also
usedthetermTaylorism in a broadsense, linkingit with whathecalledFordism
andAmericanism,which he perceivedasa revolutionarydevelopment in produc-
tive methodsthat,in its impacton Europe,would havethe potentialbothto elim-
inate the residuesof feudalismand prepareworkersfor the next (proletarian)
revolution. See also ch. 9.
14. Gordon,Edwards,andReich(1982]:11264;
ShorterandTilly [1974):11
16,180-84,23435.Therestructuring
ofthelaborprocess
proceededatadifferent
pacein differentcountries,
depending
onthelevelof developmentof productive
forcesandthecapacityforresistance
of workingclasses.
Halévy(1961)pointedto
a contrastbetweenthe relativeeasewith which employerscouldintroducethese
innovationson the continentand in the United Statesand the resistanceBritish
employers
encountered
in thetradeunions.Onthecontinent,
andespecially in
Germany,
socialism
asa politicalpartymovement
wasrelativelystrong,
thetrade
unionsasan industrialforcerelativelyweak.In Britain,socialismwasa negligible
politicalforceduringthelatenineteenth
century,
butthetradeunions
wererela-
tivelysolidlyentrenched
among
theestablished
workerclassin industry.Halévy
wrote:
bythe
systematic
restriction
ofthe
numbers
employed
inaparticular
branch
of
industry. . . they[thetradeunions]eitherenforced
anapprenticeship,
extending
overa largenumberof years,on all whowishedto enterthetrade,or xed the
the men evenreserveda denite proportion of the vacanciesfor their own children.
The aim avowedly pursued by the vast majority of unions was the transformation
of every industry and every trade into a speciesof guild closed to outside labour.
. . . The American or Germanemployer was free to introduce into his factory the
plant and processwhich madeit possibleto substitute unskilled for skilled labour.
But the British employer was faced by the organizedopposition of his men. In the
engineering trade he could employ only skilled workmen, each of whom would
serve only a single machine, whereas his German competitor could employ one
unskilled workman to tend three machines at the same time (pp. 215-16).
Gramsci (1971)graspedthe dialectical potential in Taylorism:
the brain of the worker, far from being mummied, reachesa state of complete
freedom. The only thing that is completely mechanisedis the physical gesture. . .
and not only doesthe worker think, but the fact that he getsno immediate satisfac-
tion from his work and realisesthat they aretrying to reducehim to a trained gorilla,
can lead him to a train of thought that is far from conformist (pp. 309-10).
15. Gerschenkron (1962).
16. Carr (1946) underlined the hiatus, during the interwar period, between
a residual hegemonicideology of laissezfaireand the practice of statesadopting
protectionism to defend their independence.Seeespecially pp. 54-60.
17. Quoted in Bruce (1966):262.
18. The rst use of the term welfare state has been attributed to William
Temple, Archbishop of Canterbury,in 1941,asa contrastto the Nazi power state.
Schottland, ed. (1967).
19. Beveridge (1909).
20. Bruce (1966):163~69.
21. Keynes (1936).
22. Tinbergen (1964):esp. 8 and 70.
23. The dilemma for the social democrat of recognizing that welfare policies
have involved economic nationalism is the theme of Gunner Myrdal, (1967). Polanyi
(1957:141)stressedthe spontaneous,ad hoc characterof the emergenceof planning
asa reaction to the social consequencesof laissezfaire: While laissezfaireeconomy
was the product of deliberate state action, subsequentrestrictions on laissez-faire
started in a spontaneousway. Laissez-fairewas planned; planning was not.
24. Landes (1969):33948; Hobsbawm (1969):17Z~94.
25. Shoneld (1965):17782, 193-96. Lowi, in Lindberg et al., eds. (1975),
denes the economic plan of a contemporarycapitalist state as the stateof perma-
nent receivership: a state whose governmentmaintains a steadfastposition that
any institution large enoughto be a signicant factor in the community shall have
its stability underwritten (p. 117), a situation in which there is less socialization
of production and distribution than socialization of risk (p. 118).
26. Cox, in Arthur M. Ross, ed. (1966).
27. On the role of British primary education as an agency of conformity,
Landes (1969]:34142. Dunlop (1958)and Kerr et al. (1960)write approvingly of a
perceived tendency toward decision making on the basis of technically dened
options(fromwhichunrealistic alternativeconceptions
of socialorderhavebeen
excluded), wherein the technical elites of the major interest groups (workers and
employers)havemore in commonwith eachother in the understandingof problems
than either have with their own rank and le. Wolfe (1977:298321) writes critically
of the depoliticizing tendency of late capitalism, which seemsto require a passive,
quiescent subject for its political system to work. Crozier et al. (1975) arguethat
high levels of participation are unpropitious for liberal democracy in advanced
capitalism. The conceptof governmentasa problem in technical engineeringrather
than moralchoicewasillustratedby an incidentin Canada.In Ianuary1983,the

RomanCatholicbishopsissueda collectivestatementcondemninga systemthat
allowedhighpersisting ratesof unemployment asbeingimmoralandproposed
policiesfor analternativeconceptof society(Toronto
GlobeandMail,January 1,
1983).Theprimeminister,echoed by leadingnewspaper opinion,couldcredibly
replythat the bishopsdid not understand economics. (Theypresumably were
technicalspecialists
in theology.Toeachhisown.)It will beevidentbythedates
of mostof thesereferences
thatthedepoliticizationof government
became
manifest
fromthelate1950s,thesameperiodin whichtheend of ideologywasproclaimed
(Daniel
Bell,1960).
Thisoccurred,
in otherwords,afterthewelfare-nationalist
form
of statehad beentransformedinto a new form adjustedto the new hegemonicworld
orderof the post-WorldWarII period(seech. 7 below).I believethe substitution
of technical for moral choicein governmentto befunctionally relatedto corporative-
tripartitedecision
making.
Thedepoliticizingeffectof thiswasmasked
duringthe
lifespanof thewelfare-nationalist
stateby theideological importance
of nation-
alism and its role in mobilizingcross-class
unity behind nationalisteconomic
policies.Whenthehegemonic
orderstillednationalisms,
thelatentdepolitization
became manifest.
28. Thesepercentages
arebasedon tablesin Feinstein(1972).This work
givesguresfor GNPat marketprices(table3, pp.T 10-11)andfor combined
publicauthorities
currentexpenditure
ongoodsandservices (table14,pp.T 35-
36).Theexactpercentages are9.6and28.5basedon thesegures.A different
percentage
forexpendituresbyall levelsofgovernment
in relationtoGNPis given
in Russettet al. (1964):tables15 and23.This sourcesetsthe 1959percentage for
the United Kingdomat 45.3.Comparable percentages for othercountriesin 1959
givenin thelattersource
are52.9percent for Sweden, 41.2percentfor theNeth-
erlands,38.8percentforWestGermany, and27.9percent for theUnitedStates.
If
defenseexpendituresaresubtracted
fromthesetotalgovernment expenditure
per-
centages,thehiatusbetweentheUnitedStates andtheothersis magnied: 48.2
percentfor Sweden,38.6percent
for Britain,37.2percentfor theNetherlands,
35
percentforWestGermany, asagainst18.3percent fortheUnitedStates.
29. Titmuss (1963), esp. ch. 1.
30. Therborn (198"4):11-12.
31. Briggs
[1965a):519.
Universal
manhood
suffrage
forelections
tothelower
housewasinstitutedin Germanyin 1871,reconrmedin Francein 1875.England,
France,andGermanyhadall dispensed with property,tax,andeducationalquali-
cationsby theturnof thecentury,butin all countries
apportionment
weighted
representationin favor of rural over urban areas.
32. Halévy(1961):139~40,
303,hasstressed
theimportanceof the Prussian
modelof imperialism combined with socialreformin thereshaping
of British
policyduringthisperiod.Otheraspects
ofcontemporary Germanywerealsoobjects
of British admirationand emulation,especiallythe Germaneducationalsystem
andthepoliticalphilosophy
ofHegel
(pp.140-63).
Among thereformers,
theFabian
Societylookedto IosephChamberlain
asthepoliticalleadermostlikelyto bring
Germansocialreformto Britain(p.142).OnChamberlains
social-policyinitiatives,
seeHalévy(1961:23143,
287,312)andBruce(1966):110,
122,151.Halévyhada
keen senseof the latent contradiction in Chamberlainsposition (pp. 24243). In
Germany,
a dominant
old-regime
militaryaristocracy
arbitrated
between
thede-'
mandsof anarousedproletariatanda dependent
bourgeoisie,
grantingto bourgeois
propertytheprotection
of thearmybutbeingquitewillingto defendlaboragainst
theexactionsof plebiancapitalists.In Britain,thearistocracy,
by dividinginto two
parties,had managedto remainthe governingclassevenas the dominanceof

industryoversocietywasmakingthebourgeoisie a hegemonic ruling class.At the
very time that Chamberlain
wasprovokinga revivalof theprojectof socialreform
in theToryparty,thenancial andindustrialbourgeoisie,
threatenedby theemerg-
ing specterof socialism,wasmovinginto the Tory camp.Chamberlains career
heralded the transition of Toryism from aristocratic benevolencetoward a progres-
sivecapitalismbasedon nanceandlarge-scale
industry,in which the prospects
for social reform would always be subordinated to the requirements of capital
accumulation.
33. Harcourt is cited in Bruce[1966]:xv;the quotefrom the Fabians,in Bruce,
p. 139;referenceto the works of individual reformersin Bruce,pp. 10-11, 14243.
34. Therborn (1984:16~17,Z024] points out that the workers organizations
in Germany,Austria,and Denmarkopposedstateinitiatives to introducesocial
insurance. Their attitude was based on ideological opposition to a paternalistic
aristocratic stateand afrmation of workersrights. In late nineteenth-centuryBrit-
ain, tradeunion leadersthoughtof themselves
asheirsof the liberaltraditionsof
Cobden, Bright, and Gladstone. There was no signicant labor participation in
nationalpoliticsbeforetheendof thecenturyotherthanasamodestrepresentation
within the Liberal Party. Halévy (1961):Z1314.
35. Dangereld [1961):23549, 280-98.
36. Briggs(1965a):4450.
Halévy[1966:110]describedthe British wartime
organization of production thus:
Rawmaterialsandmanpowerwerein shortsupply,but the needsof the military
statewereurgent.Now the chiefconsumerof the nation,the statesetitself up as
thenal arbiterof productionanddistribution.Tomakeits taskeasier,all theheads
of rms in eachindustrywereencouraged to combine;on the otherhand,where
their trade-unionorganizationswerestill incomplete,workerswereurgedto make
themnearlyuniversal.Thestateforcedassociations of employersandworkersto
becomeagentsof its authority.It would consultthembeforeacting.Onceits deci-
sionsweretaken,it wasup to themto transmitits ordersandto enjoinall employers
and workers to carry them out (Text written in June1919).
Regarding the NewDealseeChapter3267-8,745, andnote25.
37. Barraclough(1947]:43640. HaroldButler,a seniorcivil servantin the
British Ministry of Labourduringthewar,wrotein his memoirsof the spectreof
a greatconspiracy,which would completelydisruptthe productionof munitions
at the most dangerousmoment of the war, which led the governmentto institute
a nationwide inquiry under Mr. GeorgeBarnes,one of the Labour Party ministers.
Theinquiry calmedfearof animminentworkerrevolt.Thefearwasnot,however,
denitely allayed;the government wasperturbedagainin the wakeof theRussian
armycollapse,and GeorgeBarnesset off on a tour of the front line andbasesin
Franceto seeif the spirit of mutiny had infectedthe troops.Onceagain,he con-
cludedthe fearsexaggerated, althoughhe found that British ofcers weremuch
concerned that the future would be economically disastrousfor victors and van-
quished alike. Butler (1950):12224.
38. Halévy(1966:10557)
givesananalysisof thesignicanceof theWhitley
councils written after the event in 1919.
39. Halévy(1966):167
refersto employer-initiated
workscouncilsin anessay
on the problem of worker control written in March 1921.
40.. Maier (1975]:5370. Although German tripartite corporatism as it
emerged out of thedébacleof WorldWarI beganasanemployerinitiative,this was
by no meanstheoriginof thecorporatistideain Germany.
Therborn[1984:89)has
documented
thecorporatisttheoryunderlyingBismarcks
socialreforminitiatives
of the early 1880s.
41. Maier(1975):138-41.
42. Halévy(1966]:17177, 189-94.Halévy,writing in 1922,described
Lloyd
Georgesproposalsfor the reorganization
of the coal industryasa meresmoke-
screenbehindwhich the government could beata retreatandrepudiatethe pro-
posals
fornationalization
(p.193).Theanticipated
nationalization
oftherailways
wassimilarly averted.Thesefailuresof nationalization,Halévywrote,allow me
to understandthe silentandpatienttacticsby which theruling classesin England
underLloydGeorge wereableto defeattheworkingclassagitation(p.197).Halévy
went further to arguethat the postwarweakeningof the workingclasshad been
followedbyadeclineofthesocialist
ideain Britain,astheLabour
Partyabandoned
nationalization in favor of the liberal pacism of Cobdenitelittle England (p. 206).
43. Halévysdiagnosisof the contradictionsbetweencorporatismand so-
cialist projectsfor nationalizationandworkerscontrolof industrywaswritten in
1921:
In England-and
I believethatit is still moretruein Germanysome
capitalists
are wondering whether it would not be in the employersinterest to createa com-
munityofinterestsin eachindustrybetween
employers
andworkers
inthatindustry
by settingup a kind of corporative
system.
Theemployers
wouldguarantee the
workerswhat they aremoreconcernedaboutthan anythingelse-security.They
wouldpromise
to establish
a fundto insurethemagainst
theperilsof unemploy-
ment.Theywouldofferthemasystemof prot-sharing.In return,oncetheworkers
weredirectly interestedin the prosperityof the enterprise,the employerswould
asktheir help in gettingassistance
fromthe state,protectionagainstforeigncom-
petition,andhigherpricesbywayof customs
reform.. . . Nowbetween
thesetwo
conceptions-one working-class,
the otheremanatingfromthe employers-the
difference is obvious. One looks to the gradual expropriation of the employersand
theeliminationof profit.Theotherwantsto interesttheworkingclassin thegrowth
of capitalist prots . . . (p. 79].
44. Gramsci (1971):238.
45. Regarding
the ILO andcorporatism,
seech. 3, note35;alsoCox,in Cox
andJacobson (1974).
TheUnitedStates, reluctantto jointheILObecause of ideo-
logicalreasons,
aswellasbecause of thepoliticalisolationism
thatkeptit outof
theLeague of Nations,overcametheseobjections undertheimpactof theGreat
Depression,whencorporatistinitiatives(withoutthe name)weretakenby the
Roosevelt
administrationduringtherst phaseof theNewDeal.TheUnitedStates
thentookits placealongside
the majorEuropean
powersin afrmingthatthe
concept of tripartism was consistentwith its state structures.
46. Following the British general strike of 1926, there was an attempt to
negotiate
a centralarrangement
between
workersandmanagements
throughthe
Mond-Turner talks between a head of Imperial Chemical Industries (ICI) and a
representative
of theTradeUnionCongress
(TUC).Thetalkswereinconclusive.
British employerswereweaklyorganized,andbig corporationslike ICI couldop-
erate on their own in labor matters without being able to rally the majority of
employers.
In theTUC,theleft-wingopposition
opposed
thetalks.SeeIngham
(1974):7377; also Nigel Harris (1972):4142.
47. Katzenstein, in Ruggie, ed. (1983):11718.
48. Beer (1966):21516. '
49. Beer(1966):198209. Skocpol(1980),in her analysisof the NewDeal,
stresses
thelimitationsin thecapabilitiesof thestateandtheconstraints
of political
partyorganization
impeding
full development
ofsocial-democratic
Keynesian
plan-
6.RIVAL
IMPERIALISMS 433
ning.
There
are
some
analogies
with
thepost-World
War
11
British
situation.
U.S.
trade-union
ofthe strengthgrew
mass-production during
the
industries 19303
bytheC10with
withstate
backingthe
the
backing organization
ofthe
Wagner
Act
andNational
LaborRelations
Board.But
there
wasnopossibility
ofcentral
direction
oftheeconomygovernment administrative
reforms
wereblocked
byrivalries
among departmentsandbetween
theexecutive
andCongress.
Powerful
interests
were divided,
and whenWorldWar 11came,thegovernment
leaned
toward
an
understanding
with business
and mutedthe
tendencytoward
social
reform.
The
state,
whatever
itsintentions,
was limited
byitsowninternal
bureaucratic
politics
andby50.
theSome
pluralism
ofgroup
ofthese interests.
postwar
institutional
frameworks
are
described
inMalles
(1971).
See alsoLambruch(1977):91126',
andPanitch
(1984).
Onthe
Netherlands,
51.Panitch (1981)sees
acorporatism
limited
byarevival
ofclass
solidarity.
Windmuller (196Q):28297.
Corporatism,he argues,
was response
ofcapital
andthestate
toagrowth
inthe
power
oflabor
inconditions
offullemployment
and
tight
labor
market.
Itrepre-
sented
aconcession
bylabor
(accepting
less
than
itseconomic
power
could
have
extracted)
tofacilitate
capitals
continuing
accumulation.
This
concession
became
an
apparent
weakness
Panitch
when
renewed
isdiscussing
unemployment
corporatism
inthe
1960s
and
weakened
1970s,
laborsposition.
particularly
initsincomes
policy
form,
which,
as
I suggest
below,
isaresidue
ofanobsolescent
welfare-
nationalist form of state.
52.Maier,
inHirsch
andGoldthorpe
(1978).
53. Offe(197Z'.487-88].
55.Harrod
(1963:52526)
reported
that
54. Titmuss (1959).
Keynes
himself,
inthe1940s,
spec-
ulated
that
the
time
might
be
ripe
forKeynesianism
atthe
world
level.
On
the
failure
ofpostwar
corporatist
incomes
policies,
see
Panitch
(1976).
56.Maier
(1975]'.339,
349,
427,
574,
578;
Brian
Iohnson
(1970).64102&#
57.Maier
(1975):562,
Landes (1969):414.
565,567,571;
Landes
(1969)'.404;
Neumann
(1944].33740,
58. 417,41928.
Neumann
(1944)
described
how
National
Socialist
cartel
policy
favored
the
big
industrial
combines
(p.
264)
and
howthe
state
contributed
toinvestment
in
new
technologies
that
wereboth
instrumental
topreparing
Germanys
war-readi-
ness
and
protable
toprivate
industrial
combines
(p.
280).
National
Socialism
was
not
interested
innationalizing
industry,
but
asection
ofthe
party
acquired
control
over
asegment
ofheavy
industry
(the
Hermann
Goring
combine)
asameans
of
access
tothe
remained
industrial
the
motive
bourgeoisie
power
(pp.
298302).
ofGerman
Prot,
industry
under
Neumann
National
concluded,
Socialism.
Neu-
mann
treats
National
Socialist
pretensions
tocorporatism
asamyth(pp.
228-
32).
Inof
so
doing
zation he
restricts
industry
and themeaning
labor, ofof
whether corporatism
thekind toan
inautonomous
realized
the organi-
practice
ofthe
Weimar
Republic
orenvisaged
inthetheories
ofestates
and inCatholic
social
doctrine.
This
restricts
corporatism
towhatSchmitter
calls
societal
corporatism,
excluding
the
state
corporatist
type
instituted
byfascism.
SeeSchmitter,
inPike
59.Landes
(1969):41417;
Briggs,
inMowat,
and Stritch, eds. (1974):103. ed.
(1968:
vol.
12,ch.3,pp.
7075);Neumann
[1944):222,
228.
60. Gramsci
61. (1971):21923,
Gramsci
(1971):5Q,
10620, 228-29.
289~94;
Gramsci
(1975):
vol.
1p.504;
vol.
2, p. 1220;vol. 3, p. 1781.Theanalyses
of MaieronItalyandNeumann
onNazi
Germanyconcordin this matter.Maier(1975:57778)
wrote:
Fascism
didnotsuppress
thecauses
ofcapitalist
strifeandclassrivalry;it encour-
aged
thecentralization
andcoordination
ofthatconflict
suchaswasdeveloping
in
othersocieties.Therewasa crucialdifference:in Italy the outcomewaspredeter-
mined. . . the Fascistregimeremainedin a reciprocalandsymbioticrelationship
with the old forcesof order.Evenasthe stateasserted
newclaimsoverthe control
of all policy,includingeconomic
decisions,
it cededtobusiness
leaders
extensive
control over industrial organization.
Concerning NaziGermany, Neumann (1944:227)
wrote:the antagonisms
of capi-
talismare[1944]operating
in Germany onahigherand,therefore,
amoredangerous
level,evenif theseantagonisms
arecoveredupbyabureaucraticapparatus
andby
the ideologyof the peoplescommunity;andIt wasoneof thefunctionsof
NationalSocialismto suppressand eliminatepolitical and economicliberty by
meansof thenewauxiliaryguarantees of property,by thecommand, by theadmin-
istrativeact,thusforcingthewholeeconomicactivityof Germanyinto thenetwork
of industrial combinations run by the industrial magnates (p. 261).
62. Maier [1975):322.
53. Maier (1975):--16-50,
322-24, 428Z9, 547, 557, 561, 572.
64. Barraclough(1947):44853;Neumann (1944):passim.
65. Maier (1975):353.
66. Barraclough(1947]:44143; Neumann (1944):11.
67. Neumannand Maieragreethat NationalSocialismdid not changethe
Weimar
corporative
organization
ofbusiness
in anyfundamental
way.It did elim-
inatetheautonomyof workerorganization.
SeeMaier(1975):59294
andNeumann
(1944):24o, 471.
68. Gramsci (1971}:21012.
69. Gramsci(1971:220)
citedRamsay
Macdonalds
NationalGovernment
in
Britain after 1931as caesarismwithout a caesar.He also saw the successiveItalian
governments
fromOctober
1922upto Ianuary1925,i.e.,thecoalitions
formedby
Mussolini, as various gradations of caesarism.
70. Regardingtrasformismoseech. 3, pp. 79-80 above.
71. Forze elementari, Ordine Nuovo, April 26, 1921. Cited in Alastair
Davidson (1977):189~90.
72. Reich(1975).Reichhasexpressed
in Freudiantermsanotionwith a long
genealogyin European
thought.
Giambattista
Vico(1970),
writinghisNewScience
in eighteenth-century
Naples,
sawthereturnofbarbarism
asarecurrent
possibility
in human history.
73. This point is cogentlydevelopedby BarringtonMoore,)r. (1967).
74. Bendix(1963:11991)recountsthe transitionof industrial laborfrom
servile to nominally free status in Czarist Russia. The Czarist state was never
content,astheliberalstatewas,to enacttheconditionsfor themarketandthenlet
the marketdisciplinethe workers.TheCzaristapproach to the creationof an
enterprise
labormarketcanberegarded asprotoliberalism
withinthestructuresof
an old-regime bureaucracy.Seealso ch. 4.
75. Skocpol(1979)stresses
thefactorof defeatin warasa determinant
of
the origins of revolutionary states.
76. KonradandSzelényi(1979:pp. 85-93, 127-30)advancethethesisthat
theSovietpatternof redistributive
statedevelops
directlyoutof oldregime
tradi-
tional redistribution without passingthrough capitalism.
77. Carr (1952).
7. PAX AMERICANA 435
78. Schurmann (1974):22836.

