A Review of Nigel Harris (2003) The Return of Cosmopolitan Capital: Globalisation, the State and War. London: I.B. Taurus.
In many respects Nigel Harris' book is yet another celebration of neoliberal ideology, a jubilee for the inherent tendency of unfettered capitalism to promote growth and raise living standards. As such, it would hardly be worth reviewing here, except for the fact that if we turn Harris's thesis 'on its head', we get some important insights into the tendencies at work in the relationship between capital, the state, and the process of globalisation. Needless to say these tendencies do not embody the rosy future that Harris claims to identify.
The starting point for such a critique is found in the title of the book itself: the return of cosmpolitan capital. Cosmopolitan capital breaches the boundaries of the territorial national state, and the motif of ‘the return’ of this cosmopolitan character implies that capital once possessed this feature and is now returning to it after a long period of subordination to the state. The core of Harris' neoliberal perspective is that of the essentially dysfunctional relationship between the territorial national state and capitalist development. In its early period of development, long before industrialisation, merchant capital was serviced by the city state which provided a combination of low taxation and protection for the trade routes carved out by merchants.
The territorial national state that emerged in Northern Europe is, in contrast to the city state, underpinned by a dynamic of territorial consolidation and war-making which constrains capital’s freedom to roam where it will. Thus from the eighteenth through to the latter part of the twentieth century, capitalist development was straitjacketed into the territorial state's war-making activities. Capital continually attempted to break the boundaries of the territorial state and has now, finally, with the globalisation of the late twentieth century, achieved this and returned to its inherently cosmopolitan nature. This new globalised capitalism is regulated decreasingly by national territorial states and increasingly by networks of voluntary and non-government organisations (NGOs), and by great cities, and offers a future of stability, rising living standards, and the elimination of war.
So let’s stand this on its head. The Keynesian welfare state, beyond the minimal resources of security (law, police etc.) which all states provide in one way or another, provided some essential underpinnings for industrial capitalist development in the spheres of socialisation (education and welfare) and infrastructure (public utilities, communications networks). These in turn provided the basis for political compromise linking the working class to the state through forms of welfare citizenship. The growing abandonment of these state forms in favour of self-regulation by capital and a minimal state intervention increasingly oriented to security rather than welfare, has profound implications. And they’re not nearly as rosy as Harris thinks.
The city state and security
Harris begins by defining capitalism: "Trade… has a stronger claim to being the essence of capitalism than any other activity." (9) This is of course wrong, and completely blurs the distinction between mercantile and manufacturing capital, as well as ignoring capital’s domestic agrarian origins. But if capitalism’s fundament is trade, then clearly Harris is correct in seeing it as inherently cosmopolitan. Merchants looked disfavourably on the state and its taxes; traders formed networks based on trust (often derived from family or ethnic cohesion) rather than relying simply on the state for protection and the enforcement of contracts. States, or rather ancient empires, were generally based on land tax and the exercise of military power. The rulers of these empires were, in turn, often suspicious of merchant capitalists: "capitalists were seen as potentially subversive of the political order, unpatriotic, not committed to the state agenda." (44)
So far, so good. While Harris can be accused of blurring the distinction between types of capital, his specification of the relation between merchants and feudal princes or ancient empires is broadly correct. He then argues, uncontroversially, that there was a particular type of state, in the ancient world and continuing up to, broadly, the seventeenth century, which was fully in accord with the interests of merchants. This was the city state, epitomised by Venice, which was entirely based on mercantile trade rather than feudal territorial domination and was explicitly oriented to the mercantile agenda rather than that of territorial domination and taxation.
Thus city states "were built to draw resources from trade, banking, ship repair, the swapping of intelligence and manufacture rather than land taxes. Here rulers often promised to levy no unjust taxes to attract traders, even offered tax incentives to merchants to locate their operations there, sometimes built fleets to protect them in the sea lanes, created marketplaces and regulations to govern them, dredged harbours and built wharves and warehouses." (11-12) Referring to Venice: "The 'heart of the state' (as the Venetian government called it in 1509) was a great complex of state capitalism, the famous Arsenal [whose purpose was] to build, equip and arm the galleys of the fleet…" (30) In short the heart of the city state was security for capital: the protection of the merchant fleets. Taxation for extraneous war making, the ruling of large tracts of territory and subjection of non-urban populations was not a high priority for the city state, though of course its citizens had to be fed.
