Dynamics of Globalization at the Crossroads of Economics

İnan Akdağ

Phases of capitalism shape not only economy but also politics. Politics is formed by class struggle both between lower and upper classes and among different bourgeoisie fractions. Class struggle and class compromise lead to dominant political structure. Struggle between lower and upper classes brings about democracy or dictatorship orders. On the other hand, class struggle among different bourgeoisie fractions leads to liberal or statist capitalist orders. Compromise among classes is resulted with different political structure, all of which shape dominant politics. Right political or left political structures are sourced from class arrangement.

The main aim of this study is when the evolution of capitalism is historically analyzed, phases of liberal and statist capitalisms are natural elements of capitalism and politics shapes from these phases. The hypothesis of this study is that empirically liberal and statist capitalisms follow each other, and that politics during these phases forms from them. The importance of this study is to show that liberal capitalism, idea of liberal thought, is an illusion, that statist capitalism follows liberal capitalism in order to solve the problems which sourced from liberalism, and politics is a compromise between the left and the right which has taken shape by phases of liberal and statist capitalisms. The scope of this study is modern capitalism period.

2 Studies on the Periodization of Phases of Capitalism: Literature

Liberal approach is interested in the structure of market, according to which there are two forms of capitalism, liberal market economy and organized market economy (Soskice, 2009: 133). Companies coordinate their activities with hierarchy and competitive market regulations at liberal market economies while companies coordinate their company activities without market relations. Liberal approach uses this label as mixed economy for statist capitalism while Marxist approach uses the term “state capitalism”. After the 1970s with oil crisis, Scott Lash and John Urry (1993) separated capitalism into two forms, organized capitalism and disorganized capitalism. According to Lash and Urry (1993: 3), organized capitalism emerged in the 19th century. Organized capitalism realized with industry, banking and trade capital. Organized capitalism was different from liberal capitalism with the expansion of state and bureaucracy in economy.

The periodization of capitalism has been made by different approaches. This periodization is mentioned in Table 1.

Tab. 1: The Periodization of Capitalism (Tanyılmaz, 2002: 326);

Relevant literature stresses state role in economy because expansion or limited state determines the structure of capitalism. Marxist thought approaches emphasize the changing role of state in terms of classes while liberal thought emphasizes the role of state in economy. The role of state does not only affect economy but also affects law, politics and ideology. Both Marxist and liberal theory accented the place of state in economy during different social formations.

3 Historical Phases of Capitalism

Capitalism is a living organism. It changes its forms in terms of historical conditions. Historically, with the evolution of capitalism, respectively, free competitive capitalism and monopolistic capitalism became reality. As far as phases of capitalism are concerned, liberal capitalism and statist capitalism historically applied.

Karl Marx (2015b) put forward the law of down tendency of profit rates in his magnum opus Capital. In capitalist system, capital accumulation is the main tendency; therefore, capital wants to accumulate. However, in the framework of the law of down tendency of profit rates, accumulation speed sometimes slows down. To prevent slowing down of accumulation speed, state intervenes in economy. This transformation leads to state-led economy. State-led economy brings about not only accelerating accumulation speed but also reducing violence of class struggle because state with redistribution role distributes add value to lower classes. This mechanism reduces transfer speed of add value from down to up, which lessens the level of class struggle. In addition, the struggle between statist capitalism and liberal capitalism is defined by class hierarchy in dominant power bloc. Conflicts between industrial bourgeoisie and financial bourgeoisie determine phases of statist and liberal capitalisms.

In the world history, periodical capitalist crises lead to transformation among phases of capitalism. Capital to continue its accumulation brings about transitions from statist capitalism to liberal capitalism, after economic crisis whatever its reason is excessive production or financial. From the end of the 19th century to 2008 economic crisis, capitalism has experienced four structural crises. After all crises, capitalism transformed from statist capitalism to liberal capitalism or liberal capitalism to statist capitalism. These crises are 1873, 1929, 1973 and 2008 crises. After 1873 economic crisis from 1896 to 1929 world economic crisis, there appeared liberal capitalism as a dominant capitalist phase. G. Dumenil and D. Levy (2011: 15) determine this period as the first hegemony of finance. Economic structure in this period, free market economy and the sharp development in companies’ organizations are recorded. G. Dumenil and D. Levy (2011: 15) put forward this period as the new compromise between financial sectors and manager classes. This compromise ended with 1929 Big Depression, New Deal and the Second World War. David Harvey also (2010: 221) defines financial capital as dominant power in two periods, one of which was the period from 1890 to 1929 and another was the period after 1973.

After the Second World War, until the end of the 1970s, there appeared the phase of statist capitalism, which was the new dominant class compromise. According to G. Dumenil ve D. Levy (2011: 16), the main features of this period are dominant manager classes among capitalist classes, the expansion of state to the economy – regulation, development, macro politics and low interest rates. This period is labelled as Keynesian Revolution.

After 1973 oil crisis, capitalism transmitted to liberal capitalism again, which was the second financial hegemonic period. This period is named as neoliberal period. This period has continued to today. However, with 2008 economic crisis, this period has been damaged and in the near future statist capitalism may be reality. Protectionism and trade wars may be indicators for the near future.

Tab. 2: According to G. Dumenil and D. Levy (2011: 20), the Phases of Capitalism;

According to table, capitalism sometimes entered domination of financial hegemony, and then statist capitalist period started. This oscillation is related with capital accumulation needs. Crisis is the starting point of phases of capitalism. Under liberal period or financial hegemony, add value transfer from down to up gains speed, and then for restoration phases of capitalism transform into statist period. With statist capitalism, add value is redistributed by state, which reduces class struggle violence.

Tab. 3: Andreas Nölke’s (2012: 119) Capitalist Phases

A. Nölke puts the table like Dumenil and Levy’s periodization as well. According to his model, during the last two centuries, capitalism has taken forms, respectively, liberal, statist, liberal, statist and liberal capitalisms.