79. Cumings, Introduction in Cumings, ed. (1983).
80. Gramsci [1971]:10810, 229-39.
81. Schurmann (1966) gives the most explicit presentation of this thesis.
Thomas Lowit (1979a,b)uses the term polymorphousParty to expressthe rami-
cation of the Party through state and society.
82. The phrase historic compromise is used by Konrad and Szelényi
(1979):187.It is obviously taken from the vocabulary of the Italian Communist
Party, in which the term applies to a (proposedbut not consummatedin the Italian
case) coalition between distinctive and quasi-permanent sociopolitical forces.
Without using this term, Boris Meissner (1972:13542) gives a somewhatsimilar
analysis of an uneasycoalition betweenpower elite and economic managers,and
a more overt strugglebetween humanistic-intellectual and economic-bureaucratic
segmentsof the intelligentsia, with the subaltern society very largely inert.
83. There is, of course, a continuing Marxist debateover the nature of the
Soviet state. The official Soviet View is that since the October Revolution the state
has gonethrough the phasesof dictatorship of the proletariat, a socialist state,and
a state of all the people. Trotskys view that since the advent of Stalins power the
Soviet state has been a degenerateworkers state is maintained by contemporary
Trotskyites (e.g.,Ernest Mandel]. Other Marxist critics of the Soviet Union char-
acterize its form as state capitalism, i.e., the instrument of a statebourgeoisie(e.g.,
Charles Bettelheim or Tony Cliff) or else they see a new class that is not a
bourgeoisie in control of the state (Milovan Djilas]. These are all differing views
about the class basis of the Soviet state. The conception of the Soviet state advanced
here may appearto avoid the issueof the classbasis.In fact, it assertsthat the Soviet
state stands outside class. It is the instrument of a Party that afrms its identity
with the proletariat and gives industrial workers a relatively high status in the
society but that commandsthe proletariat as effectively as it commandsany other
social group. Indeed, the Soviet state itself created the Soviet proletariat out of
elements drawn from a peasantmilieu, since the original proletariat that had par-
ticipated in the OctoberRevolution either disappearedin civil war and economic
disorganization or was absorbedinto the Party cadres.This form of state actively
shapes and organizes a society in which preexisting class-basedstructures are
eliminated and new social categories(workers, technicians, intelligentsia) are al-
lowed to emerge,categoriesthat have more in common with precapitalist status
groups than with the social classeslinked to the property relations of capitalism.
84. Przeworski (1981 :30) refers to the worker revolt in Gdansk in the summer
of 1980 that led to the organization of independent trade unions as a sudden,
massive rebirth of civil society.
85. Bahro (1978).On the Yugoslavcase,seeBenson,in Parkin, ed. (1974).
Chapter 7. Pax Americana

1. These issues are discussed in Cox and Jacobson (forthcoming).
2. Among the many studies on the construction of the Bretton Woodssystem
and the political signicance of the postwar international monetary arrangements
three stand out: Gardner (1969);Strange(1971);and in a more critical perspective
than Gardners, Block (1977).
3. Diebold (1959).
4. Cox (1977a);Maier (1977);on U.S. support for the EuropeanMovement,
436 7. PAXAMERICANA
Beloff(1963);
onJean
Monnets
ActionCommittee
fortheUnited
States
ofEurope,
Haas(1958);
Lindberg
(1963);
andLindberg
andScheingold
(1970).
5. Keynes wasconcerned witha situationin whichwealthholders
were
unwillingto investin productive
assetsbecause theyhadnocondence in the
future,
alackofcondence thatnoreductionininterest
rates
wouldovercome.The
onlythingthatwouldovercome theirreluctance
toinvestwouldbeanincreasein
effectivedemand,
whichhe thoughtgovernments
couldbringaboutby public
spending.
Economic
orthodoxy
inthe1980s
rejected
Keynes
remedy,
andPresident
Reagansadvisers
havetakenthepositionthatthewaytopromoteinvestment
isto
makethingsmoreattractive
for investors
onthesupplyside,e.g.,bytaxcuts,
deregulation, etc.
6. Theargument thataU.S.paymentsdecitis goodforeveryone
because
it
increases
theliquidityonwhichinternational
economic exchangesarebased
was
expressed
in Gardner
(1960).
A radical
critique
oftheconsequences ofthispolicy
isin Hudson(1968)
and(1977).
Theevolution
ofU.S.policyiscritically
analyzed
in Calleo (1982).
7. As instances,
theNicaragua
of Anastasio
Somoza,
Bokassas
CentralAf-
ricanEmpire,
IdiAmins
Uganda,
Bolivia
under
theinternationaldrugracketeer
GeneralLuis GarciaMeza,andtheDuvalieristregimein Haiti.
8. In the literatureexploringattemptsto build socialistsocietiesin poor
peripheral
countries
under
revolutionary
leadership:
Thomas
(1974);
Shivji(1976);
Mittelman(1981);Ziegler(1983);andSaul,ed.(1984).
9. Upuntilthelate1960s
hegemonic
economic
theoryheldthatlessdevel-
opedcountries
wouldin thelongrunbecaught
upin theworld-economy devel-
opmental
process.
Theirdevelopment
couldbeencouraged
bymeasurescalculated
to facilitatethemovement
of privatecapital.Thelastmajorofcialinternational
document
topresent
thislong-term
optimism
asascenario
wasthereport
prepared
byacommission
chaired
byformerCanadian
PrimeMinister
Lester
B.Pearson
for
the WorldBank(1969).Subsequently,
forecasts
havebeenlessencouraging
in
respect
totheprospects
ofauniversal
developmental
processthroughtheworld
economy.Sometime
duringthe1970s,
aFourthWorld"wasdistinguished
from
theThird Worldto designate
byimplication
theleastdeveloped
countries
now
recognized
tobemarginal
totheworldeconomy. WorldBankprograms
adjusted
fromthenancing
ofprojects
deemed
tobelikelytoresult
ingrowth
through
linkage
to worldmarkets
in orderto focuson projectsdesigned
to stemthebuildupof
sociopolitical
pressuresinareasmarginal
totheworldeconomy
through
population
limitation,
self-help
agriculturaldevelopment,
andencouragement
ofinformal-
sectoremployment expansion. Mittelman
(1980)
showshowtheWorldBankrst
opposed supportforujamma village
development
(aformofcommunal
agriculture)
whilesupporting privatecommercialfarming
andthenswitched
tosupport
ofthe
ujamma
villages
in 1974~75
when
it became
concerned
withthedanger
ofsocial
andpoliticalupheavals
inherent
in massive ruralexodus
andagrarian
crisis.
10.JohnGerard Ruggiehascalledthisworldorder structure
embedded
liberalism,
drawinghisadjective
fromPolanyis distinction
betweenembedded
anddisembedded economicprocesses,
i.e.,whetherornoteconomics
isembedded
in socialrelations.
ForPolanyi,
thenotionof a self-regulating
market(classic
lib-
eralism)
wasautopian
construct
in whichtheeconomy
wasconceived
tobearti-
ciallydisembedded
fromsociety.
SeeRuggie
(1982).
Thethreefold
division
of
capitalist
economies
isfromOConnor
(1973):1318.
Galbraith
(1975)
uses
atwo-
folddivisionintoplanningsectorandcompetitive
sector.SeealsoAveritt(1968).
OConnors monopoly sectorwouldbeincludedin Galbraithsplanningsector.
Claus Offe considers the capitalist state to have two main functions: (1) allocation,
which is determined by politics and carried out by bureaucratic methods, and (2)
production. The latter function is required when private industry is incapable of
providing certain of the inputs it requires because to do so would not be protable.
Offe argues that decisions about what the state is to produce are more complex than
allocation decisions. Offe, in Lindberg, ed. (1975).
11. Calleo [198Z):14551; Blank (1977).
12. Maier (1978) passim; Calleo (1982):3031, 40-43, 97-98.
13. Maier (1978):70.
14. Special issue of International Organization (1977):31(4) edited by Peter
J. Katzenstein; Katzenstein (1983); and Zysman (1983).
15. Edelman, in Somers, ed. (1969), writes of the symbolic political conse-
quences of institutionalized industrial relations. Business, labor and related gov-
ernment agencies:
are components of a single system whose functions are (1) to ensure and promote
a continuing demand for production and a continuing flow of public contracts and
(2) to arrange a mutual exchange of economic and political benets. Once all the
major dimensions of the transaction are brought into perspective, the assumption
that union-management bargaining is a key forum for economic decision making is
no longer tenable. It becomes at most a short-run and derivative inuence upon
economic trends and frequently a ritual, though it continues to make a signicant
organizational and political impact. . . . (T)hose directly involved in the bargaining
and decision making can act only when they win support or neutrality from a large
public of rank-and-le workers and political spectators. Any analysis that fails to
take account of those aspects of the transaction that serve to win such acquiescence
is bound to be supercial. The present analysis suggests that symbolic reassurances
are partly what these large publics draw from the total transaction; reassurances
that serve incidentally to tie them economically and psychologically to the political
establishment and the status quo (p. 174).
16. On state sector unionization in Iapan, Alice H. Cook et al. (1971).
17. Beveridge (1944):200.
18. Leo Panitch cites Jack Iones the main union architect of the Social
Contract speaking in 1977 to a TUC conference:
I have yet to see . . . any rm evidence that the efforts of the sector working parties
(i.e. the bodies charged under the NEDC with investment planning] . . . have pro-
duced any signicant increase in investment or in employment, and that is the test.
. . . In my view, an industrial strategy which relies only on the deliberations of
sector working parties, on polite talks with industrialists and trade associations . . .
is not a strategy at all, but an excuse for one. Cited in Panitch (1981):39.
19. The French CGT position was that the criterion proposed for an incomes
policy, e.g., that wage increases should not exceed average increases in productivity,
would only be acceptable sil sagissait dune société différente de la notre. La
Documentation frangaise (1964).
20. Reynaud (1968).
21. The breakdown of concerted action between unions and employers in
Germany is analyzed in Markovits, Gibbs, and Allen (1980). Windmuller (1969)
analyzes the strains affecting national wages policy in the Netherlands in the late
1960s.
22. See note 4 above.
23. OECD, Economic Surveys France, February 1977, p. 52. Direct controls
were also used by the socialist Mauroy government in 1982. The arguments used
were similar to those advanced for incomes policies in earlier social democratic
438 7. PAX AMERICANA
experiments:
theLeftmusthangtogether
to makeit asuccess in orderthattheLeft
experiment
in government
cansucceed.(In this vein,seeanarticleby Maurice
Duverger,
Lagauche unieoudivisée?
addressed totheFrench Communist Party,
in Le Monde, July 11-12, 1982.)
24. OECD, Economic Surveys, Sweden, Iune 1981.
25. Katzenstein (1983).
26. Friedberg(1974):94108;
andFriedbergavecla collaborationdeD. Des-
jeux (1976);also Zysman (1983):99-169.
27. The transformation of French planning consequentialupon Francesen-
try intotheEECarediscussed
in StephenS.Cohen(1977). MichaelCrozier,who
hasappeared asthesociologist
of Giscardien
liberalism,
wrotetwoarticlesforLe
MondeentitledReflexionssur le VHIePlan (August8 and9, 1980)in which he
argued
thatthepurpose
ofthePlanshouldbetoassist
theFrench
economy
toadapt
to international competition:
Cestdelanalyse
delévolution
dumonde
quilfautpartiretnonpasdelexamen
de la situationfrancaise.Notre competivitédifférentielleest notre guide.Pour
obtenir le plein emploi, nous ne devonsplus chercheraemployertoutesnos
capacités
actuelles
tellesquellessont,maisa lesplacersurtousle créneaux
ou
elles peuvent étre compétitives.
Stoffaés
(1978)alsoarguedthattheaimof industrialpolicyshouldbeto make
Frenchindustrymoreaggressively
competitive
ontheworldmarket,althoughhe
perceives
thatthiscanbeachieved
onlybyamoreinterventionist,
neomercantilist
state.
28. Zysman (1983):16869.
29. Frenchplannersspeakof an 80-20ratio";i.e.,effective
planningre-
quiresthatcloseto80percent
ofproductionin asectorcomefromabout20percent
of therms. SeeShoneld(1965]:138.
Winkler(1976:t. 17,no. 1, pp. 120-21)also
makes thepointthatcorporatismis facilitatedby concentration
of capitalsince
government caninuencethewholeeconomy bycontrolling
afewbigcorporations.
30.Thedevelopment of enterprisecorporatism among established
workers
in theleadingsectors
ofindustryemerges fromthedebate aboutthenewworking
class in France; This is discussed in part 3 below.
31. Girvan (1976)has used the term rentier state.
32.Classicdependency
is expounded
by Frank(1969).
Thenotionof de-
pendent
development
wasputforward
byCardoso
andFaletto
(1969)
andhasbeen
elaborated in Evans, (1979).
33. Frieden(1981).For the Third-Worldcountries,borrowingfrom private
transnationalbankswasmoreexpensive, but it avoidedthepolitically unpalatable
conditionsattachedto borrowingfrom the IMF. Thetotal externalpublic debtof
ninety-sixdeveloping
countriesrosefrom$U.S.75.1billionin 1970to $U.S.272
billionin 1977,
themostsignicantchange
beingin liabilitiestoprivatecommercial
bankswhosenet shareof externalborrowingof non-oil-producing,lessdeveloped
countriesrosefrom 6 percentin 1968to 42.9percentin 1977.Crough(1979):190.
34.Regarding cooperatives,FalsBorda(1970)presentsthecasethatsuch
organizationsin theLatinAmerican experience havebeendependent on states
servingtheinterests of foreigncapital.Korovkin(1985)hasperceived
a complex
varietyof possibilities
among agricultural
cooperatives
in Peru,rangingfromde-
pendency
onthestate
toautonomy
inthemarket,
although
theroleofthestate
has
remained generally preponderant.
35. The Peruvian military regime under General Velasco, 1968-1975, at-
tempted
to mobilizepeasants
andurbanmarginals
intostate-sponsored
organiza-
tions.Followingthe Mexicanandthe Algerianrevolutions,

moreconservative
governments
in those
countries
effected
ademobilization
oftheruralpopulations
through
corporative
organizations.
Statecorporatism
hasalsobeen
used toexclude,
domesticate,
or replacepreexistingclass-based
tradeunions.Alfred Stepan
(1978:7481)
hassuggested
a distinction
betweeninclusionary
andexclusionary
corporatisms,
theformer
partially
mobilizing
andthelatterpartially
dernobilizing.
36. Touraineand Pécaud,in Touraine(1976):2079,219-26;also Stepan
[1978):16081.
37.Dore(1973)analyzes
theJapanese
patternof laborrelations.
Thisis a
case
oftheenterprise
corporatist
modeaspresented
inthisbook.
Dore
subsequently
examined
therelevancy
of theJapanese
experience
for presentday
cases
of late
development
(Mexico,
SriLanka,
andSenegal)
andconcluded
thatthough
there
weresimilaritiesin thematerialorganization
of productionespecially
thedual-
ismof thelaborforceandits implicationsfor managementthetwofactorsthat
standoutasdifferentfromtheJapanese casearetheproportionately
greaterroleof
thestateandtheimportance
of aninternational
diffusion
of ideasaboutlabor
relations. See Dore (1974).
38.Among
politicalparties
representative
ofpopulist
leadership
in cartel-
typestates
have
been
thePartido
revolutionario
institutional
(PR1)
ofMexico
and
theCongress
Party
ofIndia.Bothinstitutionalized
astalemate
among
social
groups
based in differentmodes
of socialrelations
ofproduction,
noneofwhichhadbeen
ableto establishhegemony. PresidentGetulioVargas
of Brazilin the1930sinsti-
tutionalizeda corporative
formof state,andPresidentSukarno of Indonesia
at-
tempted
in the1950s
and1960s
toleadacartelofindigenous
social
andpolitical
forcesthatincludedboththeCommunist
PartyandIslamicnationalist
military
ofcers.
39. Seeespecially Evans(1979).
40. See ch. 6, notes 60 and 69.
41. Schmitter,
in Chalmers,
ed.(1972),
adopting
theJuanLinztypologyof
states,
likened thecorporatist-authoritarian
typetotheBonapartist state
analyzed
byMarxin TheEighteenth Brumairein whichtheexecutive
powermakes itself
increasingly
independent.Schmitter
wrote:external
dependence contributes
to
thesortofnationally
stalernated,
nonhegemonicclass
andinterest structure
which
KarlMarxpostulatedasthedistinctive
basis
forBonapartism
. . . (p.101).
Evans
(1979):42rejects
theBonapartist-technocratic
version
asregards Brazilandsays
thatthestateis,in fact,based
onthenationalbourgeoisie,
although
thisassertion
is notsoclearlyborneoutin hisanalysis (in whichBrazilian
nationalcapital
appearstohavebeendependentonthestate fortheopportunity
ofkeeping aplace
alongsidemultinational
capital,
definitely
thejuniorpartner
in atriplealliance
ofstate,
multinational,
andlocalelitecapital,
whichexcludessmallerlocalcapital).
Ontheconcept
of revolutionfromabove,seeTrimberger
(1972).
Gramsci
per-
ceivedthatpassive
revolution
encouraged
anidealistic
Viewof thestate.The
technicalandpoliticalpractices
of a genuinely
hegemonic
socialgroupcanmost
readily
beseen
toberelated
tothatgroups
social
existence
andstruggle
forhege-
mony.Practices
borrowed
fromabroadbynonhegemonic
leadership
appearasthe
result of intellectual choice. Gramsci (1974):11617.
42. Stavenhagen (1981):10647.
43. Manyfactors
combined
tobringaboutthedebtcrisis,varyingfromcoun-
trytocountry.
Those
states
thatdonotproduce
theirownpetroleum
requirements
orthatimportfoodhadtofaceincreases
in theirforeigndeficitsontheseaccounts.
Thosethathadinvestedheavilyin consumergoods manufacturing increased
their
need to import foreign capital goodsand intermediate goods.Those that counted