For now, let us suppose that, as one of the key features of globalisation, manufacturing capitalism has taken on many of the features of mercantile capital. If this were the case then the city state would give us a guide to the type of state that is now (re)emerging as appropriate for globalised (cosmopolitan) capitalism. Not just merchants but all forms of capitalists would construct their own networks cutting across the borders of territorial states, make accommodations with various states and, above all, demand from the state security and protection rather than the more elaborate functions that modern territorial states, until recently, provided both to capital and to citizens as a whole. When we look at such a development from the standpoint of the abandonment of the welfare state, the deterioration of the infrastructure in many even advanced capitalist countries, we can see these radical ideas as the inverse of Harris's rather celebratory account of capital and globalisation. But this is to jump ahead a little.
The Industrial Capitalist State
Instead of carefully exploring the relationship between the state and capital Harris asserts an a priori antagonism in which the modern state is driven by an inner logic of warfare and territorial expansion which, although it may lead rulers to foster capitalism for the purposes of a war economy, constrains and hinders the cosmpolitan logic of capital. Capital and the state have different territorial logics. The natural network structure of commercial relations was progressively disrupted by the needs of state building such that:
One logic, that of the state, the territorial ruler, came to subordinate and completely reshape the other, that of capital… 'Natural' economic geography, that defined by natural features (rivers, seas, deserts, mountains, resources) was sacrificed to the interests of the political order: ultimately cosmopolitan capitalism was sacrificed to the creation of a set of national capitalisms in the interests of states." (48)
Capitalist development appears here as a purely natural process following the rhythms of nature, geography and (presumably) human needs. Historically, left to its own devices it would have developed thus were it not for the fact that the state, with its territorial and war-making ambitions, got in the way. Such a rosy account of state-free natural capitalism in which "the logic of territorial power does not correspond to the logic of capitalism nor vice versa"(47) might be welcomed at a gathering of the followers of Hayek or even libertarian anarchists, though Harris does not quite commit himself to such positions. There is some degree of interdependency between capital and the state, even if an uneasy one. Trade depends on government for security and legal regulation and the modern territorial state has continued to fulfil these functions which Harris sees as most adequately performed by the city state. Likewise the territorial state, whose prime function -- Harris quotes Martin van Crefeld (1991)‘has always been to fight other states' -- is, with the industrialisation of warfare, dependent upon capital for resources. Hence in Europe the requirements of warfare shaped the development of capitalism. The latter became "a system of warring national economies or of national capitalisms." (52)
Thus the reciprocity between capital and the state is a rather grudging, minimalist affair. The state needs capitalism to fuel its (the state's) autonomous drive to war and conquest. Capitalism only needs the minimal protection of the state, as epitomised in the earlier city state, but finds itself being coerced into the nationalist war-mongering of the Western European territorial state. This portrayal of the capital-state relationship is crucial to Harris's rosy view of capitalism. Capitalism basically only ever needed minimal input from the state, mainly around issues concerning security. The nastier aspects of nineteenth and twentieth century industrial society -— the preoccupation with war and conquest —- are due to the state as opposed to capital. It is therefore a reasonable inference that capitalism is capable of autonomously, without the assistance or coercive intervention of the state, meeting most human needs. Thus when capitalism starts, as under present conditions of globalisation, to break the boundaries of the state and regain its natural cosmopolitan nature, not only will it continue to meet human needs -— such as the elimination of poverty -— but will also lead to a marked reduction in warfare. The state will be less able to constrain capital to purely national warfaring needs. We are in for a prosperous, peaceful twenty-first century.
The first problem is that the relationship between capital and the state is a lot more complex than Harris appears to think. David Harvey whose (2003) book The New Imperialism was published around the same time as Harris', offers a counterpoint. Harvey begins with a quote from Giovanni Arrighi in which the latter specifies precisely the different logics of capital accumulation on the one hand and the territorial state on the other. The territorial state seeks the augmentation of its power in relation to other states. In pursuing this goal it is constrained by the political and military situation and, in a democracy, by the electorate. The state operates in bounded territorialised space, its time frame is determined by events such as elections. It is a fixed entity in terms of space unless of course it becomes subject to geographical conquest or disaggregation.
Capital, on the other hand seeks profit maximisation. It is constrained only by legal regulation and social pressure from the territories in which this accumulation takes place. It operates in continuous space and time. Individual capitalist firms come and go, through a process of mergers, location changes and business failures. Arrighi's question is: how does the relative fixity and logic of territorial power fit with the fluid dynamics of capital accumulation in space and time?
All this would be music to Harris’s ears. So why no Marxism in Harris’ thought? Because they start out from a much more sophisticated position; namely, the complex and contradictory relationship between the state and capital rather than the simplistic ‘the state gets in the way’ view espoused by Harris. The task of concrete analysis is precisely to show how this relationship of simultaneous antagonism and interdependence works out in practice.