on higher rents from exports of raw materials saw their expectationsdisappointed
as world raw-materialpricesdeclinedwhile their import bills for state-backed
development projects exceededforecasts.Whateverthe particular combination of
contributing factors, typically the neomercantilist developmentalist state found
itself caught in the debt trap. The term debt trap is from Payer(1974).
44. Elsenhans (1983).
45. Stepan (1978)examinedthe caseof sugarworkers cooperativesformed
by the military governmentin Peru.Membersof the cooperativeshad an interest in
limiting the number of full membersto whom sharesin the benets of the cooper-
ative would be paid. Ratherthan take on more members,they employedtemporary
laborers (who were not cooperative members)at lower rates of pay. This led to
conict between member and nonmember workers.
46. Michalet (1976:2067] discusses what he calls the dialectic of homoge-
nization-differentiation. The characteristics of the two models are examined in this
book and also in Madeuf and Michalet (1978). Differences in labor costs among
national economies become a basis for unequal exchange through the terms of trade
in the international economy to the extent that commodities embodying more labor
produced in poor countries are exchangedfor commodities embodying less labor
produced in the rich countries. The unequal exchangeconcept, for whatever it is
worth as an analytical tool, applies only to commodities exchange.Emmanuel
(1972); also Brown (1974:7172, 278-79), who points out that the terms of trade
are only a small part of the dependentrelationship of satellite to metropolis.
47. Grifn (1974)cites gures to suggestthat in 1970, 70 percent of research
and developmentwasdonein the United Statesand only 2 percentin lessdeveloped
countries.
48. U.S. Presidents Materials Policy Commission (1952). See also Krasner
[1978):50-53,93-133, 188-216; and Ioyce and Gabriel Kolko [1972]'.62030.
49. Biasco [1979):99100.
50. Palloix, in Radice, ed. [1975a):6388, esp. 73-83. Also Atta1i[1975):35
42. Surplus may be extracted without any organizational linkage between rms
through royalties for patentedtechnology.Vaitsos,in Radice,ed. (1975:198),writes:
If the licenser retains control of the volume, markets, prices and quality of goods
sold, the sources,prices and quality of its intermediateand capital goods,the hiring
of key personnel,the type of technologyused, etc., then the only basic decision left
to the licensee is whether or not to enter into an agreement to purchase technology.
Technology, through the present process of commercialization, becomesthus a
mechanism for control of the recipient rms. Such control supersedes, complements
or substitutes that which results from ownership of the capital of a rm.
Vaitsos estimates that in 1969 royalties from Chile amounted to more than three
times prots remitted by foreign subsidiaries (p. 206).
51. Duncan (1982).
52. Girvan (1976:3650, 84, 141-43, 149, 152-56] argues that localization
and nationalization of mineral extraction activities in Third-World countries con-
stitutes the present new phaseof their incorporation into world structures of de-
pendency,not a break with dependency.The buro-political managers (statebu-
reaucracyplus politicians) have through nationalization or localization succeeded
in raising the revenuesof the periphery state from its extractive industries. With
these revenues, they undertake employment creation, support of the private sector,
and maintenance of public order. From the perspective of the multinationals con-
cerned, nationalization has been a source of new capital, has not weakened their
managerial
control,
andhascommitted
theperiphery
state
more
nearly
fullytothe
successof theinternational
industryon whichmuchof its revenuesdepend.
In
suchcircumstances,themoderate
response of bothmultinationals
andU.S.gov-
ernments
maybeunderstood,
notasresignation
tofate,butastheworking
outof
newmechanisms
to preservetheessentialfeaturesof theworld-economy
structure
whileaccommodating to politicalgroups
in Third-World
countries
whosesupport
is needed
in orderto maintaintheirpartofthestructure.
SeealsoKrasner(1978).
53. Evans (1979):74,165, 194, 261, 288-90.
54.Strange
(1979).
Onthedecline
ofprotsandinvestments
fromthemid-
1960s,
Arnoult(1978).
OntheoriginsoftheEurodollar
market,
Hirsch,(1967):236
42,andMcKinnon
(1979).
AlsoCrough
(1979):esp.7392,
186~90.
PaulSweezy
andtheMonthlyReview grouphavestressed thecreditexpansion
phenomenon as
anindicatorof economic
crisisin capitalism,
e.g.,Sweezy
(1981),
alsothearticles
collected in Magdoff and Sweezy(1977).
55.Hymer,
in Bhagwati,
ed.(1972).
Evans
(1979):30-31
refers
totheinter-
nationalizationof the internalmarketof a peripheralcountry.Vernon(1966)pro-
pounds
hisproduct
life-cycle
theoryto explain
industrialization
based
oncon-
sumer-durable type products.
56.Forexample,nonational
economy(eventheU.S.economy)
wasbig
enough
toabsorb
thelevelofproduction
reached
bythecomputer
industry
bythe
1980s. SeeDuncan (1982):93.
Onthequestion
ofscales
ofproductionwithmodern
technology andless-developed-country
markets,
seeMerhav(1969).
57. Cox(1976). CharlesLevinson,
one-timesecretary-general
of theInter-
nationalChemical andGeneral Workers,
Geneva,wasa leadingpublicistformul-
tinationalcollectivebargaining.
SeeLevinson(1972).
Levinsonsclaimsarecon-
testedin a seriesof articlesby NorthrupandRowan(1974).
58. Ozawa(1979:esp.
7,8081,201,203)pointsoutthatmultinational
ex-
pansion
of Japanese
industry
wasof particular
concern
to thelow-productivity,
labor-intensive
sectorof Iapaneseindustry,whichwashardhit by tight labor
marketsin thelatterhalf of the1960s.
Theavailabilityof cheaplaborin South
Korea,
HongKong,
andSingapore
wasaboontothissector,
enabling
it tosurvive
competitively.
59. Asbackground to theusehereoftheterminternutionalizing
ofthestate,
thereis anextensiveliteraturetouchingontheimpactof externalinuenceson
nation-states.
Beloff(1961)wasperhaps therst toattempt
toanalyze
systematically
themechanisms whereby participation
in international
organizations
alteredthe
internal
policy-makingpractices
ofstates.
CoxandJacobson(1974)
represented
the
politicalsystems
of international
organization
asincludingsegmentsof states.
Keohane andNye(1974) pointed
totheprocesses
whereby coalitions
areformed
among segmentsoftheapparatuses
ofdifferent
states
andthewaysinwhichinter-
nationalinstitutionsfacilitatesuchcoalitions.
Thesevariousworks,whilethey
pointtotheexistence
ofmechanisms
forpolicy
coordination
amongstates
andfor
penetration
ofexternal
inuences
withinstates,
donotdiscuss
theimplications
of
thesemechanisms
forthestructure
ofpowerwithinstates.
It isthisstructural
aspect
I wishto designate
bytheterminternationalizing
of thestate.
Christian
Palloix
(1975b:82)
refers
toPinternationalisation
delappareil
delEtat
national,
decer-
tainslieuxdecetappareildEtat. . ., bywhichhedesignates thosesegments of
nationalstates
thatserve
aspolicysupports fortheinternationalization
ofproduc-
tion.Hethusraisesthequestion
ofstructural changesin thestate,
though hedoes
notdevelop thepoint.Thevarious worksonneo-Marxist structural
viewsofthe
stateseemgenerallytohave
neglected theinternational
dimension ofthestate,
e.g.,
442 7.PAXAMERICANA
Miliband(1969),
Poulantzas
(1968),
Habermas (1976),
Offe(1975),
Anderson(1974).
Keohane andNye(1977),subsequent
to theworkmentionedabove,linkedthe
transgovernmental
mechanism
to theconceptof interdependence. I nd this
concept
tends
toobscure
thepower relationships
involvedin structural
changesin
bothstateandworld orderandprefernotto useit for thatreason.Gourevitch(1978)
doesretaintheconcept
of interdependence
whileinsistingthatit belinkedwith
powerstruggles
among
socialforces
withinstates.
A recent
fashion
hasbeento
introduce
thewordregimeto designate principles,norms,rules,anddecision-
makingproceduresaroundwhichactorexpectations convergein a givenissue-
area,asin thespecialissueof International
Organization
(Spring),36(2),1982,
editedbyStephenD.Krasner.
TheobjectionI seetothemethodfollowed in this
particular
literature
(though
not,ofcourse,
tosome contributions
toit) isthatthe
methodtriesto nd general propositions
aboutpoliticalbehavior
abstracted
from
historicalprocess.
I nd myselfin agreementwiththecriticismsof Susan
Strange
includedin thatspecialissue(Cave!hicdragones:
acritiqueofregimeanalysis,
pp.479-96].
Closer
to thenotionadvanced
hereis thatsuggested
byLaurence
Harris, in Miliband and Saville, eds. (1980):
I thinkit [thestate]shouldbeconceivedasa hierarchical
structureof stateinsti-
tutions,onlyonesetofwhicharethoseencompassed bytheideaofthenationstate.
At onelevelin thehierarchy wehaveto placeinternational
stateinstitutionssuch
asthe IMF,the organsof theEEC,theBankfor International Settlements, and
NATO.At a differentlevel,we haveto placethe institutionsof thelocal stateof
townsandregions.
Withsucha hierarchical
concept
of thestateit is possible
to
analyze
therelations
between
theactions
ofagents
initsdifferent
parts,
themanner
in whichorganized
classforcesin onepartaffecttheothers,
andhowmarket
forces
affect each part of the structure (p. 260).
This denition is, however,limited to thegovernment
apparatus
aspectof thestate
andignores
thehistoric-bloc
aspect.
Myemphasis
ismoreontheprocess
ofinter-
nationalizationor formationof the hierarchicalstructurethan on the structure
depicted as a finished thing.
60. Strange (1971):29192.
61. Emerson,in AbrahamandAbeele,eds.(1981);AbrahamandLemineur-
Toumson,
in Abraham
andAbeele,
eds.(1981).
Francois-Xavier
Ortoli,thevice-
president
oftheEuropean
Communities
executive,
hasstressed
theneed
forcloser
coordinationof internalmonetarypolicies,includingmoneysupply,exchange
rate,
andinterestratepolicies,in AbrahamandAbeele,eds.(1981):18.
62. Speechreproduced in Radice(1975):237.
63. Turkey,Peru,Portugal,
andIamaica
underwent
suchinternalchanges
during the late 19705.
Turkeywasconfrontedwith a balance
of payments
crisisin 1976-77.An
IMFteamleftAnkarain December
1977withoutcomingto anagreementonloan
conditionswith theDemirelgovernment,
whichwasunwilling toacceptsometerms
oftheIMFsstabilization
package.
A newgovernment
wassubsequently
formedby
Mr.Ecevit,
whichdidcome
to anagreement
withtheIMFandsigned
a letterof
intent in March 1978.
In Peru,relationswith theIMFwereinvolvedin thechangeover
fromthe
government
ofGeneral
IuanVelasco
Alvarado
tothatofGeneral
Morales
Bermudez
in 1976.Gen.MoralesBermudez
tried to playthehumanrightscardin Washington
togetabetterdeal,tellingPresident
IimmyCarter
thattheIMFdeationary
stabi-
lizationprogram
wouldinevitably
leadto acycleofsocialagitation
andrepression
that would obligePeruviangovernments
to violatehumanrights.His argument
7.PAXAMERICANA 443
appears
tohave carried
littleweightinWashington.(Thierry
MaliniakinLeMonde,
November 15,1977.)Bytheendof1982, thePeruvianarmyandpolice
were engaged
inrepression
ofaninsurgency that
had occupiedmuch oftheprovince
ofAyacucho
(LeMonde, January 3,1983] whilethegovernments austerity
programwas being
monitoredbyquarterly visitsfromtheIMF.ContinuationoftheIMF-dictated
aus-
terity
program led,inMarch 1983,
toageneral strike.
Thegovernmentinreprisal
imprisonedthetrade union leaders.
InIune 1983,agovernmentcrisis
forcedthe
resignation
oftheminister oflaborwho had criticized
theIMF-dictated
policies
for
making thepoorest bearthesocial costsofeconomic stabilization
andforunder-
mining
localproducers
infavor
ofimports
(LeMonde,
Iuly1,1983).
In Portugal,
thefirst[minority
socialist]
government
of MarioSoares
was
defeated
byacondence
vote
inParliament
inDecember
1977
when
other
political
parties
refused
tosupport
anausterity
economic
program
worked
outwithanIMF
consortium
ofwhich
theFederal
Republic
ofGermany
wasthekeymember.
The
crisiswasresolved
bytheinstallation
ofa newSoares
government
withcentrist
partyrepresentation
andatechnocrat
(Victor
Constancio)
incharge
ofasupermin-
istryoftheeconomy
(NewYork
Times,
December
9,1977;
LeMonde,
Ianuary
29,
1978)
Foreign
commercial
bankscutofftheircredit
toIamaica
inMarch
1976,
citing
inflation
andwage
increases
ascauses
foralarm
concerning
theIamaican
economy.
ThislefttheIMFastheonlypossible
source
offoreign
credit.
TheMichael
Manley
government
had
adopted
economic
nationalism
andasocial
policy
program
that
IMFsources
regarded
asresponsible
forpersistent
decits
andination.
Thegov-
ernment
wasconsidered in Washington
tobeleft~wing.Lengthyinterrupted
negotiations,
punctuated
bystop-gogovernment
measures,
cametoanendinDe-
cember
1979 withthegovernmentsrefusal
toaccept
IMFconditions,
whichin-
cluded
anincomes policydesigned
toreducerealwages,
devaluation,
andcutsin
government
spending
(which
would
have
involved
ring11,000
employees
ata
timewhenunemployment
wasmore
than25percent).
Manley
appealedfromthe
IMFofficials
totheexecutive
board
oftheFund,
which
preferred
nottorespond,
awaiting
theresults
ofelections
thatManley
hadhad
toadvance
forlack
offunds.
TheManley
governments
tractations
withtheFundhadresulted
in austerity,
falling
realwages,
andrising
unemployment
without
meeting
theFunds condi-
tions.
Thenewgovernment
ofEdwardP.G.Seaga,
which
wasformed
after
Manley
losttheelections,
quickly
metwithadelegation
ofU.S.
business
leaders
andcame
toanagreement
withtheIMF.
Loansonceagain
owedtoIamaica.
SeePaul
Fabra
inLeMonde,
Iuly15,1980;
Phillips,
inHollySklar,
ed.(1980);
andGirvan
and
Bernal(1982),andArthur Lewin(1982).
AsforZaire,following
theShaba incursions
of 1977-78,
a conference
of
creditors
laiddownthecondition
thatofcials
oftheIMFbeplaced
withinthekey
ministries
ofthestate
tooversee
thefullmentoftheconditions
fordebtrenewal
(New
York
Times,
May24,1978,
IV,13:3;
June
14,1978,
124;
June
15,1978,
II:1).
Thisis reminiscent
of thearrangements
putin placebythewestern
European
creditors
oftheOttoman
Empire andEgypt
inthelatenineteenth
century
whereby
western
agentsadministered
thecustoms
services
ofthosestates
inorder
toensure
debt service. SeeFeis (1930]:332~41,384-97.
64.Theargument
ofthosewhohave written
aboutungovernability
is
couched
inmore
general
terms,
i.e.,thedecline
ofdeference,
agrowing
intensity
ofpolitical
participation,
thegreater
difficulty
ofstates
toserve
capital
accumula-
tionneeds.
Theyconsider
abroad
measure
ofpublicapathy
necessary
tomake
liberaldemocratic
government
workable.
SeeCrozier
etal(1975).
65. Industrial policy poses some interesting issues as between the old and
the new corporatisms. See Diebold, (1980); and Pinder et al (1979). If planning
evokes the specter of economic nationalism, industrial policy, as the Trilateral
Commissionstudy points out, can be looked upon with favor in a world-economy
perspectiveas a necessaryaspectof policy harmonization:
We have argued that industrial policies are needed to deal with structural problems
in modern economies. Thus, international action should not aim to dismantle these
policies. The pressure should, rather, be towards positive and adaptive industrial
policies, whether on the part of single countries or groups of countries combined.
Far from being protectionist, industrial policy can help them to remove a cause of
protectionism, by making the process of adjustment less painful (p. 50).
66. Stepan (1978):287.
Part 3. Production Relations in the Making of the Future
Chapter 8. The World Economic Crisis: Impact on State and

World-Order Structures
1. Biasco (1979):11. Biasco, an Italian economist, explores the social basis
for world-economy ination in the work cited. Although political analysis of ina-
tion is sparse in Anglo-American literature, there are notable exceptions. Maier
(1975) discusses the social coalitions and conicts underlying ination and stabi-
lization in post-World War I Western Europe. Maier advanced his thinking on this
subject further in Hirsch and Goldthorpe, eds. (1978). See also Hirschman
(1981:177-207); and Maier and Lindberg, eds. (1984).
2. Calleo (1982):14547, 152.
3. Maiers (1978:5961) type of creeping ination. On the growth of in-
dustrial conict from 1968, Adam and Reynaud, (1978). On its relationship to
ination, Biasco (1979):19-22, 102-19; and Jackson et al (1972).
4. Biasco (1979):1921, 101.
5. Hirschman (1981) quotes the advice given by President Iuan Peron of
Argentina to his fellow populist dictator President Carlos Ibafies of Chile in 1953:
My dear friend: Give to the people, especially to the workers, all that is possible.
When it seems to you that already you are giving them too much, give them more.
You will see the results. Everyone will try to scare you with the specter of an
economic collapse. But all of this is a lie. There is nothing more elastic than the
economy which everyone fears so much because no one understands it (p. 102).
6. Hirschman (1981):19293.
7. Biasco (1979):379, 86-99, 113, 159-60; Block (1977):16364, 206-10;
Calleo (1982):136~38.
8. Strange (1971):1~21.
9. Block (1977):195.
10. Calleo (1982):152.
11. Crozier et al. (1975).
12. Bowles and Gintis (1982). Note here esp. pp. 54 & 86. Also Biasco
(1979):10123.
13. Calleo (1982):129.
14. This is a point on which some radical economists appear to agree with
the analysis of conservatives. It is especially stressed by Bowles and Gintis
(1982):6978, who, though refraining from attributing to regulatory and redistri-
8. WORLDECONOMICCRISIS 445
butiveprograms
thesoleorprimarycause
oftheslowdown
in thecapitalist
growth
process,maintain that they havemadean important contribution to that slowdown.
15. Thephrasecorporatewelfarebumswasusedby DavidLewis,former
leaderof the NewDemocraticPartyof Canada,
to castigategovernment
readiness
to provide relief for big corporations in nancial trouble.
16. It is remarkable,in the light of scholarlystresson the legitimacy
functionof thewelfarestate,howlittle opposition
therehasbeentothistendency
to sacrice employment in the ght againstination and how little of that hasbeen
clearlygrounded
in alternative
ideology.An exception
wasthe 1982year-end
statementof theCanadianConference
of RomanCatholicBishops,which asserted
thatthehighunemployment
ratesresultingfromgovernment
antiinationpolicy
reected a basicmoraldisorderin societyand indicatedthe needfor a basic
shift in values(TorontoGlobeandMail,January1, 1983).
17. McCrackenReport (1977).
18. Bowles(1982149) calls this the shift from an accumulationprocess
constrainedprimarily by conditionsof aggregate demand(or the realizationof
surplusvalue)to an accumulationprocessconstrainedprimarilyby conditionsof
exploitation.
19. Biasco (1979):104;Bowles (1982):64.
20. Sabel (1982):esp.78126.
21. Italy is one countryin which a policy of working-classsolidarityhas
beeneffectivelypursuedby the left notablyduringtheautunnocaldoof 1969.The
difcultiesfortheleftpresented
bythescalbackground
to politicalissues
andby
the segmentation
of the workforcewere,however,apparentin the discomtureof
thePCIfollowingthereferendum heldonJune9 and10,1985,on wageindexation,
whichthePCIinitiated.Thereferendum
proposed
to reverse
theItaliangovern-
mentspolicy of endingwageindexationas part of an antiination program.It
ralliedlessthan46percent
of thevotersin favor,whilethemajoritysupported
the
government.Theissuehadtheeffectof dividingestablished
employees
(in govern-
mentand big industry],who would havebenetedfrom indexedwages,from the
growing numbersof nonestablishedand self-employed,who would not. Thus some
otherwiseloyal communistvoterssplit with thePartyon this issue,while neofas-
cistsof the MSI,who havemanyadherentsamongstateemployees, supportedthe
referendum
proposal.
Theeventconrmsthat evenin this mostideologically
evolvedandarticulatepolitical party,analysisof theimplicationsof theeconomic
crisisandthe development of appropriatestrategies arestill far fromadequate.
22. This rhetoricrecallsthe travail,famille, patrie sloganof the Pétainist
French state.It tends to conrm the thesis that there is a contradiction betweenthe
undisciplined individualismandhedonisticvaluesthatcapitalist
societytendsto
produce andtheasceticindividualismandotherdisciplinedtraditionalorprecap-
italistvaluesrequiredto sustainthekindof statethatcanperpetuatecapitalism.
Habermas(1976):7592. This thesis implies that fascism in someform is the ulti-
mate recoursefor the maintenanceof capitalist development.
23. Ginsberg and Shefter (1984) argue that supply-side economics was
more a political program than an economictheory; i.e., it was a rationale for over-
comingthe contradictionbetweencuttingtaxesandincreasingdefensespending,
measuresaddressedto differentsegmentsof the political coalitionReagans
can-
didacy put together.
24. Magri (1982).
25. Stoffaes(1978)contraststhe quasi-autarkicapproachto constructing
socialismof theFrenchCommunist Party(PCF)andtheCERES groupoftheSocialist
446 8. WORLDECONOMIC
CRISIS
Party,in whichFrance
wouldhaveto isolate
itselffromEuropean
andworld-
economy inuences,
withthetechnocratic
approachoftheMichelRocard
faction
in theSocialist
Party,whichadvocates
anoffensive
strategy
of adjustment
to the
worldeconomy (pp.7-12).Stoffaes
concludes:
Onnepeutfairedehonsocialisme
alintérieur
quenrestant
libéralvis-a-vis
delextérieur:
cestlalesensduvéritable
compromishistorique
quisoffrealaFrance (p.345).TheBritishcounterpart
to
thePCF-CERES
positionwouldbeTheAlternative
Economic
Strategy.
A Labour
Movement
Response
totheEconomic
Crisis,
produced
bytheConference
ofSocialist
Economists
LondonCoordinating
Group(London:Blackrose
Press,1980).
26. Katzenstein, ed. (1977).
27. Katzenstein(1983),and Katzenstein(1984).
28.Zysman
(1983:306),
likeKatzenstein,
inquires
intotheinternaldeter-
minantsof differences
in nationaleconomic
policies.WhereKatzenstein
looksfor
generalizable
structural
characteristics,
e.g.,strong/weak
states,
centralized/decen-
tralizedsocialprocesses,
andthecomposition
ofdominantcoalitions,
Zysman pays
moreattention toeconomic
organization
andpractices,
especially
therelationships
amonggovernment,
nance,andindustry.Zysmanargues
thattheseinstitutional
arrangements
determine
distinctive
developmental
types
andthatvariationsinthe
powerofsocial
groups
account
onlyfordifferences
ofoutcomeswithinthese
types.
29. Schmitter (1974).
30. Ginsberg andShefter
(1984)
pointto thedisintegration
oftheNewDeal
coalitionwith theprogressive
alienation
fromtheDemocratic Partyof (1)thein-
ternationally
oriented,
technologically
advanced,
andcapital-intensive
sectors
of
business
thatFranklinRoosevelt
hadcultivated;
(2)thedefense-sector
industries
thathadprotedfromtheKorean
andVietnam
Warbooms;and(3)manualworkers
whoperceived theMcGoverncandidacy
asgeared
to a shakyalliance
between
blacksandthe New Politics segmentof the uppermiddle class.TheReaganite
coalitionor Reconstituted
RightpoliticallyreuniedU.S.business,including
thedefenseindustry;socialandreligious
conservatives;
Southernwhites;Northern
blue-collar
workers;
andlargesegments ofthesuburban
middleclass.
These authors
conclude:
EachofReagans
themestaxcuts,socialservice
reductions,
expandedmilitary
spending,
relaxation
ofbusiness
regulations,
andsoon~was designed
toestablish
linksbetween
Reagan
andamajornationalpoliticalforce.Thechiefproblem
faced
by theReaganites
wasthatthesetheses,
howeverplausible individually,
were
mutually
contradictory.
Themostimportant
ofthese
contradictionswastheobvious
discrepancy
between
Reaganspromiseofsubstantial
taxreliefforthemiddleclass
andReagans
pledge to drastically
increase defensespending.(p.39).
Whattheseauthorsheredescribe is, in Gramscianterms,anunresolved
crisisof
representation,
givenatransitorystabilitythroughcaesarism.
31. Zysman (1983):18Z84,201-6, 21216.
32. Witnesstheself~conscious
effortsof aneomercantilist
like StephenKras-
ner(1978:590)
torehabilitate
astatistperspective
inU.S.political
science.
The
verytermhasa foreignring in theU.S.culturalcontext.
33. A NewYorkTimeseditorialcommentingon the industrial-policypro-
posals
putforward
in January
1984
byastudygroup
co-chaired
byLane
Kirkland
oftheAFL-CIO,
FelixRohatyn,
aninvestment
banker,
andIrvingShapiro,
formerly
of DuPontde Nemours,was entitled: Industrial policy ==industrial politics
(Ianuary
23,1984).
It concluded:
Conventional politicalpressures
couldall too
easily
bringdamaging
remedies
thatfavoroneindustryorregionoveranother,or
invokeprotectionist
measures,
at enormous
costto consumers
andcompetition."
8. WORLD ECONOMIC CRISIS 447
This judgmentconrmsKrasnersViewthat the UnitedStateshasa weak state,

i.e., onenot sufciently ableto subordinateparticularintereststo a transcendent
national interest.
34. Ozawa (1979).
35. Stoffaes [1978]:1056, 265-68.
36. Rohatynet al. (1984).Rohatynhasbeenoneof theforemostadvocates of
the statecapitalistapproachin the UnitedStates[seealsoRohatyn,1981].His is
one voice in a broad band of economic opinion that Robert Walters (1985) has
analyzed
asa structural-strategic
orientation
thathasarisenin challenge
to the
conventional liberal orientation.
37. Stoffaes (1973):224, 338.
38. The FrenchSocialistgovernmentunder PresidentFrancoisMitterand
hasfounditself in the somewhatparadoxicalpositionof tryingto encourage
a shift
in Frenchindustrialrelationspracticefromstateregulationtowardunion-manage-
mentnegotiationatatimewhenthetradeunionshavebeendecliningin strength.
In part,this weakening
stemsfroma relativedeclinein themanualworkforce
commonto all advanced
capitalistcountries;in part,it is alsodueto arelativedrop
in affiliations to those trade unions with a political orientation (CGT and CFDT)
compared with thosefor whichbreadand-butter issuesareparamount.Themore
politicizedunionshavealsobecome criticalof andtakentheirdistance
fromgov-
ernment policy.Thesetendencies
raisequestions aboutthefuturestrength
oflabor
in theFrenchpolity andthefutureorientationof bipartiteandtripartiteproduction
relations.Theymayopenthewayfor anincreasein enterprise-corporatist patterns
insofaras the politicizedunionscontinueto losestrength.lean-DanielReynaud
(1984:54)
hasobserved
a wideninggapbetween
trade-union
activists(militants)
and the rank and le:
Cette distance na rien en soi danormal: le proletariat a toujours eu une avant-
garde.Encore
faut-ilquilsereconnaisse
enelle,quelécartsoitmoteuretmobilis-
ateur.Onpeutsedemander si aujourdhui
lécartentreunappareilrestétresdele
a des traditions ouvrieres et doctrinales et une basede plus en plus bousculéepar
les transformations des structures professionnelles et des cultures nest pas un
fossé.
GerardAdam[1983]developedthis viewpoint,which has,asmightbe expected,
beenmuchcriticizedby thevarioustrade-unionorganizations.
Histhesisconcords
with ourproposition
thatthereexistsa widespread
crisisof representation
in the
advancedcapitalistcountries,includingtheir workingclasses,
andthat this crisis
is relatedto changes
in therelationships
among producer
groupsandthelackof
adaptation of theorganization,
strategies,
andideologies
of politicalpartiesand
labor movements to these changes.
39. As, for instance,in British football hooliganism,rampantfor more
than a decadeand culminatingin the massacre at the Heyselstadiumin Brussels
onMay29,1985,whichleft 38deadand450injured.Theoriginsof theviolence
havebeenwidelylinkedtothemarginalization ofsome threemillionunemployed,
predominantly youth,in Britain.Thereaction
hasstrengthened thecallfor more
stringentpoliceandsecuritycontrols.Indeed,thedisaster
wasin largemeasure
attributedto the ineffectiveness
of Belgianpolicemeasures
comparedwith those
practiced by their British counterparts.
40. Crozier et al (1975). The question is also posedby Stoffaes[1978:340):
Est-cea dire quepourréussirle déploiementet menerunepolitiqueindustrielle
efcace,il faut sortir de la démocratie?Stofféies
placeshis hopes[not entirely
convincingly)
in theefcacyof stateleadership
to persuade
andassistpeopleto
448 8. WORLD ECONOMIC CRISIS
make the difcult changes in their lives that industrial redeployment would require.
41. The scal crisis of New York City in 1975 and its sequel could be a
paradigmfor the emergence
andcontradictionsof the state-capitalist
approach.It
is not without signicance that Felix Rohatyn,a principal architect of the settlement
reached in the NYC scal crisis, is one of the major advocates of state capitalism in
the United States. The crisis has been analyzed in political terms by Martin Shefter
[1977):98127. The background to the crisis lay in the emergenceof three new
political groups during the 1960s: the reform movement, the black civil-rights
movement, and the movement to unionize city employees. In 1965, the reformers
abandonedtheir allies in the municipal labor movementto back Iohn Lindsay for
mayor. To gain political support in an attack on the municipal bureaucracyand
unions, this combination allied with the black civil-rights movement, an alliance
that contained the promise of an expansion of municipal services to this client
group. Lindsay found he could not govern the city without the support of the
municipal unions, and to win their support he conceded their demands in the
1969-70 negotiations. Since the city could neither raise through taxes nor obtain
through the budget of New York State sufcient revenuesto pay for the enhanced
expenditures resulting from these concessionsto both blacks and unions, it had
recourseto borrowing from the banks.By the mid-1970s,severalfactors combined
to precipitate nancial crisis: ination raisedthe costsof municipal services,reces-
sion limited revenues, and there was an explosion in the costs of retirement benets
grantedto city employeesin the previous decade.In face of the evident inability of
the city to serviceits expandeddebt,banksand New York Stateofcials were caught
between unwillingness to concedemore in taxes or loans and realization that city
bankruptcy would havedisastrousrepercussionsfor themselves,aswell asthe city.
The city was, in effect, placed in a kind of trusteeship. The state, at the urging of
the banks, createdan EmergencyFinancial Control Board empoweredto freezethe
wagesof city employees,approve all city contracts, and supervise city nances.
Members of the banking community were placed in positions of control over the
city budget and administration. Retrenchmentwas directed at programswith black
clienteles and at labor costs. The former were out most easily, since the blacks,
abandonedby the middle-classreformerswho had mobilized them into the politics
of the city, lacked effective organization to retain independent political clout.
Municipal unions were a more difcult target becausebetter organized;neverthe-
less, they were vulnerable to their corporatist involvement with the cityto prej-
udice the citys accessto borrowing in the nancial market, e.g.,by forcing wage
concessions, would undermine the source of their own salaries; and furthermore,
the unions had been pressuredto invest a substantial part of their pension funds
in new city bonds, which would be renderedworthless by bankruptcy. The lessons
of this episode are that (1) corporatism can provide a way out of a scal crisis
provoked by the demands of new political groups; (2) this solution requires a
restriction of decision power to elementsacceptableto the nancial market and the
political demobilization or exclusion of elementslikely to challengethat restriction;
and (3) it is vulnerable to a political remobilization of the excluded elements.
42. Miller (1983).
43. Crough (1979):199; and U.S. Congress (1976).
44. Paul Volker, chairman of the U.S. Federal Reserve, has proposed that the
IMF be both strengthened(by giving it a central position in the managementof the
world monetary system]and politicized (by giving it a permanentcouncil of min-
isters]: The objecthere,quite frankly, is to bring a little moreinternational political
clout to the IMF and in turn to have international concerns reected intimately and
9. MUTATIONS IN ACCUMULATION 449
directly in the councils of national governments. Volker, in Boarman and Tuerch,

eds. (1976]:18.
45. Strange [1985]. Also Stoffaes [1978].
46. McGeehan (1985).
47. Laurence Harris, in Miliband and Saville, eds. [1980); citation from pp.
25758.
48. Alain Vernholes, 1982: Les aléas du changement, Le Monde, December
31, 1982, and Ianuary 1,1983.
49. Block, in Miliband and Saville, eds. (1980), examines the possibility that
state intervention might pass a tipping point beyond which opposition on the
part of capital would be ineffective. He thinks this is conceivableonly in the case
of a right-wing authoritarianism installed with the support of capital, e.g.,the Nazi
regime. Skocpols[1980] analysisof the New Deal portrays a situation in which the
limits set by capital block any radical action by the state to mobilize and release
new productive forces.
50. President-elect Alan Garcia of Peru, in the summer of 1985, announced
a program combining stateencouragementof production of local basicneedsrather
than exports and a limit of debt service to 10 percent of export earnings. This
program was the antithesis of IMF antiination recommendationsfor Peru, which
were consideredby the new governmentto havesocially explosive implications. A
more difcult case for the international nancial networks because of its much
larger debt is that of Argentina, where the electedcivilian governmentof President
Raul Alfonsin, which ended a long period of military rule, confronted, in the
summer of 1985, an ination rate of 1300 percent, noncooperation of the Peronist
trade unions in an austerity program attempting to restabilize the currency, and
inability to service the foreign debts. Fidel Castro, speaking to an international
meeting in Havana in August 1985, called once again upon Latin American govern-
ments for a collective moratorium on foreign debt service.
51. Strange (1971):295.
Chapter 9. Mutations in the Social Structure of Accumulation

1. Gramsci (1971]:277318.
2. There is an anticipation of the Reaganite alliance with the moral major-
ity in this passage of Gramscis prison notebooks (1971:304):
The attempts made by Ford, with the aid of a body of inspectors, to intervene in
the private lives of his employees and to control how they spent their wages and
how they lived is an indication of these tendencies. Though these tendencies are
still only private or only latent, they could become, at a certain point, state
ideology, inserting themselves into traditional puritanism and presenting them-
selves as a renaissance of the pioneer morality and as the true America, etc.
3. Gramsci (1971):3U2.
4. This is a reference to Frederick Winslow Taylor (1911:40), who wrote that
it would be possible to train an intelligent gorilla so as to become a more efcient
pig-iron handler than any man could be.
5. Balancing his praise of the division of labor as the basis for expanding
markets, raising production and increasing wealth, Adam Smith also wrote:
In the progress of the division of labor, the employment of the far greater part
of those who live by labor, that is, of the great body of the people, come to be
conned to a few very simple operations, frequently to one or two. But the under-
standings of the greater part of men are necessarily formed by their ordinary em-
450 9. MUTATIONS IN ACCUMULATION
ployments.
Themanwhose
wholelifeisspent
in performing
afewsimple
opera-
tions,of whichtheeffectstooare,perhaps,
alwaysthesame,or verynearlythe
same, hasnooccasion to exerthisunderstanding,
or to exercise
his inventionin
ndingoutexpedients
forremoving
difculties
whichnever
occur.
Henaturally
loses,therefore,the habit of suchexertionand generallybecomesasstupid and
ignorantasit is possiblefor a humancreatureto become. . .
It is otherwisein the barbaroussocieties,asthey arecommonlycalled,of
hunters,of shepherds,
andevenof husbandmen
in thatrudestateof husbandry
whichprecedes theimprovement
of manufactures,
andtheextension of foreign
commerce.
In suchsocietiesthevariedoccupations
of everymanobligeeveryman
to exerthiscapacity,
andto inventexpedients forremovingdifcultieswhichare
continually occurring.
Inventionis keptalive,andthemindis notsuffered to fall
into that drowsystupidity,which,in a civilizedsociety,seemsto benumb the
understanding
of almostall the inferiorranksof people.
FromTheWealthof Nations,
book5, section1,f, 50.SeeSmith(1976)
vol.2,pp.
781-783.
6. Gramsci (1971):309.
7. Thethreefoldtypologywasproposed byTouraine
(1955).
It hasbeentaken
overbya number of others,
includingMallet(1963)
andShorter
andTilly (1974).
8. Thompson (1968):33846;Landes(1969):6063.
9. The first thesiswasthat of Mallet, (1963);the secondis expressedin
Blauner(1964).
In a thirdvariant,Naville(1963)
argues
thatautomation,
farfrom
integrating
workers
moreclosely
withtheirenterprises,
leadsto a newformof
alienationasworkis renderedmorestressfulandboring.Thiscould,hespeculated,
leadworkersto attemptto regaincontrolat a higherlevel (bothin the enterprise
andin the coordinationof the industrialsystemasa whole),which wouldunder-
mine the legitimacy of the capitalist system.
10.Technological
determinism
hashadan importantplacein theoriesof
industrialrelations.Onevein of theory,for instance,explainslabormovements
in
termsof theconditionof labormarkets,
asin theworkof Perlman(1928)andof
Sturmthal,in ArthurM. Ross,ed.(1966):165-81.
Sturmthalsthesisis that an
abundance
of laborleadsto a labormovement
focusingon political action,while a
scarcity
of laborinclinesunionstowardcollective
bargaining,
jobcontrol,
and
economistic
practices.
Theabundance or scarcityof laborderivesat leastin part
fromthetechnology
ofindustry,i.e.,technologies
thatemployrelativelyunskilled
labor drawn from a homogeneous
and abundantpool versustechnologiesthat
requirescarce
skilledlabor,whosesupplycanberegulated
by craftassociations.
Thisapproach
explains
something
about
thenature
oflabormovements
butnothing
aboutchanges
in technology
orlabormarkets.
Anothertheoretical
approach
treats
employerpower asthedetermining
factorin industrial
relations
andsees thisas
shaped
bywhatcanverybroadly becalledthetechnological
context,
asin Ingham
(1974).
lngham comparesSwedish andBritishindustrialrelations.
Briey,his
argumentis thatemployer
action
in industrialrelations
isaconsequenceofthree
mainfactors;
(1)thedegree
ofconcentration
ofcapital;(2)theextentoftechnological
complexity,
i.e.,coexisting
varieties
oftechnology;
and(3)thedegree
ofspeciali-
zationor, conversely,
of differentiation
in production.
Swedish
industryis rela-
tivelymoreconcentrated,lesscomplex(mainlycontinuousprocess
production),
andmorespecialized
in exportmarkets. Thisenables
Swedish
employers
toachieve
greater
unityandcoherence
intheirindustrial
relations
practices.
Britishemploy-
V
ers,by contrast,
aredividedalongall threedimensions.
Likethepreviously
men-
tionedtheoriesof labormovements,
this theoryexplainssomethingaboutthe be-
haviorofthepartiesto industrialrelations
butnothingaboutthetechnologies
that
are assumed to determine this behavior.
11. Touraine doesnot espousea simple technologicaldeterminism.Between