Despite his attempt to specify the new imperialism of the late 20th and early 21st centuries, Harvey ends up giving a rather classic account. But in the face of Harris’s onslaught a statement of the blindingly obvious is very much to the point. Harris concedes that capital accumulation needs a minimal protection and security such as that provided best by the city state but, he goes on, historically this then which forced capital into a dependence on the territorial state in whose arms it then became overwhelmed and diverted to a purpose not its own. By contrast, as Harvey and Arrighi point out, rather the territorial state and capital accumulation needed each other even though their logics also conflicted. The key to this is, in a word, imperialism.
Capital accumulation has, as Harvey points out, a territorial and spatial dimension. Harris does not face this fact. The reason he does not is precisely because he has already decided that the essence of capitalism is merchant capital which has no interest in territorial consolidation or ruling populations per se. But manufacturing and industrial capital needs territory: coal mines, rivers, natural resources, and of course, a compliant labour force. Its needs are nothing if not territorial. The division between town and country, the formation of the modern working class and the intricate relationship between the bourgeoisie and the state is seen, by Harris, as somehow a process of the state cajoling the bourgeoisie into a militaristic war-making project in which they would rather not have participated.
We can take the militaristic and territorial enlargement projects of the state for granted for the moment. How does this relate to capital accumulation? Firstly, Harvey points out, following Hannah Arendt (1968) that the expansion of capital accumulation simultaneously expands the minimum territorial state size required to be hegemonic in the international competititon between states. This doesn’t mean a state must just grow within its own boundaries, but it needs also to dominate and annex other areas. If other states are industrialising then a state wishing to dominate the others must grow spatially as well as in terms of capital. It must access and keep other states from accessing, new sources of raw materials, labour forces etc. If the state coerces capital to make war, then capital certainly sets the conditions under which such conflicts can be won. The military project of the state and the aims of capital accumulation are not, after all, so much at loggerheads. Harvey notes the limits to this in the argument of Paul Kennedy in The Rise and Fall of the Great Powers there is a constant tendency of overextension and overreach by states that find themselves running large empires.
The state is dependent on capital accumulation but the converse is also true. Capital requires the state to push forward the frontiers, either by direct colonialism as during the nineteenth century or by varieties of liberal governance as in the present period, of what Harvey terms accumulation by dispossession. The latter is the opening up of new markets, commodification of previously non market production (which these days takes place also within states through privatisation of hitherto public services) formation of new labour forces etc. Of course some of the forms of coercion involved could be provided privately by capital itself. This happened in the early stages of capitalist development with armed trading companies and private mercenary armies, something that is reoccurring in the global South and the significance of which will be dealt with presently. Not all war-making is directly reducible to the interests of capital accumulation. There is no direct reduction of the interests of the state to those of capital. But throughout the history of capitalism an awful lot of war-making has carved out new markets and resources for particular groups of capitalists, preventing other groups of capitalists from getting their hands on them. Capital accumulation and the geographic expansion of states has been an intimately interconnected process. We shall return to these issues presently.
A second aspect of the dependence of industrial capital on the state has been for expenditure on urban management, police and public order, education, basic health care to secure the supply of labour power. These basic requirements can only be provided by the state as collective capitalist. They might be termed the socialisation functions of the state or, simply, the welfare state. True, these were not initially obvious in the early stages of industrial capitalism but the urban chaos and pitiful health and educational standards of the urban working class soon make them so and forced capitalism to divert resources for their provision. It is not that these processes are not also intimately interconnected with warfare. Minimal levels of health and education are necessary not only for working in factories but also for fighting in armies. The connection between military power and public health was a central feature in the development of the modern welfare state.
Harris notes that in the post Second World War period war-making shifted to welfare which "led to a major increase in the productivity of work." (139) while "The national capital project, driven by the state, immensely enhanced the capacity to produce for those who embarked on the contest of states." (140) But all this is just a temporary phase and a precursor to "the beginning of the end of the old system of competitive national capitals… Capital escaped to recreate… a cosmopolitan system beyond the old power of governments." (140)
All this is familiar stuff yet Harris seems to downplay it in his view of the state as a constraint on capital accumulation. It is as if key functions such as the management of urban space and the reproduction and socialisation of the labour force could have been managed by private capital were it not the state’s determination to hitch the whole process to war-making. Perhaps Harris’s obsession with the dysfunctionality of the territorial militarised state to capital is related to the Permanent Arms Economy theory which he once espoused. He appears to have stood the theory on its head. From a particular variety of Keynesian intervention which saved capitalism after the Second World War and engineered the subsequent long boom, the war economy has now become its opposite: a drain on the natural dynamic of capitalist expansion. In both cases any discussion of contradictions and crisis tendencies internal to the process of capital accumulation is almost completely absent.
Go on to read Part II of this review.