technological changesand worker responses,he argues,the sociologistmust insert
the whole social life of the workers (attitudes, group patterns, communications,
social relations). Nevertheless,the problem is statedin terms of technology's
being
the independent variable (seeTouraine et al. (1965).S. Barkin, who sponsoredthis
study for the OECD,makesclear in the prefacethat the purpose of the inquiry was
to examine how to minimize worker resistance to technological change, e.g., through
active labor market policies and possibly through forms of worker participation (p.
7). A specialissueof Sociolgiedu travail (no. 1, 1979)entitled Lenjeu de la
rationalisation du travail, by contrast, contains articles that put technology itself
into the framework of investigation, seeingtechnological change,not as an inde-
pendentvariableor exogenous
force,but aspartof a strategyof socialconict.
12. On the question for whom?, Griffin (1974) shows how researchand
developmentis concentrated
in therich countriesandpreponderantly
in theUnited
States.Theproblemsthat technologyis to solvearedenedby capitalin the rich
countries. Various exhortations toward redirecting researchinto the specic prob-
lemsof poorcountrieshavebeenvoicedthroughthe UnitedNationsandconfer-
encesorganizedunderits auspicesto fosterscientic andtechnologicalwork in
favor of less developedcountries. Very little in practice seemsto havecomeof this.
More effective have been political pressuresby someof the more powerful Third-
World governments
on multinationalcorporationsto decentralizesomeof their
research into their countries, e.g., Evans (1979):27677. This achievement has
resulted in the concerned countries gaining a greater share of the researchand
development by multinationals;it hasnotresultedin aredenitionof development
problemsin a noncapitalistframeworkfor which technological solutionsareto be
sought.A signicant gapin technologicaldevelopment(indicativeof the social
powerrelationsdirectingsuchdevelopment) is the neglectof innovationsappro-
priateto collectivelyself-managed work. Mostself-management thinking focuses
on the institutions and proceduresof worker participation and control rather than
on the work processitself and the possibilities for autonomy and feedbackwithin
it.
13. The third point in particular is the central theme of Braverman(1974).
14. Marglin (1974255).Landes(1969:60-61,77 116-17), though he put most
emphasison the demandsidein his explanationof theoriginsof thefactorymode
also recognizedthe incentive of employer control.
15. There is good evidence that Taylorism, in its origins, was a conscious
effortby managementbothto gaingreatercontroloverlaborandto makeuseof a
cheaperkind of labor. Apart from Braverman(1974)passim,seealso Bendix
(1963):26977.
16. Sahel (198Z):3945.
17. Mickler (1979)studied medium-sizedenterprisesin Germanyin sectors
that have been the traditional preserveof skilled professional workers (printing,
precisionmechanics,
furnituremaking,construction,etc.).Heconcludedthat the
deskilling that took place in these industries derived from competition requiring
rationalization of work in order to raise productivity, not from conscious manage-
mentpoliciesfavoringdeskillingasa meansof gainingcontroloverwork.(Hedid,
however, note some casesof systematic displacement of skilled workers by low-
wagewomen workers.)
18. Other schematic histories of the labor process have used somewhat dif-
ferent categoriesfrom the technology-centeredcraft-Fordist-automatedtrilogy re-
ferred to here. Richard Edwards (1979) proposesa schemeconceived in terms of
methods of worker control: simple control (i.e., face-to-facesupervision), technical
control (i.e., control of the worker by the mechanically organizedproduction pro-

cessitself, e.g.,the assemblyline), and bureaucraticcontrol (i.e., control embedded
in the social organization of the enterprise according to its rule of law"). These
methods of control intersect with a labor force divided into three sectors: secondary
(casual nonunion workers), subordinate primary (more stably employed and gen-
erally unionized manual workers), and independent primary (professional-tech-
nical, career-orientedemployees).The resulting segmentationmakescoherentcol-
lective action by workers very difficult. Gordon, Edwards, and Reich (1982)have
added a theory of history to explain the developmentof this pattern. Basingthem-
selvesvery largely on U.S.economichistory, and focusing on the nature of the work
force, they see three stages:(1) a stageof proletarianization during which small
commodity production declines and most workers becomedependentemployees,
(2) a stageof homogenizationor leveling of statusby deskilling and massproduc-
tion, and (3) a stage of segmentation or the conscious arrangement by employers of
separatetreatment for different categoriesof workers, organizedthrough personnel
managementin big corporations, and the existenceof a dual economyof big core
enterprisesand small and medium peripheral enterprises.Lever-Tracy(1984)has
criticized this cluster of theories, demonstrating that (1) there is little in common
among some of the groups that are placed in the same categories, e.g., women,
blacks, and immigrants in the secondary labor market; (2) there is no necessary and
consistent t between the categories of workers (white men versus women, migrants,
etc.), jobs (primary versussecondary),and enterprises(coreversusperiphery); and
(3) there doesnot appearto be any single causalmechanismto which the patterned
historical changes and the existing differentiation is reducible. These points are
well taken; they call in question the adequacy of the explanatory theories put
forward, although they do not invalidate the observed differentiations that the
theories were intended to explain. The present book approaches the same set of
observations in a different way. My basic analytical categorymodes of social
relations of productionposits reciprocal relations among social forces of a dia-
lectical kind, not xed one-way power relations like systems of worker control. The
historical stagesobserved do not assumea sequenceof types (simple control,
technical control, bureaucratic control; or proletarianization, homogenization, seg-
mentation) but rather more a cumulative and shifting relationship among modes of
social relations of production. The main problems to which this approach draws
attention are (1) to understand the interrelationships among coexisting and con-
nected modes of social relations of production and through that the accumulation
processand (2) to discern the developmentalpossibilities arising out of the tensions
and contradictions within and among these coexisting modes.
19. The case of Philips-Eindhoven illustrates the dilemma of a core industry
headquarteredin a country (the Netherlands) that is neither at the heart of the
geographicalcore nor on the periphery. Philips reducedits Netherlandswork force
signicantly from 1970 on, while employment in its plants increasedboth in pe-
ripheral countries (Singapore,Taiwan, South Korea)and in the United States(also
in United Kingdom, France,and the FederalRepublic of Germany).In the peripheral
countries, production of standardized equipment for world mass markets went
ahead under various arrangements, e.g., either directly in Philips plants or under
arrangementswith local firms for Philips distributors. The growth in the United
States (and other core countries) was to be explained by the importance of the state
as buyer of sophisticated electronic equipment for military and civilian purposes
and the necessity of being located in the country to have access to this market. See
Teulings (1980).
20. Castles and Kosack (1973).

21. Bluestone and Harrison (1982).
22. Industrial Relations Review and Report August 7, 1984. Also Caire (1982).
Piore, in Berger and Piore (1980), has posited uncertainty as the principle of dis-
tinction between core and periphery of industry and between primary and second-
ary labor markets. The core is staffed in a permanent way to meet basic demand;
the periphery, employing secondary workers, is staffed in a variable way to allow
for uctuations in demand above the basic level. The periphery of industry and the
secondary-labor-market workers thus bear the burden of economic uncertainty.
Lever-Tracy (1984:70-74) criticizes Piore on the grounds that secondary workers
have been so integrated into industrial processes that their work is necessary to the
maintenance of production, and consequently, the uncertainty factor cannot ac-
count for a good deal of the labor force segmentation that exists. It is, of course,
quite possible to retain uncertainty as one of the factors conducive to segmentation
without necessarily reducing all segmentation to that single causal principle.
23. Parodi (1978) covers employment strategies in steel, aeronautics, elec-
tronics, and agroalimentary industries in the Provence-Alpes-CotedAzur region
of France in which the subcontracting practice is widespread. The distinction made
here between skilled workers and semiskilled, on the one hand, and between
permanentand subcontractedemployees,on the other, correspondsto the general
distinction between primary and secondary labor markets in the work of Doeringer
and Piore (1971), who write:
Disadvantagedworkers, the theory [of the dual labor market] asserts,are conned
to the secondary market by residence, inadequate skills, poor work histories, and
discrimination. Although the interconnections between primary and secondary
labor markets are seen as either weak or non-existent, primary employers, through
devices like subcontracting and temporary employment, can convert primary em-
ployment into secondary employment (p. 166).
Unions also contribute to the segmentation when they conne organizational efforts
to certain sectors of work, leaving the more costly and difficult to organize outside
their purview, e.g.,the residential housing sector,which is typically nonunion in
the United States (p. 174).
24. Rothschild, (1981), citing, inter alia, U.S. Labor Department, Employment
and Earnings,March 1974,March 1980,and August 1980;and OECD,LabourForce
Statistics, 1967-1978 (Paris: 1980). Also Rein (1985):2223.
25. Sengenberger, in Wilkinson, ed. (1981):24358, esp. 24851.
26. Wilkinson (1981) speaks of the trend towards the casualization of the
labour force in the metropolitan countries as one of the broad conclusions emerg-
ing from a symposium on labor market segmentation in advanced capitalist coun-
tries (p. ix). Franco Chiarello, (1983:217),who usesthe concept of informal econ-
omy, which is generally held to cover household and friendship-network
production, as well as the underground economy, e.g., Gershuny (1979), sees a
systematicprocessof informalization (un sistematicoprocessodi informalizza-
zione) taking place in the advanced capitalist economies. French authors, e.g., Caire
(1982), have referred to précarisation from their contrasting of precarious, e.g.,
shortterm or temporary jobs, with secure, contractually protected jobs. My use of
peripheralization includes these other usages. On the parallels with Third-World
industrializing countries and nineteenth-century competitive capitalism, Amselle
(1930).
27. De Grazia (1980, 1983); Redivo (1983); Tanzi, ed. (1982); Sauvy (1984);
and Chiarello (1983). The involvement of" organized crime is both as direct em-
454 9. MUTATION S IN ACCUMULATION
ployeror putterout,asin prostitution

anddrugtrafficking,
andasproviderof
servicesfor theextralegalelements
of theeconomy,
asin thechannelingof illegal
workers and protection of clandestineworkshops. The Maa, for instance,assures
a supply of child labor to Milan factories;seeAmselle(1980).On the sizeand
ramications of the organizedcrime industry in the United States,estimatedto
besecondonly to the rst-placeoil industryandaheadof theautomobileindustry
in annual revenues, see James Cook (1980).
28. Salamone(1982).I recallan instanceof well-paiddoubleemployment
discoveredsomeyearsagoto havebeencurrentamongtranslatorsemployedbythe
UnitedNationsandspecializedagencies in Geneva. Eachorganizationhada com-
plementof full-time translatorson its permanentstaffandin additiona budgetfor
free-lancetranslationsto copewith overload.The translatorsfreemasonry had
workedoutasystemwherebytranslations for eachorganization
weresystematically
put out to translatorsin the employof otherorganizationssothat translatorswere
gettingdoublepayfor theirtime(officialsalaryplusfree-lance
payforworkdone
often on office time). Of course,once discovered,a stop was put to this.
29. Rossand Trachte (1983);also Leichter, The Return of the Sweatshop,
part 2 of an investigationby StateSenatorF. S. Leichter,February1981,mimeo.,
cited in Chiarello (1983):Z21; also De Grazia (1983):20.
30. DeGrazia(1983]:2425;
TribunedeGenéve,
June13,1983,re Spain.Also
Marc Semoin Le Monde,March 14, 1981;and VeroniqueMaurus, LEspagnea mi-
chemin de la GEE, III. Le Monde, )une 24, 1982.
31. Emerson (1981):134.
32. Blades (1982);Tanzi (1982);De Grazia (1983);Philipp (1984).A survey
article in BusinessWeek,April 5, 1982,pp. 64-70, citing a variety of sources,comes
to an estimatefor the undergroundeconomyin the United Statesof about 14 percent
of theofficiallymeasured
GNP,with a rateof increaseduringthe 1970sof two-and-
a-half times that of GNP. Estimates for other countries were: Italy, 25 percent; West
Germany,10 percent; France,10 to 15 percent; and Iapan, 15 percent.
33. IeffreyHarrod(1980)hascriticizedthe conceptof informal sectorin
Third-World countries in a similar perspective.
34. Bluestone and Stevenson, in Wilkinson (1981):2346.
35. I am indebted to Ester Reiter for being able to consult her unpublished
paper(1984?), Life in a fastfoodfactory,on which this paragraph
is based.
36. Sabel(1982:4956) summarizes recentGermanresearchon this kind of
core-peripheryorganizationin Bavaria.Mallet (1963:98,111,140),in a study of
MachinesBull stafngstrategy,showeda differentiationbetweenanupgradedand
relativelyprivilegedwork forcepaid by the monthin the Parisoperationsand a
new labor force of ouvriersspécialisésrecruitedfrom rural areasfor provincial
operations.
37. RuberyandWilkinson,in Wilkinson(1981):11532.
Studiesof Solmer's
new steelcomplexat FosnearMarseillesshowedthat muchof the subcontracting
was to the samenational-scaleenterprisesthat had formerly servedSolmer plants
in Lorraine and the north of France.SeeParodi (1978);note 23 above;and Broda et
al. (1978).
38. Sabel [198Z):194219.
39. )enkins (1981215).
40. GeneralMotors hasfocusedon social-psychologicalaspects,leaving Tay-
lorized assemblylinetechnologymuchas it was;the UnitedAuto Workershave
cooperated in programsat GMandChrysler;Volvoinaugurated perhapsthe most
famousQWLexperimentat its Kalmarplantin Sweden,replacingtheconventional
machine-paced
assembly
linebyaseries
ofproduction
islands"
based
onthework
of multiskilled,self-regulating
groups.
TheVolvoexperiment
hasbeencriticized
asa kind of democratizationof theworkprocessimposedby management
in an
authoritarian
manner.
Ienkins(1981):27.
German
andItaliantradeunionshave
givenconsiderable
attention
toworkorganization
issues
in theirbargaining,
per-
ceiving
thisterrainaspropitious
forenhancement
ofworkercontrol
andperhaps
as an avenuefor changeof the capitalistsystem.RegardingWestGermany,see
Markovits
andAllen(1979b).
Pressure
by Italianunionswasinstrumental
in dis-
placing
assembly-line
production
atFiatbya system
based
onislands.Italian
unionsconcernwith workorganization questions
waslinkedto theireffortsto
makeinvestmentpolicya matterfor collective
bargaining.
Amyot(1981). French
unionshavebeengenerallysuspicious anduncooperativeregardingemployer-
initiated
workreorganizationschemes.
Gallie
(1978:31112)
studied
comparatively
theexperiencein BritishandFrench
plants
ofthesame
company,
bothengagedin
oilreningusinghighlyautomated,continuous-process
technology.
Inbothplants
therehadbeenamovetowardgreater
teamcontrolbytheprocess
operators.
In the
French
plant,unions
wererelatively
weakin theplant,andunionattitudes
were
derivedfromheadquarters;
workerssensed
a greatdistance
between
themselves
andmanagement,
andmanagement
asserted
tighter
control
insupervision
ofdetail.
It wasa low-trustsituation.In theBritishplant,theunionwasstronger
in the
workplace
andmoredefensive
ofworkshop
autonomy;
andworkers
hadlessofa
senseof distancefrom management.
It wasby comparisona high-trustsituation.
Gallieconcludesthatthe needto negotiate technological
changein theBritish
situation
ofbalancedpowercouldresultin inefciencies,
butthemoreauthoritarian
Frenchmanagerial practicehadhighsocialcosts.Hespeculateswhethera more
participativesystemmightleadtomore ready consent onthepartoftheworkforce
toradicalchanges (theBritishpractice
givingtheworkers adefactovetobutlittle
initiative].
Onemightfurtherquestion whether suchaparticipativesystem
would
bepossible shortofmorefundamental changes in thecapitalist
mode ofdevelop-
ment and accumulation.
41. BarnettandSchorsch(1983);Sabel(1982):Z045;
Brodaet al. (1978).
42. Redivo (1983):35; Sabel (1982):65.
43. Barnett and Schorsch (1983):83103.
44. Barnett and Schorsch (1983):93.
45. Brusco(1982);Bruscoand Sabel,in Wilkinson,ed. (1981);Sabel
(198Z]:2Z031.
46. Brusco and Sabel(1981):108or Sabe1(1982):255.
47.Chiarello
(1983):233;
Levitan etal.(1972).
Theunderwriting
ofsubstand-
ardwages bywelfare
isanalogous
totheoperationoftheSpeenhamlandsystemas
analyzedbyPolanyi
(1957:7785),withthedifference
thatnowthelawisignorant
oftherelationship.
Polanyi
attributed
thepauperizationofEnglish
countrypeople
to Speenhamland.
48. DeGrazia(1983):60.
In the summerof 1980,LeMonde(June24,25,26,
and27]published
a series
ofarticles
byDanielle
Rouard
underthegeneral
title
Travaillerautrement
concerning
various
experiments
in alternative
formsofwork
in Berlin, Birmingham, Italy, and France.
49. Chiarello (1983)passim;Redivo (1983):3742.
50. Barraclough (1975).
51,Brandao Lopes(1977).Charles
Vanhecke, in LeMonde,July27,1982,
described
thesituationin theMaranhao
regionin thenortheast
of Brazil:
11y adixans,leMaranhao,
cétait
laterrepromise:
alentrée
delAmazonie,une
région immensément verte et immensément vide ouverte aux paysans qui fuyaient
les sécheresses du Ceara, du Piaui, de Pernambouc voisins. Aujourdhui, cest lun
des haut lieux du western brésilien: un endroit ou la terre peut se disputer a
coups de feu entre les posseiros et les pistoleiros, cest-a-dire entre les petits agri-
culteurs sans titre de propriété et les hommes de main des grands fermiers. . . .
Les grands éleveurs ont installé partout leurs barbelés. Les capitaux indus-
triels venus du Sud ont envahi louest et le nord du pays en quéte de surfaces ou
le prix de vente du boeuf compenserait celui de lhectare. LEtat du Maranhao,
grand comme les six dixiemes de la France, a été transformé en enclos do11dispa-
raissent peu a peu les cultures qui permettaient a la population de salimenter.
Pour payer Findustrialisation forcenée de ces quinzes dernieres années, les
militaires au pouvoir a Brasilia sacrient les cultures vivrieres aux grands produits
dexportation (soja, sucre, café). Ils ne peuvent y parvenir quen concentrant au
maximum la propriété agricole. Ils ont donc décidé que le Far-West brésilien serait
capitaliste ou ne serait pas . . .
52. Nova (1980); Dobb, in Abramsky, ed. (1974).
53. Braudel (1979:3:54548) concludes his study by underlining the dis-
tinction with which he began (1:8) between the market and capitalism. The market
is no more an exclusive feature of capitalism than it is inconsistent with socialism.
54. Simes (1975) quotes a report from the Literaturnaya Gazeta on the con-
viction of two collective farm chairmen for buying from thieves badly needed pipes
for a cowshed and boxes to pack apples in. One of these chairmen subsequently
asked: Which is the greater crimeto pay thousands of rubles to thieves, or to lose
a harvest?
55. Grossman [1977):2540.
56. Cox (1985).
57. Gabor (1979).
58. Frobel et al. [1980].
59. Evans (1979]:18491.
60. Doeringer and Piore (1971:17577) make the point that in the United
States, enterprises that are exempt from the Wagner and Taft-Hartley Acts and from
National Labor Relations Board decisions are all part of the secondary labor market.
Furthermore, unemployment compensation, social security, and minimum wage
legislation all exempt parts of the secondary labor market from coverage. In addi-
tion: The public assistance system as at present structured . . . encourages people
to work on the fringes of the labor market in jobs where earnings are not reported
to ofcial authorities. Markovits and Allen (1979a:1011] point out how unem-
ployment compensation in the Federal Republic of Germany is administered so as
to encourage unemployed workers to take jobs below their level of qualications.
61. In Sao Paulo, women street cleaners, who receive half of the minimum
wage, work for enterprises that contract with the municipality for their services.
Charles Vanhecke, in Le Monde, 28 juillet 1982, Le tiers-monde brésilien. II. La
civilisation du bidonville.
62. Milton Friedman has argued that the clandestine economy, by enabling
individuals to get around state restrictions on personal initiative, was an important
bulwark against state interference in the economy. Michel Crozier, a French soci-
ologist who has become an ideologue for the liberal right in France, took the same
position: clandestine work was an outlet for the spirit of initiative and a nursery
for future enterprises. . . . Cest peut-étre un peu immoral, mais tant pis. De Grazia
[1983:89), citing an article by M. Roy, Le travail noir, Le Point, nov. 12, 1979,
which reported these interviews.
10. CLASSES AND HISTORIC BLOCS 457
63. Gershuny (1979):315; Heinze and Olk (1982). Both Gershuny,writing

in Britain, and Heinze and 01k, writing in West Germany, reject both what I have
called the hyperliberal model (what would come about for Gershuny if things are
allowed to continue the way they are) and the alternative of technocratic statism
(which Heinze and Olk seem to see as closer to German experience].They both
advocate that the state amend regulations so as to legalize and facilitate the informal
economy, taking over a range of social welfare functions (as well as providing a
range of nonstandardized craft articles). Martin Rein (1985:28], in the United States,
envisages the possibility that an anticipated reduction in the proportion of the work
force required for goodsproduction opensthe possibility of a compensatingexpan-
sion of the social services but without, so far as I know, taking a position on
bureaucratic versus informal provision of these services.
64. Amselle (1980), Caire (1982), De Grazia (1983):9091. The debate over
the dualist model has been particularly articulate in France. A study prepared for
the French Commissariatdu Planby a groupunder the leadershipof Mme. Francoise
Giroud (1980) envisaged economic futures in which either there would be an eco-
nomic dualism segregatinghighly productive jobs integrated into world-economy
processes from less productive, less well paid, more precarious employment, or
there could be a dualism in each persons own working time between conventional
(high-productivity) and autonomous (low-productivity) work. Both forms of
dualism were rejected by Edmond Maire, secretary-general of the CFDT, a socialist-
leaning trade-union organization favoring workers self-management,who per-
ceived the dualist vision as an ideological capitulation to the demands of big
industry. Edmond Maire (1980) reasserted the importance of the principle of worker
solidarity to ght against the institutionalization of dualism.
65. Gorz (1982). Heinze and 01k (1982) also recognize that support for their
alternative society requires the political support of a social movement the basis for
which is not nearly so homogeneousas the working class.The GreenParty may be
seen as the germ of such a politicized social movement in West Germany.
Chapter 10. The Formation of Classesand Historic Blocs

1. Skocpol (1977).
2. Brenner (1977).
3. For instance, the Burke-Hartke bill in the U.S. Congress, the pressures
from domestic producers that led to voluntary restrictions on textiles and other
imports into the United States, and pressures on foreign automobile manufacturers
to open plants in the United States in order to avoid import restrictions.
4. Krasner (1977) regards support for a liberal economic world order as the
goal of the statea state that is an autonomous actor not connected with an inter-
nationalist tendency in U.S. capital-and protectionist measures in Congress as the
impact on the state of private interests. He sees the peak of consensus behind the
liberal order occurring about 1960and declining subsequently.He doesrecognize
that corporations and banks, on the verge of foreign expansion in the 1960s, had a
stake in the liberal international order. Krasner favors a policy of controlled
closure that would require dealing with domestic groups such as banks and
corporations that are heavily involved in foreign activity but thinks the weak-
ness" of the U.S. political system, i.e., its sensitivity to pressures of various domestic
interests, will most likely result in U.S. policys becoming less coherent and the
world economymore unstable. OConnor(1973:6496) consideredthat monopoly
458 10. CLASSES AND HISTORIC BLOCS
capitalhasevolveda class positionexpressed throughthe executivebranchas

policiesof nationalinterest,while small-scale
capitalexpresses specialinterests
throughlobbiesin Congress, statelegislatures,and local government. OConnor
doesnot distinguishnationalandinternationaltendencies in monopolycapital.
5. On deindustrialization and the advocacyof a biggerrole for the statein
mobilizingcapital,Rohaytn(1981).Also Rohaytnsarticlein the nancial section
of the New York Times Dec. 1, 1974.The U.S. Marxist analystsHarry Magdoff and
PaulM. Sweezy(1977:6375)alsoenvisage the likelihoodof a trendtowardstate
capitalismon the lines advocatedby Rohaytn.On the avoidanceof the British
mistake and the rationale for neomercantilism, Gilpin (1975) and Krasner (1978).
On the contradiction betweencapital and community interestsin the deindustrial-
ization issue, Bluestone and Harrison (1982).
6. Strange (1971); also Blank (1977).
7. Dewhurst et al. (1961).
8. The best known case,which has becomean archetype of small business
populism,wasthe Poujademovementin France.Hoffmannet al. (1956).
9. Poulantzas (1974) argued that in the current phaseof imperialism, U.S.
monopolycapitaldoesnot dominateotheradvancedindustrialcountriesby way
of an external relationship but establishesits domination within them (in forms
that extend to state apparatusesand ideologies). Hence the concept of internal
bourgeoisiedistinctfrom nationalbourgeoisie,to designate
whatI havecalled
the international tendency of capital in advancedcapitalist countries other than
the United States. This concept discounts the possibility of autonomous
imperialisms.
10. Servan-Schreiber(1967).Reactionsto U.S. corporateexpansionbeganto
beexpressed
aboutthesametimein Canada.
Cf.Canada.
TaskForceontheStructure
of CanadianIndustry, known as the Watkins Report,after Mel Watkins, University
of Torontopolitical economistwho led thetaskforceappointedby formernance
minister Walter Gordon on behalf of the Canadian government. Also Levitt (1970).
11. Alavi (1972).
12. Evans (1979) and Cardoso and Faletto (1969).
13. Saul(1974).Thetermmanagerial
bourgeoisie
is usedby RichardL. Sklar
(1979).The state class concept is from Hartmut Elsenhans.
14. Cabral (1979):11937.
15. Girvan (1976).
16. Thepoint madehereis dealtwith briey in Goldthorpe,(1964).Seealso
Giddens (1975):2Z354.
17. Braverman (1974):4039 estimatesthis group at more than 15 percent
but lessthan20percentof totalU.S.employment.
Mills (1956)raisedthequestions
of a bifurcation between old and new middle classes in U.S. society and the political
ambivalence of the new. A U.S. marxist study edited by Dale L. Iohnson (1932)
arguesboth the proletarianizationof the new middle classand its possiblepro-
pensity for right-wing reaction.
18. Mallet(1963).Thereis areviewofthedebatein Franceoverthehistorical
role of this social category by Ross (1978) in which the author points out that
whereasin most advancedcapitalist countries sociologistshave regardedthe new
middle stratum as tendentially conservativesupporters of evolved capitalism, in
Francethis grouphasbeenheraldedasharbingersof a newsocialorder.
19. Attali (1975) distinguishes enterprises into two categories:a dominant
systemof largeintegratedenterprises
that havea globalstrategyanda dominated
systemof smallerenterprises
that aremoresubjectto their environment.
Thedom-
inantsystem,
heargues,
drawsprotsfromits domination
overits suppliers
and
clientsmorethanfromits ownlaborforce;thedominatedsystemnds theessential
partof its prots internally,i.e.,fromexploitation
of its ownlaborforce.This
distinctionleadsto relativelygoodconditionsfor the employees
of the dominant
systemandrelatively
greaterexploitation
oftheemployees
ofthedominated
system
(esp.pp.37-44).Attalisdistinctionbetweendominant
anddominatedsystems
is
doubtless derived from Francois Perrouxs (1973) concept of economy as a com-
positeofmarketexchange
andpowerrelations.
Doeringer
andPiore(1971134)
note
the incentivesto management
to stabilizeemploymentof scientic andtechnical
cadresin order to maintain its investmentin the recruitment, screening,and training
of an elite work force. Also Touraine et al. (1965):51.
20. Offe (1976).Concerningthe debateaboutautomationandworkerinte-
gration, seech. 9, note 9.
21. Adam and Reynaud (1978):24552.
22. Attali(1975)envisages
a decentralized
self-management
system
for the
future,but he doesnot revivethe argument,in Mallet (1963),that this will come
aboutthroughanenterprise-oriented
labormovement ledbythenewworkingclass.
Malletarguedthat advancedtechnologies,
e.g.,producergoodsin electronics,
woulddevelop mosteffectively
understatecapitalismwhereatechnocratic
direc-
tion of industrywould sharepowerwith bankinggroupslinked to the state(pp.
197-203).
BihrandHeinrich(1980:7981,
105,176)picturetheAttaliprogram
as
anallianceof bureaucratic-technical
pettybourgeoisie
with workersfor thepurpose
of salvaginga reformedcapitalismfromtheeconomiccrisis.
23. Dubois (1978).
24. Mickler (1979)notedreductionsin the proportionof skilledworkersin
German industries between 1950 and 1974: from 95 to 63 percent in composition
(printing),
from70to 10-20percentin furnitureassembly,
from50to23-29percent
in prefabricated
construction,
andfrom80to20-30percent in precision
mechanics.
Theseareall industriesin which enterprises
aretypicallyof mediumsize.Mickler
attributes
thesechanges to competition,
whichstimulatedrationalization andef-
fortstoraiseproductivity.
Neithersupplyanddemand forskillsin thelabormarket
norconscious management policies
favoring
deskilling
were,hethought, signicant
factors.Sabel(1982:8999)discussestheworldviewsof craftsmen in declineand
workers with plant-specic technical skills.
25. Hibbs, )r. (1978).
26. Onlaborrepresentation
in nationaleconomic
management,Shoneld
(1969).
Ontheimplications
ofmitbestimmung,
Cox(1977b).
SeealsoPanitch
(1984).
27. Issuesin WestGermanlaborrelationsfrom about1978centeredon the
demand for thethirty-ve-hourweek,humanization
of workandcontrolof tech-
nological
change,allraisedbyrank-and-le
pressures.
Markovits
andAllen(1979b).
See also chapter 9.
28. Unionsuspicionof enterprisecorporatismwasdiscussedin Touraineet
al. (1965).It has,if anything,grownduringtheensuingtwentyyears.
29. Italian metalworkers and chemical workers have been among the most
explicitin linkingtheissueof reduction
in theworkforceto a demand
fora voice
in investmentdecisionsandindustrialreconversion
policies.SeeTrentin (1962);
Momigliano (1962);and Amyot (1981).
30. Thechallengeto unionleadershippreceded
thecomingof theeconomic
crisis.Alreadyin the1960s
a shiftof powertowardtheshopfloorhadbeennoted.
Reynaud (1968).
31. Tradeunionismin theUnitedStatesandCanada,
which historicallyhas
many structural similarities, has, since the mid-1960s, diverged dramatically in

respectof the proportion of the labor force that belongsto unions. At that time, just
lessthan 30 percent of the nonagricultural paid workers in both countriesbelonged
to unions. By 1980,however, that proportion had climbed to 39 percent in Canada
and dropped to 23 percent in the United States. During the 1970s, structural differ-
ences became more accentuated. Whereas formerly most Canadian trade unionists
had belonged to international unions, i.e., with headquarters in the United States,
since 1975, Canadian-based unions have the majority of membership. The Canadian
branch of a major union, the UAW, severed its connections with the U.S. head-
quartersto becomean exclusively Canadianunion. Organizationof the statesector
has also moved ahead more rapidly in Canada. Meltz (1983). It is indicative of the
relative strengthsand weaknessesof organizedlabor in the two countriesthat under
the impact of the economic crisis, U.S. labor leadershave been more disposedto
:he negotiation of a social contract, i.e., revived tripartism, than their Canadian
:ounterpartshave, despite the greaterhistorical experiencewith tripartism in Can-
tda. U.S. businessmenhave, however, been almost unanimously opposed to tri-
tartism, an opposition only somewhat less manifest among Canadian businessmen.
./Iaital and Meltz (1984).
32. Reynaud (1984).
33. For an outline of post-Keynesian policies, Eichner, ed. (1978).
34. Doeringer and Piore (1971:17577) observe that the street group deter-
mines behavior for the secondarylabor market,and the work group, for the primary
labor market. Rejection and abuse from the [white] work group may force the black
worker back to the street group. A broader distinction is workplace vs. residence
as the critical factor in identity.
35. Discussed in Sabel (1982), esp. ch. 3.
36. Goldthorpe et al. (1969).
37. The strike at the French automobile manufacturer Talbot in June-)uly
1982 is a case where the Confederation Général du Travail (CGT) successfully acted
to improve the status of the largely immigrant semiskilled (O.S.) work force. A
mediators report on the dispute recommended adoption of a Japanese practice
giving to semiskilled workers a training equivalent to a French baccalauréat and
thereby allowing the introduction of more advanced techniques. Le Monde, )uly 3,
1982. On the ambivalent attitude of male workers toward semiskilled female work-
ers, see Rowbotham (1973):94.
38. These initial contacts were associated with what Marx called the prim-
itive accumulation of capital. Williams (1980) illustrates this phase. The port of
trade concept is developed in Polanyi et al. (1971), in essays by Robert B. Revere,
Anne C. Chapman and Rosemary Arnold. Rey (1976) advances a three-stages theory
of the impact of external capitalism on a precapitalist formation: (1) initial contact
strengthens precapitalist authorities, (2) capitalist production takes root and be-
comes articulated to precapitalist modes of production, and (3) capitalism reduces
and absorbs all precapitalist elements (this stage having been reached only in the
United States, according to Rey). In the Marxist classics, note the treatment of this
problem in Rosa Luxemburg (1968). Lattimore (1960) gives a short account of a case
in which imperialism did not lead to formal colonization. A recent addition to this
literature is Wolf (1982).
39. International development literature began to discuss the informal sec-
tor in the early 19705. See, e.g., International Labour Ofce (1972). For a critique
of this concept from the standpoint of production relations, Harrod (1980). Other
scholarly treatments include Portes and Walton (1981) (esp. ch. 3), and Sandbrook,
(1982).
40. Massari (1975); Ielin (1976). The Cordobazo was a strike movement that
occurred in the northern Argentine city of Codobain 1969. Since the 1950s,the
city had becomea center of the automobile industry, which had attracted a new,
young, and relatively well-educated work force employed by multinational corpo-
rations. Someradical intellectuals were within this work force. Though the move-
ment was ultimately repressed,it was sustainedlong enoughto shockthe political
system and weaken the government,which changedultimately as a result of it. It
demonstrated
the possibilityof protestagainsttradeunionbureaucracies,employ-
ers,andgovernmentwhena relativelywelleducated work force,angeredby frus-
tration, links with a radical ideology. Stepan (1978:102)notes that the relative
weaknessin repression manifested by the Argentine state during the Cordobazo
adverselyaffectedits ability to attractinternationalnance.Conversely,
therelative
severity of Brazilian coercion favored foreign capital inows.
41. Azad(1980).Continuingstrikesby the oil workersplayeda majorpart
in the ultimate paralysis of the Shahsregime. Other industrial workers also took
part in the movement, which set up workers councils. This proletarian success
was, however, short-lived, and the councils were soon dismantled by the Islamic
revolutionaries, who destroyedoil workers unity by pitting religious againstnon-
religiousworkers.Azadattributesthis defeatof classconsciousness
in a populist
revolutionarywaveto the youthfulnessof the Iranianworkingclass,a groupvery
largelyof peasantorigin,andto the absenceof independentworking-classorgani-
zation. The contradiction betweena class orientation and a religious-populist ori-
entation is endemic in Third World revolutionary movements.For a full examina-
tion of an earlier case--thatof the Indonesian Communist party before 1926see
McVey (1965).
42. On liberalization in Brazil in 1979-80, a series of articles by Marcel
Niedergang in Le Monde, December 9, 10, 11, and 12, 1980. The article of December
12 deals with the emergenceof opposition unions analogousto the illicit workers
commissions in Spain during the last years of the regime of General Francisco
Franco.
43. The most notableproponent of this thesiswasFanon(1968).For a critical
discussion of the thesis, seeSandbrook(1977).Turner (1966)arguesthat organized
workers in less developed countries have captured a disproportionate share of
national income, and this has reduced the possibilities of employment creation.
Organizedworkers have thus, he argues,entrenchedtheir own privileged position
at the expenseof peasantsand marginals.
44. Bates (1971).
45. Stepan (1978]:195229.
46. Sandbrook (1977).
47. The concept of occupational communities is taken from Kerr and
Siegel, in Kornhauser et al., eds. (1954). Also Sandbrookand Arn ,(1977:57),in
which occupational communities are dened as places where, owing to a con-
centration of similarly-employed workers,their insulation from moderatingoutside
inuences, and their peculiar schedules occasionedby shift-work, work-mates
interact both on and off the job to createand reinforce commonimagesof the world.
48. Wolf (1969).
49. Fanon (1968).
50. See,for example,World Bank (1975).Also Feder (1976).
51.Nelson(1969and1979).Stepan(1978:15889)
pointsoutthattheurban
squatters in Peru have not been notably radical or populist, but rather instrumental
and clientelistic, and were relatively easily organizedduring the Velascoregimeby
state and church initiatives into structures articulating them with the state in a
vertical manner and thereby avoiding horizontal mass~based or c1assbasedorgan-

ization. Touraine [1976:14256) associatesa dependent or heteronomouspattern
of behavior with the urban milieu of the marginals,whereashe seesthe workplace
as more conducive to autonomous behavior.
52. In a discussion on developmentand conict amongyoung people from
variouspartsof the world broughttogetheron the occasionof InternationalYouth
Year, in a conference on Issues for the Next Generation organized by graduate
students of York University (Toronto, August 1985), the point emergedthat the
counterpartin the Third Worldto the peacemovementin the advancedindustrial
countries was the armed liberation struggle.Peace, in other words, did not mean
pacism.In orderthatliberationcouldsucceed
in theThirdWorld,it wasnecessary
to neutralize militarism in the dominant powers.
Conclusions
1.Marx
[1957):1;544.
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INDEX
Absolutist state, 40, 112, 114

Accumulation (of capital), 2, 5-6, 36,
69,106,117,147,397-99,406n7;
capitalist,
232;fascist
state
and,
196;Bahro, Rudolf, 2, 208
in international production, 245-
Bakunin, Michael, 64
47, 2.49, 261, 264, 267; at national
Balance of payments, 221, see also
and world levels, 188-89; redistribu-
Incomes policy
tive, 205, 208-9; socialist primitive,
Balance of power, 111, 113-14, 118,
86, 90; social structure of, 159, 164,
125,127-29,15253,164,211,25
209,212,27071,285,298,30953, British management of, 123; permis~
sive, 148
Bank for International Settlements
[BIS], 301
399,
427n11;
states
role
in,133,
169, Banks, private transnational, 301-3
281; world order and, 210 Barraclough, Geoffrey, 151
Agrarian bureaucracy, 116, 118 Barter, 325
Agrarian-bureaucratic state, 198 Basic needs, 242, 251, 306, 366
Agribusiness, 44, 339, 383 Beer, Samuel, 184
Agroindustrial complexes, 92 Bendix, Reinhard, 70-71, 80, 93,
Alexander I, Czar, 121-22 422n40,423n41
Alienation, 312, 331, 382; in actually Betriebsgemeinschaft (enterprise com-
existing socialism, 401 munity), 190
Allende, Salvador, 242, 261, 276, 292 Beveridge, William, 166, 174, 225
American Federation of Labor (AFL), Bilderberg conferences, 282
67 Biparsnn 6369,161,227,374,379;
American Federation of Labor-Con- and restructuring of production, 323;
gress of Industrial Organizations weakened by hyperliberal tendency,
[AFLCIO), 377 287
Anarcho-syndicalism, see Syndicalism Bismarck, Otto von, 157, 164, 173-74,
Arbeitsgemeinschaft, 180, see also 4311140
Works councils Black death, 53
Aristocracy of labor, see Labor Bolshevism (Bolshevik revolution], 75,
aristocracy 83, 163, 178,194, 198
Arms race, 260, 298, 299, 304, 346, 402 Bonapartist state, 138-41
Assembly line, see Mass production Brandt, Willy, 374
Augsburg, Peace of (1555), 112 Braudel, Fernand, 44
490
Briggs, Asa, 135

Bukharin, Nikolai Ivanovitch, 200 INDEX
Bureaucracy, 26, 350-51, 407n7; in
Bonapartist state, 139; and central capitalism, 55-56; in the making of
planning, 95; external and internal the liberal state, 134-43 passim;
bureaucratization, 70, 80, 93; and the in the liberal world order, 147; and
revolutionary party, 91; welfare the transformation of states, 148; and
bureaucracies, 171, 187 the welfare-nationalist state, 163-
Business schools, and the transnational 64,170,173,177-78,187;andthe
managerial class, 359 neoliberal state, 221, 373, 378-79;
and the neomercantilist develop-
Cabral, Amilcar, 366 mentalist state, 240; in core and
Caesarism, 192, 195, 273, 285; and the periphery states,267; and inflation,
hyperliberal tendency, 293, 446n30; 276; and economic crisis of 19703,
and ination, 276, 278; and the neo- 281; and technology 315-17; see also
mercantilist developmentalist state, Historic bloc
237,243,266 Class consciousness, 6, 407n8; absence
Callaghan, James, 226 of in primitive labor market, 45;
Canning, George, 125, 127 weakness of in enterprise labor mar-
Capital, concentration of, 156; deepen- ket, 62; and precarious employment,
ing, 96, 250 380; and populism, 386-87
Capitalism: competitive, 51-69 passim, Class structure, 5-6, 18, 39, 45, 49,
99, 158, 324, 394, 396; monoply, 356-57; in redistributive societies,
69-82 passim, 158 97; see also Historic bloc
Capitalist development, x, 6, 21, 51-82 Classes, global, 7, 271
passhn,107,163,240,283,345,398- Chenuimn,23-24,48,384,389
Club of Rome, 282
Cobden, Richard, 126, 137, 152,
431n34,432n42
99,406n7 Coerced labor, 41, see also Encomienda,
Carr, Edward Hallett, 157 Forced labor, Slavery
Caelsuue,19596,237,241,243,307 Cold war, 403
Carter, Jimmy, 221, 275 Collective bargaining, 179, 184; inter-
Castlereagh, Robert Stewart, Viscount, national, 251; productivity bargain-
121-27 ' ing, 71
Central Intelligence Agency, U.S. (CIA), Collectivization of agriculture, 54, 83-
239 84,85,88,89,200
Central planning, 84, 93-98, 163, Command economy, 190
407n7; in China, 202; and enterprise Commissariat du plan, France, 229
labor market, 63; and second econ- Communal mode, 84, 87-93, 199, 342-
omy, 85; and self-employment,53; 43,407n7
in Soviet Union, 199-Z00 Competitiveness:and Fordism, 310,
Chamberlain, Ioseph, 154, 157, 166, 313, 321, 331-32; international, 280,
173,430n32
Chartism, 135-37, 156
290,294,296,298,3034,3
Churchill, Winston, 190
Citizen wage, 172
City of London, 107, 111, 147, 154, 213, 346,361,364,399
363 Comprador bourgeoisie, 146, 365
Class (social), analysis of, 2-3; forma- Condominium [U.S.-Soviet}, 211
tion of, 8, 267, 355-91 passim; con- Confédérationfrangaisedemocratique
cept of, 18, 355-57, 367,407n8; and du travail (CFDT], France, 28
kinship, 36 Confédérationgeneraledu travail
INDEX
(C10), 65, 68
Consumerism, 377-78, 380-81, 390,
402
Continental power state, 116-18
Cooperatives, 55, 88; in Peru, 386; in
small-scale industry, 93; see also
Labor movement
Cordobazo (Argentina), 385, 461n40
Core-periphery structure, 144-46, 150, 491
245-49,26061,319-21;pepheb
alization of labor, 324, 327, 400,
Development, see Capitalist develop-
453n26; in production and jobs, 329,
ment, Dependent development, Re-
334,344-45,348,453n22;andredm-
distributive development
tributive societies, 342, 346 Dialectical explanation, 4, 12, 32, 129,
Corn laws, repeal of (1846), 86, 130;
358,389,393
and Anti-Corn Law League, 136-37
Disraeli, Benjamin, 150, 156, 173,
Corporatism, x, 27,28, 194; in central 416n23,423n43
planning, 206-7; ideologyof, 170-71, Dominant groups, 17-18, 21, 356, 358-
187; included and excluded groups, 68
187; inationary bias of, 187; infor- Dual society, 348-51
mal, 228-29, 263; and the neoliberal
she,220,22223,26263,27E
Ebert, Friedrich, 194
Ecological movement, 381
Economic crisis (1970s), 2, 270, 274-
307,321,3Z324,36164,390,40U
and
state
capitalism,
291,
293,
295- and household production, 50, 337-
38, 346; world-economy, 226, 251,
96; and trade unions, 223; and tri-
partism, 78, 225, 227; and the wel- 26263
fare-nationalist state, 161, 170, 182, Educational system, 169-70
186, 188; see also Enterprise corpora- Employer organizations, 66-67
tism, State corporatism, Tripartism Encomienda, 41
Corporative state, see Fascism Engels, Frederick, 59, 157, 358
Cottage industries, 334-37 Enterprise corporatism, 28, 70-74,
Counterhegemony, see under 101, 171, 182; in the neoliberal state,
230, 263; in the neomercantilist de-
Hegemony
Crisis: denition, 273; of representa- velopmentalist state, 234-35; and
the new working class, 369, 371-
on,273,285,401,446n30,447n38;
72; and multinational corporations,
251; and polarization of the working
class, 381, 400; and the restructuring
see
also
Debt
crisis,
Economic
crisis, of production, 315, 323, 334, 345,
379; and transformation of the neoli-
Fiscal crisis beral state, 281, 284, 287,297
Cujus regio, ejus religio, 112 Enterprise labor market, 55-63; under
Cultural Revolution (China), 92 central planning, 85, 100; in hyperli-
beral tendency, 287; and internation-
Debtcsm,240,275,282,339,390
alizing of production, 247, 253; in
liberal world order, 145, 149; and
restructuring of production, 323,
328, 345, 349; and Stolypin reforms,
400,439n43 199; in Third World countries, 340
Dehio, Ludwig, 116 Ethic of work, 22-25; in central plan-
Deindustrialization, 321, 362, 376 ning, 94
492 INDEX
Events of May 1968 (France), 274, 276, 13, 345, 449n2; and Taylorism,
373 428n13, 428n14; see also Hegemony,
Historic bloc, Organic intellectuals,
Fabian Society, 157,174 Passive revolution, War of move-
Factory legislation, 147, 156 ment/war of position
Factory systems, 56, 316 Guilds, 55-57, 130
Family, 48-49, 415n21; and enterprise Guild socialism, 180
corporatism, 73; see also Household Guomindang, 201
production, Patriarchy
Famine, 339, 403 Harcourt, Sir William, 175
Fanon, Frantz, 64 Harmonization of national policies,
Fascism, 79, 189-98, 210, 310 255, 259, 262
Feminism, 381; and nonestablished Healy, Denis, 374
workers, 62-63 Hegemony: absence of, 236, 244 (in
Feudalism, 21-22, 29-30, 40-41, 52- France, Second Empire), 140, 148 (in
53, 56, 114, 116, 130,139,414n7; 19th century U.S.), 142, 148 (in state
transformation of, 58; new serfdom, corporatism), 79; bourgeois, 218,
112, 119 (in Britain] 123,128,137-38,148;in
Fiscal crisis: and the modern state civil society, 182; among classes,
(17th century], 115; and the neoli- 356; counterhegemony, 382, 390-91,
beral state, 224, 280-81, 324, 326, 394, 403; crisis of, 195; decline of
345, 374, 400; of New York City, (in world order), 151-64, 299, 302;
448n41; and welfare-nationalist state, in the factory, 311; Peel, Sir Robert
172 as architect of, 137; in redistributive
Forced labor, 146 societies, 206; Restoration (1815),
Ford, Henry, 311 119-23; revolutionary party as sub-
Fordism, 270, 309-14, 316, 321, 328, stitute for, 205; and tripartism,
377, 397; decline of, 345; neo-Ford- 74-75, 78; weakness of in late devel-
ism, 330-32; in Soviet Union, 318; oping societies, 266, 364; in world
see also under Gramsci order, 2, 7, 9, 108, 149-50, 209-10,
Franchise system, 329, 362-63 212-19, 265-66, 270,394, 4101111
Franco, General Francisco, 385 Hindenberg, Field Marshall Paul von,
French Revolution (1789), 83, 116, 119, 194
131, 139, 149 Hirschman, Albert, 276
Free trade, 145, 154 Historical materialism, 311
Historical structures, see Structures
Galbraith, Iohn Kenneth, 61, 70 Historic bloc, 6-8, 105-9, 147-48,
Gaullism (France), 364 244, 254, 400, 409n10; disintegration
General Agreement on Tariffs and of neoliberal, 270, 279-85, 401; for-
Trade (GATT), 303 mation of, 355-91; and fascism, 195;
Gierek, Edward, 31 in liberal state, 129; in old-regime
Giolitti, Giovanni, 79, 196 Europe, 116; and state capitalism,
Giscard dEstaing, Valéry, 258, 364 297-98, 348; and the welfare-nation-
Gold standard, 126, 132, 145, 147 alist state, 163, 173, 178
Goldthorpe, John, 378 Hitler, Adolf, 193
Gorz, Andre, 3, 352 Holy Alliance, 122-23, 126-27
Goulart, I050, 239 Homestead Act (1362, US], 143
Gramsci, Antonio, 6, 65, 79, 237, 273, Household contract system (China), 92
294, 390, 408118,409n9, 409n10, Household production, 48-50, 102,
416n22, 439n41; and fascism, 191- 351
93, 195, 197; and Fordism, 309- Households, and unemployment, 252
INDEX
Human rights, 389

Hyperliberal tendency in the state, 493
286-89, 347-53, 361; see also
Reaganism, Thatcherism International Bank for Reconstruction
and Development [World Bank), 217,
Ibn Khaldn, Abd-ar-Rahman, 107
219, 255, 259, 300-301, 359, 436n9
Ideal type, 4, 14, 129-30, 162
International division of labor, 69, 270
Ideology: and the afuent worker, 378;
International nance, 267, 305-7, 360,
and depoliticization, 429n27; and 364
the economic crisis (19705), 376; and
International Labour Organization
enterprise corporatism, 70, 72; and (ILO], 75, 101, 183, 234, 4321145
established/nonestablished worker
International Monetary Fund (IMF),
distinction, 64; free enterprise and 214, 217, 219, 255, 259-60, 265,
small business,62, 143; and hyper- 300-302, 305, 359, 368, 4421163
liberalism, 288-89; and integration Interstate system, 107-8, 151, 209,
of technical and supervisory person- 212, 357
nel, 370; and internationalizing of
Intersubjective ideas, 17, 22-26, 395,
the state, 256-59; and mobilization, 411111
91, 95, 202; and the modern state,
Investment, 25, 223, 232,274,279,
112-13; neoliberal consensus, 275, 281, 283, 321
282; petty bourgeois, 381, 386, 390; Iranian revolution, 385
Restoration (1815), 120; and separa- Iron rice bowl" (China), 96
tion of economics from politics, 150;
and the state,409n10;and statecapi-
Iohnson, General Hugh, 76
talism, 292; and state corporatism, 81
Johnson, Lyndon, 277
Imperialism, 154, 157, 163-64, 383
Incomes policy, 27, 76, 185, 188, 222,
Kant, Immanuel, 118
225-27,258,283
Katzenstein, Peter, 293
Indebtedness, 270, 275, 360; interna-
Keynes, John Maynard (also Keynsian-
onal,240,243,257,260,262,26Z ism), 167, 183, 213, 216, 220, 263,
286, 349-50, 373, 4201110,436115;
military Keynesianism, 188, 289;
post-Keynesianism, 377; world-level
277;
see
also
Debt
crisis Keynesianism, 189
Industrialization, 153, 163; import- Khomeini, Ayatollah Ruhollah, 279
substitution, 237 Knights of Labor, 65
Industrial policy, 258, 290-91, 294- Kondratieff, Nikolai, 42 7nn10-11
96,444n65 Korsch, Karl, 180
Industrial relations, state intervention- Kulaks, 88-89
ism in France, 141; see also Collec-
tive bargaining Labor administration, see under State
Industrial Workers of the World (IWW), Labor allocation, 19-21; under central
65 planning, 95; compulsory direction
Inequality: in communal production, in wartime Britain, 184; see also
91; in world economy, 147 Labor market
Ination, 75, 179, 216, 221-23, 250, Labor aristocracy, 64; in redistributive
270,274-79,283,400,444n1;hnep societies, 206; in Third World, 385,
nationalizing of, 277-79 387
Informal producer groups, 380-81 Labor costs, 245, 315, 319, 364
Informal sector, 324-28, 349, 383, 386 Labor market, 44, 52, 56-58, 149; in
Institutionalization of conict, 68, Britain, 19th century, 131-32; under
71,190,196,2Z5,416n22 central planning, 95; labor
Institutions, 12-13, 26-28 exchanges, 169; segmentation of,
494 INDEX
Labor market (Cont) Management:managerialauthority,

and welfare-nationalist state, 167; 283, 315; mitbestimmung (West
see also Labor allocation Germany),373; in redistributive
Labor movement, 63, 156, 140-41, 147, societies, 367-68; technostructures,
156; seealso Cooperatives,Political 370
parties, Trade unions Mao Zedong, 201
Labor problem, 156, 174 Marginality (social), 233, 387-389; see
Labor process, 315, 329, 332, 344, 346, also Primitive labor market
410n1; autonomous work groups, Marglin, Stephen, 316
332, 345; humanization of work, 332; Market, 23, 213, 244, 250,276, 287,
of management,369; quality of work- 289, 291,328,348, 399, 4071123;
ing life (QWL), 332, 454n40;seealso under central planning, 88, 207-8;
Factory system,Mass production, coercion, 41; and fascism, 192; in
Putting out system,and under land, 57-58; national, 56-57, 117,
Technology 130-31; and the neomercantilist
Labor reserve, 39; see also Reserve developmentalist state, 232; subsis-
army of labor tence mode outside of, 37; and the
Labor turnover, 329 welfare-nationalist state, 166, 168,
Laissez-faire doctrine, 126, 157, 429n23; 170,175,183,185;world market,
fascism and, 189 220, 223-24, 290
Landlords, 42-43, 57-58, 136-37, 193 Marshall Plan, 214-15, 255, 295
Land reform, 54, 58, 238-39, 264, Marx, Karl, 33, 44, 59, 64, 136, 138-39,
415n12 141, 157, 358, 396, 410n1, 414117,
Lassalle, Ferdinand, 157, 173 4201110
League of Nations, 163, 200 Mass production, 60, 68, 159, 160-61,
Legien, Carl, 179 270; decline of, 321; and war mate-
Legitimacy, doctrine of, 120-21, 128, rials, 318; seealso Fordism, Labor
421n20 process,Taylorism
Legitimation: of the state, 281-82, 288; Masterless men, 45, 414n16
and state capitalism, 29192 Mayo, Elton, 71
Lenin, Vladimir Illych, 64, 94 Meiji restoration (1868), 152
Liberal, denition of, 127 Mercantile-insular state, 116-18
Liberal professions, 53-54
Liberal state, 52, 129-43, 162, 165; and Mercantilism,107,111,11
political pluralism and authoritari-
anism, 134; and police, 133, 136
Liberal world order, 123-29, 143-47;
see also Pax Britannica
130,
144,
419nn8-9,
420n10;
and
Czarist Russia, 198; and the mercan-
Lifetime-commitment employment tile-insular state, 118
(Japan), 70-71 Messianic movements, 389; see also
List, Friedrich, 154
Millenarianism
Literacy, 156, 169
Métayage,seeSharecropping
Lloyd George, David, 179, 181, 432n
Mezzadria, see Sharecropping
42
Middle class: and the liberal state,
Long waves [economichistory), 158- 134-37, 148; and the neomercantilist
59, 427n11; see also Kondratieff, N.
developmentalist state, 241; and the
Lumpenproletariat, 140 welfare state, 187; see also Petty
Luxemburg, Rosa, 64
bourgeoisie
Migrants (migration of workers), 38, 47,
Macmillan, Harold, 186
60-61, 68, 143,146, 155-56, 235,
Maier, Charles, 193-94
237, 246, 247, 284, 288, 297, 314, 320,
324-25, 347, 379, 389
Military-bureaucratic regimes, 237-38,
INDEX 495
Millenarianism, 45, 48, 414n16; see tionalizing of production, 246, 248;

also Messianic movements and labor, 251; and neomercantilist
Millerand, Alexandre, 175 developmentalist
states,232,234,
Mitterand, Francois, 305, 447n38 239=345»355. 367; and transnational
Mobilization: in advanced capitalist managerial class, 359
societies, 271,297, 306, 353; in redis- Mussolini
196,238 Benito.79,140 189 193
tributive societies, 89-90, 91-92; in
Third World societies, 233, 236, 239,
243, 264, 307, 365, 367 Nasser, Gamal Abdal, 243
Mode of development, 6, 33, 398-99, National bourgeoisie,360-62; in China,
406n7; see also Capitalist develop- 201
ment, Redistributive development National economic consultative bodies,
Mode of production, in Marx, 396-97, 76, 186, 373; see also Corporatism,
410n1; and derivatives, African
Tripartism
mode, 413n1; Asiatic mode, 414n7; Nationalism. 157; and democracy, 128;
colonial mode, 413n6; domestic economic, 254; transcending class
mode, 413n1; kin-ordered mode, conict, 170, 177
413n1; lineage mode, 413n1; tribu- Nationalization: and the new working
tary mode, 414n7 class," 371; in Third World, 264
Modernization theories, 108; as ideol- National monarchies, see Absolutist
ogy, 359 state
Modes of social relations of production, National Socialism [Naziism), 76, 193;
ix-x, 1, 14, 22, 32, 410n1; and class, see also Fascism
356; combinations of [in social for- Natural economy, 36, 413n1
mations), 5-6, 33, 53, 70, 77, 81, 99- Neoliberal state, 212, 216, 218, 219-
103,106,109, 145-46, 149, 161- 30; transformation of, 285-98
62, 235, 266, 313, 356, 397-99; dia- Neoliberal world order, 212-19, 298-
gram of dimensions, 29; disparities 307, 361; see also Pax Americana
among re return to labor, 247, 252- Neomercantilism: and national capital,
53; as monads, x, 15, 34, 405n3; see 360-62; and state capitalism, 348,
also by names of modes: Bipartism, 350, 353; and world trade, 224, 303
Central planning, Communal, Enter- Neomercantilist developmentalist
prise corporatism, Enterprise labor state, 218, 230-44, 275-76
market, Household, Peasant-lord, New Deal (U.S. 1930s), 67, 75-76, 143,
Primitive labor market, Self-employ- 176-77, 417n25, 4321145,4321149
ment, State corporatism, Subsistence, New Economic Policy (Soviet NEP
Tripartism 19203], 83,200
Monads, see under Modes of social New middle class, see New working
relations of production class
Mondale, Walter, 377 New working class, 369-71, 459n22
Moneylenders, 39-40, 42-43, 54 Nicholson, Harold, 121
Monnet, Jean, 215 Nixon, Richard M., 186, 226, 277
Monopoly capitalism, 69-81, 100 Nkrumah, Kwame, 243
Monroe doctrine, 125 Noblesse dépée, 116
Mosca, Gaetano, 408n8 Noblesse de robe, 41, 116
Multilateralism, 214-15 North Atlantic Treaty Organization
Multinational corporations (MNCS): [NATO], 256
and deindustrialization, 362; expan-
sion of U.S.-based, 230, 277; and
inter-industry cooperation with so- Offe, Claus, 370
cialist countries, 368; and interna- Opium trade, 145
496 INDEX
Organic intellectuals, 294, 312 Petty bourgeoisie: and fascism, 191,

Organization for Economic Cooperation 193, 196-98; and French Third Re-
and Development (OECD), 216, 218- public, 175; and the hyperliberal
19, 282-83, 300, 327, 359 tendency, 288-89; in Third World
Organization for European Economic countries, 236, 366
Cooperation (OEEC), 214 Pinochet, General Augusto, 238
Organization of Petroleum Exporting Pitt, William, the younger, 122-Z4
Countries (OPEC), 248, 274, 278, 302 Planning, national economic, 161,
Outwork, 322-25, 337-38 167-68,177, 181,183, 184-86, 188,
Owen, Robert, 137 213, 403
Polanyi, Karl, 20,36, 58, 147, 360,
412119,4221140,4291123
Palmerston, Henry John Temple, 3rd Political parties, 6, 19, 63-64, 66, 78,
Viscount, 127, 152 106, 408n8; Christian Democratic
Pareto, Vilfredo, 408n8 Party, Italy, 196; Communist Party,
Paris Commune (1871), 140-41, 173 France (PCF), 215, 275, 4451125;
Participation: in decision making, 26; Communist Party, Indonesia (PKI),
in management by workers, 71, 264, Z39; Communist Party, Italy (PCI),
291, 332; in social development, 403 215,227,275, 335,445n21;Conser-
Part-time work, 322, 324, 328, 337 vative Party, U.l(., 186; Democratic
Passive revolution, 192, 218, 238, 244, Party, U.S., 377, 446n30; Italian
310, 345, 4391141 bourgeoisie and, 194; Labour Party,
Paternalism: bureaucratized, 72-73; U.K., 158,176, 178, 184, 186, 286,
and small business, 62 305; Republican Party, U.S., 295;
Patriarchy, 49, 348, 351; see also Family social democratic, 174, 191, 225, 227,
Pax Americana, 7, 108, 211-67, 270, 275, 372, 390; Social Democratic
394; see also Hegemony, Neoliberal Party, Germany (SPD), 75, 158, 176-
world order 77, 179, 194, 374; Social Democratic
Pax Britannica, 7, 108, 270, 400; see Party, Sweden, 374; socialist, 156;
also Hegemony, Liberal world order Socialist Party, France, 371, 376,
Payments decit (U.S.), 216, 250, 277- (CERES group) 286, 445n25; and
78, 302 ' state corporatism, 81
Peace movement, 352-53, 381, 462n52 Poor Law reform (1834), 131, 133, 135-
Peasant-lord mode, 39-44; in Czarist 36
Russia, 198; linkage with world capi- Populism: and Bonapartism,139; and
talist exchange relations, 145, 149; fascism, 196; and hyperliberalism,
and the neomercantilist develop- 288, 348; and petty capital, 55, 360;
mentalist state, 238; transformation in Third World, 236-39, 241-42,
Of, 102, 116 263, 276, 307, 384, 387, 390
Peasant revolts, 40, 44 Potlach, 413114
Peasantry,42, 387-89; denition of, in Poujadeisme, 55
Chinese Peoples Republic, 92 Poverty: attitude toward in 19th-cen-
Peel, Sir Robert, 126,131,133,137, tury Britain, 132; urban poor, 386;
4241158 see also Informal sector, Marginality
Peripheralization of labor, seeunder Power, 1, 5, 8-9, 17; diffusion of, 278,
Core-periphery structure 299, 307, 394; political, 18-19; in
Permissiveness (in balance of power, production, 18; social, 11, 18
world order), see under Balance of Precarious employment, 54, 61-62,
power, World order 324, 327, 346, 378-81, 453n26; see
Peron, Iuan, 238, 276, 444n5 also Part-time work, Temporary
Personnel management, 72-73 workers, Underground economy
INDEX
Preobrazhensky, E., 86, 90

Primitive labor market, 44-48, 59, 102,
340
Private plot agriculture, 85, 88
Production, 1, 4-5, 11, 396; decentrali- 497
zation of, 328, 332, 341, 343; and
diversication of demand, 330-31;
internationalizing of, 107, 109, 244- and world capitalist economy, 204,
53, 361; restructuring of, in capitalist 306; and world order, 299
countries, 328-38; restructuring of, Redistributors, 87, 91, 97
in redistributive societies, 340-43; Reform Bill (1832), 135
social relations of, 11-12, 270, 397- Regime concept, 441n59
98; see also Modes of social relations Reich, Wilhelm, 197-98
of production Reproduction, 6, 397-98, 406n7; ex-
Production relations, 5, 8, 12-13, 17; panded (dynamic), 35; role of house-
see also Modes of social relations of hold in, 48; simple, 35-49; social,
401-2; in subsistence, 413111
production
Research and development, 169, 346
Producvy,215,222,245,249,280 Reserve army of labor, 47, 59, 136, 172,
Z52,340,38889
Revolution from above, 205, 238
364 Ricardo, David, 125, 130, 132, 422n31
Robotics, see under Technology
Prot motive, 403 Rohaytn, Felix, 296, 448n41
Progressive movement (U.S.), 175-76 Roman law, revival of, 112
Property rights, 43 Roosevelt, Franklin D., 67, 76, 417n25,
Prostitutes, 46 446n30
Protectionism, 145, 154, 157, 183, 252, Rural laborers, 135, 138
260,Z6Z63,294,296,346,362;
see also Neomercantilism Sabel, Charles, 317
Protostates, 218, 230-31 Schlesinger, Arthur, ]r., 76
Putting-out system, 56, 58-59, 316, Schmidt, Helmut, 258, 364, 374
328
Schmitter, Philippe, 293, 296
Schumpeter, Joseph, 335, 426n5,
427n10
Raison détat, 105-7, 399, 409n10; in Scientic management, see Taylorism
old-regime states, 112-13, 118; in Sea power, 124, 129, 146,148,15253,
welfare-nationalist state, 174 155
Rathenau, Walter, 177 Second economy, see under Central
Rationalities, 22-26 planning, Redistributive societies
Reagan, Ronald, 275, 304, 436n5 Segmentation of labor market, see under
Reaganism, 270, 286, 295, 446n30, Labor market
449n2
Self-employment, 52-55, 139, 323,
Redistributive development, x, 6, 8, 21, 401; in redistributive societies, 84-
31,8398,163,204,210,219,Z60, 85, 92, 102, 341-43; and restructur-
ing of production, 323, 328, 345,
349; self-exploitation in, 54
Selfmanagement, workers, 28, 32; and
399,
406n7;
and
the
agricultural
gap, the new working class, 315, 369-
86; as alternative for Third World, 70; in redistributive societies, 208
251; and bipartism, 68-69; and the Self-reliant (autocentric) development,
enterprise labor market, 63; human- 202,Z4142,286,292,365-66
istic elite in, 98; and reciprocity, Semi-skilled workers, 60-61, 64, 68,
91; and the world economy, 306 160-61, 377-80; see also Mass
498
Slavery,32,142,146,412n17
Slave trade, 57
Small enterprises,60-62, and franchise
system,363; seealso Poujadeisme
Small holders (family farms), 39, 52- INDEX
54,58,138,140,14243,149,175
199, 339, 413111;see also Self-
employment State class, 366-67
Smith, Adam, 129, 131,13334, 312, State corporatism, 79-81, 101, 163;
449n5 under fascism, 190, 210; and neo-
Social class, see Class, social mercantilist developmentalist state,
Social contract [in neoliberal state), 233-34, 236, 244; in Third World,
373-74 345,38485,387
Social forces, 6, 58, 159, 176, 185, 195, State, forms of, x, 1, 5, 8, 355, 394,
206,209,271,274,353;ahgnrnent 409n10; and creation of modes of
in neoliberal state, 263; in disinte- social relations of production, 103,
gration of neoliberal state,285; and 105; in relation to world orders,
the Marshall Plan, 215; in post-Na- 105-9; see also Historic bloc, Haison
poleonic Europe, 126, 128 detat, State
Social insurance, 64, 147, 156, 167, 173 State sector, 167, 169, 185
Socialism: police socialism" in Czar- Stepan, Alfred, 265
ist Russia, 94; socialism in one Stinnes, Hugo, 179
country, 200; seealso socialist polit- Stoffaes, Christian, 295-96
ical parties by name,Redistributive Stolypin reforms, 198
societies Stop-go [economic management),
Social partnership, see Corporatism, 221,262
Social contract, Tripartism Strange, Susan, 256, 258, 278, 303, 306
Social revolution, 106, 356 Suikes,25,184,190,196,373
Solidarnosc (Solidarity, Poland), 3, 28, Structural-functionalism, 358
31, 207, 398 Structuralism, 395, 405n5, 408n9
Sorel, Albert, 113-14, 119 Structures, historical, 4, 15, 269-70,
Sovereignty, doctrine of, 112 39596,406n6
Soviets, 83 Subcontracting[and restructuring of
Specialized workers, 371-72 production), 323-24, 330, 334
Speenhamland system, 131 Subordinate groups, 17-18, 21, 356,
368-89
Stahnisn1,83,95,96,201,203,206, Subsistence mode, 36-39, 383, 406n7
Sukarno (Presidentof Indonesia), 239,
243
312,340 Summit conferences, 259
Surplus capacity, 249-50, 274, 321
State, 5, 18-19, 405n2, 409n10; auton-
Sweatshops, 61, 325
(nny,124,137,142,148,399-400;
Smnngrks(1830),135,138,425n59
Syndicalism, 28, 65, 175-76, 180-81,
316, 332, 416n21; and fascism, 193;
and state corporatism, 79
central
agencies
of,259,
263;
and
class structure, 39; and historic bloc,
400; internationalization of, 7, 228, Taiping rebellion, 150
253-65, 441n59; and labor adminis- Talleyrand, Charles-Mauricede, 120
tration, 68; and modes of social rela- Taxation, 43, 54, 172, 281, 325
tions of production, 67, 73, 74, 77 Taylor, Frederick William, see
Statecapitalism: and economic plan- Taylorism
INDEX
Technology, 12, 19-21, 31, 44; Ameri-

499
can challenge, 363; automation, 317,
321, 369, 377, 379; and competitive-
ness, 280, 283, 290, 303-4; coexis- World countries, 384-85; and tripar-
tence of different technologies, 318, tism, 78
372; in East-West relations, 260; Transnational managerial class, 359-
fascism and, 191; and international- 60,36768
izing of production, 244-45, 247, Trosformismo, 79, 193, 196
250, 252; and labor relations, 375, Trilateral Commission, 282, 359,
450n10; and markets, 317; military, 444n65
114,202,304,318;prnnive,37,4m
and redistributive development, 201, Tpanimn,74-78,16162,170
203; robotics, 317, 321, 379; and the
second industrial revolution, 156,
158-59; and society, 309-18; state
investment in, 169
182-83,
186,
374;
and
incomes
poli-
cies, 225-26; and the transformation
Temporary workers, 61, 37980; and
of the neoliberal state, 281, 296
restructuring of production, 324,
Trotsky, Leon, 312, 427n11
328,330,337
Tupamaros, 389
Tenant farmers, 39-40
Twain, Mark, 142
Thatcherism (and Margaret Thatcher),
22B,270,28586,374
Underground [black] economy, 62,
Thomas, Albert, 177, 183
252,284,3242B,330,34748;and
Titmus, Richard, 171, 188
welfare, 336-37; see also Second
Tonnies, Ferdinand, 411n7
Trade liberalization, 215 economy
Unemployment, 147, 221; and class
Trade Union Congress [TUC), U.K., 181
conflict, 3; and the economic crisis
Trade unions [trade unionism], 25, 27,
31, 61-63, 65, 408n8; access to gov-
ernment, 185; business unionism,
(1Q70,274,281,282-83,2
374; corporatist form of, under cen-
tral planning, 98; and enterprise
corporatism, 7173; and incomes 381;
andfascism,
189,
191-92;
and
policies, 375-77; industrial union- international competition, 250; and
ism, 66, 161, 177; and investment the neoliberal state, 223, 252; and
policy, 375-76; legal status of, 63, the restructuring of production, 324,
141, 156; and the Marshall Plan, 215, 326, 348; in the Third World, 46; and
226-27; and the neoliberal state, the welfare-nationalist state, 165,
167,172,174,176,181,184
252,263,280,28Z85,Z9596,37Z Ungovernability thesis, 262, 279,
297,402,443n64
United Nations, 211, 219
77,
390;
and
the
neomercantilist Unorganized workers, 68
developmentalist state, 236; new Urbanization, 155, 164
model, 138; Owenite, 135-36; po-
litical action by, 64; in redistributive Velasco Alvarado, General Juan, 243
societies, 206, 207; and restructuring Vico, Giambattista, 406n6
of production, 330, 336; and the Vienna, Congress of (1815], 119-20
self-regulating market, 147; and semi- Vietnam war, 277, 289
skilled workers, 377-82; and small
industries, 335; and socialist plan-
Vhence,190,192-93,19697
ning, 184; in the state sector, 374;
and technology, 314-15; in Third
Volker,
Paul,
274
500 INDEX
War of movement/war of position, 182, Workers, nonestablished, 60-61, 63,

204-6, 242-44, 307-8 156, 322, 356, 377-82, 401; in Third
Warrior class, 40-41 World countries, 240, 244, 251; and
Weber, Max, 351, 412n10 the transformation of the nonliberal
Welfare-nationalist state, 164-89 state, 230-81, 283-84, 288, 295
Welfare state, 138, 158, 164, 275, 281- Working class:fragmentation of, 284-
82 85,287, 297, 353, 358, 381, 390; in
Westphalia, Peaceof (1648),112 Third World industry, 382-87; see
Whitley, I. H., seeWhitley Councils also Labor market, segmentation
Whitley Councils, 178-81 Work councils, 180, 182; see also Cor-
Wilson, Harold, 226 poratism, Whitley Councils
Women: as cheap wage labor, 60, 297, World Bank, see International Bank for
321, 329, 379; in early enterprise Reconstruction and Development
labor market, 59; in household pro- World economy, 107-8, 357-60 passim
duction, 49; in part-time work, 284; World order, x, 1, 8, 105-9, 405112;
in underground economy, 324-25 permissive, 148, 242, 299,394
Work, ix, 13-14 World systems theory, 357-58
Workers control, see Syndicalism
Workers, established, x, 60-61, 63,
156, 223, 230,252, 322, 356, 372-82,
386; in redistributive societies, 98, Znibutsu, 70
207; and the transformation of the Zollverein, 131
neoliberal state, 280, 288, 295 Zysman, John, 293-94
ISHH
8 HR4

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PRODUCTIO

Volume 1 in the four-volume series

New York ° Columbia University Press - 1987

Printed in the United States of America

Cox, Robert W., 1926-

(Powerand production;v. 1) (Thepolitical economy

This book is Smyth-sewn

JohnGerardRuggie,Editor, The Antinomies of Interde-

CHAPTER 2: SIMPLE REPRODUCTION 35

CHAPTER 10: THE FORMATION OF CLASSESAND

The purpose ofthisbookistocon-

by thenatureandactivityof statesandof international

from below, volume three from above. In volume four, noncapi-

Production creates the material

considers that class has been transcended ever since productive

/fresh approachto the dynamicsof classformationis necessary.

The system of power that emergesfrom theselinked his-

housewivesprovideinputsto big industryand feedindust1ys

linked to a world order that bears directly on them, as well as

sively around the state.Statesadvanceand protectthe interests

the international division of labor and the internation-

The Social Relations

The social relationsof production arisein three analyti-

changeablybut to highlight the aspectsof the relationshiprele-

identied peoplein relationto whattheyareall thesedifferent

The threefold natureof produc-

social power, as, for instance, when the capitalist classesgained

THE ORGANIZATION OF PRODUCTION:

The internal dynamics of the production processare conditioned,

expectedto spendpart of their time tilling the lordselds, but

In a simple, popular view, technology has a natural history

DISTRIBUTION OF THE PRODUCT

How is the product divided? Two lines of division are important.

archies, and the more articially constructed association in

thusconditional(bycontrastto the socialobligationinherentin

falls more heavily on the peasant.Revolt by the peasantchal-

rationalitymay perceivecertainactionsthat derivefrom other

To the congurationsof objectiveand subjectivefactorsconsti-

diated by any formal organization. One can hardly speak of in-

Objective Factors Subjective Factors

(Relationship of forces] (Forms of consciousness)

Another illustration, this one focusing on the factor of

Twelve modesof socialrelationsof production are iden-

It has been pointed out above that congurations of pro-

and coordinated within it makes them analogous rather than

Taking the historicalprocesses

camesubordinatedto other modes.Their changedplace in the

Such residues constitute one part of the production pres-

its biologicalneedsfor survivalandreproductionand doesnot

relations of production in which members of the subsistence

owner was often in reality the tenant of a moneylender.Peasant

was a condition for enjoying the fruit of the land, as in western

marketson agricultural production. Peasantswho cannot meet

archy, a direct domination, that is not characteristic of the sub-

Primitive Labor Market

no place and who were known variously as the poor, beggars,

but mostleavethe rural areasand abandonthe useof agriculture-

labor marketthe beggarsand streethawkersare rounded up

attitudes and norms of behavior,as crisesof familial authority

in which the wife, already full-time employee, was principal

Debatescontinue about when, during that long period from the

gradually reduced. WesternEurope becamepopulated in the

land. Self-employment is not a form of capitalist production